Finance Committee on Sept. 25th, 2018

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Thank you.

Thank you, Mr. Chair.

[The Chair, Liberal, Wayne Easter]

I would like to thank you all.

We'll go to Mr. Richards and five-minute rounds.

[Blake Richards, Banff—Airdrie, CPC]

Thank you.

I'm going to start with Mr. Lansbergen from the Fisheries Council, partly because you had mentioned your four priority areas in your opening and you didn't have a chance to cover them all, at least in detail. I actually wanted to start with one of the areas that you were able to cover in a bit more detail in your opening, just as a bit of a follow-up with it.

You talked about—you didn't use this term, but I will—“confiscation” of essentially licences. I say that word because to me it does sound a lot like when land is confiscated, things like that. It sounds like a very similar type of situation. I wonder if you could just elaborate a bit more on that for me.

Do you have some specific stories of where people have had their licences taken and can you elaborate a bit more, as well, on the chilling effect that has in terms of investment, based on those instances?

[Paul Lansbergen]

Sure.

The primary instance, which I think everyone around the table knows of, is the surf clam quota that was taken away earlier this year. That decision has been reversed. A new process is slated to start next year. We haven't seen any signal that this new process will address our primary concern, which is that it was taken away without any compensation, that they're going to follow a willing buyer, willing seller model for reallocations such as that.

In terms of a chilling effect, obviously that had an impact on that particular company, because they had made investments to upgrade capacity and now some of that capacity is surplus. They have some tough decisions on how they handle that. For everyone else, it's who's next? On the reconciliation agenda, we're not disputing it and we're not opposing it. It's how you undertake it. Everyone else in the sector is worried about who's next. Is my licence the next one that could get taken away? Should I be making that next investment on upgrading our processing equipment or a new boat or providing assistance to inshore harvesters as they're looking to upgrade their equipment for their vessels? Because sometimes people in the industry.... The supply chain is all integrated, so we try to help each other.

Any discretionary investment is being revisited, postponed and perhaps, in some cases, mothballed until this gets addressed.

[Blake Richards]

What you're essentially saying is that the uncertainty that's being created is causing investment to be delayed or potentially forgone altogether.

It sounds very similar to what I'm hearing in my part of the country, with oil and gas and some of the changing regulations there. The uncertainty that's created makes it hard to make a choice to make an investment. It sounds like a very similar type of situation.

I wanted to ask about something that's related to that.

I would assume that you represent some small businesses, some family-run businesses, as part of the Fisheries Council. You would be well aware of some of the small business tax changes that were proposed last year. Based on a lot of public pressure, the government did somewhat walk back from those changes.

But there's something that remains a concern—or at least that I'm hearing remains a concern—and I wanted to hear your take on it, on whether it's a concern for those small businesses you represent. It's the ability for intergenerational transfers and the fact that it is something that is difficult to do. We have a system that's set up that almost incentivizes people to sell off to others outside of their family, rather than transfer within the family.

Is that something you've seen in your sector? Is that something you have a concern about?

[Paul Lansbergen]

That's a good question.

We do have issues with that, particularly with the inshore fleet in Atlantic Canada. At FCC we represent processors and our members have offshore harvesting in Atlantic Canada. Because of the rules, we're not allowed to have any inshore licences, so I'm not the expert or the authority on that, but there are rules that dictate how an inshore fisherman can transfer a licence, whether it be to the next generation or someone else. Our issues are around the licensing, not a tax treatment or anything like that.

[The Chair, Liberal, Wayne Easter]

That's your time, Blake.

[Blake Richards]

Time goes fast. Thank you.

[The Chair, Liberal, Wayne Easter]

It does, when you're having fun.

Mr. Fragiskatos.

[Peter Fragiskatos, London North Centre, Lib.]

Thank you, Mr. Chair.

Thank you to the witnesses.

Mr. Egan, you said something a few moments ago. You talked about costs to end-users and costs to producers. I want to ask you a question with that in mind, as it pertains to cybersecurity. I noted in your brief that you had a section there and you've mentioned it here today, but when I think about the risks posed by a cybersecurity attack for critical infrastructure, that impacts all of us. That impacts our economy and certainly our competitiveness. I wonder if you could speak to that in general terms and what you'd like to offer in terms of the next budget. I know as a government we are pursuing initiatives around this, and you have mentioned that, but quite frankly, I think this is a great challenge. This is, in many ways, the challenge of the future for our economy, and for our society from a security perspective as well.

I'll put that first to Mr. Egan, and I'd also like Mr. Marchi to comment on that from a critical infrastructure perspective in the electricity sector.

[Timothy Egan]

I'm happy to comment on that.

Cybersecurity is a significant priority for us. In fact, it's an area where we co-operate extraordinarily closely with electricity and gas distribution systems alongside other critical infrastructure and the energy sector and beyond, for example, with the transportation sector, with water supply and with a host of other sectors.

I share your concern with the risks that cybersecurity presents. I think it's a growing concern. I would applaud the government on its cybersecurity work to date. We have worked very closely with several federal departments on this and we continue to do so, as we did with the previous government. It's an area where there is pretty extraordinary agreement across the political spectrum on the risks that we face as a country. Again, I am very supportive of the government's current direction, and in fact, my board is in Ottawa this week meeting with officials to talk about other opportunities that we have to co-operate. We are endeavouring to ensure that such co-operation is not just within Canada and between industries, but is in fact with our allies abroad as well.

[Peter Fragiskatos]

Thank you.

[Sergio Marchi]

I would certainly echo the remarks that Tim just made.

We are spending more and more monies on finding the experts and the technologies that can stay one step ahead of what has become an unfortunate growth industry, in terms of cyber-attacks and hacking. Electricity within the energy community is the number one target for these hackers. Each of our utilities has come under a considerable amount of siege. Certainly you can multiply that by tenfold in terms of our American counterparts.

First, we certainly work very closely with not only the Department of Public Safety, but also our security agencies. We have found that the Communications Security Establishment, which most of our utilities have signed relationship agreements with, is providing top-notch information, and usually quicker than what we are getting on a shared basis from the American establishment. One of the reasons for that is that there are so many American security agencies that are trying to coordinate and then funnel the information. It is very time consuming. I applaud the Communications Security Establishment, among other agencies.

I think a second aspect has to be to get our regulators knowledgeable on cybersecurity, and the challenge there is that their reports at the end of the day are public, yet the information that you get from our cybersecurity agencies is confidential. How do we square that circle?

Lastly, we are all interrelated, so we have to have a North American disposition when it comes to cybersecurity frameworks, because we are as strong as the weakest link in that continental chain. There's a huge amount of work between the United States and Canada, government to government, private sector to private sector, and we participate in the Electricity Subsector Coordinating Council, which brings all of the personnel from our two security agencies together with the private sector. We are meeting on October 11 in Washington. The question there is Mexico, and without speaking ill of any of our partners, we, I think, have to integrate Mexico much quicker and deeper into the NERC establishment, which is the North American Electric Reliability Corporation, that actually puts out the cybersecurity standards.

I would certainly make an effort on the North American side, and I think our ministers of energy, continentally, when they meet, should have a standing item on cybersecurity.

[Peter Fragiskatos]

Thank you very much.

[The Chair, Liberal, Wayne Easter]

Thank you, all.

Mr. Van Kesteren.

[Dave Van Kesteren, Chatham-Kent—Leamington, CPC]

Thank you all for being here.

Tim, you've been here a long time—as long as I've been here. I can remember your advocating for the gas industry back when there were concerns about our fuel, our oil. We talked about peak oil at the time. Of course, with the advent of fracking, we've seen an incredible surge of that energy supply.

As you know, in my riding, gas is extremely important. In Chatham-Kent—Leamington, we have Union Gas, and we have the greenhouse industry. Back when I was first elected, I think they were paying $11 a gigajoule. I don't know what it's at right now, but maybe $4?

[Timothy Egan]

I didn't check this morning, but yes, it's under $4, I believe.

[Dave Van Kesteren]

It's under $4. That's an incredible news story.

There were some advancements made, and our government was a strong advocate for the gas. We wanted to see that happen in the private sector. I remember the trucks coming up from Robert company in Montreal.

How is that initiative going? There was some talk about fuel stations, of them lining up along the 401. Where are we with that? How is the trucking industry moving forward with natural gas?

[Timothy Egan]

The industry is quite supportive, and that support is growing. The challenge, as you know, given your own experience in the industry, is that margins are incredibly small. The decision to switch fuels represents a significant economic cost to an independent trucker, so the trucker wants to know that the infrastructure is going to be there if they do so.

I think that governments can be sending signals that they're supportive of the expansion of this infrastructure. That's the best way to move this further along.

I can tell you that we've had significant gains in the marine sector, with ferries on the west coast, ferries in Quebec, and that we have an increasing amount of interest from the rail sector about moving rail to gas. We have to think about freight transportation more broadly, and not just any one subsector. If we do that, I think we'll see significantly more movement.

[Dave Van Kesteren]

We talk about the opportunities. I remember at the time that there was such a demand for liquefied natural gas. After the earthquake, of course, the Japanese were hungry for our product.

What's the situation on the west coast as far as the natural gas being able to be exported? Are we stalled, or what's happening?

[Timothy Egan]

As you know, my membership is on the distribution side, not on the production side. Our file is not LNG exports per se.

That said, a couple of our member companies are tracking that very closely, because they have LNG facilities of their own. I would point in particular to the FortisBC facility on the west coast, which has looked at some small export opportunities, and investment in others. The challenge, as always, on LNG exports is waiting for the investors to make a final investment decision.

You can go to the press reports as readily as I can. Why are those investors not making those decisions yet? They have reservations about regulatory burdens and the competitiveness of the Canadian marketplace.

[Dave Van Kesteren]

You and I have had some private conversations in that regard, and we've moved those forward to the government as well.

You made a submission to Finance a number of years ago for the distribution of gas to the northern communities. Is that initiative being entertained by the government at this point? Is there some movement in that direction?

[Timothy Egan]

With regard to our proposal in our pre-budget submission for the expansion of the gas system to rural and remote communities—I focused on the rural in my earlier remarks, but it applies to remote communities—I would note that we're having conversations with players in the Northwest Territories and the other two territories as well, and also with what I'll call the near north.

The opportunity is significant. We need to think about it as a national picture and about the infrastructure that's required to build it.

[Dave Van Kesteren]

Thank you.

Mr. Lansbergen, do you represent the freshwater fisheries as well? You're aware that my riding has the largest freshwater fishing port in the world. I'm going to brag about that for a second. However, there is some initiative being taken right now for the basin of western Lake Erie to be turned into a park.

Is that what you're referring to as far as losing fishing opportunities for commercial fishers is concerned?

[Paul Lansbergen]

I was referring more to coastal ocean marine protected areas, but I know that it is happening in inland waters as well. That would be more under the purview of Parks Canada rather than DFO, but the same issues apply.