Fisheries Committee on March 8th, 2016

[Jeffery Hutchinson]

Those new vessels form part of a larger program. These are not the 47-footers that you may be most familiar with. Most of our lifeboats are the 47-footers. These are the larger Arun class. They can handle heavier seas and can go further offshore. We've been doing a risk assessment on various geographic locations to assess where they'll best be deployed, but final decisions haven't been made.

[Mark Strahl, Conservative, Chilliwack—Hope, BC]

The last time you were here, we talked about the Coast Guard station at Kitsilano. Is there money in these supplementary estimates (C) pertaining to its reopening? Or would we expect to see that at a future date as well?

[Jeffery Hutchinson]

No, there's nothing for Kitsilano in the supplementary estimates (C). We would expect that to be in for the coming year.

[Mark Strahl, Conservative, Chilliwack—Hope, BC]

I want to move to some of the transfers between organizations. That caught my eye. It's interesting to see a transfer from Fisheries and Oceans to the RCMP to provide “essential” services for staging the Pan Am Games in Toronto. Maybe you can walk us through what happened there.

[Marty Muldoon]

The approval for the funding was multi-agency for the security of those games. The way that model was set up right from the get-go was that there was a lead agency. If there was a need at any point during the process of that overall program rollout for a reallocation amongst those agencies participating in that endeavour, we would be corporate about it and do that.

In our case, the Canadian Coast Guard was able to deliver its full safety requirement contribution to the Pan Am Games without fully utilizing the dollars set aside for it. Another organization—in this case, the RCMP, as you note—needed extra funding. This is a transfer of the funding that we didn't require within the envelope for costs they actually incurred and did require funding for. That's all it is.

[Mark Strahl, Conservative, Chilliwack—Hope, BC]

I want to turn briefly to the $2 million for the Pacific Salmon Foundation. Can you describe some of the work that's being undertaken there on the Salish Sea marine survival project? Obviously it was announced in budget 2015 and is still proceeding. Maybe you can describe what those funds are currently being used for.

[Trevor Swerdfager, Assistant Deputy Minister, Ecosystems and Oceans Science, Department of Fisheries and Oceans]

That work is proceeding, as you know. It's being done in a collaborative way, primarily with the Pacific Salmon Foundation, but not entirely. They are, if you will, the project coordinator and leader. Many parties, including DFO, are contributing to it.

Essentially, there are three avenues of inquiry. The first is what we're trying to do collectively, and please interpret this as the royal “we”, as opposed to just DFO. It's collaborative. We're trying to understand more about what's happening to these animals when they go to sea. We have an awful lot of information about what happens when they're in their natal streams and how they behave in the early parts of their life. We know a lot about what happens to them up to that point when they leave. We don't know exactly where they go, and we don't know what happens when they get there, so there's a fair bit of effort devoted to that.

The second thing is to try to understand a little more about them while they're in nearshore waters, what is happening to them and what sorts of pressures and stressors and so on are upon them.

The third one is, for lack of a better term, a catch-all. We have a bunch of very specific questions. We're trying as well to amp up just a little some of our survey program work so we can determine out-migration a little better and improve some of our counting on the returns. The overall initiative is designed to get us to the point where we have a better understanding of what's happening to these animals, predominately after they've left, but not solely, and what's going on when they get to wherever they're going.

[The Chair, Liberal, Scott Simms]

Thank you, Mr. Swerdfager.

Mr. Donnelly, please, for seven minutes.

[Fin Donnelly, NDP, Port Moody—Coquitlam, BC]

In terms of operating costs and looking at ocean management, I was wondering if you could comment on Canada's commitment, the UN commitment, to achieve 5% by 2017 and 10% by 2020 in terms of marine protection. The departments obviously have to ramp up not only the process of protecting marine areas, but also significantly invest in the department's resources for marine planning and protection. I'm wondering if there is any money here or if it will be coming, and what kind of investment we are looking at and how soon, etc.

[Kevin Stringer]

Point number one is that there's nothing specifically in the supplementary estimates (C) that speaks to the marine conservation targets. I get your point about the challenge in terms of the investments.

Next—and I spoke to this the last time—the specific targets of 5% by 2017 and 10% by 2020 that have been set are very challenging and very ambitious and, we're saying, achievable. We will do it. Public servants will always tell you that it would be nice to have more money to be able to do that. This is a program that has been challenged in terms of resources, as many programs are, but it's something that I think we'd be dealing with in the future. There's nothing actually in supplementary (C)s to deal with that one.

[Fin Donnelly, NDP, Port Moody—Coquitlam, BC]

Thanks. I would also add that I think some of the stakeholders around the table would like to see the department have more resources as well, not just department officials but others in the process, whether it's provincial governments or non-profit organizations that are working with you on it.

Switching to fish farms for a second, I want to mention specifically some work by a couple of individuals, Alexandra Morton and Rick Rutledge, who published a paper in the peer-reviewed Virology Journal. I'm sure you're familiar with that. They looked at trout in Cultus Lake, which is also home to Canada's most endangered Fraser River sockeye salmon population run. This same virus has ravaged the salmon industry in Chile. I want to read you a quote from Alex Morton:

When [ISAV] travelled from Norway to Chile, it sat dormant for about eight years. Then suddenly, in 2007, it just took off and infected so many farmed salmon, it caused $2-billion worth of damage.

Given that government testing facilities are over their capacity by about 30%, is there a consideration for outside help in terms of additional government investment?

[Trevor Swerdfager]

I guess I'd say a couple of things in response to that.

First, I would echo Kevin Stringer's comment to the effect that, just to be clear, there's nothing in the supplementary (C)s that addresses those issues materially, if there's any question about how that links.

With respect to the paper, we're aware of it. We have people who are looking at its conclusions. The debate around many of the topics that it touches on is a very robust one, as you know.

Insofar as lab capacity is concerned, on some of the issues that are touched upon, not only in the paper but in the regulatory domain that gets into that same field, lab capacity in that particular area for the most part is not a problem for us. We have lab capacity shortages in certain areas as compared to the demand upon them, because demand has continued to increase, but in this area our ability to meet the laboratory testing requirements and activities we think is actually quite sufficient.

Should the demand change, then we might have to think about different approaches to it, but for the most part, our lab facilities across the country—we have four that we use mostly for this sort of work—are extremely busy. They're working at full capacity, but their ability to touch on these sorts of things is quite high.

We also work in collaboration with people in the university community and in other agencies when we get into some of the other issues that are about more food safety and other things, so they're not only in DFO labs. We do have access to that set of expertise as well.

[Fin Donnelly, NDP, Port Moody—Coquitlam, BC]

I have just under a couple of minutes left, so due to time, I want to switch to the Coast Guard for a second and talk about the fleet operational life, which, according to my understanding, lags well behind 50% on the target. Maybe there's a comment on that. Also, construction delays and cost overruns are quite apparent in the current procurement process, and we've only achieved 20% of our critical milestones to date. I'm wondering if the government has plans to turn that around, and again, either here in the supplementaries or in the main estimates.

[Jeffery Hutchinson]

It is true that our fleet, particularly our large vessel fleet, is aging. I will note that our small vessel fleet has a much lower average age and is of much less concern.

We're looking in particular at the icebreaking fleet, for example, where the average age is creeping up pretty high. I'll say that on the one hand we build Coast Guard vessels to a high standard, so they do tend to last longer than what you see in the commercial world, and that's intentional. We put them through their paces. Icebreaking is a much more difficult task, as you can imagine, than moving cargo, but we build them to last.

In terms of the second part of your question about the longer term for the fleet, my team is currently developing the fleet renewal plan. We do that on a five-year cycle, and we have a 2017 complete renewal plan that will be due out. We're certainly working with the yards within the NSPS to maximize the time they'll have available to build ships as we move to later stages.

[The Chair, Liberal, Scott Simms]

Thank you. That's exactly seven minutes.

Mr. Hardie, for seven minutes.

[Ken Hardie, Liberal, Fleetwood—Port Kells, BC]

I want to talk more about the science vessels. Who's actually managing the procurement of these vessels?

[Jeffery Hutchinson]

The procurement under NSPS is a partnership, if you will. Public Services and Procurement is in charge of the actual procurement process. The defence procurement secretariat resides there, and the DPS is in charge of procurement. Our role is in partnership. We work directly with the yards to ensure that our specific requirements for those vessels are understood and they're being built to the standard we need.

The lead on the procurement process itself is PSPC, but the delivery of ships is a partnership between ourselves, PSPC, and DND as well.

[Ken Hardie, Liberal, Fleetwood—Port Kells, BC]

I know that initial estimates can sometimes lead the average person astray in terms of what to actually expect, but I would like to get a sense of the number we started off with versus the number we will end up with for these science vessels.

[Jeffery Hutchinson]

The original budget for these vessels was set in a rather different time and place. For one, NSPS wasn't contemplated at the time, so the question of what a fisheries science vessel would cost was kind of using commercial comparators. I don't think they were the right comparators.

Second, those initial budgets didn't take several key things into account. They didn't account for inflation. If you have a delay in building the ship, a gap develops between the budget you set and the actual price for the ship, because inflation kicks in, and marine sector inflation tends to run hotter than general inflation.

Third, we know that some specific costs that are required for a shipbuilding project weren't included in those old numbers. Without getting too technical, warranties, for example, were not costed in. Engineering wasn't costed in. Insurance during the build process wasn't costed in. No matter where you build your ship or when you build your ship, you'll have some other costs within your project management that were never reflected in those budgets.

Our costing internally is significantly more robust than it was in 2005 or 2006. In fact we don't use the words “cost overrun”. That may sound a little defensive, but we actually think of it in terms of properly setting the budgets at this time. We're trying to take a comprehensive view of what the project costs to run. We're taking a comprehensive view of the impact of commodity prices, inflation, currency fluctuations. We're definitely working towards costing on those vessels that's in a completely different league in terms of its reliability from the original numbers.

[Ken Hardie, Liberal, Fleetwood—Port Kells, BC]

You mentioned a budget reset. What was the amount of the reset?

[Jeffery Hutchinson]

The total project went from $244 million to $687 million.

[Ken Hardie, Liberal, Fleetwood—Port Kells, BC]

That's quite a reset.

[Jeffery Hutchinson]

It is. Within the $687 million, $514 million is actually for building the vessels. Within that $514 million, you have a fairly significant margin for contingency.

We set our contingencies fairly high at the moment. As people know—it's public knowledge—within NSPS we're working with a pretty green yard in Vancouver. They're following the growth curve. They are developing, but we're mindful of the fact that every process they run building our ships is the first time they've run that process. We have taken that into account in how we've set our budgets, but our third parties who are watching the process are saying they're where they would be expected to be in their growth and maturity, and these projects are where we would expect them to be as well.

[Ken Hardie, Liberal, Fleetwood—Port Kells, BC]

Do you have a set cost and set time of delivery procurement with these folks?

[Jeffery Hutchinson]

We do have a delivery date. Those three ships, the offshore fisheries vessels, are to be delivered before the end of calendar year 2017.