Only gold prices have kept their value. Even diamond prices have fallen by 40%. This has led to the recent loss of 128 jobs at the De Beers Snap Lake diamond mine.
Falling commodity prices are not the only issue in play. Tightening credit to business is also of concern to business development in the north. Consequently, we have also noted a sharp reduction in private sector intended capital expenditures across the territories, rising from a 15% reduction in the Yukon to a 33% decline in the Northwest Territories and a reduction of 44% in Nunavut compared to last year.
While commodity prices are often cyclical, there are some issues in the north that are not, and they require considerably more effort to ensure that northerners are active participants in the northern development.
These can be grouped in three main categories: enabling environment for development; institutional capacity for economic development; and the human resource capacity. The north is challenged at all three levels.
On the enabling environment for development, northerners agree that more should be done in the way of infrastructure and that the regulatory environment is too complex and decisions take too long.
As for the institutions, I am happy to be here today to discuss with you a new agency for economic development in the north that we feel will bring an added impetus to northern development and address some of the related institutional challenges.
And lastly, there are challenges in the participation of aboriginal northerners in the northern economy, as they often lack the education and skills to participate in the workforce. This impedes their ability to be more engaged in the economic potential of the north.
Today I'm happy to discuss two key elements of economic development in the north that we have identified for action--the new agency and northern regulatory improvement.
Concerning the new northern economic development agency, I'll speak briefly about commitments the government has made towards the establishment of an agency and its planned role and mandate, as well as key milestones INAC is working towards in order to implement these commitments.
The November 2008 Speech from the Throne stated that economic development in Canada's north would be led by a stand-alone agency. This past January, budget 2009 provided $50 million over five years to establish the agency. The creation of the agency represents a change in the machinery of government, which is entirely within the prerogative of the Prime Minister. While he has not made final decisions on mandate, structure, and role of the agency, the Prime Minister has clearly indicated that it would be a stand-alone organization with headquarters in the north and a strong presence in each of the three territories.
In developing advice on the agency, we have engaged in consultations with territorial stakeholders to get their views on the priority activities that should be pursued and how they would wish to work with this new organization to achieve common economic development objectives. We have also talked to the other federal development agencies: the Atlantic Canada Opportunities Agency, Western Economic Diversification, the Economic Development Agency of Canada for the Regions of Quebec, and the Federal Economic Development Initiative in northern Ontario.
Consistent with these existing federal economic development agencies, the new northern economic development agency will be expected to perform three broad functions: first, the delivery of economic development programming in the three territories; second, coordination of national economic policy and programs in the territories, and where appropriate serving as the delivery agent for other federal departments; and third, research, policy development, and advocacy of regional interests within the federal government system.
We anticipate implementing the agency's mandate and functions over two phases with clear milestones associated with each. In the first phase, currently under way, we anticipate establishing and staffing the new agency and transferring existing and new northern economic development programs. No decisions have been made on which programs to transfer, but strong candidates include the recently renewed strategic investments in northern economic development, or SINED, program, aboriginal economic development programming for the north, and two new programs announced in budget 2009--the community adjustment fund and recreational infrastructure Canada.
Milestones linked to the first phase include organizational design, the appointment of a deputy head, the determination of staffing categories and levels, transitional planning around the transfer of existing staff and programs, securing of new accommodations for staff in the three territories and the National Capital Region, and of course, staffing and training.
An important consideration during the first phase is how best to maintain continuity of service from existing and new economic development programming during the transition to a new agency. This is a key priority and the main reason a phased approach to implementation is being pursued.
In establishing the agency, INAC officials are committed to continuing the engagement of the diverse and vibrant stakeholders across the territories. Since the November 2008 Speech from the Throne, northerners have been consulted in a number of different ways. A context paper was distributed to over 100 stakeholders this January, seeking their views about the agency. A copy of this context paper has been provided to the clerk of this committee for distribution. As well, officials have travelled to the north to meet with territorial and municipal government representatives, aboriginal governments and organizations, and private sector industry associations.
The next round of engagement sessions will start soon. This will be coordinated with the renewal of the SINED program, mentioned a moment ago. Key stakeholders in each territory will be brought together to develop investment plans that will guide the allocation of SINED funding over the next five years. We will use this opportunity to share information and discuss the status of agency implementation and to seek stakeholders' views on the next steps.
While present efforts are focused on ensuring a strong start for the northern economic development agency, we will continue to work with northerners on further developing the agency, including consideration of the development and passage of enabling legislation if needed, and in-depth policy analysis and consultation to identify gaps in northern economic development programming across the federal, territorial, municipal and aboriginal government landscapes, where there may be a role for federal government to play, or where it could make sense to evolve the delivery of existing programs from other departments to the northern-based agency.
As I have said before, the Prime Minister will make the key decisions on the agency and we are ready to move forward with its simplementation as soon as possible.
I'd like to say a few words about regulatory improvement.
One of the most important enablers of economic development in the north is a properly functioning and effective regulatory regime, and its legislative requirements.
Regulatory approval of resource development projects in the north varies by territory, although there are some similarities. Each territory has its own set of legislation governing waters, surface rights, environmental and socio-economic assessment, and land use. The regimes are founded in settled land claim agreements. Projects move through this legislative set of requirements to receive appropriate licenses, permits, and authorizations from co-managed regulatory and advisory boards. These include land use planning boards, environmental impact boards, and land and water permitting boards.
The Yukon is somewhat different than the NWT and Nunavut in that the responsibility for the management of land and resources was devolved to the Yukon government in 2003, whereas the Minister of Indian and Northern Affairs Canada retains key decision making authority in the NWT and Nunavut.
The Northern Regulatory Improvement Initiative was struck, in part, due to the increasing numbers of stakeholders comments and independent reports that indicated we need to reduce the complexity of the regulatory process in the north, particularly in the Northwest Territories. The regime we have in place in the Northwest Territories is now about 10 years old, as established by the Mackenzie Valley Resource Management Act and by various land claims settlements.
We know there have been growing pains and that some are more serious than others. We know we need to increase the efficiency, predictability, and timelinessof these regulatory processes while respecting settled land claims agreements and ongoing devolution negotiations with Nunavut and the Northwest Territories.
In November 2007, Minister Strahl appointed Mr. Neil McCrank, a former chair of the Alberta Energy and Utilities Board, to identify ways to improve the regulatory processes in the territories. For the next few months, Mr. McCrank held over 100 meetings with aboriginal organizations, resource management boards, industry representatives, environmental organizations, territorial governments, and federal departments. He then took all of what he had heard and applied his extensive experience in regulatory processes to produce his report called Road to Improvement, released in July 2008. We have provided copies through the clerk to the committee.
Since then, INAC has been developing a Northern Regulatory Improvement Action Plan that will address the McCrank recommendations along with other needed improvements to the northern regulatory regimes identified in the report of the Auditor General in 2005 and in the NWT Environmental Audit in 2006.
However, as we have been developing this comprehensive response we have not been sitting idle on regulatory improvement. We have developed water regulations in the Northwest Territories and Nunavut. We have been working on a national framework for regulatory board training and orientation. We have amended the Nunavut Land Claims Agreement to eliminate duplication of environmental assessment processes between the Nunavut Impact Review Board and the Canadian Environmental Assessment Agency. We have amended the Mackenzie Valley Resource Management Act exemption list regulations through Treasury Board to ensure one screening for each project. We have provided funding for cumulative impact monitoring in the Northwest Territories, and we have accelerated the development of the Nunavut Land Use Planning and Implementation Act.
Our Action Plan will cover a broad range of improvements. There is still much to do. We still need to address governance issues. There are outstanding commitments in land claim agreements on environmental monitoring in the NWT and Nunavut and there are legislative and regulatory gaps that need to be filled in for the system to work efficiently.
We also have to remember that while some of these changes we need to make are solely federal responsibilities, to achieve the necessary improvements we need to work with aboriginal organizations who have settled land claim agreements, territorial governments, and northerners in general.
Regulatory regimes that produce timely, predictable results while respecting our stewardship of the northern environment and the traditional lifestyles of its aboriginal people are key to the north's economic prosperity.
While there is potential for diversification of the northern economy, its backbone will continue to be the resource development sector. I know the committee is interested in better understanding the full scope of the potential for resource development in the north, and we are therefore sharing a map with you that shows all the mining projects that are currently in various phases of development, from advance exploration to environmental assessment, to permitting, production, and even in some cases remediation.
As I mentioned earlier, there remains much left to be done to improve the north's regulatory systems. I can assure you that our minister continues to work with his colleagues to move this action plan forward and looks forward to providing a complete response to Mr. McCrank's report in the near future.
Thank you very much.
