Indigenous and Northern Affairs Committee on June 16th, 2009

[The Chair, Conservative, Bruce Stanton]

Let's go to Mr. Clarke, then, for five minutes.

[Rob Clarke, Conservative, Desnethé—Missinippi—Churchill River, SK]

Thank you, Mr. Chair.

Thanks to the witnesses for being here today.

I hope I'm not off topic here, but economic development in the north for northerners, and specifically also for aboriginals, is very important. What I'm curious about is the component of aboriginals for the development of natural resources in northern territories. I'm hoping to get some clarification from each of the territories.

How many people, percentage-wise, are actually employed in the territories from the resource sector? Second, what percentage of that population is aboriginal? Third, what is the long-term range for aboriginals working in this resource sector? What percentage are we looking at as future goals?

[Lou Covello]

I can give you the figures I indicated in my talk earlier. For two mines in the Northwest Territories—that's Ekati and Diavik—the total payroll was 2,250 people last year. Of that, 70% were from the north. Of that 70%, 40% were aboriginal.

There are an additional two mines there in the Northwest Territories. In Nunavut, there are two mines in the development stage that will see production within the next two years. I think we can expect similar numbers, if not better numbers, with respect to aboriginal employment there.

[Pamela Strand]

These are all numbers that are negotiated in the IIBAs, the Inuit impact and benefits agreements, as goals for the companies to initially start with their various training programs, and increase through time.

[Lou Covello]

This also doesn't include exploration. Exploration in Nunavut now is around $200 million this year—I think it's planned—and much of that money is spent in Nunavut on local employment.

[Claire Derome]

I'll simply speak about the Yukon situation. There are about 15,000 people in the total workforce in the Yukon, and the majority of them work in Whitehorse. That's not where mining is happening. If you go into the outside communities and you look at where mining and exploration are happening, in fact they are capturing a large part of the first nation employment, either at the government level, for self-governing first nations that are managing their lands and resources—so there are government jobs that are related to the natural resources sector—or working directly for industry.

A very good example is Minto mine. About 25% of the population in the Yukon is aboriginal, and as we speak, in excess of 30% of the workforce is first nations, going up to 40%. We're going to see the same situation at the Wolverine mine, near Ross River, as well as other mines under construction.

So it's a very important component of first nation employment in the Yukon.

[Randy Ottenbreit]

With respect to the Mackenzie gas project, it's not under construction or under operation right now, but we have negotiated benefits agreements with a number of regional aboriginal groups. Those benefits agreements provide preference for qualified aboriginal people for future jobs. They also provide a mechanism whereby aboriginal businesses will get the first opportunity for certain types of work. So there are mechanisms within those agreements that are directed towards providing support to aboriginal employment and aboriginal businesses.

In addition to that, there are some training initiatives, some of which have been under way for a number of years already, partly through funding from HRSDC. A number of training programs were delivered under something called the aboriginal skills and employment partnership.

I would say, in terms of some of the work we've done in the field, where we've been gathering data, I don't remember the precise number, but about 80% to 90% of the dollar value of contracts that were done to gather baseline information went to businesses on aboriginal business lists.

[The Chair, Conservative, Bruce Stanton]

That's really it, Mr. Clarke. Sorry about that. There will be some time at the end if we still need more questions.

Now we will go to Mr. Bevington for five minutes.

[Dennis Bevington, NDP, Western Arctic, NT]

Thank you, Chair.

There are so many questions that we could keep you here all day.

Regarding the geoscience funding, I went to a presentation on some of the work that was done. The $100 million that's been identified, is that really enough money to accomplish what's needed in the north with geoscience work?

[Lou Covello]

No, it isn't. If you look at it in terms of the equivalent amount of work that's been carried out in the south—and particularly comparable are Ontario and Quebec, which have similar geology—the amount spent per unit area to the south is something in the order of, right now, ten times what's been spent in the north.

Right now, in the north, we even lack basic topographic maps. The best place to get topographic maps for some of the far north is either from the Russians or the Americans. That's how far behind we are.

[Dennis Bevington, NDP, Western Arctic, NT]

So enhancing this geoscience funding would be a great way to build exploration capacity within the north.

[Lou Covello]

The experience is that the return on geoscience funding is for every one dollar spent, you get five dollars in investment.

[Mike Peters]

I would just echo that from the oil and gas industry. There are always opportunities for more funding. That type of funding is very productive in terms of encouraging future development in areas like the north that are largely underexplored, really priming the pump in terms of building up some sort of base knowledge of the regions and helping encourage the private sector investment that follows.

[Dennis Bevington, NDP, Western Arctic, NT]

Another issue that's come up about exploration in oil and gas in the Dehcho and mineral exploration in Akaitcho and in other places is that the minister has an exemption for impact benefit agreements for exploration operations. Do you see that we should look at making a more formal structure for impact benefit agreements for exploration projects to take out some of the troubles we've been having in that respect?

[Lou Covello]

As far as exploration is concerned, there's virtually no possibility that you're going to get junior mining companies to sign impact benefit agreements, because the order of magnitude of exploration funding in the mining industry is about one tenth of what it is in the oil and gas industry, for instance, or even one one-hundredth. A big program can be a couple of hundred thousand dollars, and by the time you've finished your consultation it's eaten up 10% of that already. At the exploration stage, you're not going to get any impact benefit agreements; people will simply go elsewhere.

[Mike Peters]

Mr. Bevington, my belief in the oil and gas sector is that exploration projects are not exempt from impact benefit agreements. Even when you're dealing with an exploration licence, you still have to reach an agreement with the local groups.

My apologies if I'm confusing you.

[Dennis Bevington, NDP, Western Arctic, NT]

The minister has the right to exempt you, and that exemption has been carried in a number of cases.

[Pamela Strand]

I echo what Lou has said. And I think you have to understand that with the exploration projects, to get the required different land use licences and water licences, there's already a process in place for consultation that already engages the communities. We do abide by best practices and guidelines for operating. To have a formal IBA at the exploration stage, depending on the scale of the project, can sometimes be quite an onerous document. It is in place in certain instances.

[Scott Kent]

I guess, just from the Yukon's perspective, through the YESAA process, those smaller exploration projects, the companies are certainly encouraged to consult and engage at the community level--and these are the smaller exploration projects. As we get into the bigger mine developments, like the Carmacks copper project that went through the YESAA board, it's a requirement before the proposal is deemed adequate to proceed. The impact benefit agreements aren't necessarily part of it, but often they end up being part of it.

Maybe Claire can comment a little bit further, specifically on her project.

[Claire Derome]

IBAs are a way to put into a contract what the commitments of a company are, so whether they are captured or not in a legal document is something that needs to be negotiated between the parties. The experience we have with YESAA is a very positive one, because not only does it look at the environmental impact, but also the socio-economic impact and benefit of the project. During that process, the company is clearly stating what it's proposing to do to alleviate or mitigate negative social impact by providing benefit.

[The Chair, Conservative, Bruce Stanton]

Okay, we'll leave it at that. Thank you, Mr. Bevington.

I have a couple of what I hope will be quick questions, and then we'll continue.

I think Ms. Strand and also Ms. Derome mentioned the flow-through issue as it relates to development. I wonder, just for the record, if you could briefly describe that issue. I think it was Ms. Derome who mentioned that as well. Perhaps we'll take Ms. Strand and then Ms. Derome.

[Claire Derome]

What issue are you referring to?

[The Chair, Conservative, Bruce Stanton]

The flow-through. It was in a response to Mr. Bagnell's questions. We just want to get on the record.... What I would like to see on the record is the description of that issue as it relates to your area.

[Claire Derome]

There are costs in exploration that do not qualify for flow-through funding, but they are still the costs of doing exploration. Part of that is consultation, community engagement, and environmental assessment.

So what we are suggesting, and I think it's the position of the PDAC as well, is to make those dollars that we are investing as part of eligible expenses under the flow-through.

[Pamela Strand]

Yes. The Income Tax Act would have to change what are qualifying expenditures and add those on to what qualifies for the flow-through.