Indigenous and Northern Affairs Committee on Nov. 17th, 2009

[The Chair, Conservative, Bruce Stanton]

We'll call our meeting to order. This is the 37th meeting of the Standing Committee on Aboriginal Affairs and Northern Development.

I would like to start by saying, on behalf of the committee, how much we appreciate the opportunity to be in this wonderful city here in the Yukon.

Members and our witnesses will know that we conduct all of our deliberations in both official languages. We have translation and interpretation available for you, so please tune in.

We'll get under way. We have three departments, all representatives of the Government of Yukon. We have Harvey Brooks, the deputy minister from the Department of Economic Development; Brian Alexander, deputy minister from the Department of Tourism and Culture, together with two of his directors; and Robert Holmes, a director in the Department of Energy, Mines and Resources.

Gentlemen, I know you have some other representatives with you. We have Mr. Lemaire, who is with....

[Rick Lemaire, Director of Cultural Services, Department of Tourism and Culture, Government of Yukon]

I'm the director of cultural services with the Department of Tourism and Culture.

[The Chair, Conservative, Bruce Stanton]

Oh, yes, I missed that on my list. My apologies to you, Mr. Lemaire.

I think that covers it, although I don't have Mr. Provan.

[Richard Provan, Senior Policy Advisor, Government of the Yukon Territories]

I'm Richard Provan, senior policy advisor with the Department of Economic Development.

[The Chair, Conservative, Bruce Stanton]

Excellent. That completes the roster.

Let's begin with Deputy Minister Brooks.

[Dr. Harvey Brooks, Deputy Minister, Department of Economic Development, Government of Yukon]

Thank you very much, Mr. Stanton.

Welcome, committee members, to Whitehorse and to Yukon. Welcome in particular as you begin your journey across northern Canada.

Thank you for inviting me to speak with you again. I last spoke with you and met with the committee in April of this year, along with my colleagues from Nunavut and the Northwest Territories.

I am the deputy minister of Yukon government's Department of Economic Development, and my previous remarks to the committee are still relevant. I may reiterate several key points.

I'd like to begin by stressing two points. First, in considering northern and aboriginal economic development it is important to remember that all three territories have unique competitive advantages and challenges. Yukon, for example, is the only territory that has responsibility for its own natural resources. That's a critical difference. As a result, we have developed a thorough and streamlined regulatory process. The challenge of addressing territorial issues independently is best illustrated by noting that the report by Mr. Neil McCrank entitled Road to Improvement: The Review of the Regulatory Systems Across the North, of which I'm sure you're all aware, addresses only Northwest Territories and Nunavut issues. It does not address Yukon. Our challenges in this and other areas are completely different from those faced by the Northwest Territories and Nunavut, and one solution does not fit all.

Secondly, economic development in the north is not a blank slate. As a senior level of government in the region, we welcome a partnership with Canada to address the territory's challenges. It is crucial that Canada coordinate its northern economic development activities with existing efforts taking place in Yukon. In particular, we look forward to working closely with the newly created Canadian Northern Economic Development Agency, CanNor, for the benefit of Yukon's businesses, workers, and residents.

I'd also like to highlight three key initiatives for the Government of Canada that will have long-term, positive impacts on the growth of the Yukon economy: partnering with Yukon and the First Nation of Nacho Nyack Dun in the expansion of the Mayo B hydro project; facilitating access to skilled and unskilled workers through the temporary and skilled foreign workers program; and the establishment of CanNor, the previously mentioned regional economic development agency for the north.

Yukon has many advantages, including our abundant and valuable resources. The tourism, mineral development, and secondary industry growth that is possible from our natural resource endowment are substantial. Our people are another primary advantage, given that they are among the most educated and trade-certified in Canada.

Another advantage is our location and connectedness. Yukon is connected by 4,800 kilometres of all-season roads, which provides a vital link to Canada and deep-water port access for export and import. Yukon provides the key transportation corridor between Alaska and the rest of North America, which, in addition to the Alaska Highway, has a potential for rail, pipeline, fibre optic networks, along with the strategic access to the Asia Pacific markets through deep-water Alaskan and B.C. ports.

The Yukon Cold Climate Innovation Centre, coordinated through Yukon College, provides an example of the benefits of capitalizing on our resource advantages. The centre is a partnership between applied researchers, industry, and government. It is dedicated to developing, commercializing, and exporting sustainable cold-climate technologies, including construction materials, techniques, and technology suitable for mining in cold climates.

As for our challenges, the main critical impediment to northern economic development is enabling infrastructure. Yukon is investing heavily in infrastructure to create immediate stimulus and long-term economic growth. Some of these investments include enhancing our major highways to support the economic future of Yukon's natural resources, major upgrades to the Whitehorse airport terminal building to maintain its status as an international airport, expanding the existing cellphone service to eventually cover the entire commercial area of the territory, and expanding hydro generating power to support Yukon communities and the mining industry while reducing our carbon footprint.

We need to do more in this area, but Yukon cannot do this without a major and ongoing commitment from the federal government, which will be a prime beneficiary of infrastructure development through increased resource royalty revenues.

Transportation, both roads and access to deep-water ports, is an ongoing need. Yukon has deep-water access through Skagway, Alaska, and Stewart, British Columbia. Yukon is engaging the Borough of Skagway and the Government of Alaska to consider ways to expand this port to meet the future needs of Yukon mines and other businesses. As the economic activity in Yukon grows, so do the demands on our power generating facilities.

Finally, the speed, cost, and reliability of our telecommunications infrastructure creates a digital divide between northern and southern Canada. In 2008 the federal government committed to protect the sovereignty and promote the development of Canada's Arctic and north as key priorities. Partnering with Yukon to meet our infrastructure challenges will be a significant step in achieving these priorities, with long-term benefits to business development in the north.

In conclusion, the economic development opportunities available to Yukon and Canada are considerable. The Government of Yukon looks forward to working with Yukon first nations and the Government of Canada to enhance our capacity to move forward with sustainable economic development for the benefit of Yukoners and Canada.

Thank you.

[The Chair, Conservative, Bruce Stanton]

Thank you very much, Mr. Brooks. It's great to hear from you again.

We'll now go to Mr. Alexander for five minutes.

[Brian Alexander, Deputy Minister, Department of Tourism and Culture, Government of Yukon]

Thank you, Mr. Chair.

Before starting I'd like to acknowledge the presence of a staff member, Pierre Germain, who is our director of tourism. He'll be here to answer any and all questions you may have on that very important subject.

Thank you for the opportunity to appear before you today on this important topic. We are heightened by your recognition of the fact that to truly understand northern issues you must travel to the north and talk to northerners.

I'll be speaking about some of the development barriers I see from the perspective of my department in its two main program areas of tourism and culture.

Tourism is a major economic driver in Yukon, with annual gross revenues estimated at $200 million, and approximately 300,000 visitors travelling to Yukon per year. Tourism is the largest private-sector employer in Yukon. Training and maintaining a product that allows for year-round employment ensures a stable and trained workforce.

The cultural services branch is responsible for Yukon's arts funding programs, archeology, paleontology, historic sites, and museums. The branch is also home to the Beringia Interpretive Centre and the Yukon archives. The branch strives to maximize socio-cultural benefits for Yukon residents and visitors through the preservation, development, and interpretation of Yukon's heritage resources and the visual, literary, and performing arts in Yukon.

Before getting into specific issues I would like to start by commending the federal government for the establishment of CanNor. The need for dedicated federal economic development funding for the north is long overdue. In particular, I'd like to commend CanNor for its recognition of the importance of the core tourism and cultural industries.

CanNor's investment plan for Yukon for 2009 to 2014 proposes to allocate 20% of SINED funds to the tourism sector and 10% to the cultural sector, in keeping with the critical role these industries play in the Yukon economy. There is also significant potential for pan-northern cooperation in the area of tourism marketing. The pan-territorial fund, comprising $5 million over four years, is ideally suited for this purpose.

I will now discuss some specific issues on the tourism side, and then on the cultural side.

Marketing is a key to the north being a competitive tourism destination, yet we do not have the economies of scale to sustain competitive marketing campaigns. A solution here has been, and could be again in the future, the formation of partnerships between Canada and the three territories on marketing campaigns. Canada has the resources and the territories have the experience and expertise to market the north. Such campaigns need not be limited to marketing the north as a tourism destination. They can also market the north as a place to invest and live.

Marketing will bring tourists to the north, but high-quality tourism products will lead to the kinds of world-class tourism experiences that will generate positive word-of-mouth and repeat visits. Yukon needs to build its capacity in this area through business development assistance and access to investment capital.

Particular attention needs to be paid to the development of first nations tourism. There is a very high demand for authentic first nation cultural experiences, and Yukon has excellent potential to develop some very unique and highly compelling products. However, first nation capacity is a very serious barrier to this potential being realized, along with the aforementioned shortage of investment capital.

The development of a national tourism strategy whereby the federal government adopts a whole-of-government approach for the advancement of the tourism industry is a wonderful concept. This initiative was announced in January of this year, but we're still waiting to see what progress has been made.

Yukon has identified two areas where we'd like to see changes in the future. An ongoing irritant has been the fact that cars rented in Alaska by Canadians are not allowed by the CBSA to enter Canada. This has a direct impact on the ability of Canadian tourists arriving in Alaska to visit Yukon. We've also had issues with the early closure of the Little Gold border station on the Top of the World Highway, without prior notice or consultation. We have had discussions with the CBSA on both of these issues, and we are hopeful that appropriate solutions will be found.

A key concern on the cultural side has been an inconsistent approach to federal funding of key programs, either funding that has begun and then is arbitrarily curtailed or funding that applies only to large metropolitan markets. A telling statistic is that, of the approximately $245 million the federal government spends on museums each year, approximately $230 million goes towards the national institutions in Ottawa.

A prime example of the federal government approach is the termination of federal core funding for the historic places initiative after March 31, 2010. This will have severe adverse effects on our ability to participate in a national heritage conservation framework.

The marquee tourism events program, which was unveiled in the last federal budget, provides financial assistance for major cultural and sporting events that are a significant attraction to tourists, such as music festivals. However, for an event to qualify for funding, it must attract a minimum of 50,000 spectators, which automatically excludes the north from this program.

Canada is a special place, and the north is a unique jewel within this country. However, it is clear that a one-size-fits-all approach from the federal government does not work. In certain circumstances, the north needs special treatment to fulfill its promise. Federal government departments and agencies need to work with us to find solutions to specific problems and get away from simply telling us why something cannot be done.

Thank you.

[The Chair, Conservative, Bruce Stanton]

Thank you very much, Mr. Alexander. It's great to have your colleagues here, along with you. I'm sure we'll have some good questions for you when the time comes.

We're going to Mr. Holmes first, and then to Mr. Austin. Mr. Holmes is the director of the Department of Energy, Mines and Resources.

Welcome. You have five minutes.

[Robert Holmes, Director, Department of Energy, Mines and Resources, Government of Yukon]

Thank you.

My position is director of mineral resources, so my comments are mostly around the mining industry, although they do apply similarly to other resource sectors in the Yukon.

I think the Yukon holds a special place in Canada. One of the hallmarks of the Yukon over the years has been the ability of Yukoners, from all walks of life, to work in a collaborative way. I think this is because we live in a relatively small community and we're more aware of the interconnectedness of people and things here.

As a result, we've achieved some things that I think many parts of Canada would be quite envious of, if they knew about it. First, there's the devolution transfer agreement, which Harvey Brooks mentioned earlier, which was signed in April 2003. This gave the Government of Yukon full control over natural resources: mining, oil, gas, land, forestry, and water. The DTA, or devolution transfer agreement, allows Yukon to amend policies and legislation and to be responsive to local needs and modern requirements.

The second thing that's happened here is that we've largely settled our land claims. Of 14 first nations, 11 have completed comprehensive land claims agreements. This relationship between public government and first nations governments is somewhat unique in Canada. First nations here have self-government powers as well. We're working with the practicalities of this new relationship every day--for example, next week the lands directors for all the first nation governments are going to meet to update each other and describe new ideas and initiatives.

Third, another advantage is that we have a unique environmental assessment process in the Yukon. It's called the Yukon Environmental and Socio-Economic Assessment Act, which replaced CEAA in the Yukon. It's the sole environmental assessment process for federal, Yukon, and first nations governments. We don't have the issue of harmonization between federal and provincial environmental assessment processes that you see in the rest of the country.

When you put these changes together, Yukoners have much more say and influence on development occurring in the territory now than they ever did before.

I'll talk a bit about mining and some of the challenges we have in that industry. Mining has traditionally been the largest contributor to the Yukon economy. Of course as a result of the Klondike gold rush in 1896, the Yukon was created by federal statute in 1898. However, in the late nineties the Yukon mineral industry just about disappeared, and we were down to no producing hard-rock mines. Exploration levels were around $5 million at the time of devolution in 2003.

A number of changes, including record metal prices, new technologies, and I think new policies, have meant that we're currently experiencing a resurgence in mineral exploration and development. In 2008 our exploration reached $112 million, and this year, despite the recession, we're expecting a $90-million exploration season.

The Dawson gold fields are still active, surprisingly, after over 100 years. This year we expect placer production, or the production of gold from gravel, to reach $50 million in value, which is similar to last year.

In terms of hard-rock mining, we'll have three operational mines next year in the Yukon. We currently have a copper and gold mine near Pelly Crossing, which produces about $150 million of revenue a year. The Wolverine mine, which is in development, is a wholly owned subsidiary of Jinduicheng Molybdenum Group Ltd., which is a major Chinese metal company. This project is investing $200 million in a lead-zinc project east of Whitehorse. This is one of the largest investments of Chinese companies in the Canadian mining industry, and probably the only fully owned Chinese company operating a mining project in Canada.

In addition, the Bellekeno development has announced it will move ahead. That's a $50-million development, which will be happening this winter. And the Mactung project is in assessment. It's a $400-million project, and they expect to be in production in 2013.

These are just some of the things that are happening here. It's very busy. We have a reputation as a can-do jurisdiction.

In passing, I want to quickly mention four challenges that seem to be here all the time. One of them is geoscience information. There's a need to continue to map the Yukon in more detail. We've worked very well with the Geological Survey of Canada and INAC on funding vehicles for geoscience.

Financing has been hard for companies to find this past year. The Yukon is very active in promoting and marketing the Yukon, and it is particularly successful at getting Chinese investment.

Infrastructure has been a challenge. It creates some barriers to entry, with the additional costs of large transportation distances in the Yukon. Then there is the situation with trained workers. Most companies are flying workers in from outside the Yukon, but we're working hard to train Yukoners. We have a program through the Yukon Mine Training Association to do that.

Just before I end, I wanted to mention one issue that has been highlighted for us. It's a limitation on resource revenues under the devolution transfer agreement. The DTA provides that, even though Yukon owns and manages its mineral and other resource revenues, any resource revenue in excess of $3 million is offset by a reduction of other transfers from the federal government. This provides for an effective cap of $3 million for all Yukon resource revenues—apart from oil and gas, which has a separate agreement.

With that $3 million that the Yukon gets to keep, there's a responsibility to share a portion with first nations. This structure creates a problem in that the Yukon cannot provide capacity support for first nations to participate in regulatory reviews or increase opportunities for them in resource management.

I'll close at this point. Thank you for the opportunity to address the committee. I hope you enjoy your visit here and are able to come back when it's warmer.

Thank you.

[The Chair, Conservative, Bruce Stanton]

Thank you, Mr. Holmes.

Next, we welcome Mr. David Austin, who is joining us from the Association of Yukon Communities. Mr. Austin, thank you for coming today. We're delighted to be here in Whitehorse. After your presentation, we'll be going to questions from members.

You have the floor, Mr. Austin.

[David Austin, Director, Association of Yukon Communities]

Welcome. My apologies: you would think that after 37 years in the north I could deal with two inches of fresh snow.

Good morning, and thank you for the opportunity to address your committee.

The Association of Yukon Communities represents all incorporated municipalities and elected local advisory councils in Yukon. Eighty percent of the population of Yukon reside in member communities of the association.

My aim this morning is to bring to the committee’s attention the association’s views on barriers and solutions to northern economic development from the perspective of Yukon municipalities.

First, let me suggest that economic development that sustains Yukon communities is important to Canada because it is the northern communities that anchor Canadian sovereignty in a geography sparsely populated but rich in natural resources. Yukon’s mineral resources, boreal forests, and pristine rivers are of significant economic value to Canada.

Second, we should note that the fundamental roles for local government in community economic development are to provide necessary facilities and services, to act as a catalyst, and to become directly involved in growing businesses.

There are a number of factors that will influence economic development in Yukon communities. Obvious but important is the fact that the population of Yukon is very small in relation to the population of Canada, approximately one-tenth of one percent, and the distance between communities is great.

The population is culturally diverse, with locally significant populations of fancophones, first nations, and first-generation immigrants. Yukoners are well educated and entrepreneurial. The percentage of Yukoners 25 to 64 who are graduates of a trade school, college, or university is almost ten points higher than the national average, at 62% to 53%.

Next, we need to recognize that it is not possible to construct infrastructure in Yukon at costs approximating those of southern centres. The shortness of the season and the lack of skilled trades people in some specific trades are factors. The distance from major markets increases the transportation costs for materials, and economies of scale are difficult to achieve in the Yukon's relatively small economy.

The environmental norms of severe cold in the north are being magnified by climate change. As the permafrost weakens, aging community water and sewer systems break, and the foundations of buildings may shift.

Much of the cost of providing municipal infrastructure to support economic development falls on the residents of the community through property taxes. Property taxes alone should not be expected to bear the cost of building and maintaining roads and bridges within municipalities.

The hard fact is that while a strong business base provides employment, businesses do not provide direct tax revenue through purchases or work income to municipal governments.

Seven of the eight incorporated municipalities in Yukon are co-located with first nation communities. All eight sit on the traditional territory of a Yukon first nation. Effective communication between first nations and Yukon municipalities is critical to healthy and prosperous communities, and sustainable communities need economic development.

Conversely, moving economic development projects forward in a shared landscape requires effective communication between all orders of government and particularly the municipal and first nation governments that serve the most basic needs of their residents.

One barrier to effective communication is the capacity of municipal and first nation governments to respond to initiatives of the other. Whose duty it is to consult the other is unclear. There are two definitions of the “duty to consult”: the umbrella final agreement with Yukon first nations defines a “duty to consult” in particular circumstances under that agreement and agreements with individual first nations and the common law “duty to consult” as defined by case law.

What defines “adequate consultation”? The consultation requirements under final agreements are clearly defined in those agreements, and a protocol for their conduct has been established between Yukon and the first nations. Consultation demanded under common law needs to meet the test of reasonable.

[The Chair, Conservative, Bruce Stanton]

Mr. Austin, could you slow it down a little, in support of the translation? That would be great; thank you.

[David Austin]

I was worried about the five minutes.

[The Chair, Conservative, Bruce Stanton]

We'll give you a little bit of extra time, not to worry.

[David Austin]

Consultation demanded under common law needs to meet the test of “reasonable”. It needs to be meaningful and effective. There is a requirement on both sides to participate. First nations may require additional funding to participate in meaningful and effective consultation. No court decision has yet been rendered on whether municipalities have a duty to consult under common law.

The Canadian Northern Economic Development Agency, CanNor, provides an excellent start to ensuring a prosperous and sustainable future for Yukon communities. Because CanNor oversees strategic investments in both aboriginal and non-aboriginal communities in the north, it is well placed to bring communities together where it is appropriate to share burdens and outcomes. Flowing funding through territorial governments directly to first nations doesn’t promote cooperation.

Our recommendations to this committee are that the federal government policies promote economic development in Yukon municipalities as an act of sovereignty; that the federal government support the construction of municipal infrastructure as an element in economic development; that federal funding programs recognize that jurisdictions small in population, like Yukon, are not served by per capita allocations of funds and that base funding is required to anchor the per capita allocations.

Economic development funding can be a catalyst to bring Yukon first nations and municipalities together. Economic development efforts should be focused on innovation, labour, access to markets, investment capital, government regulations, community amenities, culture, energy, and the environment.

Thank you.

[The Chair, Conservative, Bruce Stanton]

Thank you very much, Mr. Austin, and all of our presenters this morning.

We will now go to our first round of questions. As I mentioned earlier, they are five minutes in length. We take five minutes for both the question of the member as well as your response. The more we can keep both ends of that spectrum succinct and to the point, the more information we can manage to listen to here today.

Let's begin the first round with Mr. Russell for five minutes.

[Todd Russell, Liberal, Labrador, NL]

Thank you, Mr. Chair.

Good morning to each of you. It's good to be here in Whitehorse to join my colleague, the MP for this area. There's no doubt about that. I think he's done a lot of work in helping the committee put some of the panels together, so I want to thank Larry.

We only have five minutes. You've already outlined some specific things that I think we can do. One thing that really strikes me this morning, and I guess we always need to be reminded of it, is that one size does not fit all. There's not one monolithic, homogeneous north in Canada. It's very diverse. Even within the Yukon, I'm sure there's diversity, though the territories have to be approached differently and in their own milieu.

When you talk about investment in infrastructure, how do you envision that? Is that a matter of more money from the federal government, or does the Yukon government see ways to generate its own wealth, or more wealth, for investment in infrastructure? I'm simply wondering what this comes to. I note the comment made by Mr. Austin about the impact of climate change, maybe, on infrastructure costs. How do you envision a greater investment in infrastructure, and how would that be financed if we were going to make a recommendation?

[Dr. Harvey Brooks]

If I may, Mr. Chair, it's an extremely good question and one we wrestle with. When we look at our economic development process, a lot of the projects are going to require additional infrastructure to move forward. It presents a challenge for Yukon, and we currently look to the federal government for some participation through existing programs in developing that. However, when we look at increasing own-source revenue for many of these projects, we run into the problem cited by Mr. Holmes, which is that the devolution transfer agreement caps the amount of resource revenue that we're able to maintain as Yukon government. Once we get over $3 million, there's essentially a clawback in other programs that limits the benefit that can remain in Yukon.

That means that even though many of the projects are extremely positive from a Canadian perspective, essentially any project that goes forward here is going to require steel, workers, petroleum, and all sorts of things that come from the south. As a result, the GDP generated in the south, to say nothing of the royalties, flows to the federal government.

When you look at the pie that's generated from some of the projects, it's obvious that they should move forward. However, it's a challenge when you look at the size of the pie that remains for Yukon and the requirement to invest in infrastructure that such a size of pie has to have directed toward it.

[Todd Russell, Liberal, Labrador, NL]

Can you explain it a little bit more for us? This is new, this $3 million cap under the devolution transfer agreement. What is the rationale behind that?

[Dr. Harvey Brooks]

Bob, do you want to explain that?

[Robert Holmes]

I can't really explain the rationale. I wasn't involved in the negotiations. From talking with people, my take on it is that the Yukon's motive at the time was really to acquire greater local control over resources. It wasn't so much about money. Six years after devolution, now that projects are coming on stream and things are booming, now we're starting to think a bit more about the money—particularly when first nations want to be part of the economy and they're looking to us to support their involvement.

Every time we write a letter to a first nation and say that there is a project being proposed on their land, whether it's a licensed amendment or whatever it might be, we always get a letter back saying that they would love to provide their advice and participate, but they have no money and no resources and could we help them out. In the absence of having significant resource revenues, we can't do that.

[Todd Russell, Liberal, Labrador, NL]

So is it generally agreed, then, between the departments that this is a barrier from the Yukon government perspective? Are there any talks or discussions taking place with the federal government to maybe open up that for further negotiation or for change or amendment? Are there any talks of that nature? Is that something that's being looked at?

[Dr. Harvey Brooks]

One of the aspects of the agreement is that as other devolution agreements are put in place—and the Northwest Territories and Nunavut are in stages of those same discussions—whatever resolution they are able to make with regard to revenue-sharing, then the Yukon would benefit from that.

But I think in general what Mr. Holmes indicated was that six years ago, when this was put together, the idea was that there were tremendous benefits from the local management and harmonization of regulation around natural resources, that even withstanding some of the limitations around revenue-sharing, it was worth moving forward. Now we're coming right to the brink of that understanding, that yes, we've been very successful in terms of regulatory harmonization—and a shining example, I think, across Canada. If you talk to the other jurisdictions, they will point to the Yukon as best practice. So we've had the success there, but success means infrastructure requirements.

[The Chair, Conservative, Bruce Stanton]

Thank you, Mr. Brooks, Mr. Russell, and thank you for mentioning about Mr. Bagnell as well. Indeed Mr. Bagnell was quite helpful in helping inform our visit here in Whitehorse. I really appreciate that, Mr. Bagnell.

It is now Mr. Lévesque's turn; he has the floor for five minutes.