Indigenous and Northern Affairs Committee on May 25th, 2010

[The Chair, Conservative, Bruce Stanton]

Good afternoon, hon. members, witnesses and guests.

This is the 18^th meeting of the Standing Committee on Aboriginal Affairs and Northern Development. On the agenda, pursuant to Standing Order 108(2), we have the study of Northern Territories Economic Development: Barriers and Solutions.

This afternoon we are welcoming four presentations as we continue our study of barriers and solutions to economic development in the north.

Members, I'll also say that we do have a brief bit of committee business at the end, so we will try to finish up our regular meeting at about 15 minutes past five.

I'll apologize in advance for the rather uncomfortably warm room that we have this afternoon. This is our third meeting in this room today. We are going to do our best, but please accept my apologies. We have some extra water on hand, and we'll make it through.

We're going to begin with a presentation by Monsieur Jacques Plante. Monsieur Plante is the president of Nasittuq Corporation. He will be followed by Mr. Tony Butler, who is the president of Pan Arctic Inuit Logistics Corporation. You will recall that was one of the organizations we tried to meet with when we were actually in Iqaluit, so we are delighted to have them here today. Following that we'll go to Mr. Zehr from the Nunasi Corporation, and Mr. Page from NRTEE.

Let's begin with Monsieur Plante.

I understand that Mr. Plante and Mr. Butler are going to take about five minutes each. If you go over a little bit on that, it's fine. Let's begin with five minutes for Monsieur Plante.

[Jacques Plante, President, Nasittuq Corporation]

Thank you very much, Mr. Chairman.

Thank you very much, Mr. Chair.

My remarks will be in English, but it would be my pleasure to answer all the questions in both official languages, if necessary.

I will not be talking about our own corporation so that I can skip directly to today's topic of employment challenges in the north.

I would like to present to this committee some practical experience related to the challenges we face in hiring and employing people from the north or in working in the north.

Nasittuq has around 90 people, or about 35% of our permanent workforce, deployed in the north from one end of the country to the other. During the busy summer period we also hire an equivalent number of people on a temporary basis to support our maintenance and special projects in the north. Of our temporary workforce, over 55% will be Inuit employees.

Our focus has been to increase both the number and the quality of jobs and careers for Inuit people. It is part of the mandate of the company. When Nasittuq started in 2001, we had less than 20 permanent Inuit employees, and we are currently at 51, which represents approximately 20% of our permanent workforce. Note that 34 of these employees are working directly in the north and 17 are working in the south, either in North Bay or in Ottawa.

We have implemented a permanent employment development program as well as a training program. Both programs are specifically tailored to our needs. Since December 2001, 80 people have participated in both programs. We have invested over $8 million in our training and development programs, which represents, on average, about $100,000 per employee, which has been a significant investment.

On a practical level, our experience indicates five specific areas that have been a particular challenge for us in improving employment opportunities for our Inuit personnel. These are: education; health services; security clearances; appropriate personal safety equipment; and the whole issue of distance in the north.

Let me explain each one briefly.

In regard to education, most of our jobs are multi-skilled and require a technical or journeyman trade certificate, both of which require common minimum standards in math and science. Not only are there limited opportunities for Inuit to obtain these certifications, but schools still struggle to produce the number of high school graduates with the needed math and science skills to meet demand.

Our development program has been based on assisting Inuit employees to obtain the qualifications to receive their trade certificates. Our challenge has been in finding high school graduates with the prerequisite math and science who can complete pre-trades entrance exams.

In addition, given the limited level of certification programs available in the north, we have to spend considerable resources to send our development employees to training facilities in the south. Furthermore, some people are often unwilling or unable to spend a considerable period of time away from their communities and families for this training.

On a positive note, there are Inuit who are pursuing certification through programs such as our own development program. We currently have 14 employees in that particular program.

However, as the competition continues to expand for a limited pool of qualified Inuit employees, the challenge for us is to keep the trained employees with us. With their newly acquired qualifications, an employee may find an opportunity in their home community, which we continue to view as a positive contribution to northern development and integration of the Inuit into the economy, but which comes at a great expense to us. Others find it too difficult to work on a rotational basis.

We continue to search for ways to ease the adjustment and to support the workers as best we can. This high turnover compared to southern locales does place a challenge on our recruitment process.

Let me talk about health services for a second. In this case, I am simply referring to the requirement for medical certification and testing.

For example, we require a pre-employment medical to be completed as a condition of employment, and I understand the health centres in many of the smaller northern communities do not all have the resources to be completing these comprehensive clearances, especially when additional follow-up tests are required, such as X-rays. People then have to leave the community to get those medicals completed.

I'll now talk about security clearance. Given the nature of our contract with the Government of Canada, we have a requirement for various levels of security clearance, from “enhanced reliability” to “secret”, depending on the position. Minor infractions can affect the ability to meet this requirement and many people don't anticipate that limitation.

Also, PALs, or possession and acquisition licences, are required for some of our positions, such as bear monitors. However, many northern residents do not possess this licence, and the ability to obtain this licence in the communities is difficult due to the lack of available training and assistance in obtaining the licence.

With respect to the appropriate personal safety equipment, all of our personnel must have appropriate personal safety equipment, and while we provide financial assistance for this requirement, we expect our temporary staff to meet this basic requirement prior to showing up at the work site. Safety footwear, for example, is an example of this requirement that can be a challenge for a new employee.

Finally, on distance, I believe that you all understand the challenge of travelling in the north. Until the northern community residents possess the skills required for our highly skilled jobs, we must employ staff on a rotational fly in/fly out basis, which is a substantial cost to us. The rotation lengths vary between six to eight weeks on site, as the cost of flying employees for shorter rotations would be too costly. But due to the rotation lengths, these employees sometimes face challenges in meeting their family and personal obligations due to being away from their homes for extended periods of time.

A challenge to the subcontractor is dealing with specific tasks and projects. We experience challenges that are not necessarily unique to the north but are certainly prevalent in the north. The three main challenges are: the certification; dealing with government standards and procedures, especially in regard to the lack of experience with Government of Canada terms and conditions, which are quite complex, and the depth of paperwork required for proposal purposes; and, obviously, overcoming the geographical distance.

For the small businesses, the level of complexity in dealing with the Government of Canada terms and conditions is such that in most cases they just don't have the time and resources to bother and they give up trying to compete for such business. While we have done as much as we can to reduce the paperwork and minimize some of the most demanding aspects of liability and other onerous terms and conditions, we are required by our own contract to make these flow to our own subcontractors or absorb the risk ourselves.

[The Chair, Conservative, Bruce Stanton]

Mr. Plante, I'll just interrupt you there for a second.

We're sort of over time right now. Could you just take the last remaining points and summarize them? Take about a minute or so and we'll pull that all together, and then we'll go to Mr. Butler.

[Jacques Plante]

What I was going to propose are some very basic suggestions for making things easier for businesses.

[The Chair, Conservative, Bruce Stanton]

Okay.

[Jacques Plante]

One is a travel subsidy to access health practitioners with regard to work-related requirements. Another is to assist schools and students in achieving academic certification. The last one is to assist companies in understanding all of the content of government contracting.

I'll stop on that note.

[The Chair, Conservative, Bruce Stanton]

That's very good. Perhaps in the course of questions, if you have an opportunity, you could maybe elaborate on those last points. I'm sure you'll have--

[Jacques Plante]

By all means, sir. I'm sorry about taking too long.

[The Chair, Conservative, Bruce Stanton]

No, not at all. That's fine. Excellent.

Now we'll go to Mr. Butler. As members will recall, Mr. Butler is the president of Pan Arctic Inuit Logistics Corporation.

Mr. Butler, please go ahead.

[Tony Butler, President, Pan Arctic Inuit Logistics Corporation]

Mr. Chair and members, thank you for inviting us here today to present our perspective on northern development.

By way of introduction, I am president of the Pan Arctic Inuit Logistics Corporation. It's a corporation that is 100% owned by the Inuit of the four land claim regions through their respective development corporations.

With government encouragement, PAIL was created 15 years ago with an early focus on a joint venture with ATCO Structures and Logistics to operate and manage the North Warning System radar throughout the north. Within the joint venture, PAIL has evolved from being a junior participant to being an equal shareholder, with ATCO, in our corporate agent, Nasittuq. I should mention that this equity position provides the Inuit in the north a source of capital, a source of funds, to invest in their communities and in their local businesses.

Today I would like to speak briefly to two items I see as challenges in northern development.

The first concerns the government's approach to an element of the bid evaluation process. Currently bidders' past performance in achieving their aboriginal benefits target is assessed solely on whether or not there is an outcome, not on whether the outcome was a success or a failure. One must only document the lessons learned. This approach encourages firms to make significant commitments when bidding, without any concern towards meeting those commitments, as failure will not affect future business opportunities with the federal government. Firms that invest time, money, and effort to meet or exceed their commitments are judged on an equal footing with firms that do not. This fact reduces the incentives for firms to invest in developing meaningful Inuit participation of lasting benefit.

There is a need for a graduated approach to evaluating past performance to account for degrees of success. There is also a need for a mechanism to evaluate not just the quantitative achievements of bidders but also their qualitative results.

Secondly, I wish to address the awareness of opportunities and the timing of that awareness. Within the procurement review process, program decisions made early in a project's development can limit the considerations for participation. This in turn minimizes the opportunities for meaningful levels of Inuit involvement. As some crown agencies and federal initiatives are not subject to the procurement review process, obligations under the land claims may not be considered or may be considered too late in the process.

With Inuit participation normally considered at the end of the approval process, participation is too often seen as nothing more than a tax on the projects, and like most taxes, people seek to avoid or reduce it. With meaningful consideration of Inuit participation delayed until the start of the bidding process, it is difficult for the Inuit to mount timely efforts to establish partnerships or joint ventures, meaning that Inuit communities are faced with addressing training and schooling requirements too late in the process, and opportunities for skilled employment are therefore reduced.

I believe long-term successful northern development can be achieved by having Inuit communities fully engaged in a meaningful fashion in the early stages of government plans and projects destined for the north. This involvement would allow for proper planning both to meet educational and training requirements and to provide the lead time to establish appropriate corporate capacity and capability.

I would like to end on one note. In 1998 my predecessor spoke to this committee on the same issues. While there has been progress, these issues are still present in the north.

Thank you.

[The Chair, Conservative, Bruce Stanton]

Thank you very much, Mr. Butler.

I now invite Mr. Tim Zehr, President and Chief Operating Officer at the Nunasi Corporation, to take the floor.

[Tim Zehr, President and Chief Operating Officer, Nunasi Corporation]

Thank you, Mr. Chair.

Thanks to the committee for allowing me to present this morning. I thought I'd begin by commenting that if I could have any input on future meetings, I'd say that I would hold them in the north, where it's a little cooler.

[Voices]

Oh, oh!

[Tim Zehr]

I feel like I'm melting away here this afternoon.

First I'll talk a little bit about who Nunasi is. Nunasi is a birthright development corporation wholly owned by the Inuit of Nunavut. As a development corporation, Nunasi acts as a vehicle for enabling the Inuit to take advantage of economic growth in Nunavut. Nunasi's board of directors has representation from all of the regional Inuit associations and their respective development corporations. Nunasi represents all three regions across Nunavut. In that respect, it's unique.

Most of what Nunasi does involves working with other business partners. We ask ourselves two key questions when assessing any business interest or venture. First, financially, is this a sustainable, long-term, solid investment that will create meaningful opportunities for our beneficiaries? Second, will this have a positive impact for our beneficiaries' environmental, cultural, and social well-being?

Nunasi invests in businesses throughout Nunavut. However, today I will focus on the eastern Arctic and the benefit to our beneficiaries in a number of lasting ways. This includes the important goal of earning profits for shareholders, of course, but it also includes key benefits such as creating new employment opportunities for the Inuit people and supporting developments that will advance Nunavut and improve the overall quality of life in the territory.

Nunasi is about more than just profit. It's about helping to build strong, sustainable, and thriving communities that can offer growing opportunities for individuals, families, and local businesses. It's the kind of approach you don't always see in today's business world, but it's the approach that has been right for the Arctic region and is one that has proven successful. Today, Nunasi has invested in over 60 different companies, quite diverse, and all across the north.

With regard to partnerships and opportunities, through strategic partnerships and joint ventures Nunasi has built a number of significant companies that serve the north today, companies that reflect the great ambition of Nunavut.

There's already a growing mining industry in these areas. Nunasi is hoping to find opportunities in this area. The mining industry in the eastern Arctic took a huge step forward earlier this year, as Agnico-Eagle opened its new Meadowbank gold mine north of Baker Lake. There are emerging opportunities right across Nunavut. Newmont Mining has received approval for its Hope Bay gold project in Cambridge Bay, and of course there's the ongoing prospect of iron ore on Baffin Island.

In addition to these mining resources, there are also significant oil and natural gas resources in the eastern Arctic. Current estimates suggest that the Arctic Basin may have as much as 11% of Canada's total crude oil resources and 20% of Canada's natural gas resources. However, given what's going on in the world today, perhaps they should remain untapped.

How do we see government's role? Given the huge deficits governments around the world are facing, including Canada's, we believe that much of the current funding is in jeopardy as Canada focuses on deficit reduction. Having said that, we believe the role for federal and territorial governments...there is a need to create a competitive investment climate in the Arctic, one that reflects the concerns and needs of business and industry and encourages new and exciting resource development projects in the region.

Government needs to reduce red tape and other barriers to investment. It needs to ensure we have regulations and approval processes that are effective in promoting responsible development without unnecessary complexity and duplication.

Specifically with regard to the skilled workforce, or the lack thereof, while new opportunities continue to develop in the north, by far the biggest concern is the lack of skilled talent. It's great to hear about new government agencies establishing operations in places such as Iqaluit and Nunavut; however, it continues to be a huge disappointment to see, for example, 20 new jobs coming to the north, only to be filled by 19 southerners who stay for only a short period of time or sometimes just simply commute back and forth.

The talent pool is so slim that there is a huge need for educational infrastructure and training. The reality in the north is that many young, single females are having children at a very young age, and the barriers created by a lack of day care means that many of these kids can't even begin to think about starting a career, let alone a full-time job.

The demographics in the population are completely reversed in the north compared to the rest of Canada. Most of the country is dealing with an aging population; Nunavut is dealing with a large percentage of a youthful population who will need the skills to fill these roles. Nunavut has the fastest-growing population in Canada. The population doubled from 15,600 in 1981 to 29,000 in 2006. The pregnancy rate is the highest in Canada.

A growing population creates demand for capital projects and infrastructure: educational institutions; transportation facilities; housing; office space; and utility infrastructure for water, sewer, and energy. One answer specific to government's need to respond to these demands would be to foster and encourage public-private partnerships, or P3s.

P3s integrate a project's design, build, finance, and maintenance components. An example of this would be Nunavut's Legislative Assembly building in Iqaluit, which was built under the P3 model. P3s are not privatization but a true partnership, outlined in a business agreement.

Bringing more opportunity to the north is great, but we need to ensure we have a recipe for success in place for the people who live there. A good start would be an Arctic university.

Thank you, Mr. Chair.

Thanks to the committee.

[The Chair, Conservative, Bruce Stanton]

Thank you very much, Mr. Zehr.

Now, last but certainly not least, we'll go to Mr. Robert Page, who is the chair of the National Round Table on the Environment and the Economy.

Welcome, Mr. Page. I know you've probably done this before, and as you know, you have up to about 10 minutes.

After Mr. Page's presentation, we'll go to questions from members.

Go ahead.

[Dr. Robert Page, Chair, National Round Table on the Environment and the Economy]

Thank you, Mr. Chairman. Merci, monsieur le président.

I'm here to give a short review of a report from the national round table that came down last November on Arctic infrastructure and climate change adaptation in Canada.

The national round table is a group of Canadians in leadership positions from across the country who are working on environment and sustainable development issues. In terms of putting together this report, we held hearings in the north, and we had a great deal of northern input in connection with it.

This particular report, True North, or Franc Nord, is an effort to look at the very severe infrastructure challenges that Canada will be facing with climate change and the need to adapt to those new conditions. We are seeing in the Canadian Arctic today some of the most rapid climate change of anywhere in the globe, and we will be pioneering the adaptation processes and projects whether we like it or not. This deals with airports, sewage, roads, tailings, pipelines, drilling, mines, and building foundations above all--things that are critical to northerners for their existence.

In terms of our report, there are three particular areas: codes, standards, and related instruments; insurance and liability issues; and emergency measures and disaster management.

Mr. Chairman, in this morning's Wall Street Journal, there is an article on the increase in insurance rates, by 15% to 50%, for all offshore drilling as a result of events in the Gulf of Mexico. In terms of looking at this, the final area will be emergency measures and disaster.

On the physical challenges we face, some have already been mentioned: temperature and active layer expansion in permafrost; the ground ice degradation; the sea level rise and storm surges; and the melting of sea ice and the marine risks that result from it.

We go into some detail on the economic and social side, so I will just touch on it here. Northern people depend on this infrastructure to a very great extent. It's a dispersed population, with great challenges, far greater than those of many southern Canadians. The viability of northern settlement locations, as we're already seeing in some planning in the pan-Arctic area today, is in doubt. Increased economic development brings increased risks in some cases, as we will be seeing. High construction and operating costs in the north are already there.

In terms of actual applications, what are the kinds of issues we're trying to draw out in our report? One is the shorter season for winter ice roads, for instance, as Diavik experienced in 2006, and the increased helicopter costs that are involved as a result. There is enhanced coastal erosion in areas including Tuk, forest fires such as Dawson faced in 2004, and increased drilling in Arctic waters and tanker traffic from Siberia through the Northwest Passage, to say nothing of some of the more mundane things like breaches in sewage or mine tailing ponds.

Codes and standards are a very important part of how we build infrastructure. We have shown in this report the way in which we feel there has been inadequate consideration of northern conditions and circumstances in terms of developing national codes. We show the way in which there are gaps in data for engineers and northern architects and the way in which the real rate of climate change has to be brought down to the settlement level, the local level, in terms of applicability. We welcome the recent responses of the National Energy Board--although we feel it is only the beginning--on pipeline and drilling codes for northern regulatory purposes.

On property and liability insurance, a great deal of this will not be covered by normal private sector insurance coverage. In many cases, government will be the insurer of last resort. It will not cover flooding and settlement relocation issues.

As we are seeing in the Gulf of Mexico, Arctic oil spills will be difficult to curtail. One of the issues, which is of even more concern in the north, is that natural recovery from biological processes will be much slower in the cold water. And for insurance purposes, gradual phenomena like ground subsidence will be harder to document for our purposes.

On disaster and emergency management, I don't need to say very much here. The melting sea ice will lead to weather changes in the circumpolar area. Sea level rise and storm surges will certainly impact soil erosion and settlement locations. Northern emergency measures services are limited and as yet scattered. Northern oil and gas regulation must allow for industry-based emergency measures and response teams, and some of this has international implications because the ocean currents spill from one side of the marine boundaries into the others.

In finishing, Mr. Chairman, I just want to end on barriers to action. We feel there are severe issues in connection with these three areas in terms of federal, territorial, and first nations institutions and governments, to say nothing of the provincial norths, from B.C. to Labrador, which are so important.

Second, we feel that northern input into national standards and codes of practice is essential and needs to be increased.

Third, northern-based research—and I emphasize northern-based here—must include research, assessment, and policies on climate impact and adaptation needs. I strongly support Tim's comment earlier with regard to a northern-based university as part of that.

Last, building community capacity to monitor and address infrastructure needs and climate change is an important part of this overall program.

Once again, many thanks, Mr. Chairman. Merci beaucoup.

[The Chair, Conservative, Bruce Stanton]

Thank you very much, Mr. Page, and all of you. I appreciate the fact that each of you actually addressed some specific suggestions, recommendations, in your presentations.

At this point we go to questions from members, and we have a pre-set list that we go by. It is seven minutes for both the question and the response, so the more succinct that members and your responses can be, the more questions we will get in.

Before we proceed to that, this topic has come up, and I want to just inform members of this in case anyone has to get away for any reason. You received in your packages last week—we're going off topic here for a moment—an invitation from Mr. Leon Benoit, who is the chair of the natural resources committee. Tomorrow for lunch an invitation has been extended to each of the members of this committee to attend a demonstration event. This is from Geomatics Industry Alliance. This is pertaining to the offshore drilling, safeguards, and so on. It's at the Rideau Club, 99 Bank Street, 15th floor. It was in one of your circulations. If you are interested, go to it. There is an RSVP you can send over. If anyone is interested in that offshore drilling issue, you may want to attend this. The formal part of the event will not commence until 12:30, so you can get there after caucus. I just want to pass that along in case anybody had to leave early.

Let's go to questions from members.

Mr. Bagnell, you have seven minutes.

[Larry Bagnell, Liberal, Yukon, YT]

Thank you, Mr. Chair.

I will try to give you all fair air time and ask one question of each of you, so if you could, keep the answers pretty short in the seven minutes.

In reverse order, Mr. Page, I've been saying for a long time that we need a lot of adaptation funds in the north for exactly what you said, climate change. Could you elaborate on that, maybe, and give some scope or scale of the millions' worth of dollars of adaptation we're going to need because of climate change in the north?

[Dr. Robert Page]

First of all, that's a very important question. It's one we tried to deal with in our report, and I have to say, because of the difficulty in making cost estimates on this, it was impossible for us to come up with a figure on it. But that very process showed us clearly that the costs are large in connection with what we are dealing with, and the costs are beyond the ability of northern territorial and first nations governments to deal with on their own.

The second point in our report is that we strongly support the northern strategy of the government going forward, but we do feel this is one of the areas that must be addressed in connection with it, for exactly the reason you are getting at in terms of the costs that are involved in it.

I think you can appreciate, with the number of northern settlements, with the new Department of National Defence interest in the north, with the new economic development initiatives in the north, the costs we're dealing with here are a very hard number to nail down.

[Larry Bagnell, Liberal, Yukon, YT]

Thank you.

Mr. Zehr, I just want to make clear whether as an Inuit, totally northern organization, you're saying that there's too much red tape in the north for some economic development projects.

[Tim Zehr]

Yes. In some of the areas.... Let me speak more specifically to mining, for example. In talking to some of the mines—actually, last year with the Agnico-Eagle mine that recently opened—I was told specifically, and not just by them, that in the regulatory process to get things under way, the permitting process was very long, and much of it, they felt, was unnecessary. Any big business is going to tell you that; however, the concern they brought forward had to do with the duplication, over and over again: they would meet with one body and then go to another body. They found that the process was all duplicated. This is an area in which I think we could certainly streamline things to help some of the business interests in the north.

[Larry Bagnell, Liberal, Yukon, YT]

Thank you.

Mr. Butler, are there no provisions or not enough special provisions in the federal and territorial governments to ensure that Inuit have the best chance of getting as many jobs as possible?

[Tony Butler]

Nunavut, for example, provides preference. I believe it's about 15%, if you're Inuit-owned, and then another percentage if you're a northern-based company.

What I was speaking to was that many of the projects the federal government puts out will have as an evaluation criterion that companies have to report on past performance, which has always been something the government looks to. The problem is that the standard is still stuck in the 1980s and 1990s. They're just looking for people who have tried to do something. The evaluation is based on whether or not you can produce a lessons learned plan. You don't have to achieve your targets. So if you have a project that's looking for 10% or 5% or 2% aboriginal participation, if the company fails to meet it, in subsequent bids all they have to do is explain why they didn't meet it. As Jacques outlined, there are a number of reasons why it's very easy not to achieve targets. It's very hard, though, to actually follow through.

[Larry Bagnell, Liberal, Yukon, YT]

Jacques, you were talking about security clearances being difficult. Is the tightening up of laws recently making things stricter? Is that making it any more difficult to get security clearance for your people?

[Jacques Plante]

It's one aspect. It's the processing. There are about seven different factors that come into play with security clearance. One of the issues is—I don't know what the exact politically correct term is here... People who used to get pardons...it would certainly help. People in the north were not aware. A number of people did not participate in that process, and it certainly had an impact for security clearance. That's one specific example.

It is also a matter in which, given the nature of the work we do, the higher the security clearance, the more investigation needs to be done. In some cases, the investigating officer will have to wait until he has enough cases to go up north to investigate. The time delay in getting that done also impacts on the possibility of getting the person hired.

Those are two specific examples of time problems.