Thank you, Mr. Chairman.
Just to identify in more detail my colleagues, Howard Brown is assistant deputy minister of energy policy, energy being quite a significant part of the department's work; and Frank Des Rosiers is director general of strategic policy.
As the chair said, what I'd like to do is take you through a relatively short deck, which tries to explain what NRCan does, what its mandate is, how we mesh with the provinces, and also give you a bit of a sense of the important issues we're working on over the course of the next weeks, months, and years.
I believe you have the deck in front of you. I won't repeat the statistics on page 3, except to say something you already probably know, and that is the financial importance of the natural resources sector is significant. It's 13% of GDP, and it contributes some $93 billion to Canada's trade surplus.
I'd like to leave you with two thoughts about the natural resources sector. One is that despite popular myths, this sector is a highly technical and advanced sector. You do not have people going into the woods with an axe on their shoulders cutting down trees. You have highly sophisticated equipment, computer runs. Similarly, the mines and the energy sector is a very sophisticated modern part of the economy, and one that is more productive than many other parts of the economy.
On the next page, I just want to emphasize the importance of growth in this sector over the course of the next little while. Canada has more megaprojects going on in this sector over the next few years than we've had for a very long time. In the oil sands of Alberta alone, over $100 billion in investments are projected in the next 10 years. You'll see similar figures here relating to oil and gas, hydroelectricity, and mining. Similar investments off the east coast relate to the offshore and a variety of others. One of the real challenges we have in dealing with these megaprojects is rising costs: the rising value of the Canadian dollar and rising costs generally. But probably the most important challenge for this sector right now is a lack of manpower. Despite movements across the country, in particular from the Maritimes to Alberta, there are real shortages in some parts of the industry, and it's being suggested that if we do not find a way to increase the manpower available to this part of the economy, it is going to slow down development. I think if you have before you in the months and weeks ahead representatives of the various trade associations, they'll confirm this. It's becoming a very, very significant challenge, being able to find the men and women who are necessary to keep this economy going.
I thought I would talk a little bit about the federal and the provincial roles relating to natural resources. You'll be aware, Mr. Chairman, that the provinces own and are constitutionally responsible for the natural resources within their borders. The federal government, on the other hand, has a variety of jurisdictional points that I think are quite important, and these form the basis for natural resources intervention in natural resources--obviously jurisdiction over crown lands, the north, offshore, all nuclear matters, a responsibility for interprovincial and international issues, science and technology, and the not insignificant regulatory power of the federal government, which is used to regulate the environment and other things of that nature.
The way we describe this is that the corollary to respecting the Constitution on this issue is respecting the Constitution. There are two sides to the coin. There's a very legitimate basis for the provinces' jurisdiction in their ownership, but the federal government also has a wide range of authorities and responsibilities to deal with natural resources. I think it's fair to say that by and large NRCan's relations with the provinces and the territories are quite good. We believe that by and large we supplement what they do and that the role of the federal government in this area is welcome.
Having said that, I think it's fair to note that large numbers of other federal departments have a significant impact on the natural resources sector. Environment and DFO, the Department of Fisheries and Oceans, in particular have a significant regulatory role in mines and forestry and in the energy area. And I may as well tell you, because all our stakeholders will tell you, regulatory reform is one of the major desires of most of the stakeholders who operate in this area. It's also one of my minister's priorities while he is in the portfolio. It's also something the department has been working on over the last couple of years.
But as you will be aware more generally, regulatory reform is very difficult because of the clash between a number of departments that are involved and stakeholders on both sides of the equation. Every time you want to make a regulation more effective, you have stakeholders who are concerned about the substantive objective of the regulation arguing that you're diluting that. So dealing with overlap, duplication, timeframes, and whatnot is a significant issue for the minister and for the industry.
On page 6 we describe the department as a multi-purpose department. Traditionally, it's described as a science and technology department, but I don't think that captures what NRCan does. We do have a significant science and technology capacity. We have I think world class laboratories in mining, in forestry, and in industry, and in many instances we share these facilities and work with the private sector. In some cases we do work for the private sector as well as with it. We also deliver a large array of programs, particularly in the energy policy area and the energy efficiency area, but also in a significant number of other areas.
We also undertake a variety of public good activities. The department is responsible for regulating explosives in Canada and we are the ones who issue permits for the use of explosives. The department has a national system of warning sites for earthquakes and tsunamis. So we have a couple of direct involvements in the management of natural disasters. And we provide a lot of basic geoscience for the economy. This is the kind of science that is needed in order to be able to assist industry to focus its research when it's looking for new mines. A lot of that is provided at one level before the interest of particular companies.
We also believe we have an important economic policy role. That indeed is the role, we think, of the government, which is to develop policies, and our science and technology, our programs, and our public good activities are in support of the government's economic policy activities. We do this through a variety of means: promoting, regulations, and things of that nature.
I think one of the other aspects of NRCan that we'd like to emphasize is that we believe very strongly, as does the minister, that the work activities within the natural resources sector have to be undertaken while balancing economic, social, environmental, and security of supply objectives. It's another way of talking about sustainable development or responsible development. Over the years, depending upon particular preoccupations, you could have security of supply take precedence, or you could have economic activities take precedence, but we believe that one of the things this sector needs to do in a systematic and organized way, helped by the federal government, is to consciously say that decisions in this area are a balance of these four objectives and not with one predominating.
You have a bit of a snapshot on page 7 of the department's location across the country. We have about 4,500 employees across the country. You'll see here we have a variety of sites, virtually in every province and territory. We have a budget of about $1.4 billion, of which about $800 million is transfer payments of one sort or the other.
What I thought I would do now is talk a little bit about some of the issues that are occupying the minister and the department over the course of the weeks and months ahead by just going through them very quickly.
You'll be aware of the importance that everyone is attaching to climate change, and we're working with Environment Canada to develop a somewhat new approach to reducing greenhouse gases and dealing with these issues, while at the same time contributing to the development of clean air and clean water objectives.
Pipelines: there are two really major ones on the drawing board, one being Mackenzie, the other being Alaska. We provide the public service support to Minister Prentice as the minister responsible for pipelines in respect of Alaska, and we work very closely with Indian and Northern Affairs in dealing with Mackenzie.
On the offshore, there is a request from the Province of British Columbia to allow for the lifting of the federal moratorium on offshore oil and gas. We're talking to the province about that, the issue there being, of course, that there's far from unanimity in British Columbia as to whether or not this is a desirable thing. Also, there are significant first nations issues that need to be resolved before I think ministers will be in a position to make a decision.
On geoscience, this relates to what I was mentioning a little while ago, that while Canada has a relatively large number of well functioning and fully functioning mines, many of them are approaching depletion. If the mining industry is going to remain vibrant over the course of the next few decades, new mines will have to be discovered. This is the role of geoscience--to map in particular the northern part of the country, so that the companies involved will be able to use more precision in trying to find new mines. It's also an area in which we need to develop new science and technologies to allow for deep mining. Many of the mines that are becoming depleted have resources beneath the level that now can be mined. We have a range of technological efforts under way to assist the companies to be able to do that.
On softwood lumber, you'll be aware that working with Industry Canada brought a resolution of this issue with the United States some time ago. To address a variety of issues for the forestry industry, the government is making available a package that is something on the order of $400 million over two years. We're working with Industry Canada and other colleagues in the government to try to come up with a range of proposals for ministers. These would involve worker and community adjustment, but would also--and, we think, very importantly--aid in assisting and encouraging the industry to restructure, because there are parts of the industry that we believe really do need to be restructured if they're going to be economically viable. Also, part of these moneys is to fight the mountain pine beetle in British Columbia.
The other issues that I mention on page 3 are somewhat broader and of a longer term, but we need to work on how the natural resources sector is regulated. I've talked about some of the issues there. We need to find another way to promote innovation and skills, to make available the human resources that are necessary to help the industry continue to develop. There are significant issues in dealing with first nations with respect to the three subsectors that I'm talking about. Just about all of the megaprojects we're talking about, and all of the mines and forestry developments, are on lands on which there are either claims or potential claims by first nations. It is a significant challenge for these companies to deal with the legitimate and constitutionalized rights of first nations, so we're working with our colleagues in Indian Affairs and elsewhere to try to help in that respect.
I've already talked a little bit about effective regulation. We're trying to facilitate, to the extent that we can, coordination among a variety of agencies within the Government of Canada to make sure we reduce duplication to the extent we can. NRCan itself is not really a regulatory department--except that, as I said earlier, we regulate explosives--but there are two significant regulatory agencies that report to Parliament through the minister. They are the National Energy Board and the Canadian Nuclear Safety Commission. They have very significant regulatory roles. They work increasingly closely with the Canadian Environmental Assessment Agency; we're trying to promote even more coordination there, because one of the great frustrations of industry is that we have two or more regulatory agencies appearing on scene whenever new developments are under way. In particular we're promoting, as much as we can, the principle of substitution, whereby one agency would substitute for another in carrying out regulatory functions--for example, the National Energy Board would carry out the CEAA's functions, so that we wouldn't have two federal agencies dealing with the same stakeholders.
The other area in which we believe we're going to have to spend a great deal more time, money, and effort is fresh water. In fact, I hope personally that the committee can find some time to work on water, because it's an issue that spans a large number of departments. We still don't have enough information about water in Canada, I think, to develop a rational policy. NRCan would be able to contribute a great deal, because we have basically the technical and the scientific capacity to map the aquifers throughout Canada.
The one I skipped on page 9 was the issue of energy R and D. Whether you're talking about greenhouse gases, clean air, or clean water, we very firmly believe that the solution is in research and development and in new technology. It's entirely fair that industry be asked to contribute to the development of new technologies, but the government is in a position to encourage this, both by using the tax system and other incentives and by using its own existing laboratories to push the development of new technologies.
If, for example, we're going to solve the greenhouse gas problem in this country and the world, we're going to have do it through technology. I don't think there's any other way. I think that will be one of the areas the government will want to advance as it brings forward its policies in the months ahead.
I'll conclude by saying that, as you will be aware perhaps better than I am, commodity prices right now in Canada are high. They're very good, except for some parts of the forestry industry that are really having a tough time. Both base metals and precious metals are doing very well. The oil patch is making a great deal of money. We need to organize this growth and work with the province to do this so that this can continue into the future.
I think the other thing we have to do is plan for the day when this will not necessarily be the case. To take the forestry industry as an example, if the United States' economy slows down significantly, it would affect the forestry industry very quickly. I think we need to work with the industry and with the provinces to try to come up with ways of dealing with that sort of thing.
I think over the course of the next five to ten years, decisions that governments at all levels will make will have a significant impact on how successful development will be in these three areas. There is extraordinary potential, particularly in the energy sector. Canada could, I think, legitimately claim to be an energy superpower. We need to make sure that continues. We provide a significant amount of the United States' energy needs, and we could potentially do so for other countries around the world, but we have to do so in a way that develops those resources in a responsible way and in a way that complements and does not trip over the efforts of the provinces.
Over the course of the next year or two, the government is going to face a number of quite significant decisions in this area. There are a number of energy megaprojects--the two pipelines that I was talking about; the offshore moratorium in B.C. will be lifted; there are significant development issues relating to forestry; and, of course, climate change. NRCan, to the extent that it can, is dedicated to supporting the minister and the government in working through potential solutions for these problems.
I've tried to give you a bit of a snapshot of what we do and how we do it. I consciously did it fairly briefly because I've always been told when I appear before parliamentary committees that their main objective in life is not to listen to public servants talk. So I've kept it as short as I could, but I would be glad to answer any questions you might have.
In terms of understanding the department at a greater level of detail, I would really commend these blue books to you: the performance report and the report on plans and priorities. They outline in some considerable detail what this and all other departments do, they reflect our plans for the year ahead, and they report after that year on what we've been able to accomplish.
Thank you, Mr. Chairman.
