Natural Resources Committee on Nov. 23rd, 2006

[The Vice-Chair, Liberal, Alan Tonks]

Good afternoon, members of the committee and our deputants. Welcome. I just have the opportunity to welcome you and hope you enjoy your time before the committee, and to say that the real chairman has come in and he will probably take over.

Mr. Chairman.

[The Chair, Conservative, Lee Richardson]

Thank you. We'll get under way.

I'm sure you've been ably welcomed by Mr. Tonks, but let me welcome you as well. I'm delighted to have you here. I'm sorry we didn't have an opportunity to see you earlier in the week in your town. It was a great experience for all of us, as I'm sure you've heard.

I think without further ado we're going to proceed right into it, and I am sorry for being a little tardy.

We have been simply asking for a point of view to be expressed by you. I think the committee's going to be very interested in hearing from you and then asking questions, for enlightenment really. Again, it's not to put you on the spot in any way, but just simply to try to get a better understanding of the situation up there at this time. We're very much looking forward to hearing from you.

I don't know if you've spoken among yourselves with regard to presentation, Ms. Blake, as to whether you are going to start and the others are going to join in.

[Melissa Blake, Mayor, Regional Municipality of Wood Buffalo]

Thank you very much.

Good afternoon, Mr. Chairman and members of the panel. We really appreciate this opportunity to be here with you today. My name is Melissa Blake and I'm the mayor of the Regional Municipality of Wood Buffalo, which tends to throw some people off. I'm also the mayor of Fort McMurray, which more people tend to be familiar with. We represent 80,000 people up in that region, and on behalf of them, it is a pleasure to convey to you some of the experiences we've had.

What I'll do is just start into my dialogue and tell you that we've really come a long way since our early European traders to the region noted that natives were using a tar-like substance to waterproof canoes. From that aboriginal population that has called Wood Buffalo home for eons, to the fur traders who plied our pristine waterways 300 years ago, today we're now home to the world's energy giants, and it has been a remarkable transformation. It is a compelling story as well, but that's going to have to wait for another day.

I've come today to address the key question engaging your committee: is the development of the Athabasca oil sands sustainable? My perspective today comes from our experience as the municipal bedrock on which the oil sands development is based, and that basis includes a strategic look at three pillars of oil sands development sustainability, including economic, environmental, and social pillars.

But to get straight to the point, we embrace the knowledge that within the municipal boundaries of Wood Buffalo is contained the energy security for Canada and North America. Alberta's oil sands established reserves amount to about 177 billion barrels, behind only Saudi Arabia. But our known reserves, ultimately recoverable with current technology today, amounts to 311 billion barrels, which is by far the largest source worldwide. If we extrapolate Alberta's total reserves in place, including oil sands that will need new technology for future recovery, the number skyrockets to 1.7 trillion barrels.

The Regional Municipality of Wood Buffalo, working with the regional issues working group, produced a business case in 2002 and again in 2005. In this brief account of economic impact, I'll refer to data either contained in the original, or updated from that work. To begin recovering just a small percentage of oil from these reserves, the capital investment had topped $37 billion between 1996 and 2005. Between 2006 and 2011, which is just a five-year window of opportunity, industry expects to invest an additional $56.6 billion conservatively. That would bring the 15-year total to nearly $100 billion.

The development, of course, has tremendous spinoff. It will generate 240,000 new jobs in Canada by 2008, and although we anticipate 60% of those will fall in Alberta, or about 144,000, that means there are nearly 100,000 new jobs that will ripple across Canada for oil sands development. What we expect as we go forward is that those numbers will continue to build in future years. For perspective, we produce about one million barrels of crude oil today. That additional $56 billion would get us to two million barrels per day, and projections or the vision for Alberta looks to be on tap for three million and five million respectively in 2020 and 2030 potentially.

From that business case in 2005, the revenues that flow to the federal government, using only a $30 oil scenario, amount to about $69 billion over 20 years, and certainly that is conservative with higher world oil prices, which are included in the 2005 business case. All of this investment, along with accelerating development and revenue creation, has stretched our municipal challenges to past capacity. Six years of explosive growth at more than 8% per year far exceeds that of any other major municipality in Canada.

What that means to the citizens in our region in practical terms is that we're spending $160 million for a new waste water treatment plant that's going to open with an immediate need for expansion, and we're currently exceeding our production capacity. We have $40 million for an expansion to the water treatment plant, which will reach capacity next year; $107 million for a MacDonald Island recreation centre redevelopment; $24 million for new landfill; and $51 million for a new RCMP facility, and that budget, in fact, started at $30 million for two facilities, not just one.

We experience significant cost escalations on most of the projects we face. We have the most expensive rents in Canada and the most expensive housing in Alberta. It's $483,000 now for an average-price single family home in our region. We also have problematic road congestion, with a strong need to increase capacity and routing operations, and it means we suffer a host of other serious growing pains as well.

So when thinking about economic sustainability, based on the current pace of oil sands development, Wood Buffalo's ability to deliver core infrastructure needs in Fort McMurray has been stretched beyond our means to keep pace. Without additional help, the simple reality puts into jeopardy the sustainability of oil sands development.

On the second pillar of sustainable oil sands development, there's a focus on environmental realities and stresses. Our environmental conscientiousness, as oil sands development accelerates, is routed in the country's billowing concerns over greenhouse gases driving climate change, clean air, and clean water. In that regard, the Regional Municipality of Wood Buffalo supports the Federation of Canadian Municipalities' submission to the Minister of the Environment, addressing the planning and design initiatives on clean air and climate change.

We know that northern climates such as ours are particularly vulnerable to rapid degradation from climate change and pollution, and that's why Wood Buffalo has taken an active stance as an environmental steward for our region. We know that the province of Alberta has primary jurisdiction over environmental standards and practices, and we know that the federal government has significant jurisdiction over waterways and climate change in our region.

Our part in the equation guides us to invest heavily in improving water quality for our communities and population, and we enthusiastically endorse LEED Canada certification. Our next residential community, called Saline Creek, will set new standards for sustainability, incorporating measures from innovative design to the application of energy alternatives.

We're committed to all measures and efforts designed to keep northeastern Alberta's airsheds as clean as possible. In that regard, we support the efforts of our region's environmental watchdogs, and we know that we need to do more, increasing our level of environmental vigilance.

This brings me to the third pillar of sustainable oil sands development that overlaps with economics and challenges our municipality beyond its current capacity. It is squarely grounded in accumulated social impacts, resulting from years of sustained high growth in oil sands development.

Currently we are gripped in a losing battle to address the cumulative effects of this explosive expansion in oil sands resource development, driven by accelerating global demand.

Here's what that means to our 80,000 citizens and residents. Six years of explosive population growth, at more than 8% per year, far exceeds that of any other municipality in Canada. In fact it is more than three times the rate of the national population growth, and it's more than twice the rate of the next fastest growing municipality in Alberta. Another six years of growth at this rate, which may be a conservative estimate, means that the population for Fort McMurray could nearly double again by 2012.

The social stresses this creates are widespread. Our housing deficit grows with each additional approved oil sands project that drives the workforce to our region. Supply is limited by a provincial timetable in releasing crown land surrounding Fort McMurray and by an available building workforce. Demand for housing in all categories, from affordable to the market norm, continues to sore. Costs are the highest in Alberta, and likely in Canada. New housing subdivisions will quickly cover land that can be serviced at a reasonable cost, which pushes us into areas where servicing costs will also soar, due to topography and muskeg conditions.

We are adding RCMP resources constantly to provide the requisite public safety. Our health care system needs a 100% increase in on-site doctors, a new funding formula, a new continuing care facility, and more than 150 additional staff. We need more schools, teachers, and education resources. Also our social programs, services, and facilities don't meet the current needs for child care, addictions, family violence, and homelessness. When you stop to consider this picture, I think you quickly realize that our cup is indeed overflowing.

To fund current needs, Wood Buffalo has had to increase its debt limit to two times the total revenue, with the province's approval, as compared to other municipalities at one and a half times. Yet in a province that prides itself on its debt-free status, our debt level exceeds the tolerance limit imposed by regional council and is now the highest in the province—three times higher than the debt level currently carried by the cities of Edmonton and Calgary. Council does not believe this is prudent financial management, but our needs dictate that we must proceed under these circumstances.

As responsible stewards of our municipal mandate, council has undertaken a number of measures—some mandatory, some typical, and some that are creative and unusual—to address our unique challenges and our community shortfalls.

I'll finish today by pinpointing some ways that the natural resources committee and the federal government can make a major difference overall in supporting our municipal effort to sustain this major economic engine for the entire country.

First, the Regional Municipality of Wood Buffalo needs a new, formal, and recognized working framework with the federal government. Therefore, Wood Buffalo requests a tripartite regional development agreement with federal and provincial governments to plan for and share required investments in future growth, including infrastructure and services in Wood Buffalo.

Second, the municipality needs $1.9 billion for infrastructure investment to address capital requirements for basic community services over the next five years. Going forward from there, a sustaining infrastructure fund is needed. Therefore, we request immediate special funding instruments from both the federal and provincial governments to help bring existing infrastructure and services to the standard that other municipalities enjoy. This outcome would recognize the region's unique characteristics, its strategic importance to Canada's overall economic strength, and its key role in delivering energy security for the country and the continent. In addition, we request the federal government's creation of a long-term infrastructure fund for use in this aggressively growing region.

Third, the municipality is keenly aware of the need to accurately forecast and monitor the effects of cumulative socio-economic impacts from the accelerated pace of oil sands development. This is an outcome that currently suffers from a significant vacuum in terms of predictability, joint commitment, and resources. Therefore, we request the federal government's cooperation in creating and maintaining a system to analyze and monitor the cumulative socio-economic impacts of oil sands development, including verification of predictions and support for regular public communications.

Finally, at least for today's purposes, the municipality advocates for the development of a much closer relationship with the federal government at the level of elected officials and with the public service. We therefore request the federal government's ongoing support and engagement in a bilateral intergovernmental relations program, based on common interests, outcomes, and opportunities flowing from oil sands development and operations.

That concludes my presentation to your committee today. I do thank you again for this opportunity, and I look forward to your questions and any support that you're able to give.

Thank you.

[The Chair, Conservative, Lee Richardson]

Great. Thank you very much, Mayor Blake.

I think we'll proceed to the other presentations, and then we'll have a general question period.

We will move then to Mike Allen, who is the president of the Fort McMurray Chamber of Commerce.

Mr. Allen.

[Mike Allen, President, Fort McMurray Chamber of Commerce]

Thank you, Chairman Richardson, committee members. I'm pleased to be here to present to your committee on behalf of the Fort McMurray Chamber of Commerce.

First of all, we acknowledge that we have no expertise in either environmental or social matters, and we defer to other stakeholders to represent issues in these spheres.

To begin, I wish to share with the committee members what should be obvious. Our mandate is to support sustainable economic development in our community. To that end, we adopted a position statement this past summer, which is included on page 2 of our formal brief. In summary, it says that the Fort McMurray Chamber of Commerce believes in responsible and sustainable economic development achieved through working with the full complement of community stakeholders. We wish to be clear. We do not dispute that there are challenges related to oil sands development that require bold thinking and innovative approaches. The chamber believes that Wood Buffalo can be a model for the integration of the industrial and knowledge economies for the benefit of Alberta, and indeed all of Canada. We are hopeful that all levels of government will receive contributions from the chamber that are focused on a practical solution to the challenges with which they are faced. In this case, let me add that we believe the federal government has a significant role to play.

There is more the federal government can do than just adjust its tax and environmental policies, although those are certainly measures within its jurisdiction through which it could address some of the issues in Wood Buffalo to the benefit of all Canadians. However, the constellation of issues in Wood Buffalo is enormously complex and requires a more concerted effort of will from all orders of government.

We encourage the committee to remember its interview with Pierre Alvarez, the president of the Canadian Association of Petroleum Producers, who said:

The markets send signals and companies clearly respond by reducing costs and doing things more efficiently. It’s not appropriate for governments to decide what goes ahead.

Significant oil sands players have already adjusted their schedules to respond to market conditions.

Finally, with respect, we urge this committee to resist the urge to let its recommendations devolve into inter-jurisdictional wrangling, a cognitive and procedural logjam that is entirely too familiar to Canadians when the spheres of the federal government and the provinces intersect. It is true that in the approval it granted only last week to Suncor Energy's expansion proposal, the Alberta Energy and Utilities Board said:

The EUB believes that additional infrastructure investment in the Wood Buffalo region is needed, and it believes there is a short window of opportunity to make these investments in parallel with continued oil sands development.

However, this statement, which directs the provincial government to respond appropriately within its jurisdiction, does not absolve the federal government from its moral and financial responsibility in the region that benefits the rest of Canada. In fact:

The EUB recommends that coordinated action be taken at all levels of government [emphasis added] to ensure that the Regional Municipality of Wood Buffalo has the ability to service the anticipated level of sustained growth in the region.

We believe this committee can help the federal government to consider how it can best address the following issues in support of a sustainable oil sands development in the 21st century.

In June 1996 the Government of Canada and the Government of Alberta jointly issued the “Declaration of Opportunity” in Fort McMurray. The declaration was endorsed by both senior orders of government and 18 representatives of the oil and gas industry with an interest in oil sands development. The chamber believes that this document, although implemented by the previous government, is consistent with the principles of the new Canadian government and is worthy of its support, both in word and action.

The private sector is expected to invest $125 billion in the Wood Buffalo region over the next decade, as developers seek to triple the current output of synthetic crude oil. That is a five-fold increase over the investment projections estimated in 1996 in that “Declaration of Opportunity”.

Wood Buffalo is indisputably the most robust regional economy in the world. Madam Mayor spoke briefly on the tax revenues that come forward. I would expand on that a little bit. At $30 a barrel, it was projected the federal government would receive approximately $54 billion in taxes. At $40 a barrel, the total government revenues will increase nearly 50%, yielding the federal government revenues of $84 billion. Of course, last week, we just closed at a record low for the year at $55 U.S. a barrel. In other words, those revenue projections did not account for the real world prices. We believe the federal government benefits tremendously from oil sands development, and the contribution to federal coffers of the oil sands revenues will only increase. The federal government must look to match its commitment to the region more closely with the benefit it receives.

Among the greatest regional challenges resulting from oil sands development is the recruitment and retention of skilled personnel, not only in the oil sands but in all economic sectors. Wages are high; companies offer signing and monthly loyalty bonuses and still they cannot fill the vacancies for skilled workers.

In May 2004, the Governments of Canada and Alberta signed a memorandum of understanding for the entry of temporary foreign workers for projects in the Alberta oil sands to allow for the targeted entry of temporary foreign workers to meet the urgent need for skilled oil sands employees.

Just last week, the federal government announced changes to the temporary foreign worker program to make it easier for employers in Alberta to hire foreign workers more quickly when there are no Canadian citizens or permanent residents available to fill those vacancies. The range of employees was also increased to 170 different occupations, which further demonstrates the extreme labour pressures in the region.

The willingness of the new Canadian government to build upon and improve existing agreements is encouraging. The MOU and related commitments align Canada's immigration practices with Alberta's labour force strategy, which recognizes immigration and foreign workers as the province's third most important labour source.

Although the MOU supports the recruitment of skilled employees, challenges still remain within the labour market. Among them is the accreditation of potential recruits who have received their education and training in other countries. Stories of the foreign-trained doctor or engineer supporting his or her family by driving a cab are well established.

Both the federal and provincial governments must work together to improve the recognition of foreign education or assist trained immigrants to elevate their skills sufficiently to meet Canadian standards. Most importantly, despite the MOU's narrow scope and application only to labour pressures, it has evolved under the leadership of the new Canadian government to demonstrate increasing collaboration between two orders of government where there is a demonstrated, indisputable need.

The chamber believes that ongoing efforts to address persistent labour pressures can provide the model for other tripartite agreements that are badly needed to support sustainable development in our region. There is no question that municipalities across the country are struggling with infrastructure, and since 2004 the federal government has responded by rebating GST and sharing the gasoline tax.

While those programs and others are important, they do not adequately address what is being called the fiscal imbalance in the nationwide debate over the distribution of tax dollars. The chamber merely wishes to note that out of every tax dollar collected from Canadians, roughly 65¢ goes to the federal government, 30¢ to the provinces, and 5¢ or less goes to municipalities.

The Regional Municipality of Wood Buffalo also boasts, if such a word is appropriate, unique demographics. We have virtually doubled in size over the last decade. The municipality must also provide services to a shadow population that fluctuates between 7,000 and 15,000 at any given time.

These pressures combine to create a situation in which the regional municipality has been advocating for increased investment in municipal infrastructure since 2004. The municipality pegs its share at $814 million of the $1.9 billion that has been mentioned in the RIWG's business case with the municipality. That figure still needs to be tested against continuing infrastructure requirements, inflationary increases, recent municipal commitments, and recent funding provided by other orders of government to transportation projects with municipal impacts.

In a speech to the Federation of Canadian Municipalities in June 2006, Prime Minister Harper said, “The federal role”—with respect to infrastructure—“must be defined to deal with projects of national significance.”

We cannot imagine a region in which infrastructure to support economic development is of greater concern to the nation. In particular, we emphasize that the government identified among its five principles, number four, the support for, “More competitive economic union”, and number five, “Effective collaborative management of the federation.”

Our brief, to which I direct you, outlines an area of particular concern, and that is our water and waste treatment plant.

At this time, we wish to repeat that the Alberta Energy and Utilities Board has recommended that there is a short window of opportunity for all levels of government to make the necessary investments in infrastructure to ensure that the region can handle sustained growth.

The Chamber of Commerce believes that an MOU between the Governments of Canada and Alberta to provide necessary municipal infrastructure in the Wood Buffalo region through the Canada Strategic Infrastructure Fund or other programs is not only appropriate, it is just. Such an agreement would help the federal government determine the levels of infrastructure investment in the region proportionate to the benefit it receives, would help to make oil sands development both more competitive and more sustainable, and would be consistent with the federal government's commitment to collaborative management.

The chamber also believes that the federal government must work with the provinces to remove remaining interprovincial trade barriers. More details on that issue are in my brief as well.

In closing, I would like to thank the Standing Committee on Natural Resources for the invitation it issued to us. We cannot overemphasize the degree to which we believe that addressing the sustainable development issues in the Wood Buffalo region requires the collaboration of all levels of government, and that an opportunity exists for the federal government to display leadership in this area.

The research conducted by the Canadian Energy Research Institute clearly demonstrates that the federal government is deriving tremendous benefit from the oil sands, and it is our contention that the government has not made a commensurate investment, either through taxation policy or direct investment in the region, to that benefit. We encourage you to work with your colleagues at the Government of Alberta, perhaps using the 2004 memorandum of understanding as the model for future cooperation.

The chamber has also conducted surveys with our members to ensure that the interests of the regional business community, whose products and services are precisely those that make Fort McMurray more than just a company town, are considered in decision-making. We would be happy to share with this committee our findings and to forward to you any new information or statistics we gather in pursuit of the sustainability action plan.

Once again, thank you, and we're open for business.

[The Chair, Conservative, Lee Richardson]

Thank you, Mr. Allen. That was an excellent presentation.

I'd now like to call on Pat Marcel, former chief of the Athabasca Chipewyan First Nation.

Mr. Marcel.

[Pat Marcel, Elder, Athabasca Chipewyan Tribe]

Good afternoon, Mr. Chairman, members of the committee, ladies and gentlemen. My name is Pat Marcel. I am a former chief of the Athabasca Chipewyan First Nation. I am chair of the Athabasca Chipewyan First Nation elders' committee, and I am an elder.

I thank you for the opportunity to speak today. What I have to say is important. What I have to tell you is serious. After I speak, ask yourselves whether or not you think the lives of our seniors, our elders, are sustainable. Ask if you would want your parents living in the conditions described. Ask why these conditions exist amidst the prosperity of Canada's Athabasca oil sands, where, in Fort McMurray, the average annual salary is $91,000. The after-tax low-income cut-off—Statistics Canada's fancy words for the poverty line—says a person living alone in a rural setting and making less than $10,718 per year is living in poverty.

Mr. Chairman, the majority of our elders live in Fort Chipewyan, where a litre of milk costs 53% more than it does in Fort McMurray. A one-pound bag of apples costs 209% more. A head of lettuce costs 333% more. Overall, food in Fort Chipewyan costs 121% more than it does in Fort McMurray, where prices are already inflated. This all means that just to buy the basics, the elders are paying about $500 per month for food.

Mr. Chairman, on some winter nights in Fort Chipewyan, the temperature can dip to minus 40 degrees Celsius. We heat our homes with heating oil. That oil costs about $190 per barrel. We use about four barrels of oil a month during the winter months, from October to April. There are rebates, thankfully, but even after rebates, our heating costs still consume a significant portion of our small income.

Up until now, elders were living rent-free because of our first nations housing policy. But due to the high cost of capital and maintenance, due to inadequate housing subsidies from Indian Affairs, due to the age of our homes and their poor condition, our chief and council are forced to charge rent to elders. A recent inspection found mould growing in the homes of some elders. The first nation says its 80 homes need $1 million worth of repairs.

Here is the problem, Mr. Chairman. The average elder's income is only $13,228 per year. On average, each elder is more than $4,000 in debt by the end of every year. And those are the lucky ones. Four of our elders have an annual income of less than $10,000. We are living well below the poverty line, Mr. Chairman. We are poor.

Eleven years ago, the average income for an aboriginal person in Canada was over $16,000. That was eleven years ago, Mr. Chairman, and we are nowhere near that meagre amount yet.

There will be some who whisper in your ear to ask us about the honorariums we get from oil companies for attending meetings about oil sands development. That great honorarium is $150 a meeting. Often that money goes to help out our families, to pay unexpected bills, or to buy a small Christmas present for our loved ones. That honorarium gives oil sands developers the proof that they have consulted with us about their never-ending projects and expansions. As one elder said, industry is here when they need something. They feed us. They give us small gifts. They talk about their own needs.

I could go on, but I think you get the picture. That picture shows that near Canada's Athabasca oil sands, where purchases are measured in the billions and the average annual salary is approaching six figures, there is a group of people living as if they live not in Canada, but in a third-world country. To be clear, our elders are struggling to put food on the table while industry is getting their approvals and government is getting billions in royalties from our traditional lands. Why is this? Elders should not have to live this way. If we were your parents, would you tolerate these conditions? Is this way of life sustainable?

Mr. Chairman, maybe the most difficult part of all is that we were not always poor. Once, we lived off the land. We had plenty of meat, fish, and berries. Even our medicine came from the land. We were rich because of what that land gave us. Now we read the white man's consumption advisories that tell us we can only eat fish once a week. They tell us there is arsenic in the moose. We are afraid to eat the traditional foods that have sustained us for thousands of years.

We did not ask for our lives to be changed. We did not ask for the moose to disappear, for the fish to be poisoned, for the furs that we trap to become worthless and scarce. We did not ask for our cost of living to go up because Canada can sell its oil to the United States, India, and China. One of our elders said that we have been approving the old sands project since 2000, and we are as poor as we can be.

Finally, I have two last questions for the panel. What will Canada's legacy be with respect to the aboriginal elders who live in one of the most prosperous economies in Canada? What will each one of you tell your grandchildren when they ask you what your role was in forming that legacy?

Thank you very much, members of the committee and Mr. Chairman.

[The Chair, Conservative, Lee Richardson]

Thank you very much, Chief. We appreciate the sincerity of your remarks.

It is 4:10. We do have a little business to discuss at the end of the meeting, so I'm going to try to get through this and get everyone's questions in, in one hour. We'll adjourn this portion at 5:10, and then we'll go into some committee business at that point.

I'll begin with Mr. Cullen for our question period today.

[Roy Cullen, Liberal, Etobicoke North, ON]

Thank you, Mr. Chairman, and thank you, Ms. Blake, Mr. Allen, and Mr. Marcel.

There's something I find amazing with this oil sands study. I have been here for a few years and I've never witnessed a project or an initiative that's crying out to be dealt with, yet every witness who comes here talks about their powerlessness. It seems that no one can do anything.

Mr. Allen, in your presentation you started off by saying you have no expertise in environmental or social matters. I understand that, but, with respect, we know there is a lot of money to be made on the oil sands. That's a good thing if it can be done in a sustainable and environmentally responsible way. But we know there are some huge challenges there with respect to water, with respect to CO₂, with respect to the pressure on the infrastructure, and with social problems. We've heard some of that today from Mr. Marcel and Ms. Blake.

Why is that? Are you so powerless? We're going to be having the Alberta government come here, because if one wants to deal with this.... There have been proposals for a moratorium or to regroup a bit before we proceed with all these new projects and a desire to deal with some of these issues of infrastructure, social problems, water, CO₂, and the use of natural gas, before we just start on the next phase. Jurisdictionally, the province clearly could do that. I'm not sure if they have the political will to do that.

The federal government has certain levers it could use. I don't know if the federal government has the political will to do that. I'm hoping this committee has the political will to make some strong recommendations that something be done to deal with these problems, because the bitumen is going to be there for years to come.

We were just up there, and I must say that Albertans and Canadians should be proud of what's going on up there in some respects. But unless we deal with the environmental and social issues, the phrase has been coined that we have our heads in the sands--although I know it's a very poor pun.

Let me start with you, Ms. Blake. In terms of your role, you have certain levers that you can use in terms of permitting. I'm not an expert on municipal affairs, but are you obliged simply to respond to every single demand that's put on your system? Do you have any power to say you are not permitting that because you don't have the infrastructure to deal with the sewage, to deal with the traffic, to deal with the drug addicts, to deal with whatever? Do you have any powers, and are you using them?

[Melissa Blake]

I would tell you, from our historical perspective, that in 2002 we collaborated with industry to create what was called the business case. It was an assessment of the type of investment we would see, the impacts on the community, and the investment required to address the population growth we were facing.

Our advocacy role with the province was very publicly done in 2005. It was an update to the original from 2002. We've given a subsequent update in 2006. We're seeing cost escalations that are influencing that.

Our intent was to get the necessary players to support the infrastructure requirements, to welcome oil sands, frankly. We, as a municipal council, came to the point this June of unanimously supporting a determination to intervene in all subsequent oil sands hearings, on the basis that we have not seen the kind of progress...and we need to deal with that. Our own municipal instability in relation to our ability to finance that infrastructure growth is simply that with our population doubling and tripling in the next few years, those infrastructure requirements are bearing down on us all at once. Our taxation ability is insignificant to be able to address that. We're financially crippled in what we're able to do.

[Roy Cullen, Liberal, Etobicoke North, ON]

Well, good for you for at least doing that. I encourage you to do more.

We know the oil and gas industry is powerful. I'd try to appeal to their self-interests, in the sense of the cost escalation that's occurring. Their reputation as an industry is at stake here, too. I don't think the market is going to solve all these problems. Even though I'm a big believer in the markets, there are some things the markets don't do.

Mr. Marcel, when we met with Syncrude and Suncor, we were told of the many jobs that were created and the care and attention they're paying to involving aboriginal Canadians in the work and the projects. Are you seeing this? You paint a somewhat different picture in your brief, in terms of the impact on aboriginal Canadians.

[Pat Marcel]

What I presented today is what you see as the plight of the elders in the community. We are part of Syncrude and Suncor and we have companies that operate on site, but it does not address the need we have at home. We're talking about houses that are 80 years old, about to be demolished. We're trying to talk to industry and government to say that we need a lot more. I don't know how you can put a dollar figure on the total destruction of our heartland and our traditional lands where there are still trap lines. They're being overrun by recreational vehicles and everything, and that grows every day; it doubles every year.

Even though we have socio-economic benefits from industry in the approvals--we do the EIAs--that's where it stops. We have to bid for jobs on site like anybody else in Canada. There are only one or two specific jobs you get when you do the approval--menial work like janitorial or something. We're talking here about self-efficiency for the band, and I don't see anything happening in my lifetime.

I've talked to the Alberta government about sustainability, and it's the most argumentative government I've seen in my life. I say that to them every time we meet. I say, “Why can't you see me at my level? You're up here with industry.” Yet when we talk about environmental impacts, it's as if you know you're going in there to negotiate something. But even if you didn't, if you went against them on intervention, just short of going to the courts, you still wouldn't stop anything. We have to put pressure on industry and come with an MOU, so that for the life of the project they have to talk to us. It's only now starting to come together, where we're actually talking to industry.

If you were to see my community and the conditions in which my people live, you would realize what I'm talking about. We don't see any benefits from the oil sands here. It's not happening for my people. There might be 10 or 12 young people who benefit because they've got work and education, but there are a lot of people back home who cannot survive in Fort McMurray by working for $15 an hour. Unless you've got a good paying job, you'll never live in Fort McMurray. The cost of living is terribly high--the price of food and everything. People have to live in Chip and try to commute back and forth. Then the trouble starts. When a family man leaves for an extended time, you create more tension and anguish in that family.

We're slowly putting things together, but we need some help in telling the Alberta government not to forget the people whose land it is they're getting the tar sands from and all the development there. They're my traditional lands. We can't go anywhere beyond the socio-economic and environmental agreements we have. That's as far as we go. The contracts are menial, and we won't see a self-sustaining people for a long time.

That's all I have to say for now.

[Roy Cullen, Liberal, Etobicoke North, ON]

Thank you for that.

We heard when we were up there that to deal with the expansion they're buying up trap lines and paying compensation. But obviously, as you've said, unless you're into one of the really big paying jobs, you can't afford a house or property in Fort McMurray. So you're in this very difficult position.

Thank you.

[The Chair, Conservative, Lee Richardson]

Thank you, Mr. Cullen.

Monsieur Ouellet.

[Christian Ouellet, Bloc, Brome—Missisquoi, QC]

Thank you, Mr. Chairman.

Mr. Marcel, I am moved by your speech. I will come back to that in a moment.

Mr. Allen, your presentation talks a little about the point Mr. Cullen just raised. You said, and I quote:

—we urge this committee to resist the urge to let its recommendations devolve into inter-jurisdictional wrangling—

Clearly, we are on complete agreement on that point. However, federal jurisdiction is extremely limited. There are a number of things in your presentation that fall much more under provincial rather than federal jurisdiction.

You are making recommendations to the federal government on how it can improve environmental policies. As Mr. Cullen mentioned, you are saying that you have no jurisdiction over the environment, but you will address sole matters related to economic sustainability. Here, you are talking about sustainable development.

Personally I quite agree with what you are saying about economic sustainability. This morning, at a meeting of another committee, witnesses demonstrated that there was a direct link between green house gases and economic development. If green house gases are not taken into consideration, innovation will decrease and other countries will enjoy greater profitability than us. In other words, if we push companies to deal with green house gases using technological innovation, they will become more efficient. If those companies are more efficient, they will be able to drop their prices, instead of thinking that this will cost more.

In your area, what is your capacity for making manufacturers and corporations understand this economic dimension which means that economic sustainability can only come from technological innovation. I am not talking about the environment, because this is more a municipal and provincial jurisdiction than a federal one. I am talking about green house gases.

[Mike Allen]

Thank you for that.

Certainly we believe that industry has a major role to play there in all of the environmental policies within their companies. I know there are some initiatives going forth right now, capturing CO₂ gases. They're looking at pumping that into old wells, for example.

But I believe that if we all work together, or if the companies are working together, to solve some of these greenhouse gas emissions...I know they're committed to doing it, if they can. Once we get a handle on how to do that properly, those are technologies that we could sell internationally. Not only would Canada benefit, but these technologies would benefit other countries.

But as far as the actual technology with greenhouse gases, this is certainly not an area that I can speak on.

[Christian Ouellet, Bloc, Brome—Missisquoi, QC]

So you don't push too hard on it? Maybe you should.

[Mike Allen]

We are a business advocacy group, but we do work very closely with our members. If there is technology or something we're aware of, we would certainly be working with our members to work on it.

[Christian Ouellet, Bloc, Brome—Missisquoi, QC]

Ms. Blake, I found your presentation very interesting, particularly when you said and I quote:

And we know that the federal government has significant jurisdiction for waterways and climate change in our region.

You have hit upon something that concerns us a great deal, I am talking about climate change caused by this energy source. Personally, I was also moved by the facts that you said you had adopted the LEED standards. I was involved personally in the implementation of the standards some 15 years ago. So I was very moved to see that you have adopted this. I think this is fantastic.

What are your expectations of the federal government with regard to climate change in your region? What do you want it to do?

[Melissa Blake]

As a Canadian citizen, I have an expectation that the federal government will create the proper direction for climate change within our country. As a first nation country, we have a greater responsibility, even greater than those that are developing.

Coming from a region that produces energy, it's almost in diametrical opposition to what I believe in personally. My municipal vehicle is a hybrid because I believe in reducing our impact. The LEED certification costs me an extra $6 million, but I insist on having it. When we look at our new development, we want to have geothermal and solar. I want landfill gas reclamation. I want us to be able to capture that and reuse it.

The challenge I face as a municipality.... My council is prepared to make those decisions on behalf of our citizens. When it costs us extra money and we're up against the financial wall that we are, as a nation we should be looking to find ways to support the initiatives that will help us reduce that, because inevitably, oil is going to be a commodity that is desired for a very long term into the future. Again, we need to set the appropriate standards as a nation, but we also need to support initiatives that can help us achieve those.

[Christian Ouellet, Bloc, Brome—Missisquoi, QC]

Thank you. That is a good answer.

Mr. Marcel, I was extremely moved by your presentation. It is extremely shocking to see first nations living in poverty, particularly near areas such as the one where we live, where there is so much wealth. It is dramatic.

Earlier, you said that you had not always been in this situation, that you had been a rich people, a strong civilization. As a matter of fact, this made me think of us, the whites. This made me to think of our civilization, which is totally dependent on oil. Some 88,000 objects on the table are oil based. When oil disappears, our civilization will fall.

I am extremely sensitive to what you said in your presentation. However, I think that whites are not sensitive enough to what environmentalists are saying. You just taught us an extraordinary lesson, that all we have can easily be lost when sole profits and the economy are considered. This is probably what is happening to us.

I know that it may not be very comforting for me to say this to you, but there is not much else that I can offer you. Nevertheless, I can say that I am very aware of poverty. I am the Bloc Québecois critic on poverty, and I am very sensitive to this issue. I hope that all my colleagues will realize that we could also end up living in poverty if we do not take care of our planet Earth.

I have no further questions.

[Pat Marcel]

That's good.

Thank you.

[The Chair, Conservative, Lee Richardson]

Thank you.

Mr. Bevington.

[Dennis Bevington, NDP, Western Arctic, NT]

Thank you, Mr. Chair, and welcome, of course, to you from Fort McMurray.

I come from a community just a ways down river from you. I've had plenty of time over the years to visit your community and experience the growth of the tar sands personally and see the issues that surround it.

I know that the Municipality of Wood Buffalo was expanded in the nineties to give you tax control over the resource development. In this day and age, as the price of oil goes up, that seems to be one opportunity that the municipality has to achieve some balance in your fiscal structure.

Are there limitations on what you can do in the tax system to--

[Melissa Blake]

I would just explain that what I face in our municipality is related to taxation. We have two streams of revenue: one is user fees, the other is property taxation. Independent of output or the levels of profitability for these oil sands companies, we can only assess the value of the project. Projects are not valuable until they are producing. We have a time lag between when they are producing and when the infrastructure is required.

When we look at our Municipal Government Act and what we're entitled to do, machinery and equipment is the bulk of industry-type assessment. What happens in our region--despite the amalgamation, which is a very positive move and we're glad it happened--is that I can't distinguish between Mr. Allen's businesses versus industry. If I escalate tax rates, I will potentially harm the small businesses, to the point of unsustainability. As much as I would love to be able to acquire more from the major cause of our growth and development, I am restricted by the effect I'll have on other businesses in the region. That's one of my hindrances; it's not one of the principles our government is based on.

We have made application to the provincial government to change that in the Municipal Government Act. They're going to give it consideration the next time they do a major restructuring.