Natural Resources Committee on May 6th, 2008

[The Chair, Conservative, Leon Benoit]

Good morning, everyone.

Mr. Anderson.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

Mr. Chair, I just want to point out that some of us are going to have to leave partway through the committee meeting, which is unfortunate.

Yesterday we had Bill C-5 come to the House for debate. We were in the middle of debate when the House was adjourned yesterday, and it was going to come up again this morning at 10:15. Now we're being held up by some NDP amendments. It was interesting that when they made their presentation yesterday, Mr. Chair, their main objection was that the bill had not come back quickly enough for them. This morning we came to the House to debate the bill, and they pulled a procedural trick, and we spent three hours discussing a completely different issue. Some of us had expected to be in the House this morning discussing Bill C-5 and hopefully have it done by now, so we could have been at the committee the entire time.

So I just wanted to point that out and let people know the reason why some of us will have to leave. I believe the critic for the Liberals is also going to be one of those people who are going to have to leave.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Anderson.

I see no other point of order.

We're here today, pursuant to Standing Order 81(4), to deal with the main estimates for 2008-2009, votes 1, 5, 10, 15, 20, 25, and 30, under Department of Natural Resources, referred to the committee on Thursday, February 28, 2008.

We have appearing before our committee today the Honourable Gary Lunn, Minister of Natural Resources. Welcome.

From the Department of Natural Resources we have Cassie Doyle, deputy minister, and Richard Tobin, assistant deputy minister. So welcome, to all of you.

Mr. Lunn, I understand you have a presentation to make. Go ahead and make your presentation, and then we'll get directly to questioning. Go ahead.

[Gary Lunn, Conservative, Minister of Natural Resources]

Thank you very much, Mr. Chair.

It's great to be back before the committee to talk about the main estimates. As you've pointed out, I'm joined here by my deputy minister, Cassie Doyle, and Richard Tobin, my assistant deputy minister.

Mr. Chair, as I begin, we're all very much aware of the enormous economic growth of the natural resource sector right across Canada, even more specifically within the energy sector, which is providing tremendous benefits to Canadians.

In 2006 our natural resource sectors contributed 13% toward Canada's GDP and accounted for nearly half of our domestic exports. The natural resource sector contributed $91 billion to Canada's trade surplus, and that is one of the reasons, Mr. Chairman, that the Canadian economy remains so strong today.

Along with this rich resource endowment also comes an enormous responsibility to ensure that we develop our natural resources in a sustainable way. I believe, Mr. Chair, that we can build our country's strengths in a responsible manner, with innovation and the ingenuity of the Canadian people, a world-class investment climate, and open and transparent regulatory systems.

There are three strategic objectives, Mr. Chair, that must drive our natural resources. The first one is economic competitiveness, where natural resource sectors are productive and competitive so they continue to contribute to the well-being of Canadians. Equally important is environmental responsibility, where Canada is a world leader in responsible development of the use of our natural resources. The last one is safety and security, where knowledge of our resources and our country strengthens the safety and security of Canadians.

Let me begin with economic competitiveness. Rising commodity prices and increasing global demand have benefited most of the natural resource sectors. The future of Canada's competitiveness relies on our ability to apply knowledge and innovation to our strategic assets and to our rich resource endowment. As you know, the competitiveness of Canada's natural resource sector is built on innovation. These are knowledge-based sectors, and our government is focused on fostering science and technology. The significant science and technology expertise at Natural Resources Canada sharpens the competitive edge of Canada's resource sectors.

Mr. Chair, the forestry sector remains an important contributor to our economy. Despite an increasing number of challenges, including the downturn in the U.S. housing market and the rise in the Canadian dollar, here again innovation and knowledge will be key in helping enhance our competitiveness in this sector. Our government has created a long-term competitive forest industry initiative that supports innovation and assists the forest sector in moving towards higher-value products and exploring new markets. We have led the creation of the world's largest public-private partnership in forest research and development--FPInnovations.

Mr. Chair, recently this committee heard from witnesses, including FPInnovations, regarding the unique opportunities and the challenges facing the forest industry. Your committee has also suggested convening a forestry round table. In a response to this, I will be co-hosting a forestry round-table discussion on the paths to a prosperous future of innovation and markets, in conjunction with the Forest Products Association of Canada and FPInnovations, on May 13. We did have some discussions with both of these industry groups, seeking guidance from their members, and it was believed that a focused approach would be the best way to bring all the stakeholders together to have a focused, good discussion, and that is in fact what we're going to do.

It will be a great opportunity. We would welcome the participation of all the committee members. As well, the following day is forestry day on the Hill. There will also be a number of meetings following that with various caucuses and an opportunity to have a good discussion over those few days on forestry.

The input received from this session, along with other mechanisms, including public consultations of the Canadian Council of Forest Ministers' draft, Vision for Canada's Forests: 2008 and Beyond, will help outline our priority actions for the sector over the longer term. I hope you'll be able to participate in these important discussions.

The second strategic objective that I outlined earlier is critical. In developing our natural resources, it is essential that we do so in an environmentally sustainable way.

We will continue to deliver successful initiatives for energy efficiency, renewable energy, and clean energy. We have invested over $3.5 billion to our ecoENERGY efficiency initiative, to our ecoENERGY renewable initiative, to our ecoENERGY for biofuels and to our ecoENERGY technology initiative.

Our government is committed to a safer, cleaner, and more secure energy mix in Canada. This year we are investing over a quarter of a billion dollars in carbon capture and storage that will significantly reduce greenhouse gas emissions by capturing carbon dioxide from coal-fired industrial plants. This includes the world's first fully integrated clean coal electricity generation facility combined with carbon capture and storage. This project in fact will be happening in Saskatchewan.

Again, this is an enormous opportunity for Canada to lead the way on the development of technology and innovation. We're also investing in geological research on carbon capture and storage potential in Nova Scotia. As well, we're partnering with the University of Calgary to further examine the regulatory, economic, and technological issues to accelerate the deployment of this important technology.

We're also investing $300 million to support AECL and the development of its next-generation nuclear power reactor, the advanced CANDU reactor, and its ability to maintain safe and reliable operations at Chalk River laboratories. Canadians know that nuclear power generation is safe. It's clean and it's emission-free. It's based on Canadian technology that uses Canadian resources.

Finally, Mr. Chairman, the third strategic objective is to promote the safety and security of Canada. As the committee is well aware, the Prime Minister places a strong emphasis on developing opportunities in Canada's north. Investments in geo-science and mapping will help industry discover and develop new energy and mineral resources. Building on this strength in our most recent budget, the Government of Canada invested $34 million over two years for the northern geological mapping and logistical support for the polar continental shelf project.

These investments will provide enormous economic potential for developing resources in remote communities, including the north. Not only are we pursuing the sustainable economic development of this region, we are building on our capacity to support Canadian sovereignty.

Our recent investment of $20 million in seabed mapping, for example, will promote the scientific basis needed to demonstrate Canada's claim in the Arctic for our submission under the UN Convention on the Law of the Sea.

Mr. Chair, I had the opportunity, the week before the break week, to visit where we have 25 researchers from the Department of Fisheries and Oceans and Natural Resources Canada working together to make our territorial claim. It was an amazing experience to go right out onto the polar ice cap and see first-hand what our scientists are doing.

Dr. Ruth Jackson is our lead scientist, and the work they're doing there, the data they're collecting, will be absolutely vital to Canada making a successful claim for a part of the continental shelf the size of the prairie provinces combined. It's very important that we continue this work.

Again, I want to applaud this. I had an opportunity to see first-hand what they're doing. There are very specific rules on how we will make this claim. I believe it's critical that we are successful in this claim so that we ensure that we have the jurisdictional control, not only about the potential economic opportunities, but, even more importantly, that we control the ground rules--what the environmental standards are and how we are to ensure that this is done to the highest standards to ensure environmental protection for future generations.

The north is a very important part of our country, and I'm pleased, as I said, to have been there to see this first-hand.

Finally, I must mention an important initiative to improve our regulatory systems. The government is taking action to improve the efficiency of the regulatory approval processes through the creation of the major projects management office. This investment of $150 million over five years, together with a number of federal agencies, will provide industry with a single point of entry into our federal regulatory process. This will give Canada's natural resource industries greater certainty, improved predictability, and increased transparency, while strengthening the integrity of the overall regulatory process. This will ultimately mean more timely reviews that will aid in attracting critical investments. This is an improvement in the governance that Canadians have been seeking, and I'm proud to report that we are delivering.

Mr. Chair, this government will build on Canada's rich endowment of resources and the skills and ingenuity of our people to keep our economy competitive, to meet our environmental responsibilities, and to contribute safely to the security of all Canadians. Our government is committed to developing policies that maximize the potential of Canada's natural resources. As natural resources continue to rise in strategic importance in the global economy and as concern increases for the future of the planet, our government is creating a sustainable resource development for the advantage of all Canadians.

I would like to thank you for giving me the opportunity to appear before you this morning, and I look forward to your questions.

[The Chair, Conservative, Leon Benoit]

Thank you very much, Minister Lunn.

We will now go directly to questions. We go first to the critic from the official opposition, Mr. Alghabra. Go ahead please, for up to seven minutes.

[Omar Alghabra, Liberal, Mississauga—Erindale, ON]

Thank you, Mr. Chair.

Good afternoon, and thank you for coming here, Minister, Deputy Minister, and Assistant Deputy Minister.

As you can imagine, I want to focus for some of our time on AECL. There are still a lot of outstanding questions on the future of AECL and also lessons we learned from the incident that happened last Christmas. Could you please update the committee and the public on where the review process is, the process for which you've hired National Bank to look into AECL?

[Gary Lunn, Conservative, Saanich—Gulf Islands, BC]

The National Bank has been engaged to do an evaluation within all the business lines of AECL. We want the best information we can get, so we will be evaluating that. Obviously I have nothing more that I can report. But again, you'll be hearing more from me in the coming months, as we move forward through this first phase of the evaluation.

Our ultimate objective, Mr. Chair, is to put AECL in a position of strength. This crown corporation has been badly neglected over a decade, chronically underfunded, and it's time we had a serious look at this. We've got some of the best people in the world, some of the best nuclear scientists. We've got great technology. We believe that by giving this some attention and having a serious look at it, we'll be able to actually put AECL in a position where it can be a world leader.

[Omar Alghabra, Liberal, Mississauga—Erindale, ON]

Thank you.

Has the report been sent to you by National Bank? Have they completed their study?

[Gary Lunn, Conservative, Saanich—Gulf Islands, BC]

I'm not sure if they have actually completed it. I've seen some drafts, but I'm not in a position to discuss that publicly.

[Omar Alghabra, Liberal, Mississauga—Erindale, ON]

I'm not asking you about the content. I'm asking you if they have completed their study or not.

[Gary Lunn, Conservative, Saanich—Gulf Islands, BC]

I've got a draft, but I haven't seen a final draft.

[Omar Alghabra, Liberal, Mississauga—Erindale, ON]

You know that Ontario right now is in the process of considering bids for a large reactor, a power plant.

[Gary Lunn, Conservative, Saanich—Gulf Islands, BC]

Yes.

[Omar Alghabra, Liberal, Mississauga—Erindale, ON]

AECL is one of the bidders. But the Premier of Ontario had requested that the federal government clearly articulate and state its position towards the future of AECL, and that will play a big role in determining Ontario's decision. As you can imagine, there are a lot of jobs depending on it, a lot of technologies depending on it. So I'd like to know from you what your commitment is to the future of AECL and that bid process.

[Gary Lunn, Conservative, Saanich—Gulf Islands, BC]

First of all, I don't think anyone can challenge our government's commitment to AECL. We put $300 million, an unprecedented amount, in this year's budget to fully fund the completion of the ACR technology. Again, we've got a world-class technology. We're fully aware of the Ontario bid process as well. Ontario has launched a competitive process. One of the greatest things AECL has done internationally recently is that it has delivered on time and under budget almost all the reactors, if not all of them, that it has built. These reactors, the ones in Korea—

[Omar Alghabra, Liberal, Mississauga—Erindale, ON]

Just because I have a limited time.... I understand. I actually share with you how we value AECL. Just for the sake of this process right now, the Ontario government needs to hear from the federal government. So I'd like to know what your commitment is going to be for the future for AECL.

[Gary Lunn, Conservative, Saanich—Gulf Islands, BC]

First of all, our commitment in budget 2008—as I've just stated, $300 million was unprecedented—sends signals. So we are 100% committed. We've launched a review to strengthen AECL, so it can capitalize on the opportunities here at home, and we believe it is a world leader. There are some things that need to be addressed, and we are focusing on those, but I can't get into those specifics at this point in time. You will hear more from me in the coming months.

Our ultimate objective is to seize upon the opportunities and capitalize on the great people we have at AECL—the nuclear scientists, the nuclear engineers—and a great technology. The CANDU reactors are some of the most efficient operating reactors anywhere in the world. I'll give you a few real quick examples. In Korea there are 20 nuclear reactors. AECL has four of those CANDU reactors. The reactors in its entire CANDU fleet are number one, number two, number three, and number five in efficiency. The ones in Argentina won awards for the most efficient reactors anywhere in the world. In China, Qinshan 1 and 2—CANDU reactors—are the most efficient reactors in the entire Chinese fleet—

[Omar Alghabra, Liberal, Mississauga—Erindale, ON]

I've read the brochures.

[Gary Lunn, Conservative, Saanich—Gulf Islands, BC]

These are not just brochures—these are the facts. That's why we're putting a lot of support into AECL. We believe in the future.

[Omar Alghabra, Liberal, Mississauga—Erindale, ON]

I'm well aware of AECL's performance and its track record. I'm concerned about your outlook, your vision of AECL. Are you going to privatize AECL? Are you going to sell it off? Are you going to create a joint venture?

It is important for Ontario, other customers, AECL scientists, and hardworking individuals to know the government's commitment to AECL.

[Gary Lunn, Conservative, Saanich—Gulf Islands, BC]

I'm not going to restate the commitment.

[Omar Alghabra, Liberal, Mississauga—Erindale, ON]

I'm talking about the privatization.

[Gary Lunn, Conservative, Saanich—Gulf Islands, BC]

What are we going to do exactly? We are looking at AECL with a critical eye, so that it can emerge, where it rightfully belongs, as a world leader with a great technology. We are very much engaged in the discussions with Ontario, and I'm confident that AECL will be able to compete with the other technologies in the Ontario bid process and emerge successfully. We believe they have a great technology with a—

[Omar Alghabra, Liberal, Mississauga—Erindale, ON]

So privatization is on the table?

[Gary Lunn, Conservative, Saanich—Gulf Islands, BC]

I did not say that.