Natural Resources Committee on April 23rd, 2009

[The Chair, Conservative, Leon Benoit]

Good afternoon, everyone.

We are here today, pursuant to Standing Order 81(4), to deal with the main estimates for 2009-2010, votes 1, 5, 10, 15, 20, 25, and 30 under the Department of Natural Resources, referred to the committee on Thursday, February 26, 2009, and, pursuant to Standing Order 108(2), to study the issues relevant to the Chalk River nuclear facility.

Appearing with us today is the Minister of Natural Resources. With her are Serge Dupont, associate deputy minister, and Richard Tobin, who is the assistant deputy minister, corporate management and services sector.

I thank you all very much for being here today, and I thank you, Minister.

I assume that you have a presentation. You can go ahead and make the presentation, and then we'll get directly to questions at that time.

Go ahead, please; the floor is yours.

[Lisa Raitt, Conservative, Minister of Natural Resources]

Thank you very much, Mr. Chairman.

I'm grateful for this opportunity to appear before the committee. I do have a presentation to make and then I'll be happy to answer questions from the committee.

I know there is a great concern about developments in the natural resources sector. I'm here today with a willingness to answer any questions that the committee may have.

Let me get straight to the point. The effects of the global economic recession are deepening. During 2008 there were numerous mill closures and slowdowns in the forest sector, resulting in more than 20,000 layoffs across the country. In the mining sector, since September of 2008 there have been 15 mine closures, with almost 9,500 individuals either losing their jobs, being laid off, or taking wage cuts to keep operations open. Last July a barrel of oil was almost $150, while six months later it was under $40. Employment in the energy sector has been in constant decline since the historic peak of 288,000 jobs reached in October of 2008. By January of 2009 it had dropped by 12,000 jobs, and it is still declining.

Given the importance of the natural resources sector to Canada's economy, these figures are a source of great concern.

Our government knew things were going to get difficult. In devising our economic action plan, we used reliable estimates and built in recognition of the possibility that the recession could become more severe and enduring. We have already reported on progress being made with the economic action plan, and it's clear to us that the best strategy is to continue to move swiftly to implement the action plan while regularly engaging affected sectors, provinces, territories, workers and communities to ensure programs adequately address the current challenges.

Our economic action plan for Canada is a sound strategy, and the International Monetary Fund has confirmed this. As you all know, despite the enormous challenges being faced today, world demand for Canada's energy and natural resources will return. When that occurs, we can expect a substantial boost to Canada's economy because of the central role played by natural resources here in our country.

We are committed, therefore, to two main priorities. The first is to support individual Canadians in communities hit hardest by the global economic downturn. The second is to ensure that the natural resources sector is best positioned to take full advantage of the recovery when it occurs.

These are the central themes of our Government of Canada's economic action plan. The plan aims to mitigate the effects of the global recession we're currently facing while providing opportunities to secure our long-term growth and prosperity.

Let me point out some of the ways in which this is being done. I'll focus on the forest sector as one example.

It is no secret that this is a difficult time for the forest sector. It is especially so for the workers and the communities who depend on it, and that's why we are now acting to provide new supports for the workers and communities hardest hit by the global recession. Right across Canada, many communities hit hard by the economic downturn will be eligible for funding under our economic action plan's $1 billion community adjustment fund, which builds on the work of the $1 billion community development trust first announced in Budget 2008.

Quebec, like many parts of the country, has been hit hard, as evidenced by the mill closures, the job losses, and the impacts on communities. This week our government and the Government of Quebec agreed to lead a Quebec-Canada task team to coordinate efforts to support the forest sector in Quebec.

Let me be clear on this: this is not about new money, but it is about shared interests. Quebec made forestry commitments in their recent budget, and clearly we did the same. They approached us to explore a mechanism to coordinate, collaborate on, and accelerate our respective programs in Quebec. This is about moving quickly to create results together.

In fact, we've recently used a similar federal-provincial task team approach in the forest sector in British Columbia to ensure effective and timely delivery of forestry programs there.

As a concrete example of moving quickly, I announced that we will be accelerating the delivery of $211 million to Quebec from the $1 billion community adjustment fund. The forestry sector has been identified as one of the priority areas that will benefit from this funding.

Our government is determined to stand behind this and other resource sectors, and to do everything we can to ensure their successful future. Consequently, under Canada's economic action plan, over the next two years $170 million will be invested in measures directed at the forest sector, adding to our already substantial investments in forest research and innovation and in the development of new markets for Canadian forest products. These funds will help develop pilot-scale projects demonstrating new products for use in commercial applications.

Investments are also being made in the transformative technologies program administered by FPInnovations in new areas such as nanotechnology. Another $50 million is designed to extend successful marketing initiatives such as the Canada Wood program, the Value to Wood program, and the Wood First program. These funds will also support large-scale demonstrations of Canadian wood uses in offshore markets.

To assist individuals suffering hardship, we are expanding regular EI benefits and work-sharing agreements and we are providing significant support to skills training programs to provide these individuals with the necessary tools to take advantage of new opportunities when the economy recovers. These measures are part of an $8.3 billion Canada skills and transition strategy launched by the economic action plan.

We're offering further financial assistance to the forest sector. In 2008, on commercial principles and at market rates, Export Development Canada provided $14 billion in commercial solutions to the forestry sector. EDC is a key player in providing credit insurance to the forest sector and has active relationships with approximately 80% of the industry. EDC served 534 different forestry companies in 2008.

Budget 2009 increases the authorized capital limits of EDC and the Business Development Bank of Canada by $1.5 billion each, and increases their associated borrowing limits as necessary to enhance their guarantee and insurance programs.

Before turning from the forest sector, Mr. Chairman, I would mention that the American kraft pulp producers have become eligible for an alternative fuel tax credit that is affecting the competitiveness of Canadian pulp producers. We are aware of the situation, we are concerned about the impacts of the subsidy on the Canadian forest industry, and we have raised this issue with the United States. The payments from the U.S. government to the U.S. industry are very large, and they are coming during a global recession, when all industries are struggling. Again I emphasize that we are very concerned about the situation, and we're determined to resolve it expeditiously.

Our economic action plan is providing initiatives that will benefit other natural resources industries as well. These initiatives invest in and build on Canada's strengths. They're not quick fixes; they are further investments that will help our industries in the short term and that also invest in Canada's long-term competitiveness. They are investments in people, in research, in our innovation systems, and in sustainability.

Canada's economic action plan included funding of $1 billion over five years to support clean energy technologies through a clean energy fund. This includes $150 million over five years for research and $850 million over five years for the development and demonstration of promising technologies, including large-scale carbon capture and storage products.

On March 26 I announced funding through the ecoENERGY technology initiative for eight projects that will further develop and demonstrate carbon capture and storage technologies. These projects will help us to address our challenge of finding cleaner ways to produce energy.

Canada's economic action plan is also providing tax and tariff relief to stimulate business investment. This is critical to our natural resources sectors. This includes the extension of the mineral exploration tax credit for flow-through share investors by one year. This measure will help junior mining companies access the venture capital they need to finance their exploration activities.

We're also permanently eliminating tariffs on a range of machinery and equipment, thus lowering costs for Canadian producers in a number of sectors, including forestry and energy. This measure alone is expected to save Canadian industry over $440 million over the next five years.

Our economic action plan is accelerating and expanding recent historic investments in infrastructure, with almost $12 billion in new infrastructure funding over two years. Our plan provides $1 billion over five years for a green infrastructure fund. Green infrastructure includes infrastructure that supports the creation of sustainable energy, such as modern energy transmission lines, and investing in wind and solar power. Sustainable energy infrastructure, such as modern transmission lines, will contribute to improved air quality and lower carbon emissions.

The fund will focus on a range of green priorities in the following categories: waste water infrastructure, green energy generation infrastructure, green energy transmission infrastructure, and solid waste infrastructure.

Mr. Chairman, while all of the measures I've cited will assist our natural resources sectors, there are other measures in the economic action plan that will also help by stimulating greater economic activity. For example, the economic action plan includes a $2 billion investment in social housing. We are working with our partners in the provinces and territories to build new social housing units, and to renovate and increase the energy efficiency of existing units.

We're encouraging people to buy homes, increasing the amount Canadians can take out of their RRSPs to buy a first home by $5,000. This is an increase of 25%. We're creating a new tax credit that will provide $750 in tax relief to help people with their closing costs. There's a new home renovation tax credit, providing up to $1,350 in tax relief for as many as 4.6 million families who will take advantage of this to improve their homes. We're adding another $300 million to the ecoENERGY home retrofit program. This investment will allow another 200,000 homeowners to benefit from the program over the next two years, generating as much as $2.4 billion in economic activity. Mr. Chairman, it is expected that these measures will have a particularly beneficial effect on the forest industry.

Before concluding, Mr. Chairman, I understand some committee members may have questions concerning activities at the Chalk River laboratories late last year. I'd be happy to address these questions during the question portion of today's meeting. Mr. Chairman, let me first remind the committee members that on February 5, I tabled reports in the House of Commons from Natural Resources Canada, the Canadian Nuclear Safety Commission, and Atomic Energy of Canada Limited regarding this event. These reports made clear that at no time was the public or the environment put at risk.

Mr. Chairman and members of the committee, to conclude, our government's investments through the economic action plan demonstrate recognition of the crucial role the natural resources sector plays in Canada's prosperity. These measures demonstrate recognition of the sector's singular direct importance in the lives of thousands of Canadians and hundreds of communities. Our economic action plan builds on actions that our government has already taken. These initiatives include investing in the geosciences and opening up Canada's north, in clean and renewable eco-energy technologies, in improving the efficiency of our regulatory system with a major projects management office, and in creating the most competitive business tax regime in the G-7. The plan utilizes previous successes to meet both short-term and long-term challenges, and to mitigate the effects of the recession, while providing a strong foundation for recovery, prosperity, and sustainability.

Now I'm happy to answer any questions that members of the committee may have. Thank you very much.

[The Chair, Conservative, Leon Benoit]

Thank you very much, Minister, for your clear and concise statements on many of the key parts of your ministry. Thank you very much.

We now go directly to questioning, starting with the official opposition. Mr. Tonks, for up to seven minutes, go ahead, please.

[Alan Tonks, Liberal, York South—Weston, ON]

Thank you very much, Mr. Chairman.

Thank you to the minister for being here. It's always a pleasure to have you before the committee.

I guess my first question was on a point that you made, Madam Minister, with respect to alternative energy. In particular, it related to something you said that alluded to wind energy and the clean energy fund. The concern has been expressed.... We've had hearings before the committee on an integrated energy approach that would be nationally coordinated in various ways. One of the criticisms that has been raised is that, with respect to wind, the United States is investing far, far more on a per capita basis in that particular technology. It's acting as a negative influence with respect to additional technology and job creation that would emanate around that particular activity.

Would you like to make a comment with respect to how you view that situation, and whether the estimates have taken into consideration the concerns that have been raised by the industry?

[Lisa Raitt, Conservative, Halton, ON]

Thank you very much for your question.

As you know, the Government of Canada is a strong supporter of renewable energy technologies. We're committed to the objective of having 90% of our electricity needs provided by low-emitting sources by 2020.

The ecoENERGY renewable power program introduced by this government is investing $1.5 billion over 14 years. It has been a great success. The goal was to encourage 4,000 megawatts of renewable power capacity, which is enough power for a million homes. To date we have signed projects for 2,736 megawatts of new renewable power as well. It's a combination of wind and solar and hydro.

The amount of $500 million in contribution funding for new projects is still available under the program. In the department, we are continuously taking a look at the projects to ensure that they are being reviewed and to make awards.

It has been a very successful project. It is anticipated that we will have exhausted the funding about a year and a half earlier than anticipated. That has caused great concern for the wind energy folks. They have been discussing that matter with us. We're ensuring that they understand our commitment to renewable energy going forward, having not anticipated that it would be so successful.

The positive aspect is that, having put the program in place one year ago, in 2008, we're seeing the projects coming online now. It's really gratifying to see the wind projects in Chatham and in other areas. It's very positive to see that we are adding those new megawatts.

To sum up, the program is still there. We still have applications. As I indicated, we've made commitments to 51 projects already, and there are another 22 projects that we're taking a look at, with a further 13 projects after that. It's a remarkable success story. It has added to our overall plan to make sure that in electricity, 90% comes from low-emitting sources by 2020.

[Alan Tonks, Liberal, York South—Weston, ON]

Thank you, Madam Minister.

This morning we had the opportunity to listen to, on a video conferencing basis, the results of both German and Swedish experience with green job creation using the kinds of strategies that have been alluded to in your presentation. The question that I'm going to ask now will be similar to the question that was asked then.

We asked them what percentage of the GDP was in fact calculable in terms of job creation and in terms of investment that would compare with older industries. Has your ministry done any calculations in two respects: one, as a result of this strategy, what is your target with respect to job creation and high value-added investment in renewable resources; and two, are there any calculations, with respect to the reduction of carbon dioxide, as a result of the strategies implemented in your action plan and in your presentation today?

[Lisa Raitt, Conservative, Halton, ON]

Thank you.

In my discussions with the industry, one of the questions I had for them is that if you take a look at these programs as being the Canadian taxpayer's investment in renewable power, it's nice to be able understand the calculation of what the return on that investment would be. They've indicated that they have taken a look at what their economic generation is and the number of jobs, and what it means to the economic sector. They have indicated that they will be forwarding the information.

I'll turn to my officials here to see if we've done anything internally on that matter. I'll also defer to them on the specifics in terms of your second question, on the technical aspect of greenhouse gas emissions.

The reality is that recognizing that more electricity will be needed, every time you can replace a new megawatt--that is, from fossil fuels, from an emitting source--either through energy efficiency or through a renewable source, that's a good thing. That's why we've invested $1.5 billion in bringing these 4,000 megawatts of renewable power capacity onto the grids in various provinces.

Perhaps my officials can add to this.

[Serge Dupont, Associate Deputy Minister, Department of Natural Resources]

I would simply add, Mr. Chair, that although I certainly don't have consolidated numbers to present to you today, on a program-by-program basis, if one takes the ecoENERGY retrofit for homes program as an example, we've estimated additional amounts invested in Budget 2009 would represent the activity of $2.4 billion. That, I think, through some multipliers, can easily be translated to a number of jobs, a number I don't have with me right now.

We also calculate amounts of carbon dioxide that would be achieved as reductions through this approach. It is the same thing with biofuels and the same thing with wind. We do go through these calculations and look at the actual projected impacts of programs, and then we obviously try to look back afterward as well.

[Alan Tonks, Liberal, York South—Weston, ON]

How much time do I have, Mr. Chairman?

[The Chair, Conservative, Leon Benoit]

You are actually out of time. You shouldn't ask; you might get a little extra.

We go now to the Bloc Québécois and Madame Brunelle, for seven minutes.

[Paule Brunelle, Bloc, Trois-Rivières, QC]

Good afternoon.

Madam Minister, I am pleased to hear you talk about the forest industry, because that is the issue I wanted to raise with you. Obviously, given that Quebec accounts for 40% of the industry and that a considerable number of jobs have been lost, this issue is of great concern. You say that you want to ensure, as part of your mandate, that the natural resources sector be in the best position possible to take full advantage of the eventual economic recovery. This is an objective that we share.

We all recognize the need to assist our forestry companies. The Government of Quebec has invested $100 million, which is a significant amount for a provincial government. The unions, the Quebec Forest Industry Council and the Forest Products Association of Canada are calling for immediate action. Some 21,000 jobs have been lost in Quebec since 2005, and 49,900 jobs since 2006, when you took up your position, unfortunately.

The government's response was to provide Quebec with $170 million over two years and strike a committee to conduct a study. The forest industry is asking for immediate loan guarantees in order to reach agreements and maintain operations. If you want the natural resources sector to be in a better position to take advantage of the economic recovery, companies must remain open. Today's situation is disastrous, businesses are shutting down.

Shouldn't you be reviewing your decision and providing the industry with loan guarantees, as they are calling for?

[Lisa Raitt, Conservative, Halton, ON]

Thank you very much for the question.

I too share the concern. One of the more remarkable experiences that I had, both in preconsultation and since then, was the close working relationship with Quebec and with the other provinces in terms of recognizing the forest industry's need for help and aid.

First and foremost, the softwood lumber agreement is extremely important to the industry. They've told us loud and clear that it must be respected and that we can't put it at risk. We start from that premise of abiding by the softwood lumber agreement.

As I indicated in my remarks, we did strike a Canada-Quebec forestry task team. They're going to be looking at priorities for early action. One of them is credit and finance, and specifically what can happen in terms of provision of aid and help to the industry within the softwood lumber agreement.

However, it must be recognized, as I also mentioned, that the forest industry does actually access the credit facilities of the Government of Canada through EDC. In fact, it is remarkable that there's a relationship with 534 forestry companies, about 80% of the total forestry companies in Canada, to the tune of approximately $14 billion, so supporting EDC and BDC and increasing their availability to help countries and industries and sectors is beneficial to the forestry sector as well.

More important is the fact that this task team will be focusing on credit and finance as they apply to Canada-Quebec forestry issues. We'll be taking a look at all options and seeing what can be done. We have asked that officials report on the progress of the team by May 15, 2009.

[Paule Brunelle, Bloc, Trois-Rivières, QC]

There are two issues regarding the task team. We were told that a working group would have to submit solutions on or before May 15. However, no new money has been allocated, and I am quite puzzled by that.

In your remarks today, you spoke about loan guarantees, but within the context of EDC. What were you referring to exactly? Your Minister of Revenue has always told us that, in his view, loan guarantees contravened the softwood lumber agreement, something the Bloc Québécois is challenging, of course. We voted in favour of the softwood lumber agreement because the industry asked that we do so and that we put an end to the disaster. Nevertheless, I have a hard time following you.

Are the loan guarantees you refer to intended for new projects? If that is the case, I have to say that that is not what companies are asking for. Instead, they want loan guarantees to continue to pay their suppliers, stay in business and not have to lay off workers as is now the case.

[Lisa Raitt, Conservative, Halton, ON]

Thank you for your question.

When we talk about loan guarantees, what we're really talking about is the general issue of access to credit, which is affecting all the sectors and all the companies. Even companies with strong balance sheets are facing problems in accessing credit in this global economic recession.

We view that the financing arrangements available through EDC and BDC are consistent with the softwood lumber agreement. As I said, last year in the forestry industry, $14 billion was accessed, and 534 companies have utilized it.

The reason financing arrangements through EDC and BDC, which are the appropriate channels to go to, are in compliance with the softwood lumber agreement is that they're provided on commercial terms, and they are broadly available to the entire industry sectors across the country, not only in forestry. That is an important statistic, in fact, when dealing with the softwood lumber agreement.

The other aspect that is important to note is that we recognize the issue of access to credit in the economic action plan and have bolstered what has been available at EDC and at BDC in an extraordinary enhanced financing framework in order to allow more companies to take advantage of the facilities of EDC and BDC.

[The Chair, Conservative, Leon Benoit]

Thank you, Minister.

You have time for one short question, Madame Brunelle.

[Paule Brunelle, Bloc, Trois-Rivières, QC]

I would like to comment on the funding under your Community Adjustment Fund. In your presentation, you praised the fact that $211 million were earmarked for Quebec. However, 40% of the forest industry is located in Quebec. Given that the problem is more acute in Quebec, we would have expected additional amounts, as you gave to the automotive sector in Ontario.

I see single industry towns in my region closing down, and the government has nothing to offer them. What we are seeing are true human and family tragedies. I do hope your task team gets to work, finds other solutions and asks for more advice from the industry, which has the solutions the government is failing to heed. Now is the time to act.

[The Chair, Conservative, Leon Benoit]

Merci, Madame Brunelle.

Could you give a very short answer, Madam Minister?

[Lisa Raitt, Conservative, Halton, ON]

During our consultations we heard from the industry. We continue to work with the industry on the matter. We look forward to working with the task team in order to flow the funds under the community adjustment fund as quickly as possible to make it matter.

[The Chair, Conservative, Leon Benoit]

Thank you.

We go now to the New Democratic Party, to Mr. Martin. And if there is time left--and that did happen one time seven years ago--then we will go to Mr. Cullen for the remainder of the time.

Go ahead, please, Mr. Martin.

That shot wasn't only at you. That is general.

[Lisa Raitt, Conservative, Halton, ON]

He says that with love.

[Pat Martin, NDP, Winnipeg Centre, MB]

I wonder who was in the chair then.

Minister Raitt, thank you for this opportunity.

Minister, asbestos is the greatest industrial killer the world has ever known. More Canadians now die from asbestos than all other industrial diseases combined. In fact, in the province of Quebec, 80% of all the deaths due to industrial disease are from this carcinogen. Yet Canada remains one of the largest producers and exporters of asbestos in the world. Without exaggeration, we are exporting human misery on a monumental scale.

Asbestos is not only not banned in Canada, the Government of Canada spends millions of dollars actively subsidizing and promoting asbestos all over the world. It's not only in direct subsidies, but Government of Canada officials act like globe-trotting propagandists for the asbestos industry--not only promoting the product, but undermining other countries' efforts to curb its use.

So, Minister, I come to you today noting that in your estimates you have a further direct subsidy to the Asbestos Institute, a group of charlatans. I have no qualms whatsoever calling the Asbestos Institute a bunch of frauds and charlatans. I can show you a list of 150 scientists, doctors, and researchers from around the world who say that asbestos should be banned in all of its forms. The Chrysotile Institute has one discredited charlatan, David Bernstein, who says that asbestos might be able to be used safely if you're careful, and that's the only researcher that your government, the Government of Canada, hangs its hat on.

I agree with Keith Spicer that Canada's policy on asbestos is morally and ethically reprehensible, and I ask how you, as the Minister of Natural Resources, can in good conscience shovel taxpayers' money to this bunch of clowns to go out and dump 220,000 tonnes of asbestos per year into the third world.

Now you're spending tens of millions of dollars to remove the asbestos from these buildings, because no MP should ever be exposed to a single fibre, yet you're dumping 200,000 tonnes per year--only into third world countries, because all western countries have banned the stuff--with no health and safety protection whatsoever. You're creating a legacy of illness in those countries with every tonne you export. How do you justify this appalling international embarrassment, this disgrace, this stain on Canada's reputation?

[Lisa Raitt, Conservative, Halton, ON]

Thank you.

Mr. Chair, the health and safety of Canadians is the number one priority of the Government of Canada. The government supports the controlled use of chrysotile in the same way it supports the controlled use of all other industrially important materials. Canada, in partnership with the Government of Quebec and the industry, has mandated the Chrysotile Institute since 1984 to promote the controlled use.

[Pat Martin, NDP, Winnipeg Centre, MB]

No, it was created to take the stink off of the asbestos industry, and it hasn't worked. Tens of millions of dollars is never going to take the stink off of that industry--

[The Chair, Conservative, Leon Benoit]

Mr. Martin, as chair, I allow leeway for people to interject once a minister has given an answer. She only started to give her answer. Please let her answer the question and then you can ask another question if you'd like.

Go ahead, Madam Minister.

[Lisa Raitt, Conservative, Halton, ON]

Thank you very much.

In 1984 the governments of Canada and Quebec, labour, and the industry established the Chrysotile Institute, a not-for-profit organization, to promote the controlled use of chrysotile domestically and internationally. Since its inception, the Government of Canada has contributed one-third of the institute's annual budget, which is $250,000. The Government of Quebec contributes an equal amount, as does the industry.