Natural Resources Committee on Nov. 2nd, 2009

[The Chair, Conservative, Leon Benoit]

Go ahead, Minister.

[Lisa Raitt, Conservative, Halton, ON]

Then to put it more directly, Mr. Regan, there is no damage to the industry. What this government is doing is actually beneficial to the industry, and it is welcomed by the industry. I met with the organization of CANDU industries on Friday at their annual meeting. They welcome the restructuring. They understand the time it takes for it to go. We've been getting great feedback from the stakeholders.

As far as the Government of Ontario is concerned, as I indicated, it would be very helpful if they would move on their procurement process. However, we can't make them move any faster, therefore we continue with our restructuring.

[Geoff Regan, Liberal, Halifax West, NS]

Minister, through you, Mr. Chairman, we certainly heard something very different here from the industry last week at the committee.

Let me ask you, some are saying that in fact this privatization will be the death knell for CANDU technology. In view of that concern we're hearing, are you in fact looking at breaking up the CANDU sales side of AECL from the research part at Chalk River?

[Lisa Raitt, Conservative, Halton, ON]

As we indicated on May 28, what we've determined, based upon the advice that's been received from the AECL review team, based upon their input financially as well as talking to stakeholders, is that it makes the best sense for the corporation to be divided into two pieces: one taking a look at Chalk River and the R and D there, and the other side dealing with the aspects of marketing, and selling, and delivering on CANDU technology. We think that's really the best way to structure so that we can take advantage of the nuclear renaissance.

[Geoff Regan, Liberal, Halifax West, NS]

If I have time, let me turn to some of the issues that AECL has been facing.

There was $100 million included in this year's supplementary estimates for cost overruns at Bruce and Point Lepreau. Was that to cover off-balance-sheet liabilities, or has that figure been adjusted through the ongoing problems at Point Lepreau if it wasn't enough for the off-balance-sheet liabilities? If it's otherwise, what is the figure now? Won't the government be on the hook for the cost of Lepreau, regardless of whether it's AECL's problem or not?

[Lisa Raitt, Conservative, Halton, ON]

Atomic Energy Canada Limited expects to complete its part of the Point Lepreau refurbishment project about 16 months late. They're working with New Brunswick Power on the refurbishment process. We also expect they'll honour their obligations under the fixed-price contract that was entered into in 2005.

[Geoff Regan, Liberal, Halifax West, NS]

Okay, but that doesn't answer the question about whether it's $500 million. If AECL is worth about $300 million, is someone else going to assume the $500 million in off-balance-sheet liabilities? What's the intention in relation to that? Are the taxpayers on the hook?

[Lisa Raitt, Conservative, Halton, ON]

As I indicated in my opening comments, that's the difficulty with AECL right now. The government and the taxpayer are responsible for the front-end costs associated with their annual budgets, as well as any cost overruns, as we are experiencing currently with Point Lepreau.

[The Chair, Conservative, Leon Benoit]

Thank you.

Thank you, Mr. Regan.

We'll go now to the Bloc Québécois and Madame Brunelle for up to seven minutes.

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

Good afternoon, Minister.

Good afternoon, gentlemen.

To continue on the topic of AECL restructuring, I see in your presentation that you are looking at new management models. You referred to a government-owned, company-operated structure, for example, one possibility that you are taking a serious look at.

I would like to have a few more details on what you mean by that. Isn't that the kind of model that was adopted with MDS Nordion concerning isotope management? We saw that that model did not work very well because now the company is suing the government.

[Lisa Raitt, Conservative, Halton, ON]

I believe the honourable member is talking about the Chalk River labs side, which is the government-owned, company-operated model. It's a model used around the world--in the United States and the United Kingdom as well. It's looked at as a way to ensure there is focus, innovation, and excellence in the delivery.

It's also a way to ensure that they won't be looking just at CANDU reactors; they'll be doing research on all kinds of different R and D priorities in the nuclear field here in Canada. On the benefits associated with this management model, it will bring in private sector expertise and ensure it's being managed as best as possible and that we're unleashing the best aspects of our scientists for R and D.

It is a model that we're considering. Much work has been done by the department on it, but our current focus at Chalk River is really to ensure that the NRU is brought back into production as expeditiously as possible. That's the most important, pressing matter right now at Chalk River.

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

My comment was more general. I am concerned that what is most lucrative for companies working in the nuclear industry will go to the private sector and that what is the most costly, such as disposing of nuclear waste and all that, will remain a government responsibility.

More specifically, you referred to a renaissance in the nuclear sector. However, we get the sense that AECL is an isolated player on the global market of major companies. There is a great deal of criticism around the CANDU reactors. Are you not concerned that, by restructuring AECL, you will leave the door open for the CANDU market to be purchased abroad and that, in the end, it will be eliminated by international competitors and that this technology will leave Canada?

[Lisa Raitt, Conservative, Halton, ON]

Again, thank you very much for the question.

The CANDU reactor division.... As we indicated in the opening remarks, there will be a point in time when we need to build a great amount of nuclear reactors every year in order to deal with the reduction in GHG emissions that we're seeking in the world. That being said, only a handful of companies around the world can do that. The CANDU technology is a niche product, but it is a very much sought after product for certain countries. There is a good fit with certain countries in the world, and they continuously approach us. We have reactors working in Korea, in China, and of course here in Canada. As well, there is great interest from Ukraine, from Lithuania, and from other countries in Europe.

The main reason is because of the ability for it to work on unenriched uranium, which is of course of great importance, and because of the safety. Indeed, when I was at the IEA, the minister from Japan commented that the one thing about CANDU is that it has the highest rate of efficiency for power in the world, and it has a stellar reputation. We want to take advantage of that technology, and we believe there's a marketplace for it. What we're currently lacking are the tools and the skills and the abilities to sell that to the marketplace in the world.

What we want to do in the AECL restructuring is to actually become versed in what you indicate is the fear of what will happen. We want to build an industry; we want to preserve these jobs and make Canada a world leader on CANDU technology.

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

How much have Quebec and Canadian tax payers invested in AECL since it was created?

[Lisa Raitt, Conservative, Halton, ON]

It's $8 billion.

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

How much is AECL worth? How much will you sell it for?

[Lisa Raitt, Conservative, Halton, ON]

Currently, we are actually reviewing the appropriate way for the restructuring plan to happen. We don't have evaluation with respect to AECL. It really is a case, as Mr. Dupont indicated when he appeared before you, that the value will be determined by the market. The market will determine the value of it. An example of that, as I referred to as well in my opening remarks, is the intellectual property, the expertise, and the human capital that we have invested in AECL over the past number of years. The sheer knowledge there is of great market value. Until we understand from the market what that value is, we won't be able to have a number on it.

One of the three priorities for this government is to ensure that there's a fair return for taxpayers on their investment.

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

Some groups, such as Greenpeace, tell us that AECL is worth $300 million. What is your opinion on that?

[Lisa Raitt, Conservative, Halton, ON]

As I indicated, I think AECL is worth what the market will pay, and that's the true value of assessment. As Canadian taxpayers, we've made an $8 billion investment, and we have received much out of it. We are, as I indicated, a world leader in the CANDU technology, but it's time to take advantage of the next push for nuclear new builds in the world, and that's what we're positioning for.

What we're looking for isn't a wholesale sale of AECL/CANDU. What we're looking for are partners and expertise and capital infusion, making sure that the risk associated with new builds isn't too strenuous on the Canadian taxpayer and that we can take advantage.... To give you an example, AECL was not able to take part in the nuclear bidding processes in the United Kingdom because they simply did not have the capacity. That's a lost opportunity that Canadians should have been taking advantage of.

[The Chair, Conservative, Leon Benoit]

Thank you, Madame Brunelle.

We go now to Mr. Cullen from the New Democratic Party. Go ahead, please, for up to seven minutes.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Thanks, Chair, and welcome back, Minister.

I'll make you a deal. I'll try to keep my questions short, and the answers will hopefully correspond somewhat.

One quick question on the subsidy. Is the $8 billion in adjusted dollars or is that in figures that were applied at the time?

[Lisa Raitt, Conservative, Halton, ON]

I have to look to my officials for that.

[Tom Wallace, Director General, Electricity Resources Branch, Department of Natural Resources]

It was the figure at the time.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Okay. The only reason I raise that point is to caution the use of the amount that Canadian taxpayers have put in, because we rarely, in business or government, use dollar figures that are not adjusted to modern terms, to give people a proper sense of what the actual investment would mean in today's world.

A question about the Ontario move. I know this is not delicate, but it's a fine line to cross to suggest what Ontario should or shouldn't do. The Ontario government suspended its bid process. One of the things they came out with during that discussion was that they wanted a subsidy from Ottawa. They wanted Ottawa to come on and help subsidize the new builds that they were looking to have happen in Ontario. Does your government have any official policy on what a subsidy limit might be, or whether to subsidize at all in terms of builds for AECL?

[Lisa Raitt, Conservative, Halton, ON]

We've made the very clear decision that the procurement process is the appropriate place that we're competing in. We put in the price, along with answering the questions with respect to risk, as we were asked to do on the Ontario process.

They indicated two things: one, they wanted to know where we were going on restructuring; and two, they wanted to be able to have a conversation.

I have not had the conversation with Minister Smitherman about it. What we are doing is working on AECL's restructuring in order to give them assurance that we'll be in a better place to deliver on the contract.

The second part is that Ontario and the Government of Canada share a common interest, in that there are 30,000 jobs in southern Ontario in the nuclear industry. So it's a point of conversation for both of us, but they have suspended their process at this point. But we must continue with restructuring.