Natural Resources Committee on March 27th, 2012

[The Vice-Chair, NDP, Claude Gravelle]

I will call the meeting to order.

First of all, I'd like to welcome the minister and Mr. Dupont for being here today.

Pursuant to Standing Order 81(4), we are dealing with the main estimates for 2012-13, votes 1, 5, 10, 15, 20, 25, and 30, under Natural Resources, referred to the committee on February 28, 2012.

Minister Oliver, the floor is yours, sir.

[Joe Oliver, Conservative, Minister of Natural Resources]

Good morning and thank you.

Mr. Chair and members of the committee, thank you for the opportunity to meet with this committee. As a government, our number-one priority is jobs and economic growth.

We're concentrated on putting in place the economic fundamentals that will ensure Canada will prosper in the 21st century. We're lowering personal and corporate taxes, cutting red tape, investing in innovation, and promoting free trade.

It's not a coincidence that Forbes magazine ranked Canada as the best country in the world in which to do business, and we want to keep it that way. Both the IMF and the OECD predict that Canada's economic growth will be among the best this year and next in the G-7.

Canada's natural resources have underpinned Canada's strength, with energy, minerals, and forest products accounting for more than 10% of Canada's gross domestic product. Our natural resource sectors directly employ over 790,000 Canadians, generating economic activity right across the country, including in remote and aboriginal communities.

There is a tremendous new global opportunity for Canada to thrive economically if we make the right decisions today to capitalize on our resource development potential. Over the next ten years, we're looking at as much as $500 billion in new energy and mining investment in major projects across Canada. The investments in these sectors are not limited to major projects. There are also the day-to-day investments in new machinery, equipment and buildings. According to Statistics Canada, our natural resource sectors intend on spending $125 billion on new capital investments this year. This represents nearly one-third of the $400 billion in investment intentions across the broader economy.

Imagine what kind of investment that would mean for jobs and growth in our economy. Imagine what that investment would mean to generating billions of dollars in tax revenues, revenues that go to support health care, education, roads and bridges, and other important services and programs that give us the quality of life we enjoy in this great country.

But we cannot simply take those investments for granted. These companies have the opportunity to invest around the world. Without a strong investment-friendly atmosphere, they will simply take that capital elsewhere. We're going to have to compete for them, just like we're going to have to compete for global markets.

If we want to succeed, we have to get our outdated regulatory system right. The existing regulatory system was developed and added to over the course of many years without much consideration for the overall effect. The result is a tangled web of rules and procedures. We're reviewing literally thousands of small projects every year, projects that even the Canadian Environmental Assessment Agency says have virtually no impact on the environment.

This is a disincentive to investment that can cost Canadians good, well-paying jobs and jeopardize the economic viability of major projects. You need to keep in mind that the market for capital is as competitive as any market in the world.

Canada is not the only country that can provide the resources to growing economies in the Asia-Pacific region. For example, Australia is approximately the same distance from China and has a very similar economy to Canada. They have already taken action to tap the Chinese market and have progressed further down that road. If we want to get into this market, we need to move quickly or the opportunity will pass us by. I am confident that we can achieve a regulatory system that does its job to protect Canadians and the environment but, at the same time, supports Canada’s competitive advantage.

Mr. Chair, let me now turn to the proposed spending under review by this committee. Let me emphasize at the outset that when it comes to spending, our government will continue on the path of prudent fiscal management.

The $2.8 billion in proposed spending for 2012-13 in my department can be broken down into three major categories of expenditures: 40%, or $1.12 billion, is for statutory payments that flow to the provinces of Newfoundland and Labrador and Nova Scotia under the offshore accords; 32%, or $892 million, is for grants and contributions paid under different statutory or program authorities; and 28%, or $778 million, comprises the operating expenditures of the department, including salaries, contributions to employee benefit plans, and other operating and maintenance costs.

Through funding we receive from Parliament, Natural Resources Canada is able to make a significant difference in our energy, forestry, and mining sectors. We are building on an impressive track record in research and innovation across all our natural resource sectors.

For example, in energy we are investing $14 million in Aquistore, a carbon capture and storage demonstration project in Estevan, Saskatchewan. The Aquistore project, which I had the opportunity of visiting, will examine the potential for deep CO₂ storage in southeastern Saskatchewan. Canada is in an excellent position to lead the world in the development, implementation, and deployment of carbon capture and storage technology.

In forestry we've invested in the CelluForce facility in Windsor, Quebec, the world's first commercial-scale producer of nanocrystalline cellulose, or NCC, a company I also had the privilege of visiting.

Canada is becoming a global leader in transforming this organic material into a broad range of new industrial and consumer products. Our investments in research and development are also supporting the competitiveness of Canada's mining industry.

Our CANMET mining and mineral sciences labs have developed an enhanced leaching process for recovering precious metals. Companies using this new process have reportedly experienced productivity gains totalling $28 million.

We're also helping to unlock the vast potential of Canada's north. Natural Resources Canada is Canada's leading centre of expertise for receiving, managing, and interpreting remotely sensed data by satellites and aircraft. We're using remote sensing to help ensure the health, safety, and security of Canadians. For more than 50 years, the polar continental shelf program has been helping scientists to unlock the mysteries of Canada's north.

This program supports a wide variety of scientific research, ranging from archaeology and geosciences to climatology and wild life studies. Every year, it provides air and ground support to about 130 scientific groups from more than 40 government departments and universities—from across Canada and around the world. Researchers heading up to Canada's High Arctic know they can count on this program to provide reliable and cost-effective source of equipment, supplies, support and expert advice.

A $100 million GEM program, the geomapping for energy and mineral initiative, is about to enter its fourth field season. The program is modernizing geological methods and techniques to map Canada's northern resource potential. We've identified areas of high potential, not only for gold, but for nickel, platinum group elements, rare metals, base metals, and diamonds. GEM data is not just fuelling current exploration activity, it is laying a robust, modern foundation for years of future exploration, development, and land use planning.

These are only a few examples of concrete initiatives of the government to help make Canada a global leader in the responsible development and use of natural resources.

Mr. Chair and members of the committee, I have provided a brief overview to help set the context for our discussions.

Let me conclude by emphasizing that responsible resource development is vitally important to the continued health of Canada's economy.

Canada's abundant natural resources have an enormous potential to stimulate jobs and growth in a period of global economic uncertainty. The work of Natural Resources Canada and its portfolio agencies play a critical role in helping to unleash this potential.

I welcome your support in approving the proposed estimates, and I'm pleased to take your questions.

[The Chair, Conservative, Leon Benoit]

Thank you very much, Minister, for your comments in setting up this meeting. Thank you for appearing on such short notice and for the work you've done to date on helping to open markets to our natural resources, as well as for the work you've done to improve the regulatory process. Thank you for that in advance.

We'll get directly to questions and comments, starting with the government side, Mr. Allen, for up to seven minutes, please.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Thank you very much, Mr. Chair.

Minister, thank you for coming. Mr. Dupont, thank you for being here today.

I want to focus my questions specifically on the regulatory reform aspect of things. As you're aware, we've been doing a study on resource development in the north over the past little while. We have heard, and in your comments you indicate, that there are thousands of projects every year that the Environmental Assessment Agency says have virtually no impact on the environment. We've also heard from a number of witnesses in committee who talked about regulatory overlap and had concerns about the inefficiencies in the regulatory process. You've been making some statements over the past little while.

Could you comment in terms of what changes you believe need to be in the system in order to create that regulatory environment you've spoken about, which is competitive and attracts investment?

[Joe Oliver, Conservative, Eglinton—Lawrence, ON]

Thank you very much for that important question.

To ensure that responsible development of our natural resources proceeds as it should, Canada needs a modern, predictable, rigorous regulatory system. It's really crucial to our national prosperity, both in the short and the long term. Our government has already implemented a number of innovations to enhance the performance in the regulatory system for major projects. The major project management office has in fact halved the time needed for these projects on average. That's a first step, and there are others, but more must be done.

We need a system that is fair and independent, that considers different viewpoints, that is open to people who have a legitimate interest in participating, and that is based on science and facts. It must ensure that aboriginal groups are listened to, that we fulfill our constitutional obligations to consult, and that we engage the aboriginal communities in meaningful consultations and discussions.

The system should not take years and years to review a project. It's possible to make regulatory decisions in a reasonable amount of time without compromising the rigour or the standards of the process. We believe reviews for major projects can be accomplished in a more streamlined fashion. It isn't an either/or question.

Our ultimate goal is simple but not necessarily easy to achieve: one project, one review, in a clearly defined timeframe. We can achieve a regulatory system that protects Canadians and the environment while at the same time helping to ensure the future prosperity of Canadians across the country. We are immensely blessed with the resources that we have, and it's up to us to responsibly develop them.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

In your comments yesterday, Minister, you were talking about the single review, one review, process. You indicated that you felt confident that in some cases many provinces were a long way ahead in terms of undertaking that kind of review. I guess just as big a danger from the standpoint of having a lot of overlap would be the potential for a gap, to ensure that the federal government is supporting these processes.

You did bring up the project management office. I would like to ask, regarding the project management office, how do you perceive their role going forward? The reason I ask that question is because in some of the review we've done on resource development in the north, there was a significant difference between the operations of the major project management office and the northern project management office. There were some gaps up there. They didn't think the northern project management office, maybe, was functioning as well.

Could you comment about the project management office? How is that functioning now, and how, under a one-review process, will that be a key element in terms of the success of these reviews?

[Joe Oliver, Conservative, Eglinton—Lawrence, ON]

Thank you.

As you know, I don't have responsibility for northern development. The major projects management office, which brings together the responsible deputy ministers, in a very practical way focuses on these projects to make sure they're handled efficiently and effectively, without in any way undermining the regulatory integrity or the ability of the regulator to conduct a thorough scientific review. Those principles will, of course, continue under any changes that we propose going forward.

What we have talked about is defined timelines that are enforceable, that make sure that the projects don't go on forever but provide adequate time for consultation and scientific review. We expect that the major project management office will continue to play an important role within the more modernized structure.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Let's say you saw New Brunswick as being a good single point of entry for the review of a mining project. You would see the devolution of that responsibility to the province, yet the project management office would be the single point of entry to ensure that there were no gaps in the process. Is that kind of what...?

[Joe Oliver, Conservative, Eglinton—Lawrence, ON]

Right. What we can do, within our jurisdiction, is eliminate duplication so we don't have more than one federal regulatory body looking at the same project. That's the one project, one review, at the federal level. But as we know, the provinces have constitutional responsibility as well. Some projects they will be responsible for on their own—that's not our issue—and there will be some in which there will be overlapping jurisdiction. In that category, what we would like to see is an equivalency approach where either of the two, and certainly not necessarily the federal government, will take over the regulatory review. But no gaps would emerge from that because the review would be comprehensive. It's just a question of who would be doing it. If a province, such as Quebec or British Columbia, has that capability, they would have that opportunity.

[The Chair, Conservative, Leon Benoit]

Thank you, Minister. Thank you, Mr. Allen.

We go now to the official opposition, starting with Mr. Gravelle. If you leave some time for Mr. Stewart, then we'll go to Mr. Stewart.

[Claude Gravelle, NDP, Nickel Belt, ON]

Thank you, Mr. Chair.

Thank you, Mr. Minister, for being here. It's too bad there are only two days before the next budget. Hopefully, we'll see you again after the budget.

Mr. Minister, my first question is about your cheerleading, cross-country, pipeline promotion tour.

Do you really think it's legitimate to dismiss Canadians' concerns about 60-plus thousand long-term permanent jobs in fisheries and wilderness tourism, generating billions of dollars each year and sustaining coastal communities, as radical? This sort of ideological attack by a government on its citizens is nearly unprecedented in Canadian history and shows a complete lack of understanding of the concerns about livelihood and environment that many people are expressing through the review process. It gives the impression that the government has already made up its mind and would be willing to approve any pipeline that increases oil companies' profits, regardless of the impacts on the environment and livelihoods.

[Joe Oliver, Conservative, Eglinton—Lawrence, ON]

The first point I'd like to say—and I've said this repeatedly but there are those who don't want to hear it—is that I have never characterized all environmental groups as radical. I have only said that there are some radical groups—and there are—that do not want any development whatsoever. They will deny they are against all development, but they oppose every development. So it pretty well comes to the same thing.

I've not—

[Claude Gravelle, NDP, Nickel Belt, ON]

Could you name some of these groups?

[Joe Oliver, Conservative, Eglinton—Lawrence, ON]

I've not characterized all groups as radical, and I don't believe that's the case. I don't even think that's the case.

[Claude Gravelle, NDP, Nickel Belt, ON]

Could you name some of these radical groups?

[The Chair, Conservative, Leon Benoit]

No, Mr. Gravelle, as you know, at this committee we give.... When you asked the question, the minister clearly hadn't finished answering your question. Just give him some time to answer. If you feel he's dragging it out, then you can interject. Let's allow the minister a chance to answer.

Please continue with your answer, Minister.

[Joe Oliver, Conservative, Eglinton—Lawrence, ON]

We know that there's immense potential in the oil sands for generating employment and economic activity. In fact, if all the infrastructure needed to be built is built, over the next 25 years the oil sands can produce $3.3 trillion in economic activity, over 700,000 jobs on an annual basis on average in Canada—

[Claude Gravelle, NDP, Nickel Belt, ON]

Thank you, Mr. Minister. I only have a couple of minutes here.

[Joe Oliver, Conservative, Eglinton—Lawrence, ON]

—and tens, maybe hundreds of billions of dollars in government revenue to fund important social programs like health care, housing, education, and pensions.

[Claude Gravelle, NDP, Nickel Belt, ON]

Thank you, Mr. Minister.

I hope, Mr. Chair, you're not counting this interruption in my time.

[The Chair, Conservative, Leon Benoit]

Go ahead, please, Mr. Gravelle.

[Claude Gravelle, NDP, Nickel Belt, ON]

Mr. Minister, two weeks ago a delegation of B.C. first nations leaders came to Ottawa to share their concerns about the Northern Gateway pipeline and tanker project. They were refused meetings by all but the parliamentary secretary for fisheries, yet you meet regularly with oil companies.

Is your government so firmly beholden to the oil patch that you won't even bother listening to concerns?

[Joe Oliver, Conservative, Eglinton—Lawrence, ON]

I had the opportunity to meet with some of the chiefs at the crown-first nations meeting here in Ottawa. I've subsequently had meetings with chiefs in Vancouver and Winnipeg. I have been interviewed on aboriginal TV. I've had excellent, productive, constructive, respectful, equal conversations with aboriginal communities. I intend to continue to do that, because that's my responsibility.

[Claude Gravelle, NDP, Nickel Belt, ON]

Thank you, Mr. Minister. My time is up.

[The Chair, Conservative, Leon Benoit]

Mr. Stewart, you have about three minutes.