Natural Resources Committee on Dec. 4th, 2012

[The Chair, Conservative, Leon Benoit]

Good morning, everyone.

We're here today, pursuant to Standing Order 81(5), to deal with the supplementary estimates (B) for 2012-13. We're dealing with votes lb, 5b, l0b, 15b, 20b, 25b, and 30b under Natural Resources, referred to the committee on Thursday, November 8, 2012.

We have two one-hour sessions today. In the first hour we have witnesses from the Department of Natural Resources, and in the second hour we have the Minister of Natural Resources.

Starting the first hour, we have from the Department of Natural Resources, Serge Dupont, the deputy minister; Anil Arora, acting assistant deputy minister, corporate management and services sector; and Thérèse Roy, director general, financial management branch, corporate management and services sector.

I welcome all three to the meeting.

Monsieur Dupont, I understand you have a presentation to make first and then we'll get to our usual question and comment session. Please go ahead with your presentation.

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

Chairman, members of the committee, I welcome your invitation to present Supplementary Estimates (B) for 2012-13 for Natural Resources Canada. I will keep my remarks brief and would be pleased to respond to any questions that you may have.

As members are aware, Natural Resources Canada outlined 2012-13 expenditures of just over $2.85 billion in the main estimates presented earlier this year. The main estimates still reflect the department's budgetary needs, with the exception of a supplementary request for additional net funding in supplementary estimates (B) of $1.2 million. A number of transfers are also proposed under these estimates.

The supplementary estimates presented today include the following items, most of which were announced in budget 2012: $54.2 million in funding to support the Canadian forest sector by expanding market opportunities and promoting innovation; $7.7 million to revitalize NRCan's three satellite receiving stations; $6.9 million to advance the development of alternatives to existing medical isotope production technologies; $4 million for a Government of Canada advertising campaign explaining the contribution to Canada of our natural resource industries; and $2.5 million to assist Natural Resources Canada with the restructuring of our corporate support groups. As a result of these amounts, NRCan will have an increase in its voted appropriation of $75.2 million. I'll set aside, in the interests of time, some of the smaller amount transfers.

Mr. Chair, these amounts are largely offset by the re-profiling of $40.3 million of previously authorized monies under the clean energy fund and from $34.9 million in savings identified as part of budget 2012 savings measures. The net increase in the department's spending authority is therefore $1.2 million, as I mentioned.

I will mention briefly the proposed funding for the Natural Resources portfolio agencies. The supplementary estimates (B) requests for them are as follows: $77 million for Atomic Energy of Canada Limited; $8.6 million for the Canadian Nuclear Safety Commission; and $5.9 million for the National Energy Board.

The AECL request will allow the agency to meet operational requirements for its nuclear laboratories for the remainder of the year. These operational expenditures are consistent with AECL's overall budgetary plans for 2012-13, so they are not a function of any cost overrun.

Finally, let me elaborate briefly on NRCan's savings measures as announced in budget 2012. As reflected in the economic action plan 2012, NRCan's contribution to the government's deficit reduction objectives is $112 million annually by 2014-15, or 10% of the department's review base.

It is worth putting this budget 2012 reduction into the broader context under which NRCan is now operating. After increases to its budget over the last few years, largely in response to the economic downturn of 2008, NRCan is returning to a smaller budget. Our budget doubled between 2008-09 and 2010-11, as we were called upon to deliver on government priorities, including a suite of one-time economic action plan investments.

Change and transformation have been constant themes in NRCan's history, encompassing what we do and how we do it, and we stand ready to support future government initiatives.

Mr. Chair, members of the committee, I would conclude by assuring you that NRCan manages its funds prudently with the goal of contributing to the prosperity of Canada.

Thank you.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Dupont.

We'll go now to the seven-minute round of questions and answers.

For the information of members, this meeting will be divided into two parts. We'll start with a seven-minute round for each meeting, and each party can handle it as they wish.

We start the questioning and comments with Mr. Anderson, for up to seven minutes.

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

Thank you, Mr. Chair.

I want to thank the witnesses for coming once again.

I'd like to talk for a few minutes about some of the nuclear issues. In your opening remarks I think you mentioned that $77 million is committed to AECL. What's that being spent on, and what impact is that going to have?

[Serge Dupont]

Essentially, the funding is there to allow the nuclear laboratories to conduct their work, in terms of the production of medical isotopes, the management of the site at Chalk River, and the conduct of research that is taking place at that site. This is largely in line with the requirements that were set out by AECL at the beginning of the year. Therefore, contrary to prior years, whereby in some cases this committee and others were essentially facing funding requirements to address cost overruns, this is very much in line with planning and is the required amount to meet the regulatory and operational requirements of the Chalk River laboratories.

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

Okay. Some of us have been on the committee a little longer than others, and we've come through a couple of discussions about isotope production. I would like to have you take a few minutes, if you don't mind, to talk about the isotope technology acceleration program. We've got two or three streams in the process. I'm wondering if you can tell us a little more about where that's going, how that's developing, and where we sit with that.

[Serge Dupont]

I will do that gladly.

You may recall in budget 2010 the government provided an investment of $35 million over two years to try to develop non-reactor-based sources of medical isotopes for Canadians. That funding supported four projects: two cyclotron and two linear accelerator projects. They're two different technologies, cyclotron and accelerator, both in the nuclear technology world, but none are reactor based, and indeed both technologies would not create the kind of high-level radioactive waste that there is with the existing sorts of medical isotope supply.

Those projects advanced the science, advanced the technologies, and budget 2012 then announced a further investment, $17 million over two years, to be awarded on a competitive basis, to try to bring these technologies to the point of commercialization. As you know, the government has been clear about its goal to phase out production of medical isotopes at the Chalk River site by 2016. That is not an economic proposition for Canada, and it's not a good use of facilities over time. New technologies that can provide the services and the medical isotopes for Canadians may come from some of these technologies that can be distributed across Canada on a smaller scale, closer to the patients, closer to the needs.

We're very encouraged by the response we had to the request for proposal that we issued in June 2012, and quite encouraged by the prospect of having some solid proposals to bring these technologies, if not to market, very close to market, within the timeframe.

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

Are you able to give us any more information about the four choices that were made?

[Serge Dupont]

Mr. Chair, we are expecting to announce the name of the recipients of the contributions in January. That is when we will have tied down the negotiation of the contribution agreements. I think it's fair to expect that we will again be encouraging research into two competing technologies, the cyclotron and the accelerators, and ensuring at the end of the day that either both technologies find a role or that the best of the two technologies succeeds in making it to market.

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

Did you have any comment to make about some of the things that are going on in the United States in terms of this as well? They seem to have decided to put some fairly large resources into this at the same time that we have.

[Serge Dupont]

The U.S. has been putting some significant resources into this, greater amounts than we have, but I'm not sure they have had the kind of successes that we have had to date in terms of bringing together different partners from the medical research community, from industry, from research centres such as TRIUMF and others to work together to find those solutions. They're struggling in the U.S. right now. They're looking at other technologies. Some would be more expensive; some would be larger scale. We're not unhappy with where we are right now, frankly.

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

In terms of the funding—I don't know what percentage—how much of it has gone towards setting up that collaborative structure and how much of it is actually geared toward the research projects themselves? The money which to this point has been spent on bringing people together and trying to get them working together, can you explain that a bit more as well?

[Serge Dupont]

In the first instance, some of the money was going to some of the research infrastructure, to pay for the cyclotron and the accelerators, but basically there has been very little overhead money here. The money has been largely allocated to the partners. Each of the proposals has come in with different partners, again, from academia, from the research community, from industry. They're bringing in their own resources as well.

In the second stage, we're saying that we're not going to fund infrastructure this time because that infrastructure is there and there is equipment out there to work from, but we will fund some of the other costs, some of the testing and so forth. There's a series of costs that we're prepared to fund. Again, we're very confident that those moneys can be used productively.

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

I think I'm getting close to the end of my time, but I see an item in here about revitalizing Natural Resources' satellite station facilities. I'm wondering if you'd be interested in explaining to us what that means and how we're involved in a number of different things in terms of geomapping, satellite management, and all of that. Can you talk about that a bit?

[Serge Dupont]

As members will appreciate, earth observation essentially is a growing field that can serve a range of public policy purposes and, indeed, a range of private sector purposes as well. It is important in that context both to have the devices in space to signal back to the earth and to have the receiving stations on the ground, in order to be able to capture the images from the satellites, process them, and make them available to the users.

We have antenna facilities right now in the north, in Inuvik, and in Prince Albert, Saskatchewan, and here in Gatineau. We needed to revitalize these facilities and basically buy new antennas because they were coming to the end of their lives, and they were not equipped to capture the signals from the new generation of satellites that will be launched by Canada—the new RADARSAT Constellation mission—or other satellites that will be launched from other nations. This is going to give us not only the dish, but also the infrastructure that is required, the software to convert those signals into usable information and then to disseminate it under a very open system of dissemination that we're fostering at Natural Resources Canada and in partnership with many other departments in town.

[The Chair, Conservative, Leon Benoit]

Thank you very much, Mr. Anderson.

We'll go now to Mr. Julian, for up to seven minutes.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Thank you very much, Mr. Chair.

Thanks to our witnesses.

I am very interested in this transfer to Atomic Energy of Canada. Can you remind us of how much money taxpayers received from the government sale of Atomic Energy?

[Serge Dupont]

The actual sale amount was $15 million, Mr. Chair—

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Okay.

[Serge Dupont]

—with as well some royalties for future sales of reactors from Candu Energy, and also some royalties from some of the refurbishment work that they would be willing and able, of course, to carry out.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Okay. Thank you.

On the $15 million, what was the value of the assets that the government sold for $15 million?

[Serge Dupont]

The value of the assets—I mean, the books of AECL at the time—I don't have those numbers in front of me. It would have been very difficult to ascribe a value to the assets. The books at the time actually had AECL in a deficit position, given overall the kinds of liabilities that had been accumulated over time.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Yes, but I'm speaking of the assets, right? What was the asset figure?

[Serge Dupont]

Essentially, the asset that was sold was, frankly, fundamentally human resources. There was—

[Peter Julian, NDP, Burnaby—New Westminster, BC]

No, I appreciate that, but you did say.... You mentioned the liabilities, so you obviously saw or were aware of the accounts. I'm wondering whether you have the asset figure, and if you don't have it—