Natural Resources Committee on May 5th, 2015

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

Thank you, Mr. Chair.

I'll follow up with a very similar question, basically the same question I asked the minister. His answer was a good answer but I'm looking for an answer in a slightly different sense.

I asked before about the targeted geoscience initiative and I've asked before about the GEM program, $22 million over five years etc., the spending. Since I've worked in the field I do understand how difficult this is to evaluate. What I'm trying to figure out is this. How do we figure out our bang for our buck when we do programs like this, the targeted geoscience initiative, thematic programming, when we do mapping? I realize the length of time, believe me. Better than anyone else on this committee, I realize how long it takes to do. I realize why you have to do it as far as infrastructure goes, but when we look at the number and it's $22 million, we're supposed to consider whether that number should go up, go down, or stay where it is. How does the department figure out that we are getting this much return on investment x number of years in the future? How do they do that?

I mean, the minister quite accurately listed the papers, the geophysical surveys, all the research. I know the industry. PDAC loves the program, etc., but in the end it's not only about what you get out for papers, it's how much exploration money is invested in the country by the private sector, and really long-term down the line, how many mines are produced in the country.

It's very complex. I get that. But is there some way that the department tries to evaluate that from a really long-term perspective and say these $5 million a year really pay off in multiples because of x, y, and z?

[Bob Hamilton]

Let me take that at a couple of levels. As you said, those two programs.... You can think of them together, one of which is trying to tell us where the deposits are that we don't really know about now, a kind of public science aspect. That's important work that the industry then builds upon and goes out and makes the finds. The second, and the targeted geoscience initiative is one, tries to take existing activities and see if we can go deeper, get more efficiency, get more extraction out of the mine.

You raise the point about how we evaluate these. Take the targeted geoscience for example. When we have a program like that, which sunsets and is due to end, we go through a pretty rigorous evaluation in which we go and talk to the people in the program. We talk to stakeholders and say, “What is this doing for you, what's the result, what's the outcome of this?”

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

Can they quantify that rather than just in a general sense?

[Bob Hamilton]

In some cases, yes, but you've certainly said it. It's difficult sometimes to draw the link between the activity you're funding and the concrete outcome at the end. I'll give you a couple of examples in a second where I can. You can't always do that because of the timeframes involved, and as with basic research, there are often a few meanders along the way before you get to the final result, but we do go through as rigorous an exercise as we can to try to find out the outcomes and how the program performed. Should we renew it, should we change it, or should we just keep it the same? That would really be for all of the programs that are sunsetting. If I take the geo-mapping as an example, in addition to what the minister had quoted that are, as you said, examples of surveys, new maps, and data, one of the studies that has been done suggested that—and again I can't claim this to be absolutely rock solid, but it's the best estimate we have—for every $100 million of investment we put into the GEM program, it results in upwards of $500 million in exploration investment.

That's the kind of statistic we have. We're always probing on those to make sure that we are sure they are solid and robust, but that's the kind of thing we look for—how much activity this program actually generated in addition to the other things that, as you mentioned, are positive, but sometimes harder to quantify.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

I do appreciate that. Following up in that sense as well, how are they sometimes decided, the expenditures between mapping versus new technology development? In the field of geophysics, a lot of the technologies that we have and use came out as sheer coincidence, such as World War II weapons exploration at the University of Toronto and places like that. When the department sits down and says, “We're going to put money in geosciences, mapping versus technology”, how is that conversation held as far as, “Hey, we should maybe spend some more money on geophysical research versus mapping“? The 5:1 ratio was very useful, but is there some thinking about what we should do about geoscience technology, particularly for the hard-rock mineral industry?

[Bob Hamilton]

I think again it goes back to our evaluations where we talk to the users of the program, other experts who are out there, and ask, “Given what we have in Canada now, and given whatever is the appropriate split between public science and private science, how are we doing, how are people finding the program, do they think it's helpful?“ One of the questions on the evaluation would be, “Are you using the information that's coming out of the program?” We use that, in addition to a number of other things, to tell us whether we should enhance this program, take it down, or put more emphasis over on the other side.

It really is a question of our own analytics. We try to figure out where the biggest bang for the buck is, but we also talk to people who know about it on the outside, and the people who use these programs to see if they think we have the balance right. At the end of the day, I don't think there's any precise right answer we can pinpoint, but we use it to guide us as we take policy decisions about where we put each additional dollar. That's really the process that we follow when we try to be as rigorous as we can about it.

[The Chair, Conservative, Leon Benoit]

Thank you.

Thank you, Mr. Trost.

We go now to Ms. Charlton, followed by Mr. Regan, and then Ms. Block, and if there are no other questioners after that, we'll go to the votes on the main estimates.

Go ahead, please.

[Chris Charlton, NDP, Hamilton Mountain, ON]

Thank you very much, Mr. Chair.

I was going to go in a bit of a different direction, but I want to follow up on Ms. Crockatt's comments about SDTC. She was lauding the program, yet, when I look at the estimates, I see a decrease of $110.8 million and an additional decrease of $99 million for the biofuels producer incentive program. Noting that money has been taken from SDTC for biofuels, if the next generation biofuels fund wasn't working, why didn't that money get invested somewhere else in another part of the clean-tech sector?

[Bob Hamilton]

I think I alluded to that in my comments. In that particular area, the next generation biofuels, we just found that the growth in the sector wasn't fast enough to really support the kinds of projects that needed that money. The money was taken. In a lot of cases, it was given back to the fiscal framework, and then can be reallocated elsewhere, depending on the government's priorities.

[Chris Charlton, NDP, Hamilton Mountain, ON]

But we're not seeing a growth in any other parts of the clean-tech sector in the estimates, right? So that money for the purposes of clean tech anyway is kind of lost.

[Bob Hamilton]

The one thing I would say—and it goes to the earlier point we raised—is that when you look at the programs in the clean-tech area—and we talked about energy efficiency and innovation—two things are happening. Those programs have a natural cycle to them. You see them being at one level for a number of years, and then toward the end they typically tail off a bit as they're going to sunset. So we're seeing that, actually, in a couple of those programs.

The second thing is that they're coming to the end of their sunsetting period. We're going to have to go through an evaluation, and the government will have to decide whether it wants to renew them. We don't know if it's going to be at a higher rate or a lower rate or the same rate.

What you're seeing right now, in this snapshot we have this year, are programs that are in place. They might be reducing spending, but that's the way they were designed so you see a little bit of that.

You also see that in out-years, and this goes to the question that was raised earlier. The funding can just drop off, if you look at the reports on plans and priorities. In fact, it might; they might be totally eliminated. But the more likely scenario is that they are renewed, perhaps in a modified form, at some level—either a bit lower, a bit higher, or the same.

Anyway, I just want to clarify that when we talk about the funding for clean energy programs and what the estimates are telling us, we just have to keep those two things in mind.

On the biofuels, yes, the money was returned to the consolidated revenue fund, and it finds its way into...wherever. It might go into research in one area; it might end up finding its way into the renewal of some of these clean energy programs. We don't have those decisions yet.

[Chris Charlton, NDP, Hamilton Mountain, ON]

That's fair enough, and it's not really a fair question to you. I didn't get a chance to ask that of the minister.

Let me go to the set of questions I wanted to ask you originally, which relates to the new funding for the NEB.

Do you have a sense of what the NEB will be spending that money on? Is it going to be on inspections, or is it going to be on things like advertising and education, enforcement of regulations, or consultations? Internal services at the NEB are cut, but what services are being cut?

Do you have any sense of what's happening at the NEB?

[Bob Hamilton]

Yes, but probably not as deep a sense as Peter Watson, who heads it up, who will ultimately be determining precisely where they spend their money. But I know that in the context of the additional money they did receive, it will be for compliance and oversight, activities they can undertake to make sure that the system is safe and secure. I know from talking to Peter that this will be one area of emphasis for him.

Another area of emphasis, probably with less money in proportionate terms, will be engagement with communities and just making sure that people understand what the NEB is doing. He's going across the country right now to try to explain to people and to try to build that dialogue between the NEB and communities about what they're doing. So there will be a small amount of money that will be there for that engagement.

But my sense is that it's really to make the organization stronger to make sure they can do the compliance and the oversight that they're charged with and responsible for. In previous measures there were additional powers they were given for verification and audit, and I know he'll have to make sure he has adequate resources for those as well.

There may be something more that he could provide you in terms of specifically where he'll put the money, but those are the general directions that I'm aware of from the NEB.

[Chris Charlton, NDP, Hamilton Mountain, ON]

I should probably know this, but I'm sorry, I don't. If it's for oversight and compliance, are there strings attached to the money, then, that it has to go to oversight and compliance, or is that what you're hoping it will go to based on conversations and understandings?

I'm sorry, I just don't know the relationship well enough.

[Bob Hamilton]

I doubt that there would be any formal strings, but certainly, in constructing a case for the dollars that they would like, they would put their case forward, and those would be some of the things they would have flagged.

[Chris Charlton, NDP, Hamilton Mountain, ON]

But it could go to advertising.

[Bob Hamilton]

I don't know if Kami knows. I'm not sure if they would have the flexibility within their powers to redirect it totally in that area. In any event, they regularly publish their documents that say how they spend their money, and they'll have to be accountable for that.

I can check whether there are any specific strings on that, but typically there would be an expectation of what they would spend their money on, and they would be held accountable through the normal reporting processes.

[The Chair, Conservative, Leon Benoit]

Mr. Regan, go ahead.

[Geoff Regan, Liberal, Halifax West, NS]

Thank you, Mr. Chairman.

Thanks very much for being here.

I mentioned earlier that budget 2015 provides up to $72.3 million this fiscal year to AECL to maintain safe operations at the Chalk River labs. Is any of that funding earmarked to have the NRU licensed beyond 2016?

[Bob Hamilton]

I don't believe that any of that money is for....

That's money for 2015-16. It's in our estimates, basically, to allow AECL to keep operating. Whatever moneys they need for operations beyond 2015-16 would be in the future main estimates.

[Geoff Regan, Liberal, Halifax West, NS]

Does the licence expire in 2016? Do you know at what point it expires?

[Bob Hamilton]

I believe it's 2016, and they will have to go forward for another licence application to the regulator.

[Geoff Regan, Liberal, Halifax West, NS]

Clearly you would go forward before the expiry of the licence.

[Bob Hamilton]

Yes.

[Geoff Regan, Liberal, Halifax West, NS]

But there's no funding before April 1, 2016 to do that, it would appear.