Natural Resources Committee on May 5th, 2015

[Geoff Regan, Liberal, Halifax West, NS]

Mr. Chair, my question was far shorter than both of the minister's answers so far. I think I should have the opportunity to pose the question. The fact is the answer is—he had it in front of him—that in 2013-14 the government spent $65.5 million on protection for Canadians and natural resources. This years it's proposing to spend only $58.7 million. That's a cut.

Why is the department slashing the funding to protect Canadians by almost $7 million this year?

[The Chair, Conservative, Leon Benoit]

Mr. Regan, if you would give the minister a chance to answer the question. I agree with you that if you feel that he's given the answer that you've expected and you want to continue—

[Geoff Regan, Liberal, Halifax West, NS]

I don't think he was addressing the question, Mr. Chair, and I only have seven minutes.

[The Chair, Conservative, Leon Benoit]

—in that case you can certainly feel free to gently interrupt, as Monsieur Caron did. But do give the minister some opportunity to answer the question.

[Greg Rickford, Conservative, Kenora, ON]

It's okay. I'm used to rapid fire from this particular member.

I can tell you there has been no compromise of the safety. I would turn his attention to a piece of legislation recently that appears to have had unanimous support at this point in time around pipeline safety, for example. I just reviewed earthquake monitoring. Pipeline safety legislation, and the resources required to support it, build on a record of 99.999% safety over more than 72,000 kilometres of federally regulated pipeline.

Obviously, what we're focused on first and foremost is safety and it will not be compromised. No resource project or infrastructure project required to support natural resources will be compromised in terms of safety. This would include the resources that cover the entire process of developing resources responsibly from the environmental assessment process itself and the National Energy Board's important work, to compliance for profound safety reasons around marine, rail, and pipelines that give and meet that public confidence test around safety prevention preparedness response and world-class liabilities, based on the polluter pays principle.

[Geoff Regan, Liberal, Halifax West, NS]

Minister, the 2015-16 estimates in total are $2.2 billion for the department versus $2.5 billion a year ago, even though you're spending tens of millions extra for things like the Port Hope initiative or mapping the Arctic Ocean. We don't opposed those initiatives, but the point is that you seem to have found this extra cash by gutting the NextGen biofuels fund, with the decrease of $110 million. You've gutted the clean energy fund, wind power, eco-energy, stakeholder engagement, and outreach. Why are you cutting biofuels, clean energy, or eco-energy?

[Greg Rickford, Conservative, Kenora, ON]

First of all, we've made unprecedented investments that help create a Canadian biofuels industry through capital and operating incentives for domestic production, regulations for renewable content, and support for construction of first-of-kind next generation biofuel facilities.

You might remember that in 2008 we announced $1.5 billion over nine years for the eco-energy initiative for the biofuels program to provide incentives for producers of renewable fuels. That, obviously, is set to expire in 2017. To date, I can tell you that this program has contributed more than $901 million to biofuel producers, 63% of the total contribution funds, in order to encourage domestic production of renewable fuels to meet the demand associated with Environment Canada's regulation. This program is expected to invest almost $1 billion by 2017.

Declining funding to this program is due to the funding profile for each of the programs as they wind down and obviously projects near completion.

[Geoff Regan, Liberal, Halifax West, NS]

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

[Greg Rickford, Conservative, Kenora, ON]

Obviously, we're very proud of the accomplishments of Chalk River in representing Canada's nuclear position the world over. There is a transition taking place at AECL. Funding for this will ensure safe and reliable operations at the Chalk River Laboratories and will include nuclear science and technology and supporting infrastructure.

Obviously, the decommissioning of the NRU still represents an opportunity for medical isotopes to be produced by alternative means, but the ability of the NRU to produce, in particular medical isotopes, on a contingency basis past 2016 is in place. I might add that this has been very well received by experts in the nuclear sector.

Chalk River remains in its aggregate a dynamic and robust place where important nuclear science, technology, and innovation is taking place. We believe that moving forward with a GoCo, which is consistent with our partners at least in the United States and England, will continue to put Canada at or near the top of all of the nuclear science technology.

[Geoff Regan, Liberal, Halifax West, NS]

I think it's a yes. I think that's a yes.

[The Chair, Conservative, Leon Benoit]

Thank you, Minister.

Thank you, Mr. Regan.

We go now to Ms. Crockatt, followed by Mr. Trost, and then a member from the official opposition.

Go ahead, please, Ms. Crockatt, for up to five minutes.

[Joan Crockatt, Conservative, Calgary Centre, AB]

Thank you.

Thank you very much, Mr. Minister, and thanks for being here today.

I want to say that I particularly appreciated your championship of a balanced budget in 2015. That is something that will help the entire resource sector and Canadians by keeping their taxes low and something that's the number one priority for my constituents in Calgary Centre. I wanted to mention that.

I have to say that maybe “elated” is too much of a strong word, but they are certainly relieved that we have a balanced budget, given that oil prices are now about $60 a barrel. They also are appreciative of your incisive leadership on both energy and the environment. One of the examples that I had cited to me was the $80 million that we have announced over five years for environmental protection.

I want to ask you, in light of the $60 a barrel WTI right now, my constituents are really interested in our being able to take advantage of export opportunities, particularly in the clean LNG sector.

You started to answer the question, but I believe you were cut off across the way, so I would like to hear from you exactly what that tax break looks like, how it could be used, and why, please.

[Greg Rickford, Conservative, Kenora, ON]

Thank you for that question.

First of all, I don't profess to be an expert on oil prices. For the federal government's purposes, we're more interested in the prudent approach to any potential revenue, in particular from oil over the course of 25 to 40 years, and its average cost, as opposed to the highs and lows. Obviously the current volatility reminds us of a much broader situation of a fragile economic environment the world over, but when it comes to oil prices, the responsible thing is to take an average cost over a longer period of time.

With respect to production, as I said in my opening remarks this continues to increase, both for the United States and for Canada. I would add that Canada in particular is increasing its production and export to Europe. The fuel quality directive obviously took us a step closer to that. Oil sands crude now sits with the light and sweet crudes that Europe currently permits. We're marching towards 5% of the crude oil supply to Italy.

Our transportation of crude oil is obviously going by pipeline, rail, and marine transportation. I think the most important thing we can do right now is to ensure as a matter of public confidence that when it comes to these three important transportation pieces of infrastructure, as they relate to reaching the markets that your constituents are thinking about and want, that safety, prevention, preparedness, response, and world-class liability based on the polluter pays principle are the bedrock of moving forward on any options for export of Canadian crude.

[Joan Crockatt, Conservative, Calgary Centre, AB]

If I could switch to the mining industry now, in economic action plan 2015, there is a commitment by the government to extend the 15% mineral exploration tax credit for flow-through share investors. I'm wondering if you can tell us exactly what that is and highlight what importance this has to the mining sector.

[Greg Rickford, Conservative, Kenora, ON]

In the extractive sector, you have oil and gas, and then mining. Within mining, you obviously have the exploration side and the extraction side. I think the key challenges right now are on the exploration side. The focus ought to be—and I believe that budget 2015 strives for that—to extend the mineral exploration tax credit to 15% flow-through to support junior mining companies in raising capital to finance exploration activities. It's been terrifically successful and it needed to be extended.

Another important piece, certainly speaking as the member of Parliament for the great Kenora riding and the interests across northern Ontario, is that outside of some world-class, scale-yielding mines, we also have a number of smaller extractive opportunities that have arisen out of good policy related to exploration. Atikokan and Rainy River come to mind, and there are others. Importantly, what we heard from those stakeholders was to examine the Canadian exploration expenses for tax purposes.

Obviously within the extractive sector as a whole, environmental processes are rightly a more prominent part of the process in obtaining permitting for exploration and for extraction, and community consultations. To that end, the expansion of this definition is focused squarely on exploration activities, and effective this tax year, there will be a full deduction on the costs associated with any environmental processes or community consultation processes required as part of getting a permit to carry on exploration activities.

[Joan Crockatt, Conservative, Calgary Centre, AB]

Good. Thank you, Minister.

[The Chair, Conservative, Leon Benoit]

Thank you, Ms. Crockatt.

Go ahead, please, Mr. Trost, for up to five minutes.

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

Thank you, Mr. Chair.

Mr. Minister, I don't think it's a surprise, knowing my previous profession, where my questions are going to go.

For the geo-mapping for energy and minerals program, renewed in August 2013, this year there's been an increase in spending for the program. I wonder if you could give an idea of how the program fits into what the government's doing for its resource development strategy and any details as to why the increase.

[Greg Rickford, Conservative, Kenora, ON]

Thank you for that question. It builds on the previous responses that I've given in identifying what would be the most responsible and strategic investments for the mining sector at this critical juncture. Obviously, exploration is a key part of this. I mentioned the mineral exploration tax credit and the expanded definition of “exploration”, but the conversation around exploration is incomplete without talking about geo-mapping.

I know your background and I've appreciated your insights and counsel in this regard. It's designed to set the stage for long-term investment in what I often call legacy resource development, particularly in Canada's north, to guide the research activities. The geo-mapping program engages extensively with provincial and territorial partners.

There are 14 research activities launched last year alone that were shaped by important consultations, stimulating investment in exploration. The geoscience knowledge produced by geo-mapping for energy and minerals, or GEM, gives northern communities and investors valuable information to make informed decisions about the viability of a site. Frankly, it indicates the best locations to advance the extractive activity, obviously, for the benefit of the market and the speculation that goes on around commodities, particularly in mining, to give investors confidence of the scope, if you will, of a particular resource deposit, and obviously the justification for its mapping, for exploring it further, and in certain instances moving on to the extractive exercise.

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

Following up on that, the 2015 budget proposed $22 million over five years specifically for the targeted geoscience initiative. Looking specifically at what you've been hearing from stakeholders, from industry, from universities, and from researchers who have been involved in that project, what is the feedback you've been getting in response to that initiative?

[Greg Rickford, Conservative, Kenora, ON]

The proposition, if you will, the opportunity that they presented and what I think this program addresses, is to explore deeper mineral deposits, and in some cases to understand better the extent or scope of an existing deposit where there may be extraction activity.

What we heard, Mr. Chair, was that the the targeted geoscience initiative 4—its acronym is TGI-4—is helping global competitiveness, but the industry is telling us that the innovative tools and techniques developed by the program have resulted from specific innovations in this more targeted geoscience initiative. So far, I can tell you that 45 TGI-4 innovations have in fact been adopted by industry within their mineral exploration program.

By any standard, it's a great return on an investment and obviously significant advancements in the more targeted exercise of the geoscience initiative.

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

I only have 30 seconds, but to follow up with both of those questions, this is always a tough one, because in mineral exploration there is such a long timeline before you get mines or development. But what are some of the measurable outcomes from what NRCan does with their geology and their geophysics program? It's difficult, but what measurable outcomes can you give us?

[Greg Rickford, Conservative, Kenora, ON]

We obviously engage in a number of different activities. They range importantly from completions of things like a 597,000-square kilometre regional geophysical survey; publications of bedrock and surficial maps covering more than 490,000 square kilometres; the release of more than 840 open files on the NRCan website resulting in a nearly 40-fold increase in the rate of client downloads; and delivery of more than 800 technical information sessions to representatives from industry, government, and non-governmental organizations.

I can tell that you in 2011-12 alone, GEM results accounted for more than 30% of the presentations given at three major geoscience forums in the north, reaching more than 2,000 key players.

[The Chair, Conservative, Leon Benoit]

Minister, I'm going to have to get you to end your remarks very quickly if you could.

[Greg Rickford, Conservative, Kenora, ON]

I can stop there, but there are several other examples.