Mr. Speaker, it is a pleasure for me to rise in the House tonight to speak on Motion M-292 which reads:
That, in the opinion of this House, the government should consider implementing a new program of mining incentives which would encourage exploration and development in Canada.
But before going any further, I would to state some very important facts, for the benefit of our viewers. First of all, Canada is the third largest mining country in the world, extracting about 60 metals and minerals, including zinc, uranium, potash and gold. The mining industry provides employment for approximately 335,000 Canadians in 150 communities. Mining companies in Northern Ontario have created 18,000 direct jobs in the metal industry and 5,000 in the non metallic minerals industry. I am very proud to say that the Williams mine, in Marathon, in the riding of Cochrane-Superior, is the largest gold mine in Canada.
There are however many barriers to the survival of the mining industry. First of all, mining exploration is a temporary land use that disrupts small areas for a very short time period. Once the mineral deposit is depleted, cleanup procedures are undertaken and land can be used for other purposes. Unfortunately, land use issues are fraught with uncertainty because of the development of new parks and native land claims, some of which are being negotiated as we speak.
The industry is facing new difficulties since countries like Chile, Argentina and Mexico are upgrading their economies and taking steps to attract mining exploration and, thus, investors.
In 1993, Canadian companies with budgets over $1 million invested nearly $260 million, or half their budgets, in exploration outside of Canada. This represents an increase over 1992, when these companies devoted 40 percent of their exploration budgets abroad.
Why is that? First of all, at the natural resources committee hearings last year, the Canadian mining industry had a lot to say about stringent environmental standards-that is the first problem-and the slow licensing process as well. The second problem is non-unionized labour in Latin America and Mexico. Because of this, wages are extremely low; also, the standard of living is lower in these countries than here. Investors enjoy a much higher return on their investments over there than in Canada.
Since the licensing and environmental assessment processes are under federal and provincial jurisdiction, they are characterized by duplication and delay. We need at least $900 million to $1 billion a year in exploration capital in Canada to rebuilt our ore reserves which have dropped dangerously.
We must bear in mind that, from 1990 to 1994, while 44 mines shut down operations in Canada, only 24 were opened.
If we want mining exploration to continue and to keep investors interested, there should be incentives from the government. We need a new program of mining incentives that will encourage exploration and development, encourage Canadian companies to keep investing in their country. That will permit the industry to help stabilize the economy and create employment.
Last year, as I mentioned a while ago, the committee for natural resources issued a report after its very long hearings. The report says:
Canada needs to remove existing structural impediments to the achievement of a sound mineral investment climate. These have been identified as: the tax burden on the industry, particularly the one imposed by non-profit taxes; the inefficiencies of the current environmental regulatory regime; and the uncertainty surrounding land use policies and security to mineral title.
Another recommendation coming from the report is that the government has to work with mining communities and the provincial governments to establish those crucial partnerships to work together to ensure that we have a viable mining industry in Canada.
There is a great need for the harmonization of environmental guidelines. As it is today, the federal government's guidelines
differ from those of many of the provinces. This simply adds complexity to opening new mines.
The mining companies are not asking for grants but they want a level playing field and a tax system that is truly competitive with the rest of the world. There should be security of land tenure and a certainty of continuity in the rules of the game in terms of issuing permits and doing environmental assessments.
After extensive hearings the Standing Committee on Natural Resources have recommended nine key points on mining incentives. These points were also present in the Whitehorse mining initiative report.
I would like to emphasize a few of those recommendations. First, change the adjusted cost base of flowthrough shares from zero to the actual costs of the shares for five years only, to kickstart mining exploration again.
Flowthrough shares would provide a less costly means of raising equity based financing for exploration and development by facilitating a widespread share issue. Flowthrough shares allow access to a broad range of investors while minimizing the impact on corporate management and control.
Second, there should also be harmonization in the federal and provincial environmental guidelines. Co-operation agreements should be established among the jurisdictions for the development, administration and enforcement of environmental standards to improve the efficiency and effectiveness of the regulatory system and to reduce unnecessary industry regulatory compliance costs.
A new mining project should be subject to only one timely environmental assessment by a single lead agency with only one set of recommendations that meet all the requirements. We should try to conciliate conserving the environment with the creation of employment.
Third, we should amend the Income Tax Act to defer taxation of income generated by mine reclamation trusts until the funds within these trusts are finally allocated for reclamation purposes. Reclamation funds should be treated also like RRSPs.
Therefore I support Motion No. 292 by my colleague from Timiskaming. I insist at the same time that we should provide a newer direction for our mining industry and ensure that it continues to make a strong contribution to the Canadian economy.