Debates of April 24th, 2001

Resource Industries

[Gerald Keddy, Progressive Conservative, South Shore, NS]

Mr. Chairman, I appreciate the format this evening which allows more interaction between the government and opposition parties.

I have a quick question on private woodlot taxation. There are around 440,000 private woodlot owners in Canada. There are certainly more on the east coast than on the west coast but they are certainly prevalent across the country. Part of the challenge woodlot owners face is an onerous tax burden because they tend to harvest their woodlots every 50 to 80 years in a cyclical manner. There is no way to amortize that profit over a 10 or 15 year tax period. They pay their tax up front, all at once.

What we have been suggesting and pushing the government to do is to find a way to accommodate private woodlot owners so they do not have to pay all the tax up front and can amortize the tax payable over a 10 year period. This would provide them with the opportunity to do some replanting, some thinning and some silviculture practices in the meantime so they have some expenses to claim against it.

I would like to hear the minister's comments on that and the possibility of looking at that.

[Andy Mitchell, Liberal, Parry Sound—Muskoka, ON]

Mr. Chairman, obviously specific tax policies fall within the purview of the Minister of Finance.

This gives me an opportunity to refer to a very important point that the member made. We need to ensure, as we deal with the comprehensive national issue of tax reform, that we do it in a way which makes sense for rural Canada and rural Canadians.

The woodlot situation is an example of that. That is part of what I talked about in terms of rural lens. Yes, we have to deal with taxation as a comprehensive issue for all Canadians, but we must make sure that even though woodlot owners are a small percentage of the overall economy they are an important part of the economy. They are an important part of the rural economy and their needs through the rural lens need to be taken into account when we undertake tax reform.

[John Herron, Progressive Conservative, Fundy Royal, NB]

Mr. Chairman, my colleague from South Shore has raised the same issue. If woodlot owners were given the capacity to deduct expenses for silviculture in the same way as the farming community would actually do, it would enable them to offset the cost of managing woodlots in environmentally sustainable ways.

Quite often, when woodlots are passed on from an inheritance perspective, it may be more cost effective because they cannot pay the inheritance tax and the capital gains tax to clear-cut the woodlots. They have no other choice. It is a very perverse way from an environmental perspective.

I know the Minister of Finance has been amenable to looking at that, so I would say to the hon. minister that this is an issue of public policy of which I know the Minister of Finance is aware. He seems to be amenable to doing something, and we would seek his help to try to move that particular yardstick.

[Andy Mitchell, Liberal, Parry Sound—Muskoka, ON]

Mr. Chairman, I am sure the Minister of Finance is familiar with the issues that the two members have raised. I am certain he will give them his consideration as he looks on an ongoing basis at reforms to the tax system.

[Larry McCormick, Liberal, Parliamentary Secretary to Minister of Agriculture and Agri-Food]

Mr. Chairman, this is certainly an interesting format. About a year or so ago, along with colleagues from both sides of the House, I was fortunate to attend a rural economic development conference in Magog, Quebec. It was a great success. It was open to all of us. About 500 Canadians from sea to sea to sea, from rural and remote communities, attended that conference.

This the first time in the history of the House that we have had a minister for rural Canada. I want to recognize that. Will there be more of these conferences? It was a great learning experience. I learned a lot as I am sure a lot of other people did.

I encourage all colleagues to come to the next one. Has the final report of that conference been published yet?

[Andy Mitchell, Liberal, Parry Sound—Muskoka, ON]

Mr. Chairman, the member is quite right in terms of having a national conference in Magog a year ago this week.

This gives me an opportunity to make a distinction. It is not a consultation process. It is a dialogue process. It is an ongoing process where we reach out to rural Canadians from across Canada on an ongoing basis. We want to hear their perspectives and their suggestions and then in return to feed back to them our reactions.

Specifically the process during the off year, which is this year as we had the conference last year, is that there is a series of regional conferences. There will be another national conference next year. The action plan leading out of that, where we specifically committed to do the things that were brought forward to us in Magog, I expect and hope to have public within the next month or so.

[Jocelyne Girard-Bujold, Bloc, Jonquière, QC]

Mr. Chairman, I listened carefully to what the secretary of state had to say and he did not mention anything about creating a partnership with the provinces.

For the last 50 years, the federal government has dealt with regional development. During the last 50 years, numerous programs were implemented with none of them taking into consideration the specificity of the various communities and their development which the provincial government has been promoting.

I would like to know if he would go that far. I have many more questions for him, but this one is a good place to start.

[Andy Mitchell, Liberal, Parry Sound—Muskoka, ON]

Mr. Chairman, the member makes an excellent point. For rural development to work well, it needs to have as many partners at the table as possible. The provincial government is certainly one of those partners. I have had an opportunity to have meetings, not with the new minister in Quebec but with the previous minister in the region, Mr. Jolivet.

Essentially we agree that the orchestra leader, the leader of rural development, has to be the communities themselves. It is the federal and provincial governments which supply the tools. The hon. member is right. We have to make sure that we do not duplicate what the provincial government provides the community in the form of a tool. Obviously the federal government does not need to provide that tool or vice versa.

A good example, though, of where we work in co-operation with rural communities is the infrastructure program, which is a tripartite program with financial assistance coming from the municipality, from the provincial government and from the federal government.

[Ben Serré, Liberal, Parliamentary Secretary to Minister of Natural Resources]

Mr. Chairman, I am very happy to join in the debate tonight. I would like to thank the member for Abitibi—Baie-James—Nunavik for his initiative. Natural resources is a tremendously important sector for my riding of Timiskaming—Cochrane and for Northern Ontario as a whole.

Natural resources represent a very important sector for Canada and account for 11% of our gross domestic product, or $90 billion, $100 billion a year in exports, a positive trade balance of $60 billion. It is the livelihood of close to 3.5 million Canadians in more than 600 communities and represents 750,000 direct jobs, good jobs to boot, and as many indirect ones.

Resource industries are some of those who invest the most in capital equipment in Canada, a majority of their investments going to scientific and technologic innovations. A good number of our resource industries are among the most innovative in our economy and their productivity is growing faster than the average.

This should prove that the Canadian resource sector has nothing quaint about it. These are world class and knowledge-based industries. They have a rich intellectual capital and are part and parcel of the new global economy of the 21st century, which is based on knowledge.

They need it to reduce their operating costs, increase their productivity and competitiveness and overcome the difficult conditions and uncertain success due to the Canadian scene.

Because a strong natural resource industry is so important to Canada, because we have learned to excel, to innovate and to be a leader in almost every facet of this global business, it is crucial for government to lay a solid foundation for natural resources to thrive in the 21st century, guided by the principles of sustainable development.

The Government of Canada is working hard to lay the right foundation for this sector, balancing environmental, social and economic concerns in three ways: by providing sound economic fundamentals, and we have done that in the last seven or eight years; by encouraging innovation and knowledge so we remain at the cutting edge; and by promoting environmental stewardship and sustainable communities. These are the three areas I would like to address this evening.

The first area is sound economic foundations. The most recent federal mini-budget of last October delivered some of the tangible results of the success Canada has achieved in its fight to eliminate the deficit and to restore fiscal responsibility. Canada is stronger today since it is in the best financial position it has ever been in the recent past, as evidenced by the comments made by the International Monetary Fund.

Indeed, according to the IMF, Canada should continue to enjoy sustained economic growth and be able to react well to the economic downturn in the United States.

The new budget brought good news for Canada's mineral industry with its 15% tax credit for flow-through shares investment in exploration projects in Canada.

This measure was put it place as a result of a grassroots campaign led by an effective coalition headed by the Prospectors and Developers Association of Canada, the Canadian Drilling Association and several members on this side of the House. My colleagues from northern Ontario and northern Quebec, including the member for Kenora—Rainy River, the Secretary of State for Rural Development, the member for Abitibi—Baie-James—Nunavik, the member for Timmins—James Bay and myself have understood the benefits of exploration in our communities. I must say that it was not easy to convince the Minister of Finance. We had to work hard to convince him.

We hope this tax credit will attract new investments in exploration in Canada, especially since other levels of government have added their own programs to it. Such is the case in Ontario.

Moreover, PDAC announced that flow-through financing coupled with tax credits and totalling about $30 million was confirmed just before the end of the year 2000. I am told that investments are growing for the year 2001, which looks very promising. I hope that more investors, advisors and stakeholders in the financial sector will take note of this major new incentive in the months to come.

This tax measure makes it more appealing to invest in mineral exploration. Since there is a more favourable treatment of capital gains, which we reviewed in the last budget, and a commitment to fiscal prudence on the part of the government, it can be said that a sounder economic base is in place. The minerals and metals sector, like the Canadian economy as a whole, can conduct its activities in a sounder context, and it is in a better position in the race for capital money on international markets.

This brings me to my second point, the need to focus on knowledge and promoting innovation to be competitive in global markets. Innovation is about making opportunities happen, and without it we cannot succeed in the marketplace. By turning ideas into action, by finding new and creative ways to do things, companies can gain a competitive advantage and become leaders internationally in their respective fields. They can generate greater profits and a larger market share and they can create quality jobs. This is what we have done in Canada with the mining sector.

Innovation is a fundamental characteristic of our natural resources sector. Let us think of our success in exploration and mining, geomatics, remote sensing, mapping, surveying and environmental engineering. Our high tech natural resources industry generates economic, environmental and social benefits right across the country.

As a matter of fact there are more mining jobs in Toronto than there are in rural Canada. People do not realize that there are over 25,000 direct jobs in Toronto related to mining.

This sector builds strong links to other sectors. One obvious example is the sheer volume of commodity traffic that natural resources generate for our Canadian railway system. Where would Canadian National and Canadian Pacific be without natural resources? Canada's natural resources industries also purchase more computer equipment than all other Canadian manufacturing industries combined.

There is this idea in big cities that mining and forestry are backwoods industries and do not belong in a new age economy. That is wrong.

The value of our natural resources, the very nature of the industry, is often misunderstood. Some would have us believe that natural resources have a diminished role to play in a dot com universe because they have not kept up with the times. The reality as we all know is very different. The brain power and the technology used by this sector today are as sophisticated and innovative as any other. We need to get this message out across Canada and around the world. We must promote the innovative nature of our natural resources sector.

I was in Toronto not too long ago at the PDAC annual meeting. I met with members of a delegation from the Japanese mineral and metal association. They were worried that Canada would not continue to produce the minerals that they needed. They had heard the Prime Minister talking about making Canada the most connected country, the most innovative, and being in the forefront of the high tech economy. I reassured them that the mineral industry was still the mainstay of our economy.

Canadian resource companies recognize the importance of innovation. This is why, in the recent throne speech in which the Government of Canada stated its priorities for the years to come, natural resources were put under the theme “innovation”.

The government pledged “to promote innovation, growth and development in all parts of our economy”, including our resource sector. We will achieve that goal by doubling our investments in research and development. These investments, and I am quoting the throne speech, “will directly benefit Canadians in areas such as ...natural resources management”.

Currently, natural resource industries invest heavily in Canadian research and development, including research on the use of state of the art technologies, such as robotics, computer vision, environmental technology and specialized software.

We must go even further. We must invest in the new technologies to maintain a competitive edge and remain a truly sustainable industry for the future. Natural resources must be part of a renewed will to promote research and development in our country.

A good example of how innovative the mining industry has become allows an operator to be sitting in a Toronto office and running a scoop tram in a Sudbury mine using a computer. This prevents injuries to workers, et cetera.

[The Chairman]

I will have to interrupt the hon. parliamentary secretary. He was sharing his 20 minute block with the secretary of state. The beauty of being in committee of the whole is that members can come back and speak subsequently. I am sure he will have the opportunity to conclude his remarks.

In order not to monopolize the time on one side or the other, we have had approximately 30 minutes on the government side with the original 10 minute intervention of the secretary of state and approximately 10 minutes of questions and comments. I will now turn to the opposition parties.

[Dave Chatters, Canadian Alliance, Athabasca, AB]

Mr. Chairman, we are all in a learning process tonight of how this format will work. It is a refreshing idea and I am pleased to be a part of it. So far the debate has been somewhat broader than I had expected, ranging from issues of rural communities and on from there.

We came as a party prepared to discuss natural resources specifically and the state of Canada's natural resource industries from a number of different directions. My direction will be the issue of energy as that is where my interest lies. My riding currently supplies 15% of Canada's fossil fuel energy and it is a huge issue.

We currently have some $30 billion to $35 billion worth of committed investment going into the riding and the development of heavy oil and tar sands. All this is in view of the discussions that have been ongoing between Canada, the United States and Mexico on a continental energy program. It is of great interest to us.

At this time not only we in opposition but the industry as well seems to be wondering what the government is talking about and what its position is particularly in view of the Prime Minister's recent announcement of the creation of an energy cabinet committee with a number of the most senior cabinet members in Canada's government sitting on it.

There is a curious emphasis put on an issue, particularly because Canada some time ago when it entered into the Canada-U.S. trade agreement and the Canada-U.S.-Mexico trade agreement committed to a certain position on energy that binds Canada's energy industries essentially to supply.

The free trade agreement between Canada and the U.S. made commitments on behalf of Canada to guarantee delivery of Canada's energy to the United States. The Americans are allowed to buy it at the same price that we Canadians are allowed to buy it. We are not allowed to ration those energy resources to the Americans any more than we ration them to ourselves. It really has the industry and many western Canadians curious that the issue of the continental energy policy might be more than what is already committed.

There are issues dealing with the Mexican petroleum industry and issues around the North American electrical industry that need some discussion, investment and development. However, regarding the fossil fuel energy industry, it seems we are addressing ghosts that do not exist.

Going back to the whole issue of the free trade agreement and how we got into that position in the first place is curious and of some concern to me. It is part of Canada's history that we went through a national energy program under a former Liberal government which raided the natural resource of the fossil fuel industries of Alberta and the west to the tune of some $60 billion.

The reaction to that program and that raid on the wealth of one of Canada's provinces resulted in a move by the premier and the energy minister of that province to fight very hard on behalf of my province and the natural resource industry in my riding to protect the industry and the province from that ever happening again.

That was a serious mistake, not only on behalf of a previous Liberal government but on behalf of a province in Canada that moved to protect its interests the way it did. If Canada had been behaving as a country should have in a time of crisis with a short energy supply and threats of energy interruption from other parts of the world, it should have moved to provide the assurance of energy supply and price to all of Canada.

It should have provided an assurance from the west as the national energy program had proposed to do and at the same time returned or exchanged that assurance of supply and price from the western producing regions to central and eastern Canada. The return should have been some kind of benefit to those provinces to counterbalance the loss of income from those provinces.

Had that happened we would have been behaving like a country should have in the interests of the entire country. We would have been in a better position today to deal with the energy crunch we faced last winter and that we will face again. We are looking at perhaps record gasoline prices for Canadian consumers this summer. All of that is related in some way to the history of the whole national energy program and the reaction to it in Canada.

Even as recently as a couple of weeks ago in committee, some government members were using some of the language I heard so often back in 1980 about the national interest and how the government had a responsibility to act in the national interest when dealing with energy prices and protecting the interests of consumers across Canada. That scares the heck out of people in my part of the country because of the history.

While the government today gives assurances that we will not revisit the national energy program, there are still concerns that the interests of a more populous region of Canada will take precedence over the producing regions in the national interest. It would be a shame to do that.

As we move into this negotiated continental energy program, the power that has been presented by the government in the creation of this energy cabinet committee again raises concerns. We do not understand what is going on. Everyone is hoping the government will provide some clarity and assurance that when we start negotiating with Mexico and the United States to engage in this continental energy program that the interests of all Canadians will be paramount. The benefits of the development of the energy supply to the United States from primarily Alberta will certainly provide great opportunities for Albertans, for Canadians from coast to coast and for people from all over the world who would come to my part of Canada, my riding, to find employment in highly paid, skilled jobs.

We do appreciate and want those great things but at the same time we want the interests of all Canadians to be kept in mind. Albertans are fair-minded and are willing to consider those benefits but we should do it in a national perspective. If a compromise is asked for in one area to achieve an objective, then there should be give on the other end as well.

In the negotiations on this national energy policy we could all come out winners if we do it properly. Some of us, or perhaps even all of us, could come out serious losers if we fall to the interests of the Americans who, quite frankly, do not give a sweet tweet about the Canadian environment or Canadian rural communities. They want our energy and they will have our energy one way or the other.

I would like assurances that the Government of Canada will fight hard and negotiate hard in the interests of Canadians and of rural Canadians in particular.

[The Chairman]

I understand the member for Athabasca is splitting his time with the member for Vancouver Island North. Before I give the floor to the member for Vancouver Island North, are there any questions for the member for Athabasca? The hon. Parliamentary Secretary to the Minister of Natural Resources.

[Ben Serré, Liberal, Timiskaming—Cochrane, ON]

Mr. Chairman, the member asked a few questions and he probably would like a response from the government side. I am pleased to do so. The member had me worried for a while. I thought he was asking for a return to the national energy program which I do not think would do well in his province.

Let me reassure all members, if they have been listening to the Minister of Natural Resources, and specifically to the Prime Minister when he was in Calgary, that the government has no intention of going back to an NEP type of program. We are talking about a continental energy program or policy. We prefer to call it an expansion of the continental energy market.

The issue is quite simple. The Americans need more energy and we have a surplus of energy. Whether it is the tar sands, Churchill Falls, a region of the country that can develop electricity or whether it is natural gas in the northwest, we have a huge potential to create jobs and wealth in the country.

We as a government are willing to expand our market and to sell, for the benefit of all Canadians and specifically the provinces that produce energy, to the Americans and to the rest of the world, but only by respecting provincial jurisdictions and the environment.

If the Americans do invest we will not allow them to call the shots. This government intends to maintain sovereignty over natural resources which is critical for the security and the well-being of any nation. That is what we intend to do.

[Gerald Keddy, Progressive Conservative, South Shore, NS]

Mr. Chairman, the member for Athabasca talked about a former national energy policy, and there is a relevant point there.

In the past governments have tended to raid natural resource profits from individual provinces or territories. We have set that precedent and somehow or another we have to move away from that precedent. The specific instance I am referring to is the east coast.

The oil field on the east coast is now bringing in an unprecedented profit that was never there before. That is in direct loggerheads with equalization payments. When Alberta found its resources under the ground, the federal government accommodated Alberta by allowing it to keep the profit from those resources and its equalization payments from 1957 to 1964.

We have been asking the federal government to recognize the advantage it gave to Alberta so it could get out from under and become a have province instead of a have not province. Nova Scotia, Newfoundland, Quebec or any province is never going to get out from under the yolk unless they are allowed to keep some of their profits. It is not just the oil field. It could be the mining industry or the diamond industry in the Northwest Territories or in Nunavut.

I would like the member's comments on that.

[Dave Chatters, Canadian Alliance, Athabasca, AB]

Mr. Chairman, this has always been a favourite issue of mine so I thank the member for his question.

It has always been my position that the provinces should be treated equally. Nova Scotia, or Newfoundland or British Columbia, where this is just becoming an issue, should be treated no differently than Alberta. If the provinces where the industry develops are expected to provide the infrastructure to support the industry, they should reap the benefits of the development of that industry. That can never happen if the federal government continues with its greed to demand ownership of a resource and benefit from a resource and then dribble money back to the province in whatever formula it thinks is appropriate for that province.

It has always been my and my party's position that the responsibility for the management, development and regulation of offshore resource development should be with the provinces. While constitutionally the supreme court chose that the federal government would own that industry, there is absolutely nothing to prevent it from delegating responsibility for the resource development, and therefore accruing the benefits of the resource just like Alberta does. The sooner that happens the better.

If we start meddling with equalization and start allowing the producing provinces to keep their equalization at the current level and at the same time enjoy whatever benefits the federal government thinks the province should have of the royalties, then again we are skewing the way the provinces are treated. That is a mistake.

If we simply delegate responsibility to Nova Scotia for offshore development or the same for Newfoundland, then those provinces take on the same responsibility as Alberta did to conduct the regulatory and environmental protection process. They develop the infrastructure then they enjoy the benefit. As that benefit increases with the development, the provinces lose in the gradual process that equalization and they become a have province the same as all other provinces that have achieved that status through resource development. That seems to be the fair way to do it.

[John Duncan, Canadian Alliance, Vancouver Island North, BC]

Mr. Chairman, I am the chair of an ad hoc group called the coastal parliamentarians in British Columbia. It is comprised of all federal members of parliament and provincial members of the legislature that touch on salt water. Interesting issues come up in this group.

One of the things that is very awkward is the fact that there is not a single government member of parliament from rural British Columbia, whether coastal or non-coastal. Therefore, there are an awful lot of frustrations on that file. What I am finding, and what is apparent to everyone, is that a lot of those frustrations deal with two departments, the Department of Fisheries and Oceans and the Department of Transport.

Of course, what we are talking about tonight deals with the Secretary of State for Rural Development. If members want to take some question out of what I am talking about tonight, one question would be how can we end the frustrations that we face in dealing with rural and remote coastal issues in British Columbia when we are dealing with a bureaucracy and a government side that does not really understand those issues? Many of them are fixable. One of the things that is becoming very apparent to us is that when those same kinds of issues are brought up in Atlantic Canada where there are government members, they get fixed an awful lot easier than what happens in our circumstances.

We have some real life examples right now. Many of them are two-bit items that really hurt and public safety is often at risk. I just fail to understand why the government would choose to put public safety at risk. The marine travelling community is the busiest recreational waterway in Canada. The federal government is basically abandoning its strong mandate for public safety in those areas by getting rid of rescue stations. It was to do it this year. Now it is saying it will not do it until next year. It is just summertime events, not big cost items.

Getting rid of the coast guard divers off the Hovercraft near Vancouver airport is putting people at risk. We have every signal from the coast guard now that the destaffing of light stations will be back on the burner again. The promise was not in this millennium, which I think was what the minister of the day said in terms of destaffing. However we are into a new millennium now. Those are great frustrations.

I heard the secretary of state refer to community futures and some initiatives with that group in rural communities. We have rural coastal communities that have been denied community futures coverage. They have written to the appropriate minister of the day on numerous occasions and have never received satisfaction. Maybe if I had had a chance to rise on a second question, that would have been my question. How can this be? It is a political decision.

[The Chairman]

During the time of the member's intervention, he is free to use any of that time for a question to a member opposite or otherwise. Within that 10 minutes timeframe that he has he can either speak or ask questions, whichever he might choose later on. If he has a question that he wants to put, he should feel free to do it during this period. It is entirely his period to do with as he chooses, either to simply make a speech or mix it with questions. The floor is his to do as he chooses.

[John Duncan, Canadian Alliance, Vancouver Island North, BC]

Mr. Chairman, I think that is what I am doing but I appreciate the guidance.

The other thing that occurs to me is that this is a new format, a different format. We have some existing formats in the House of Commons that are used inappropriately.

For example, if I get up in the House of Commons during question period to ask a minister a question and do not get the full answer because of either time constraints or the minister is not really familiar with what I might be asking, I have the opportunity to file a piece of paper with the clerk and go on what is called the adjournment proceedings or the late show. I have done that on numerous occasions. Guess what? The minister who responded to my question was never been there for the late show. It was always a stock prepared answer. It was as if it did not matter what I asked because the answer was just simply read. Some things could be done a whole bunch better around here. That is all my unprepared speech for tonight.

There are three things I wanted to touch on. I will do it very quickly. One is we spent two years in this place. I was on the natural resources committee in 1999 and 2000. I know the secretary of state was on that in 1996. We prepared a report called “Forest Management Practices in Canada as an International Trade Issue”. We tabled it in June of 2000. It was also a unanimous report and I think we said some very good things. Of course, the government's response did not occur because of the election call. Now we have resubmitted to the committee a request for the government to respond, which under the rules is within 150 days. We are already looking at next September. That is a year and a half after submission.

There are some emergencies out there. A lot of this report dealt with the mid-coast of British Columbia because that was like a litmus test for what was going on regarding the environmental pressures on international market access for forest products on the Canadian basis.

We had recommendations in there for pro-active delivery of Canadian forest practice messages in our major markets. We had a very practical program presented to our committee. The committee was enthusiastic about endorsing that. The commitment from the federal government was a minor one because industry and the provincial government in British Columbia had already bought in. The financial commitment being asked for was simply to demonstrate real commitment. It was not to extract a bunch of money. Guess what? It fizzled. There was nothing.

In the meantime, we have companies operating in the mid-coast, the provincial government to some extent, environmental organizations, Greenpeace and so on have signed some protocols. This was been a huge struggle. Last week International Forest Products, a major operator on the B.C. coast, announced layoffs of 500 direct employees, 400 contract employees and the closure of a sawmill, which will have tremendous other implications as a consequence of what is happening on the mid-coast. There are going to be other announcements from other companies.

All of this is happening and it is as if the federal government is blind to it. The federal government has a mandate for international trade and international access to market issues. It is doing nothing to fulfill that mandate compared to what it could be doing. Yes, I know we have an international partnership program run through the embassies, diplomats and so on. This was a practical program that would have had real buy in. It could have gone somewhere. It could have done something. There is no excitement. There is no response. Everything is flat when it comes to the government response.

That is a very strong suggestion from the Canadian Alliance in terms of something the government could do to help in the natural resources sector, that is, to implement the program and do it immediately. There is no reason why it could not.

The program is a practical market access initiative put forward by forest workers, in this case IWA Canada, the international woodworkers and their largest local, which covers their coastal loggers, some forest workers in northern Ontario and also a fair chunk of the sawmill industry.

Secondly I want to touch on the softwood lumber dispute for a just a few minutes. We cannot ignore it if we are going to talk about natural resources. All I want to say is that it is a great disappointment to me that although the official opposition, the Canadian Alliance, was proactive on that issue and had its position out as of June 7, 2000, until February of this year the Alliance still did not know what the government's position would be upon the expiry of the softwood lumber agreement. We went through a federal election campaign never being able to extract from our British Columbia candidates or from our rural candidates where they were on the softwood lumber agreement. That is not leadership.

Mr. Chairman, an ex-Liberal member of parliament who is now the CEO of the Council of Forest Industries in British Columbia is saying exactly the same thing. Where was the leadership when we needed it? That was another letdown.

The last thing I want to touch on in my remaining 30 seconds is west coast oil and gas. I want to serve notice today to anyone who is unaware of it that this is the next huge issue in British Columbia. There is a coastal rural consensus that it is required and needed, and we have to get there. We need to get there with provincial leadership and either federal leadership or federal non-interference. That is the message I want to deliver. Obviously we would like proactive federal leadership, but at the very least the government should not put obstacles in the way. The senior members of the Liberal caucus from British Columbia need to receive that message very strongly.

[Andy Mitchell, Liberal, Parry Sound—Muskoka, ON]

Mr. Chairman, I just want to take a moment to respond to a couple of the points my colleague made in his presentation.

He talked about the frustration in coastal communities in British Columbia. One of the things I talked about in my speech was the need for us to have an opportunity as a federal government to understand and listen to the specific solutions the coastal communities themselves want to pursue.

That is why I am pleased to be able to announce that this week in British Columbia one of those rural dialogue sessions I talked about is in fact occurring. Members of the coastal communities of British Columbia will be attending.

As I am sure the hon. member knows, there is an organization in British Columbia, the Coastal Community Network, which represents many of the coastal communities. I will take the opportunity when I am in British Columbia on Friday to meet with the CCN and discuss directly with its members many of the issues and concerns the hon. member has brought forward in the Chamber.

There is one last point on the issue of community futures, which the member has brought forward. I would be pleased if he would have an opportunity to talk to me at some time later this week specifically. I will endeavour with my colleague to undertake to find out the difficulties or to try to deal with the difficulties the member is alluding to.

[Larry McCormick, Liberal, Hastings—Frontenac—Lennox And Addington, ON]

Mr. Chairman, this could be an interesting format. I am thinking about a certain hour that is called QP when quite often we wish we had the chance to ask questions, even of our own ministers and even of the opposition. Perhaps down the road it will be the opposition that is not sure about this format.

I have a question for the member, who represents one of the most beautiful parts of our country, and all parts are great. I want to clarify this. He may not have time before he addresses another subject. I admire ad hoc groups of all MPs for the coastal parts of B.C. Our daughter is working and going to school there, and I do want to include the comment that there are some CAP sites in some very remote areas. I know there is a need for more.

My colleague mentioned that this ad hoc group from the B.C. coast includes all the federal and provincial members. I want to clarify this. Does the ad hoc group include the Minister of the Environment, who I know is very passionate about not just the environment but coastal B.C.?

I have no props, but I am sure that in the future when we talk about our great resources in Canada we will perhaps focus even more on H2O.

[John Duncan, Canadian Alliance, Vancouver Island North, BC]

Mr. Chairman, I thank the member for his question. I think the member's daughter may be my constituent. Am I correct?

[Larry McCormick, Liberal, Hastings—Frontenac—Lennox And Addington, ON]

Does the member think she voted for him?

[John Duncan, Canadian Alliance, Vancouver Island North, BC]

Yes, most likely she did vote for me. The member asked me if the member for Victoria, the Minister of the Environment, was a coastal parliamentarian. It is ad hoc. Everyone gets the communications and can choose whether to attend or not attend, whether to participate in the e-mail network or not. I will say that our annual meeting is actually held at the same time as the Coastal Community Network meeting. The two groups are linked in that regard, although they are at arm's length. This year's meeting was just a month ago, but 13 months ago the Minister of the Environment and the Minister of Fisheries and Oceans, as I recall, both attended and both spoke. It was greatly appreciated.

There was a high level of support from the federal government at that time, but from my perspective, my vision, in the optics I saw this year, there was a low level of support. Maybe that was because November is a terrible time to have an election and run all the machinery of government. Everything gets out of sync and gets disjointed. I am letting the member off the hook by saying that.

[Pierre Paquette, Bloc, Joliette, QC]

Mr. Chairman, I will be splitting my time with the hon. member for Témiscamingue.

I am extremely pleased to take part in this debate on the state of the natural resources of Canada and Quebec. I am going to use a topical example to address this question: softwood lumber.

We are going through some extremely difficult times in connection with this. We know the American commission has decided to look into Canadian trade practices, in what I would term a highly impertinent manner.

We will have a pretty tough row to hoe, and I feel it is important to have a clear picture of the situation, as it pertains to Quebec in particular, as far as the importance of wood as a resource and of the lumber industry.

We have had occasion to discuss this matter in the House several times, so hon. members will know that it accounts for 130,000 jobs in Canada, which are directly connected with the industry. The figure for Quebec is 40,000 jobs. Quebec is the second highest producer, ranking after British Columbia, which is responsible for close to 25% of lumber production. It means that 7 billion board feet are produced annually, which represents a total value of $4 billion Canadian. About half a billion dollars are directly invested in the sawmill industry each year and some $65 million in the forest industry.

As far as Quebec and the regions of Quebec are concerned and I am looking at my colleagues and all of us are being affected by this crisis some 250 municipalities have sprung up around wood processing. In 135 towns and villages, all of the jobs are related to this industry. Except for our major urban sectors, all our rural, semi-rural and semi-urban regions are affected.

My riding is located in the Lanaudière area, which produces lumber. The ridings of my colleagues from Témiscamingue and Saguenay—Lac-Saint-Jean are also affected. In the Mauricie area that I had the opportunity to visit during a tour concerning the summit of the Americas, producers asked me a lot of questions about what we had done in the House. The same is true for the Lower St. Lawrence, the North Shore, the Eastern Townships, the Laurentians and many more areas.

This all goes to show how crucial the sawmill industry is for the regions of Quebec. This crisis in our trade relations with Canada is extremely serious, and we are following the situation very closely.

All in all, 51.4% of Quebec exports go to the United States, while the rest, or 47.6%, goes to Canada. As we can see, the U.S. market is a major outlet.

Quebec exports to the United States represent about $2 billion a year while Canadian exports as a whole represent about $10 billion or $11 billion a year.

It is a very important industry, an industry for which the free trade provided for under NAFTA must be maintained. It is widely known that for the last twenty years now, the American industry, and I should even say part of the American lumber industry, has been harassing the Canadian and Quebec industry as soon as our market reaches 30% of the American market.

The real reason of all that fuss is that the Canadian and Quebec industries have been successful over the years, thanks to the investments they made in their equipment and to their revamping of their production methods.

The lumber industry is closely related to the pulp and paper industry in Quebec. Accordingly, a great deal was done over the years with regard to the environment, work organization and investment in new technologies.

The problem is not that Canada and Quebec are subsidizing their industries by requiring very low stumpage fees. We all know that the investigations made in 1991-92 have shown that as far as the Canadian industry was concerned, especially in Quebec, there was no subsidy. Actually they really had to look hard to find a 0.01% subsidy. Therefore, the problem is not there.

I believe people need to be reminded that since 1992 stumpage fees have been raised substantially in Quebec and in all of Canada's provinces. For example, in 1992, when the most recent inquiry on the alleged subsidies took place, stumpage fees were $5.42 a thousand board feet. In December, they were $9.26. So they have just about doubled, and reached $11.61 in December 1997.

Since 1992, our stumpage fees have increased in objective terms. This is true for Quebec and for the other provinces—making our case even better.

This is why we are disappointed to see that the American secretariat has nevertheless initiated inquiries under anti-dumping procedures and countervailing duties, despite the facts.

The paradox, and I think it is important to point it out, is that the American interests established in Quebec and Canada are complaining, in terms of their production in Canada and Quebec, that stumpage fees are too high. Often these same American interests criticize Canada and Quebec for having stumpage fees that are too low, when it comes to their American production.

This is a sort of schizophrenia, which demonstrates the extent of ill will in the whole matter in part of the American industry. As I mentioned, we find it completely unacceptable that the U.S. department of commerce has begun investigations when there is absolutely nothing to justify them. I read the Minister for International Trade's press release and we share his point of view completely—

One interesting thing is that, contrary to 1995-96, it seems that the Canadian and Quebec industry, and I can guarantee this for the Quebec industry, is united. After five years of the Canada-U.S. softwood lumber agreement with quotas and countervail duties, we came to the conclusion that it was not a question of negotiating any agreement at all and that we had to return, in fact, there was a short period of free trade, to the rules of free trade, as set out in NAFTA, for all goods, including energy. This is in a context where there are new rules of the game compared to 1995-96.

One thing Canada did was file a complaint with the World Trade Organization, which agreed to set up a panel of experts to look into the legality of American practices with respect to countervailing duties, which we are now subject to. Let us hope that we have their response soon.

Our regions in Canada and Quebec deserve to see members of the House stand together against harassment from the American industry and, I would say, a certain lax attitude on the part of the U.S. government.

I am pleased to recall that on March 20 of this year the House almost unanimously passed a motion which I moved on behalf of the Bloc Quebecois to support the Canadian government's wish to go back to free trade, that is free and equitable circulation of all softwood lumber. Following this motion, our subcommittee on disputes and investments took the initiative of sending a letter signed by a large number of parliamentarians from all parties to the American secretary of state for commerce, Mr. Zoellick, to inform him that we were in disagreement with the situation and that we wanted to go back to free trade.

I said, and I think we all agree, that this is not a subsidy issue. As I mentioned earlier, our stumpage fees are not low. I will read a short excerpt of a letter sent to the minister for International Trade by Gilles Baril, the Quebec minister of state responsible for regional development and minister of industry and commerce, and Jacques Brassard, the Quebec minister of natural resources. They remind the federal minister that:

Under the Quebec forestry development plan, timber royalties are based on the market value of timber from private forests. That timber and the timber from the United States account for 31% of all the lumber provided to the Quebec industry.

However, the situation is still critical. There is the structural problem to which I referred, in that the American industry did not invest enough money. It cannot compete with the Canadian and Quebec industries and its production costs are indeed higher than those of our industries. There is also a problem with economic conditions in that lumber prices in Canada and in Quebec are currently going down.

There are three reasons, which I will review briefly. American consumption has slowed down because of the economic downturn in the United States, which means that there is less demand for softwood lumber. Supply has increased substantially, not because the provinces, those provinces affected by the agreement between Canada and the United States, have increased their exports, but because other countries have taken advantage of the agreement.

During the time that the agreement was in place, Canada increased its exports to the United States by 7.9%, while other countries increased theirs by 187.7%. This means that certain countries took advantage of the fact that the Canadian industry could not do more.

Another important aspect that is specific to Canada is the issue of quotas, which forced several provinces, including Quebec and British Columbia, to sell to Canadian markets.

This led to such a drop in prices that, and I will conclude with this, at this very moment, stumpage fees in Quebec are $9.26 and the price is $10, which means that our industry could not survive countervailing duties.

I remind members that the Bloc Quebecois wants this situation settled rapidly, without compromising the principle of free trade. We want all of Canada's regions to work together through these difficult times, from which I am sure we will emerge as winners.

[Guy St-Julien, Liberal, Abitibi—Baie-James—Nunavik, QC]

Mr. Chairman, I have listened to the hon. member for Joliette. I appreciated his speech, because it is an excellent one. He knows his business. We know this dates back more than 18 years to 1982. After a thorough investigation by the U.S. department of commerce, Canada concluded that stumpage fees did not represent a subsidy on which any action could be taken.

It is also important to say, as I read in the Quebec Lumber Manufacturers Association's press release, that the association remains confident in its capacity to demonstrate the inconsistency of the allegations advanced by the American coalition in connection with the lumber issue.

The hon. member raised all the elements of the issue and perhaps he could once again remind us of them in just a few words. There is talk of a quota system for certain provinces, but much harm has been done by the quota system in certain provinces, particularly Quebec, in the resource regions, the remote regions, particularly to the small sawmills. Does the hon. member agree?