Mr. Speaker, it is a great privilege to rise in the House and join my colleague from across the way.
I rise to address the House on Motion No. 136 which calls on certain limitations to be put on the development of Donkin mine in Cape Breton as a crown corporation.
I would like to begin by thanking the hon. member for Bras D'or for her interest in the issue and the future of the Cape Breton Development Corporation, also known as Devco. As a member from Atlantic Canada, I welcome the opportunity to debate this motion.
I believe the hon. member and this government share common concerns about Cape Breton. We are concerned, for example, about the high levels of unemployment on the Island, as well as in other parts of Atlantic Canada. We are concerned about the long term economic health of Cape Breton and about the future of its young people. I would also suggest the hon. member and this government share a common will for Cape Breton, to achieve long term economic success and social progress across the Island.
That is why our government continues to support the work of the Cape Breton Development Corporation which the hon. member knows is a federal crown corporation. The Government of Canada has set a clear and reasonable goal for Devco. As a coal mining company that is in the business of providing jobs and other economic benefits to Cape Breton, we expect Devco to become commercially viable on its own right. I believe that is a fair and reasonable expectation and I believe hon. members on both sides of the House will agree that this is indeed a reasonable expectation.
We believe that commercial viability is the best way to ensure the tradition of coal mining continues in Cape Breton and that Devco maintains its position as a major employer within the region. The need for Devco to succeed cannot be overemphasized. The corporation continues to contribute more than $150 million to the Cape Breton economy through wages, pensions and the purchase of goods and services. It is the largest coal producer and one of the largest industrial interest in eastern Canada, employing approximately 1,700 people. The economic spinoffs from Devco's activities are felt in virtually every community of Cape Breton.
I am pleased to inform the House that Devco has embraced the government's challenge to become commercially viable. It has taken steps to overhaul its operations, to introduce new technologies, to improve productivity and the labour relations found there and to better manage its business. The corporation's five year business plan approved by the government in May of 1996 clearly stated Devco's mission which is to become a profitable coal mining company.
To aid the corporation achieving its goal of profitability and competitiveness with other energy sources, the government has provided Devco with a repayable loan of up to $69 million over three years. I might add this is in addition to other federal funding that has been provided to the corporation since it was created in 1967.
I am also pleased to report that Devco made a number of positive achievements in the one year of its operating business plan. Although it faced a number of ongoing challenges, particularly at its Phalen mine, the corporation operated within the $43.5 million funding level approved by the Government of Canada.
Devco's annual report for the period ending March 31, 1997 shows a positive development on a number of fronts. I would like to briefly outline some of the progress that has indeed been made.
For the first time in the history of the corporation, new contracts were negotiated with bargaining units without the use of an outside conciliator. This is solid evidence of improved labour relations and the commitment of its employees, unions and management to work together.
Also during the past fiscal year Devco's safety results improved by more than 40%. This was reflected in a 10% improvement in employee attendance at the workplace. The corporation's emphasis on safety is good for workers and it is good for Devco.
Devco has also taken further steps to involve its workers in the decision making process. A quality management program known as beyond 200 was developed last year to promote continuous improvement and a commitment to quality across the corporation.
In terms of sales, in 1996 the corporation sold a record 2.8 million tonnes of coal to its primary customer, Nova Scotia Power Incorporated. Coal sales for the first six months of the current fiscal year yielded revenues of $86 million.
Devco's coal marketing strategy will continue to focus on meeting the needs of Nova Scotia power, which is far and away the corporation's most important customer.
I know hon. members will want to join me in congratulating Devco's management and workers on their efforts over the past year and a half. Their achievements to date have been meaningful and important.
For me personally I would like to congratulate Devco workers who have gone above and beyond the call of duty and showed the expert miners they truly are.
At the same time, it is important to acknowledge that more needs to be done. The corporation is projecting a funding requirement of $25.5 million over the next two years which is within the limit approved by the government. Devco is forecasting that it will achieve positive cash flows in the year 1999-2000.
To achieve this latter goal, the corporation will have to continue to improve productivity at its existing facilities. Devco's short term planning framework which as I noted earlier has been fully endorsed by this government calls for the corporation to focus its efforts on addressing the challenges it faces at its existing mines.
This is not an easy task. Over the next few months the corporation will explore ways to get around serious geological problems recently encountered at its Phalen mine. Devco will be considering all options for the Phalen mine and for its other coal resources including Donkin coal.
This does not mean the Donkin mine will or will not be developed. Far from it. In fact, as the hon. member for Bras D'Or is aware, a private company is in the process of undertaking a feasibility study to determine whether the mine can be developed on a commercial basis by a private sector entity.
This analysis, combined with Devco's own studies over the past few months, will form the basis of its next annual corporate plan update. This update will be submitted to government in early 1998.
The government has complete confidence in the management of the Cape Breton Development Corporation and in its workers. We agree that with the decisions that have to be made we firmly believe in management and workers ability to make appropriate recommendations to government for the future of the corporation.
In closing, I want to once again thank the hon. member for Bras D'Or for bringing this matter before the House. I believe that the underlying objective of this motion is to ensure employment and economic security in Cape Breton. I can assure the hon. member that we will keep the House informed of any developments relating to Devco that contribute to this important goal.
If I may say, we are very open to assisting in the process of Cape Breton development and Atlantic Canadian development. This government is committed to keeping an open channel to any and all new options.