Proceedings of the Standing Senate Committee on
National Finance
Issue 12 - Evidence - June 23, 2010
OTTAWA, Wednesday, June 23, 2010
The Standing Senate Committee on National Finance, to which was referred Bill C-9, An Act to implement certain provisions of the budget tabled in Parliament on March 4, 2010 and other measures, met this day at 9:02 a.m. to give consideration to the bill.
Senator Joseph A. Day (Chair) in the chair.
[English]
The Chair: I call this meeting to order. I thank all honourable senators for being here.
I have had a request from the deputy chair to have a meeting in camera. I have agreed, if you agree, to have this in camera meeting of our committee, and we would do it at the time that we change panels. We will have this panel for one and a half hours, then we will have a short in camera meeting after which we will proceed with the second panel.
Senator Ringuette: What is the purpose of having an in camera meeting and having our witnesses delayed? Is that not something we could do at the end of our agenda today?
The Chair: Are we content to do it at the end so that we do not keep witnesses waiting?
Senator Gerstein: I would be satisfied with doing it at the end. That is fine. Thank you for that suggestion.
The Chair: We will have an in camera meeting following our session here today. I would ask all honourable senators to keep that in mind.
Senator Murray: Just so there is no misunderstanding in public about what we are up to, the reason for holding an in camera meeting would be either to discuss individuals, persons in the employ of the Senate or something of the nature, or future business of the committee. Which is it?
Senator Gerstein: It is future business.
Senator Murray: Thank you.
[Translation]
The Chair: This is our twelfth meeting on Bill C-9, An Act to implement certain provisions of the budget tabled in Parliament on March 4, 2010 and other measures.
[English]
Over 10 previous meetings, this committee heard from the Minister of Finance, as well as departmental officials who explained the provisions of each of the 24 parts of this bill. We have also begun hearing from outside stakeholders who are interested in or impacted by this legislation.
This morning, we will continue our consideration of the issues surrounding Atomic Energy of Canada Limited, AECL, as impacted by Part 18 of the bill.
For our first panel, we welcome Mr. David Shier, President, Canadian Nuclear Workers' Council, CNWC; Michael Ivanco, Vice-President, Society of Professional Engineers and Associates, SPEA; Peter Routliff, International Representative, International Brotherhood of Electrical Workers, IBEW; Rodney Sheppard, President, The Society of Energy Professionals.
[Translation]
We also have with us Jacques Dubois, President of the District Council of Eastern Canada, International Association of Bridge, Structural, Ornamental and Reinforcing Iron Workers.
[English]
We have 90 minutes in this session. Your cooperation in keeping questions succinct would be appreciated.
We welcome you. Mr. Shier, please proceed.
David Shier, President, Canadian Nuclear Workers' Council: I have provided a copy of my comments. I apologize that they are only in English. At Canadian Nuclear Workers' Council, we produce most of our documents in both languages, but due to the short time frame, I did not want to send my translator something last night at midnight saying that I wanted it this morning. I apologize for that.
Good morning, Mr. Chair and members of the committee. My name is David Shier. I am President of the Canadian Nuclear Workers Council, chairperson of the ICEM International Nuclear Workers' Union Network, INWUN, which is based in Geneva, and I am also staff officer with the nuclear sector for the Power Workers' Union.
The CNWC is a council of unions that represents members working in the Canadian nuclear industry. A list of our members is attached on page 3 of my submission.
The council was created in 1993 to provide an organized focus and direction for views and interests of unionized workers in all parts of a diverse industry that operates in five provinces across Canada. The CNWC works to ensure that members' views are reflected in the ongoing debate about nuclear energy. The council maintains a dialogue with other labour organizations to build support for our industry, explain nuclear issues and address misconceptions about nuclear energy. A copy of our objectives is attached at page 4.
Today, we are here to provide our views on Bill C-9, specifically as it relates to AECL. The majority of the unions at AECL are members of CNWC. As two of the other presenters here today are members of the council, I will dwell on a national and international perspective, as they will address more specific areas.
CNWC addressed the AECL issue in our latest newsletter, and I have attached a copy of the article to our submission for your benefit.
We suggest that Canadians will worry about the safety of Canada's nuclear technology should AECL become a fully private corporation. When it comes to benefits, CNWC believes that a private AECL would not create jobs, maintain the current number of jobs, help the economy more or be better able to sell our Canadian nuclear technology around the world.
Forecasts show that building new reactors in Canada and abroad would create thousands of jobs in Canada, but we suggest this will only be true if the Government of Canada maintains a major stake in AECL.
Reducing the financial exposure of taxpayers is an admirable goal, but this must be balanced against the benefits that accrue to the Canadian economy by keeping CANDU technology a continuing Canadian success story. Other jurisdictions, such as France, Finland and Japan, understand the importance their nuclear technologies have to their economies, and that is why they get behind their nuclear industry.
U.S. politicians are seeking to increase taxpayer-backed loan guarantees for new nuclear plants by tens of billions of dollars. This supports U.S. technologies while providing reliable greenhouse-gas emitting electricity. These governments clearly get the substantial economic and environmental benefits new nuclear power projects bring.
On the international scene, AECL is a respected company with a good product. The future of AECL being in limbo is creating a major problem with future orders for our CANDU power plants. We urge the government to rectify this situation as soon as possible so that we can once again say that Canada is open for business in the nuclear industry.
In conclusion, we believe that the Canadian government must maintain a major stake in AECL for our Canadian nuclear industry to survive.
We thank you for the opportunity to address your committee, and we will be pleased to answer any questions you may have.
Peter Routliff, International Representative, International Brotherhood of Electrical Workers: I, too, am happy to be here this morning, and I appreciate the opportunity to provide my views on Bill C-9 and the sale of AECL.
I have also provided a copy of my presentation. I am an international representative with the International Brotherhood of Electrical Workers, IBEW.
We represent about 63,000 members in Canada and about 730,000 members internationally working primarily in the electrical construction and utility industries. We also represent the electricians and instrument technicians at Chalk River, the employees of Point Lepreau and the thousands of electricians who have been involved in the building of nuclear generating plants in Canada and who are presently engaged in the refurbishments at Point Lepreau and at Bruce Power.
To begin, I would like to comment on Bill C-9. I believe that the loading of a budget bill with issues such as AECL, Canada Post and the environment is simply wrong. Hiding these important issues in a budget bill is, in my view, irresponsible. I especially think that the way the potential sale of AECL is laid out, without transparency in the terms of the transaction, is a blemish on our legislative process. However, I am here to speak about AECL and its technology.
I know I do not have to tell you that AECL provides a huge amount of work for Canadians, and I do not have to tell you about the exceptional quality of the AECL design, nor do I have to tell you about the opportunity for nuclear technologies in the areas of health and food sciences, other technologies and certainly the opportunities in the electrical generation businesses.
The world needs new generation to be built, and I do not have to tell you that AECL is recognized as a world leader in nuclear design with its CANDU reactor. The opportunities for new build and refurbishment have never looked more promising. I am also sure that the government has been a little frustrated with the situation that AECL is in today with respect to the isotope production problems, and we hear that the refurbishment at Bruce Power and Point Lepreau are taking its toll. This situation is not an unusual one for a business to be in; AECL is in a learning stage. It is developing the business of refurbishment. They need investment to help them work through the issues related to developing these skills.
Let us not forget that AECL is going through these refurbishments for the first time, and it is not child's play. This is highly complicated work. Any business would need to invest in developing these skills and business lines, but it appears that this government is impatient. They want a return on their investment today; but the nuclear industry does not work that way. The nuclear industry does not measure itself in years; it is measured in decades. It takes a decade from the time the idea of construction starts to the time of connecting to the grid when the plant is operating. The plant runs for about two and a half or three decades and then becomes decomissioned or is refurbished.
The skills AECL is learning today will be used in the decades to come, especially when you look at the U.S. fleet where the refurbishment skills of AECL and the related equipment and techniques that they have designed for refurbishment can be used and be profitable for AECL in the future.
However, let us not lose sight of the fact that even today the skills that AECL is developing at Point Lepreau are being used at the Korean site, where the refurbishment is on time and on budget. AECL is learning and applying their skills and making a return on that investment today.
Frankly, I think it may be hard for people to understand the magnitude of the work that is involved. Hundreds of new pieces of equipment and techniques are being developed, and that builds on our history of innovation as Canadians.
However, problems do arise when doing this work. At Point Lepreau, for example, there are approximately 2,000 workers there today, and the coordination of workers can be difficult, especially if delays occur. One small delay can have a large impact on productivity. Certainly, that has been the case at the Point Lepreau and Bruce facilities. An example would be the engineering of tools to do the work. That was a new challenge. Unforeseen changes and modifications made as the jobs progressed also led to delays, and, in some cases, AECL's attention was concentrated on developing incredibly complex robotic equipment along with tools and techniques, leaving the coordination of trades to individuals sometimes unfamiliar with directing multi-craft tradespeople.
As I said earlier, that is part of the learning process, but we, in the IBEW and in the building trades and our employers, are taking steps to find ways to improve how we do business. As an example, the Bruce Power generating station refurbishment is continuing with half the plant still operational. We have all come to realize that if the operating electrical supply was isolated from the refurbishment, significant time improvements would result. In addition, pairing trades workers with the designers to provide a hands-on perspective was discussed to minimize the potential for delays.
At Point Lepreau, more practical approaches to tool design were discussed and considered. For example, designing a tool to last 30 years for a job that takes six months is generally impractical — that is part of the learning curve — and NB Power employees at Point Lepreau have embraced job flexibility and multi-skilling.
Without a doubt, there have been problems, but these are the growing pains one should expect when doing work of this magnitude for the first time, and solutions have been found. Selling AECL now would be the same as throwing the baby out with the bathwater. If needed, there are other options to selling AECL. If the government has to find relief and will not be patient in waiting for its return, then finding an appropriate Canadian partner, keeping the technology in Canada, or perhaps selling ownership to Canadians through a share unit structure or a lease-to-operate agreement could be negotiated.
There are options, but I guarantee that once sold, we cannot go back, and if sold to another nuclear company, we know there would be no value in a competitor keeping a second type of technology. It will not happen. It will not happen in the first or maybe not in the fifth year, but I can guarantee you that AECL will end up on the garbage heap right on top of the Avro Arrow. It will be another huge Canadian disaster made by short-term decision makers with short-term balance sheets.
IBEW, building trades, contractors and owners want this to work, and we are finding better ways of doing business. Setting all that aside, selling AECL at this time simply does not make sense. Generally, a company would divest its asset at a time when it has attained a premium value.
Selling AECL today, at a time when the balance sheet is reflecting this stage of development, will lower its valuation. Canadians will not receive a fair price for their asset. From a business perspective, it does not make sense to sell AECL at this time, nor does it make sense to sell AECL considering the effect it will have on the tens of thousands of Canadians who rely on the nuclear industry to earn a living for themselves and their families.
For many reasons, including the reasons I have discussed today, I truly hope the sale of AECL does not happen, and I thank this committee for giving this issue the consideration it deserves. Of course, I will be happy to answer any questions you may have.
The Chair: Mr. Routliff, thank you very much. We appreciate your comments. I will now move to Mr. Ivanco.
Michael Ivanco, Vice-President, Society of Professional Engineers and Associates: Good morning, Mr. Chair and members of the committee. I am Vice-President of the Society of Professional Engineers and Associates, SPEA. I am also a scientist who works for Atomic Energy of Canada Limited, AECL.
SPEA represents engineers, scientists, technicians and technologists who work for the CANDU reactor division of AECL. Our members work in Ontario, Quebec, New Brunswick and internationally. Currently, we have a big contingent in South Korea. Collectively, we represent most of Canada's nuclear design expertise. Indeed, the intellectual property associated with the CANDU design is resident primarily within our members.
Part 18 of Bill C-9 contains proposed legislation that allows for the sale of AECL, but essentially it is our members that are for sale. As a company, the CANDU reactor division of AECL does not hold many patents. It holds few physical assets, such as buildings or property. The sale consists primarily of the transfer of knowledge, skills and experience of the employees who work there — our members. Hence, we have a very keen interest in this bill.
In response to the growing business opportunities around the world, our competitors have been restructuring. In Russia, for example, state-owned Atomenergoprom formed a collaboration with Gazprombank, the largest private- sector bank in Russia, to form Atomstroyexport. This consortium recently won a competition to build new reactors in Vietnam.
In Korea, the state-owned Korea Electric Power Corporation, KEPCO, has formed a partnership with Doosan Heavy Industries and Construction Co., Ltd., Hyundai Heavy Industries Co., Ltd. and Samsung Heavy Industries Co., Ltd. They recently won a $20 billion contract to build four reactors in the United Arab Emirates.
The Japanese government last week was reported to be forming a consortium to compete in the export market. This consortium will be led by the government who will be an equity partner. It will involve three electrical utilities as well as three private-sector companies, Hitachi Ltd., Toshiba-Westinghouse and Mitsubishi Heavy Industries Ltd.
All of those consortia are either government-owned or government-led public-private partnerships in which the government shares both risk and reward. However, the private-sector partners know that government equity and partnership gives long-term credibility with potential buyers of nuclear reactors. A nuclear reactor is a strategic 60-year to 100-year investment, and a buyer needs to know the seller will support the product over the long term.
These restructurings will put South Korea, Japan and Russia in a good position to compete with state-owned AREVA of France, the world's largest nuclear vendor.
In response to the restructuring of the global nuclear business, the Government of Canada has embarked on the restructuring of AECL. In December of 2009, the Rothschild bank, contracted by the Government of Canada to manage the restructuring of AECL, issued an investment summary. The three main policy objectives identified in the summary stated that, first, Canada requires safe, reliable, and economic options to address its energy and environmental needs. Second, the costs of the Government of Canada's support of the nuclear industry need to be controlled and the return on its investment in the industry maximized. Third, the final outcome and structure of AECL should position Canada's nuclear industry to seize domestic and global opportunities.
We agree with these objectives and recognize the need for restructuring. However, SPEA's concern is that the process that the government has set up is focused on a simple financial transaction that will not achieve its stated policy objectives or deliver good value to Canadians, who have invested in the development of this technology.
Indeed, SPEA has learned that it is the government's intention to sell AECL 100 per cent to the private sector. Such a restructuring would leave AECL as a private-sector company in competition with four government-owned or led consortia, as well as General Electric, the world's second-largest corporation with annual revenues higher than the GDP of most countries. Against such competition, a private-sector Canadian nuclear vendor stands no chance of selling a reactor into the international market, no chance whatsoever.
SPEA believes the three policy objectives in the Rothschild investment summary are effectively a contract with the people of Canada and that the government is obligated to deliver on them. However, as far as we can tell, there is no one on the Rothschild's restructuring team who can advise on these issues. None of the policy objectives are entirely related to the financial value of the transaction, yet there appears to be a large number of advisers entirely focused on this single aspect of the transaction.
This imbalance suggests to us that the process is not designed to deliver on the policy objectives. The process is being kept under a cloud of secrecy and no one in Canada will have a chance to comment on the outcome until it is too late.
This may well lead to an inappropriate outcome: The potential loss of the Canadian nuclear industry, its Canadian jobs, even a loss of electrical power generation in Ontario, if the critical mass of nuclear expertise within AECL that supports the safe operation of nuclear power plants is dispersed.
This is such a problem and a problem of such magnitude that the Canadian economy would likely collapse if that were the case. This should cause grave concern to all Canadians.
Bill C-9 gives carte blanche to cabinet to dispose of the largest Canadian Crown corporation in whatever way it sees fit, with no oversight from Parliament. Imagine giving a real estate agent permission to sell your house without requiring that you agree to the terms and conditions of the sale. This is what the government is asking you to do when you approve Bill C-9 as it applies to AECL.
AECL, which was created through an act of Parliament in 1952, will be dissolved through an act of cabinet and Parliament will have no say. To us, this is a travesty of democracy.
The legislation that allows for the restructuring of AECL should allow the government to implement the restructuring in a prompt and efficient fashion, while ensuring that the restructuring achieves the stated policy objectives. We recommend that a review of the restructuring opportunities be undertaken by a team with all the necessary competencies, and must include representatives of the industry, labour, and current CANDU operators. We believe cross-party representation on such a team would be appropriate. We think appropriate weighting should be given to the evaluative criteria and that these are scored by competent people on the team. Finally, the results of this evaluation should be made public to demonstrate to the Canadian public that the stated policy objectives were met.
Without such checks and balances, Canadians will have no evidence or confidence that the restructuring of AECL will be good for Canada. Canada has created a unique nuclear technology and is one of only six countries in the world that belong to the prestigious circle of nuclear reactor builders — all members of the G8. Our last seven new-build projects, conducted over the last two decades, have come in on time and on budget. Of our 440 reactors in the world, 3 CANDU reactors are amongst the top 5 in lifetime performance. We are second to no one in terms of our technology.
We urge you to remove Part 18 from Bill C-9 and let Parliament decide the fate of AECL, the cornerstone of Canada's nuclear industry. AECL's fate should be decided by Parliament, not cabinet.
Rodney Sheppard, President, The Society of Energy Professionals: Good morning, Mr. Chair and Senate committee members. Thank you for allowing us the opportunity to present to you today on issues we think are important with respect to the sale of AECL.
Besides being the president of The Society of Energy Professionals, I also sit on the board of directors of the Canadian Nuclear Association although I am not appearing here today in that capacity.
The Society of Energy Professionals represents over 8,000 employees in Ontario's electricity sector, including engineers, scientists, supervisors and financial specialists. Our members work for Ontario Power Generation Inc., OPG; Hydro One Inc.; Bruce Power; the Independent Electricity System Operator, IESO; the Ontario Energy Board, OEB; the Electrical Safety Authority, ESA; and other key electricity-sector employers.
Over 53 per cent of our members work in Ontario's nuclear industry. All of these members are involved in the operation and management of CANDU reactors. We are proud of the expertise and knowledge that we bring to Ontario's nuclear industry and believe society can play a role in the debate around the restructuring and sale of AECL.
We are here today to make our concerns known about Bill C-9 and the parts within it that allow AECL to be restructured with minimal scrutiny or public debate.
Bill C-9 will give the Minister of Natural Resources unfettered power to sell off Canadian nuclear technology. We are concerned that this sell-off will potentially limit the growth of Canada's nuclear industry and export highly skilled, well-paying jobs, at a time when governments are looking for clean, reliable energy solutions and green jobs.
Let me remind you of some of the facts that highlight the importance of the nuclear industry in Canada. The nuclear industry in Canada is a $6.6 billion a year industry, employing over 71,000 people in well-paying, highly skilled jobs, including 17,000 directly and 54,000 in spinoff industries.
The nuclear industry pays over $1.5 billion in taxes, and in Ontario alone our 4,300 members will pay approximately $131 million in provincial and federal income tax in 2010.
The nuclear industry in Canada produces 15 per cent of the country's energy needs through emissions-free power generation, demand for which will only continue to grow as Canada's population grows; and the nuclear industry produces 50 per cent of the global supply of medical isotopes.
At the society, we know that jobs in this industry are challenging, knowledge-intensive and high paying — they are good jobs. In these difficult economic times, these are the types of jobs that the government should aim to protect and grow. We know that a growing worldwide need for nuclear energy exists due to the increased energy demands and environmental concerns. Countries that are poised to address these demands will experience economic growth and job creation. Canada is poised to be such a country, if the right decisions are made here today.
The technology and expertise produced by AECL positions Canada favourably in the emerging global energy market. Canada sells over $5 billion annually in nuclear technology worldwide and is seen as a world leader. Worldwide, 34 CANDU reactors are in operation, and with the growing demand for clean, reliable power in emerging economic powers, the demand for our technology will only continue to grow. In fact, even the Government of Ontario has signalled its desire to purchase more CANDU reactors for its nuclear new build.
We have come to testify before this committee to make our voices heard in this matter. Our objectives are simple: First, we wish to ensure that Canada's nuclear footprint, our reputation as a leader in nuclear design and operation, is maintained. This entails maintain and enhancing Canada's nuclear assets and high-skilled, high-quality, domestic nuclear jobs. Second, we wish to ensure that Canada does not become an "intellectual branch-plant" in the nuclear field, with important research and design work being done offshore. Third, we wish to maintain and enhance the level of Canadian content in the nuclear industry and ensure the domestic nuclear supply chain remains intact. Fourth, we wish to increase the public debate on the sale of AECL and its assets.
In conclusion, we are concerned that Bill C-9, if passed in its current form, will give the government the power to unilaterally decide the fate of Canada's nuclear industry. We understand that AECL's operations as they are currently structured cannot be sustained for the long term. However, we are concerned that selling AECL wholesale to foreign interests puts at risk over 70,000 well-paying, high-quality, Canadian nuclear jobs. It ignores the real value of CANDU technology as an asset and treats it as a liability.
Canada has been and can continues to be a leader in nuclear power technology. We ask that the government think about this and the position of nuclear energy stakeholders as they work to restructure AECL in the coming months.
Mr. Chair, senators, once again, thank you very much for this opportunity to speak to you today. I encourage you and the government to include us in any dialogue on this important issue as we move into the next stages of nuclear development in Canada.
[Translation]
Jacques Dubois, President of the District Council of Eastern Canada, International Association of Bridge, Structural, Ornamental and Reinforcing Iron Workers: Mr. Chair, honourable senators, I am the chief organizer for the International Association of Bridge, Structural, Ornamental and Reinforcing Iron Workers. We are an affiliate of the Building and Construction Trades Department. Accompanying me is Christopher Smillie, Director of Government Relations at the Building and Construction Trades Department. I want to start by thanking you for the opportunity to express our views on an issue of paramount importance, one that affects our future as a construction trade.
[English]
I would be pleased to answer your questions at the end, whether in French or English. My notes will be available. I find it less expressive to just read a pre-written text, so I will only say a few key words, and I will make the text available to you at the end.
[Translation]
The Building and Construction Trades Department represents more than 425,000 construction workers in Canada, people who, for the most part, are married with families. It also represents 14 international associations or brotherhoods, most of which have been around and acquiring experience for more than 100 years. It also represents a full apprenticeship program, and let us not forget how much value Canada has placed on the learning, development and knowledge of Canadians and their ability to practice trades and professions. The department also includes 750 training centres across Canada. These centres are managed jointly by the department's affiliated members and the signatory employers. It is therefore a joint initiative that has been undertaken by partners, in other words, construction labour and management.
For my part, in Quebec, I chair the management committee of the steel trades training centre. So I could speak to you at length about the training principle, and that is one of the points I want to discuss.
The Building and Construction Trades Department also includes 10 provincial boards, which bring together groups of associations.
Canada's construction industry accounts for more than 12 per cent of the gross domestic product. Buying Canadian first gives rise to savings in a number of areas, such as payroll taxes. One of the issues we have been hearing about in the media recently is unfortunately the solvency of pension funds and the Employment Insurance Account. When a Canadian worker stays home because he is unemployed, it is due to the fact that goods and services are being purchased overseas. That is part of the total cost. The lowest price is not always the best price for Canada and Canadians.
First and foremost, we represent construction trades. On that note, I just want to mention that on my way here yesterday, I took Highway 40, which goes over the Lac des Deux-Montagnes bridge. I noticed that the water level was at least 4 feet lower than normal. Why? Because we had virtually no snow last winter, and unfortunately we have no control over the rain. As I often say, "It's called the `whether': whether it rains or not." It is beyond our control.
I will give you another example. Hydro-Québec is one of Quebec's shining stars and has a proven reputation. Just a few short years ago, the Manic-5 basin was over 80 feet too low; the water was below the spillway level. Hydroelectricity is clean energy, but you still need water on the other side of the dam.
Nuclear energy is the energy of the future. We make sure, at the Building and Construction Trades Department, that all of our expertise, knowledge and know-how are available to the industry, to our partners, to our employers, to all those who are owners and acquirers, so that we can carry out all future projects. We have under our belt all the experience gained from every nuclear project undertaken in Canada from the very beginning, all the way back to when Slowpoke, our first reactor, was built right up to the latest one.
So all that is available, and, as far as we are concerned, the source makes no difference. You were just given some figures; there are 36 CANDU reactors in operation throughout the world. So it is understood that some sharing takes place. Perhaps Canada's next nuclear reactor will not be a CANDU reactor. We will live with it, we will continue to work hard and to build.
The issue we are talking about today is not just the CANDU reactor. We must take certain things into consideration in Canada. I want to touch briefly on some of the figures you were given; every reactor that is built represents more than 5,000 high-paying jobs. That is expertise that our industries already have. I want to mention, if I may, that just two Thursdays ago, in the Montreal business section of La Presse, Jean Paschini, the chairman of ADF Group Inc., was proudly talking about how his company had successfully qualified in the U.S. — because that is where things are heading very quickly — to build nuclear reactors. His company successfully qualified in the U.S., which means that it now has access to hundreds of millions of dollars per project because it already has the expertise and the skilled workers, who have the training and availability when the time comes. If you look, ADF or even other Canadian companies have had a hand in most of the sports stadiums or indoor skating rinks recently built in the U.S.
Ultimately, the paying user is Canadian, be they a private citizen, such as you or I, or a corporate one; they are first and foremost Canadian. There are two ways you can approach life: planning ahead or wishing you had. I often use the example of labour relations in the construction industry. As you may already know, it can be a bit crazy, and sometimes there are things that need explaining. It is often said that everyone is entitled to a mulligan — you do not have to play golf to understand the expression: everyone is entitled to make a mistake. But you get one mulligan every round, not every hole. You have to keep that mind. If you do something wrong once, it is a mistake. The second time you do it, though, it is no longer a mistake, just an act of stupidity.
Expertise entails an obligation of diligence, which exists at all levels in every position. In your case, you must bear in mind your oath of office. When you agreed to become Canadian senators, ladies and gentlemen, you also agreed that, to the best of your judgement, ability and knowledge, you would always make the best decisions possible for Canada and Canadians.
I want to take a moment to offer my sympathies to the victims of our mismanagement, victims with a capital "V". You have probably figured out that I am referring to the medical isotope issue, which can be likened to the Canadarm used in space. Whenever the Americans have led a space mission, what have they used to handle the airlock? The Canadarm, which proudly bore the Canadian flag. It was and will always be a great source of pride for us.
The same goes for medical isotopes. Canada supplied more than 50 per cent of them. They may not bring us quite as much glory, but they are certainly responsible for saving tens of thousands of people around the world. Unfortunately mismanagement — and I am not putting anyone on trial here, just making an observation — has led to the deterioration of one reactor. One day they just announced that it could no longer be used to produce medical isotopes. The law of supply and demand came into play, and the price of isotopes doubled overnight because they were less available. People who have money can still pay for the medical examinations, but unfortunately they are not available to those individuals who do not have the money, in certain cases, such as screening for cancer, which is a serious illness. And that is one aspect that this bill addresses. In that case as well, we had the expertise. It is the same for our troops who are on peace missions abroad; that is our mission. Supplying medical isotopes may not have brought us much glory, but we certainly took a lot of pride in providing that service to people who really needed it.
The same goes for the CANDU reactor. We developed that expertise, which was a long and labour-intensive process. So how do you acquire expertise overnight? It takes years for things to happen; nuclear research started back in 1952.
Today, we are at the stage where we have to make a decision. I will give you a current example. After more than 30 years, the U.S. president has authorized the construction of 1,000-megawatt nuclear power plants. But there is a small problem: the 1,000-megawatt turbine was sold and is now overseas. Under the Buy American Act, the U.S. has to build two 500-megawatt turbines. As construction workers, you will not hear any complaints from us, because it will take twice as long to build two turbines. But as paying users, that was not a wise decision to wait so long before exporting that technology. That is precisely the situation we have before us today.
Are we going to retain control over our expertise and technology? Atomic Energy of Canada Limited should come up with an energy strategy for Canada, because the issue is under provincial jurisdiction, especially since we have experienced some recent failures when it comes to systems, and even conflicts between premiers arising from the fact that one province has energy and is not willing to share it with another province that does not.
Atomic Energy of Canada Limited has the staff and the expertise necessary to establish a Canada-wide strategy.
There are numerous amendments on the table that need to be made to the current rules. I am referring, among other things, to the significance of the $50 million, a provision in the event of an accident, which should be added to the $650- million figure that is also before you.
What are the real reasons behind the sale of Atomic Energy of Canada Limited? I am not sure. But I would remind you that we used to own Petro-Canada, which was sold off as soon as it became profitable. Nowadays oil companies are making more money than banks. If we had kept Petro-Canada, with the same number of service stations, we could be paying off our national debt right now. That is the difference! Canada made a commitment in Copenhagen, and nuclear energy is definitely the best source of energy we have so far.
Part 18 of the budget should be taken off the table and postponed until the fall so that a more in-depth analysis can be done. The experts — and I am in no way claiming to be one — talked to you about it, and they were loud and clear. So I will end with these words: if the energy that we all use is the heart of the nation, our know-how is its soul.
Today we are asking you not to go ahead with the sale of a part of our soul.
The Chair: Thank you, Mr. Dubois.
[English]
Senator Peterson: Thank you, gentlemen, for your presentations this morning. I am interested in your opinion as to who would be best suited to determine a fair market value for AECL and to maximize the benefit to the shareholder, which is the Canadian taxpayer, whether or not the government should retain some involvement, for example, through a public-private partnership.
Mr. Ivanco: I tried to say in my statements that all of our competitors are government-owned or government-run organizations, where the government has substantial equity, other than General Electric, which is almost the size of a government itself. I do not think we can sell reactors. We have invested approximately $8.5 billion in CANDU technologies over 50 years to develop a unique capability. It is quite an achievement for a small country such as Canada to be able to design and build a nuclear reactor anywhere in the world.
The industry is at a point in its history where trillions of dollars of business will be out there in the coming decades. We will not secure that business if we do not have strong government support both in an equity situation and also in marketing. People in the industry will tell you the best salesperson the government has is Nicolas Sarkozy. He goes out there and sells reactors. Vladimir Putin sells reactors for the Russians. We need that level of engagement from our chief politician as well, and we need equity to put some meat behind that marketing effort. A country that wants to buy a reactor needs the security of knowing that the organization from which it is buying will be there for half a century. Not many companies have that level of credibility.
Senator Peterson: You do accept the premise that there must be some type of restructuring to be effective?
Mr. Ivanco: Yes. The industry is restructuring, and it is restructuring because the scope of the business is increasing, or will, to the point where it was in the early 1970s when reactors were being built every month in the United States. They were being mass produced, and we will be at that level again in the next 5 to 10 years, so the industry must restructure.
Senator Finley: Thank you for your presentations. I understand you are here to represent your industry and, more particularly, those people employed in your industry. We are here trying to do the same, but we are also trying to protect the interests of Canadian taxpayers.
It was interesting to hear Mr. Ivanco say a few minutes ago that, over the next few years, there will be trillions of dollars of business available. Yesterday, we were told it was $400 billion, not trillions. Obviously, some numbers are floating out in the atmosphere somewhere that do not seem to add up. What does not add up is the fact that, up until now, in now dollars, the Canadian government has stood behind AECL to the tune of some $20 billion. The current liabilities are over $4 billion. I sometimes get a little annoyed when I hear the relationship to the Avro Arrow. This is not analogous to the Avro Arrow. This is a 50-year project in which the Canadian government has been involved.
At this point in time, the Canadian taxpayers lack of confidence in AECL and, probably by extension, the nuclear industry at large. You are asking these people, who have already invested all of this money and, at this point in time, feel somewhat let down, to invest more. No one, however, can tell us how much more. We hear such things as the need for smarter management, projects to be managed better, partners — this is not just you guys, rather this has been over several days now — infusion of capital and more time. We hear about all these needs, yet no one can tell me or even suggest how this might be arranged. Who will take on $4 billion or $4.5 billion of accumulated debt and $20 billion investment, to, in effect, a corporation or an industry that has not sold a new reactor in 14 years? This requires a massive injection of funds.
I think it was Mr. Routliff who said that obviously the assets of AECL would go at a bargain-basement price. I wonder if perhaps your pension funds may be prepared to invest and risk the money, seeing as it is such a good deal. No one so far has been able to come to this committee, at least that I have heard, and make a sound business case. I wonder if someone on the panel could please tell me what the business case is, with some hard numbers.
Mr. Dubois: Senator Finley, I can mention a few numbers. For example, up to most recently, I was the treasurer of Quebec's building trade. You mentioned pension funds. In August 2007, the price of gold was $280 per ounce. However, the president of Manning Association said that by November, it would reach $480. I talked to investors who said that it was not a sure deal, so we did not buy it. No one knows the future. I will give you some others numbers. It has been 30 years since the last American reactor.
In 2022, 56 per cent of the population in China will be aged 65 or older. Today, China has more than U.S. $150 billion invested in Africa, which does not have that much wind or that many rivers. Everything that is currently made in China will shift to Africa. I do not think they will bring people from Africa to China because they are doing the opposite now. In every place the Chinese land, they establish a Chinatown. They build hospitals, roads, infrastructure, mines and projects to extract oil, and they leave their people on site. They do not get involved in local politics, but they do speak the language and know who is who in that business. When that shift happens, guess where they will get the energy from. It will be from a nuclear reactor. Let us get in the game.
Mr. Ivanco: The size of the business is not hard to calculate. It is estimated that a couple of hundred reactors will be built in the next couple of decades. The most definitive estimate I have seen is by the South Korean government, which made it a goal to capture 25 per cent of the market. They estimate that will give them $400 billion. Perhaps that is from where the number came.
With respect to the business case, people need to understand that AECL was created for many reasons. It is a national laboratory and a depository of knowledge, but there is also an engineering division, which is the part that is for sale. Until last year, we made money every year for two decades. The Rothschild report broke out the profits of the engineering division from AECL, and it shows that we made money every year until last year. It is the profitable part of the company that is being sold.
We have not made money on the refurbishment projects, but we are improving, and the refurbishment project that we are working on now in South Korea is very close to the budget and schedule. Potential investors see that and see it as a potentially lucrative business.
There is a business case for selling the engineering division, but that business case tends to disappear if it does not have proper government support similar to what all of our competitors have. A business case does exist; it is a profitable business. That is why the bidders are out there.
Mr. Routliff: Thank you for your question, senator. You have raised some interesting points. First, on my Avro Arrow comparison, I thought I was the only one who raised it, and I thought I was being ingenious, but you are telling me I am not, so thank you for that. I am comparing it to the use of the technology. It is probably a higher level than the Arrow, but abandoning it would be a travesty.
I do not envy the responsibility of this committee, and I hear your frustration. You are asking when you should cut the line, which is a fair question. It is hard to do from the 30,000-foot level when looking for a business plan that should be created by management. That is where business plans originate, and the board would confirm it.
Mr. Ivanco has given you some numbers off the cuff. There is an excitement in the industry that I have seen pick up over the last number of years. We have membership in the United States, having numerous plants there. The need for energy exists, but the world has undergone a shift now in response to the change in weather. At one time CO2 was talked about but not acted on. We are now seeing the elements change. People are saying that the scientists were telling us the truth, and they are looking for alternatives. We are seeing a rush for renewable sources such as wind and solar, but it will not provide a baseload. That is the change we are seeing.
In terms of the opportunity for refurbishment, I have a seven-page printout of nuclear plants in the United States. Many of them are 25 years old or older. They have to do something with them. They will either decommission them or refurbish them, and refurbishing is the cheaper thing to do. They cannot lose that energy; they need it for their economy.
I would like the opportunity to come back to you with additional information, if I may. You have raised the question of pension funds. I was the chair of the investment committee on the OMERS pension plan for three and a half years, so I understand the strategies with pension funds. I do not know how I would be able to approach these funds with any authority, although the Senate would, but I would like the opportunity to come back to you and see how that looks.
Building trades and local unions manage their own pension funds. We do the all the training, manage the pension funds and manage the benefit funds. We have relationships with employers. Therefore, when employers need membership, they pick up the number of people they need. When those workers are done on that job, they go back to the hall and pick up another job. There is no overhead for the contractor, and they are normally part of our plans. When they get rich, we get rich. When their contractors are working, we are working. We have great relationships with them, and we have pension funds that would potentially be interested in that type of a venture.
The Chair: If you would like to send something in written form to the clerk, it will be distributed to all our members. That would be very helpful.
Mr. Routliff: Thank you for the opportunity.
Senator Callbeck: Thank you for your presentations. Mr. Shier, I would like you, and anyone else who wants to, to comment on the suggestions you have made in your paper. You want the Government of Canada to have a major stake in AECL and that it not be fully privatized. Will you explain to Canadians why you think that if it becomes privatized, Canadians will worry about safety? That was the first thing you said.
Mr. Shier: It is our belief that if AECL is fully privatized it would be bought by a large entity. As was indicated by some of the other speakers, although perhaps not right away, but probably in a few years, we would see our technology disappear and be replaced by their technology, and we would lose that technology.
With respect to the safety aspect, Canadians trust their own technology. The CANDU system has operated safely for many years. To introduce a different technology into the nuclear debate would be confusing. People are more comfortable with what they are used to than they would be with the new products that would come from offshore.
Mr. Ivanco: I brought up the same issue. You must realize that in heavily regulated industries there is the concept of design authority. Most people are familiar with entire fleets of airplanes being grounded when generic design flaws are found. AECL is the design authority, and it is owned by the Government of Canada. Twenty years ago, Ontario Hydro could design reactors as well as us. However, their design group was disbanded, and we hired many of them. When Ontario Hydro was broken up, Humpty Dumpty was broken up as well. That would have been a serious problem for the operators were it not for AECL and its critical mass of expertise. We are the design authority, and selling us to the private sector sells the design authority to the private sector. That will make all the CANDU operators extremely nervous, including the Government of Ontario, because the private sector is driven by different goals and objectives than an entity owned by the government.
Senator Callbeck: That is what I was getting at. You went on to say that you believe a private AECL would not create jobs or maintain the current number of jobs.
Mr. Shier: Again, an offshore company will tell you that it will maintain jobs, but I suggest that more jobs would be in their country than would be in Canada. We have an infrastructure for our design, which you will probably hear about later today, and our supply chain is in Canada. If it stays within AECL, those supply-chain jobs would stay in Canada, whereas a foreign investor would ensure that plenty of jobs are in their country. That would be their priority over jobs here for the long term.
Mr. Sheppard: Coming from the former Ontario Hydro here in the province, we were promised a decade ago that we could privatize certain parts of the corporation. The corporation was quite cautious in what they allowed to be privatized. Those jobs were supposed to maintain servicing the fleet, OPG, and companies were spun off. Historically, those jobs shrunk or disappeared. For example, information technology, IT, jobs for part of this fleet are now located in India.
The union fought to wrench those jobs back. We have been reasonably successful, but our concern — and, it is shared by the panel — is that once you allow that to migrate to another jurisdiction, any decisions that they make will only be based on one driver, namely, whether it will make me money. The second driver will be that it caused some grief from a safety perspective. Money comes first, then safety. Right now it is safety first, money second. We like it that way. It has worked well for 50 years. That is the concern when you start spinning out business parts. We have already experienced that in Ontario.
Senator Callbeck: You said that a government-backed company would be better able to sell Canadian nuclear technology around the world. Will you explain to Canadians why you say that?
Mr. Shier: I was fortunate to have the opportunity to travel internationally within the nuclear industry, so I talked to workers in other countries. To give you a prime example, last week our union hosted a union delegation from Egypt that represents electricity workers there. They wanted to learn about our system. They were interested in nuclear power, for example. They were very interested in learning about the CANDU system. When we explained that AECL was a Crown corporation and that is was a government-backed corporation, and so on, they indicated that that would give them a secure feeling because Canada has a good reputation around the world.
Purchasing a product from a government-backed company was a benefit to them. I believe that view would be shared by many other organizations that I deal with. Other countries that I deal with are also interested in the CANDU design, because they say it is a good, safe system. Their perspective is that it would be easier to sell reactors under a government-backed company.
Senator Marshall: Thank you to the panel for being here this morning. My question is to Mr. Routliff, but I am interested in hearing the views of all panel members.
You said that now is not the time to divest AECL because better times are ahead and that we should wait until we can maximize the return on our investment. We have heard from a number of witnesses now, and they have referred to the large subsidies that are going into AECL, the accumulated deficit that is increasing, and the fact that, even with the subsidies from the federal government, they are still incurring significant losses. We have heard other witnesses testify that projects are over budget and not being completed on time. Yesterday, we heard from members of the medical profession, who spoke about the loss of confidence in AECL, especially with the isotope issue.
Could you elaborate on that? In your presentation, it sounded as though AECL is getting ready to launch into better times, and that to restructure or to privatize AECL would be premature. Could you elaborate on that and give us your views as to why you think all of these problems that have been identified to date will be resolved, hopefully, in the near future?
Mr. Routliff: That is quite a number of questions. I will do my best to tackle them as quickly as I can.
Let us deal first with the isotopes. We all need to know that the NRU reactor was 50 years old when it failed. It was a small leak, but, ultimately, I do not think there was a backup plan for that type of situation. I do not know how you want to interpret that, but that reactor was running well over its time. Talk about return on investment; that had to be a fantastic investment if you took that on its own.
Nevertheless, that, too, is a business line. I cannot speak for the company or for the board of AECL on what they were thinking or how they decided to do that, or the management at Chalk River. Our workers were there. We also sit with the other building trades, and we knew. We do the work on those things. Everyone knew that it was almost time for it to cease operation and that something would eventually happen. No one knew when; it just happened at that time.
I do not know how to answer that, other than to say that you would think that other provisions could have been made.
Senator Marshall: Even with that, when they were trying to gear back up, they were providing cost and time estimates that were not being met. Next month, it is supposed to come back on stream. We are all waiting with bated breath, wondering if this will materialize. We are saying that the reactor is old, et cetera — and we all know that — but we still have a big problem. It is not just that project but other projects, too. It is not as though it is one problem; a variety of problems have to be overcome before we launch into what we are anticipating.
Mr. Routliff: As I said in my remarks, refurbishment is not child's play. It is technical and difficult. We are seeing unforeseen things occurring. I will give you an example.
At Point Lepreau — and, I do not know if you are familiar with the CANDU reactor — they are sealing off the tubes and rolling those joints, and as they put testing on it to determine if it is sealed properly, they are getting a small, minute amount of leakage. Where does that come from? They are now thinking that it was potentially the water-based solvent and that it should not have been that type of solvent.
Small things such as that cannot be foreseen, but you put that in the book. That becomes the business case of the refurbishment practices, and you know not to use that in the future. It is the small things such as that or tools or robotics that are set up initially and you do the best you can, but, when you are putting it in, you have to rebuild it perfectly. If the alignment is off a little — and you do not know that until you are there — you have to stop, realign it and put the tools in place. That is what we are seeing.
The importance of my message is that we are learning from that. I believe there will be opportunities for that business line. I am not privy to AECL's business plan or their processes, but I read their annual report. It seems that their services went up from $78 million to $120 million. They are starting to move on the business line. That tells me that it must be part of their plan to build up the refurbishment plan. I do not know how else to answer.
Senator Marshall: How long do we wait? While we are waiting, Canadian taxpayers are putting money into the corporation to keep it going. After hearing some of the witnesses testify and reading the financial statements, we are left wondering whether the public purse can sustain the money required to keep that organization going. It is not as though it is a flat amount, either. It seems that the amount required by the corporation is escalating. If you are looking forward and thinking that, at some point in time, we will launch into better days, that trend is not there.
Mr. Routliff: I heard from Senator Finley about looking for the business case for it. I hope to be able to find information on that and provide it to the committee.
Mr. Ivanco: Any time you embark on a complex new business, there is a learning curve. When we built reactors in the early 1980s, they were over budget. However, the last seven reactors have been on budget and on time, and we earned a large amount of money, although that money went to the Treasury Board and not into our general coffers because we are a Crown corporation.
The early oil sands projects were 200 per cent or 300 per cent over budget. However, they build them now and make money on them. Darlington Nuclear Generating Station was over budget, yet it makes some of the cheapest electricity in Ontario now.
Big, complex projects always involve a learning curve. Once you get over that, you start making money. Mr. Routliff mentioned that we are over budget at Point Lepreau, but the project in South Korea, which is virtually identical in scope, is on time and on budget. We are learning from our mistakes and growing pains. The next project after that should be more efficient and more profitable still. I do not think it is far away; I think we are very close.
Senator Ringuette: Mr. Ivanco, you indicated in your presentation that the intellectual property belonged to the designer. Can you elaborate on that? We were under the impression that it was legally the property of AECL and was up for sale.
Mr. Ivanco: There are design drawings for a CANDU reactor. If you take those design drawings and try to build a reactor, it will not work because much of the knowledge necessary to help make it work is between people's ears. The intellectual property is important for building, and it is perhaps even more important for operating a reactor safely.
I mentioned the example of how entire fleets of airplanes have been grounded in a heavily regulated industry. This happens within the nuclear industry, as well. Reactors can be shut down because something happens and the regulator comes to the operator and says not to start that reactor up again until the problem is fixed or until it is demonstrated that it is safe to run with it.
I can tell you that our members become extremely busy getting that reactor up when these events happen. Every day of downtime is a million dollars lost. With that intellectual property, you cannot write down a recipe for someone to fix problems such as this. You need the people with the expertise to come forward to do it.
Senator Ringuette: Exactly. My biggest fear is that we will have a foreign owner of the CANDU technology and refurbishing experience, and that the 20 CANDU reactors that we have right now in Canada, along with all the investments in those CANDU reactors from taxpayers and different provinces, will be gone. We will lose these jobs. We will have to buy from foreign owners if we want to keep nuclear energy in Canada.
I am a New Brunswicker, and we are a small province with a small pool of taxpayers. We have just reinvested $2 billion in Point Lepreau. We understand that it was a learning curve with refurbishing and so forth. On the other hand, we made that investment assuming that we could count on that CANDU reactor to provide electricity to New Brunswickers for the next 25 to 30 years.
If we lose that CANDU technology, knowledge and so forth, then our investment is down the drain for the next 25 or 30 years. That is just one nuclear reactor in New Brunswick. There is one in Quebec — Gentilly-2 — and 17 in Ontario. If I were a resident of Ontario, I would be up in arms against what this government is trying to slide into a budget bill.
Mr. Ivanco: I am not sure if that was a question.
The Chair: You may or may not react to it.
Mr. Ivanco: You brought up the Avro Arrow analogy, with which I understand some people have difficulty. We have always said from the start, since we have been commenting about this, that we are not that concerned about our members' jobs. That may seem odd for a union person to be saying that. However, I say it because our members are very mobile and have skills that are in demand.
If you talk to any of our members, without me around, they will say, "I am not worried about getting a job; I will get a job somewhere. That is not what concerns me. I am proud of what we have here. We have developed something special. I like my job, and it is interesting. I do not want to do something else, but I will if the money is good."
Only time will tell whether this becomes a situation similar to the Avro Arrow. If the worst thing happens and our members disperse, and, if 15 years from now we have to start replacing CANDU reactors with pressurized water reactors from France, Japan or wherever, then, yes, it will have been an Avro Arrow. It would be just the same as when we had to buy CF-18s from McDonnell Douglas in the 1980s.
Mr. Sheppard: You have heard it from the panel today. If AECL is sold, there is a better-than-average chance that another government will become involved in that. Why should it not be our government? Keep it where it is; partner up, restructure and do whatever else is required.
Obviously, we did not come here with that answer today. We are here pleading that some of the processes are used. We have had this debate, and the debate should be taken back where it should be, which is back to the government.
If AECL is to be sold holus-bolus to someone, there is a good chance it is going to a government. Why give it to another entity? Why not keep the control and work at making it better?
There is a renaissance that we hoped would happen two years ago. We were all on the edge of our seats hoping that the questions Senator Finley was asking would not need to be asked anymore. We would have just moved on, and we would be rolling forward, first in Ontario and wherever else after that.
This will require some government to back many things. We are hoping it is this one and that Ottawa makes the guarantees it has made in the past, and let us get on with it. If AECL requires some tweaking and restructuring, then, fair enough, let us do that. However, let us move on with the business because every day that we wait in Ontario for this decision becomes another day that I have another problem. I have a lack of generation; I have band-aid solutions to complex problems being made in Ontario. This issue has to be dealt with, but it has to be dealt with a debate. Let us move to that.
Senator Neufeld: I have heard interesting information both yesterday and today. Generally, I do not think you would be opposed to a restructuring, which is allowed in Part 18 of this bill. It does not say that AECL will be sold to some foreign government; rather, they have opened the kimono to say, "Here it is; come bid on it and give us an idea of what can be done, whether that is partnering and other courses of action."
I totally understand the job situation, the high technology and all of those issues. I would like to keep that here. I do not think the government thinks any differently; they want to actually see those jobs stay here.
Contrary to what Senator Ringuette said, the Liberals in the other place voted for this bill, as did the Bloc and the NDP. It passed through that house to come here, so there must have been some thought process from the Liberals and other parties. Therefore, maybe this is okay. Would you agree that this allows for a restructuring? I think I heard from all of you that a restructuring is badly needed to be able to compete in the marketplace.
Mr. Ivanco: I am not a politician, though my recollection of what occurred in the other place is that everyone voted against it, but not enough people showed up to vote against it.
Senator Neufeld: That is how it works.
Mr. Ivanco: Regardless, I think a restructuring is necessary. I agree the bill allows for it. That said, the bill allows for anything. It allows for the company to be sold or split into 10 pieces, if that is what cabinet desires.
Our problem is that it allows the cabinet to do anything that it wants with the company. This is enabling legislation that basically says that you need to kill a fly, here is a sledgehammer; use it however you want. We think that is a bad idea.
Mr. Routliff: We had Mr. Ignatieff come to our building trades conference, and he was asked whether he would vote against this or try to take those items out of the bill. His response was that the people of Canada do not want an election right now. This is a confidence vote, and by putting these matters in this bill, it kind of sets you up.
I am not portraying one position or the other; I am just asking why these matters are in a budget bill. It is a confidence bill. That is the leverage this government put on Parliament.
Senator Neufeld: Could I get an answer to the question, the politics part aside? All I want to do is remind Senator Ringuette that some Liberals voted for this bill in the other place. I wanted that on the record.
Mr. Routliff: With respect to partners, that was something that Senator Finley was alluding to with pension plans. I mentioned in my presentation that if Canadian partners were interested in investing in AECL, that would fit right along with our views, absolutely.
Senator Hervieux-Payette: My constituency as a senator is Bedford, Quebec. Senator Rivest comes from there as well. We are the most represented in the country.
Mr. Ivanco, you alluded to the request for a proposal or something that was prepared by the Rothschild group. You talked about three different points. Is that available? We were not supplied with that.
For the first step, when the government wanted to decide on the future, they asked Banque Nationale du Canada to decide what that future would be. For the second step, in the middle of last year there was supposedly a request for proposal, RFP — and I asked for the request for proposal. Since then, Rothschild has repeated four contracts, totalling $2 million, that were signed with Natural Resources Canada.
We are kept in the dark, the same as everyone else, on that. We do not know what the contract was, what their mandate was or what recommendations will come from it. Were you privy to that information — at least what could be available to us on the scope of the mandate of Rothschild?
Mr. Ivanco: What I quoted was from the Rothschild investment summary. The document is on the NRCan website; it was there in December 2009. With respect to the actual RFP and the terms and conditions under which Rothschild is engaged, we have asked for it repeatedly and even put in a freedom of information request, but it has been postponed and delayed. We also would like to know that information.
Our own opinion is that the banker is potentially conflicted. If they were engaged on a basis where they would get a percentage of the sale of AECL, they are in a conflict of interest, in my estimation. We wanted to find that out, and that is why we filed a freedom of information request, but we have not received that request back.
Senator Hervieux-Payette: Did I understand correctly when you said that they are experienced with that type of business? When they were asked to analyze, maybe there were some Canadian companies that could at least have set the terms of reference for the restructuring, and at the same time, perhaps they could have conducted the process because it is a two-phase process. The first was the pre-qualification and the second was the qualification, which started at the beginning of this year and should end up, in terms of tabling the first step, in June of this year.
The Deputy Minister of Natural Resources told us last week that we would have a final answer in December of this year. The process is quite engaged. I have not heard that there will be partnership or some government involvement in the future. The only thing we heard from the ministry was that the mandate was given to divest the commercial portion.
We know that it will not be a company such as Loblaw Companies Limited that will partner to buy that asset. Only a few companies in the world have knowledge about nuclear energy. We are talking about a very high-skill sector.
Therefore, who are the companies that would make proposals that would make sense in running a nuclear energy business? Do you know of more than those you mentioned? I am not aware of more than five or six potential buyers that know how to operate nuclear energy plants with different technology.
Mr. Ivanco: The number is probably six; half a dozen is roughly correct. I do not know who, if any, might have expressed interest in AECL. I could not say.
Does the organization running the process have competent people to assess whether the objectives stated in their investment summary have been met? That is my biggest concern. I have asked them — even suggested names of third parties I think were respected by everyone — but they have not engaged them or told us that they have engaged anyone that we would consider to be an expert in the nuclear business. They have some competent bankers, but I do not know about people who know about the nuclear business.
Senator Hervieux-Payette: Could you at least tell us if there is one Canadian company, besides SNC-Lavalin, that could partner with government on this?
Mr. Ivanco: All I can say is the companies out there in the nuclear business that are big in Canada are generally known; there is SNC-Lavalin, Babcock & Wilcox, GE-Hitachi Nuclear Energy and Bruce Power. I do not know if any of them are interested in buying AECL, but people generally know who the big companies in this business are in Canada.
Senator Runciman: Contrary to a statement by one of the witnesses, AECL was not created by an act of Parliament. It was created by an order-in-council and incorporated under the Canada Corporations Act, pursuant to the powers of the Minister of Natural Resources under the National Energy Act. If it was created by cabinet, surely it can be restructured by cabinet.
Today and yesterday, we heard promises of better days ahead from people who were not terribly enthused about this initiative. I think we can all share the view that the potential for nuclear looks promising. The concern is where AECL fits into that picture.
The other side of the coin with respect to jobs is that not selling AECL can indeed risk Canadian jobs. There has not been a CANDU sale for 13 years, and we are not aware of any on the horizon. Someone mentioned the last CANDU sale to China and Prime Minister Chrétien, but to make that sale, he provided $1.6 billion from the Canada account.
Senator Ringuette: It was paid.
Senator Runciman: It was still a sweetener to the deal. That is part of the way. We are talking about— and we have heard this time and again —the issue of confidence. It is not just the government losing confidence; I think it is the people of Canada.
We have seen the Chalk River debacle. We heard yesterday that the Americans believe that they were betrayed with respect to Chalk River and the isotope supply. We know now that MDS Nordion has filed a $1.6 billion lawsuit against AECL for defaulting on its contract. The taxpayer will foot the bill if that lawsuit is successful.
You will be familiar with Jan Carr from Ontario Power Authority. She said the following:
Internationally, AECL is hobbled as a publicly-owned entity without access to commercially motivated capital and organizational flexibility . . . . We would all benefit from a well executed privatization focused on relieving taxpayers of AECL's business risks while freeing up the company to pursue global commercial opportunities.
I would like you to respond to that. I understand your position, but I think you also have to understand the frustration of Canadian taxpayers with the never-ending, better-days-ahead scenario.
Mr. Ivanco: I would like to comment on that. As I mentioned before, the part of AECL that is for sale is the CANDU reactor division, which has traditionally always made money. The liabilities associated, for example, with isotope production in NRU will remain even after the sale is gone, and the Canadian taxpayer will have to foot those.
When it comes to the NRU reactor, I do not want to make it sound as though I am dumping on the other part of the company in Chalk River. When I joined AECL in the late 1980s, it was not Chalk River. They were building an NRU replacement reactor called the MAPLE-X10 and paying for it with the proceeds of the very profitable radioisotope business. That radioisotope business was spun off and sold to MDS Nordion, who made billions in profit from it; yet, we lose money producing isotopes. The MAPLE-X10 reactor project was shut down. It was a multi-purpose isotope- producing research reactor. We subsequently built one in Korea that works just fine. That is where the seeds of the isotope crisis were planted. Most of the liabilities will remain after the commercial part of AECL is sold off. We had generally made money. We have lost money at Point Lepreau, which has been a tough learning curve. However, I am confident that we will continue to make money moving ahead because historically we have done so.
We welcome restructuring. The criticisms and other things that Mr. Jan Carr mentioned are absolutely right. We need some private-sector involvement to do some of the heavy lifting. We have been saying that when the competition is government-owned and led corporations that have the weight of the federal governments of their countries with the deep pockets behind them, you cannot compete if you are a 100 per cent small Canadian company. About 12 years ago, the biggest company in Canada was Nortel. Had Nortel sold reactors instead of cellphones, their buyers would be in big trouble right now.
Senator Murray: I will pick up on the exchange between Mr. Ivanco and Senator Neufeld. It is true that Bill C-9 will give carte blanche to cabinet to do whatever they choose with AECL. Depending on how much confidence you have in that process, that might be good news or bad news. It is not the way we privatized Air Canada or CN or Eldorado Nuclear Limited or Petro-Canada. In each of those acts of Parliament, we imposed certain terms and conditions.
My question to you is: What will we do with this bill?
[Translation]
Mr. Dubois is strongly urging us to simply reject it.
[English]
Are there terms and conditions that you would find acceptable that could be put by way of amendment into this bill? If you want to send them to us in writing, by all means, please do.
Mr. Ivanco: Briefly, the excuse for putting this in the budget bill was to get it done quickly. I believe that everyone agrees restructuring is necessary and should be done quickly. We think it should have been done separately because even with this bill, it will not be done until the end of the calendar year, if we are lucky, which is a long way away.
Senator Murray: What do we do with it, then?
Mr. Ivanco: To separate it from Bill C-9 at this time will not slow things down because the restructuring process likely will not be concluded until the end of year, if we are lucky. It would give the legislative process a chance to a catch up with the commercial process.
Senator Murray: Do you suggest that terms and conditions be put into a new bill?
Mr. Ivanco: We will suggest that, but I cannot speak to those now. We could do that in writing.
The Chair: Anything that you can send to the committee in writing would be helpful and appreciated.
Senator Dickson: Thank you for the excellent presentation. As I understood your theme, restructuring is necessary, although if you had more time or were given more consideration, you would have brought together a consortium that included your profession and other groups to address the weaknesses. We do not have to get into the weaknesses of AECL or its component parts. Along the line that Senator Finley was discussing, I am interested in whether there is the desire and the time for you people to put together such a consortium and develop a business plan that would set out clearly the extent of the necessary government support. Do you have comments on such a business plan and what the financial exposure would be?
The Chair: On the written reply to the business plan, would anyone be interested in acting in an advisory capacity?
Senator Dickson: In an equity capacity as well, I think. Unions have substantial funds to put at risk.
The Chair: I believe that Mr. Routliff indicated he would reply in that regard as well.
Mr. Routliff: Yes, if I could, absolutely.
Senator Banks: Mr. Ivanco, I do not understand anything that contains more than three zeros. If I may abridge clause 2139, it says that the minister may sell all of the securities of AECL.
You talk about the part that is for sale. I am dumb, in this respect, and I have always understood that AECL encompassed all of the operations of AECL: Chalk River, the engineering, the sale of CANDU reactors, et cetera. Am I labouring under a misimpression in that respect? Is some part of what you are talking about not encompassed in clause 2139 of this bill, which says that the thing can be sold?
The subset to that question is that we have heard rumours from others that the MAPLE reactors, which are not working, could operate at less than full capacity and produce isotopes. Isotopes are very sexy but the research aspect of AECL is just as important as the production of isotopes.
Mr. Ivanco: The bill allows the government to do anything with the whole corporation. The answer we received is that they need this enabling legislation so that a year from now, after they have sold the commercial division, which they are doing now, they may be able to disposition AECL. They might plan to bring in private-sector management, but the government would maintain ownership of Chalk River Laboratories, which is where the NRU is located.
However, it does not say that in the bill, so we have to believe that the minister is telling us the truth. I am sure he is an honourable man, and I believe him. That is what we have been told. Currently, CANDU Inc, which is the commercial division of AECL, is for sale. We have to take what we have been told on faith.
Senator Banks: We are not passing policies or intentions at this committee. We are passing law. This proposed law says that AECL can be sold — period.
The Chair: I apologize that we have run out of time. All are welcome to stay and listen to the comments by the next panel on AECL. The fact that we have run out of time and that many senators would like to ask more questions is an indication of the quality of your presentations. We appreciate your appearance before the committee today.
Honourable senators, we continue our discussion of issues affecting AECL, which is Part 18 of the 24 parts of a 900- page bill, Bill C-9 on budget implementation and other matters.
We are very pleased to now welcome Mr. Neil Alexander, President, Organization of CANDU Industries, OCI. We welcome back to our committee Mr. Jason Cameron, Director General, Strategic Planning Directorate, Regulatory Affairs Branch, Canadian Nuclear Safety Commission, CNSC.
Senator Dawson: I have a point of order.
The Chair: Point of order, Senator Dawson.
Senator Dawson: Following this morning's meeting, I am sure Senator Neufeld did not purposely want to mislead the committee, but the Liberals in the other place did not support the bill; they just did not vote against it. There is a big difference. On the record, you understand that there is a big difference.
Senator Neufeld: Go to the record and have a look.
The Chair: A point of clarification, then; we now have two different statements. The record speaks for itself.
Senator Dawson: We have it on the record.
The Chair: Honourable senators, sometimes imposing questions exaggerate the facts somewhat in order to make the point. We all understand that.
Please proceed with your presentation, Mr. Alexander.
Neil Alexander, President, Organization of CANDU Industries: Good morning. I very much appreciate the opportunity to speak to you today. I did have some written introductory comments that I have scribbled over as I listened to this morning's presentation to the point where I now cannot see them. I will try to address the issues as I felt they arose this morning.
As an introduction, I am President of the Organization of CANDU Industries. The OCI is an association of about 165 companies that have bases in Canada and that have sufficient interest in the nuclear power technology industry to consider it worth being part of an association.
Our private-sector member companies employ around 30,000 people directly on nuclear work, and they represent a significant proportion of the 70,000 people who owe their livelihoods to the investment by Canada in its nuclear technology.
We are an independent organization. We work closely with stakeholders, such as AECL, and the power generators, such as OPG and Bruce Power, but we do not represent their views; we represent the views of the supply chain.
I thought it might be helpful, having listened to the discussion this morning, to bring forward a few distinctions. A number of issues came together, at which point they became confusing. First — and I think everyone has recognized this — in principle, we are dealing with the restructuring of AECL. In practice, we are dealing with the restructuring of the entire Canadian nuclear power technology supply industry. That is the first observation.
Second, AECL is an organization, a Crown corporation, and it has a number of different business lines. The CANDU is a technology that has been successfully deployed around the world and demonstrated as a very effective generator of nuclear electricity, one that can be and has been routinely built to time and cost.
I also thought it would be appropriate to make a distinction between the isotope business and the nuclear power technology supply business. The two are completely different. If we use the oven as an analogy for a nuclear reactor, you can use it to fire pottery or bake a cake, but it does not make a cake into a plate.
We should make the distinction between the investment in the isotope business, which is a medical business, and the investment in the nuclear power technology business, which is different even though both of those investments are made through AECL.
I also wanted to make a distinction, because I think it was being raised and confused this morning as well, between a business being in Canada and it being a Canadian business. I put it to you that the important part in the modern world is that jobs are created within Canada with the businesses based here, and we hold the intellectual property. Who the owner actually is is largely irrelevant in the modern world, with most companies being huge international, multinational companies. That creates some distinctions that are very important to me.
I also want to make an observation about some of the discussion in which we were clearly looking at the context of the fire and some of the challenges that might be created from the heat within the fire, but we were ignoring the frying pan that we currently sit within. That is an important part of the discussion.
It is important to understand that the state of our industry at the moment and the uncertainty surrounding AECL is crippling that business, and therefore it must be sorted out soon. Without resolving this issue, we will not have a business to be discussing. We will lose it. The issues are quite critical in terms of timing. SPEA did not mention it, but I am sure this will be one of the issues that AECL is facing. If they do not have a long-term future that is clear to their employees, in a market where their competitors are recruiting people daily and aggressively, nuclear engineers enjoy building nuclear reactors, and if they are not doing it for Canadian companies, they will go abroad. We do not have the luxury of time to deal with some of these issues. We must get some resolution in the near future.
The frying pan is a very uncomfortable place to be, and we need to take that into context when we look at the other options. Many of the upsides of the options are attractive, and that is where I would like to focus next.
In restructuring AECL and, therefore, the Canadian nuclear power technology supply industry, we can go two routes. One is that we can take Canada back to a superpower status in the nuclear industry. We are one of the world's largest suppliers of uranium. We are one of the few nations that have a developed reactor technology of our own that can meet the requirements of the current renaissance. In creating a superpower, it is more than just the immediate opportunity that is created by the industry. Everything in the nuclear power industry is very big, strategic and long term. When you do a deal with another nation to sell a nuclear reactor, you are actually creating a long-term relationship with that nation that will last for the 10 years while you build the reactor and for the 60 years thereafter that it operates.
There is a much bigger play than the immediate deal. That needs to be taken into account when we consider the opportunity to become a superpower.
Also, in doing that, we retain our ability to undertake R&D and to innovate not just in the nuclear industry itself but in surrounding industries. For example, though I divorced the isotope industry in terms of the investment, it is very clear that, as a result of having a nuclear industry, we brought those people into the nation, and we have been very successful in developing that other line of business. Therefore, there are related benefits.
If we are carrying out R&D and innovating, we are attracting people from around the world into Canada and attracting in some of the very best talent. That is an upside as well.
The final upside in being a superpower is in the creation of high-quality jobs for people on the shop floor producing nuclear components. If we are selling CANDU reactors around the world, then we are also selling the components that go into them. Those are largely supplied by members of my organization, and they are supplied out of factories here in Canada. It is a very big opportunity for us, if we get it right.
In talking about the opportunity, it is sometimes difficult to grasp the scale as we talk about billions of dollars and the overall opportunity in the trillions of dollars. I have been very impressed with the way the Koreans have dealt with their industry. We heard this morning about the sale that they made to the United Arab Emirates. That was a $20 billion deal. That does not mean too much to people. It is obviously a very big figure, but it is difficult to get your head around it. The Koreans, in order to make their people understand just how significant an opportunity it was, put it in terms that they understood relative to their industrial base. They said that this one contract is equivalent to the export sales of one million cars. That starts to really create the value.
One million cars may not mean too much to you in terms of a picture. If you have been on Highway 401 on a Friday night you have some impression, but to give you a more economic impression, that is two thirds of Canada's entire output for a year in one single contract. That is the significance of the ability to sell reactors around the world. To gain the benefits of that, we need to continue developing and innovating within the CANDU technology.
CANDU Inc, the part of AECL that is presently being restructured in this existing round, is an essential part of creating the opportunity for us to take that superpower status and have those opportunities in job creation. It is also important in ensuring the success of the existing fleet of CANDU reactors. We heard this morning about its role as a design authority and of supporting the existing reactors operated by OPG and Bruce Power and by countries around the world that have bought CANDU from us.
I would like to address the requirement for speed in the restructuring. We have been a long-term and consistent supporter of the restructuring of AECL. We were pleased when Minister Raitt made the announcement that the government was moving ahead with that, and we very much appreciate the effort she put into understanding the needs of the industry, making a decision and moving forward. It was a much-needed decision, and we appreciate the fact that it was made.
They did then move forward with an investment summary produced by Rothschild in which a series of objectives were identified. We consider those objectives to be important as well. We agree that CANDU technology must be properly capitalized to be successful. Clearly, it is not in that state at the moment. We agree with the investment summary that says that the management team at AECL does need significant injection of commercial capability to allow it to be successful and that the sales team needs a much greater international outreach and presence. That is something with which they are presently struggling.
We believe that all of those issues can be dealt with through seeking a business partner for the organization, as specified in the investment summary.
We also believe that to gain access to the wave of opportunity, the restructuring does need to be completed promptly. As I said before, further delay will cripple the opportunities for CANDU. The countries around the world that are making decisions about their future nuclear programs are making them now. There is a significant drive in this new wave of nuclear acquisitions toward creating and operating fleets because of the benefits of having repetitive styles of reactors. If we do not get on at the bottom of the escalator, it is hard to jump on later. Now is the time to be acting.
As I have said before, if we do not act soon, we run the risk of not just losing the scientists and engineers within AECL itself but also those skilled technicians in the supply chain because if we are not creating hope and opportunity for them, they will be seeking alternative jobs as well. We need to sort this issue out as quickly as possible. As a result, we support any process that leads to a rapid restructuring of AECL. Bill C-9 does allow that to happen.
We would also like to focus on the objectives because the objectives are just as important as the timing. As well as the need to make the decisions promptly, we do need to ensure that we are achieving the stated objectives that are identified in the Rothschild report. In the investment summary, they identify three policy objectives, and they are all important. Within that, there are five evaluative criteria and eight desired outcomes. We want to ensure that the government puts appropriate focus on achieving those objectives. We believe those policy objectives are effectively a contract with the Canadian people and that the government is obligated to deliver on those objectives.
Two of the policy objectives, three of the evaluative criteria and three desired outcomes are focused on prospects for the industry, including expanding access to the markets and growing jobs in design and engineering. One policy objective, one evaluative criterion and two desired outcomes are focused entirely on safety and performance. These issues are complex, and the restructuring team should have to demonstrate how it is ensuring that these objectives will be met.
If I summarize that, the supply chain is trying to say that we do want to give the government a free hand to move forward quickly and in a way that achieves these objectives, but it is not a completely free hand. We are doing it on the complete understanding that they will deliver on the policy objectives that they have set for themselves.
In summary, I would like to use some words from another presentation that was given to another Senate committee, the Standing Senate Committee on Energy, the Environment and Natural Resources. They were provided by Duncan Hawthorne, the CEO of Bruce Power, who I am sure is familiar to many of you. If you have not read his presentation to the Energy Committee, it is interesting and useful. People probably know that Duncan Hawthorne comes from the same island I did, but speaks in a different accent. I will not try to repeat his accent.
He said:
I can talk to you about the sale of AECL. I can be very specific on what needs to happen, to your question, but very much do not let the CANDU flag fall. Do not let this be about simply removing liability because that would be a great travesty to the people that pioneered this technology. . . .
. . . ensure the design authority is still there because the expertise that exists in AECL is critical to our ongoing operations. Not surprisingly, the government and the restructuring want to ensure that whoever acquires it continues to maintain the capability to support the existing fleet. That is a specific requirement.
Those are telling and useful words. I tried to say them as well myself, but I certainly could not say them better.
My final comment is that in successfully restructuring AECL, it is important that they understand the needs of their stakeholders. There are a number of important stakeholders in the process, one of which is the Province of Ontario, which has a large number of the CANDU fleet operating within its boundaries and is the owner of a significant number of CANDU reactors. It is also the most likely buyer of the next CANDU reactors, and, therefore, it is obviously important to the process of restructuring AECL. We would ask that appropriate discussions take place between the federal government and the provincial government to ensure that major stakeholders such as the Province of Ontario are appropriately handled.
With that, I thank you for allowing me to speak and finish my comments.
Jason K. Cameron, Director General, Strategic Planning Directorate, Regulatory Affairs Branch, Canadian Nuclear Safety Commission (CNSC): Thank you, Mr. Chair and members of the committee. I am pleased to be here this morning at the invitation of the committee on behalf of the Canadian Nuclear Safety Commission, Canada's nuclear regulator, to address Part 18 of Bill C-9.
[Translation]
I had the opportunity to speak to you on Friday regarding Part 19 of Bill C-9. Unfortunately our president, Michael Bender, could not be here this morning.
On Friday I gave you an overview of the CNSC, but I want to take this opportunity to come back to some important points for the benefit of the committee members.
[English]
The Canadian Nuclear Safety Commission, CNSC, is Canada's nuclear watchdog. It was established in May 2000 with the coming into force of the Nuclear Safety and Control Act, or NSCA, which gives the CNSC the mandate to protect the health, safety and security of persons and the environment and ensures Canada respects its international commitments on the peaceful use of nuclear energy. Under the NSCA, we have in place a robust, modern and comprehensive regulatory framework that ensures public participation and independent decisions when it comes to nuclear safety.
In 2009, a thorough peer review of Canada's nuclear safety framework conducted under the auspices of the United Nations International Atomic Energy Agency determined Canada has a mature and well-established nuclear regulatory framework and that the nuclear regulator is effective in meeting this mandate.
On Part 18 of Bill C-9 and the topic of this morning's session, the CNSC is not involved in the restructuring of AECL. The measures contained in Part 18 do not affect in any manner the regulatory framework for nuclear energy in Canada, including the role of the CNSC to regulate health, safety, security and environmental aspects of AECL's operations and that of the nuclear industry in Canada.
Under the NSCA, a CNSC licence is required to operate a nuclear facility or possess nuclear materials, and nothing in Bill C-9 — including Part 18 that deals with AECL restructuring — changes this requirement. Should any AECL ownership change impact any of the facilities or activities licensed by the CNSC, then there might be a need for a licence approval by the CNSC, but this is the only involvement we anticipate at this time.
I would assure the committee and Canadians through this committee that whether AECL is restructured or not, the CNSC's focus will remain on effective oversight of any and all nuclear facilities activities in Canada. I am happy to respond to any questions the committee may have.
The Chair: Thank you, gentlemen.
Senator Finley: I enjoyed your presentation, Mr. Alexander, particularly your references to ovens, plates, cakes and frying pans. It helped crystallize a few things in my mind.
I do not think anything in Part 18 of Bill C-9 essentially contradicts any of the mandates that you have set down. There seems to be a preconceived notion that the minister has already made all these decisions, and, as soon as this bill passes, we will be sold to Radio Shack or something.
The following intrigues me: Let us assume that the minister does what he has to do and the eight policy objectives that you mentioned. Let us say that I am an investor and someone came to me with an offering and said, "Look, we are one of the only five producers in the world in what is a trillion-dollar business" — this is the number we heard this morning; I was overruled on the $400 billion I heard the previous day — "and we have trillions of dollars of sales. We already have a product. We have the technology and the expertise. We have 70,000 highly skilled employees and a complete supply chain." Why would there not be literally millions of financial organizations falling over each other to invest large sums of money, equity, into the business? Do you not think that would happen?
Mr. Alexander: It is a good question, and I do not know how to answer it because I do not know who is involved in the process. Certainly we have gone out to the world and made an announcement and the process is running. I hope that significant organizations are interested in the technology.
We might possibly have done a better job at promoting the technology in advance of indicating the investment opportunity and ensuring the world was aware of this opportunity.
Senator Finley: You identified, as did the other witnesses this morning and others previously, three or four deficiencies with AECL. I use the word "deficiency" broadly and guardedly, I suppose. First, there is a management deficiency, and probably a need or a preference to have a partner that fully understands the technical and marketing management of the business. The second is an equity or a financial base deficiency. I have included two of them together. There is also a confidence issue, particularly with the Canadian investors, who are currently the taxpayers.
We are told that the preference is not to partner with any of our foreign competitors, for example. There may only be one, two or three Canadian companies that understand the technology and the marketing.
Putting those aside and dealing with just the equity part, you say that you do not know what the process is, but you do acknowledge that there are trillions of dollars of sales, a product, 70,000 skilled employees and a complete supply chain. Even if I did not know what the product was — it could be a widget or a gizmo — with those numbers, why would every investment company in the world not be falling over itself?
Senator Ringuette: Why would Canadians not?
Senator Finley: That is the whole point. Why should it be the taxpayer by force as opposed to investors?
Senator Ringuette: They are the shareholders.
The Chair: Order. We will question the witnesses, or we will let them go home.
Mr. Alexander: I come back to the fact that it is a good technology, and we have possibly not been as good as we should have been at making people aware of that. I would hope that there are significant investors. It is probably not as broad a group as you made it out to be in that it is a complex field. It would not just be investment companies, although they may form part of a team. It would likely be companies that have some familiarity with that scale of project and that style of industry, and that cuts the numbers down somewhat.
My hope is that significant companies are interested and that the focus is on making a successful industry and keeping it here in Canada, which for Canadian companies is easy. For multinational companies, that is not a difficult decision, because they largely do not care where they operate. If we can do that, we will have done a successful restructuring; we will have rewarded Canadian taxpayers quite handsomely for the investment they have made in the industry through ongoing taxes and through the jobs that are created; and we will have had a successful industry as a result.
Senator Neufeld: Thank you both for your presentations.
Mr. Cameron, I appreciate what you said, that none of the rules or regulations actually change regardless of what happens. That should give Canadians some comfort.
Mr. Alexander, you said that the factories are in Canada. I am not saying that they are not. I would like to keep the jobs in Canada, too, but you say that the factories are here. However, I understand that the last sale was 13 years ago.
Can you tell me what has been happening for the last number of years with the factories you talk about? Perhaps it took them 13 years to make all those products; I do not know.
Mr. Alexander: That is a very good question. It brings me to one of the other strengths that Canada can build on if we stay in this business. We are one of the few nations that have been building successfully one after the other, leading up to the last sale to which you referred, which was in China and was an incredibly successful project for Canada. It was built under the cost that was expected. The first unit was brought on line 42 days ahead of schedule, and the second unit was 112 days ahead of schedule. To put that in context, each unit produces about $1 million worth of electricity a day, so we had a very happy customer and an opportunity to build on that relationship had we wanted to.
We were building components right through that. Then, almost as soon as that ended, the refurbishment program began, and we started building components for the refurbishment program. Canada has one of the best practised and reliable supply chains of any country in the world, and that is something of which we should be proud and on which we should try to build.
Senator Neufeld: Thank you for your answer.
AECL is coming to the government for hundreds of millions of dollars because the refurbishment is not going so well.
You have to look at the whole business. Just because the government says that they have opened it all up does not mean it will go to some foreign entity. Someone mentioned Eldorado Nuclear Limited. Senator Murray will remember when that was put up for sale, and he will totally understand this.
Section 4(1) of the legislation at that time — the Eldorado Nuclear Limited Reorganization and Divestiture Act — read:
On such terms and conditions as the Governor in Council may approve, Eldorado or a subsidy of Eldorado may enter into any transaction providing for the sale, assignment and transfer of its assets, business, works and undertakings, including the shares of a subsidiary of Eldorado, to the new corporation or to a wholly-owned subsidiary of the new corporation for such consideration as the Governor in Council may approve . . .
(d) sell or otherwise dispose of any shares of a subsidiary of Eldorado or any assets of Eldorado or a subsidiary of Eldorado . . .
(f) reorganize the capital structure of Eldorado and a subsidiary of Eldorado . . . .
They have gone back to history and put some of the same wording in this bill to encourage this. I think there is a small market that will look seriously at this. As I said earlier, you need to open the kimono all the way. You cannot hide some behind the curtain and say, "Maybe later."
This type of thing has happened in the past, and it is happening again now. However, it does not mean that it will be sold to a government someplace else. However, they need the ability to look at all the avenues, similar to this. I am not saying that there is anything wrong with this legislation, but it is similar.
Mr. Alexander: You have headed straight to the challenge that we face, and that is why we are very focused on the objectives and not the route by which you get to the objectives. If you start defining specific criteria, you may throw away the best opportunity that you have. To some extent, you have to leave it as free and as open as possible to allow the best opportunity to come forward. Then, of course, you have to place a great deal of trust in the people who are doing it to get it right.
Senator Marshall: Mr. Alexander, I do not have a copy of your opening statement, but did you refer to a large liability that was taken into consideration in deciding to move forward with restructuring, or did I misunderstand you?
Mr. Alexander: I do not believe I made any reference to a liability. I have been trying to focus very much on the future and the opportunity.
Senator Marshall: Whatever you said during your opening remarks, it reminded me that there is a large liability on the books for decommissioning and waste-management provisions. Would that liability follow whoever ends up with the restructured assets? Do you know how that works?
Mr. Alexander: I do not know how that works. Again, that would probably be taken into account in the discussions that would take place. Not all of the decommissioning and waste liabilities that exist arise from the development of the nuclear power technology. It would be difficult to sort out who was responsible for which part of those liabilities.
Senator Ringuette: Thank you, Mr. Alexander, for being here. I have read your speech made just a few weeks ago at the Economic Club of Canada in Toronto many times. I support your comments that promoting the CANDU technology in the last few years would have been an additional selling and marketing tool. However, if you followed our committee hearing yesterday, you would have noted that that has not been the case for the last three years. AECL has been constantly attacked for its money, its management, et cetera.
I really enjoyed your speech.
You stated the following:
There is a disaster scenario, and I think it's important that we understand that, if we do not pay appropriate attention to the restructuring of AECL, that we could put ourselves at risk of this happening. And that is that presently there are a lot of people in AECL, cross-functional teams, that are solving problems in order to ensure the ongoing safe operation of the existing fleet. Should those cross-functional teams break down as a result of the restructuring, and as a nation we are not able to support the existing fleet, then we run the risk of the footnote saying that actually, at the end of the day, we came up upon a crisis and we had to close the reactors. That would obviously be disastrous to our industry. Think of the consequences to Ontario to have 50 per cent of its base load electricity suddenly off line.
Mr. Alexander: That was meant to be a small piece within a very long speech so that it had context. I will emphasize that. That is a very unlikely scenario, but I felt that it was appropriate to make that comment so that people could understand the significance of what we are actually dealing with. I wanted to emphasize to the team involved in the restructuring that they need to understand all of the consequences of their actions not only for the upside but also to ensure that we do not have the potential for any downside, so that when they make their decisions, they are taking these things into account.
You have provided another wonderful opportunity for me to say how useful it would be for the country if there were constructive dialogue between the Province of Ontario and the federal government to ensure that they, as an important stakeholder, are looked after in this process.
Senator Ringuette: Not only Ontario; there are three other provinces that have the CANDU reactors and need some certainty of continuance of service.
Mr. Alexander: Absolutely.
Senator Ringuette: That brings me to the fact that the only way to provide for certainty of continuance of service is to ensure that the industry can grow in Canada. I have a hard time looking at a probable assumption of foreign ownership and our losing all that.
Mr. Alexander: I will try to avoid being definitive because that can lead you into problems. I will refer back to it later. It really does not matter where the ownership is, as long as the industry is based here. We can focus on that. One of the ways to guarantee that it stays here is for it to be Canadian-owned, but the key issue is that it stays here.
Yes, the best way of guaranteeing that you have all of the support that you need is to keep a vibrant, growing industry that is continuing to undertake R & D and innovate and bringing the best-quality people into the country. It is consistent with a model that says that we really should be looking to get back our superpower status and to get this process completed in a way that is constructive and is looking to the future.
Senator Ringuette: From the current statement, I agree that one of the missing elements in Bill C-9 on AECL is the condition that the industry, technology and knowledge remain in Canada in order for us to become what you consider to be a superpower. That is not in this legislation, and that is worrisome.
Mr. Alexander: I agree; those are things that we need to be looking for to try to ensure that we have them as part of the process going forward. My concern is where to bring in the comment about conditions. As you bring in conditions, you may well cause disinterest amongst the best partner that we might have at the moment. You need to be careful.
Senator Ringuette: Who would be those best partners?
Mr. Alexander: A partner that achieves the objectives as specified in the Rothschild investment summary, namely, looking to the future, looking to grow the technology and keeping the opportunity here in Canada.
Senator Ringuette: The Rothschild policy objectives are not part of the legislation that we must deal with here. Therefore, we cannot hold the current government to these objectives. You have to understand that. As Senator Banks said earlier, we are not dealing with a policy document or a spinoff issue; we are dealing with legislation and a bill.
Mr. Alexander: I understand.
Senator Ringuette: I was intrigued with the supply chain related to CANDU and your membership. I was intrigued by one of your members being AREVA, which is a competitor in the CANDU technology industry. Can you explain the relationship here?
Mr. Alexander: AREVA are not presently a member. They used to be a member because their major interest in Canada was providing services to the CANDU stations. AREVA is a large group that sells reactors. They are also involved in uranium mining, and they are big here in Canada, through their uranium mining interests. They joined because they were doing business with the CANDU stations here in Canada. It was a totally appropriate relationship.
Recently, we have taken a pro-CANDU line. We are not actually, by definition, pro-CANDU. We work for the health of the Canadian supply chain. However, we are healthiest when CANDUs are being constructed. That is how we came to that conclusion.
At the time that AREVA was competing directly with CANDU in Ontario, they decided that it was not appropriate to support OCI and withdrew their membership. Any organization that wants to see a healthy Canadian nuclear industry is welcome to join.
Senator Hervieux-Payette: They are still on your website.
Mr. Alexander: That surprises me. I will check.
Senator Hervieux-Payette: That is how we got the information.
Senator Ringuette: It shows that one of them is a member of your board of directors.
Mr. Alexander: We are down to 164 companies, then. That is what I have learned this morning.
Senator Ringuette: It is interesting that you are indicating to us that they removed themselves from your association because they were competing with CANDU, which most of your members promote. Perhaps that is an indication that if that entity were to become a partial investor or a whole investor in AECL, the CANDU technology would probably disappear from the Canadian industry.
Mr. Alexander: You are making an assumption. I will revert back to the objectives because we do not know the motives behind any of the bidders and, therefore, cannot comment.
Senator Ringuette: No one seems to know. That is another issue.
Mr. Alexander: The same as many of you, I have been told factually who the deal will be with, but it is a series of different companies, a different one on each occasion.
Senator Runciman: Mr. Alexander, I think some of the language you have used with respect to the need to proceed with the restructuring has been some of the strongest we have seen. "We do not have the luxury of time" was one of the phrases you used, for instance.
I wonder if you could expand on that timeline that you see with respect to the need for this restructuring to occur.
Mr. Alexander: Everyone would like me to give them a date that says that if we have not done it by this time, this will be the consequence. Unfortunately, it is not as simple as that. I describe it as follows: We came to a fork in the road some time ago, and we are now walking down the wrong route. Each day that we do not make a decision, we take a further step in the wrong direction, and it becomes that much harder to get ourselves back onto the route that we want to take.
There is no deadline, but my expectation is that we will start losing our resources, both within AECL and the supply chain, unless we act swiftly.
Senator Runciman: We heard from earlier witnesses about the potential markets, that now some of those negotiations are currently underway and that there are opportunities there that we are we limited in in terms of our availability to access. The actual restructuring will take some period of time. We have the Ontario situation where there are two reactors, where I think that decision is an advance because of the indecision surrounding this situation. That is one of the factors, in any event.
I was looking for an approximation from you. Senator Murray, especially, has called for pulling this portion out of the legislation and doing it as a separate bill in Parliament this fall, despite the fact he supported a similar process with Eldorado.
I will give you an example of the current situation in a minority Parliament. The Canada-Colombia free trade agreement was before that house for two years, I believe. If you look at that situation and the implications of what you are saying about the future of the industry in Canada and the implications for the economy, I think it is quite appropriate that this bill is being dealt with in this manner. If Senator Murray were to reflect on his past views, he might share that perspective.
Mr. Alexander: I will not give a day or date on which decisions have to be made. It is also not my place to talk about parliamentary process. However, another observation may be helpful; namely, that we do want our partners for AECL. Pretty much all of the testimony that you have heard has indicated that that is a good idea. From the point of view of the Organization of CANDU Industries, we want one that will take the technology forward. We are looking to identify the best possible partner to make this industry a success in the future.
Something that worries industrial companies is government decisions. If governments waver, that will cause them concern. As well as the consequence of timing, a radical change of decision now may well be a disincentive to what could turn out to be the best partner. I do not know who the partners are, nor do I know parliamentary process. However, I can say that industrial companies worry about risk, and if governments start getting involved and changing their minds and things become less certain, that creates a challenge for them.
Senator Hervieux-Payette: We are talking about restructuring. Do you think it would be important or absolutely essential to have a Canadian partner in the restructuring, or do you feel that any of the foreign-owned companies active in the nuclear reactor business could buy it and preserve the interests of Canadians?
Mr. Alexander: Again, we are focused very much on the objectives. The objectives are to see an ongoing industry. The vision I have is us selling CANDU reactors around the world, with the operations being based here in Canada. It is building on the existing team that exists with AECL and bringing new resources into that.
To my mind, and to the way most of my members think, it does not matter who owns that organization as long as it is based here in Canada. There are other examples in the nuclear world. Westinghouse Electric Company LCC is one of AECL's competitors. They have been traded a number of times in recent years, going to U.K. ownership and now under Japanese ownership. The base of Westinghouse continues to be in Pittsburgh, and they still consider themselves to be an American company. Even though the majority ownership is Japanese, they also have Russian and American ownership as part of it.
The issue to focus on is not where the owner sits, but where the work is done. We would like to see the industry continuing here in Canada, based around the ongoing development of technology and innovation.
Senator Hervieux-Payette: Let me be clear. Westinghouse is now part of the consortium in Japan where the majority owner is the Japanese government. That was my question. When you have a privately owned company more in the equipment and technology sector, you need an engine that will put all the pieces of the industry together, including the 70,000 people.
Do you feel that our industry would be protected if it was totally privately owned by a foreign company with a competitive technology?
Mr. Alexander: It must come back to the objectives. We need to find an organization to partner with AECL that is signed up to the objectives of continuing to make the CANDU brand successful and that is prepared to do it using the current CANDU suppliers and AECL team. We could speculate on what different organizations might have as a viewpoint. However, I do not know their plans. All I can do is focus on the objective.
Senator Hervieux-Payette: We are not speculating. I think Senator Dickson spoke previously about consulting the industry on what the model would be that we would finally end up with if we restructured, protecting the interests of Canadians at the same time and ensuring that the stakeholders are being consulted as part of the final model and it not being left wide open, as it is now in the bill.
There is an essential step to cover, and I think we would be reassured on this side if the stakeholders were part of this process. That would have happened if this process had taken place much earlier. It could have taken place more than year ago. Regardless, we want assurances that if we want to bring in some fresh money and reinforce management, we would have a model of an enterprise that would be a success.
We talk about renaissance. I do not think any of us believes in that, and that is not because it has been 13 years since a sale; rather, we cannot forget Chernobyl and Three Mile Island. I think the big black hole in the industry came from that. Also, the U.S. banned related construction for many years. Now that the business is re-opened, we should tap into all the talents and knowledge and have a new entity. However, it should be backed by the Canadian government.
Mr. Alexander: I think your objectives and mine are the same. You are talking about a route to get to them. All I am saying is that I do not want to comment on the route to get to them because I do not know enough about the opportunities that might exist.
Senator Hervieux-Payette: Would you participate in the consultation process?
Mr. Alexander: I think the industry would love to be consulted.
Senator Murray: This Eldorado business is a side issue. It was first brought up last week by Senator Gerstein. I did not say anything at the time because I wanted to refresh my memory, which I have done. I find now that poor Senator Neufeld and Senator Runciman, whose willingness to take their cue from Senator Gerstein is well understood, have been badly misled by him.
In 1988, when we legislated the divestiture of Eldorado, we legislated certain mandatory provisions that had to be in the articles of incorporation. That was section 5; Senator Neufeld stopped reading at section 4. Section 5 is entitled "Mandatory provisions in articles." Several subsections follow.
I will not bother with them except to say that among the restrictions are legislated restriction on the percentage of shares that could be held by any resident shareholder, a lower limit on the proportion of shares that could be held by a non-resident and so on — even to the point where we obliged them, by legislation, to have their head-office operations in the province of Saskatchewan. Many conditions were imposed there, as they were in other privatizations.
If Senator Neufeld and Senator Runciman want to put their heads together and suggest some amendments to this bill along those general lines, I want them to know I would give favourable consideration to such amendments.
Mr. Alexander, do I take it that you do not share the concern that has been expressed here by some witnesses that some potential suitors might want to get control in order to dispose of the technology?
Mr. Alexander: No, I would be concerned, if that was the case. I am saying that you cannot automatically assume that that is someone's objective. I do not know what the objectives of the different organizations might be. Some of the articles that I have seen in the press where they speculate may or may not be right.
Particularly, the CANDU 6 — the reactor that we have demonstrated around the world — has a number of very significant niche-market benefits that are not replicated in any of the other reactor designers' fleet. For example, they use natural uranium as their fuel. They can be rearranged to use used fuel from other reactor designs after the fuel has finished its useful life in the other reactor, and then reutilized in the CANDU brand. Also, there is the potential that they can use another fuel, a much more plentiful fuel, which is thorium.
There may well be opportunities for other reactor vendors that would take the technology forward. I am not saying there are; I am just saying I do not know. It is the objectives of the organizations that we need to worry about rather than making assumptions about their plans.
Senator Murray: Exactly; we are legislators. None of us, I think, will be involved in the negotiations or in the process. Once this bill, if it passes, receives Royal Assent, we are finished with it. We will not see you here again, so if you have complaints, you know where to take them — to the government.
Is there any potential suitor whose potential control of AECL would give you pause with respect to disposing of the technology?
Mr. Alexander: No, I will default; it must be about the objectives, and I do not know what the objectives of the organizations might be.
Senator Murray: Therefore, AREVA taking control would not concern you, is that correct?
Mr. Alexander: Again, it depends on the objectives. If they have a business plan to continue to develop the CANDU technology, which they could well do, then AREVA is a very good organization.
Senator Murray: I am less worried now about the minister than I am about Senator Finley, whose unrelieved pessimism — indeed negativity — about the past, present and future of AECL is such to suggest to me that if he had his way, we would unload this thing fast. I think it is not unfair to infer, from everything he has said, that he would not hesitate to exercise one of the options, which is to dissolve the whole thing, if that seemed to him to be the way to go.
Senator Finley: Are you accusing me of something?
Senator Murray: I do not want to impute anything; you do take a very negative view of the whole picture — the confidence that Canadians have in it, the financial situation and the management. You would not be a great salesperson for the company, senator.
Senator Finley: I actually have worked with AECL in the past.
The Chair: Perhaps we should focus our questions to the witnesses here.
Mr. Alexander: We could step out.
Senator Murray: No, I want to be very clear about this — and other senators have referred to this; you have clearly indicated that there is a huge degree of urgency to this and that you want the thing to go ahead. With respect to the future of AECL, I take it your advice is to trust the government and pass this bill as it is.
Mr. Alexander: I have been endeavouring not to give advice but to try to provide information. We do need to move forward quickly.
Senator Murray: Pass the bill.
Mr. Alexander: We need to focus on the opportunities and not focus on some of the past challenges. I will not deny that there are challenges, but the focus needs to be that the Canadian people have invested in a technology in a field in which the world is developing very rapidly, and in which we ought to be trying to position to make it a huge success to the benefit of all those people that have invested in that technology. It is a technology that has some very distinct advantages, and if we position it correctly, we have huge opportunities.
All I am trying to say is, yes, we have to do it, but let us ensure that we focus on the opportunity it can create.
Senator Murray: Who, the government? Not this organization; we have no role in that.
Mr. Alexander: Yes.
Senator Murray: Pass the bill.
Mr. Alexander: The people that are involved in the restructuring process should focus on making sure that they achieve the objectives, and that we have a successful, ongoing business that should take us up to a superpower status in the supply of nuclear technology.
Senator Murray: We should pass the bill. Thank you.
Senator Peterson: Mr. Cameron, if AECL is sold and there is the issue of the lingering waste liability, would it be your view that this would remain in the sovereign field?
Mr. Cameron: It is a speculative question. In terms of the legacy materials that currently exist at Chalk River — the labs in particular — or at AECL's other sites throughout Canada, it is clear that, regardless of whether those activities remain with the government or whether they were to become owned and operated by a private institution or some combination thereof, our requirements to ensure the health, safety, security and protection of the environment would be met by any institution.
Senator Peterson: That could have a dramatic impact on any potential purchaser, if they have to take over those liabilities, because of the unknown.
Mr. Cameron: I missed the last part of your question, senator.
Senator Peterson: If the waste liability remains with whoever purchases the corporation, it will have a dramatic impact on what the value would be. It is a legacy waste that is there.
As I recall, with Eldorado, the federal government did retain all the liability on the waste. I am wondering if it would be the same instance again here.
Mr. Cameron: As my colleague mentioned, I am not familiar with or privy to the ongoing discussions with potential suitors and the potential scope of the transaction that may be involved. I would go back to my remarks that those legacy sites exist within Canada and that Canadians will be assured that, regardless of what happens to the transaction, the health and safety of Canadians will be protected.
Senator Peterson: Mr. Alexander, you talked about refurbishing. Could you give us an indication of how large that is and what the future potential is for companies dealing with that?
Mr. Alexander: The immediate answer is the CANDU fleet. An ongoing refurbishment program is outlined. Argentina is moving toward refurbishment; Ontario Power Generation has announced that it will refurbish the four reactors at Darlington; Gentilly in Quebec is deeply into its planning process; Korea's refurbishment is in progress; and Romania and China will be finished down the road. Those are the predictable refurbishments.
There are additional benefits to being in the nuclear industry. As a result of the work of SNC-Lavalin and Babcock & Wilcox at Bruce Power in replacing the steam generators, our industries have been successful in doing the same work in the United States. Our activities in refurbishment also give us the industrial benefits of providing refurbishment services to other reactors, which total 430 around the world. It is a much bigger market, but less predictable, and it is a market that I have not followed.
The Chair: Mr. Cameron, if, as a result of a transaction that takes place, the ownership of these legacy spent-fuel areas changes hands, would that trigger a hearing of the Canadian Nuclear Safety Commission?
Mr. Cameron: The legacy waste facilities that we speak of are licensed under the Nuclear Safety and Control Act, which is a process run by CNSC. Currently, those licenses are held by Atomic Energy of Canada Limited. Should any transaction result in a change that would change the operator or controller of those particular locations, it would trigger a process under the Nuclear Safety and Control Act.
The Canadian Nuclear Safety Commission is familiar with instances of business and commercial transactions where ownership changes are made. We have seen entities recently within the nuclear industry join together. Those processes have been well managed under the current provisions of the Nuclear Safety and Control Act.
The Chair: Thank you for the clarification of Senator Peterson's question.
Senator Dickson: Mr. Alexander, I have a clarification question. You referred to a website where one can source the policy criteria and outcomes of the Rothschild report on AECL's restructuring, the investment summary. What is that website?
Mr. Alexander: The Rothschild report is available on the NRCan website. I can never explain to people how to navigate through it, but if you just go to the top box and enter "Rothschild" in the search box, it will take you to it.
Senator Dickson: Mr. Cameron, my question relates to the MAPLE 1 and MAPLE 2 reactors. I understand that a third party review of the engineering study has not been permitted. Am I right in saying that those reactors can operate at approximately 80 per cent capacity. Do you have a role in that?
Mr. Cameron: We have a role, obviously, in ensuring the safe operation of any nuclear facility's installations.
Senator Dickson: Is it safe?
Mr. Cameron: With respect to the MAPLE reactors in question, decisions were taken by other entities to not pursue that particular facility or project any further. As with any installation or facility, if a company or business takes a decision to pursue a project that triggers our legislation, they can bring that to CNSC.
The Chair: I am not sure what you just said.
Mr. Cameron: The decisions to discontinue the MAPLE project were taken by the government and AECL. There was an ongoing process under the Nuclear Safety and Control Act through the Canadian Nuclear Safety Commission and our public hearing processes. However, when the decision was taken to stop that project, the hearing process also stopped with CNSC.
Senator Dickson: Therefore, no decision was ever made.
Mr. Cameron: No final decision was made.
Senator Dickson: Was an interim decision made? Were there interim findings? What was the direction?
Mr. Cameron: This is slightly beyond my particular expertise in terms of decisions taken by CNSC. A series of tests were brought before public hearings of the Canadian Nuclear Safety Commission, which are on public record. However, the details are slightly beyond me, senator.
Senator Ringuette: Were the decisions to shut down the MAPLE reactors and stop the secure production of isotopes made by current government? Is that not so, Mr. Cameron? When was the decision taken?
Mr. Cameron: The exact date of the decision, senator, is maybe something I would like to get back to the committee on. CNSC had no role in that decision.
Senator Ringuette: My line of questioning pertains to waste disposal. I have read that AECL has developed and patented a specific technology for the disposal of waste from a nuclear facility and its security.
Mr. Alexander or Mr. Cameron, are you aware of that technology?
Mr. Alexander: AECL does a good deal of work on the back end of the fuel cycle, including dealing with the used fuel. However, I am not sure which part of it you are referencing. Certainly, they are quite well known for a technology they provide to facilities at reactor sites that keeps the fuel in a safe state after the end of its use. That is one of their technologies.
Senator Ringuette: That technology is part of AECL's composite operations. With the disposition of AECL, Canadians could lose any benefits derived from that technology. There is no security against such a loss in Bill C-9.
Mr. Cameron, with respect to AECL's technology of waste disposal, could you tell us about CNSC's safety guidelines?
Mr. Cameron: Currently, waste-management facilities across Canada are operated in a safe manner by all of our licencees, including Atomic Energy of Canada Limited at its Chalk River location.
To ensure the safety of those particular sites, companies such as AECL come before our public hearing process and must meet the requirements of the Nuclear Safety and Control Act and our associated regulations to receive a licence from the commission, which is a quasi-judicial hearing body. Those facilities that are operated by AECL currently hold licences in good standing.
Senator Ringuette: What other facility that does not benefit from AECL waste disposition exists in Canada in which you would have a say?
Mr. Cameron: There are numerous waste locations throughout Canada that are not associated directly with AECL's activities. Some of them are at our CANDU operating sites and some are associated with uranium mine sites, particularly in Saskatchewan. There are other waste locations that are not AECL's.
Senator Ringuette: Are they approved by you with respect to safety?
Mr. Cameron: Yes.
The Chair: Seeing no other names on my list and time having run out, on behalf of the Standing Senate Committee on National Finance, Mr. Alexander and Mr. Cameron, thank you very much for being here, answering our questions and helping us understand the industry and your position on Part 18 of Bill C-9 in relation to AECL.
We will allow you to pack up your things, and then we will continue.
The first matter of business is a motion by Senator Gerstein, deputy chair of the committee, for this committee to convene in camera. I would ask if everyone is in favour of that.
Senator Murray: I spoke to you about this just a few minutes ago, earlier in the meeting, as it occurred to me. Sometimes in camera meetings have the simultaneous translation, and sometimes they do not. I presume that we will keep it.
Second, sometimes a verbatim transcript is kept, and sometimes it is not. I think we should put that to the committee.
The Chair: Yes. Senator Murray, I appreciate your raising that point. Because you let me know beforehand, I spoke to our clerk and the following is what is proposed as possible wording for a motion, if you wish to pass such a motion:
In that the in camera proceedings of the meeting be transcribed, that the transcription be kept with the clerk of the committee for consultation by members of the committee; that no copies be made of the transcription; and that 30 days following the presentation of the final report of the committee on the study of Bill C-9, or upon prorogation or dissolution of the Third Session of the Fortieth Parliament, whichever is earlier, the clerk of the committee destroy the transcription.
Senator Murray: Senator Gerstein has indicated that we are talking about future business. I would have no objection to keeping the transcript and giving copies to senators if they want to refer to them, including referring to them publicly.
The Chair: This may be a sledgehammer to deal with the situation.
Senator Murray: Unless there are privacy issues or something similar, I am for keeping the transcript.
The Chair: Is it agreed, honourable senators; is there consensus that we keep the transcripts without any restriction, and that we continue with simultaneous translation?
Some Hon. Senators: Yes.
The Chair: The only other issue is staff in the room. I do not know what the matter is that you want to deal with. Do we object to staff being present or not?
Senator Finley: I have no objection.
The Chair: There is no objection to staff being present. Have I covered all the preliminary matters?
We are now going in camera. We will no longer be televised. We are going in camera based on the conditions that we have just determined.
(The committee continued in camera.)