Proceedings of the Standing Senate Committee on
Energy, the Environment and Natural Resources
Issue 19 - Evidence - November 18, 2014
OTTAWA, Tuesday, November 18, 2014
The Standing Senate Committee on Energy, the Environment and Natural Resources met this day at 5:02 p.m. to examine the subject matter of those elements contained in Divisions 3, 28, and 29 of Part 4 of Bill C-43, A second Act to implement certain provisions of the budget tabled in Parliament on February 11, 2014 and other measures.
Senator Richard Neufeld (Chair) in the chair.
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The Chair: Welcome to this meeting of the Standing Senate Committee on Energy, the Environment and Natural Resources. My name is Richard Neufeld; I represent the province of British Columbia in the Senate, and I am chair of this committee.
I would like to welcome honourable senators, any members of the public with us in the room and viewers all across the country who are watching on television. As a reminder to those watching, these committee hearings are open to the public and also available on the webcast on the sen.parl.gc.ca website. You may also find more information on the schedule of witnesses on the website under ''Senate Committees.''
I would like senators around the table to introduce themselves, and I will begin by introducing the deputy chair, Senator Paul Massicotte, from Quebec.
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Senator Boisvenu: Pierre-Hugues Boisvenu from Quebec.
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Senator Patterson: Dennis Patterson, Nunavut.
Senator MacDonald: Michael MacDonald from Nova Scotia.
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Senator Ringuette: Pierrette Ringuette from New Brunswick.
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Senator Sibbeston: Nick Sibbeston, Northwest Territories.
Senator Tannas: Scott Tannas from Alberta.
Senator Seidman: Judith Seidman from Montreal, Quebec.
Senator Wallace: John Wallace, New Brunswick.
The Chair: Thank you. I would also like to introduce our staff, beginning with our clerk on my left, Lynn Gordon, and our two Library of Parliament analysts on my right, Sam Banks and Marc LeBlanc.
Today is our third meeting on Bill C-43, the second budget implementation act, which was introduced in the House of Commons on October 23, 2014.
As you are likely aware, we are one of five committees in the Senate, in addition to the Senate Finance Committee, that were separately authorized on October 30 to examine the subject matter of particular elements of Bill C-43 and report our findings back to the Senate no later than November 27, 2014. For our committee, the particular elements are Divisions 3, 28 and 29 of Part 4 of the bill.
I'm pleased to welcome to the first segment of our meeting to provide us with their commentary on Division 28 of the bill, which deals with the extractive sector transparency measures act, by way of video conference, from the Canadian Association of Petroleum Producers in Calgary, Alex Ferguson, Vice-President, Policy and Performance; and Ben Brunnen, Manager, Fiscal and Economic Policy.
With us in the room, from the Assembly of First Nations, is Cameron Alexis, Regional Chief for Alberta.
Mr. Ferguson and Chief Alexis, I understand you have opening remarks to deliver, and then we will go to a question and answer session.
Alex Ferguson, Vice-President, Policy and Performance, Canadian Association of Petroleum Producers: Thank you. I will defer to Ben, who will lead us through the opening statement, and then we will be pleased to take any questions that follow.
Ben Brunnen, Manager, Fiscal and Economic Policy, Canadian Association of Petroleum Producers: Thanks, Alex. Thank you, Mr. Chair and committee members, for the invitation to speak today on Bill C-43, the sections pertaining to the extractive sector transparency measures act.
As you know, CAPP represents companies, large and small, that explore for, develop and produce natural gas and crude oil throughout Canada. Our member companies produce about 90 per cent of Canada's natural gas and crude oil.
CAPP commends the Government of Canada for undertaking this initiative. Our members recognize the critical importance that this act will have in the fight against international corruption, through enhanced disclosure of payments by companies doing business in Canada to all levels of government, both domestically and abroad.
While our members are broadly supportive of this legislation and the potential role we can play, we are also cognizant of the need to ensure this legislation is effective at achieving its objectives while minimizing the administrative burden on business. In this regard, we offer our commentary today based on the following three key principles: first, recognizing existing financial reporting practice and standards; second, minimizing administrative burden while harmonizing with other jurisdictions; and third, variations arising from competitiveness and conflict situations.
Perhaps the most substantial challenge for CAPP confronting our members relates to the issue of attestation under section 9(4) of the proposed legislation. As currently worded, the proposed section establishes a standard that is more stringent than any other major established forms of legislation on the issue of financial disclosure.
By comparison, the certifications required by both the federal Income Tax Act and the Sarbanes-Oxley Act, which was introduced in response to the major corporate and accounting scandals such as Enron in the early 2000s, are less stringent that what is proposed in the legislation before you.
While there may be instances where an officer or director would be comfortable with the true, accurate and complete language with respect to one entity that he or she is familiar with, under the proposed legislation, where an officer is certifying with respect to many payments over $100,000 made by multiple entities around the world, the need for a due diligence defence or the insertion of a knowledge and due diligence qualifier would be reasonable. This is especially important when considering the complexity of the payment categories in combination with the potential penalties.
To address this challenge, CAPP recommends that section 9(4) be amended and the words ''to the best of my knowledge and belief'' be added to the end of the sentence.
The second priority relates to administrative burden while harmonizing with other jurisdictions. A core consideration in this regard is ensuring that the Canadian reporting framework aligns with established reporting frameworks in other jurisdictions. While the U.S. continues to develop its Dodd-Frank framework, the EU Transparency Directive and its imminent application in the U.K. is the most relevant precedent.
The structure of the U.K. reporting framework is comparable to what Canada has proposed, and CAPP recommends that the federal government develop an approach similar to that developed in the U.K., particularly as it pertains to the engagement of industry in the development of its industry guidance material.
Key considerations for our members include the definition of project and format for reporting, the identification and attribution of payments, whether reporting will be required for parent companies of reporting entities, and the process for determining substitutability of other reporting frameworks.
These are complex issues, and it will be important that the government work collaboratively with industry to achieve the policy objectives of the proposed legislation in the most effective and reasonable manner.
Finally, I'd like to speak to the issue of variations arising from competitiveness and complex situations. Many contracts have confidentiality clauses, and often foreign jurisdictions will legislate confidentiality agreements with respect to payments to government.
Compliance with the proposed Canadian rules may therefore require some companies to break confidentiality provisions of contracts and will force them to choose between complying with the proposed act or complying with foreign legislation.
Another consideration is the potential disclosure of information under the act that may be commercially sensitive, at least on a temporary basis.
The inability to recognize this consideration was the main focus of the successful legal challenge in the U.S. and is something Canada needs to consider. Other pieces of related Canadian legislation allow for exemptions. The most relevant example is the Canadian securities regulations, which enable a report issuer to report material changes on a confidential basis if such disclosure would be unduly detrimental to the interests of the issuer.
The proposed extractive sector transparency measures act contemplates this consideration by regulation, and CAPP recommends that the government work with industry now to identify situations where variations to the standard reporting requirements would be warranted and develop a regulation that comes into force concurrently with the legislation.
In closing, thank you for the opportunity to present today. We look forward to your comments and questions.
The Chair: Thank you very much.
Chief Alexis, you have the floor, sir.
Cameron Alexis, Regional Chief (Alberta), Assembly of First Nations: I want to thank the Algonquins for allowing us into their beautiful traditional territory. I want to thank the Senate standing committee for the kind invitation to speak specifically to the proposed extractive sector transparency measures act.
My name is Cameron Alexis. I am the Assembly of First Nations Regional Chief for Alberta. Prior to that I was the Grand Chief of Treaty 6, which is central Alberta. I was also chief of my own community for a number of years. We are located just west of Edmonton, Alberta.
Presently I am the co-chair of a working group on natural resources development. I sit on the AFN chiefs committee on economic development and hold several official duties related to the office of the national chief while our organization is preparing for elections.
In the context of the recommendations, according to the federal government, the purpose of this act is to require that companies involved in the commercial development of oil, gas and minerals publicly disclose payments that they make to foreign and domestic government entities.
Further to this, I am told this act is part of a larger international effort led by the United States and the European Union to impose mandatory reporting requirements and that the federal government has stated its legislation will be aligned with similar legislation in the United States and the EU.
More specifically, the focus of this legislation is to put an end to corruption in other parts of the world and domestically.
I recognize that some of the large multinational extractive companies, some of which are based in Canada, find economic opportunity in parts of the world where government safeguards to support responsible development and structured administrative support systems accountability are only in the process of being established or perhaps may not be as buoyant as some processes in first-world countries.
Internationally, there may be a need to ensure the corporate community is disclosing its investments. As a former member of the RCMP for 23 years, I am intrigued by your work to consider an act to implement Canada's international commitments to participate in a broader global fight against corruption.
I have long since been an advocate that the principles of fairness, accountability and law must reflect the values and culture of the people they are intended to serve. After all, our values are primary drivers to arriving at good policy and good practice.
I also agree that the development activities in our territories must be approached respectfully and transparently to ensure the interests and rights of our citizens and our cultures are upheld and advanced.
However, I disagree that corruption exists in our First Nations communities to the degree which Canada may wish to address internationally, and that our good practices are a reflection of many professional relationships developed by First Nations over time with the corporate community.
While I understand that accountability practices in some instances may need to be redesigned, I remain unconvinced that a focus on ''disclosure'' as the new lead corporate relations strategy is necessary, or that which may amount to an overhaul of every current and future relationship within the resource sector is necessary.
Approaching our domestic relationships with a lens of regulating corrupt activity is unfortunately similar to swatting a fly with a hammer. The messages left behind are that there are terrible problems to be corrected in these relations between the business community and the First Nations, and that First Nations are not to be trusted or permitted to have business agreements with the corporate community.
This is inaccurate, and the force of the tool will do more as a disincentive to working with First Nations than is possibly recognized.
More consideration is needed on how this initiative intersects with other acts, such as the First Nations Financial Transparency Act, the accountability act, plus 300 other requirements we have to participate in.
We also learned from public materials provided by NRCan that the engagement period was very constrained — March and April, with all to be completed by May 5, 2014. Including greater input from First Nations would have been a challenge in such a short timeline.
I am left to question how much of this proposed act has taken into consideration the long-standing positive relationships that some First Nations, tribal councils and businesses have had in place for decades, which embody the responsible business practices between both the community and the corporation.
Does this legislative means suit the First Nation requirement when it comes to corporate reporting on our relationships? These are important factors that need to be further considered prior to an act of this nature being applied and impacting relations with First Nations.
I recognize there is a two-year grace period to communicate with First Nations. Canada could use this time to fully consult with First Nations and understand the implications of this act and make consequential amendments as required before the two years are over.
In closing, I would like to share with the standing committee recommendations on next steps as they relate to improving relationships with First Nations and the opportunity for our communities to be more involved in the resources sector.
Given the existence of the First Nations Financial Transparency Act, acknowledge First Nations project reporting as having been covered — that box can be checked — and instead focus on initiatives to support First Nations involvement in the sector.
Consider mechanisms to engage and support First Nations involvement in the natural resources sector such as through a national centre for resource sector project development where project support, market information, expert resources and a place where other sorely needed supports are housed.
Business incentives, such as ownership, involve First Nations in identifying objectives and design of reporting related to resource projects. In instances where reporting objectives have not been met, consider new and remedial approaches. Sometimes a lack of engagement too often equals poor outcomes. This will allow for greater accountability for all involved in resource development.
Consider the observations and recommendations brought forward by the working group on natural resources development. The Government of Canada through Aboriginal Affairs and Northern Development Canada and the AFN has struck a working group. The working group will report on ways to involve First Nations in the resources sector and next steps by the end of November 2014. Accountability and questions on lack of accountability have been raised in some discussions. The working group is considering this question.
However, the focus for the working group is to look at impactful changes and actions needed to involve the First Nations in sectors such as financial instruments, national trust, and governance models.
Fourth, ensure that First Nations have been appropriately consulted. We all have an interest in a better Canada. Legally, the landscape related to First Nations and resource development is improving. Four leading Supreme Court of Canada decisions confirm the Crown's obligation to consult where projects and decisions have the potential to adversely impact First Nations' treaty rights, for example, the Sparrow, Mikisew and Haida cases and the recent one, the Tsilhqot'in case, also known as the Williams case.
Leaving the wrong message in interaction between the business community and First Nations will certainly imply delays in agreements across Canada.
Last, but far from least, seek ways to work with First Nations as sovereign nations. First Nations have the right to determine how to manage our affairs and to take control of our destiny in accordance with our treaties. A new relationship between First Nations and other jurisdictions must be encouraged, rather than stereotypes of the past being fostered.
With that, once again, chair and honourable senators, I thank you for this opportunity.
The Chair: Thank you very much, Chief Alexis.
Senator Massicotte: Thank you, Chief Alexis and the people on the video.
I will direct my first question to Mr. Ferguson or Mr. Brunnen. The principal argument you make, other than the administrative argument, relates to the fact that an officer has to confirm the accuracy of the information submitted. You're saying that there should be a due diligence defence or the words included to say ''to the best of your knowledge or to the best of the knowledge of whoever's signing that.''
I am aware of those arguments because I have occasionally argued the same thing, but, as you know, in the Canadian securities commissions, when you follow a prospectus or, every year, when your CFO or CEO files and signs what they call a representation letter, the commissions have refused the words ''to the best of your knowledge.'' They say that these are factual items that you should be responsible for representing and ensure that you do your due diligence. Make sure you are aware of the information. Therefore, they have refused those words ''to the best of your knowledge.'' They say that it allows a lack of knowledge; it gives people the excuse not to adequately find out. It is too much of a wide opening. Why would you object to the existing requirement under the act, where, when you follow prospectus and the annual representation letters, there is no such subject, ''to the best of my knowledge.''
Mr. Brunnen: I can start on that one. I think what we're talking about here is different than the terms for a prospectus. What we're looking at here is disclosure of financial payments, if you will, for a specific purpose. The challenge that we see with respect to the legislation is that it does not include those words that enable the discretionary or due diligence argument for the reporting of these funds, inconsistent with the current standard under the federal Income Tax Act, for example. As well, when we talk about the Sarbanes-Oxley Act, which was the act introduced in response to some of the corporate accounting and public disclosure challenges that the U.S, in particular, experienced in the early 2000s, the disclosure statements with respect to those financial reports also include the due diligence opening in them, recognizing that, at end of the day, it is difficult for the director to be able to attest directly to all of the payments within an organization that could have billions of dollars on its balance sheet, looking at a single payment in a different jurisdiction that represents 0.001 per cent of the finances. What we're asking for is a comparable or reasonable standard that represents the level of diligence expected, consistent with existing convention for these types of disclosure requirements. We think this is a reasonable approach that would add substantive confidence with respect to the reporting for our membership under the proposed legislation.
Mr. Ferguson: One thing I would like to add, senator, is that as we've gone through the consultation processes with government on this, there was clearly a lot of uncertainty still on the table as to how a project is defined, what the thresholds are at which the different company levels would be caught in this net. On the securities regulatory front, clearly, there is a lot more history and certainty in terms of what's required. Companies have had the chance, over many years, to build the processes and systems internally to be able to meet those requirements.
I think that if we could get to the point where we had more certainty from government as to what the specific requirements and needs here are, our companies could get ahead of the game and start building those systems and processes so that we had more assurance. Without a proper due diligence defence, without that clarity, we're just struggling right now.
Senator Massicotte: The argument can be made that these are factual things. These are not a projection of the future. As to the party whose signature is required, why doesn't he just find out what payments were made? Obviously, I presume he's surrounded by competent people. Why would he need that ''subject to?''
Mr. Ferguson: Again, to Mr. Brunnen's comment about reporting requirements for a company that has operations in other jurisdictions, while those payments may not meet the threshold test for any kind of materiality within that individual company, they could, depending on how that's defined. What we're not seeing, at this point, is the clarity through guidance or any regulations that would give us any comfort today. Without that due diligence defence, we could be walking into almost a trap, if you will, if I can call it that. Without understanding that detail, our companies are very uncomfortable being able to comply without a due diligence defence right now.
If, over a few years, those could be clarified, if we could see that direction, that clarity in the regulation or in the guidance that has been put forward as we're going to be able to see, then we can start looking at the systems that are required to give that certainty to those signatories.
Senator Massicotte: Chief Alexis, thank you very much for your presentation. You raised some good objections, some even constitutional, relative to the relationship with the federal government. I'm a business person, so, if I forget all of those arguments, which are more objections of why not, from a transparency sense, would you not agree that, usually, transparency provides a better process? Is there any real, substantive reason, other than the more formal arguments, why you would resist providing that kind of information?
Mr. Alexis: Thank you very much, honourable senator, for asking the question. First Nations, as I alluded to earlier, have over 200 reporting requirements already in place nationally. We also have the Transparency Act, as well as the accountability act, already in place. Now, you are going to add an additional proposed requirement for us to follow. Sometimes that might convolute the whole reporting mechanism and subject it to mistakes if these things are not done correctly.
We're not opposed to accountability or transparency, it's just that there are many mechanisms in place already. My observation is that it shouldn't even get to that point.
Senator Massicotte: If you're already doing it 200 times, why not 201 times?
Mr. Alexis: How many times do other individuals report in this country?
Senator Sibbeston: I would, offhand, just ask the representatives of the oil and gas industry about the phenomenon of companies operating in areas of First Nations. Through the decades, there has been a process established because of Aboriginal rights and people's rights to the land and the resources. Now there are benefits agreements. There are access agreements and impact-benefit agreements that have become the norm, as it were. Now, it seems that there will be a process where all of this, particularly by the First Nations, will have to be reported. I was thinking that, on the First Nations side, they may not want their business revealed to the public.
How does the industry feel about having to report the subject or the amounts of all of these benefit agreements? Are they not also sensitive to that and perhaps don't want to have these agreements put out to the public?
Mr. Ferguson: Thank you for the question, senator. We have been very consistent in our discussions with government on the Aboriginal part of this piece of legislation. We enjoy many excellent relationships with First Nations groups across Canada. We value those a lot. Our companies hold them to high regard, and we certainly want to increase and continue those relationships and opportunities for our Aboriginal partners.
We have been pretty clear all along that we believe this is a discussion that our government — the federal government — needs to have with Aboriginal governments, and we will take our lead based on what the outcome of that consultation and dialogue is.
We are sensitive to it; there's no question. We certainly value our relationship with the federal government and provincial governments as well. Certainly with no disrespect to anybody, we also equally, if not more, value many of our relationships with our Aboriginal relations.
Senator Sibbeston: In the government coming to the point where they made the decision that there would be a reporting process, have they had much consultation with the industry? How does the industry feel? Invariably the First Nations have to report it. It's going to also reveal the whole agreement made by industry. In a sense, it affects the industry as well as First Nations.
How do you feel? Did you resist it, or was there any consultation that had gone on before this provision was put in the act?
Mr. Ferguson: Initially there was not a lot of discussion. When we heard about its being included in the net in the legislation you have in front of you, our initial observation was that's interesting. We think that not only is our sector complex and difficult to understand sometimes, but there needs to a lot more discussion with Aboriginal groups across Canada to make sure they're comfortable.
The legislation includes a window or delay of bringing into force any of these provisions with Aboriginal groups. We would expect or hope that would be subject to a significant amount of dialogue and consultation with Aboriginal groups across Canada.
We don't want to see something like this disrupt our many and important businesses and relationships with First Nations across Canada.
Senator Patterson: I would like to address my question to the gentlemen from the Canadian Association of Petroleum Producers. You have identified three issues where you would like to see engagement with industry, developing the industry guidance materials such as reporting formats, situations where exemptions may be justified, and situations where variations to reporting requirements might be warranted.
These can all be worked out in the regulatory process; is that correct?
Mr. Ferguson: We believe so, yes.
Senator Patterson: Have you been given some reason to believe that your industry could be engaged in the process of developing regulations under this legislation?
Mr. Ferguson: Certainly we don't have any commitments, but we have spoken to the need for that. We believe we have made a good case to government that with the complexities of our business across Canada, the different kinds of plays we're involved in, we need to be able to bring that forward so they can fully understand it as they develop the guidance and regulations under this legislation to make sure unintended consequences are properly managed and intended consequences are properly met.
It is an opportunity. There is an existing process for everybody to get engaged in regulatory development. In Canada, we would see ourselves being an important part of that consultation process, but to this date there hasn't been a specific work or commitment on that yet.
Senator Wallace: Mr. Ferguson, I want to come back to the point that was raised by Senator Massicotte. It related to your comments on certification by the corporate officer concerning payments over $100,000 by multiple entities, and the difficulty that that certification could present for an officer if it were absolute. The way it seems to be in the bill now, it would be an absolute certification, and you wish to qualify that with what you refer to as a due diligence qualifier.
The officer would be certifying to the best of his or her knowledge and belief, and you raise the practical issues, which I'm sure are real, that in a situation where the officer is responsible for multiple entities, being able to say that with absolute certainty, there are some practical considerations and issues to be dealt with.
When I think of it, aren't those issues that your companies would have within their control to control? In other words, you could develop — and many companies do — internal controls so when an officer is put in the position of having to certify something as serious as this would be, if this bill becomes law, the officer would be relying on what is presented by others in the organization. There would be systems in the organization to ensure that all of these payments of $100,000 to governments are very precisely tracked and leaving no room for error.
My basic question to you would be this: I understand why you would want a due diligence qualifier because the consequences of certifying that something later turns out to be incorrect could be extremely serious. Isn't it within the control of corporations to provide the insurance they need by developing proper controls internally?
Mr. Ferguson: Yes, senator, I certainly agree. I didn't want to mischaracterize the intent of our statement there. Clearly, if we had in front of us today the detail in the regulation — the guidance we believe is coming our way in terms of how to define a project and over what spatial and temporal scales — any company could go out and build those systems to make sure they have the right processes in place that you see in some of the securities regulatory pieces.
Without that guidance at this point, we're suggesting that if you don't give us something right now, are we going to have that guidance in time to give ourselves, our shareholders and our stakeholders the confidence that we can make those concrete firm attestations without knowing the rules?
If we saw more of the detail, I guarantee that many of our companies are pretty adept. If you look at our compliance record across Canada, the governance model in Canada is pretty superlative. There's no question that Canadian companies will respond well to this if they know the running rules that they have in front of them in enough detail to build those systems and processes.
We're not seeing it yet.
Senator Wallace: I'm sure, as Senator Patterson pointed out, when the additional regulations are developed, more details will be provided. It seems to me, at a somewhat higher level, we would be talking about accurately tracing payments of $100,000 and more to governments. That's pretty straightforward. It seems to me that a system that could track that accurately so an officer could certify based upon it, yes, there may be horns and whistles further on down the line, but that's a pretty clear basic requirement. It would seem to me within the ability of a business, a corporation, to be able to handle that.
Mr. Ferguson: You're right. Maybe I can offer a small example of the uncertainty that we're still seeing. Over what time period is that $100,000 payment to be made? Is it a series of small payments in terms of acquiring some lease holdings? We don't see that guidance yet.
It would be nice to understand what the definition of the project is and over what time period do you make up those thresholds that are to be reported on, so that we can give ourselves some confidence that we can track that.
I agree with you, if it was one single payment. But, that's not what we're seeing or hearing yet. We are concerned about that level of detail in order to look at this firmly.
There's no question that we believe firmly in the intent and the direction of the legislation. We think this is an important piece and an opportunity to highlight some significant leadership by Canadian companies. We just don't see the detail yet, in order to be that confident.
Senator Seidman: Chief Alexis, if I might just ask for a clarification on something that you talked about, which was the onerous reporting issues. It is my understanding that under the act, the onus is being placed on industry to report. There wouldn't be another layer of reporting burden on First Nation governments, but just First Nation companies involved in the extractive sector. Is that your understanding, or is it different?
Mr. Alexis: Thank you very much for the question, senator. In this day and age, more and more First Nations are getting into business and entrepreneurship, not only with Canadians but also with multinationals.
If we get into IBAs, et cetera, then disclosure of financial information definitely works both ways. For example, industry would have to report it and so would we. The mechanism of reporting all of our financials, in this country, is not included with another additional act. That's our observations on this.
Again, we're not opposed to accountability or transparency. It is just another mechanism of reporting.
Senator Seidman: It wouldn't be First Nation governments who would be reporting, right? It would be First Nation companies who are involved in the extractive sector. So it is corporate reporting; is that correct?
Mr. Alexis: It is an interesting question. In this whole realm — I guess you call it own-source revenue — we have to report that now. It is just like individuals or companies having shares in units. How far does the reporting go? At some point, we have to question that. How far does it go for the reporting of shares, units and ownership? Respectfully, that's the concern we have. Thank you.
Senator Sibbeston: While I was reading through the bill, I noticed in the provision of proposed section 23(1)(b), where it deals with regulations, it says — I will just read it — ''respecting the circumstances in which any of the provision of this Act do not apply to entities, payments or payees.'' Basically, what that provision provides is that by regulation, the government can negate the requirement of any, of what the whole act is about, which is providing information.
I think it is unusual for an act to have this provision, where you have a whole act dealing with disclosure. In regulation, all of this can be negated, can be put aside, and the government can say that you don't need to report after all.
I was going to ask the representatives from industry if from your discussions with government you know what the government has in mind with respect to this provision. Why would they have a clause like this, which makes it possible to basically negate the effect of this bill and the regulations? It seems unusual. Do you know what they have in mind?
Mr. Ferguson: Not specifically. We were involved in some of the discussions and dialogue leading up to the release of that. But all we can assume is that when we started sharing information about the complexity of the industry that we're talking about, at least on our side, perhaps not so much the mining industry, but if you understand the oil and gas sector in Canada, it is pretty rich in depth in terms of service companies and subcontracting service companies, and all we can assume is that maybe some of that complexity was not intended to be caught up.
I will give you one specific example. If you look at the threshold test for what size of entity would be required to report, if you look at those numbers, then you can quickly see that an Aboriginal-owned business of a certain size and scale would probably easily meet the test of having to report its payments to governments, including potentially, two years down the road or whenever, First Nations.
I'm not sure whether the intent was to capture all of that detail in the companies or whether it was meant primarily for the extractive industry that controls and governs the service sector that's there.
That's all we can assume at this point. It depends on what kind of direction comes out in the regulatory piece, when it does come. I can't help you with too much detail. Sorry.
Senator Massicotte: Chief Alexis, maybe I can just get a clarification. Your objection is the bureaucracy and the cost of preparing the reports. That is your principle concern. You have provided 23 reports, and you are saying that you don't want this burden. But, the way that I read the legislation, it looks like unless you are doing the exploration yourself or making a payment, the legislation pertains only to those making the disbursement. It is highly probable that your tribe would not have to file any report, unless you are creating a company, which is probably organized and therefore presumably has a staff and the competency to provide that information.
Given that there's nothing required from you, does that make you agreeable to this legislation?
Mr. Alexis: No. It is a good question. Thank you very much. In this day and age, respectfully, senators, First Nations aspire to become masters of their own destiny. In some cases, we do have our own businesses. There's no doubt, in some instances, we are making over $100,000. At some point, we aspire to be owners of our own businesses and industry-related entities in this country. And, at some point, we will be owners, and that's the interesting point in all of this. Again, I'm going to go back to how many times we have to report, in definitive terms, the own-source revenue that we have.
In this country, we would like to participate in partnering with multinationals. There's no doubt about it. At the same time, we would like hopefully to have multinationals who are also interested in partnering with us in this whole realm. The reporting mechanism is going to perhaps becomes convoluted in that how many times do we have to report and what do we report?
Those are some of the issues that we have. I hope I answered your question.
Senator Massicotte: It is clear: It is only if you are doing the development or the exploration yourself. As a tribe, there's no reporting. As the chief of the tribe, I presume you have no concerns there. What you are saying is if we develop and become entrepreneurs doing their own business, then that's when the problem arises, but not as the tribe per se.
Mr. Alexis: That's reporting; there's no doubt, at this point. Right now, under the Transparency Act, we have to report these, and we have been.
Senator Massicotte: So there's no reason to object to it, then?
Mr. Alexis: I still have some objections, but it depends on how this is all going to come together, and what it includes. What other acts does it include? What other omnibus bill is going to include reporting? Does it all come together at some point, or is it going to be an additional reporting mechanism that we have to comply with?
Senator Massicotte: If you want, we can give you a copy of the bill. It is over 500 pages. I'm sure you will enjoy it.
Mr. Alexis: I'm sure we can find a place to read that, sir.
Senator Massicotte: Thank you.
The Chair: We don't have any other questioners, so we will bring in the next group of people.
Thank you very much, Chief Alexis and Mr. Ferguson and company there in Calgary. You have a good evening.
We will continue our pre-study hearings on Bill C-43, the second budget implementation act, Divisions 3, 28 and 29 of Part 4. And here to speak with us regarding Division 3 of the bill, which deals with the Canadian High Arctic Research Station act, I'm pleased to welcome Terry Audla.
Here to speak with us regarding Division 29 of the bill, which deals with AECL and the Public Service Superannuation Act, I'm pleased to welcome Jonathan Fitzpatrick, President, and Vince Frisina, Vice-President, Chalk River Professional Employees Group.
Mr. Audla, please proceed with your opening remarks, after which we will hear from Mr. Fitzpatrick and then we will go to questions.
Terry Audla, President, Inuit Tapiriit Kanatami: Thank you, Senator Neufeld, and I appreciate the opportunity to come before you to give the Inuit perspective on Bill C-43.
Good evening. Indeed, it is truly impossible to have a fulsome discussion about what could or should be happening in the Arctic without involving the indigenous people who live there.
Again, I thank you, Mr. Chairman, for inviting me to this committee to discuss the Canadian High Arctic Research Station and the Canadian Polar Commission.
I will begin my remarks with a quick introduction about Inuit, our history and relationships with the Crown before delving into the matter at hand.
As Canada's national Inuit leader, I am honoured to represent the close to 60,000 Inuit in Canada. Our northern homeland, or Inuit Nunangat in Inuktitut, spans about 40 per cent of Canada's land mass and 50 per cent of Canada's coastline.
To put this into perspective, it is a land mass between the size of Australia and India, peppered with only 53 communities and no highways. Our communities are accessed by plane or sea, and in some cases winter roads.
Inuit have had earnest and sustained contact with the outside world for only a few generations. In fact, there are many Canadian Inuit alive today who were raised in nomadic communities, in igloos and tents, travelling the Arctic land and sea by dog team and kayak, tracking game and marine mammals for survival.
In a matter of decades, we have moved to static communities, in often overcrowded homes, with inadequate access to services like health care and education. In essentially one generation, we have made the rocky transition from Eskimo to Inuit, or from the igloo to the iPhone, and the incredibly rapid speed of this transition has come with its share of challenges. Our communities persistently struggle with economic and social challenges, including access to affordable and appropriate food, physical and mental health support, and disproportionate rates of diseases like tuberculosis, infant mortality rates and low life expectancy, among other concerns.
In our history of relations with outsiders, Inuit opinions have not always been considered and sometimes not even really heard.
Upon our first earnest encounter with the European system of governance, which was very different from our community structures, we were told that all lands and waters in Inuit Nunangat, our Inuit homeland, were owned by the Crown, and all the rights and privileges that attached to sovereignty and ownership, notably the power to make binding laws impacting the lives of Inuit, rested in the hands of political institutions located elsewhere. In this process, we were led to believe that we had no place as all.
Starting in the 1960s, a succession of young Inuit decided to take on these concepts and regain at least a degree of control over our own lives. Under the shadow of the residential schools and the relocation of Inuit families by the government in the name of sovereignty, these young Inuit took the approach that our decolonization had to feature a fundamental reassertion and rebalancing of our rights and responsibilities with others.
In the last quarter of the 20th century, this work gave way to five agreements with the Crown signed, which formed a continuous chain across the Canadian Arctic from the Alaska border to the Labrador coast and which are protected by section 35 of Canada's 1982 Constitution Act.
Fast-forward a few more decades to today. With our agreements being implemented, we find ourselves with a new wave of external forces that are pushing into our homeland, the romanticized visions of frozen tundra and ice as well as the quest for economic gains in our vast territories. In this clamour, who is asking Inuit what we think should happen in our own homeland within our own Arctic environment? How do Inuit see the future of the Arctic and Arctic development?
This is where my introduction dovetails into the discussion about CHARS, the Canadian High Arctic Research Station, and the Canadian Polar Commission. There is a growing global interest in the circumpolar Arctic that has been fuelled by the issues of resource extraction, modernization and sovereignty, as well as climate change, what I tend to call the global guilty conscience. This has resulted in a desire to obtain the best available knowledge to increase our understanding of these issues. The demand for Canadian Inuit involvement and knowledge in Arctic research has never been greater. Drivers of this demand are in part a result of initiatives such as the International Polar Year, the Northern Contaminants Program, ArcticNet, and the Government of Canada's Northern Strategy, including the Canadian High Arctic Research Station.
Proponents from academia, federal, territorial and provincial governments, non-government organizations, industry and the private sector are increasingly seeking the support of Inuit and their respective organizations, as well as the inclusion of Inuit knowledge, to inform good science and policy.
Simultaneously, Inuit have been effectively increasing their involvement in these initiatives and have been integral to ensuring the appropriate inclusion of Inuit knowledge in many of these programs. Inuit have achieved this by insisting on and successfully obtaining Inuit representation as board members, research management committee advisers, proposal adjudicators and through conducting their own research or establishing Inuit research centres like in northern Quebec in Nunavik.
Involving Inuit in research projects from the earliest stages and throughout the research process is increasingly being recognized as beneficial. This is being done not only for the betterment of Inuit but also for the advancement of Canadian Arctic science and policy.
While there have been successful gains in mobilizing Inuit engagement in research, there still remain challenges, including, among other things, differing cultural perspectives, sheer volume, lack of capacity, short timelines and ad hoc procedures.
In an effort to address these challenges, our goal in this program is to develop innovative partnerships between Inuit and academic researchers that have an interest to work towards the establishment of best research processes and practices across Inuit Nunangat.
Inuit, like Western scientists, have a system of acquiring knowledge based on observation, forming hypotheses and experimentation. However, Inuit knowledge is a distinct knowledge that is currently undervalued in Arctic research.
Inuit Qaujisarvingat, the Inuit knowledge centre at our organization Inuit Tapiriit Kanatami, strives to collect and communicate Inuit knowledge with rigour and respect. At the centre we recognize that Inuit knowledge is multi-faceted and nuanced, and true Inuit knowledge stewardship requires consideration and support and the fostering of distinct local world views, perspectives, ways of life, language and culture, rather than the simple incorporation of Inuit knowledge into mainstream methods and systems of Western science.
Inuit have a special relationship with and a particular interest in Arctic research. We should be considered as the most invested researchers given that the Arctic is our home and is vital to our way of life.
Our involvement in the Canadian High Arctic Research Station process started in early 2008 in the CHARS initiative when we wrote a paper called Identifying Canada's global science advantage in addressing the grand challenges facing the Canadian Arctic: An Inuit perspective. Canada's unique advantages with respect to Arctic science offer an opportunity to make major, unparalleled contributions to the global and circumpolar research communities.
The early International Expert Panel on Science Priorities for the Canadian Arctic Research Initiative agreed with the conclusion of the visioning workshop report that one of Canada's two principal advantages with respect to Arctic science in an international context is driven from Canada's human capital comprising the knowledge base of northern inhabitants, the majority of whom are indigenous, and its excellent scientists and engineers based primarily in southern universities or within government.
Our citizens have an innovative role to play in new partnerships to develop platforms and methods of long-term, community-driven and community-based monitoring. Traditional knowledge, including indigenous languages, provides cultural tools uniquely suited to making precise observations for year-round monitoring of their Arctic ecosystems. That knowledge itself is of inherent value and represents a research advantage in its own right.
But there is an ever-increased research burden placed on Inuit by this growing Canadian research landscape. Inuit, more than ever before, need to have improved capacity to become involved in all aspects of research in order to become part of a solution for themselves, Canadians and the world by creating the required knowledge concerning the Arctic region. This has to be addressed and accounted for immediately in CHARS.
Our government has a globally unique opportunity with the project. However, if it is truly to be a significant, world- class science and technology initiative, then Canada will need to increase its recognition of the involvement and capacity of Inuit in the process in a transparent and timely fashion. Inuit have much to provide and want to be part of making Canada a leader in Arctic science and technology.
To be honest, given that Inuit have been asking that we address the CHARS governance issues since 2008, the recent news about the CHARS-Canadian Polar Commission merger is somewhat surprising for Inuit, and much remains unclear, from our point of view, particularly in how we might be engaged in the process.
Inuit would like to have a position on this. It may, in fact, be a very good idea, but we have not been part of this decision, nor have we had time to appropriately analyze this path forward to make an informed decision or set of recommendations.
Inuit have not had sufficient time or information to assess the possible impacts that the changes proposed under Bill C-43 may have on our rights and interests as beneficiaries of modern land claims. As CHARS will be situated in and focused on our homeland, Inuit submit that meaningful and timely discussions must occur with Inuit on this subject. We will be exploring these procedural and substantive concerns as information and time allow.
So what Inuit have at the moment are many questions. We are supposed to be part of an emerging advisory committee, but, again, when we heard of this, it was already drafted and headed to committee. Inuit want to be partners in Arctic research. It is our home that CHARS is being built on, and Inuit have a great deal to offer as research and economic partners in the Arctic.
I'll conclude with these remarks, and I'm looking forward to your questions. Thank you.
The Chair: Thank you very much. Next, we'll go to Mr. Fitzpatrick for his presentation.
Jonathan Fitzpatrick, President, Professional Institute of the Public Service of Canada: I'm joined today by Vince Frisina, Vice-President of the Chalk River Professional Employees Group of the Professional Institute of the Public Service of Canada. The Professional Institute of the Public Service of Canada represents almost 100 engineers, scientists and technicians at the Chalk River and Whiteshell sites of Canadian Nuclear Laboratories, formerly known as Atomic Energy of Canada Limited. These professionals are at the very heart of the Canadian nuclear industry. Collectively, we are the bearers of a tremendous amount of knowledge and experience. Together, we have endured the ups and downs of the nuclear industry's eventful history.
Nuclear energy supplies a big part of our country's energy needs. It is also an important contributor to our medical, industrial and innovation requirements. Our members are a key part of Canada's science and technology knowledge infrastructure and collaborate with advanced nuclear research institutions worldwide. We provide the research that the Canadian Nuclear Safety Commission, the industry's regulator, requires to keep this industry safe and on line.
Nuclear contributes $5 billion to our economy and tens of thousands of direct and indirect jobs in this country as a result of domestic needs and international trade. Canada's long history as a nuclear nation has been built on this research and expertise.
Division 29 of Bill C-43 includes measures related to the implementation of a new model for the laboratories of Atomic Energy of Canada Limited, an entity now known as Canadian Nuclear Laboratories. These measures include the provision of transitional pension coverage to CNL employees following the share transfer, after which CNL would become a ''GoCo,'' a government-owned and contractor-operated facility.
Ensuring that this new management model works means ensuring that CNL can continue to retain and attract the best and brightest nuclear scientists and engineers. These scientists and engineers are needed to maintain Canada's status as a tier 1 nuclear nation and to meet the federal government's long-term obligations to public safety and scientific innovation, both nationally and internationally.
We are here today to voice our deep concern that the pension measures in this bill do not meet this requirement and will put this capacity at risk. Let me explain.
Bill C-43 would allow existing employees to continue to participate in the Public Service Pension Plan for a transitional period of three years. However, the public service plan would not be extended to any new employees of CNL following share transfer, and there would be no requirement to maintain a similar standard of defined benefit pension, as provided under the Public Service Superannuation Act, the PSSA, once the transition is complete. In fact, the request for proposal prepared for prospective new operators requires them to have an alternative pension plan in place at the time of share transfer. By excluding new hires from the transitional coverage, the message to industry workers is that the next pension plan will not be equivalent, comparable or, for that matter, negotiable.
As a result, the Canadian industry and, more specifically, the new corporate entity will be at serious risk of failing to attract and retain the best and brightest nuclear expertise.
To be clear, we agree that three years of transitional pension coverage under the PSSA should provide certainty and stability for both employees and the bidders in the procurement process. Unfortunately, by not extending the same treatment to new hires, Bill C-43 undermines the objective of a seamless transfer from AECL to CNL.
In fact, putting in place a two-tier pension system for the first three years of the new entity would be divisive in the workplace and will have an impact on collective agreement negotiations. Once a new plan has been imposed on new hires and, eventually, on all employees of CNL, it would be highly unlikely and very complex to successfully negotiate a different plan at a later date. This, in our view, will place the labs at risk of being programmed to fail rather than set up for success. It sends a clear message to highly skilled professionals at CNL to start looking elsewhere in a very competitive industry.
I should note that while our union represents 900 employees at CNL, all 3,400 employees will be affected by these pension measures. The future prospects of Canada's premier nuclear labs depend on a fair, stable and predictable pension plan being put in place for all employees. We believe the best, the easiest and the most cost-effective avenue to achieve this goal is to have the three-year PSSA transitional coverage apply to both existing employees and new hires of CNL following share transfer.
Transitional pension coverage should give the new employer and its employees three years to negotiate a deal that pleases everyone, but this will only be possible if participation in the PSSA is extended to new hires following share transfer.
Thank you for your time. We look forward to your questions.
The Chair: Thank you, Mr. Fitzpatrick. We'll go to questions, and I'll begin with the deputy chair, Senator Massicotte.
Senator Massicotte: Thank you to all three of you for being with us. It was very interesting.
Maybe I'll start with Mr. Fitzpatrick. If I understand your issue, your issue is not the three years. You're okay with that for existing employees. Your issue is only that the new employees will not be subject to the three-year transition, having the right to the old pension plan. Is that your principal issue?
Mr. Fitzpatrick: Yes, that is correct.
Senator Massicotte: The argument I would probably make — and I want to see how you respond to it — is that it's normal practice in Canada that when you buy a company, the acquirer basically assumes the responsibilities of the previous entity but becomes the master of determining what he must do to retain and attract future employees. It is very rare that the vendor of a company will force the acquirer to stipulate, in the future, what the pension plan is going to be. Don't you think the person who enters into that contract from the bidding contracts the government is looking at will be motivated enough to ensure that his package is attractive enough to retain these very valuable employees, about whom I agree with you?
Mr. Fitzpatrick: Thank you for the question. Ultimately, it is our goal and our wish that the future pension and compensation packages will be comparable to or better than the existing pension plan we have. However, there are no guarantees. There is no pension equivalence language for the employees. As the bargaining agent for the engineers and scientists at Chalk River, we represent the current workers as well as future workers. In our opinion, this is an area where there is a gap.
Senator Massicotte: Mr. Audla, I'll just ask you a question. Obviously, your arguments are very valid. We should employ and have your people very heavily involved in this research, but it seems to me that that is common sense. Why are you raising the issue? Do you have reason to believe that won't the case?
Mr. Audla: For the merger, as it stands right now, there are more questions than there are answers, just based on the accelerated process of how it came about. The Canadian Polar Commission has an Antarctic mandate. When you look at Inuit representation and the voices of Inuit, I'll use the Arctic Council as an example where we are considered permanent observers and we participate in the discussions in that forum. When you consider other observers coming in from the European Union, the Asian countries or non-northern states, we tend to get worried about getting drowned out by all the other states at that table.
We feel as it stands now, with the Canadian Polar Commission and its Antarctic mandate, will that do away with the amount of work we've done to date? We still have questions on that.
The governance issue is another matter where we were given notice that the issue is coming, but at the same time because of the CPC merger, we're not sure where that lies with respect to the priorities. How are Inuit going to be involved with that?
When you look at the whole issue of the scientific aspect, the types of sciences you're looking at, the natural resources, the mandate of collecting the science and technology expertise, the logistics, and the Polar Continental Shelf Program as another example, would that not be one to consider for a possible merger? Then you're involving another department in that. There are good ideas where it could maybe make it more efficient to ensure that Canada becomes the model for the High Arctic research aspect of it all. When you include the Canadian Polar Commission mandates with the Antarctica aspect to it, it muddies the waters, in my opinion. When you look at the mandates of the types of studies that are going to happen, will the health and social sciences aspect be given the same amount of weight? It was agreed to, with CHARS as a stand-alone, that that would be the case. But in the case of the proposed merger under this act, we're not sure what will happen.
Senator Sibbeston: I was going to ask Mr. Audla a question. You indicated that you thought it would be beneficial to involve indigenous knowledge, another word for traditional knowledge. I looked through the act and there is no mention of traditional knowledge. The place it ought to have been is perhaps in section 5, the purpose of CHARS, recognizing traditional knowledge.
How much of a concern is this to you? Do you think it's significant? Do you think it's a significant fault of the act to not have recognition of indigenous or traditional knowledge? You also indicated that you weren't consulted very much — or very little — in terms of this bill. Could you express your feelings about that?
Mr. Audla: Thank you for that question. It is significant in the sense that our knowledge has been contributing to the basic research and scientific evidence gathering. It has gained significance over the past few decades based on the fact that the Inuit have always been very good at observations and gathering knowledge that has been passed down over generations. That gives you a very clear picture as to the cumulative effects and the trend.
As an example, it took a biologist 30 years to finally realize that Inuit were more accurate in the aspect of polar bear distribution and population trend. It's difficult for us to accept that it's not necessarily mentioned in the act, but we try to move forward from that and include it within the whole design of how they will carry out their activities.
Someone asked me if traditional knowledge is still relevant in this modern era. It was a scientist who asked me that question, so I shot back, ''Is science still relevant?'' At the end of the day, it's knowledge. When you gather knowledge and the facts, you're that much more prepared, in my opinion.
It's an opportunity for Canada to uphold this as a model of how to include the indigenous peoples with respect to decision making.
Senator Sibbeston: I was glad this summer when there was news about the discovery of Sir John Franklin's ship in the Arctic and the Gjoa Haven area. After the initial news, a few days later there was talk about the role that traditional knowledge played in the discovery of that ship. How significant would you say traditional knowledge was in the scientists' eventually finding the ship?
Mr. Audla: It was quite significant. Without it, there would have been a shotgun approach and hopefully one of those pellets would make a hit. In this sense, Inuit sort of narrowed the scope. If Franklin had used Inuit traditional knowledge, he would probably still be in the history books for further advancement, as the case would be with Roald Amundsen, who went on to Antarctic expeditions. This is the difference between those two famous explorers.
I thought I would jokingly tell our Prime Minister that we had used the wood for firewood and the metal for spears and tools, but I decided against it.
Senator Seidman: Mr. Audla, thank you very much for your wonderful presentation. My question has been touched on by Senator Sibbeston because I was struck when you said that Inuit knowledge is undervalued. How is it undervalued? Could you give examples, in your opinion, of how it's undervalued? How could it be better incorporated into the program?
Mr. Audla: When the Canadian Polar Commission was not part of the discussions during the creation of the Canadian High Arctic Research Station, we included ourselves in the committee discussions towards program development design. It took us a good three or four years to finally have the powers that be start including Inuit in those decisions and start including Inuit knowledge as an aspect of their design of these programs. But because we now we have this new Canadian Polar Commission merger happening, we're feeling a little left out of the loop and not included in the discussion as to how that might work out.
I'll use the example of Environment Canada being very proactive in including Inuit in the management of the polar bear, and how we were successful in defeating the U.S. and the United Kingdom in their proposal for up-listing the polar bear based on science and traditional knowledge. They go hand in hand, and it worked out for our country. I feel this is an opportunity, as Canada is an Arctic nation, to hold up to the other Arctic nations around the world that this is how you gather information based on using the indigenous people that happen to live in the area.
The whole CPC aspect of it, again, just makes it unclear as to how that's going to be implemented.
Senator Seidman: Do you have a suggestion about how you would like to see it evolve? Ongoing, in the Canadian Polar Commission, there's going to be a whole evolution as it grows and develops.
Mr. Audla: Yes.
Senator Seidman: Do you have a vision for how Inuit knowledge can be incorporated?
Mr. Audla: A big part of our issue is capacity. The traditional knowledge has always been based on oral traditions. Our research arm, within our organization, has been working quite diligently to try and establish a written record so that it is given more credence by academia, scientists and researchers. This is to try to have those people understand how we gather information and to make it that much more relevant.
Senator Sibbeston identified that there is no specific wording in the act that gives any weight to traditional knowledge, and I would say that would be a tall order, just based on the fact that it is not defined enough. This is where we need to work together to try and establish that.
On top of that is just our capacity. There are not too many of us, but at the same time we're underfunded. It is sometimes not possible for us to be able to contribute as we would like to. Specifically, in this case, with respect to our participation, a lot of what we have done with the Canadian High Arctic Research Station has been voluntary, just because we felt it is too vital and too important for us not to include ourselves.
Senator Seidman: I hope in the evolutionary process as this develops and grows, there will be some way you can incorporate Inuit knowledge and participation.
Mr. Audla: That's our hope. We did make good headway towards the establishment of the High Arctic Research Station. But with the Canadian Polar Commission merger, it becomes a little greyer, with respect to how they're going to involve us and whether or not the Antarctica mandate aspect would water down our contributions.
Senator Patterson: I would like to warmly welcome Mr. Audla to our committee. He's well qualified to talk about High Arctic research because his hometown is Resolute Bay, which is one of Canada's most northern communities. I would like to ask Mr. Audla just to step back a bit in looking at this act. There is a well-known joke, which you have heard: In the North, the average Inuit family consists of a mother, a father, four children and an anthropologist from the South. But the CHARS legislation, as I see it, is in principle about creating a hub — I think that's the language used in the act — a hub for scientific research in the Canadian Arctic, rather than for people in Southern Canada who are studying the North.
Mr. Audla, in principle, is the idea of having Arctic research occur in the Arctic a big step in the right direction for Canada?
Mr. Audla: Thank you, Senator Patterson. It is a significant step in the right direction, where prior to that, the people of the North, the indigenous people, were never involved. The headway that we made was quite commendable. At the same time, we're finding ourselves competing with other people, other scientists, researchers or NGOs, with respect to their participation.
The initiative through the Canadian High Arctic Research Station and this merger should keep Inuit at the forefront of all those other groups, as one policy, as a way of ensuring that our participation is included and maintained. Again, it is a matter of how much actual commitment will be given to do that. We're more than willing. We volunteered a lot of our time and our participation. But again, if we can involve ourselves a lot more, given the capacity, then that would certainly be a good step in the right direction.
Senator Patterson: You talked about governance and, as you mentioned, keeping Inuit at the forefront. I believe one of your board members from the Inuvialuit region is a member of the Canadian Polar Commission. The governance of CHARS is going to be a board that will be composed of members — and I'm quoting from the bill, ''having regard to the ethnic, linguistic and regional diversity of Canada's Arctic.'' That board will oversee the CHARS science and technology plan, annual work plans, budgets and the like. Would you be recommending to Canada that Inuit and perhaps particularly Inuit Tapiriit Kanatami, which has the mandate to represent Inuit of all of Canada in the Arctic regions, have a major voice on the board or in selecting board members? Would that be one way of ensuring that Inuit are kept at the forefront and that your needs, including capacity building, would not be neglected, as this new governing model is developed?
Mr. Audla: That's the encouraged direction to take. During the early development of the Canadian High Arctic Research Station that was truly the intent. You are correct that one of my board members currently sits as interim chair for the Canadian Polar Commission. We had discussions about this proposed merger, and she was unsure what it meant with respect to the amount of work that we have already put into the Canadian High Arctic Research Station development. This is mostly because of the aspect of the Antarctic mandate and how the CPC and the Canadian High Arctic Research Station would actually merge.
We have not been included in those discussions. For the governance aspect of it, we're highly encouraged that Inuit Tapiriit Kanatami or any of the regions that it represents be included in those discussions as to how they may select actual board members. It may be that some of those board members may come from the regions themselves.
I know that Nunavut is a huge territory and that the proposed Canadian High Arctic Research Station will be situated in Cambridge Bay. Again, we need to see that right now, just based on the speed of how everything seems to be happening. We have been trying to include ourselves in the discussions. We have been trying to engage with their chief technical staff, but because of the process we're in right now, we just feel that it is not currently enough.
Senator Tannas: Mr. Fitzpatrick, this may be naive and optimistic, but I wondered, if the way it is set up right now requires the new employer to show their cards on what they would propose for a new pension program well in advance of a negotiation that would take place with existing employees, it would give existing employees an opportunity to weigh and measure the delta — if there is indeed a delta — between the superannuation plan and whatever is being proposed. It would also provide the employer with an opportunity to test drive exactly what you talked about, which was whether or not they were going to be able to attract anybody at what they propose, or what they think they can, in the meantime.
I don't know if that was the genius of why they did this, but I would be interested to know if you think I'm missing something, out to lunch, or if maybe you could see that this may be an interesting opportunity.
Mr. Fitzpatrick: Thank you for the question. Yes, it would give them an opportunity to test the market, as it were. Our concern is, on a go-forward basis, the recruitment and retention of the highly skilled employees that will be needed to work at the Canadian Nuclear Laboratories over that three-year transitional period.
Again, we would like to see everyone on the same level playing field, comparable benefits to all employees, regardless of whether they were employees of CNL prior to the transfer or post-transfer.
We want the Canadian Nuclear Laboratories to be successful, and to be successful, the compensation package has to remain competitive.
Again, the PSSA plan is already established. To include the new employees under the PSSA doesn't cost the government any more money. The contributions are made by the new employer; it is not coming out of government funding. We have one chance to do this right, and this is one aspect that we see to do right and to have a seamless transition to the new entity.
Senator Tannas: Do you think in the course of your negotiations, as the three-year period winds down, you will be negotiating on behalf of everybody? Could you ever conceive of a situation where you would not be negotiating to chin up the new employees to the existing employees, whatever it is they get, that you would leave those employees off on their own in a separate and somehow lesser plan than what you ultimately agreed to?
Mr. Fitzpatrick: I don't think it is feasible or practical for the new employer to run multiple pension plans.
Senator Tannas: Right.
Mr. Fitzpatrick: There is a certain economics associated with pension plans and the minimum number of members you need to make it self-sustaining. Again, the understanding we have for the three-year transitional coverage is that that will give us the opportunity to negotiate that successive pension plan.
However, if we have already got some employees into a separate plan, into a new plan, it makes it that much more difficult for us to negotiate a fair plan that everyone, employers and employees, are happy with.
[Translation]
Senator Boisvenu: Thank you very much for your very informative presentations. Mr. Audla, you said in your presentation that you represented the Inuit of Canada. Does that also include the Inuit of Quebec?
[English]
Mr. Audla: Yes, it includes the Inuit of northern Quebec.
[Translation]
Senator Boisvenu: You said in your presentation that one of your objectives was to have more of a say over economic development involving the Inuit. In 1975, Quebec signed the James Bay and Northern Quebec Agreement, which included two nations: the Cree and the Inuit. Is the situation different now? Having, myself, worked in the north with the Inuit and the Cree, I know that the Cree have developed a very autonomous economy. They have a hand in air transportation, road transportation, as well as in the mining and forestry sectors. They participate significantly in the economic development of their communities. Is it the same for the Quebec Inuit? Did the James Bay and Northern Quebec Agreement give the Inuit of Quebec greater autonomy over their economic development?
[English]
Mr. Audla: Yes, it has to a certain degree. The James Bay and Northern Quebec Agreement is the first Inuit land claim agreement that more or less kick-started the other land claim agreements that followed. The Inuit in northern Quebec have become more autonomous with respect to how they provide for themselves. They have become successful owners in venture capital. As well, they own an airline. They have become quite successful in that aspect.
When you look at the progression of the modern treaties in the Inuit regions, what followed was an Inuvialuit land claim, then the Nunavut land claim and then the Nunatsiavut land claim in northern Labrador. The Inuit have been quite successful overall. When you look at the Nunavut example, there are two mines operating now. They happen to be on land that the Inuit own where they collect royalties from those projects.
Now it is a matter of receiving those funds and using them in a responsible manner. And we're in that mode of looking at how we do it responsibly. We had the advantage, I guess, because of the isolation factor, of being able to look at the best and worst examples done by other First Nations and other groups. We hope to learn from those. In the aspect of the James Bay and Northern Quebec Agreement, the Inuit in Nunavik are relatively successful, but they are now looking at other opportunities. The resource extraction industry is one where they're continuing to see how they can further improve their ability to participate, to be not only the employees but also the employers.
[Translation]
Senator Boisvenu: Along the same lines, legislation was adopted last year that confirmed new agreements between the federal government, the Northwest Territories and Nunavut. As the leader of that community, are you optimistic about the future improvement of economic conditions in your communities? Are you relatively optimistic about the agreements being developed and the integration of your communities in that development?
[English]
Mr. Audla: I have to be, and I am. I feel that these modern land claims are quite comprehensive; I would say they're the best examples in existence when it comes to the relationship between Inuit and the Crown. I feel that they give Inuit a considerable amount of leverage when it comes to their say as to what happens in their homeland, what extractive industries are going to enter into their area, the type of extraction that is involved, how we will participate. That is all included within those specific land claims.
Where it gets a little greyer is the socio-economics, the social sciences, as well as science in general.
Some of the land claims, like the Nunavut land claim, have specific research requirements to include Inuit. In Nunavik in northern Quebec, the Inuit have been quite successful in developing their own research station. It's in partnership with McGill University. It includes other global participants when it comes to understanding the Canadian Arctic, especially in the northern Quebec region. We're hoping that the Canadian High Arctic Research Station will add to that.
Senator Ringuette: Mr. Fitzpatrick, correct me, please, if I'm wrong, but when the officials from the department were here, I understood that the government was retaining the patents only of AECL, of the Chalk River laboratories. Did I miss something? Everything else was up for a bid. This is more than a structure. If that's the case, let's clear up that situation first.
Mr. Fitzpatrick: Thank you for the question. I hope I will answer it correctly. The current transfer, the phase 2 restructuring, is the government retains the assets and liabilities and the new contractor will be the operator of the site, of the facilities. I'm not sure if that's speaking to your question.
Senator Ringuette: They're only contracting out the management.
Mr. Fitzpatrick: That is my understanding; it is the management and operation of the facilities.
Senator Ringuette: Essentially, there is no sale. They are still the owner, and technically you are still the employees of a government-owned entity, and your collective agreement power is still there, because an accreditation is with the owner.
Mr. Fitzpatrick: As Dr. Walker and Dr. Lafaille mentioned at the meeting two weeks ago, and I reiterated today, it is a government-owned, company-operated model that they're moving towards.
However, what we're being told is that upon share transfer to the new management and operations company, at that point we are no longer eligible to remain under the PSSA. That's what we're being told. That's part of our concern.
Senator Ringuette: I certainly agree, because that goes outside the model, the usual flow and model of industrial relations and transfer of responsibility in regard to a collective agreement, definitely. This is setting a precedent. I really don't know of any court challenge that has been successful in regard to eliminating a collective agreement, as this is doing essentially.
Mr. Fitzpatrick: Under the rules of the Canada Labour Code, under which AECL and CNL currently fall, we will have successor rights when we are transferred to the new operating company. However, as I indicated earlier, what we're being told is that following transfer, that portion of our collective agreement that stipulates that our pension plan is the Public Service Pension Plan, we're being told that that aspect is no longer applicable by legislation and we're being told that the legislation supersedes the collective agreements.
Senator Ringuette: I don't agree with that, because if it was the entire collective agreement, there might be grounds, but just a portion of it, no. I wish you luck in your future process.
Mr. Fitzpatrick: Thank you.
Senator Wallace: Mr. Fitzpatrick, just following up on Senator Ringuette's comments, it is my understanding that the bill is clear that Canadian Nuclear Laboratories would be a Crown agent as long as it is a wholly owned subsidiary of AECL; correct?
Mr. Fitzpatrick: That's my understanding.
Senator Wallace: As long as it is a wholly owned subsidiary, any employees of CNL would be members of the Public Service Pension Plan; correct?
Mr. Fitzpatrick: Correct.
Senator Wallace: That would apply to any who are employees of CNL today, or it could be in the future, at any time prior to the sale of the shares of CNL by AECL. Is that correct?
Mr. Fitzpatrick: Yes, that is correct.
Senator Wallace: In your presentation you said the bill would allow existing employees of CNL to continue in the Public Service Pension Plan, but it would not extend to new employees of CNL. When you say that, are you talking about new employees after the sale of CNL to the private company?
Mr. Fitzpatrick: Yes, that is correct.
Senator Wallace: What puzzles me when I think of that is how could new employees of CNL in that situation ever be members of the Public Service Pension Plan, since CNL would not be a Crown agency at that point, and only employees of Crown agencies, Crown corporations, can be members of the Public Service Pension Plan?
Mr. Fitzpatrick: My understanding is that the legislation could stipulate that those new employees could also participate.
Senator Wallace: It would seem to me that employees that would be eligible to be members of the Public Service Pension Plan have to be employees of the government or government-controlled agencies. CNL after the sale would no longer be a government-controlled agency. I don't know how you could ever to extend that to apply to what would at that point be a privately owned corporation after the sale.
I thought maybe I'm missing something in this, and if I am, I would appreciate you clarifying.
Mr. Fitzpatrick: I believe that there has been some past practice where the stipulations of the PSSA and participation have been extended beyond that which is stipulated in legislation. Therefore, it's not unforeseeable that these changes could be made to the legislation for the Canadian Nuclear Laboratories.
Senator Wallace: That's interesting. That's something we'll follow up with. It would really surprise me that a government pension plan could apply to a privately owned private sector corporation, which is what CNL would be. I just find that hard to understand.
Mr. Fitzpatrick: There are examples.
Senator Wallace: We'll talk afterwards.
Senator Massicotte: Can I just clarify an issue, Mr. Fitzpatrick? Senator Ringuette raised some issues, and she has an understanding that's not consistent with mine. While the federal government was seeking bids to manage this entity, while they may not own the trademarks, the acquirer of this entity will be putting significant financial resources at risk relative to future profitability, or he will have to absorb losses. I presume that, if there are any profits from this operation, they will belong to the future owner, subject to the successful bid process or arrangement. So it's not only providing management services — I'm not at risk; it's not my asset, not my property. I suspect that the government is looking for somebody who basically assumes that risk, assumes total management control and assumes the consequences of its good or incompetent management. Am I not correct?
Mr. Fitzpatrick: Thank you for the question. Unfortunately, at this time, I'm not aware of the terms and conditions under the request for proposal. I understand that those terms and conditions will not be made available to us, so I can't comment on what stipulations will be made on the new employer. My colleague, Mr. Frisina, would like to add something.
Vince Frisina, Vice-President, Chalk River Professional Employees Group, Professional Institute of the Public Service of Canada: The RFP process for the management of the Chalk River nuclear labs is for the duration of five to seven years. At the end of that, it's up for renewal, so the consequences and risks borne by that contractor end at the end of that contract. Any damage that is done, in terms of recruitment and retention, to the scientists and engineers is already done and will be borne by AECL, the federal Crown corporation, ultimately.
The Chair: Thank you very much, witnesses, for the answers to the questions. I appreciate very much your being here tonight. We have to go in camera for a few minutes. We'll ask the room to be cleared so that we can continue with that.
(The committee continued in camera.)