THE SPECIAL COMMITTEE ON THE ARCTIC
EVIDENCE
OTTAWA, Monday, June 18, 2018
The Special Committee on the Arctic met this day at 6:30 p.m. to consider the significant and rapid changes to the Arctic, and impacts on original inhabitants.
Senator Dennis Glen Patterson (Chair) in the chair.
[English]
The Chair: Good evening. Welcome to this meeting of the Special Senate Committee on the Arctic. My name is Dennis Patterson. I am a senator representing Nunavut, and privileged to chair this committee.
I would now ask senators around the table to introduce themselves.
Senator Bovey: Patricia Bovey, Manitoba.
Senator Coyle: Mary Coyle, Nova Scotia.
Senator McIntyre: Paul McIntyre, New Brunswick.
The Chair: Colleagues, tonight, as part of our study on the significant and rapid changes to the Arctic and impacts on original inhabitants, we continue our study on two specific topics: economic development and infrastructure. Tonight I’m pleased to welcome two witnesses: from First Air, Dr. Brock Friesen, President and CEO; and from New North Networks, Mr. Tom Zubko, President.
Thank you, gentlemen, for joining us. I invite you each to proceed with your opening statement, perhaps in the order you were introduced, starting with Dr. Friesen, after which we will go to a question-and-answer session.
Brock Friesen, President and CEO, First Air: Thank you, Mr. Chairman.
First Air is the largest Arctic airline, with 17 jet and turboprop airplanes. We have bases in Iqaluit and Yellowknife. Although our head office is here, we’re an Iqaluit- and Yellowknife-centric airline. We have 800 employees. Half are in the North.
We’re probably the largest private sector employer in Nunavut other than one or two mines, and 13 per cent of our staff are Aboriginal.
We’re a for-profit airline, even though our company is wholly owned by the Inuit of northern Quebec, Makivik Corporation. We’re the main and only supplier of essential air services to many communities across the Arctic.
I won’t spend much time on them, but I’ll identify 10 issues. I only have nine in my introductory statement but I have 10 issues I think are worthy of the government’s consideration.
Many of these issues arise because most of the policies that apply to transportation and transportation infrastructure in the North are really policies in the South that are not customized in any way for the North. That’s basically the problem. It’s a one-size-fits-all type of an approach.
Starting with government support for essential air services, as I said, we’re an essential air services provider. Government policy is to fund essential road and rail infrastructure nationwide. That is normally how Canada looks at transportation. For aviation, it’s user pay. It’s an old mentality that aviation is somehow for those rich people going on leisure. It has become the main transportation for long distances in Canada.
The user pay model in the South is the wrong model for the Arctic, where the Arctic is the only basic transportation. Other than a road to Inuvik, it’s hard to think of anywhere with road connections. Pretty well everywhere we fly is air only: so, no road, no rail, and only seasonal ships.
Air policy is another issue. The Arctic airline industry is in its infancy. It’s much like the national airline industry was in the 1940s. That doesn’t mean we have old airplanes; it means the method of regulating it and the growth of the industry is in its infancy. We don’t have the regulatory protection that Trans-Canada Airlines had during the formative years, which went until probably the 1970s. They regulated where Air Canada would fly and who could compete with them. They wanted Air Canada to build the infrastructure up, build the roots, get people flying and then they would introduce competition.
Well, in the North, it’s not like that. It’s the open skies policy of the South. We work hard on a route like Edmonton-Yellowknife, and then Air Canada and WestJet come with a considerably lower cost base and take our traffic away.
Now we work hard on Iqaluit, Kuujjuaq and Rankin Inlet, but if we buy brand new airplanes at $40 million or $50 million a copy, somebody else could come in there and take us out. If we don’t have these routes that make money, then all the other routes that don’t make money — like Pond Inlet, Resolute and Cambridge Bay — won’t exist anymore. The long routes subsidize the short routes. We don’t have that kind of regulation.
In Europe, Europeans have got it right. There is a very good example from the Norwegian Embassy back here. On long, thin routes on the fringe of Europe, they regulate it while within Europe, on routes like Frankfurt-London and London-Paris they don’t regulate it. In Canada, it’s all unregulated. It just so happens in Canada that the regional Arctic airline industry is dominated by Inuit-owned companies: ours and Canadian North are both Inuit-owned companies. There is no protection whatsoever.
How do you build a reliable and sustainable air service? It’s something of a miracle First Air has survived 72 years.
Regarding airport infrastructure, the National Trade Corridor funding program has shown the way by supporting a new cargo facility in Iqaluit. We’re building it. They are paying roughly two thirds of the cost. It’s a fantastic example of a public-private partnership that will make the movement of goods more efficient and less expensive in the North.
We’re working on another public-private partnership whereby the government would save hundreds of millions in runway improvements. First Air would go out and buy brand new airplanes and operate on existing runways. You wouldn’t have to spend $200 million or $300 million in Pangnirtung and another $500 million on other airports. You don’t have to do it; we’ll buy new airplanes. We need the government's participation — not money, just government participation.
Carbon pricing is intended to incentivize consumers to pick transportation options that are less carbon producing. The Arctic residents don’t have any options. You can’t carpool and you can’t take the bus; it’s only flying. A higher ticket price and higher prices for food are simply a burden on the residents of the North.
Jet fuel is three times as expensive in the Arctic as in Southern Canada. It is priced to contribute to general revenue by the local government of Nunavut. It’s the largest operating cost for airlines. They are using the money from the extra margin on jet fuel to cross-subsidize other types of industry or for general revenue. The result is higher prices for goods and services and higher prices for travel. In addition, there are excise taxes on fuel in the South, and these are basically luxury taxes like a cigarette tax or an alcohol tax. This tax on jet fuel in the South translates into higher prices for basic food and basic transportation to the Arctic. If we fill up our tank in Ottawa or Montreal we pay these taxes, et cetera.
In order to comply with the proposed flight and duty time regulations designed for large carriers in the South and international carriers, we have to add 13 per cent more pilots to keep up the existing service levels. We have no choice but to hire more pilots and it’s at a time when there is a significant pilot shortage. Where do we find these pilots? I’m not sure.
The impact will result in a drastic increased staffing and training costs, which will translate to increased costs for services in the North. This was the policy crafted for airlines in the South. It doesn’t work in the North. Our time zones are different and the lines of longitude are close together up there.
National economic development policies for Southern Canada don’t create an economic base in the Arctic. The Arctic has basically a colonial economy. I’ve lived in Africa. I know a lot about colonial economies. Goods and services are largely imported. There is very little investment in human capital. Other than Pangnirtung and Cape Dorset, I’m hard-pressed to think of any communities that have real industries in the North. Other jurisdictions such as Denmark and Greenland have built viable economic activities in the Arctic.
Government travel generally moves on the cheapest airline offer. As a personal taxpayer, I like that. However, northern carriers like First Air can’t compete with southern carriers on price because we have invested so much in infrastructure and staffing in the North that we’re a high-cost carrier. So if the government wants to fly from the South to the North, they will pick a southern carrier and leave us out of the bidding.
The Nutrition North program does not meet the needs and expectations of Arctic residents. It’s a very controversial program. Government has undertaken extensive review. It doesn’t work for the airlines. We lose money on that program. We’re glad the government recognizes it and recognize the need for change and are actively working on change.
One other policy I’ll address is the new Air Passenger Protection Regulations. Again, these are crafted for the environment in the South. There are penalties for delays longer than three hours. Well, in the weather conditions in which we operate and without the infrastructure to fix airplanes in every community, three-hour delays do happen in the North. Sometimes we make them five-hour delays because you need to get the service in. There is only one flight per day and people might not eat or there might be a medical passenger who wants to go out. You adapt to the local situation. Well, these rules are designed for the big carriers in the South that run 10 flights a day between Toronto and Winnipeg.
Another example is flight overbooking. This is a big concern in the South. We don’t overbook in the North. If we get a last-minute medical passenger, we do overbook. What does the government want us to do? Don’t overbook and leave the medical passenger behind? Or do you overbook and bump somebody and say, “Have a nice day?” That’s all you can do. These regulations don’t consider the North.
The bottom line in all of these examples is that most of these situations have arisen because government has taken a one-size-fits-all to approach to the Arctic.
Thank you.
The Chair: Thank you very much. Now we’ll go to Mr. Zubko and we’ll save questions for you both until after his presentation.
Tom Zubko, President, New North Networks: Good evening Mr. Chair and honourable senators. I thank you for inviting me to address the special Arctic Committee on economic development and infrastructure in the Arctic.
I travelled to Ottawa last night from my home community of Inuvik, Northwest Territories, to represent my company, New North Networks, my industry colleagues and fellow northerners in addressing the challenges we face living and building an economy in the North and, more specifically, on the impediments and frustrations we’ve encountered with the federal government on licensing earth observation facilities in Inuvik.
With the proliferation and demand for space-based applications, the new drivers of the global satellite marketplace are high-tech commercial enterprises which are global in scope, multidimensional in services, highly proficient in infrastructure development and consumed by early delivery and short timelines.
The town of Inuvik’s unique geographic position above the Arctic Circle and the superb municipal and territorial infrastructure make Inuvik the destination of choice for earth observation facilities in Canada. These high latitude attributes place Inuvik in a competitive advantage over other global jurisdictions.
However, these attributes are countered by Canada’s antiquated regulation and inability to adapt quickly enough to the new realities of the space industry, namely, non-government participants in the space sector.
It is estimated the commercial investments in the space industry have moved from about 3 per cent to over 70 per cent in the last 10 years. Canadian regulations simply have not kept pace.
Perhaps the most pressing issue is the immediate need to modernize the Remote Sensing Space Systems Act, the RSSSA. The legislation was enacted in 2005 and 2007, when space was predominantly the domain of government, defence and academia. While the RSSSA is dated, it did provide provisions which anticipated exceptions may be required and gave the Minister of Global Affairs latitude in her decision-making. These interim measures and exceptions can and should be taken until regulatory improvement is completed.
There are two satellite station developments in Inuvik. One is owned by the federal government, the Inuvik Satellite Station Facility, or ISSF, and hosts four satellite dishes for Canada and several European clients.
The second station, Canadian Satellite Ground Station Inuvik, or CSGSI, is a private facility developed in 2016 by Kongsberg Satellite Services of Norway which host their own assets and those of Planet of the United States. Both proponents have waited over two years for a licence which has yet to be issued by Canada.
The Canadian site, which Natural Resources Canada operates under their Canadian Centre for Mapping and Earth Observations sector, has had at least two licences approved for the exact same functions in under a year.
In February 2018, Global Affairs Canada advised the proponents, KSAT and Planet, that it has been determined they did not pose a security threat and could be issued licences. It does not appear the government has a clear protocol on process or timelines with respect to private satellite facilities, but clearly does for government-sponsored enterprises.
What is more astonishing is Canada’s recent indignation with the suggestion by the United States that Canadian steel and aluminum pose a potential threat to the U.S. national security, when at the same time, after almost two years of review, Global Affairs determined the U.S. does not pose a threat to developing earth observation facilities in Canada.
This lack of certainty and behaviour by Canada has been noted in the international space community. Consideration of future satellite facility development is on hold until such time as clarity in licensing is achieved.
It is also not helpful that Canada continues to send mixed messages both to northerners and to the international community. In 2016, Canada and the United States unilaterally placed a moratorium on Arctic offshore oil and gas development which has sterilized industrial activity in the region and placed uncertainty into the northern business environment.
In February 2017, while Prime Minister Trudeau was in Yellowknife to defend his Arctic drilling ban, he said: “We have closed one door of potential economic opportunity. We need to work together to ensure that we are opening many more doors of economic opportunity.” What exactly those doors to economic opportunity would be to grow and diversify the northern economy has not yet been shared.
A more puzzling message by Canada is the invitation by the Prime Minister, in both Davos and San Francisco, to welcome the international community to “bring your high-tech to Canada,” where the very audience he is speaking to are the proponents for which this government has withheld licensing.
The Northwest Territories has a history of prudently investing their limited resources into their communities and people. They have invested wisely in necessary public infrastructure such as bridges, highways and, more recently, a $110 million investment in fibre-optic infrastructure down the Mackenzie Valley to an Alberta gateway specifically to support ground station potential.
In the absence of a robust and formalized Arctic policy, the Northwest Territories, Nunavut and Yukon will continue to lag behind their southern counterparts and continue to be net recipients, rather than the possibility of becoming net contributors to Canada’s national economy and social fabric.
The premier of the Northwest Territories, Premier Bob McLeod, once quipped in the Globe and Mail that his biggest challenge is keeping the federal government from turning the North “into a great big national park.”
Canada must enunciate that the Arctic is in fact part of Canada’s economic framework and respect the North’s history of balancing environmental stewardship with economic development.
It is important in the current geopolitical context, given other nations’ interest in the Arctic, to present a clear and unequivocal message that the Arctic is indeed of value to Canada.
While nothing will replace the value of a petroleum economy, investments in science, technology and innovation can be essential elements of the Arctic’s new economic future.
I hope my presentation tonight has been informative. I would be pleased to answer any questions.
Thank you.
The Chair: Thank you both.
Senator Bovey: Thank you both for your presentations. I certainly very much appreciate it. It was very informative. There seems to be at least one question that’s relevant for both your backgrounds and your work, and that’s policy.
Dr. Friesen, in talking about the fact airline policies are those derived really in and for the South, but having to work in the North, my question to you is: Have you recommended specific policy changes to the federal government which would deal with some of the issues you’re facing?
Mr. Zubko, likewise, I appreciate you’re in the middle of a very changing and changeable scene. You, too, have talked about the lack of policy. What specific recommendations have you made policy-wise to help tie a conversation together or move the conversation forward?
Mr. Friesen: I personally put a lot of effort into the Emerson Report on Transportation done maybe three years ago. I know Mr. Emerson. I know some of what we suggested and wrote ended up in the report.
However, I’m hard-pressed to find anybody at Transport Canada who has implemented any of it or even studied it seriously. It’s like another report that went on the shelf. It’s an outstanding report. I don’t agree with some of the recommendations, like paving runways is a total waste of money. But most of the recommendations in there are helpful.
The number one core key policy change I have been advocating since I’ve been back in Canada, five years now, has been the government adopt a European style of regulation. This is don’t regulate Vancouver and Toronto, just like you don’t regulate Rome to London, just open skies, fly as much as you want, price it the way you want, do whatever you want.
But on the fringes of Canada—Cambridge Bay, Iqaluit, Inuvik—those very long thin routes where communities have 1,600, 2,000, 3,000 people, those long routes don’t support a deregulated free-for-all airline environment. They support a regulated environment where you identify a carrier capable of investing and capable of sustainable high-quality services, and you let that carrier do its thing. You can regulate prices so there is no price gouging. That’s exactly what they do in Europe.
They go one step further in Europe. They subsidize. I have never asked for subsidies. I don’t think you need subsidies. What you need is a rational market. We have a situation all over the North where essentially you have multiple airlines going into a little town where there are 10 passengers. Each one has twenty seats and they each load five passengers and fly out. Talk about carbon production for nothing; you have this kind of stuff. Both carriers are always on their knees trying to survive. That’s no way to have sustainable modern air services.
The average airplane in the North is 30, 35 years old. When I was in Africa, I wasn’t allowed to fly those airplanes. I come back here and Lisa Raitt tells me: Brock, don’t talk about it. I don’t want the world to know we have such old airplanes.
That’s what our policy creates.
Mr. Zubko: Somewhere around 1980, Transport Canada — I will speak a little bit to Brock’s business — put a plan in place, did an extensive study on the Mackenzie Valley to determine the air support mechanisms up and down the valley in support of the foregone Mackenzie Valley pipeline program. Around 1990, we got word they were planning to extend the runway in Tuktoyaktuk. We’re from Inuvik, so that didn’t seem like such a great idea to us. More particularly it was counter to the report done on Mackenzie Valley air corridors, as they called it. We went to Edmonton to Transport Canada and said, “We’d like to know how this policy changed.” And they said, “What policy?” We said, “Well, it is called the Mackenzie air corridor program,” and they looked at us, looked at each other and then they said, “Oh, that guy retired.” So with it did the policy.
The problem, as I see it, is we do a lot of studying and talking about policy, but we don’t create policy. I know over the course of your hearings, and I’ve read some of your previous dissertations and hearing minutes, I suspect most of what you’re going to hear throughout the course of your program are the same subjects that have been discussed in the past. Again, the problem is none of these items get put into a long-term policy strategy for the North. They come, they go, the winds change and the policies evaporate, and it’s really not a policy if that’s the way it’s working.
The Chair: Thank you. If I may follow up on Senator Bovey’s question, Dr. Friesen, there was a time, and I remember it, when the Canadian transport commission regulated routes in Canada and particularly in Northern Canada. That was dissolved by a government.
Are you recommending this committee should recommend, at least for the more remote communities, we go back to regulation as opposed to deregulation of routes and prices?
Mr. Friesen: Yes, definitely, for sure, absolutely. Have I made myself clear? You have to go back to that; it doesn’t work right now. Don’t study; I don’t want to say that word because that takes forever in this country.
The Europeans have done it. It works, just cross off the subsidy part, adopt the European program; it works. I lived and worked in Europe for 12 years. It works. It may not be perfect, but it certainly is a lot better than what we have. I wouldn’t recommend you follow the American model, which is expensive and creates distortions. Europeans seem to have gotten it right — not perfect.
The Chair: If I may, you mentioned carbon pricing and the threat to costs and creating an economic burden in the Arctic. This is a set up question: Have there been any developments that you care to inform the committee about in this connection?
Mr. Friesen: I understand change is coming and the government has listened. On the carbon pricing issue an exemption is coming for the North. I welcome that very much.
As I said in my other remarks, I’m not critical of everything. The public-private partnership in Iqaluit, fantastic move by the government. They listened, they studied and they got it right.
Senator McIntyre: Thank you both for your presentations. My first question would be to Dr. Friesen.
Dr. Friesen, item number 7 is one of the nine examples of Arctic transportation policy issues you have elaborated on. I note, contrary to Canada, other jurisdictions such as Denmark and Greenland have built economic activities in the Arctic. Could you elaborate on that please?
Mr. Friesen: With pleasure. Thirty years ago, when I was a graduate student, I did a regional economic study in the Arctic on resource development with renewable resources as opposed to non-renewable resources.
You have two kinds of developments in the North. You have mines, which create a lot of employment in the short term, usually for southerners who fly in. Mines are good; I’m not being negative on mines. The problem is with world mineral prices, Canada has waited for decades for the prices to be right in order to develop, and the mines don’t come very quickly.
There are lots of renewable resources in the Arctic. The most obvious one is fish. The community of Pangnirtung on Baffin Island, not far from Iqaluit, has built a robust fishery. We carry it all on our airplanes virtually for free. We make no money on it. We want the fishery to develop. We carry that fish south, a million pounds in the last period I looked at, mostly char and turbot. The community has a real live economic base.
I sit with the fishery every year. There are a lot of people. They get paid piece work, like any other fisherman, paid by the fish, but a lot of people make a decent living, so you have a viable fishery.
Greenland has done that in spades. They have a huge fishing industry, as does Iceland. I don’t understand why 30 years ago it seemed obvious to me that many communities could have a fishery. After 30 years there is one community with a fishery. It’s like they’ve ignored the opportunity.
Tourism—Antarctica has 40,000 tourists a year. There are no hotels in Antarctica. We have no infrastructure in the North. All you need is floating hotels, which means if the ships are in Antarctica, they can come to Nunavut and park and maybe become hotels. Ships are nothing more than floating hotels. We have no infrastructure in the North for tourism whatsoever. If you want to lower prices of aviation, one of the best ways is to have more customers -- you can spread your costs over a bigger base. But if there are no tourists, how do you get more customers? The North only grows at a certain rate.
Tourism and fishing focus on the renewable sector.
There is another aspect which is a bit more controversial if you like. To me that’s a no-brainer to do the fisheries; the other is mining. Most of the mines up there don’t employ northerners. Most people fly in on airlines like my very own. If you can’t find a way to give employment to the local people out of the mine, you can at least use the northern airlines that have employment — we employ 400 people in the North — rather than using Montreal-based charter companies with 40-year-old airplanes, force the mining companies to use one of the two or three airlines more or less based in the Arctic and you will give employment to the northerners. If you can’t get them work in the mines, they will work on the airplanes. I would like to have more local pilots and flight attendants and mechanics. Airlines create high-quality jobs, not just grunt jobs loading bags.
Senator McIntyre: On the issue of airport infrastructure, I understand you are working on another public-private partnership to upgrade Arctic transportation infrastructure. Are there any obstacles or impediments to your project, and if so, what are they?
Mr. Friesen: Yes, medical travel is funded entirely by the federal government. The federal government gives money to the Nunavut government who buys medical travel.
Medical travel supports the airline industry in the North. How does that relate to runways? We would like to buy eight new 48-seat turbo prop airplanes for the North. If we can have a medical contract for 10 years exclusively, we will buy eight new airplanes for the North. These airplanes can land on all the existing runways. Pangnirtung, it’s $300 million for a new runway, and they want to build it on a plateau where the crosswinds will blow the airplanes off and the fog is worse than in the valley. We’re willing to buy the airplanes. My owners, the Inuit of northern Quebec, are willing to support me buying the airplanes to fly this. We need a 10 year secure medical contract to make it a manageable risk. We’ll do the work. Government doesn’t have to spend a billion dollars on northern runways for 30,000 people living in communities of 1,000 people.
It doesn’t quite fit within the perspective of the Government of Nunavut yet. We’ll see with the new premier. The old premier was interested, but what does that mean? I don’t know. That proposal will probably be quite public in the next four weeks because we’re about to sign a LOI to buy airplanes subject to getting the medical contract. No one else can do that.
Senator McIntyre: Mr. Zubko, if I may, the problem appears to be one of licensing, in other words, clarity in licensing earth observation facilities in Inuvik. Is there any reason why the federal government is so slow in issuing licences? What appears to be the problem?
Mr. Zubko: There have been two mandatory reviews of the legislation since it has been enacted.
To give an idea of how much attention was paid to the first one, the second one started out by saying everything we told you five years ago still applies. As I said in my introduction, space is moved very rapidly, so the requirements have changed dramatically.
The reports or reviews that were done identified quite a number of problems with the legislation. One identified it did not meet the new or the existing requirements of space entities. It indicated Global Affairs was understaffed and underfunded for the purpose of issuing these licences and did not have the expertise within the department to really understand the requirements.
It was quite a long review. A lot of those criticisms or observations made by McGill University are the items we seem to be running into in terms of processing the licences. There is no defined timeframe for the licence application process. There is no checklist to determine are you eligible or not eligible, can you meet the various requirements that maybe imposed? It’s a very unusual process.
One of the items was perhaps Global Affairs is not the right place for this legislation to be housed any longer. Maybe it should go to somebody like ISED who is a licensing body to a great extent.
Senator Oh: Thank you for your excellent information. Do you have any idea how much has been invested to date on the grounds of Inuvik to support the satellite industry?
Mr. Zubko: I can’t give you the exact numbers. I know it’s well over $50 million. I mentioned earlier the Northwest Territories government has invested $110 million in fibre infrastructure and has also committed to support that infrastructure to the tune of probably another $140 million over the next 20 years.
I think the infrastructure in place is probably somewhere between $50 million and $100 million, plus the fibre.
Senator Oh: Does this cover the whole North, across the whole area?
Mr. Zubko: The attributes of Inuvik for this kind of industry are unique, as I mentioned. Particularly we have road access into Inuvik which is quite important. A lot of the equipment is large. Flying it or sending it by ship is an expensive proposition. We have good air service into Inuvik with three different airlines running in daily.
We have sufficient infrastructure and contractors to be able to build this infrastructure for the space companies, the ground station companies. We have a lot of advantages.
The further north you are the better it is from the point of view of being able to see these low-earth orbiting satellites. It is more applicable to Inuvik than it is to other parts of the Arctic.
Senator Bovey: I have to go back to the comment you made, Dr. Friesen, about needing more pilots. You mentioned 13 per cent of the employees of First Air are Indigenous.
My question, I guess to both of you, what about training? You mentioned the workers primarily come from the South. What needs to be done to encourage Indigenous and northern folks to take the training? Is it possible? Is there the infrastructure to deliver the necessary training so hiring can take place from the North?
I don’t know how that plays into the projects on your plate, Mr. Zubko. I’m sure it is not that different. I read in the last 48 hours about the desire of all three territories to have a university of the Arctic and that seems to be moving forward. Yet I read today that 65 per cent of children live in poverty in Churchill. How do we square all that?
How do we provide the training so that so many people aren’t living in poverty, and you can do hiring from the North and not be so South-dependent?
Mr. Friesen: I’m less than an expert on education and training. Speaking for my own industry, we basically have different categories of jobs, with different skill sets. The most difficult to fill is the job of a pilot because a pilot has to fly small airplanes, ideally for a lot of hours, 1500 hours, and then they get to graduate to larger planes. We don’t have small airplanes. If other small carriers, with small airplanes, don’t bring the pilots up to speed it’s hard for us to recruit pilots.
Mechanics are easier. That’s a situation where, if the schools are providing enough encouragement and ideas for their students, such that they get interested in doing things like that, then somebody has to send them to the South to school, and they can come back. They do come back, and a mechanic's job at an airline, whether it’s Air Canada or First Air, is a good job. It pays well. You feel good after work. It’s fairly high-tech work. It is not like changing the oil on your '57 Chev. It’s high-tech work.
On the service side of it, on flight attendants, that’s a lot easier, but we have not been very successful at recruiting flight attendants. Part of that is union seniority, which means we don’t hire very many. You don’t have very many opportunities. It’s relatively easy, for the semi-skilled, cargo-type jobs, to hire.
If the school or social system is failing the children of the North, it’s too late when you get to me. I can’t do very much about that. The statistics you read are real. I see it when I go up in the North. It is just like the small villages in Ghana, which is sad.
Senator Bovey: With New North Networks, there must be all sorts of potential opportunities, and perhaps you can talk about the hiring and training and job security you’re dreaming of?
Mr. Zubko: In the satellite-ground-station industry at the moment, there are only part-time jobs, which is why my company has been retained, to a great extent, to look after these facilities. It’s not a full-time job. There’s economic activity that comes about from the construction phase of these facilities, which is a good thing. It is spread fairly widely across the community. There’s some movement to try to take some of these products that come from the satellite download and apply them to local situations, by local offices or facilities in Inuvik and possibly other places. For example, there’s good reason for Inuvialuit to be concerned about, and study, coastline erosion as the ice opens up and we get more waves in the Beaufort Sea washing into shore. There is some movement there to try to bring that kind of activity to be available for employment, but, of course, that’s a fairly long-term process. First of all, to develop the requirements and the concepts behind the programs and, of course, also the education. I think part of the problem we have in our part of the country and probably other parts of the North is our society has been pretty beat up over the years. In my life, I have witnessed some huge booms that promised a long-term economy, long-term jobs. People went out. They got excited. They got good jobs. They were able to provide for their families, and, in a flash, those jobs were all gone. People went home.
They now could not take care of their families. Their children suffered. The idea of making sure their children went to school evaporated, to a great extent. Then, another boom would come along, and the same thing would happen. People would go out. They’d create wealth for themselves. They’d look after their families, and they’d have expectations for the future. They’d be dashed, again, in a flash.
That’s happened over and over again in the Mackenzie Delta and other parts of the Northwest Territories. It creates a situation that is very difficult to recover from. It takes a long, long time.
Again, I think we come back to: What are you going to do with the North? Is this going to be part of Canada? Is this going to be part of our economic framework for the country, or are we always going to be the red-headed stepchild, so to speak? It’s a huge problem, in my estimation.
Mr. Friesen: I’d like to make one other observation on a topic I’m less than an expert in. It seems to me building a university in the North is not the place to start. The place to start is with primary and secondary education because the standard of education across communities in the North is pitifully low in many cases. Yes, they send southern teachers, and they’re all teacher trained. But whatever methods or techniques they’re using are not very good because the children don’t come out with the basics. They don’t come out with the motivation. Something is wrong. My general observation would be to spend the money when the kids are 6 to 16, and let them go South for more education. Canada has a wonderful university and technical school system. Let them go to the best schools, but get them ready for it.
The Chair: Mr. Zubko, I’d like to drill down a bit on the situation you described to us, where the Mackenzie Delta, where you live, is in need of new economic activities after the moratorium on oil and gas development was announced. I think you were referring to the offshore drilling boom in the Beaufort Sea when you talked about the good times when everybody could work.
You’ve gone into this earth-station economic potential, with Inuvik’s strategic location. The federal government built, owns and operates one facility, which has been licensed for several European clients and for Canada. But there’s another facility that has been built, another similar facility.
Why did Kongsberg Satellite Services — I think that’s from Norway — decide to build their own station and not partner with the NRCan-owned and operated facility?
Mr. Zubko: There are quite a number of reasons, senator.
The governance model developed by NRCan was circulated in the earlier days, 2010, 2011, in that area. The private satellite-ground-station operators present at those meetings were critical of the one-stop-shop concept NRCan put forth. They also had problems with the fact the land would be owned by the Canadian government, which, for the smaller companies, would make it difficult to mortgage their equipment that they put on government property.
All of these concerns were left with the NRCan people.
They pretty much ignored all of them. Then, to exacerbate the situation, they hired MacDonald Dettwiler and Associates, MDA, to have exclusivity over that entire development, which basically allowed them to contract local people or other companies and up the cost of the services they were providing to companies wishing to build there.
Both the Norwegian and U.S. companies had quite extensive discussions with NRCan about locating there. In the final analysis, they had three particular problems. One was they couldn’t meet the timeline; they couldn’t meet the cost expectations and third, there was a requirement for all of their licensing details to be channelled through MDA to the RSSSA or to Global Affairs. That was a problem for them because that meant they had to potentially give proprietary information that would be revealed in a licence application to a company they considered to be their competition.
Those were the three reasons they stated to me when they asked me if there was another opportunity for them to locate in Inuvik. Had there not been, they would have moved to Alaska and we would not be having this discussion. Those problems still exist today. I think there is becoming a realization about putting everything through a company like McDonald Dettwiler, especially considering the changes they have gone through in the last couple of years: they are now essentially an American-controlled company called Maxar. It is kind of ironic that we have an American-owned company controlling our Canadian satellite ground stations, including all the government ones.
There are a few of those kinds of issues that have to be put away. I can tell you when we built the ground station for Kongsberg and Planet, we went from virgin ground to operational status in six months. We did it much cheaper. In fact, we built the entire ground station for less than what they were quoted to put in for just the satellite dishes foundations and support themselves. They wouldn’t have had to build any buildings or anything like that. We would put the buildings in. We did all of that for less than what it would have cost them simply to have the foundations and extended infrastructure put to them.
The Chair: The local private sector — namely your firm, I understand — built a facility next to the government facility, but your clients, Kongsberg and Planet, are still waiting for a licence while licences are being given to patrons of the government-run facility. Am I correct in summarizing?
Mr. Zubko: That’s essentially correct, yes.
The Chair: Can you explain why there is a problem in getting licensing approval for KSAT and Planet? Is their data any different than the data being downloaded in the government station?
Mr. Zubko: Right now, some of the data KSAT contracted to the European Space Agency is being downloaded by the Germans in Inuvik. It’s the same data. The Planet data is a little different. It’s a lower resolution product and it’s a much higher repeatability. That means they can look at the same place on earth many more times. They have about 180 satellites in their constellation. I believe it’s the largest earth observation constellation anywhere.
The Chair: Are there security issues that are making Global Affairs nervous about giving licences to the companies you mentioned?
Mr. Zubko: I think security was raised by NRCan. NRCan made it very clear they were not happy about this additional ground station being put in place. They stated many times it would never get licensed. We have a substantial understanding they had lobbied very hard with other government departments, including Global Affairs, to see these licences wouldn’t be delivered.
Security is a funny thing. As soon as somebody raises the spectre of security everybody backs away. I think that’s a lot of what happened with these licence applications.
The Chair: Are we in danger of losing investment in Inuvik because of these licensing problems? Have there been any investments lost because of what seems to be uncertainty in that area?
Mr. Zubko: There has been. I don’t know how much for sure. I know KSAT took at least three programs to Chile where they built a ground station and had it licensed in 90 days. I’m sure, without a doubt, there are opportunities that have not been presented simply because the proponents know of the problems that exist. It’s a small world in the space industry. It doesn’t take very long for people to know there is a problem.
The Chair: What about Kongsberg and Planet? Are your clients they still hanging in there despite the delay?
Mr. Zubko: They are. There has been some movement in the last two months, I guess. They are now having back and forth conversations. There has been a draft of licence conditions forwarded to the two companies. They are reviewing them to try to figure out how they can comply with those in a manner that is satisfactory to Global Affairs Canada. We’re optimistic.
However, this only fixes the current problem. This does not fix the real problem, which is we have a legislative situation not conducive to attracting investment in Canada.
The Chair: What advice would you give to the ministers of Global Affairs and NRCan if they were here today?
Mr. Zubko: Well, I think NRCan has to recognize they put together an incorrect model and it’s failed. They have to try and fix it. We’re more than happy to try and help them fix it. This is an important industry for Inuvik. I can tell you they have not engaged. They have spurned approaches by KSAT and Planet to do cooperative ventures but they have to recognize they have a problem.
We want it to work. It’s important to Inuvik the government facility work. It’s important the private facility works. It’s also very important the federal government figure out how to deal with their space policies. My recommendation would be that Global Affairs apply to the greatest extent possible the recommendations from the McGill University review done in February, 2017. That would alleviate the majority of the problems. The legislation allows for the minister to make exceptions on just about everything, as long as it doesn’t imperil Canadian security.
The Chair: Is that McGill review publicly available?
Mr. Zubko: It’s on the web site.
The Chair: Thank you. Dr. Friesen, you talked about the new crew duty day regulations being unsuitable for northern carriers. Would you be able to give a specific example of how northern carriers are imperiled by that?
Mr. Friesen: I am not an expert on the technical aspect of all of those duty days. I know some of the requirements for when you must sleep, what time of the day you need to sleep in order to comply, how much rest you need between flights — all of those kinds of requirements work very well for long-haul international airlines; in fact, it’s the standard.
In the North, it’s not quite like that. The pilot working hours are not that long. There tends to be a lot of ad hoc scheduling. We don’t go beyond the legal duty day, which is about 12 hours per day, depending on how you cut it. We never go beyond that. We have one of the best records in the North for staying within the rules.
Because we have to hire 13 per cent more pilots, it effectively means we get 13 per cent less productivity from the existing pilots in order to comply with these rules regarding sleep. If you fly at night — and we always fly at night. If you live in Iqaluit, you always fly at night from November to February.
I can follow up; I get our expert to do it. I cannot go beyond that and be factual and articulate.
The Chair: Okay. Thank you very much. It would be useful for the committee.
You’re a member of the Northern Air Transport Association, which I understand --
Mr. Friesen: We are. My VP of Flight Ops represents us. He is leading the messaging from the small- and medium-sized airlines to the federal government. I will send you one of the most recent submissions he has made. He has lots of examples.
The Chair: That would be very useful, if that could be sent to the committee.
There being no more questions, and the Senate being in session tonight, I would like to thank you both very much. Mr. Zubko, thank you for coming from Inuvik to be here today. That’s really appreciated. This has been a most enlightening evening for all of us. We thank you.
(The committee adjourned.)