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Proceedings of the Standing Senate Committee on
Banking, Trade and Commerce

Issue No. 9 - Evidence - October 27, 2016


OTTAWA, Thursday, October 27, 2016

The Standing Senate Committee on Banking, Trade and Commerce met this day at 10:31 a.m. to study and report on the development of a national corridor in Canada as a means of enhancing and facilitating commerce and internal trade.

Senator David Tkachuk (Chair) in the chair.

[English]

The Chair: Good morning. My name is David Tkachuk, and I am the chair of the committee. Today is our fifth meeting on the subject of our study on the development of a national corridor in Canada as a means of enhancing and facilitating commerce and internal trade.

We are pleased to welcome today, appearing as an individual, Mr. Ian Satchwell, Senior Fellow, Perth USAsia Centre.

Between October 2011 and June 2015, Mr. Satchwell was Director of the International Mining for Development Centre, a joint venture between the University of Western Australia and the University of Queensland, supported by the Australian government. The centre provided practical research, advisory, education and training services to resource-rich developing nations to support development of strong mining governance regimes.

During this time, Mr. Satchwell authored a paper entitled "Resource corridors: A case study of the Pilbara, Australia.'' Senators, we have distributed a copy of this paper to your offices electronically.

Mr. Satchwell has three decades of experience in minerals, energy, trade and development policies at national and international levels. He has worked on projects in Australia, Asia, Africa and Latin America.

Welcome, Mr. Satchwell, and thank you for appearing via video conference in Perth, Australia, during your late evening hours. We greatly appreciate it.

Please proceed with your opening remarks, after which we will go to a question-and-answer session.

Ian Satchwell, Senior Fellow, Perth USAsia Centre, as an individual: Thank you, chair. It's a great privilege and honour to appear before the standing Senate committee on a subject that is dear to my heart, as the summary of my background might indicate.

To share a Canadian connection, I am a member of the advisory board of the Canadian International Resources and Development Institute, which is a joint venture of the University of British Columbia, Simon Fraser University and École Polytechnique in Montreal. In that role, I will be sitting in this same room in two weeks in a four-hour board meeting.

I am going to talk briefly to you about resource corridors and some experience from Australia that will, I think, be relevant to your deliberations. The same sorts of discussions are going on in Australia as are going on in Canada about better ways to move freight and create connectivity, particularly around the development of natural resources, as our country strives to maintain competitiveness with the fast-rising new producers in Africa, Latin America and elsewhere.

Between Australia and Canada, it would be very difficult to find two countries that are more similar, and on one of the slides that you have, there's a map there overlapping the maps of the two nations. You can see that geographically Canada is roughly a bit larger but not much. Then there are some metrics before you that indicate how similar we are.

Culturally I had an interesting indicator and am somewhat bemused by this, but Australia's number one export to Canada in 2014 was beer. The number two export was wine. Canada's major export was automotive engines. So we sell you beer and wine and receive parts for our motor vehicle industry.

Near to where I am sitting is Brookfield Place, Perth, and some two kilometres from where I am, Brookfield Rail has the closest railhead, and I was privileged to do some work for Brookfield Rail on the acquisition of that rail network.

So I too have had some long-standing connection with Canadian infrastructure organizations as they reach out around the world with Canadian expertise.

As I understand it, the corridor concept that you're considering is in large part about giving the resources sector in Canada and the overall Canadian economy better access to markets in Asia across the Pacific. I provided a map for you showing Australia, and in particular Western Australia where I am, and its proximity in terms of geography and time zone to major markets dominated by China but also Japan and Korea.

Australia, like Canada, is very fortunate to have a natural resource endowment. But, like Canada, we are inherently a high-cost producer, and we need to do all that we can to maintain competitiveness of our resources exports.

Because of our position, and I believe a map has been circulated showing Australia's major goods and services export markets, China has become in very short order the dominant market for goods in particular, followed by Japan. And then Korea is just pipped by North America and Europe — North America including Canada — as the third- largest markets for our exports.

But you can see from that map that naturally our goods and now our services exports are very Asia-oriented, while traditional markets remain important. And China is the main game, but of course, in marketing terms we must not forget our traditional markets.

The McKinsey Global Institute in 2013 published a report called Reverse the curse: Maximizing potential of resource-driven countries. It was aimed at the emerging countries, the developing countries, but it is nonetheless highly relevant to Canada and Australia. In the presentation before you, I think on slide 5, there is a table showing that in terms of the main criteria for success in resources, development and capturing value and generating long-term economic gain, only Australia, Norway and Canada are consistently the top countries. And that, I think, indicates how successful our countries have been. Canada prima facie is more successful than Australia in developing its resources and doing well from its resource development.

Just moving to Australia, in your slide pack is a map of Australia showing the main resources development areas and the sort of capital expenditure that has been made since 2009 on both resource projects and associated infrastructure. I'm going to focus shortly on the Pilbara region, but there are other regions in Australia that have had very large levels of capital expenditure by companies from around the world, including from Canada, and that is delivering record production in terms of volume, and if mineral prices continue to improve, that will also deliver record production in terms of value as well.

Key to this development has been the parallel development of infrastructure. But I have to say that in Australia infrastructure development for transport of mineral and energy products and for the communities that support efficient mining, processing and export has fallen rather behind. A key reason for that is infrastructure planning not keeping up with the pace of development and planners being somewhat surprised at the scale of activity.

In your pack on slide number 7 are two charts. This was put together by our central bank, the Reserve Bank. The Reserve Bank was apparently concerned that in the discussion around resources development, mining was under- appreciated by commentators and others in terms of its contribution to the economy and the Reserve Bank said "Listen, we need to think about the resources economy, not just the mining industry and the oil and gas industry.''

And what it showed in this analysis was that gross value-added contribution, if we think about the resources economy, was 100 per cent greater, and employment was 200 per cent greater than simply mining directly.

We have, as I alluded to, a lot of study of infrastructure, starting around 2004-05. The slide with the green map of Australia was a study commissioned by the Minerals Council of Australia. I worked on that. It looked at 21 growth regions, resources-driven in Australia, and assessed the infrastructure adequacy currently, looked at growth scenarios, looked at how much infrastructure needed to grow and, importantly, identified infrastructure gaps and needs. It found plenty of infrastructure gaps and needs currently and found that there will need to be a lot of infrastructure in the future if we were to maintain our growth trajectory in minerals and energy.

Importantly, it also found that it's not just about hard infrastructure. It's also about softer infrastructure, infrastructure to support communities, attract skilled people and build local businesses in these mining regions to create long-term value.

So that was an important study in 2009. Other studies that I've cited in the pack are the Pilbara Planning and Infrastructure Framework, which I'll come back to, and quite recently the Australia infrastructure plan was released by an organization called Infrastructure Australia. I commend that organization to you as an organization that could be consulted about current approaches to infrastructure, and its plan does cite the Pilbara infrastructure study.

Just as recently, the northern Australia development strategy has taken great prominence under the current government. It's established an office in northern Australia, and it is looking in particular at infrastructure required to develop this relatively sparsely populated region of Australia, albeit one very close to markets in Asia and also one that disproportionally produces a lot of minerals and energy products.

So the northern Australia white paper and the infrastructure audit are examples of government responses, as is the infrastructure facility, and I commend that to you. It has some very strong parallels to northern Canada in most respects except for climate. It's very hot in northern Australia, especially coming into our summer season.

Chair, and members of the committee, the Pilbara region is one of the most intensely producing regions of minerals and energy products anywhere in the world. Infrastructure Australia estimates that by 2030, nearly $89 billion will be the gross regional product, and that gross regional product from one of the regions of the state that I'm in, Western Australia, is greater than the gross regional product of one or two states of Australia.

I have provided a detailed map of the Pilbara region showing the oil and gas production facilities, mostly offshore, with four LNG plants onshore, iron ore production and roads. There are three rail networks, and the region produces base metals, gold and salt and is a growing region for tourism, including industrial tourism.

The Pilbara commenced its development in the 1960s, and at that time the original proponents of projects, both government and industry, had no idea of the scale that Pilbara development would reach in 2016. So the thinking around infrastructure was very narrow at the time. As well, government had no money. We were just becoming a major mining region here in Western Australia, so the thinking about infrastructure was very constrained by lack of knowledge of what this region could become and also lack of resources.

In the early development, there were three iron ore producers and two salt producers. They provided under what were called "state agreements'' or what are still called "state agreements'' for most of the infrastructure: rail, ports, water, power, housing, whole towns and community infrastructure. The government provided education services, health services and common user roads. The mining companies provided most of the rest.

That worked quite well until the 1980s. As we started to develop energy in the region and more mining towns became more multi-user in character, and ports began to need to service more than one company.

By the time of the China-driven boom, since the year 2000, we realized that not only had infrastructure planning not foreseen the scale of growth but also the fact that companies individually had built three rail systems, as I already mentioned, their own electricity systems, their own towns and, in some cases, their own roads. That started to restrict the development of the region because the company-owned infrastructure tended to hold out other companies, particularly smaller companies. We had some litigation over access to rail systems, and in the end the company that undertook that litigation right up to our high court built its own railway system, which runs in for some length in parallel with another rail system.

If we had our time over again, I believe there would be fewer towns because each company built its own towns. There would be a much more integrated approach to energy planning — the government is looking to create a more integrated energy network in the Pilbara — and there would have been, perhaps, a more rational approach to rail and other infrastructure to do with transport.

As well, there would have been much more emphasis on housing community facilities and infrastructure for small business, because the Pilbara is quite a hollow economy, and small business has struggled to develop in the region because of the high costs and the relatively poor infrastructure that inhibits them in being competitive with businesses servicing the mining out of Perth.

So as for the major shortfalls, there was no integrated planning framework in the early days, right up until 2012, when the Pilbara Planning and Infrastructure Framework was issued. There was poor coordination between mining companies; they tended to do their own thing. Between companies and government, the companies said to government, "This is what we'll do.'' The government said, "You're paying for it. Go ahead and do it.'' The focus was on hard infrastructure, transporting the minerals and energy products. It was on towns just for the employees and there was little focus on infrastructure for the community.

In 2012, the Pilbara Planning and Infrastructure Framework — I believe you may have been provided with that framework or the summary of it — was issued. It is a framework for planning for all infrastructure, and it emphasizes cooperative planning between industry and government and community organizations. Importantly, there is hypothecation of royalty revenues to fund infrastructure, the royalties-for-regions scheme, which is not without its detractors, but there was a hypothecated revenue stream to pay for this. There was a move to multi-user ports rather than single-company ports. Governments have always owned the ports, but they've been dominated by single companies, so there was a move by government to allow access by smaller companies to those ports.

There has also been a move by government to invite a rail operator in to operate a multi-user rail facility. Currently, for smaller producers, I think there's only one that has an arrangement with a rail operator, which is indeed another mining company, on a hook-and-pull basis.

For roads, long-term planning.

For energy, I talked about the electricity grid and much greater cooperation between companies for water supply. Importantly, small to medium enterprise development has been emphasized.

So what have we learned? We've learned that predicting the future is very difficult indeed. A guiding overall vision is needed, albeit you don't know the future, but we know a lot more about what could be for future development, and early planning and coordination of infrastructure is vital.

I'll finish by quoting the Australian Infrastructure Plan, which has a box in it, Box 4.2, that cites the Pilbara experience. It says:

Early planning and coordination between private and public sectors is essential to deliver infrastructure efficiently, avoid duplication and minimise costs;

Governments should encourage multi-user infrastructure and efficient, integrated supply chains to ensure equitable access to infrastructure for present and future businesses, and to support diverse, sustainable investment in the region;

Government and industry should work together to understand the available complementary resources, such as water, to meet the needs of immediate development and sustainable use over time.

The mining companies involved in iron ore hold, and I think they have a very strong point, that the rail systems, which are some of the most efficient in the world, are integral parts of their mine-to-port supply chain. And that's a key reason that they have resisted, right up to the High Court, access by others lest their supply chains be disrupted.

So creating multi-user railways is an issue if it compromises the efficiency of supply chains. We don't actually have an answer for that, but certainly the mining companies are very keen to maintain monopoly control over rail.

That said, in the coal region of Queensland, Australia, there is multiple user rail, and after some tweaking a few years ago, it is much more efficient than it used to be.

Chair, that's the end of my presentation. I'd be very pleased to participate in discussion and some questions.

The Chair: Thank you very much, Mr. Satchwell. As you may know, in our country our resources are within the northern parts of our provinces and also in the interior parts of our country: mining, oil and gas. The need to move to ports is something desired by all of them, and we have run into some problems over the last number of years with building infrastructure that takes into account the new paradigm, in this country at least, of indigenous rights, environmental issues, greater community participation in communities across the country about infrastructure moving through their communities. Everybody wants a say. Everybody wants a piece of the action. It becomes a very difficult process and in some cases nothing gets built.

I know you have some of those same problems. Perhaps you could brief us a little bit as to how you may have overcome them, or how you're planning to do it.

Mr. Satchwell: Yes, you're right, chair. Australia has some similar issues to Canada, and there have been some moves, particularly in terms of infrastructure development, both to take those issues into account and to take the community and indigenous people along.

Our indigenous rights, particularly the historic ownership of land, has been codified through what's called our Native Title Act, and under that act, indigenous people have a right to negotiate with a project proponent.

With regard to infrastructure corridors in which the state has an interest, that right under the legislation is not as strong. In practice, there is still negotiation, but in the legislation there is a right for government to set aside an infrastructure corridor and to have infrastructure built along that corridor. As I say, in practice there is full negotiation, plus full heritage clearance.

What we have found is where government can really help is by anticipating where the infrastructure corridors might be required and moving early to gain indigenous clearance for those corridors. It is also important to design the corridors so that they are big enough to take multiple pieces of infrastructure.

So, for example, the Dampier to Bunbury natural gas pipeline, which runs some 1,200 kilometres between the Pilbara and Perth, needed to be expanded. The pipeline was built before the native title legislation and before indigenous rights were properly recognized. It needed to be expanded to take additional infrastructure, in particular looping of the pipes. But the government said, "Let us make this of sufficient size to take other infrastructure,'' not necessarily roads, because you don't want roads right next to a gas pipeline but infrastructure such as telecommunications infrastructure, potential power electricity lines, et cetera.

So that corridor of 1,200 kilometres, plus some spurs from it, was reserved and cleared. And that now sits there only partially used in terms of its potential, but it is there as a very important piece of land infrastructure with indigenous rights recognized and duly compensated with environmental clearance up to a certain point, and with the community very comfortable about it.

So there's an example of government moving a little late but not too late to enable this to happen and creating land infrastructure, in effect, that becomes a very important asset for the future.

Indigenous people initially under native title legislation — well, they have always been very tough, quite rightly, negotiators, but a lot of support has been put into helping them develop very strong business negotiation skills and also into assessments of Aboriginal heritage to enable them, on a business-to-business basis, to negotiate long-term agreements that deliver fair returns for the indigenous people and an incentive for them to agree, subject to heritage issues and cultural issues, to this infrastructure being built.

In terms of environmental issues, we don't have permafrost but we have desert and some very nice country, moderately mountainous — in the Australian context anyway — and again, governments have been involved in clearance of infrastructure corridors from an environmental perspective, which makes each piece of infrastructure easier to get environmental licensing for.

While we've had difficulties in practice in recent years, our lack of corridors has not provided a major barrier to development of infrastructure.

The Chair: Thank you.

Senator Wallin: Thank you, Mr. Satchwell, for being here. I want to dig in a little, because we just heard as recently as yesterday testimony from a coalition of our indigenous people, of native people here, who have raised many of the issues you have. They need to have their own capacity funded in advance so that they can ask the questions. Was that done willingly in your case?

Second small point on that, when you talk about environmental issues, is that separate and apart from the indigenous issues? We have problems here in Canada where on some of these projects you go through provincial regulatory bodies — or in your case state bodies — national bodies, community bodies, indigenous bodies, environmental group bodies and we're repeating the same work dozens of times. I would appreciate some comments on that. Thanks.

Mr. Satchwell: Certainly, senator, on the funding issue, under the original native title legislation, there was no provision for funding to be provided to the native title parties. That has changed.

Where we have major economic development — a major new iron ore mine, a major new oil and gas development or a major new infrastructure corridor being developed — quite typically now through a trust fund arrangement, there is funding provided to enable our indigenous people to hire the sorts of advisers and analysts they need in order to have a peer-to-peer negotiation. If you have an asymmetry of power, you mostly do not have a sustainable agreement. And we have seen that for agreements that might be 30 or more years old that are now being renegotiated, we look at those agreements and we determine from what we know now that we would have done that agreement differently, and the indigenous parties say, "We would have asked for a whole lot more and a whole lot more in terms of sustainable benefits.''

So typically government will put in — or mostly actually companies will put in to trust fund arrangements, which go to hiring the same sorts of advisers that a company may have. When I was consulting, we worked for both companies and — not on the same negotiation — native title indigenous organizations. We've done things like built economic models of LNG plants to enable the people to look at the internal rates of return and decide fair rates of return in financial terms but also to look at the technologies employed and to look at the sorts of business opportunities they would like to tap into on a competitive basis.

In terms of environmental clearance, I think we've been where Canada has been and where you might still be. We have state bodies. We have national environmental legislation under certain conditions and matters of national environmental significance, but any environmental treaty that Australia has signed onto can be visited on environmental approvals.

So in terms of the particular environmental issues — I'll come back to social in a minute — there has been much better coordination among the states and the federal government. And among agencies that have environmental responsibility within the state government and within the federal government, there is much better coordination. So we've been able to reduce the time taken for government consideration and government coordination. Under the old, uncoordinated regime, the time taken was imposing a massive cost on project proponents but also on society through revenues foregone over several years of delay.

In terms of typically social impact assessments for major projects, at least fully integrated within the overall environmental licensing regime, typically a social impact assessment will be commissioned at the same time as an environmental impact assessment.

In terms of heritage impact, particularly indigenous heritage, that is, again, alongside the environmental impact assessment and the whole package is considered.

Under most legislation, economic impact is not considered except insofar as it impacts on people's social amenity. But typically economic assessments are done as well to provide some information about the economic impact of the project but are typically not considered within the overall social-environmental-heritage consideration.

Senator Day: Thank you very much for being here. I would like to expand on some of the points, Mr. Satchwell, that you made earlier.

In Canada, when we built our railway, we didn't have one user for the railway so we didn't have that problem, but we do have in some of the remote areas access and power generation, in fact, restricted to one user. So we're going through a lot of the same growing pains that you're going through in that regard.

As you develop this corridor from Pilbara down to Perth and presumably onto Fremantle, which is the port, I believe, near Perth, as I recall, does the government set a corridor for the entire distance from Pilbara down and just put a restriction on development for a particular area that you decide, a kilometre wide or whatever it might be? Or do you just work away at trying to get rights-of-way and go through all the environmental work that you've just described? Do you try to do everything up front, or is there a process that you could use to make sure the land is going to be there when it's needed?

Mr. Satchwell: If I may, senator, just comment on the multi-user issue that you raised at the outset and in advising governments and others in Africa, in particular, we say look to two examples in Australia of multiple user and single user and think about how you can create multi-user corridors but also multi-user rail, power networks and pipeline networks. Very importantly, though recognizing that to be competitive, mining companies need to have very efficient supply chains.

In the case of the corridor from the Pilbara down to Perth and around the back, the eastern side of Perth, there is an easement into the Fremantle Port area, so you're quite right, senator. The government took that on, recognizing that back in the 1960s, when that corridor was first designated for a pipeline, native title legislation wasn't anticipated and neither was the phenomenal growth that we have seen.

So the government established a long-term process that took several years to get all of the clearances for that corridor all the way, 1,200 kilometres from the Pilbara to Perth and then a little south of Perth to create that corridor. The government, as part of its contribution on behalf of the community, including industry, said, "We will do that because we recognize that as a very important strategic asset for ongoing gas transmission, for potential other energy transmission, for high-speed telecommunications and for other potential uses that we haven't thought of.'' So government did all of that, a lot of consultation. Landowners were compensated, and in many cases, if they were farmers, they could go on using the corridor because the pipelines and other infrastructures varied are buried, so it's okay for cattle or sheep to be grazing over that. I don't think there's too much tillage done in the area; that's a bit hazardous. All of those negotiations were done and the corridor was cleared. It took several years, but now that corridor is effectively in place for perpetuity for uses that we haven't thought of yet.

Senator Day: Just as a follow-up to that, initially, while the negotiations, the clearance and the indigenous people's negotiations were going on, you can't do all of that. You say it took several years. What was the first step? In my province, similar to your state, here in Canada we have a process whereby the government can declare possible future use for an area, expansion of a highway, et cetera, where they don't buy the land. They don't pay for the right of way at that time, but it prevents a development that could possibly interfere with possible future use. Did you have something like that?

Mr. Satchwell: We certainly do. I think it's very similar in Australia as to Canada.

The first step was to define what's needed to then consult with potential future users and also consult with those with interests in the land — the landowners, the land leaseholders, where we have leasehold land further north and the native people — and through a process, negotiate fair compensation or arrangements for future compensation, as the land is then used and infrastructure is built which, in effect, then restricts the use to which current users can put the land. It took a lot of planning, and the very first step was to define what sort of a corridor we need without perfect knowledge of what future uses could be.

Senator Day: You have a corridor now north-south in Western Australia. Do you have one from west to east as well, maybe not being used?

Mr. Satchwell: We have smaller corridors. One of the useful things is that we have going out into the remote outback some old railway easements which have never been rescinded by the Crown, so they have become corridors that were given title more than 100 years ago. They have become very useful as corridors for gas pipelines or even to build new railways.

In terms of a corridor west to east, and it's around 4,000 kilometres from Perth to Sydney on our east coast, there are multiple corridors, but because of the nature of the Western Australian economy, the main corridor action has been north-south, although there are multiple corridors along rail easements and there are some new pipeline easements plus the sharing of corridors by road and rail and electricity transmission. But mostly it's around north- south.

Senator Day: Thank you.

Senator Massicotte: Thank you very much for being with us this morning. I have a couple of questions. My first question relates to Aboriginal rights. You seem to have a better relationship or better definition of each person's responsibilities in including them and negotiating to make sure it's fair.

I understand that the rights of your Aboriginal people are somewhat equally defined by the United Nations relative to their history and their heritage. In Canada, if it's proven to be that this is part of their territory, either their hunting season or whatever, they have significant rights to that territory. They don't have ownership rights but it's significant. Is that also the case in Australia?

For instance, in Canada, relative to municipal-provincial-federal, if the level of government sees a need for public goods and it's more important than private goods, they have a right of expropriation. Can you describe your situation and how it is that you progress so well to having them included and onside to the developments?

Mr. Satchwell: I'm not a lawyer, so this will be a lay response. Back in the early 1990s — just thinking back when I got involved here — there was quite a famous decision by a High Court which found that when Australia was settled from 1788, the assumption that was made, terra nullius — no one else lives here, so therefore we can take it over — was false. There were people living here. They'd been living here for around 60,000 years, so the High Court found that the original inhabitants and their descendants had underlying title to all of Australia, except where that title had been extinguished by certain acts, for example, freeholding and certain classes of state reservation. But because of the nature of Australia, similar to that of Canada, vast areas of open space, we call it "unallocated Crown land,'' even if there's some pastoral leases over it, prima facie, the Aboriginal people have native title rights to that land. There are even parts of our cities where it's arguable that people have those rights just due to the nature of the tenure, for example, of large- scale parks within a city.

Then that was followed by legislation, which then codified what the High Court had found in the early 1990s. That was not without its controversy. In particular, the rights were granted but with no pathway to economic benefit. The rest of us that might own land freehold or even leasehold can see a pathway to economic benefit. The indigenous people had the rights but no particular leverage other than something called, as I mentioned earlier, the right to negotiate. If the land was going to be disturbed by another user, they have the right to negotiate. Even if their rights aren't necessarily proven — and it would take many decades for people, in effect, to get full title to their land — because prima facie they have rights to the underlying land, they have a right to negotiate.

In the early days, those negotiations took a long time and were not very satisfactory either to the native title holders or to the project proponents who were trying to negotiate with them. In later times, very pragmatic responses have emerged from the indigenous people and their representative bodies and from project proponents who initially resented all of this and, perhaps, in some cases may not have been negotiating in full good faith or at least not negotiating while thinking strategically.

What has emerged is much more satisfactory and more peer-to-peer negotiation. It's still unbalanced, but it's better than it was between the native title parties and the project proponents, which, by the way, can include the state. The state government just concluded an agreement with the Noongar nation, which covers the whole of the southwest of Western Australia, including the city of Perth, for long-term compensation, and it's, if you like, a more generic agreement to enable land use to proceed in a more orderly fashion rather than both the native title parties and project proponents having to negotiate each and every project, albeit major projects will need to negotiate still.

I hope that clarifies things a little more, senator.

Senator Massicotte: You say they have a right to negotiate. That's all very good but if they don't agree, what happens?

Mr. Satchwell: It can go on for a long time. The Native Title Tribunal can, up to a point, facilitate the negotiations, if not arbitrate. But, in general, there can be an agreement reached because the benefits packages that are now being negotiated go to the values that the Aboriginal people hold for their land, for their culture, but in particular for their children. Most of the modern agreements are very long term and intergenerational. They include not only financial compensation, but also packages around education, access to employment, access for their businesses, and recognition and protection of heritage sites and cultural value.

Senator Massicotte: You said "arbitration.'' If they don't agree, is binding arbitration automatic? Is it available?

Mr. Satchwell: I think what can happen is a case can come up to work out whether or not the people actually have the rights. This is getting beyond my area of expertise. In general, the negotiations do reach a satisfactory conclusion, with the support of the Native Title Tribunal and our court system. I'm sorry I don't have all the details on it, but I can provide the clerk with more information.

Senator Massicotte: You obviously found a solution. Is the solution often the case whereby Aboriginal peoples have participation in the project? You mentioned earlier they're getting funded to make sure they're knowledgeable and advised, but is government funding available to Aboriginal people for them to participate financially in the projects?

Mr. Satchwell: In general, Aboriginal people don't take equity in mining projects. In general, the way they interact with the project is either through employment, business opportunities or financial flow into activities that go to education.

Where there is funding available, it tends to be to underpin equity for new businesses. So that might be a stream from a mining royalty, in effect, through to a trust fund, which can then be used to underpin businesses.

From the government, there are several schemes through Indigenous Business Australia, a government organization, to underpin some input to equity, but in particular, feasibility studies for new businesses, training, et cetera, to enable these Aboriginal businesses to start, to thrive and to be able to compete with businesses that might have been around a lot longer.

Other than from the mining flows, there are not massive injections of equity, and not a lot directly in mining, although there are some Aboriginal people involved as partners in mining projects.

Senator Massicotte: I think I heard you correctly in saying that the corridor is not extensively used, in fact, it's poorly used. Is that a disappointment or is that just the case?

Mr. Satchwell: The corridor was expanded and in effect created looking at multi-decade uses, as I said earlier, uses that we haven't even thought of yet. The Dampier to Bunbury natural gas pipeline has been expanded several times, and the easiest way to expand a pipeline is to loop it, in effect duplicate it. The corridor is not necessarily poorly used. It is there as an asset for even in 100 years' time to be used.

So it's not a disappointment. I think it's seen as a very important state asset by all that are involved in economic activity that may depend upon that corridor in the future.

Senator Massicotte: To clarify a response you gave to Senator Day earlier: You talked about the corridors, and he was asking whether there is what we call in Canada "a reserve on lands.'' The way I understood your answer, this corridor is defined basically as a reserve. In other words, there's still some negotiation to be done with the Aboriginal people when they actually use it.

Did I understand your answer correctly that where all negotiations are done, and if an infrastructure project comes along, they can get access, it's defined, there's no more negotiation? Can you clarify that a little bit?

Mr. Satchwell: There's no more negotiation, but there would still need to be environmental clearance, which would include Aboriginal heritage clearance. In some places that corridor goes through or close to important cultural sites. For a major disturbance to be done — building a new pipeline, for example — there would need to be environmental and heritage clearance. But otherwise the corridor, in terms of the easement of the land, is open for development. The government owns the title to that and users negotiate with the government to get access.

Senator Patterson: Thank you, Mr. Satchwell. I was interested in your presentation. With a little background here, you'd be familiar with MMG's Century lead-zinc mine at Karumba and Lawn Hill, which closed last year after 16 years of production. The reason I'm interested in MMG is they're now looking to replace this lost lead-zinc production from two ore bodies in my home territory of Nunavut, in the Far North of Canada. They've said that without support — probably largely from the federal government — for a 227-kilometre corridor to tidewater, their project won't be economical. What they're proposing is a multi-use transportation corridor, like you've studied and like we've talked about this morning.

I'll just mention one of the possible other users. There are three diamond mines in the Northwest Territories, a growing industry in Canada. They depend on winter roads for their annual resupply. It's a vital artery for them. But those roads are threatened by climate change. So they'd be users of this north-to-south all-weather road that could resupply them from the Arctic coast, amongst others. It's also in a rich geological province called the Slave province. The road is expected to stimulate mineral production if it could be built.

In your experience with multi-use corridors around the world, have there been corridors that you could refer to us that have been built based on multi-mineral deposits in rich geological regions?

Mr. Satchwell: I'm trying to think of contemporary examples. This concept is quite new, and I think that goes to your question. Before I start answering, and while I'm just processing your question, MMG and the Century mine is an excellent example of indigenous engagement in their region. Pasminco, the owners before them, and now MMG, have done a great job in engaging with the local indigenous community, and in particular through the very difficult process of the inevitability of closure of that project. My own organization has taken Native people from the Andean region, for example, in South America to that mine and had them meet with the Aboriginal people there to talk about their experience.

I'm trying to think of multi-user corridors. Pilbara is probably the best example we have had in a corridor. It wasn't ideal; I mentioned earlier two railways from two different mining companies running in parallel for quite a distance, running essentially down the same corridor. If we had our time over again, it might be better that they shared the railways, but at least they are sharing the corridor. I think the work that World Bank has been doing in Africa, in particular Mozambique and in some other areas of Africa, a lot of that has been planning, some of it has been executed.

The work around multi-user corridors that the World Bank has been doing in Africa, I commend to you. That is accessible on the World Bank website. If you go to the gas and mining section of that website, there should be a link to that work.

I've done some work with them on that concept. Yes, it's Africa, but the parallels to underdeveloped regions of Australia or Canada, once you start looking at it, are very apparent indeed. There is a lot we can learn even from the banks' theoretical work in some cases. At least they have done the on-ground planning around how do we plan multi- use corridors, and within that, how do we plan for multi-user infrastructure given sequential developments all happening in the sort of time frames to make it nice and orderly. How do we get first movers not to have to pay 80 or 90 per cent of it, and pay a fair amount of it? What's the role of government? Is there a role for government pre- investing in the hope that others in the private sector will then take up rights to the use of the corridor or the infrastructure being built? Only governments can pull all this together, and I think that's a key thing.

Aside from the question of who funds the initial roading, or indeed clearance of the corridor, I think that clearly is a role for the government, maybe getting some contribution from mining companies. But only governments can really coordinate all of this and say to the mining companies and to the people who have a stake in the corridor, how can we put all of this together? If necessary, the government needs to tell proponents very plainly these are the things they need to do to enable it to happen.

I've danced around the question. I hope the answers are a little bit helpful. I think some of that World Bank work will be useful. It's getting pretty well documented, and in Mozambique they're starting to implement the corridor concept.

Senator Patterson: Thank you very much. I'd like to turn your emphasis to the importance of what you called "soft infrastructure.'' You mentioned telecommunications in your paper on Pilbara. Canada has a $20 billion infrastructure fund that has been announced by our new government, and it's not clear yet that fibre optic or telecommunications infrastructure will be allowed within the framework of this infrastructure fund. The terms of reference are still being worked out, as I understand it, for what Canada calls projects of national strategic importance.

We're very Internet primitive in northern Canada. We're relying on expensive satellite technology. There are no fibre optic connections anywhere in my region, which is the largest region in Canada, of Nunavut. Could you comment on how important telecommunications and perhaps a fibre optic network is in the economic growth that you've studied?

Mr. Satchwell: Senator, look, the short answer is it's absolutely vital. We'll come back to the question of how to pay for it.

I remember doing some economic development work around a new gas project in a moderately large indigenous community in northern Australia. I believe 3,000 people lived there. I had to do all my emails in the morning because it was monsoon season, and when the thunderstorms came over in the afternoon, as they did every afternoon like clockwork, the Internet went out because of inadequate satellite communications, and a big, heavy rain cloud wiped it out entirely. So we learned to time shift, to get all our communications done in the morning and then in the afternoon we weren't interrupted by those pesky emails. It's very serious because you've got a community of 3,000 people with very flaky telecoms.

At the medical clinic, when someone presents with is a sore arm, has had a fall or a motor vehicle accident, the normal thing is to x-ray them for broken bones. They could x-ray them, but they couldn't scan it and send it out for a radiologist to have a look at it. That's how serious it got in terms of delivery of health. Just a simple transmission of an x-ray could not be done during the monsoon season in that community.

A couple of things: We have had the $43 billion national broadband network announced, and it's now rolling out. Originally, it was a fibre-to-the-premises network, including advanced satellite communications to remote communities. There is not fibre everywhere. That's been modified somewhat to reduce cost. We also have the recently announced $5 billion Northern Australia Infrastructure Fund. Telecommunications is mentioned as something that may qualify, and that fund is accessible by the private sector bidding, including unsolicited bids, for infrastructure development projects in the regions.

Principally, the fibre optic backbones around Australia have been built by the private sector with some government support, particularly support for, in effect, clearing the title to the land to enable that fibre optic to go in, and that has ringed Australia. We have different climatic extremes to northern Canada, but it has enabled development of a fibre optic network and now more recently that network is being connected to more remote communities through either fibre or through high-density-radio-transmission microwave.

Australia has recently launched its second of broadband communication satellites from French Guiana, I think, and I think there are some more to be launched. That will deliver much more reliable satellite communications at broadband speeds. That is funded by the government. The satellite launches are not put up there by commercial telecommunications companies.

Telecom is absolutely vital. One of the drivers for the corridor between Pilbara and Perth was something called the Square Kilometre Array. This is the world largest scientific instrument. It hasn't been built yet. It's being built in Australia and South Africa. It's designed to look into deep space. It will deliver data at such volume that the supercomputers to process it have not been built yet.

So there's going to be a phenomenal amount of fibre capacity installed to transmit that data to Perth, and I think there will be submarine cables as well to data processing centres to process this new data. That corridor had an immediate use for that particular application.

Have I answered your question?

Senator Patterson: Yes. Thank you very much.

The Chair: I'm going to try to keep this to a quarter to because we have a meeting in-house after, and I'd like everybody out of here by 12.

Senator Smith: Thank you. Sir, there's been a study done by the University of Calgary. There has been a study that was initiated back in the mid-1960s with this national corridor, which would basically be along the boreal forest in our country which is between the 50th and 60th parallels. Coast to coast, it starts at Labrador, goes through what we call the Ring of Fire in Ontario, then through Manitoba into Saskatchewan and up through the Mackenzie Valley. It then shoots up north to Mackenzie Valley and then west to Prince Rupert.

We've had people in and we've talked. How do we get this started? We are in the preliminary stages. People know it's important, but what would be your recommendation in trying to kick-start this? The concept is fantastic, but it's a huge project, and they estimate it will be a minimum of $100 billion. That's their initial estimate, but they don't know what the real cost is going to be.

Suggestions to kick-start, and then what would be your three strategic recommendations that we should be very conscious of as we try to move forward with this project?

Mr. Satchwell: I have read the University of Calgary study. I enjoyed reading it. I find it interesting that in the mid- 1960s the corridor concept was discussed. That's very good.

You're asking how to kick-start it. You're not talking about this committee or necessarily the Senate but government more generally, how do we get this going?

Senator Smith: Right.

Mr. Satchwell: As I said earlier, only government can get these things going. The private sector can participate in the discussion, but if you left it to the private sector, we'd be running through several generations of Canadians before anything happened, if it ever did. So government definitely needs to be the initiator of this.

To kick-start it, you start to find the corridor, you've had the studies done, but there need to be a range of studies on the precise location of the corridor, some sort of sizing of it to take and uses that you can anticipate and the uses nobody can think of right now. Along the corridor there will be some key economic nodes that you know about now and some areas that could be key economic nodes to drive the use of that corridor.

Identifying those at all times saying, "Look, this could be the future'' or "Here are a range of scenarios for the future, and they could all be wrong to a degree, but they all point to a need for this corridor.''

So to kick-start it, just start by defining the corridor, define the known uses and talk about scenarios for uses that are known and in the future. At all times I would advocate taking what my old firm used to call an "options-based approach,'' and that is at any point of decision-making or in discussion, keeping all potential options open and not consciously taking a decision that may close off a future option. You're in a world of uncertainty, of great opportunity, but you cannot identify all of those opportunities, and in many cases, infrastructure decision making has inadvertently, in most cases — and in some cases somewhat malevolently — closed off options. And we have regretted that to this day and our children will regret it because we closed off options for future infrastructure or for other uses of the corridor. So taking an option-based approach is a very important thing to do, and again, only government can do it.

In terms of strategic recommendations, I think a corridor that doesn't necessarily close off other land uses immediately but allows for future use for infrastructure along the corridor, understanding the current and potential future economic nodes and population nodes along the corridor, even if the future is full of uncertainty.

Finally, take that options-based approach to planning. There are good practitioners around that can guide government on that options-based approach that at all times maximizes the range of futures that the infrastructure corridor can take and doesn't consciously close off options in the future.

The Chair: Thank you, Mr. Satchwell. That was a very good discussion. We all enjoyed it very much, as you can tell from the questions. We thank you for your wisdom and your information. If there is anything else we may need, we may write or email you.

Enjoy your fine weather. It's a little cool down here, but I hear it's going to be 20 above in Perth. I just checked. So we're envious.

Thank you very much. I'll now go to suspension of the meeting for about two minutes and then we will proceed in camera. Thank you.

(The committee continued in camera.)