Proceedings of the Standing Senate Committee on National Finance

Issue 22 - Evidence

OTTAWA, Thursday, February 11, 1999

The Standing Senate Committee on National Finance, to which was referred Bill C-41, to amend the Royal Canadian Mint Act and the Currency Act, met this day at 10:50 a.m. to give consideration to the bill.

Senator Terry Stratton (Chairman) in the Chair.


The Chairman: Honourable senators, this morning we will hear witnesses regarding Bill C-41, to amend the Royal Canadian Mint Act and the Currency Act.

Please proceed.

Ms Danielle Wetherup, President, Royal Canadian Mint: Honourable senators, it is always an honour to be in this building, and it is a pleasure for us to appear before the committee today to participate in the further examination and discussion of Bill C-41.


My last appearance before this committee, about four years ago, was to discuss the introduction of a $2 coin. This coin has been an immense success. To date, some 400 million coins have been released into circulation and the government has received over $700 million in seigniorage.


I am here today to obtain your support for the changes to the Royal Canadian Mint Act, which would help the mint achieve its vision of being the global leader in minting. Our mandate at the Mint is to supply Canadians and our international customers with high-quality coins that are both cost-effective and delivered on time. We are the only mandated corporation for the production, sale and distribution of coins in Canada.

Similar mandates are shared by our major competitors, which are national mints owned and operated by foreign governments, such as the British Royal Mint, the Austrian Mint, and the U.S. and French Mints, just to name a few.

We must balance this important role with that of a commercial entity generating financial returns to our shareholders, which we achieve by producing cost-effective coinage for Canadians and by successfully marketing our minting services and coinage products worldwide. It is important for all of you to understand that 80 per cent of the revenue of the mint comes from outside Canada.

Since the Mint became a Crown corporation in 1969, we have returned to the government $164 million in dividends and, since 1987, $1.5 billion in seigniorage.

In the 30 years since its creation as a Crown corporation, the Royal Canadian Mint's mandate remains unchanged. It is now time to review the legislation, to bring it up to date to reflect market realities and to provide the Mint with the power to meet the challenges of the future. Bill C-41 is designed to improve the Mint's business operations and potential in markets that have changed dramatically in the past 10 years.

The basic purpose of Bill C-41 is to modernize the Royal Canadian Mint Act by removing antiquated provisions, streamlining the approval process for issuing coins and coin design, providing flexibility in the governance structure of the mint, and increasing the powers of the Mint within its existing accountability structure. The effect of that will allow the Mint to compete effectively in the global environment and to achieve its goal to become the international leader in minting.

Mr. Chairman, you put it quite accurately when you stated during the debate that most of the changes are not controversial and are of a housekeeping nature. The vital changes can be found in the clauses that will give the Mint more flexibility to compete against foreign, government-owned mints. The clauses to which I refer are those proposing that the Mint be given the powers of a natural person and an increased authority in borrowing.

Let us look first at the power of a natural person.


Giving the Mint the powers of a natural person will provide it with sufficient flexibility to meet its long-term strategic direction. The powers of a natural person will allow the Mint to support its public policy role of producing domestic coinage and to carry out its statutory mandate by operating for a profit.

These powers will provide it with the flexibility to enter into alternate business structures, such as alliances, partnerships, and subsidiaries. Our major competitors, the national mints of foreign countries, already possess these powers. Acquiring these new powers will place the Mint in an equally advantageous position in relation to those competitors within an extremely competitive international market. This global market demands that the Mint maintain a constant vigilance to identify new opportunities and the ability to respond with flexibility. The advantages to Canada are clear. If the Mint is successful, it will continue to create jobs for Canadians and export Canadian technology and know-how.


I have no hesitation in saying that the powers of a natural person will give the Mint an increased competitive advantage and are crucial to our future plan.

The Mint is a worldwide organization in terms of its product, its technology and, most important of all, its people. The powers of a natural person would allow us to respond more readily and effectively to market opportunities and therefore increase our chances of winning even more business. By doing so, we will continue to create high-quality jobs for Canadians.

Bill C-41 does not mean that the Mint would be less accountable. I wish to be quite clear on this point: The Mint will still be subject to the same rigorous approval process and accountability framework that exists today to exercise any of its new powers.

The accountability framework requires the approval of the Treasury Board, the approval of the Minister of Finance, and the approval of the Governor in Council. In addition, the Auditor General conducts an annual audit as well as special examination of the Mint's operation. As president of the Mint, I expect nothing less in order to maintain our credibility and our accountability.


This legislation is a much needed step towards improving the Mint's competitive position in a global and competitive environment while continuing to ensure a secure, low-cost and high quality supply of coins to Canadians.

Entrusting the Mint with these new powers, and it is a trust that is deeply appreciated, will give the Mint the ability and flexibility to plan, anticipate and react in a highly competitive and changing international market. Canadian taxpayers will reap the benefits of this trust because the Mint will be more successful. I want to re-emphasize that the existing checks and balances that govern the Mint's business will still remain.


Another concern expressed was with regard to the intention to increase the Mint's borrowing authority from $50 million to $75 million. This change will allow the Mint to maintain a borrowing cushion, or a margin of safety, to meet the needs of a growing business.

This added borrowing flexibility is an integral part of the mint's long-term strategic plan to meet the challenges and opportunities that the new millennium will undoubtedly present. This long-term plan depends upon the aggressive search for new markets, the development of existing ones, the creation of new products, and gaining added value through an alternative business structure.

In preparing for the future and for any unexpected opportunity that may arise, the Mint must foresee financial needs and be able to respond quickly.

In keeping our practice of rigorously reviewing all our business plans, we requested an expert third party to review, from a business-case point of view, whether it was wise to increase our borrowing authority. The financial experts advised that the higher borrowing limit is prudent and realistic and that, in fact, it brings the Mint more in line with the realities of the current marketplace.

I wish to make it very clear that the increased borrowing authority does not imply that the Mint needs more money.


The higher borrowing authority is simply another measure designed to give the Mint more flexibility and room to manoeuvre in the marketplace. Once again, it will still be subjected to the same approval process that governs its business mandate today.

In closing, I would like to thank you for the opportunity to speak about the Mint. The Mint plays such an important role in Canada, but it is not often that we have the opportunity to meet in such a forum to discuss our needs and our goals. In reading over the House of Commons Debates on C-41, I was pleased and very proud to note the number of times the Royal Canadian Mint was referred to with respect and pride. It is a tribute to the team at the Mint -- a world-class team that I am so honoured and privileged to be associated with.


My experience at the Mint has taught me that there are no limits to what a skilled and dedicated group of employees can achieve together. We truly believe that we can be a world-leading mint. My dream is to make it happen. My hope is that members of the committee will share this dream and provide the Mint with the tools necessary to make this dream a reality. To be a world leader in any undertaking demands the best team, the best plan, and the necessary tools to get the job done.

I respectfully submit to the committee that with Bill C-41 we will get the job done, achieve our vision, and be able to even better serve Canadians.


Senator Bolduc: You told us that 80 per cent of your revenue comes from outside of Canada. Who are your foreign clients?

Ms Wetherup: We have a number of countries as customers. We have regular contracts with about 41 different customers. Last year, we had 19 contracts to produce foreign coinage. We also have people working on numismatics projects. We are having great success in Europe, particularly in Germany, thanks to our numismatics projects. We also sell precious metals such as bullion on the international market. Japan and the United States are major purchasers, as are certain European countries. We do refining for countries that do not have the necessary facilities, such as certain South American and African nations. We also sell our technical assistance to these countries.

Senator Bolduc: Do the African countries pay?

Ms Wetherup: Yes, that is one thing that is to our advantage. Usually, a government makes its domestic coinage a priority, from a financial point of view, so we have always been paid.

Senator Bolduc: So you do not have any bad debts?

Ms Wetherup: No, absolutely none.

Senator Bolduc: Since we are laymen in this area, could you tell us a little more about what you referred to as the Pollyanna investment climate?

Ms Wetherup: Some gold and silver coins are sold to investors. Some people buy shares or units, some people buy gold. This gold is sold at the price that the market sets, with a small profit margin for manufacture and distribution.

When strong international currencies weaken, as was the case with the yen, all of a sudden there is a surge in demand for gold, because people become worried. When U.S. exchange rates fluctuate, there is a tremendous demand.

Senator Bolduc: Who do you buy your gold from?

Ms Wetherup: We purchase gold from global commercial enterprises.

Senator Bolduc: I suppose you too are subject to price fluctuations?

Ms Wetherup: Yes.

Senator Bolduc: Consequently, you take them into account automatically when you set your resale price. But what happens if the market drops? Let us say that you have an inventory of 500 million bars of gold, then all of a sudden the market drops, the price drops from $324 to $287, and you are forced to resell your gold at $287. How do you manage to make money?

Ms Wetherup: We manage our inventory very, very well. We very quickly learned that keeping gold in our vaults was not the smartest thing to do.


The Chairman: So far we have yourself, Senator Fraser and myself.

Senator Bolduc: I take for granted that the company is well managed, and I do not wish to discuss that aspect. We are very proud of the management; there is no doubt about that. I suggest perhaps that the government should continue to put women in charge of some of those corporations.

Senator Mahovlich: Do not get carried away.

Senator Cools: Imagine if I take your recommendation and run with it.

Senator Bolduc: I have three questions. First, I am a little surprised that the minister is not here. We are amending a law respecting the Mint, which is a Crown corporation. In my opinion, we should have the minister here. It is embarrassing to ask policy questions to quasi-civil servants. That is not to criticize, at all, your presence here.

You come under the Minister of Public Works and Government Services Canada, and not the Minister of Finance, and I wonder why that is. You gave as one of your arguments to have your headquarters in Ottawa the need to have very close technical advice from the Minister of Finance. I would have expected you to be under the umbrella of the Minister of Finance.

In any event, that is another matter, and one that we will address to the minister, should he attend before the committee.

Senator Cools: If I could just interrupt for a second to satisfy the senator's concerns. I want to assure him that from our side we see no need for embarrassment. We have asked the minister to appear before us, and it is my understanding and belief that the minister is happy to accept the invitation to appear before us. He has attended before this committee on many occasions, and I am sure he will be happy to do so again. There is no need for embarrassment.

Senator Bolduc: Clause 4 of the bill refers to the Mint's power to "procure the incorporation, dissolution or amalgamation of subsidiaries," as well as to acquire or dispose of any shares in them. I am a little embarrassed by that. The primary purpose of your business is to produce Canadian coins. I know you said that you want to make money on the international market, become an enterprise.

I have some experience about those powers at the provincial level. We have given power to Hydro-Québec to have various subsidiaries; also with the Société générale de financement, and many others. It will be hard to convince me that the Mint should get involved with subsidiaries and dealings with other corporations. The principle of our liberal democracy is that subsidiaries of government have only the powers given them by Parliament. The Mint is asking for a kind of general power, and that embarrasses me.

What do you have to say about that? It is a question for the minister, but since he is not here we would like to hear your views.


Ms Wetherup: In response to your first question, which has to do with the Mint's governance, I should point out that the Department of Finance also is my customer. I produce circulation coins for the Department of Finance. From a business point of view, I am not necessarily thrilled to have one of my customers as my boss. I think that the division of responsibility between the customer and the responsible department, which usually is the Department of Supply and Services, and which may have somewhat more independence in relation to my customer, is a good balance. I have to constantly think of both departments, but I think that from a business point of view, Canadians may be well served by this dual approach.

As for the creation of subsidiaries, we must not forget that since prehistoric times, since the time of the Roman Empire or ancient Egypt, for example, government has always been responsible for producing coins.

Furthermore, we are dealing with a product, the products that we brought here, that is not just for circulation, but also for collectors, who do form a market.

Both government and the private sector operate on this market. I will give you an example of what can happen. Austria and Germany are two of my biggest markets. When one of the biggest European distributors, a family-owned company, decided to sell, they came to see the Mint, and they asked, "Are you interested in buying our company?" We certainly were interested, because I would be much more reassured if we owned the Hersher company, rather than one of our competitors, such as the Austrian Mint or the British Mint.

Austria was able to move immediately, because it has these powers. It would have taken me at least two years to go through Parliament, committees, to get a decision. What I am asking you is to put the Royal Canadian Mint on an equal footing with the mints that are our competitors.

Furthermore, by selling numismatic products, by selling abroad, we are not just turning a profit, but we are also creating jobs, and I am delighted that we are growing and so we can create new jobs. Last year, we created more than 100 full-time jobs, and about 120 part-time jobs. In my opinion, our energy, creativity and entrepreneurship have had both economic and social benefits.

Senator Bolduc: It is the dilemma between efficiency on the one hand and accountability on the other.

Senator De Bané: So the companies that you are competing with are allowed to set up subsidiaries?

Ms Wetherup: Yes.

Senator Bolduc: So for the sake of efficiency, and I do not blame you for stressing efficiency, because a commercial enterprise has to do so, you are asking that the Mint not be subject to prior authorization from Parliament in the future, but rather, that the minister or the Governor-in-Council could decide to issue a $3 coin tomorrow, for example. I'm uncomfortable with that.

Ms Wetherup: Your colleague in the House of Commons raised that point. The minister agrees with that line of argument, and any new circulating coin would be subject to approval of the House of Commons and the Senate.

Senator Bolduc: In advance?

Ms Wetherup: In advance.

Senator Bolduc: So there is an amendment to your act. That is not what the bill says. Wouldn't this bill give the Governor in Council the power to decide whether or not a $3 coin will be issued?

Ms Wetherup: Only if it were a non-circulating coin. Any new circulating coin, such as a $5 coin, will have to be approved by Parliament. A change was made to the clause.


The Chairman: I read here that approval for a new coin would be via order in council. Is that for non-circulating coins?

Ms Nadeau: Non-circulating.

The Chairman: Perhaps, for the benefit of all here, you can define "circulating" and "non-circulating".

Where in the bill does it specifically state that --

Ms Nadeau: At the bottom of page 2.

The Chairman: So it is clearly stated that a circulating coin must have the approval of Parliament.

Ms Nadeau: A new circulating coin.

The Chairman: Whereas a non-circulating coin can be done by order in council; is that what you are saying?

Ms Nadeau: That is correct.

Senator Cools: I believe the chairman is on to something here. The definitions of "circulation" and "non-circulation" coinage are right at the front of bill. However, if we move to page 2, under the heading "Circulation Coins", clause 6.4(1) states:

The Governor in Council may, by order, authorize the issue of circulation coins of a denomination listed in Part 2 of the schedule.

The Chairman: That was exactly my point. My reading of my notes when Bill C-41 was tabled in Parliament is that this just informs us as to what you will do; that you are telling us what you will do.

This does not ask Parliament for its approval.

Ms Nadeau: The legislation before you, under Part 2, lists all the circulation coins that will be issued. Those are the existing coins in circulation, as we know them.

The clause Senator Cools just read refers to actually putting the issue in circulation. To introduce a new coin, say a $5 coin, that is not listed under Part 2, the government would have to come before Parliament to authorize amending that part.

The Chairman: That is in Part 2.

Ms Nadeau: Yes.

The Chairman: I was concerned about that. I would not want us to approve this bill and then all of a sudden see a $5 coin. I think we would pay a price with the citizens of Canada. Their pockets are getting heavy enough as it is.

Senator Fraser: The more I look into this circulation of coins issue, the more confused I get.

My original question related to something Senator Bolduc raised, which was the way you would plan to exercise your powers as a natural person, your new flexibility. I found your example of the European distributor interesting.

In terms of your business plan, would most of these new powers be exercised outside Canada or inside Canada? If they are exercised inside Canada, what do you have in mind?

Ms Wetherup: At this particular time, I do not see any business opportunities inside Canada. The distribution network that exists in Canada is very healthy and profitable. We assume that if a distributor wanted to go out of business, that business would most probably be acquired by one of the existing distributors. Frankly, on the distribution network, it would not be to our advantage or interest.

One of our manufacturing companies asked us to purchase them. For a number of reasons, the board of the Mint -- and we concurred with their opinion -- decided that it would not be wise to make that purchase.

To be honest with you, I do not believe that there would be many business opportunities within Canada. These opportunities rest in the international market. As I stated in my presentation, 80 per cent of our revenue comes from abroad. Our focus is much more on the bigger slices of the pie, which are basically outside of Canada.

Senator Fraser: If you are thinking of business expansion by acquiring subsidiaries or creating subsidiaries outside of Canada, then increasingly your operations would not be subject to Canadian law or even to a true accountability before Parliament.

Senator Fraser: You would not, for example, be subject to the normal equity laws that would apply inside Canada.

Ms Wetherup: We would be in the same situation. We would have had to go through our board of directors, our minister, the cabinet, the Minister of Finance and Treasury Board for approval. Then our operation would be treated exactly as any commercial venture that has an international subsidiary.

Senator Fraser: Let me describe the sort of scenario that a really paranoid and suspicious person might envision here. You get the powers to act all over the world. You decide to go to a nice cheap labour jurisdiction and set up manufacturing plants somewhere in Southeast Asia where they use children as their labour force. Parliament cannot do anything about it, so to speak, or does not do anything about it because the control is so far removed. That is why I am trying to find out what business plan you have to use these new powers on.

Ms Wetherup: First, as a corporation we have proven that we are responsible, ethical, and very sensitive to Canadian values and norms. I doubt very much that it would be possible within the regulatory process. Do not forget that I do have a board of directors that is extremely active, believe me. It would be impossible and intolerable.

Here is what would most probably be a potential scenario. Some of the developing countries, in South Asia, for example, do not have coinage. The use of notes only is costly because notes do not last long. Let us assume that a number of Asian, South American, and African countries say to us, "We are buying coins from you. We would like to build our own mint. We do not have the technical skills; we do not have the managerial skills; we do not have the marketing and sales skills; we do not have the distribution skills. Could you come and help us?"

For us, the transfer of technology is interesting only to a certain degree. Those people can become competitors. If we can have a sort of partnership, then it becomes more interesting. That is a realistic potential.


Senator Ferretti Barth: You have asked for an increase in borrowing authority from $50 million to $75 million. Is that to respond to the demand on the global market? Forty-one countries have you manufacture their coinage, but there are other countries that also make coins and are competing with us.

To us Canadians, if the flag represents our nation, our currency represents our wealth. So we should make every effort to maintain our position on the global market.

Is there enough of a foreign demand to require a change to the Act to increase borrowing authority?

Ms Wetherup: You are right, this is not an extravagant request. The Mint is evolving in a very competitive, changing environment. It needs more flexibility to borrow. You must also understand that these borrowings are both short-term and long-term.

I will give you an example of short-term borrowing. When a country asks us to produce its coinage, we have to purchase the metals in advance. A contract just for the metals will cost us $10 million. We are not paid until we have delivered the coinage.

When our production was only 700 million, we had enough money for the short-term, but now our production of foreign coinage has reached two and half billion, and we intend to increase it.

Our goal is to produce six billion per year within five years. We need this money for short-term borrowing so that we can increase production. I would remind you that the more coins we produce, the more Canadians we hire. If Canadians do not make the coins, some other country will.

If we want to create jobs in Canada producing circulating coins, you must give us the tools we need to increase our volume.

Senator Ferretti Barth: Senator Bolduc and I mentioned probable subsidiaries that could be built elsewhere. In addition to responding to the needs of other nations, the governments of countries where the subsidiaries would be built to produce coinage would not have to pay as much for their coins. That would be a dynamic way of remaining competitive.

Ms Wetherup: Exactly. If Canada does not form such partnerships, Great Britain, France or other competitors will.

Senator De Bané: You hinted that this increase in the borrowing authority of your corporation has already been looked at by outside consultants. Would you mind providing their report to this committee?

Ms Wetherup: I would be delighted to give you the report. We contacted a firm by the name of Rothschild, which has a very solid reputation. They made some recommendations, and told us that our request was conservative and wise for a corporation. I should remind you that when the mint was created as a corporate institution in 1969, it had borrowing authority of $35 million. In 1987, this was increased to $50 million. We are now asking the government to increase it to $75 million. This is the gradual evolution of a corporation. With inflation rates and the cost of production and the cost of metals, it's logical for us to be asking for more borrowing authority over the course of time.

Senator De Bané: Are there other federal Crown corporations whose status is similar to that of the Royal Canadian Mint?

Ms Wetherup: Yes, several corporations have that flexibility.


There is the Business Development Bank, the Canada Deposit Insurance Corporation, the Farm Credit Corporation, the Canadian Museum of Civilization, and the Canadian Museum of Nature. They all enjoy flexibility and the power of individuals.


Senator De Bané: You would like to have the same tools that your competitors already have.

Ms Wetherup: Exactly. I would like you to put us on an equal footing with our competitors. I cannot have my hands tied when I have to compete with these other institutions everyday. I spend six months of the year on airplanes, travelling abroad, selling Canada and selling Canadian products, but I do not have the tools I need to do so.

Senator De Bané: Some people have argued that instead of the Royal Canadian Mint getting certain contracts, why not grant them to the Canadian private sector? Could you explain, given our international agreements, to what extent you can restrict a competition just to Canadian companies? Or do you have to allow foreign companies to bid, even though your institution is a Crown corporation, and then we are sure that the contract will be carried out by a Canadian company, that is to say, the Royal Canadian Mint?

Ms Wetherup: The Mint is subject to the laws that govern Canadian business. We come under NAFTA. All our competitions must be open. We cannot sole-source. Sole-sourcing would not be in the interest of Canadian taxpayers.

Under the act that governs us, we must produce the best possible coins for Canadians at the best possible price. When it comes to coinage, NAFTA is a very good agreement that protects taxpayers. We constantly are asking for bids. Last year, we asked for bids for 98 millions blanks. Of these 98 million blanks, only 13 million were produced in Canada. The rest were produced overseas. Only 14 p. 100 of the blanks were made in Canada.

In addition, I should remind you that the blanks for only one denomination are made in Canada, and that is the one-dollar coin. At present, we have a supply of approximately five years or more of one-dollar blanks and coins because the company that provided us with these blanks warned us that it was planning to close down. We had to build up this inventory, so that Canadian business would not be affected by a shortage of one-dollar coins because this company was going to stop operations. At present, the blanks for nickels, dimes, quarters, fifty-cent coins and pennies are all made in the United States. We get blanks not just from Canada, but from everywhere else, mainly the United States and Germany, including the blanks for the two-dollar coin.

Senator De Bané: So if I understand correctly, if the Royal Canadian Mint had contracts outside of Canada, it could not restrict its calls for bids to companies located in Canada. Because of our international obligations, others will also be able to compete.

Ms Wetherup: We are currently losing contracts because we cannot get enough blanks. When I have to ask England to sell me blanks and England is competing with me, what do you think they will do? They will ask for twice as much as the price they usually bid. I have lost several contracts because I can't get enough blanks.

Senator De Bané: Your explanation speaks volumes. Two years ago, you announced that a facility in Winnipeg would be built for plating.


What will be the payback on that new facility that you are establishing? I understand from what you have said that there are many imperatives for the establishment of that new plant, but I would be interested to know on behalf of the Canadian taxpayers how long it would take to recuperate your investment.

Ms Wetherup: I wish to assure all senators that the business case of this plating plant is so good that it would make any entrepreneur drool with envy. Savings to the taxpayers amounts to $9.5 million per year. We will generate an additional profit of $3 million in foreign circulation business. The payback on a $31 million investment will be in two and a half years. We have even discounted on a 10-year discount the cash flow, and it is three times the investment, which is formidable.

We have had two pre-feasibility studies and a detailed project definition supported by a business case. We have compared the current coinage cost to the Royal Canadian Mint and the Canadian mint's plated process and other plated alloys, and we were coming in at a much better price. We calculated the depreciation at RCM rates and interest on borrowing $31 million. We did a sensitivity analysis on nickel and copper price fluctuations, as well as a volume analysis. We reviewed the options of licensing and lease-to-buy alternatives, but they were not beneficial. We did a comprehensive review and approval of our corporate borrowing plan by Treasury Board, the Minister of Finance, and the Governor in Council. Our borrowing was obtained from a bank source, through Scotia Capital Markets, and they were very happy to loan on such a good business case. We also contracted UMA for engineering and construction management services. Our business plan is one of the best anyone could present.

Senator De Bané: Is there any relationship between the bill that we are considering at this moment and the construction of that new facility? Is there any relationship between the two?

Ms Wetherup: Absolutely not. There is none. The building was in place and proceeding before we even started to consider this bill.

Senator De Bané: Perfect.


Senator Ferretti Barth: You said that this new facility in Winnipeg is already being built. Was it being built before Bill C-41?

Ms Wetherup: Yes.

Senator Ferretti Barth: That was done because there was a very specific need. The supplier was penalizing the Royal Canadian Mint. Once you have a facility that belongs to the Mint, will you be able to meet customers' requirements?

Ms Wetherup: Yes.

Senator Ferretti Barth: You said that the government has a number of environmental concerns. Will this new facility still allow the use of cyanides? A facility that processes metals uses cyanides a great deal. Will the new facility still use this toxic substance? The government and citizens are concerned. They think that new facilities that are being built should not be as harmful to the environment.

Ms Wetherup: That is also related to the senator's earlier comments about the Royal Canadian Mint's corporate conscience. We were very concerned that some of our products were manufactured using cyanide. The new plating facility will produce the only plated metal in the world that does not contain cyanide. This new environmental approach is certainly praise worthy.

As well, this coin is easier for vending machines to read. This will do away with the problem of bad coins that people sometimes use in vending machines. The facility will certainly be in operation by December of this year at the latest. The coins will be distributed next June, in accordance with an agreement with the financial institutions and the vending machine associations. We are well along the way. With our budget, it is going very well.


Senator Mahovlich: You mentioned that the concept of using coins began in Egypt and the Roman Empire. Did the concept of coin usage not begin in Greece?

Ms Wetherup: The Greeks instituted coins before the Romans, yes.

Senator Mahovlich: I was taught that that is where the usage of coins began.

Ms Wetherup: In the metal form, yes. I think the Egyptians had a stone exchange.

Senator Mahovlich: Now collectors are collecting these coins. For an investor, how are these coins used as collateral? If I wish to borrow from the bank, are coins a good leverage point?

Ms Wetherup: We never sell the numismatic coin, or the collector's coin, on the basis of investment. It is misleading. Some coins gain value and some do not. However, when you buy a collector's coin, you are buying a piece of art, the reflection of a culture. In Canada, we are making a coin that reflects the Chinese lunar year, which is a reflection of the cultural diversity of Canada.

Senator Mahovlich: The banks do not look at it as an investment.

Ms Wetherup: I cannot speak for the banks, but when I sell a coin, I hope people will make money on it. However, I do not sell it on that basis. I sell it on the basis of its artistic value or as a collector's item. If you buy a painting, sometimes it increases tremendously in value and sometimes it does not.

Senator Mahovlich: The banks stay away from paintings.

Ms Wetherup: Exactly.

Senator Mahovlich: Loonies came out first, and then the $2 coin, but our dollar keeps falling. I was in the United States, and someone said that every time a new coin is issued, our dollar drops. Have you noticed that?

Ms Wetherup: The Americans are introducing a $1 coin, so we will see what happens to their money.

Senator Mahovlich: How many private companies do you compete against in the world? Are there any private mints?

Ms Wetherup: No. There are a few mints that produce numismatic products for countries. I know of one.

Senator Mahovlich: Is there a Krueger Mint?

Ms Wetherup: No, but there is a Pubjoy Mint. They go to a small country like the Isle of Man and say, "If you would like to produce some numismatic coins, we will strike them for you." They are the only company that I am familiar with in that regard. The Isle of Man has the choice to have it done by the British Mint, the Canadian Mint, the Singapore Mint, or whatever mint they choose.

Senator Mahovlich: We are competing with other countries, then.

Ms Wetherup: Yes.

Senator Cools: Thank you for speaking to us with what I consider to be considerable candour and knowledge. It is always reassuring for us.

I have two questions, and they relate more to levity than anything else.

I believe it was around 1858 that we stopped making the 20-cent piece. Maybe you did not know this, but Canada used to have a 20-cent piece. The reason I know is that I used to have one. I have a penchant for giving presents to the leader of the Liberal Party. I gave my 20-cent piece to Mr. John Turner. I wonder if you could tell me the current value of a 20-cent piece? I have had so many people express interest in it since that time.

Ms Wetherup: I am sure it is much more than 20 cents, but I did not come prepared for that. I will get you the answer and communicate it to your office.

Senator Cools: If you go to the Prime Minister's office, there is a lovely, huge portrait of Laurier. I gave that to him. I tell you that just to let you know how I feel about my leader.

The second question I have relates to Gresham's law: bad coins drive out good. What does that mean?

Senator Bolduc: It is a matter of economics now.

Senator Cools: Thank you very much.

Ms Wetherup: You have given me a challenge, Senator Cools.

Senator Bolduc: You told us that you make some money every year, and I am very happy about that. Regarding the salary of your employees, you are outside of the civil service jurisdiction. Are you paying more than the civil service for your employees in comparable jobs?

Ms Wetherup: I do not compare the income of my employees to the civil service. I compare it to the manufacturing sector, and we are definitely on par. We are very proud of the relationship that we have with our employees. In an employee survey, 98 per cent of our employees said they were thrilled to work at the mint, which to us was the best complement that we were given.

The Chairman: I am very proud of the Mint; it is a very fine building, as well as producer of jobs for Manitoba. The question I have has been debated in the other place. It is regarding Westaim, which is a blank producer in Edmonton. Can you give us an explanation about the patent lawsuit, or something to do with it -- and I am speaking from hearsay now. As well, on the issue of you being in competition with Westaim, I do not believe that is true but I wish to hear an explanation from you for our sake.

Ms Wetherup: I would love so much, Senator Stratton, to give you details on the patent suit. Unfortunately, it is before the court right now, so I do not believe it would be wise for me to be giving you details. However, I can tell you that it is not something that I lose sleep over because I have full confidence in our patent. I am very sure that we will be successful.

With regard to the relationship between Westaim and the Mint, Westaim is a supplier of blanks to the Mint. And when I referred to the $98 million that we spent on blanks, $13 million of that was spent in Canada from Westaim.

The capacity of Westaim for production of blanks is 3 billion blanks. The plating facility of the Mint's capacity will be 1 billion blanks. Our objective is to sell 6 billion coins.

Therefore, the Canadian capacity is no where close to our business plan. Last year, we needed 3.5 billion blanks. Very few, only 14 per cent, of them came from Westaim.

The Chairman: Indeed you are not in competition with Westaim Mint. From what you are saying, one would think that Westaim would want to enlarge its plant to help you fulfil your needs as well?

Ms Wetherup: We have always worked very closely with Westaim. Whenever we are bidding on a contract, we always Westaim to compete. And when we look at contracts, we look at price, quality, and delivery time.

One of the problems that we have encountered in many of the contracts is delivery time. If a country needs coins, and they need them for, say, January, because it is a new year or there is a commercial activity, you cannot tell them you will deliver the coins in May.

One of the reasons we have been able to grow so fast, so well, and so securely is that we have developed the ability to be quick in our response. Many countries have mints, so when they come to another mint for coins, very often it is because of a flux in the demand. They have been told by their ministry of finance or their national bank that they must have coins, that the commerce and trade requires it. Therefore, a mint must be able to deliver coins in an extremely short time, and that is what we excel in.

The Chairman: Contrary to opinion, there is not an oversupply of blanks in the world. If you read the documentation from the other place, it says that globally there is a 30 per cent over-capacity for the production of blanks.

Ms Wetherup: When I came to the Mint, the Mint was in a deficit situation. My management team told me that we were in a deficit situation because there was no business in coinage. I created an extremely strong marketing team. We have people on the five continents. We have demonstrated that the coinage business is a growing business.

Other mints, not only the Royal Canadian Mint, but the British Mint, are increasing their blanks capacity. The French Mint is also increasing its blanks capacity. Do not be misled by anyone, it is not because of the euro. To build a plating plant costs $31 million. You do not do it on a temporary basis if there is an over-capacity because you will be stuck with the facility. It is because everyone knows that the coinage business is growing.

When I first came to the Mint, the production requirement for Canada was approximately 700 million to 800 million coins. Last year, we were asked to produce 1.3 billion coins. It goes with the increase in population and economic transactions.

And I know someone will ask the question: What about the effect of e-cash? None. Absolutely none. As a matter of fact, as much as credit cards and Interact cards have been popular, e-cash has been a strong disappointment. Many of the banks have withdrawn from the Mondex project.

The Chairman: You are projecting a bright future for the Mint, and I am delighted to hear that because it means more jobs for Winnipeg. Your success will hopefully mean that Westaim will have continued success.

Senator De Bané: I fully agree with your conclusion, Mr. Chairman. I was informed some time ago, and I was happy to hear the chairman reiterate it, that the Mint has, in the past, lost business opportunities because Westaim refused to quote on manufacturing blanks. They refused to quote because, as they have said since 1991, that kind of business is not part of their core business. And because Westaim refused to quote on those blanks, the Mint was unable to try to get those additional business opportunities.

Is that true?

Ms Wetherup: Yes, it is.

The Chairman: In conclusion, would you please send us an explanation of the approval process for a new circulating coin? By having a written explanation, we will have it clearly set in our minds. That would be very beneficial. In order to discuss this proposed legislation in our communities, we need that explanation from you. In that way, we will be able to give a correct explanation if someone says that the Mint can approve a new $5 coin without coming back to Parliament.

Ms Wetherup: I would be delighted, senator. I wish to reassure you, because some of you were in these chambers when I was here discussing the $2 coin, that nothing has been changed. I must come back.

The Chairman: Thank you for being here. It is wonderful to have heard such a positive story about a company that belongs to Canada.

The committee adjourned.