Proceedings of the Standing Senate Committee on
National Finance

Issue 21 - Evidence - June 6, 2012 (evening meeting)

OTTAWA, Wednesday, June 6, 2012

The Standing Senate Committee on National Finance met this day at 6:45 p.m. to examine the expenditures set out in the Supplementary Estimates (A) for the fiscal year ending March 31, 2013.

Senator Joseph A. Day (Chair) in the chair.


The Chair: I call this meeting of the Standing Senate Committee on National Finance to order.


Honourable senators, this evening we will continue our examination of Supplementary Estimates (A) for the fiscal year ending March 31, 2013.


Our committee began consideration of the Main Estimates of 2012-13 in early March, consideration which is ongoing and will continue throughout the year. This constitutes our second meeting on Supplementary Estimates (A). This evening, we are pleased to welcome the following officials from Public Works and Government Services Canada: Mr. Alex Lakroni, Chief Financial Officer, Finance Branch,; and Pierre-Marc Mongeau, Assistant Deputy Minister, Parliamentary Precinct Branch.

We are also pleased to welcome the following officials from Transport Canada: André Morency, Assistant Deputy Minister, Corporate Management and Crown Corporation Governance; and Claude Corbin, Senior Director, Financial Management.

I would ask each department to briefly describe what is contained in your section of the supplementary estimates. I think that you each have introductory remarks, after which we will move to a question and answer and comment phase.

I have speaking notes from Mr. Lakroni, so I will call on him first to give his remarks.

Alex Lakroni, Chief Financial Officer, Finance Branch, Public Works and Government Services Canada: Thank you, Mr. Chair and members of the committee. I am here today in my capacity as CFO of Public Works and Government Services Canada, and I am joined by my colleague, Mr. Pierre-Marc Mongeau, the Assistant Deputy Minister of the Parliamentary Precinct Branch. The department appeared before this Senate committee on March 13 regarding the Main Estimates 2012-13. Today, we are pleased to discuss the Supplementary Estimates (A) for PWGSC, which were tabled on May 17, 2012.


As you are aware, Public Works and Government Services Canada plays an important role in the daily operations of the Government of Canada. As its principal banker, accountant, central purchasing agent, linguistic authority, and real property manager, we manage a diverse real estate portfolio that accommodates 269,000 federal employees in 1,819 locations across Canada, including the Parliament buildings. PWGSC contributes more than $14 billion annually to the Canadian economy through government procurement. We prepare the annual public accounts of Canada and manage a cashflow of more than two trillion dollars a year; and, translate more than one million pages of texts on behalf of federal organizations, and provide translation and interpretation services for Parliament and its committees.


These Supplementary Estimates (A) request $237.2 million for PWGSC in net new funding. Approval by Parliament will bring PWGSC's gross budget to $5.9 billion to be spent on the delivery of its mandate. The department is heavily revenue dependent, with 56 per cent of our expenditures, or $3.3 billion, covered by revenue, primarily from client government departments, to support their programs. This brings PWGSC's net appropriation to $2.6 billion.

Let me take this opportunity to break down PWGSC's budget. The department has an operating vote with gross expenditures of $3.2 billion, which has two basic components. First, $0.9 billion is needed to deliver on our core programs, such as central purchasing and banking, public accounts, payroll and pension services; and internal services. Second, $2.3 billion is required to pay for rent, fit-up and utilities for government-wide accommodation; the Receiver General and central compensation administration functions, such as banking fees paid to financial institutions, cheques and envelopes; and translation services to Parliament.

The department also delivers other services to departments on a full cost-recovery basis. It provides $2.1 billion of other services, such as real property, project management, expert advice and translation. PWGSC also has a capital vote of $497 million, primarily to invest in Government of Canada buildings and infrastructure.

Now that I have described the department's budget, let me turn to why we are here today.

The first notable item in PWGSC's Supplementary Estimates (A) is the Parliamentary Precinct Program. Public Works and Government Services Canada is asking for $242.9 million for the rehabilitation of the Parliamentary precinct buildings. This covers the funding for projects such as the West Block Rehabilitation, the Wellington building, the recapitalization program, as well as lease costs for interim relocation. These are major projects that have already been approved and are part of the long-term vision and plans for the Hill.

The total expenditure forecasted for the fiscal year 2012-13 to rehabilitate the buildings of the Parliamentary precinct is $247.6 million. The difference of $4.7 million was approved in the Main Estimates.

As you know, the spending for this program is project driven, and project requirements have to be defined and approved by Treasury Board. Given the magnitude and the complexity of these projects, coupled with the timing of approvals, PWGSC is now including the amount of $242.9 million in Supplementary Estimates (A).

I am pleased to share with you that the Auditor General's 2010 report recognized PWGSC's strong results in project management and project delivery. My colleague, Mr. Mongeau, is prepared to provide you today with an overview of the program and its performance to date, should the committee wish.


The second item is a transfer from PWGSC to Shared Services Canada of nine million dollars relating to activities now within their mandate.

This current year adjustment related to two projects is over and above the permanent transfer of $113.4 million in the main estimates. Finally, PWGSC is receiving close to four million dollars from other government departments in order to carry out the consolidation of pay services in Miramichi, New Brunswick.

These three items constitute PWGSC's request in Supplementary Estimates (A).

My colleague, Mr. Mongeau, and I would now be pleased to take your questions.

The Chair: Mr. Mongeau, do you wish to make any comments?

Pierre-Marc Mongeau, Assistant Deputy Minister, Parliamentary Precinct Branch, Public Works and Government Services Canada: Mr. Chair, if you so wish, I would suggest that I immediately give the floor to our colleagues. Then we can answer your questions.

André Morency, Assistant Deputy Minister, Corporate Management and Crown Corporation Governance, Transport Canada: Thank you for inviting us to this meeting this evening to assist the committee as it considers Supplementary Estimates (A) for the year 2012-2013. I will limit my comments to your question on what is being presented today regarding our supplementary estimates.


Transport Canada is requesting a net increase of $16.6 million to 2012-13 Main Estimates through the Supplementary Estimates (A). New funding is being requested for five items, for a total of $20.9 million as follows: Funding of $16.1 million to fund the Regional and Remote Passenger Rail Services Class Contribution Program until March 2013, and $2.8 million for the renewal of the major projects management office. Transport is also seeking $1 million to support the sustainability and maintenance of the Port of Churchill; $693,000 to provide essential services in the form of inspection, enforcement and emergency planning activities in support of the 2015 Pan America and Para Pan American Games announced by the government; and $198,000 to cover Transport Canada's incremental costs for implementing costs relating to the Evergreen Light Rail Transit Project in British Columbia.

Funding transfers to and from other departments are also found in the supplementary estimates, and they result in a net decrease of $4.3 million. They involve a transfer into Transport Canada of $7.9 million from Jacques-Cartier and Champlain Bridges Inc. for the planning of a new bridge across the St. Lawrence; a transfer of $12.1 million out of Transport to Shared Services Canada to complete Transport Canada's contribution in consolidating and streamlining the delivery of email, data centre and network services across government; and a transfer out of Transport Canada of $30,000 to Industry Canada as part of Transport Canada's share to support the federal coordination of global satellite navigation systems.

These supplementary estimates also involve two of our Crown corporations. VIA Rail Canada is seeking through these supplementary estimates $68 million to fund incremental pension funding requirements, and $21.5 million is also being sought to be re-profiled from a 2011-12 frozen allotment into 2012-13 to complete capital projects that were delayed for a variety of reasons not in the control of VIA Rail.


I mentioned earlier that Jacques Cartier and Champlain Bridges Incorporated will be able to transfer $7.9 million to Transport Canada.

This completes my comments, Mr. Chair.


The Chair: Thank you, Mr. Morency. I am looking at page 95 of supplementary estimates under Transport, and at the bottom is VIA Rail Canada Inc. Do you have the Supplementary Estimates (A)? I want to ensure I am following you. You gave two figures under VIA Rail, and they add up to $89.5 million; is that correct?

Mr. Morency: That is correct.

The Chair: You gave us some of the figures earlier, as well. I did not write them down; I was looking for specific figures but they may be part of a larger figure that appears here, might they not?

Mr. Morency: VIA Rail in total is $68 million for the pension requirements and $21.5 million for capital improvements.

The Chair: We do not see that breakdown. If you were not here, we would not see that. Do we see it?

Mr. Mongeau: Page 96 of the supplementary estimates. You will see them at the very bottom of the page.

The Chair: I was looking at page 95 at the bottom, which is a summary. Thank you very much.

Senator Ringuette: My first question is for Public Works. The renovation of Parliament Hill has been ongoing for years and will go on for the next 20 years. Why was the amount of $247.6 million for the renovations that will occur during this fiscal year not a part of the Main Estimates?

Mr. Lakroni: The Parliamentary Precincts Program is project-based. It is a program, but it contains multiple projects. The requirements of these projects are defined on an annual basis because the projects are multi-year.

When these approvals are obtained from Treasury Board, sometimes the timing of the Main Estimates has passed, and the next opportunity we have to seek funding is from the supplementary estimates.

We try to have fulsome amounts. In this particular case, the majority of the requirements were defined outside the timeline of the Main Estimates. The requirements that were defined we can elaborate on, but it is just a timing issue.

Senator Ringuette: I understand the timing issue, but I also think that even on a project basis, you should have at least a five-year plan to take us forward and a budget requirement to do so.

Nevertheless, I also think that with regard to your department — and I grant you, it has not been so many days since I have asked your department a series of questions with regard to your staffing, staff that you hire to work on Parliament Hill through to placement agencies. It is the same staff year after year after year, professional people that will be needed for probably the next 20 years. I am looking at Heritage Masonry, for example. We see the same faces, yet they are not employees.

That is certainly a question with regard to supposed temporary workers and enforcement, at least within your department. Notwithstanding the MERX process and the section of your department that tenders these contracts for other departments, at least for your department, there is the enforcement of the Treasury Board guidelines with regard to temporary staffing.

With regard to the amount of money that you are requesting from Parliament, how much will be used to hire temporary workers or maintain temporary workers on the projects to repair the parliamentary precinct?


Mr. Mongeau: With respect to Parliament Hill and temporary jobs, the managers in our team focus primarily on the entire issue of contract management and implementation. They also do cost assessments. Our teams are already more or less complete.

For example, when we put out a bid to obtain contract employees for project management, we have an advantage in that these people come for a certain length of time but do not become permanent employees. This gives us greater hiring flexibility. Our objective is to ensure that we have on our teams the engineers, architects and good project managers who are going to be able to manage all of this. However, we do turn to private companies that provide project management services for the busy periods.

There is also a large transfer of knowledge because, if we want to hire someone, it takes several years before they can be brought to a senior level, when in fact we can strike a good balance between our senior employees and the employees we hire on a contractual basis. And we take advantage of their experience. For example, in the field of masonry, we have a complete centre of expertise with specialists. This centre of expertise will work with us and we will then hire project managers to implement the decisions that we make together.

These companies will assist us in the area of project management. Essentially, they will help us maintain a solid base within our teams, and they will also help us get through the peak periods without having to hire permanent employees for these projects.


Senator Runciman: In your opening statement, Mr. Lakroni, you mentioned the Auditor General's 2000 report and the complimentary remarks made. She also spoke to project management and governance structure, referring to the rehabilitation of the Parliament Buildings. She felt that it was too fragmented. What has been the response of Public Works to that comment?

Mr. Mongeau: I will take that question.


There were two main aspects in the Auditor General's report of 2010. First of all, the report dealt with project management in Public Works. We were given high marks; we were told that management was good, that we had developed a cost control process. In a nutshell, we heard very positive things about our project management.

We did, however, receive more severe criticism in the area of governance. The problems pertained primarily to the difficulties experienced in achieving a consensus. For more or less the past two years, the teams have worked hard to improve communications and consultation, to the point where Senator Tkachuk, with whom I met this week, informed us that, in his view, consultation had improved and team work was effective.

The first thing we did in Public Works was to ensure that we had better relations and better coordination between the House of Commons, the Senate and ourselves. We have obtained much better results, and this will become apparent to you over the next few weeks when we develop our projects further.

In order to respond directly to the Auditor General's recommendations, we went to see what was done in other countries. Every country has its own style of governance. We visited England, the United States, Scotland and Norway. We wanted to understand their type of governance and see what they did to ensure that each party understood each other and knew who did what. We have done this analysis and now we are seeing how the central agencies — those responsible for the  "machinery " — are reacting to it.

We have taken a two-pronged approach. First of all, we are ensuring that communications within our teams are enhanced — as confirmed by the Sergeant-at-Arms and Senator Tkachuk — and, from the technical perspective, we are meeting the objective of understanding how things are done in other countries and discussing those matters with the central agencies. We are now waiting to hear how the central agencies will position themselves with respect to this issue. As far as the machinery is concerned, unfortunately the decision does not lie with Public Works but rather with the central agencies.


Senator Runciman: Do you keep a record over a 10-year period, or whatever the appropriate timeline might be, with respect to your track record in terms of on-time completion?

I am saying that, as a modest project, the sidewalk at the east perimeter of Parliament Hill was started, I think, in April. My secretary phoned today to see when it might be completed, and they said the end of August. The heavy tourist season is pretty well shot.

Looking at municipal and other levels of government, when they are putting in new sidewalks, for example, you are not talking about six months to do it. I know that that sidewalk was out of service for about six months last year because of faulty work, I guess, by the contractor.

Still, there does not seem to be any kind of pressure to have some of these projects done in a timely way. That may be why the Auditor General also expressed some skepticism about five years and $5 billion with respect to the precinct rehabilitation. That is an example. Looking at it from my window, I do not think anyone was working on its today, certainly not in my line of sight anyway. It raises questions about deadlines and costs of not meeting deadlines. Would you like to respond?

Mr. Mongeau: Thank you for that question. You always get killed by details. I will look at that sidewalk tomorrow, and I am going to make sure that it is done as fast as possible.

The Chair: Why not tonight?

Mr. Morency: Because I have a meeting right now.

Seriously —

Senator Eaton: It goes along the canal.

Mr. Morency: Yes, I know it is a close part.


I am not able to give you an answer about that specific timeline, but I will look into it.

However, concerning the long-term vision, we work with five-year plans. We assess the work that can be done within a five-year period. We seek the necessary approvals from the government through memorandums to cabinet and then we put in place all the projects through Treasury Board approvals. With Treasury Board approval comes a set amount of money for us.

Over the past few years, we have benefited from a good roadmap. Of course, the devil is in the details, as you showed us tonight. But if we take as an example a project like the Promenade building that you probably know, we had a budget of $83 or $84 million and, in the end, we were able to reduce the costs to $77.5 million. So we reduced the costs.

For the building at 1 Wellington Street, we had a budget of $23 million for the rooms used by the House of Commons and we did it in a year. It was $23 million all at once. There are also the off-site food production facilities, for which we had a $34 million budget; we were able to reduce those costs in the end to $28 million.

We put a lot of care into our daily management. As you know, we are currently doing work on the West Block. These are major renovations, and they are being done on time and on budget.

There is also 180 Wellington Street, the big building. You cannot see it, but the interior is completely demolished; the project will be completed in 2015-2016. We are on track for that deadline. All of these major projects will be completed on time.

The Sir John A. MacDonald building, the former Bank of Montreal, will also be completed for 2014. We started the work with a budget that we will keep to.

We always operate with five-year plans to have better monitoring and to be able to report on a five-year basis. If you gave us a 25-year project, at a certain point, monitoring would no longer be possible. With five-year plans, we can properly monitor things.

Nevertheless, we can still have broken sidewalks and I will look into it.


Senator Runciman: As long as the sidewalk does not take five years.

The Chair: You have invested a lot of your time in that sidewalk.

Senator Runciman: Thank you.

Senator Callbeck: Thank you for coming here this evening.

I want to go back to what Senator Ringuette asked about to ensure I understand it because I find it difficult to understand. This is a project that has been going on for years. In the Main Estimates, we only had $4.7 million, and you will spend $247.6 million. I find it incredible that most of that was not in the Main Estimates. I could see it if it were the other way around.

Mr. Lakroni: As my colleague mentioned, this is a 25-year program, with five-year slices.

In terms of plans, yes, we have plans. We know what work needs to be done when, and the high level of division is well- established. When it comes to funding the appropriation — printing the money and giving it to the project — the project must be defined in much more precise parameters. You have to go to Treasury Board and pass all of the checks and balances. It is not planning; it is crystallizing the requirements. On a multi-year basis, it is done for a given project, but, because many of these projects, as I mentioned, are in the initial stages, we go to Treasury Board and ask for approvals. When the approvals come — past the time to submit the costs to the Main Estimates — that is the time when we come before Parliament.

The second thing is that we do not want to fragment the cost of a project, putting some in Supplementary Estimates (A) and another slice in Supplementary Estimates (B), et cetera. We do cash management, and we align when we have the bulk of the requirements ready and approved by Treasury Board. Then we come to Parliament to seek the funds. That is exactly what happens.

Senator Callbeck: As I said, this project has been going on for years. Here we are this year with only 4 per cent, roughly, in the main budget. Is that the way it has been done in the past? I do not remember that the Supplementary Estimates had such a huge amount.

Mr. Lakroni: I have the records in terms of what is happening in the Main Estimates. Every year is different. It depends on the project in the works.

For instance, in Supplementary Estimates (B) last year, we had $65 million for the parliamentary precinct.

Senator Callbeck: What was the total for the year?

Mr. Lakroni: The total was $146 million for the year so almost half was in the supplementary estimates. However, the year before that, we had almost everything in Main Estimates. That means that the projects for that year were approved on time for the Main Estimates.

Again, on principle, in the Main Estimates, one would expect to see ongoing programs that are predictable, not projects really. However, for programs that are project based, it is normal that you see a difference in terms of when the money is sought. That is when the projects requirements are nailed down.

Senator Callbeck: I just find it to be unbelievable that we get 4 per cent in the Main Estimates.

What about all these programs for identifying savings? I think we have had two strategic reviews; we have had a deficit reduction plan. Has it been looked at under those programs? Were there any savings?


Mr. Mongeau: The work currently being done on Parliament Hill is major work that we have to do quickly because of the state of the buildings. Our main goal is still the Centre Block, the East Block and the West Block. That is our priority.

The team is not huge, but we were lucky this year. Given that our role is to deliver these services in order to accelerate work on the Hill as much as possible, the branch was not affected by the cuts.


Senator Callbeck: The strategic reviews and the deficit reduction plan have not applied to you?

Mr. Mongeau: It has not applied to us this year,  "us " meaning the parliamentary precinct.

Mr. Lakroni: I would like to add that, given that this project is project based — and Mr. Mongeau can talk to the savings — savings that occur in a given project are used within the program. Basically the savings are recycled within the program, as opposed to returned to the fisc and taken back from the fisc. They stay within the program on a multiyear basis.

Mr. Mongeau: I would like to give an example.


For example, completing 1 Wellington Street, where there are four committee rooms, allowed us to empty the West Block all at once rather than in two stages, as was initially planned. Vacating the West Block all at once and sending it to Sparks Street allowed us to start work earlier, and we saved three years of contracts. If you calculate the costs, those three years represent a savings of about $83 million. But we are not reinvesting the saving somewhere else. They are long-term savings for our program.

So our role is to achieve greater savings and find effective solutions, but we are not facing the same reductions that are occurring in other branches of Public Works.


Senator Buth: I am a relatively new senator. I have gone through the Main Estimates and have asked some questions. I want to come back to what we have been talking about.

I am from the West and I do not think a lot of westerners get the opportunity to come to Ottawa. Frankly, every time I walk out of Centre Block and see the Peace Tower and watch everything being done in terms of the West Block, I think this is extremely important. This is a jewel for Canada. It is very important for tourism and I am really happy that it is happening, as a Canadian.

Under Main Estimates, I ask if this project is on time and on budget.


Mr. Mongeau: All of our current projects — and I will look into the sidewalk project tomorrow morning when I get to work — that have been approved by Treasury Board, namely 180 Wellington, once again, the West Block, the Sir John A. Macdonald building and the other buildings I referred to earlier, are on time and on budget or under budget.

This exercise is done internally, we have experts that audit the costs. We also have private architects who look after the design, international Canadian companies who do the cash accounting as well. And we hire what we call an  "outside third party " to examine construction costs when we prepare our plans and specifications.

So we have a triangle of three separate areas of expertise, who review our costs before we begin the tender process, in order to ensure that we have the best costs and the best designs.

Our role is to ensure that we have the best costs on a daily basis. We have good engineers and good architects monitoring the project. We obtain expertise from the private sector to assist us. And I can confirm to you that all of the long-term vision projects are on time and on budget.


Senator Buth: I am not too concerned about the sidewalk.

Mr. Mongeau: I am now.

Senator Buth: Maybe you should not be too concerned about the sidewalk.

If someone from Manitoba asked me how much it is costing to renew Centre Block, East Block and West Block, where would we find that information? What is the scope of the planning process? Main Estimates, Supplementary Estimates (A), (B) and (C) are not easy to understand. Where do we find that information about what Canada expects in terms of renewal of the parliamentary precinct?


Mr. Mongeau: There was an article in this week's Hill Times and we provided the reporter with all of our costs and timelines. Since it is difficult for us to announce good news, we are always very pleased to be able to provide all of this information when reporters ask us for it.

We do not really have a website indicating costs incurred to date. The information is available internally because we are the ones monitoring the costs. I cannot give you an address where you will be able to find all of the costs, but I could refer you to the article in the Hill Times, which is very good.

All of the budgets, however, are in the public domain. For example, if you look at the West Block, we know that, according to our cost estimate, as presented to the Treasury Board, the work will cost approximately $863 million. This amount includes consultant fees, Public Works salaries, contingency funds — we have set aside money for a contingency fund because we are dealing with old buildings — and the cost of construction, the amounts that will be paid to the contractor.

This could give you the impression that this is an extremely expensive project and, indeed it is. But these are projects that will move slowly. Each rock and stone removed by the masons must be cleaned and replaced. If the stone has rotted, a similar one has to be made to replace it. This takes an extremely long time.

The overall budget for the Sir John A. Macdonald Building is $99 million; again, that includes all of the costs.

The budget for 180 Wellington is $425 million. All of these figures are available publicly. We are prepared to provide the figures and that is what we do with the reporters.

Unfortunately, I do not have a website that shows how costs have evolved. I apologize for that; it is something we might eventually do.


Senator Buth: Could you provide a two- to four-page briefing note in terms of the entire scope of the project? You just finished doing an interview for The Hill Times.

Mr. Mongeau: If you wish. A two-pager explaining where we are?

Senator Buth: With the parliamentary precinct renewal.

Mr. Mongeau: It could be a four-pager.

Senator Buth: You could do six.

The Chair: The overall plan and where you are within the plan.

Senator Buth: Just the highlights.

Mr. Mongeau: Maybe I am taking too much time, but we are working on five-year plans. I cannot tell you everything that will be done over the next 20 years because we are getting the approval on the basis of five years.

Senator Buth: The next five years would be great.

Mr. Mongeau: I could give you what we are doing right now, which would be good.

Senator Buth: Thank you.


Senator Hervieux-Payette: This would not be a good meeting if I did not talk about the Jacques Cartier and Champlain bridges, do you not think? When you look at the cumulative amount at the end, and when you look at it at the start, it is still $7,905,000.

I know how big both bridges are; one of them — actually, both of them — I can see from my window, and I believe this is a very modest budget.

In terms of the critical path for building the Champlain Bridge — because I think we will either build a bridge or a tunnel, regardless — how far along are we in the process of finding a solution? Are we really talking about building a new bridge? This says that we need to start planning for a new bridge, even while the renovation of the current bridge is still going on.

Mr. Morency: The money was requested from the Jacques Cartier Bridge Incorporated because the department was asked to plan for the construction of a new bridge. At the beginning, the money had been given to the Jacques Cartier and Champlain Bridges Incorporated, but the government then decided that it wanted the Department of Transportation to take over and look after the planning process. So this money was part of the amount given to the incorporated entity, and it will now be transferred to expenditures under the supplementary estimates to help with the planning for this year.

Senator Hervieux-Payette: How are we doing in terms of planning, specifications, the preliminary study and all of the other phases? I used to be with SNC, so I know a little about how this works, and I would like to know where things are standing. Are we still in the initial phase? Have we defined anything? Because as it now stands, we are talking about $7.9 million. Will it be handled internally or by outside consultants?

Mr. Morency: We have put together a project team. We are paying the department's expenses to start the preliminary work until authorization is given to transfer that amount back to us, or until we are reimbursed. The team will be made up of a combination of employees from Transport Canada and consultants and experts, who will help us with the planning. We have not built a bridge in many years, and this approach will enable us to count on the right experts.

Senator Hervieux-Payette: Will it take you 10 years to think about how to deal with the bridge, or is there a timeline for finishing the specifications and proceeding to tender?

What are the phases of this project? I would like to know where we are starting from and how we will proceed in the coming years to see this project through to the end.

Mr. Morency: I believe that the department announced that the intention was to have a new bridge built within 10 years. Of course, the preliminary work will be very important, but we got onto it right away. A project is already under way, and we need this money to keep our work going forward.

Senator Hervieux-Payette: On another subject, you mentioned 1,819 buildings. I would like to know how many buildings we own and how many we are leasing. What is the breakdown?

Then, when you refer to the $497 million for capital expenditures, buildings and infrastructure, does that include construction or maintenance, or both?

As well, 19,000 federal public servants are being laid off. That represents 8 per cent of all employees. Will that result in vacant space everywhere, or will new arrangements be made at that time? When you lay off 50 people, it seems to me that it has to make a difference somewhere. Will we be stuck paying rent for years to come? How are you going to reorganize leases and office space? Since there will be 19,000 fewer employees, surely it will have to affect the use of space?

Mr. Lakroni: PWGSC's contribution to the government's deficit reduction plan is about $177 million; 70 per cent of that amount, about $127 million, involves real estate, as laid out in the federal budget. For the most part, we are undertaking two activities. First, over seven years, we will consolidate the space made vacant because of employee cutbacks in the federal government. We have communicated with departments and worked with the Treasury Board Secretariat to estimate how much space we will be able to save.

Second, we will reduce the physical space per employee to match industry standards. The reduction will be about 10 per cent; this will generate ongoing savings of about $127 million to $130 million over seven years.

Senator Hervieux-Payette: What about ownership versus leasing? When you are an owner, you have to do the maintenance; but when you lease, you normally pay rent over a given term. When you are an owner, there is no term.

Mr. Lakroni: Our real estate strategy is about 50 per cent leasing and 50 per cent ownership, depending on the region.

Generally speaking, when we need to find space for public servants, and if it is for the short term, we prefer to lease. For long-term needs, we either lease to own or build. Leases are taken into account in our calculations. We will not renew leases as they expire, and we will do things on a smaller scale. We have a plan to achieve the forecasted savings.


Senator Eaton: I have questions about the Port of Churchill. This money has come into being since the legislation was passed to make the Wheat Board no longer compulsory. Are steps being taken to help the Port of Churchill be sustainable? Granted, there will be a continuance of shipping of wheat, but are there other projects in mind that you know of to help the port thrive?

Mr. Morency: In these supplementary estimates, we are asking for $1 million this year to contribute to the Port of Churchill for the undertaking of various repairs and maintenance at the port to ensure its continued viability, given the fact of the decision with respect to the Wheat Board. It is a program that we are only seeking $1 million for this year, but it is a three-year, $4.1 million contribution program. We are seeing what we can do in that regard.

Senator Eaton: Is that Transport's contribution?

Mr. Morency: Yes. There could be others that may have some interest but ours are primarily around the port infrastructure.

Senator Eaton: What about the railway leading to the Port of Churchill?

Mr. Morency: I would not be in a position to comment on that.

Senator Eaton: There is no money to increase, subtract or do anything for tourism or shipping to the Arctic or anything of that kind.

Mr. Morency: No.

The Chair: Do we know who owns that?

Senator Eaton: It is private, but at the time of the Wheat Board legislation, Mr. Chair, there was talk about making it a major port to ship to the Arctic.

The Chair: I recall that.

Senator Eaton: There is nothing.

Mr. Morency: Not in our specific budgets.

I am informed by a colleague that there is a project with respect to rail currently underway where Transport Canada is contributing $20 million towards looking at the rail line into the Port of Churchill.

Senator Eaton: To make it more efficient.

Mr. Morency: Yes. We are working with the province in that regard.

The Chair: Are we likely to see that in another supplementary estimate?

Mr. Morency: If we say we already have a contribution agreement, then it is in our Main Estimates already.

The Chair: It is hidden away. From our point of view, we would not have seen it as a separate number but we will look for it, but it might be in operating?

Mr. Morency: Otherwise, I will provide the committee with the specifics around that.

The Chair: That is the end of round one. We are now into short questions.

Senator Ringuette: VIA Rail, $21.5 million for capital funding. What was it in the past years? Was it approximately the same amount?

Mr. Morency: No, this is part of a larger amount of money that was given to VIA Rail for major projects. Back in Budgets 2007-09, VIA Rail Canada was provided with $903 million for capital funding. VIA Rail has been spending up to now about $690 million but they had some projects last year that were subject to delays. These supplementary estimates are taking 21.5 of that allocation into this year to complete those projects they were working on.

Senator Ringuette: That is the capital but the operating funds that you usually grant to VIA Rail, how much has it been cut? Now they are threatening to cut services to Atlantic Canada and eastern Quebec.

Mr. Morency: They get on average about $166 million a year for operations and they have not been cut to date on that. That was in their appropriations at the start of year.

Senator Ringuette: Are you saying that VIA Rail has not been cut in their appropriation?

Mr. Morency: VIA Rail, I could mention, was part of the portfolio within Transport that was under the strategic and operating review exercise. We had four Crown corporations and a department that were subject to that. VIA Rail was asked to come up with efficiencies in terms of its operations, and it is currently in the process of working out the details in the context of how it will be able to meet its commitments that were announced in the budget with respect to the efficiency cuts.

Senator Ringuette: You are saying that the cuts that VIA Rail are saying publicly that they are looking into are cuts that have not yet been announced in their operation funds from Transport Canada.

Mr. Morency: Yes.

Senator Runciman: The pension shortfall is $150 million, and the government, through these estimates, is contributing $68 million to partially address that situation. Based on a press clipping, there is one pensioner for every one worker. That seems to be an unsustainable situation. I was reading this as well. It says that the fund was in surplus before 2008, but existing regulations prohibited contributions, so I am assuming if the fund is in surplus, no contributions are made to the fund.

What else is being done to get the pension plan back in balance other than simply putting taxpayers' money into it? Are any changes being contemplated?

Mr. Morency: VIA Rail itself has been undertaking work to reduce its pension costs by $192 million over the last five year by looking at early retirement provisions and such things. You will know that pension solvency is a big issue with respect to not only private corporations but to Crown corporations as well. They had an obligation to infuse $68 million into their pension plan this year to make sure they were meeting their solvency payments. Normally they would fund that from operations. Because VIA is challenged in terms of the cost of operations, the government has decided to help them with respect to the pension fund.

Senator Runciman: Nothing is being done with respect to the regulations. I can see a cap with respect to surplus and at that point contributions could be frozen for a period of time. Once you are in surplus, is that how the regulations are worded? You are simply in surplus, no contributions?

Mr. Morency: I am not an expert in terms of the regulations per se, but I know that in prior years when interest rates were very high, companies were able to take what they called pension holidays in terms of premium, which has not been the case over the last several year due to the recession and the fact interest rates are so low. In fact, many both private and public corporations are finding themselves now in situations where under a solvency situation they have to amplify their payments. They usual take those out of operations, which is a considerable cost to operations.

Senator Callbeck: Page 94 of Supplementary Estimates (A), the second item down, capital expenditures including contributions to provinces or municipalities, states that over $6 million is being transferred. What is being cut? What is Transport cutting that they can transfer $6 million?

Mr. Morency: This is a capital component associated with our transfer of money to Shared Services Canada, which was the new department created. In our supplementary estimates you will see $12.1 million and that we are completing our contribution to them. We had a $28 million levy, as you can see, along with 42 other departments, to create this new organization. Part of what we are transferring to them is capital funds and operating funds. The $6.2 million represents capital funds, which is money the department would have spent on an annual basis to do what Shared Services Canada is now doing on our behalf.

Senator Callbeck: In other words, it is not cutting out money that would be going to the provinces or municipalities.

Mr. Morency: No. This is more to internal government and the provisioning of email, data centres and other likes that are being now offered through one organization in government.

Senator Callbeck: I have one question with respect to Public Works. In the budget there is a provision to repeal the Fair Wages and Hours of Labour Act. I was told that that piece of legislation also sets a minimum standard for work performed on federal sites. Is that right?

Mr. Lakroni: I am not aware of such provision so I cannot confirm. It is something I could check and follow up on.

The Chair: Could you let us know as soon as you can?

Mr. Lakroni: Absolutely.


Senator Hervieux-Payette: As for the capital expenditures, I was wondering how many projects they include. For every project, you only become involved in planning and the relationship with outside contractors. Do we not have any employees who do construction?

Mr. Mongeau: In fact, we do not have anything to do with construction. We use general contractors or construction managers. For example, when a project is being developed, we hire architects and work with them to make sure that the work is being done well. We then put out a call for submissions and a general contractor does the work. We have quality control experts, but we are not in the construction business.

The only caveat to that is that we have small workshops in Ottawa, with people who help us on Parliament Hill. They do small jobs, mostly within the National Capital Region. Generally speaking, our role is not to do the building ourselves, but to make sure that any construction is done well.

Senator Hervieux-Payette: Is Public Works responsible for construction work involving National Defence?

Mr. Mongeau: For National Defence, actually, Defence Construction Canada does the work. Defence Construction Canada reports to our minister, I believe, but it is arm's-length, as they say, so it is independent. We do not do construction work for National Defence.


The Chair: On behalf of the Standing Senate Committee on National Finance, I would like to thank you very much for being here. You have helped us with Supplementary Estimates (A) and we only kept you five minutes over your time. We appreciate your help.

The next panel consists of witnesses from Natural Resources Canada and Aboriginal Affairs and Northern Development Canada.

We are continuing our study of Supplementary Estimates (A) for the fiscal year ending March 31, 2013. Our committee began consideration of the Main Estimates 2012-13 in early March. The consideration is ongoing and will continue throughout the year. However, this constitutes our second meeting on Supplementary Estimates (A), which supplement the Main Estimates.

In our second session this evening, we are pleased to welcome from Natural Resources Canada Mr. Serge Dupont, Deputy Minister; and Thérèse Roy, Acting Chief Financial Officer. We are also pleased to welcome officials from Aboriginal Affairs and Northern Development Canada: Michael Wernick, Deputy Minister; and Susan MacGowan, Chief Financial Officer.

I understand each department will have a few introductory remarks. Then we will go into a question and answer session, and I expect each senator will have approximately six minutes for questions and answers.

Michael Wernick, Deputy Minister, Aboriginal Affairs and Northern Development Canada: Thank you, Mr. Chair. It is a pleasure to be here. I was with the committee not long ago, going through the Main Estimates, so the opportunity to talk to you about Supplementary Estimates (A) is a welcome one.

This is $159 million in investments. It comes on top of $7.8 billion approved in the Main Estimates, bringing the total funding to the department to approximately $8 billion so far, and we do anticipate there will be further supplementary estimates in the fall because of the budget.


These estimates include some significant investments that will enable progress towards an improved quality of life and economic prosperity for Aboriginal peoples and northerners.

More than 90 per cent of the supplementary estimates, or $150 million, will go to fund the settlement of specific claims. Negotiated settlements resolve outstanding legal obligations of the Government of Canada and enable First Nations to access the resources they need to realize their full potential.


There are several other smaller items, as I am sure you have noticed. Also included is $3.4 million, which supports the implementation of a number of Yukon First Nation self-government agreements. The implementation of these agreements will have a positive impact on the lives of these communities and on all Yukon residents. Another $1.6 million is allocated towards the implementation of the Sechelt Indian band self-government agreement, which is a historic agreement concluded more than 25 years ago in the Province of British Columbia. These supplementary estimates include $2.6 million for the First Nations and Inuit Youth Employment Strategy. This is a program that helps provide work placement opportunities for youth living on reserve, particularly focused on skills in the field of information and communications technology.

There is a $2 million item that is for the design and build of a new First Nations Child and Family Services information management system, which is, as the title says, a system designed to track and manage very large investments that are made in the funding of child and family services programs.

The final amount I would draw your attention to, related to my colleague's work, is the $1.4 million this department was allocated. It supports our particular role in the review of large resource projects, part of the larger frame of the Responsible Resource Development Initiative, which was announced recently.

Those are the spending investments that are particularly indicated in these supplementary estimates.

Briefly, I would like to touch on the important role that legislation has also played, and I would want to note that much of this legislation was initiated in the Senate of Canada. I will quickly cite Bill S-6 — which many of you will be familiar with — on electoral reform. It is now awaiting second reading in the House of Commons. Bill S-8 concerns drinking water standards and Bill S-2 concerns matrimonial property. These and other legislative initiatives are all part of a larger agenda aimed at removing obstacles that prevent Aboriginal people from sharing equally in the prosperity of our country.

I will stop there in the interests of time and to take as many questions as possible on this or any matters that the committee has pertaining to supplementary estimates.

The Chair: Thank you. I will now go to Deputy Minister Dupont.


Serge Dupont, Deputy Minister, Natural Resources Canada: Honourable senators, I had had the opportunity of appearing before you in March on Natural Resources Canada's main estimates. I therefore welcome your invitation to present Supplementary Estimates (A).

Let me take a moment to briefly describe the proposed supplementary estimates for the Natural Resources Canada portfolio. Then I would be pleased to take your questions.

Under its supplementary estimates for 2012-2013, it is proposed that Natural Resources Canada increase its spending authorities by a net amount of $8.7 million for this fiscal year. There are also a number of transfers proposed under these estimates.

The estimates include $73.2 million for ongoing implementation of the Port Hope Area Initiative to clean up historic low-level radioactive waste sites in the municipalities of Port Hope and Clarington; $5 million for a Government of Canada advertising campaign relating to the importance of Canada's natural resource industries; $3.4 million to support and modernize the regulatory system for major resource projects, essentially our renewed funding for the Major Projects Management Office.


Turning to the transfers, the proposed adjustments include $9.8 million from National Defence for the Canadian Forces Arctic Training Centre in Resolute Bay to enhance efforts to make efficient use of infrastructure that we share in Resolute in Canada's high Arctic; $30,000 to Industry Canada for an initiative called Global Navigation Satellite System Coordination Office; and $1 million to Public Works and Government Services Canada to support the consolidation of pay administration services in Miramichi.

These amounts are largely offset by the re-profiling of $81.7 million of previously authorized monies under the Clean Energy Fund. The net increase in spending authority is therefore $8.7 million.

I should also touch briefly on the proposed estimates for Atomic Energy of Canada, Ltd. as part of the Natural Resources portfolio. The estimates show funding of $166.2 million, which is largely for the nuclear laboratories division, to ensure continued supply of medical isotopes and to meet regulatory requirements for health, safety and the environment.

Honourable senators, I can assure you that Natural Resources Canada manages its financial responsibilities with a keen sense of discipline and with the knowledge that our work contributes to Canada's economic growth and prosperity. We will continue to support the government's key priorities through our commitment and vying to improve the quality of life for Canadians by creating a sustainable resource advantage for Canada.

The Chair: The voted appropriation of $160 million for Atomic Energy of Canada is the Chalk River and isotopes? It has nothing to do with the renewable projects?

Mr. Dupont: It is all to Chalk River and to the nuclear laboratories division, except for $6 million, which were workforce adjustment costs related to the divestiture of the reactor division to SNC-Lavalin.

The Chair: Nothing here with respect to outstanding liabilities for repair jobs being done prior to the sale?

Mr. Dupont: No.

Senator Eaton: Mr. Wernick, can you tell me about the monies that go out of your ministry? We have heard a lot of complaints about education in Aboriginal communities, how we are not spending the same amount of money per child as we are in the rest of Canada.

Do you direct that specifically to education? Is there a fund within the monies you transfer that is specifically geared to education, or does that largely depend on how each Aboriginal community chooses to spend the money?

Mr. Wernick: Briefly, there is a stream of money that flows to First Nations for K to 12 education. It is about $1.4 billion. This is set out in the Main Estimates in the report on plans and priorities. There is an additional approximately $300 million that goes to fund post-secondary education.

Senator Eaton: It is focused, streamlined and directed towards that?

Mr. Wernick: Yes. In fact, there is additional money that goes to the building of schools and physical infrastructure as well.

Senator Eaton: How far behind is an Aboriginal child compared to a non-Aboriginal child now?

Mr. Wernick: In what respect?

Senator Eaton: We are told that we do not spend the same amount of money per child.

Mr. Wernick: I am not sure that is accurate. There are lots of ways to slice and dice the money. If you took the raw numbers and divided it by the number of children enrolled in school, the numbers are extremely comparable.

The problem in First Nations education is not the lack of money; it is the lack of structure, like school boards, and the lack of legislation.

Senator Eaton: It is governance?

Mr. Wernick: It is the structures around the education system that would support the classroom teacher, which is why the government made the commitment to pursue putting First Nations education on a firm legislative base during this Parliament.

Senator Eaton: Thank you very much.


Senator Eaton: Mr. Dupont, can you tell me a little bit about the $9.8 million that you are spending in the Far North?


Is it meant to enhance efforts to make efficient use of infrastructure?


Mr. Dupont: Essentially these are expenses for the construction of a larger platform at Natural Resources Canada Resolute Bay. The Department of National Defence is involved for two years essentially building a new wing on the building and a new storage wing. It is an arrangement between the two departments that is extremely successful because researchers are mostly there in the summer.

DND wants to do its exercises in the winter. We share infrastructure and that means better performance for this world-class facility in Resolute, ensuring good logistics for all Government of Canada activities, specifically science- based activities in the North.


Senator Eaton: How much more expensive is it to build in the Arctic than it is here? Is it 10 per cent or 20 per cent?

Mr. Dupont: Public Works and Government Services Canada is basically the authority that manages the project from that perspective.

Senator Eaton: I should have asked the last panel.

Mr. Dupont: I would be happy to get the answer for you. They would be the knowledgeable parties.

Senator Eaton: Thank you very much.

The Chair: I wonder if you can help me. I am reading at page 81 of the Department of Natural Resources Canada. It is the funds available under the Clean Energy Fund. If you could explain that, it looks like you have moved over $80 million from vote 10 to vote 1, about halfway down the page,  "Internal reallocation of resources . . . — To reduce the amount of new appropriations required. " You are putting into operations $80 million that was previously in vote 10. Is that correct?

Mr. Dupont: Correct. In a way, this is how the system works with the Treasury Board. We have those monies earmarked for the Clean Energy Fund. We have asked that these monies be re-profiled to future years because they are monies that will be engaged in partnership with the private sector on certain clean energy projects, including carbon capture and sequestration.

It turns out we do not need the money this year. Rather than authorizing us new gross amounts of money, they are indicating where it is we have new authorities, and they are drawing from that amount that we do not need this year to reduce the net new authorities, if you wish, to the $8.7 million that I mentioned earlier.

The Chair: Then $80 million is moved over, correct?

Mr. Dupont: Correct. That is right.

The Chair: Then if you go down to the heading  "Explanation of Funds Available (dollars), " it looks like vote 10 still has $1.3 million there.

Mr. Dupont: The $1.3 million is necessary. That is related to the Port Hope initiative. There is another piece that goes to that. That is essentially a transfer program to households or to communities in Port Hope related to the project.

The Chair: That was also under the Clean Energy Fund?

Mr. Dupont: No, it was not. It is the same mechanism whereby it is a separate kind of authority for which we require funding. Rather than giving us new funds, they are drawing from funds that were previously authorized that are actually re-profiled now.

The Chair: You are taking both of those out of the Clean Energy Fund that had been allocated, and now you are moving them into other —

Mr. Dupont: That is correct for this year technically, but the $80 million that is actually for the Clean Energy Fund is pushed out to future years.

The Chair: I think I understand that a bit more now. I appreciate that.

Senator Buth: I want to go back to the ecoENERGY fund, which I asked questions about in the Main Estimates. I asked whether the $500 million that has been allocated for biodiesel was actually going to be expended and whether or not there was a review of those projects.

I am continuing to hear from constituents that there are projects that will not go ahead under those funds, and they are waiting for the reallocation of those funds from projects that will not go ahead to projects that are sitting in the queue. There is a lot of frustration within the biodiesel industry in terms of ensuring they get the allocation that was set when this project was essentially announced in the program.

Where is the review of projects at? Part of this port is for the biodiesel industry in order to meet the 2 per cent renewable fuels objective. Will we meet that? Where is the funding at?

Mr. Dupont: The 2 per cent, in terms of meeting the target, is challenged at this time because of some economic conditions related to this industry. There are a number of projects that we hope will still come to fruition. They have until September 2012 to build.

We are not taking new applications to the program. The application deadline was March 31, 2010. We will have to ascertain by September 2012 where we are vis-à-vis the program and how much of the target in terms of capacity the program will have facilitated. We had contractual commitments to bring into production capacity equivalent to 500 million litres of diesel per year. That was the target. The question now is whether this production will actually come on stream. Will the capacity actually be built by September 2012 so that it is coming soon, and, where the capacity is built, will production be closer to capacity?

I think there will be a gap, senator, and I guess the government will have to reflect on the way forward and whether other kinds of measures are required in order to get closer to the target. I do not have the definitive numbers at this time.

Senator Buth: If a plant is not under construction now, it will not be producing in September.

Mr. Dupont: That would be correct, yes.

Senator Buth: Are there projects like that right now?

Mr. Dupont: There are projects that, right now, we do not expect will be built by September 2012. I do not have those definitive numbers with me.

Senator Buth: Is there a reason, then, why those funds cannot be reallocated to projects that are ready to go?

Mr. Dupont: We are operating under the parameters and rules of the program as set out by Treasury Board. In early fall of 2012, we will basically have to take stock of where we are and then determine the way forward.

Senator Buth: What happens to the dollars that are left over in September of this year because there has been no build?

Mr. Dupont: Depending on the government's decision, the money could be re-profiled to future years. If there is an allowance for additional contracts to be signed, that may require policy and funding decisions. Absent that, the monies simply lapse. They are not then allocated to those endeavours. I guess what I am saying is that there are still decisions, going forward, with regard to the utilization of monies that will not go to the projects that were initially contracted and that were in line with the target. We had provided a response to the committee further to my appearance that shows that we have funded for capacity of 504 million litres per year of biodiesel. Again, we will need to ascertain where we are within a span of a few months.

As I said, even where we have capacity, a number of producers are not producing to capacity. Therefore, there is under spending in the program.

Senator Buth: Are you supportive of re-profiling those dollars in terms of new projects going forward?

Mr. Dupont: Those are decisions that the government has to make, senator, and not so much a matter of my opinion.

Senator Buth: Thank you very much, Mr. Dupont.

Senator L. Smith: Mr. Wernick, I have a done a little reading — and that is probably dangerous for me to do — on the Department of Aboriginal Affairs. Can you give us a high-end summary of your department? You have a powerful and important role as a deputy minister, but, concerning the $8 billion, where does all the money go? Where are the major items? Where are we with this particular animal because it is very important to our country? Obviously, the role that you play and the powers that you have as a deputy minister are fairly important.

Could you give us a rough overview of that $8 billion and your plan and your priorities?

Mr. Wernick: I will throw myself on the mercy of the chair because this is off the topic of the supplementary estimates, but I am willing to take the question.

The Chair: If you can.

Mr. Wernick: It is a big topic and I appreciate the interest.

If you thought of our department as delivering the services that the provinces deliver plus those that the municipalities deliver, except that we do not really have any of the legislative underpinnings and governance, you get an idea of what we are involved in. Most of the actual services to about 600 reserve communities are delivered by band governments. They run the schools, the water plants and that sort of thing. Our principle role is a funding one. The money flows from Parliament through us to recipients, and we try to get some results out of that. It is a lot of contribution programs and contribution funding.

The other large role that we have on the Aboriginal side of the department is in negotiation and implementation of treaties and land claims agreements. We have agreements that we have settled, and we have implementation obligations. We have places where treaties have not been reached, and we are trying to negotiate them. In many places, people are trying to upgrade from basic land claims to self-government agreements. That is a big part of it.

We have a third set of activities, the vestiges of the Indian Act, which we are stuck with. We have to register people as Indians as they are born, adopted, married and so on. We keep the legal underpinnings of the reserve land system, land registries and lots and lots of land transactions require the minister's approval. It is an archaic world, and we are trying to find our way through into more modern structures there.

I think those are sort of some of the highlights. We have, temporarily, quite a number of people working on the Indian residential schools agreement, which the government reached in 2007. We are processing and adjudicating individual claims under the settlement agreement, and we are a little more than halfway through the implementation of that.

The northern part is quite important. A lot of the overall orchestra leading of the government's relationships in the North are done by my minister. Other departments have northern activities, but sort of the backbone of the government's relationship with the three Northern Territories flows through our department as well.

There is, on our website, a PowerPoint breakdown of where the $8 billion goes, which we hope is a little clearer than the way some parliamentary documents are drafted. We would certainly be happy to take any policy or program questions that flow from that. The bulk of it is for province-like programming.

Senator L. Smith: What is the most important priority that you have in dealing with your department?

Mr. Wernick: I think that the theme that the government has struck, which I am personally very supportive of, is to see what we can do to get Aboriginal people, on or off-reserve, into the labour force and into the economy to create real economic activity in or near their communities, to get people into jobs to give them the revenues that come from earned income, to create revenues for communities and so on. The biggest problem is a dependence on transfer payments from other governments and a dependence on income programs for individuals. We do our best with that sort of the thing, as do other departments, but there is a massive opportunity because of the growth of the resource sector and the fact that jobs will be all over the country, from coast to coast to coast. This is the best opportunity we will have ever, arguably, to get Aboriginal people into the labour force and into the economy. That is kind of a hat for most of what we are doing. I could go on at some length, but I will not.

Senator L. Smith: Senator Eaton asked about education and the statistics, with the graduation rate around 57 per cent. I think these are kids who, by the time they have turned 20, have graduated from high school. This obviously has to improve. There have been complaints that there is not enough money being invested in education. You mentioned earlier that there is an issue of the system itself, the teachers and getting the equipment.

You have seen this for some time. What needs to be done to improve that situation so that we can get these people into the workforce and so that they can be major contributors to the development of the North and of society?

Mr. Wernick: It is another very big topic. K to 12 education and getting people through high school would probably be the most important thing we could do because, if people have high school diplomas, a lot of doors open up. If they do not, a lot of doors close.

There is a pretty strong consensus on what needs to be done. I would draw your attention to a report from the Standing Senate Committee on Aboriginal Peoples, which has a fairly clear four pillar recipe or prescription. It is very similar to the findings and recommendations of the National Panel on Education that the government struck with the Assembly of First Nations. They have landed on certain things. It will come down to teachers in front of a group of kids and giving them all the support to be effective teachers. That includes safe, clean schools and access to the Internet, teaching aids and curriculum and all that sort of thing.

Funding is part of the answer, but funding without all of those other pieces would not change the results very much.

Senator L. Smith: I know this probably involves a huge answer, but where are we are our land claims? If we went from zero to 100 per cent of where we have to go, where are we and how far do we have to go to complete claims? There are claims that date back to 1740 in Montreal and Kahnawake. The chief says that they have been here for 300 years waiting and they can wait for another period of time. What is your sense of urgency and how will this unfold?

Mr. Wernick: That is another big topic you have chosen. There are two kinds of claims, one of which results from never having had a treaty. Europeans arrived; indigenous people lived there; and the issue of lands and resources and other things was never settled. Most of British Columbia is unresolved and good chunks of Quebec are still unresolved, as you know. Parts of Labrador are unresolved, as well as parts of the Northwest Territories are unresolved. We are trying to get a land claims settlement, that defines land and resources issues in particular.

There were treaties all across the Prairies from the Ontario border to the Rocky Mountains. They are treaties 1 to 11. The issues that arise there are: Were the treaty obligations honoured? Do we still have obligations to meet? Those can be land entitlements, services and all kinds of things.

Specific claims, which I can link to the supplementary estimates, are essentially assertions or allegations that the government broke one of its legal obligations in the past, such as a band was coerced out of land or cheated out of its monies. There was a breach of the lawful obligation. There are about 800 of those in the system now that we are aware of. We are chunking our way through those.

Senator L. Smith: The $150 million will cover approximately how many of them?

Mr. Wernick: They can range from $100,000 per settlement on a small issue to $350 million per settlement, which is one that we reached last year. It is not a simple kind of math. We hope that in the coming fiscal year, which is the one we are here to talk about, we could reach between 60 and 80 settlements of various sizes.

Senator Callbeck: Thank you for coming here. I have a question regarding Aboriginal Affairs and Northern Development Canada on the youth initiative that you spoke about. Does that replace another program or is it completely new?

Mr. Wernick: It is a top-up. Youth employment funding was allocated through various initiatives. We got a slice of it to use in the North with indigenous communities. It is being used with northern partners largely around internships and training opportunities around the use of the Internet.

Senator Callbeck: It is a top-up to the amount in the budget.

Mr. Wernick: Yes. It is an additional $2.6 million, senator. It is roughly $100,000 in the Atlantic; about $300,000 in Quebec, and so on. A piece of it is up north as well.

Senator Callbeck: The program exists and this is extra money.

Mr. Wernick: Yes. That is it my understanding.

Senator Callbeck: I notice on vote 10 money is changing from contribution to grant. Why is that?

Mr. Wernick: Much of the funding that flows through self-government agreements is in the form of a grant. It is a straightforward grant for a specific purpose — most of the funding that goes into our province, like programs or contributions. It is just the way it is set up.

These are specific cases of communities that, if you would, graduated from our regular programming to self- government funding. The funding that used to take the form of a contribution is now in the form of a grant.

Senator Ringuette: My first question is to Mr. Dupont on the Port Hope cleanup. Could you give us some detail about what is being cleaned up?

Mr. Dupont: This waste has accumulated in communities in Port Hope. It goes back basically to the immediate post- war period and has accumulated over a number of years. It is a 10-year cleanup program that will cost $1.3 billion over this period. It is a massive cleanup of major contamination. Now, it is low-level radioactive waste.

Senator Ringuette: What caused it?

Mr. Dupont: It was caused by the operations of the former Eldorado Nuclear Limited in the treatment of uranium at the time.

Senator Ringuette: That waste was created by a Crown corporation.

Mr. Dupont: Yes. It is now Cameco. Those wastes accumulated, and at the time they were essentially treated in a primitive manner and placed into different kinds of waste sites that eroded over time. There were also some traces of radioactivity in other parts of the community and in people's backyards, ultimately. Studies have demonstrated that this is not a direct, immediate kind of impact on the health of the people of Port Hope and Port Granby. Nonetheless, it is a legacy liability that must be cleaned up. The tonnes and tonnes of waste must be picked up in trucks and placed into modern facilities. We have gone through environmental assessments for two facilities. We are going through detailed design and actually building the two facilities to modern standards to contain that waste. That will include digging up a lot of soil and waste that had accumulated over decades.

Senator Ringuette: I understand that you are getting this year's funding to do part of the necessary cleanup. What company is doing the cleanup?

Mr. Dupont: The governance is assured essentially by a committee that includes people from Natural Resources Canada, and we fund the effort. Public Works and Government Services Canada is associated with this and Atomic Energy of Canada's Low Level Radioactive Waste Management Office is also working in the overall coordination of the effort. Much of the work will be tendered to contracts on a competitive basis.

Senator Ringuette: Wait a minute. Have we not sold Atomic Energy Canada to SNC-Lavalin?

Mr. Dupont: The reactor division was sold but there are still 3,300 people with Atomic Energy of Canada Ltd., the majority of whom are in Chalk River, Ontario. They continue to serve as the foremost source of knowledge on nuclear matters in Canada regarding things like waste management and impacts of radioactivity.

Senator Ringuette: They are the management group.

Mr. Dupont: Exactly. They are in the management group to help us to coordinate and ensure that this is done with proper technical standards. Of course, it is all overseen as well by the Canadian Nuclear Safety Commission and must meet provincial standards in terms of the actual outcome.

Senator Ringuette: This is a 10-year effort; and this is year one.

Mr. Dupont: This is year one, when we are really starting construction. There has been a long preparatory phase in terms of going through the environmental assessments and the planning and so forth. We are starting to put the shovels in the ground and do some work. There are some monies in the Main Estimates as well in the amount of $57 million.

Senator Ringuette: You are doing a proper tender process.

Mr. Dupont: There is a proper tender process through PWGSC. I would add that they are working collaboratively with the municipalities, who obviously have a huge interest in the matter.

Senator Ringuette: Absolutely. Thank you.

Mr. Wernick, at our last meeting I indicated my concerns to you with regard to funding for post-secondary education. Have there been any additional funds for our Aboriginal groups that want to pursue post-secondary education?

Mr. Wernick: No.

Senator Ringuette: The people that were in the queue are still in the queue.

Mr. Wernick: If their First Nation puts them in a queue, yes.

To go back to the other question, these funds are managed by First Nations governments.

Senator Ringuette: I understand that, sir, but my question to you at our earlier meeting was whether you were going to have additional funds. Whether it is managed by the department or by the communities is not the issue. The issue is that there are not enough funds in there to satisfy the requests. If you are telling me that the unemployment rate in our native communities is the lowest in Canada, then you might have an argument. However, I do not think that we are in a position to say that the rate of unemployment of Aboriginal people is the lowest in Canada.

Many of them are in a queue to get a post-secondary education in order to get a decent job, so why are we not adding funds to that program?

Mr. Wernick: That is a policy matter for the government. I would not advise them to add money to that program. It is extremely poorly targeted and extremely poorly designed.

Senator Ringuette: Then design one and put some additional money into it.

Mr. Wernick: We would not impose a program design on First Nations. You would be the first to criticize us if we did that. There is no consensus among First Nations on an alternative design for the program.

Senator Ringuette: I certainly remember that they have their own university and funds were cut from it.

Mr. Wernick: If you mean First Nations University, we are allocating them over $7 million this year.

Senator Ringuette: For how many people, sir? How many people are in the queue?

Mr. Wernick: No one is in the queue at First Nations University. That is funding that goes to the operation of an institution which is now formally part of the University of Regina.

Senator Ringuette: Do you know what the unemployment rate is for our native citizens?

Mr. Wernick: I do not know whether Statistics Canada counts that by race.

Senator Ringuette: Do you also know that under Bill C-38 there will be removal of employment equity, which includes employment opportunities for our Aboriginal people with federal contracts, like the contracts in Port Hope, for instance?

Mr. Wernick: I am not aware of that. I am not sure what this has to do with the supplementary estimates.

Senator Ringuette: I understand the difficulty in the department. Thank you.

The Chair: I thank Natural Resources Canada and Aboriginal Affairs and Northern Development Canada.

Mr. Wernick, when will we be able to call it Aboriginal Affairs and Northern Development?

Mr. Wernick: It is certainly styled that way in all the signage. It would require legislation to change the legal name, so you will see that parliamentary documents, contracts and that sort of thing are still signed by the Minister of Indian Affairs and Northern Development.

The Chair: And the estimates are still in the old name.

Mr. Wernick: For money organizations, their legal name and public branding name would be different. We would hope to catch this up in a miscellaneous cleanup bill one of these days.

The Chair: One of the budget implementation bills, no doubt.

Mr. Wernick: That is for the government to decide.

The Chair: We will look forward to that.

Thank you all for being here. We look forward to seeing you on Supplementary Estimates (B)

(The committee adjourned.)