Proceedings of the Standing Senate Committee on
Issue 13 - Evidence - May 27, 2014 - Morning
OTTAWA, Tuesday, May 27, 2014
The Standing Senate Committee on National Finance met this day at 9:32
a.m. to study the Supplementary Estimates (A) for the fiscal year ending
March 31, 2015.
Senator Joseph A. Day (Chair) in the chair.
The Chair: Honourable senators, this morning we will begin our
study of Supplementary Estimates (A) for the fiscal year ending March 31,
2015, which were referred to our committee.
Our committee began consideration of the Main Estimates earlier this
year, which is ongoing and will continue throughout the year, but this
session today constitutes the beginning of our examination of the
Supplementary Estimates (A).
In our first panel this morning, we're pleased to welcome officials from
Natural Resources Canada and Atomic Energy of Canada Limited. From Natural
Resources Canada we welcome Jean-Frédéric Lafaille, Director General, AECL
Restructuring. There has been a lot of restructuring going on, so it will
keep you busy this morning. We also have Mr. David McCauley, Director,
Uranium and Radioactive Waste Division, Electricity Resources Branch, Energy
Sector. It must be a big business card that you have.
From Atomic Energy of Canada Limited, we welcome Robert Walker, President
and Chief Executive Officer; and Steve Halpenny, Vice President, Finance and
Chief Financial Officer.
We welcome all of you here this morning and look forward to your
We have set side one hour to deal with matters, colleagues, so we will
hear from our witnesses and engage in a question and answer period.
Jean-Frédéric Lafaille, Director General, AECL Restructuring, Natural
Resources Canada: Mr. Chair, honourable senators, thank you for the
opportunity to be here today to discuss appropriations to Atomic Energy
Canada Limited, or AECL, in Supplementary Estimates (A) and other funding
provided to AECL through Budget 2014.
I will begin by providing the committee with some background on AECL.
AECL is Canada's largest nuclear science technology and radioactive waste
management organization. AECL has unique nuclear expertise in facilities
under licence from the federal regulator, the Canadian Nuclear Safety
Commission, CNSC, and has applications in fields important to public policy
and the nuclear sector domestically and internationally.
Today, AECL consists of Nuclear Laboratories comprised primarily of two
main sites, the Chalk River Laboratories in Ontario and the Whiteshell
Laboratories in Manitoba currently undergoing decommissioning.
As announced by the Minister of Natural Resources in 2013, the Nuclear
Laboratories work in the areas of management of radioactive waste and
decommissioning obligations; nuclear science and technology programs to
fulfill public policy responsibilities; and scientific, technical and
testing services to support the nuclear industry's need. They also produce
medical isotopes up to 2016.
With respect to the ongoing restructuring of AECL, the Minister of
Natural Resources announced in 2013 that the Government of Canada would
engage in a competitive procurement process with industry for the management
and operation of AECL's Nuclear Laboratories. The government is seeking to
implement a government-owned contractor- operated model as is done in other
jurisdictions, such as the United States and the United Kingdom.
The goal of the restructuring process is to put in place the conditions
for Canada's nuclear industry to succeed in the future while reducing cost
and risk exposure for Canadian taxpayers.
In March of this year, the government launched the qualification and
consultation phase of the procurement, known as the Request for Response
Evaluation. Interested suppliers will be assessed based on mandatory
technical and financial requirements, as well as national security
considerations. Those that have qualified will be invited to engage in
detailed discussions on the requirement of the procurement.
During the restructuring process, the government will take all steps
necessary to protect national security. The Canadian Nuclear Safety
Commission will also continue its role in maintaining safety, security and
environmental stewardship in all aspects of the nuclear industry, including
the Nuclear Laboratories.
Mr. Chair, it is in this context that the government is funding the
activities of AECL.
Since the 1990s, AECL has received base funding of about $102 million
annually to support basic laboratory operations. This funding was provided
in the 2014-15 Main Estimates.
As in past years, AECL's annual base funding level has been recognized as
insufficient to cover core costs at the Nuclear Laboratories. As such, you
will note that Budget 2014 announced supplemental funding for AECL in the
amount of $195 million on a cash basis. This funding is included in the
Supplementary Estimates (A). This funding will allow AECL to continue
medical isotope production, complete infrastructure and operational upgrades
related to health, safety, security and environmental priorities, meet
regulatory requirements, and prepare for the expected transition of the
laboratories to a government-owned contractor-operated model. I'm sure Dr.
Walker and Steve Halpenny can talk about specifics around the funding.
I will pass the floor to my colleague, David McCauley, who can speak to
the Nuclear Legacy Liabilities Program.
David McCauley, Director, Uranium and Radioactive Waste Division,
Electricity Resources Branch, Energy Sector, Natural Resources Canada:
Thank you, Mr. Lafaille. The Government of Canada is committed to the safe
and secure management of nuclear decommissioning and waste activities at
Atomic Energy of Canada Limited's Nuclear Laboratories.
In 2006, the government established the Nuclear Legacy Liabilities
Program, NLLP for short, to decommission outdated and disused research
facilities and associated infrastructure, remediate lands affected by past
practices, and implement long-term solutions for managing the legacy waste
at AECL's sites.
The government provided an initial five-year funding commitment in 2006
totalling $520 million and extended the program in 2011 with a further $439
million in funding over three years, ending March 31, 2014.
Under the NLLP, over the past eight years the government has reduced
liabilities and risks through decommissioning and site remediation projects,
and has established new facilities to characterize, handle and store
In addition, pursuant to the Prime Minister's commitments at the Nuclear
Security Summits of 2010 and 2012, we are making good progress on the
repatriation of highly enriched uranium, currently stored in Canada, to the
United States as a safe, secure, timely and permanent solution for the
long-term management of these materials.
In the context of the restructuring of AECL, the decommissioning and
waste management work currently being carried out by AECL under the Nuclear
Legacy Liabilities Program will be fully integrated into the private sector
management of the contract and the program will formally cease once the
contract is in place.
In the meantime, the government is seeking $195 million in additional
funding to extend the program until March 31, 2015, to continue to manage
and reduce risks and liabilities at AECL sites.
These funds will be used to make further progress on highly enriched
uranium repatriation initiatives, continue decommissioning activities at
AECL's Chalk River and Whiteshell Laboratories, and implement initiatives
and activities to prepare for the transition to the government-owned
contractor-operated management model that will advance strategies and
planning for future work.
Thank you, Mr. Chair. We would be pleased to take any questions you may
Robert Walker, President and Chief Executive Officer, Atomic Energy of
Canada Limited: Thank you, Mr. Chair. It is a pleasure to be here before
the committee. I am joined today by Mr. Steve Halpenny, Chief Financial
Officer for AECL.
Honourable senators, I am pleased to report that AECL has just concluded
a very good year. We continue to develop the innovative science and
technologies needed to drive our industry confidently into the future,
serving government departments, industry customers and our many
More importantly, we are doing this more efficiently and effectively.
The Nuclear Laboratories delivered against AECL's core programs in order
to realize a strategic outcome that offers significant economic, social and
environmental benefits to our country. AECL's world-class workforce and our
powerful nuclear research facilities help to ensure the success of the
entire Canadian nuclear sector. We do this by delivering the vitally
important products, services and expertise required for Canada's global
nuclear industry to thrive.
As I have highlighted during past appearances before the committee, my
management team and the board of AECL have been for some time systemically
changing the way AECL operates. Our focus is on improved productivity,
business growth, meeting customer and regulatory commitments, and reducing
costs to taxpayers. Accordingly, I'm very pleased to inform you that, thanks
to productivity gains, efficiency improvements and growth in commercial
revenues, AECL was in the position to return to the Government of Canada $26
million in supplementary funding received during the past fiscal year.
If I may, I would also like to bring to your attention a few other AECL
performance highlights for the past fiscal year.
We have just completed the three-year, $439-million nuclear legacy
liabilities programs — the second phase just referenced by my colleagues
from NRCan — delivering the program under budget while achieving 93 per cent
of the milestones.
We grew our commercial revenues by 33 per cent to $154 million, and we
increased our margins. We delivered 95 per cent of the demand from Nordion
for medical isotopes with the NRU reactor operating at 97 per cent of
We achieved an 8 per cent ongoing reduction in our operating budget
compared to 2011-12, and that will ramp up to a 12 per cent reduction by end
of this fiscal year.
We also executed an $82 million capital program at our laboratories
within 93 per cent of budget.
Mr. Chair, the AECL today is a respected international leader in the
development of leading-edge applications in nuclear science and technology
that benefits all Canadians. We are continuing to work hard to up our game
in a very competitive marketplace.
In this connection, AECL launched 10 new centres of excellence. These
centres of excellence will provide the means by which AECL will sustain the
unique competitive advantage of Canada's nuclear technology. The centres
will strategically develop core science and technology expertise,
mission-ready facilities and our valuable intellectual property. They will
also focus on industry collaborations with supply-chain partners to address
changing customer needs.
Finally, I'm proud to say that the many strategic improvements made over
the past few years are now leveraging the incredible strengths of AECL as
Canada's premier nuclear science and technology organization. In my view, we
are well-prepared to undertake the process of transitioning to a new and
exciting management model for Canada's Nuclear Laboratories.
Thank you. I and my colleagues would be happy to take your questions.
The Chair: Thank you very much, Dr. Walker. A number of senators
have indicated an interest in points of clarification, so we will begin.
Senator Bellemare: I listened very carefully to what has just been
said. We know that Atomic Energy of Canada Limited is a crown corporation
which was created in the 1950s. Now we are headed toward a different
Could you comment on this new business model, which will be developed in
the private sector? I see that Atomic Energy of Canada Limited, as a crown
corporation, has provided the government with dividends. How will this work
in the context of the new business model?
If I understand correctly, this will be a for-profit enterprise. How will
that for-profit enterprise ensure the safe disposal of all of the
radioactive waste? All of this is related to society in general. The private
sector is not the only one concerned; there are a lot of public elements.
How can you ensure that this new business model will allow for the work
to be done correctly, to ensure the complete safety of Canadians?
Mr. Lafaille: Your question has two parts, Senator Bellemare.
There is the matter of the business model and the issue of safety.
Insofar as the business model is concerned, if we look at what has been
done over the past decades in the United States and more recently in the
United Kingdom, according to the model, the state retains property of
nuclear installations as such and keeps the responsibility as well. You were
talking about nuclear waste; managing it remains the responsibility of the
The private sector will be called on to manage operations on a daily
basis at the nuclear laboratories; both science and technology and the
management of radioactive waste in both cases.
The business model allows us to obtain certain indicators that are not
possible with the crown corporation model; certain indicators that will
allow the private sector to realize savings or present innovative ideas
involving new technologies; it will also allow it to form certain
partnerships which would not necessarily be possible now, in order to aim
for the best possible performance and the best value for taxpayers' money.
This is what the model has demonstrated in the United States and in the
United Kingdom as being possible. Those are my comments on the business
As for the issue of national security, if the private sector is
responsible for it there could be certain concerns, for instance, will as
much careful attention be focused on matters of security and environment? It
must be said that the nuclear laboratories will be subject to the
regulations of the Canadian Nuclear Safety Commission. That will not change,
that is to say that the regulatory agency will be responsible for ensuring
that the laboratories are managed in a safe and secure manner.
Thus, no matter what company deals with nuclear issues in Canada, be it
AECL or electric power companies such as Ontario Power Generation or Bruce
Power, it is subject to the commission's regulations, and this will be the
case with the business model we have been discussing, the government-owned
contractor-operated model, and this will continue to be the case.
Senator Bellemare: Is SNC-Lavalin, from the private sector, the
company that will manage AECL?
Mr. Lafaille: There were two phases to the restructuring. The
first phase was the sale of the assets of AECL's commercial division, the
one that dealt with nuclear reactors, the CANDU. That division was purchased
by a subsidiary of SNC-Lavallin called Candu Énergie. That transaction was
concluded in 2011.
We are currently in the second phase of the restructuring, which involves
asking the private sector to manage the laboratories. At the present time,
we have put out calls for tenders and the process was launched in 2013. We
are currently at the stage we call "Request for Response Evaluation." This
is procurement jargon, but in short, it is a qualification stage. We ask
certain companies to qualify, to show us that they are competent to manage
nuclear laboratories. Once they have qualified, we go into a detailed
consultation process about our needs. What does it mean for the government
to want to give the private sector the management of the laboratories, what
are our expectations? At the end of this detailed consultation period, a
formal call for tenders will be issued, and we expect that to take place
So, to answer your question, a competitive process is currently going on
to choose the entrepreneur who will manage the laboratories. We have no
preconceived assumption about who will win the competition in the end.
Senator Bellemare: Will the government be making profits from the
sale of isotopes, so as to generate income to prevent eventual catastrophes
or production problems?
Mr. Lafaille: Regarding the isotopes specifically?
Senator Bellemare: No, on all the activities.
Mr. Lafaille: AECL has several income sources. I am going to ask
the chief executive officer of AECL to reply, because there are several
isotope-related sources of income, but they are also connected to other
science and technology services.
Mr. Walker: I could add two points, first of all regarding the
strength of this model and also concerning nuclear safety.
Building on Dr. Lafaille's comments, the enormous force of this model is
that it creates a strong customer-supplier relationship between AECL and the
Government of Canada. The Government of Canada has needs of the Nuclear
Laboratories. One is to address the decommissioning and waste-management
liabilities that need to be addressed efficiently and safely over the
decades to come.
The second is to provide science and technology insight to allow federal
government departments to exercise their mandates appropriately, including
regulation, regulatory oversight of the nuclear sector, matters of border
security, counter proliferation and environmental protection.
The first enormous strength of this model is that the relationship
between AECL and the Government of Canada will no longer be a
shareholder-Crown corporation relationship; it will be a customer-supplier
relationship with strong performance measures. We know the private sector is
much better positioned to be able to deliver customer value on schedule at
the right price point.
The second strength is that we also have a mandate to service the nuclear
sector and other industries in Canada that are able to take our science and
technology to address their needs and, frankly, to turn our technology into
Again, we recognize that the private sector is much better at being able
to commercialize technology and create wealth. So we have two advantages
addressed at one time with this move to the GoCo model.
A core principle is that regardless of who is operating the laboratories,
the oversight of the laboratories will remain with the Canadian Nuclear
Safety Commission. It is the regulator for all nuclear activities in Canada,
public sector or private. It has an international reputation for knowing how
to do this and doing it well. It holds the industry to a high standard.
There are other nuclear facilities in Canada that are privately operated. In
fact, the largest nuclear power facility in the world is at Bruce Power,
which is a private sector operator. So that oversight will continue to be
exercised by the CNSC.
Senator Callbeck: Thank you all for being here this morning.
You spoke of the business model. You say that in the U.S. and U.K., waste
management is still a responsibility of the government. Is this new model
that we're going into — government-owned contractor-operated — found
anywhere else in the world?
Mr. Lafaille: Thank you for the question.
Yes, as you indicated, the U.S. has always had this model whereby the
responsibility of making sure that the waste is taken care of —
Senator Callbeck: No, I guess I misunderstood, then.
Mr. Lafaille: It is the responsibility of the country, of the
government, to ensure that the waste and decommissioning responsibilities
are discharged properly. The question is how you do it? Is it done through a
model whereby you would hire a private sector company or consortium to
discharge the responsibilities to manage that or, as is the current case,
will it be a Crown corporation? The decision was made that through this
government-owned contractor-operated model, it would be the private sector
company in charge of managing the waste.
Senator Callbeck: Is that what happens in the U.S. and U.K.?
Mr. Lafaille: This is correct, yes.
Senator Callbeck: Fine. I misunderstood that.
Now, to Natural Resources, you are looking for $195 million the
Supplementary Estimates (A). You mentioned that in 2006 the Nuclear Legacy
Liabilities Program was set up; $520 million went in then and later, $430
million. Now you are asking for $195 million. So then that program ends; is
Mr. McCauley: That's correct. The intent of the additional $195
million is to extend the program until such time as the new model can be put
in place. We have asked for an additional $195 million to the end of March
2015. The GoCo model is unlikely to be in place until later that year, and
so it is quite plausible that we would be returning to seek additional
monies until such time as the GoCo model is in place.
Senator Callbeck: How is the contractor going to be selected? Is
that in the works now?
Mr. Lafaille: Yes, it is. It is important to note that AECL has a
70-year waste plan to discharge its responsibilities. So this yearly funding
is based on the much longer plan to discharge out the liability. What will
happen with this new model is that during the period of the contract for the
private sector consortium, we will seek from the private sector to discharge
a portion of the plan. This is why it will be no longer a program of NRCan,
if you will. It will be folded into the GoCo contract whereby we will seek
that the private sector company actually manages the program for AECL.
Senator Callbeck: But are you in the process now of selecting that
Mr. Lafaille: Yes, that's right.
Senator Callbeck: When will that be finalized?
Mr. Lafaille: For the procurement process that started in 2013, we
are currently in the phase of qualification of interested bidders and moving
to the detailed consultations on what the requirements are. The procurement
is expected to be completed in 2015.
Senator Callbeck: So you are certainly going to be back here for
more money, then, no question.
Mr. Lafaille: That's right.
Senator Eaton: Thank you, gentlemen. It's fascinating. I wish we
had you here for hours.
To follow up on Senator Bellemare's question, for this government-owned
contractor-operated model, does the contractor have to be Canadian?
Mr. Lafaille: There's no requirement that they be Canadian, no. It
could be international companies. I would point out that national security
requirements have to be met, so the bidders are screen-based on national
Senator Eaton: Right. So that will limit who can —
Mr. Lafaille: This is correct.
Senator Eaton: I have another question along those lines. I think
Mr. Lafaille said something about moving our nuclear-enriched uranium to the
U.S. Why is the U.S. safer than we are?
Mr. Lafaille: Maybe I will let David McCauley answer that.
Mr. McCauley: Thank you.
The United States has a program of repatriating enriched uranium that it
has provided to a number of countries for nuclear research, et cetera.
Currently, we have inventories of highly enriched uranium in Canada, which
are being safely managed.
Senator Eaton: They are U.S. origin?
Mr. McCauley: Yes.
Senator Eaton: I see. This is not our stuff we are sending to
Mr. McCauley: Exactly. It is material that we received from the
United States over the course of the years, and it is now safely and
securely managed at Chalk River Laboratories, the majority of it. Under this
program, however, the intent is to repatriate all highly enriched uranium
around the world such that it is safely and securely consolidated in one
location or fewer locations, and where it might be reprocessed into material
that could not be abused by those who shouldn't be getting ahold of this
Senator Eaton: Do we have any enriched uranium ourselves that we
hold safely or what do we do with ours?
Mr. McCauley: The enriched uranium that we have has come from the
Senator Eaton: We don't make our own?
Mr. McCauley: No, we don't. We have no enrichment plants in
Canada. The CANDU process uses unenriched uranium to fuel our reactors.
Senator Eaton: Thank you for clarifying that for me.
Mr. Walker, we do this by delivering vitally important products, services
and expertise required for Canada's global nuclear industry to thrive. Could
you give me examples of products and services?
Mr. Walker: Surely I could do that.
Approximately a year ago, the Ontario Power Generation went to the
Canadian Nuclear Safety Commission to indicate that it believed it could
safely operate the Pickering nuclear power plant until 2020. That decision
was based on fundamental work done at AECL to validate the remaining
lifetime in the core workings within the nuclear vault of those reactors.
Senator Eaton: So the Pickering Nuclear Generating Station will be
good until 2020?
Mr. Walker: That's correct. The scientific evidence to give OPG
the basis for making that submission was generated at Chalk River through
our science to be able to look at the remaining life left in what are called
the pressure tubes, the infrastructure inside the reactor vault that
actually holds the fuel bundles. They are critical to the operating life of
We are currently also producing a number of innovative products that make
CANDU plants around the world safe. As an example, we have the unique
technology that allows us to turn hydrogen into water and to do so
passively. Since hydrogen is a by-product that gets produced from time to
time in nuclear reactions, it can be a hazard in the environment. In fact,
the explosions that occurred at Fukushima plants were hydrogen explosions.
Well, there has been an up-swing in the purchase of AECL technology to
install in the reactors around the world, because we're able to absorb the
hydrogen and turn it into water without the need for electricity.
Those are but a few examples of where our technology is able to increase
the life cycle, the safety and the economies of nuclear power plants — not
only the CANDU fleet but reactors around the world.
Senator Eaton: And that will continue?
Mr. Walker: That will absolutely continue. In fact, the intent
with this new business model is to create greater opportunities to
commercialize our wealth of intellectual property to create economic
opportunities for Canadian companies.
The Chair: Next is the deputy chair of the committee, Senator
Senator L. Smith: It's a fascinating area. I'm not sure if any of
my colleagues are confused, but listening to the report — changing the way
that AECL operates, restructuring the organization, your unique competitive
advantage — your new operating model will only be implemented by 2015.
That's my understanding. There is a lot of work going on now. Is it for the
old model or the new model?
From a structural perspective, how does it work today and how will it
My question comes down to measurements, which I think Senator Bellemare
was looking at. Do you have a profit measure? Is that realistic in this
business? When you talk about $195 million here, $450 million there, and the
money is coming from the government, it gets confusing as to how all these
pieces fit together. Where is the accountability?
There is a three-year $450-million liability program achieving 93 per
cent of the milestones. What are the milestones? Commercial customer
revenues grew 33 per cent. A lot of good things are happening, but I haven't
seen anything about the bottom line. Is there a bottom line in this industry
so that there is ultimately accountability in terms of whether this thing is
profitable? Obviously there is a huge potential for growth.
Mr. Walker: I will attempt to give you a sense of this. It is fair
to say that we are in transition from an appropriated Crown corporation
model into a private-sector model where we service the needs of customers.
Senator L. Smith: And the Crown corporation model is exactly what
Mr. Walker: The Crown corporation model has us serving third-party
customers but looking back into the Government of Canada with a less
rigorous process by which we are accountable to the government for the
results we deliver to government. The new model will turn all the
relationships between the Government of Canada and this new restructured
entity into an accountable customer-supplier relationship.
Senator L. Smith: In the future, the model will have the
Government of Canada —
Mr. Walker: And third parties. Those are the two big customer
Senator L. Smith: And where does AECL fit?
Mr. Walker: Nuclear Laboratories' future business model is to keep
those customers happy with the right results at the right price at the right
schedule. We are now in the process of changing the way we operate to bring
that rigorous customer focus to both the way we work for the government and
for the private sector, and to look at the multiplier effect as we work for
both — to allow companies we work with to turn the results of this work into
Senator L. Smith: Is there a profit concept in that new model?
Mr. Walker: Yes, there will be. The key point here is that the
incoming selected government-owned contractor- operator, or GoCo, will be
incentivized to deliver results back to the Government of Canada at lower
cost, to better schedule and at greater value. As the incentives are met,
there will be a fee paid for realizing more.
In terms of the world of the third party, a formula will be set up
through the negotiation of the contract by which the profit realized by
creating wealth in the private sector will be shared with the Government of
That will all be sorted out as the contract gets negotiated.
Senator L. Smith: When new money is needed for facilities,
development, upgrades, et cetera, will that be dealt with through the
private entity or as the government serving as the banker for the group? How
does that work?
You're talking $195 million; that's a lot of money. How is that tied into
that operating model, accountability? How is it repaid and how is it tied
into the profit issue? It seems a little unclear at this time, especially if
you're only going to implement this in 2015. If you're working on this now
for 2015, what is it going to be?
Mr. Lafaille: Let us try it another way.
Right now, the Crown corporation model is such that AECL reports to
Parliament through the Minister of Natural Resources. Everything goes as a
relationship between AECL and the portfolio ministry, so any requests for
the 195 or others come to us and then go through the system.
In the new model, there will be a small oversight body that would have a
contractual relationship with the private sector. So everything will be
contractual as opposed to the Crown corporation model.
To your question about new funding and new activities required and how
that will work, it will work through the clauses of the contract. If the
private sector operating the labs says, "There is a need for a new building
because this one is decaying, and we need a new building to do the science
and technology from which we will have revenues," all of that will be
specified in the contract.
The role of the small government agency overseeing the contract will be
to say, "Does it make sense? Is their value for taxpayers? What is the
private and public sector contribution? What model makes sense for that
To build on Dr. Walker's comment, the value for taxpayers — well, we want
to do this at the best price for taxpayers, so we will incentivize the
contractor to come up with the best plan possible. We will hold the
contractor accountable to specific performance measurements, schedules and
budgets. The contractor will be paid based on performance. If they
underperform, they will not get a fee for this work. If they over-perform
and the government saves money, we can share some of the savings there.
This is what is different from the Crown corporation model. We cannot
incentivize Crown corporations in the same way. Incentivizing contractors is
at the heart of the GoCo model, with performance measurements to be able to
specifically incentivize. If they are met, we know we are getting value for
money. If they exceed expectations, we can share some of the savings and
give incentive to the private sector to do better for the government.
Senator L. Smith: In the write-up on the second page, you talk
about your "unique competitive advantage." Is your unique competitive
advantage in the existing structure, or will it be in the new structure?
What is your unique competitive advantage?
Mr. Lafaille: It will be in the new structure. It's about what I
just said about being able, through the contract, to turn to the private
sector contractor and say, "We have this need. Come up with the best plan
possible for the taxpayers to deliver on this plan."
Senator L. Smith: If I understand this, you're saying the unique
competitive advantage is basically the new structure that will be
implemented in 2015.
Mr. Lafaille: That's right.
Senator L. Smith: So it's a work-in-progress?
Mr. Lafaille: Yes.
Senator L. Smith: To say you have a unique competitive advantage,
you need proof of the unique competitive advantage in terms of the actual
operational efficiencies. I'm trying to understand. When you make a
statement like that, it's a far-reaching statement that needs to have a
track record and results.
I wasn't trying to put you in a corner, but was trying to understand how
it fits together because there are some fairly important statements being
Mr. Lafaille: It is, you're right, a work-in-progress because it's
a model that does not exist in Canada, so we are implementing an
unprecedented model. We're learning from the experiences in the U.S. and the
U.K., in terms of lessons learned, what works and what has not. We are
building this model right now. We see the advantages of what will not be
possible now with the Crown corporation model. The challenges and the
opportunity are to make sure we implement the right model that will bring
value for money for Canadians.
The Chair: Could I ask for a point of clarification to Senator L.
Smith's question? Once you have this new model in place with contracts on
the ground in Chalk River, what will be going on? You stopped the MAPLE.
You're not going to start up that new type of reactor. This other is almost
at the end of its life. Will the new contractor have an obligation with
respect to the NRU, the National Research Universal reactor? Will the
contractor have the obligation or the right to operate that?
Mr. Lafaille: The work of the contractor will be specified in a
statement of work of the contract.
Basically there are three main missions. There is the waste and
decommissioning mission, so there is a long-term plan, as we said. They will
need to deliver on that.
The contractor will need to deliver science and technology services both
to government to meet our own responsibilities to the public policy and
third parties, as Dr. Walker said. Currently, laboratories are selling
services to utilities and other third party customers. All that will be
specified in the contract.
With respect to specific facilities, whether it is the NRU reactor or
others, it will be based on the business case of operating these facilities
to provide services both to government and third parties. Right now the NRU
is licensed until 2016, so there is a case to be made in terms of the future
business case for the NRU post the current licensing cycle.
It depends on the needs of both the government and third parties for
specific facilities at Chalk River.
The Chair: You do have a need for research. You do have a need for
decommissioning. If you don't get it from Chalk River, you will get it from
somewhere else. That hasn't been decided as to where that particular
activity will take place?
Mr. Lafaille: It depends on the needs of government and the
The Chair: You know the needs of government.
Mr. Lafaille: We know the needs of government. So there will be
what we will call a science and technology federal program where, with a
specific funding envelope and requirements, we will turn to the private
sector contractor and say, "These are our needs; please provide us with the
services for the best value-for-money proposals or plans."
The Chair: And we'll let you use our reactor in Chalk River to do
Mr. Lafaille: The private sector contractor will be in charge of
operating all the facilities and the laboratories.
The Chair: That's what the contract would say. You will say,
"These are the needs; please provide the service and, by the way, you can
use our reactor in Chalk River to do that."
Mr. Lafaille: Yes, if there's a need and if the federal government
has needs that would include using the reactor, there will be a discussion
about using the reactor. If there is no need for it, then the private sector
contractor will need to seek other customers for the reactor and will come
back to the government in terms of the entire proposal for managing the
labs, which facilities will be required and not required in the future.
The Chair: We're trying to clarify what's going on and I
appreciate your comments.
Senator Gerstein: Dr. Walker, am I correct that AECL is one of a
few major suppliers of medical isotopes in the world today? Is that a
correct assumption on my part?
Mr. Walker: That's a correct assumption.
Senator Gerstein: My recollection is that several years ago — I
can't remember exactly how many — there was a major problem that happen left
Canada scrambling for medical isotopes. Is that also correct?
Mr. Walker: That's also correct.
Senator Gerstein: With that said, I noted in your performance
highlights that you indicate, "We delivered 95 per cent of the demand from
Nordion for medical isotopes . . . ." My question to you is: Percentages
aren't a number. How does the number of deliveries of medical isotopes
compare to what it was before the problem, and how has AECL maintained its
position of what I understood was a relatively few people that manufactured
these? When the problem arose, there was great difficulty in supplying
Canadian needs, never mind anyone else. Can you take us through that?
Mr. Walker: I will attempt to do this. This is a complex file.
We're all aware and the first to recognize that the concept of medical
isotopes was invented in Canada. The whole idea of how one can get isotopes
out of a nuclear reactor and into patients in hospitals, that whole supply
chain concept was pioneered in Canada. It is true that AECL, through
partnership with Nordion, a company spun out of the AECL, is one of the
major suppliers of a very specific medical isotope. We talk about the word
"isotopes," but there are many tens of isotopes used in various medical
diagnostics and cancer treatments.
The one that is the workhorse is known as molybdenum-99, or moly-99, and
that is the isotope that comes out of the reactor. NRU is shipped to Nordion
and then in a FedEx like system, it is delivered through other suppliers to
hospitals around the world where it is subsequently transformed into another
very short lived isotope called technetium. That is the product that would
be injected in patients for medical diagnostics. In that whole process, one
has to recognize that time is of the essence. The half-life of the moly-99
isotope is 66 hours. The half-life of technetium is six hours. You have to
get the isotopes produced and out of the reactor, to the distributor and
around the world and into the hospital. Every time you do it, the inventory
is decaying. One typically talks about how many. There is a unit of
radioactivity called a curie and how many moly curies are we delivering
around the world, and the measure is six days after the reactor.
Senator Gerstein: I appreciate your answer, but mine is not a
scientific question. It is a financial question. What was AECL delivering —
that's a dollar amount — prior to the problem and what is AECL now
delivering after the problem?
Mr. Walker: In that process, today AECL supplies between 15 and 20
per cent of the global weekly demand for moly-99 around the world. In 2007,
we were about 40 per cent. I would highlight for you, senator, that the
lesson learned around the world when we had the forced outage of the NRU in
2009 is the vulnerability of such a high priority supply chain to a single
point of failure.
When the NRU went down and you lost 40 per cent of the world supply, the
world was in crisis because there wasn't alternative supply. One of the
initiatives taken on, in fact led by Canada, was to diversify the supply
chain to create other suppliers around the world that together can
contribute, and with that also coordinate the scheduling of reactor
maintenance outages so we don't end up with periods where multiple reactors
Senator Gerstein: What I understand is we dropped from 40 per cent
of the world's supply to 15 per cent of the world's supply.
Mr. Walker: That's correct.
Senator Gerstein: How does the 15 per cent we are supplying
compare in actual dollars to the 40 per cent? In other words, the market may
have increased; 15 per cent of the market today may be more than what 40 per
cent was five or six years ago. How does the actual production compare in
Canada today after the fixes had been put into the system? What is the
Mr. Walker: Senator, there are reasons that I cannot get into the
actual dollars because of the commercial relationship with Nordion. I can
tell you, however, that the price of the moly-99 isotope on the global
market is a very competitive capitalist system, and the price of moly today
is about the same as it was in 2007.
Senator Gerstein: Is there a shortage in the world today?
Mr. Walker: There is not.
Senator Gerstein: Thank you.
The Chair: Colleagues will recall we are dealing with Bill C-31,
the budget implementation bill, which deals with Nordion and releases, if
it's passed, the requirement in relation to shareholdings being Canadian.
The same day the bill was filed, a U.S. company announced it would be most
pleased to bid on becoming the majority shareholder of Nordion. That is all
in the knowledge of this committee because we studied that particular
situation. Nordion has a contract with Atomic Energy of Canada Limited for
the supply of molybdenum-99.
We're all aware that there was a court case on that, which has been
settled in your new model, and we would like to know where you're looking on
that. In your model, will there be radioactive isotopes produced? Is there
an ongoing contract with Nordion that the new contractor who will be running
things for AECL will be required to meet?
Mr. Walker: We currently have a supply arrangement with Nordion
that goes until 2016 for moly-99. I would highlight that we produce other
medical isotopes with Nordion and for other suppliers, and those contracts
are not sunsetted in 2016. When it comes specifically to moly-99, the
contract terms end in that year.
The Chair: Will it be up to the new contractor to determine
whether it wishes to continue the relationship with Nordion? Or is the
decision that that's just off the board, and once this contract is over,
you're not interested in continuing it? It will be a revenue source for AECL
in the future, unless you discontinue it. It's a question of whether you've
decided to put that into the mix or not.
Mr. Lafaille: Maybe I can answer that question. I think what Dr.
Walker said, there is a specific moly-99 question and other revenues. As a
general rule, all existing contracts will be continued by the private sector
company, and it will have to make a case that they are still bringing value
to the government.
In terms of your specific question on moly-99, coming back to the
question of what happened in 2009-10, the government has taken a number of
actions. At the time of the decision, the government said it intended to
cease the production of moly-99 by 2016.
The Chair: I recall that.
Mr. Lafaille: That's part of the current policy. There has been an
investment in alternative technologies so that it could pick up and provide
the alternative supply of technetium-99, which is really the end product
used by doctors. The government has acted on that. That is the current
policy of the Government of Canada.
Any future business in terms of isotopes, be it moly-99 or others, will
need to have a business case brought to government to see if it makes sense
The Chair: It will be part of the negotiations with respect to the
private sector operated, government-owned relationship that Senator Smith
was asking about. Is that correct?
Mr. Lafaille: That's correct.
Senator Chaput: I would like to obtain some clarifications on some
of the questions other senators have asked. If I understand correctly, you
are currently in transition, that is to say that the business model has yet
to be developed. Will the government be retaining responsibility for the
facilities, and for safety and security?
Mr. Lafaille: The government will retain ownership of the
facilities, but the private sector will be responsible for ensuring that the
regulatory licenses are respected, and will be responsible for management.
It will be accountable to the regulatory agency.
Senator Chaput: Since the government will be retaining ownership
of the facilities, if there are problems, if renovations have to be done and
costs are incurred, will this be the government's responsibility, and it
will have to ensure that the facilities are maintained properly?
Mr. Lafaille: To the extent that these facilities meet specific
needs such as the management of nuclear waste or the provision of science
and technology services, yes, this will be the government's responsibility.
The private sector will manage the sites and will have to submit a business
plan to the government proposing conditions regarding the renovations of
these facilities or the construction of new ones in order to continue to
provide service to clients.
Senator Chaput: But if renovations have to be done, the costs
related to the facilities will remain the responsibility of the government?
Mr. Lafaille: It depends on the clients. If the client is an
electricity company such as Bruce Power or others, it will have to pay its
fair share if the facility is used to meet its needs. If it meets the needs
of the Government of Canada, then, yes, the Government of Canada will pay
for that portion.
Senator Chaput: Concerning the division purchased by SNC-Lavalin,
what are the responsibilities of the SNC- Lavalin company at this time? Who
does it report to?
Mr. Lafaille: It is a private entity that is accountable to its
shareholders. There are now commercial links between CANDU Energy, for
instance, and the laboratories, but these are purely contractual relations.
Senator Chaput: Excuse me, but what did SNC-Lavalin purchase,
Mr. Lafaille: The commercial division of AECL that dealt with
development, construction and servicing the nuclear reactors to produce
electricity, including the CANDU reactors. The government kept the nuclear
Senator Chaput: Will the appropriations requested in the
supplementary estimates be allocated to maintaining activities such as those
of the laboratories, or will they be used to facilitate the transition to
the business model, or both?
Mr. Lafaille: Both. With your permission I will ask my colleague
from AECL to provide you with more details.
Mr. Walker: Most of the funds will be allocated to the
continuation of programs and to investment in infrastructure. A small part
of the funds will be used to create the surveillance entity mentioned by Mr.
Lafaille; this will amount to approximately $15 million. The rest will be
used for daily operations.
Senator Chaput: Daily operations mean everything involving the
current personnel and everything that is being done currently?
Mr. Walker: Absolutely.
Senator Chaput: Very well, thank you.
I have a final question for Mr. Lafaille. In your presentation you
mentioned that AECL had created 10 new centres of excellence. Where are
these centres located, and what are they exactly?
Mr. Lafaille: Mr. Walker would be in a better position to answer
Mr. Walker: This is one aspect of our transition which aims to
focus the centres of excellence we have in the laboratories, which have a
certain value to the clients, be they industry or government. In each of
these centres, we have to consider the expertise, infrastructure,
intellectual property, and partnerships. They contain a certain value.
Coupled with the new business model, this is the concept of competitive
advantage. When customers come to the Nuclear Laboratories, it is because
we're recognized as having certain expertise, and certain unique facilities
that are appropriately priced and efficiently managed to meet customer
However, one has to have clear precision on what one's value proposition
is to ensure that one is renewing, investing and advancing the capabilities
that will be critical for your customer base into the future.
So through those 10 centres of excellence, we are establishing the
starting point. We expect the incoming GOCO will look at that, look at where
it wants to take the business and decide whether these 10 will grow, sustain
or perhaps some diminish, and go forward from that.
With that we think we are providing a strong foundation by which we will
transition to the new business model.
Senator Chaput: What are they, exactly, and where are they?
Mr. Walker: Within the Nuclear Laboratories, these are virtual
centres. You will not see a building. For example, we have world-class
capabilities in irradiation services. A prime example of that is for
production of medical isotopes. However, we offer a number of unique
capabilities in Canada — in fact, the only place in Canada where one can
irradiate materials to understand the effects of radiation on materials —
and with that to generate commercial value or to address public policy
There are very unique capabilities in modelling and simulation related to
nuclear processes — what goes on inside power reactors — and critically
those modelling and simulation capabilities are at the foundation of power
utilities being able to demonstrate to the regulator that the way their
reactors are operating will be safe when changes are made to the systems in
We also have strengths in decommissioning technologies. How do you deal
with the decommissioning of contaminated buildings safely and economically,
So we have 10 such centres. We have scientists, engineers and
technologists associated with these centres. Each has a combination of
unique scientific facilities and equipment. Each generates the unique
intellectual property, and from that, we are able to offer to a customer set
a menu of capabilities by which we attract business from the private sector
or meet the needs of the Government of Canada.
Senator Chaput: Are all of those scientists, people and
researchers in the same building, and are the 10 centres virtual?
Mr. Walker: Not quite. Oftentimes, they're associated with unique
facilities, and around those facilities, there are times when buildings
would contribute to more than one centre. But if you go to Chalk River, you
can say, "This area over here is this centre of excellence, and this area
over here is that centre of excellence." It's just hard to draw it on a
Senator Chaput: I'm trying to understand here; I'm sorry. Are
there quite a few of those facilities, and are they across Canada or out of
Mr. Walker: This is largely the Chalk River site. There are still
a few facilities at the Whiteshell site in Manitoba, but Chalk River is the
largest science and technology facility in Canada. Some 3,000 people work
there, and it has an impressive gamut of scientific facilities that are very
special in the sense that they are able to operate with radioactive
Senator Chaput: Chalk River is the largest one in Canada. Are
there others in Canada besides Chalk River?
Mr. Walker: When it comes to the nuclear sector, no; it is the
largest. There are other science facilities like TRIUMF that play into
Canada's foundational capability in nuclear physics, but when it comes to
nuclear power, AECL is the hub.
Senator Rivard: I have two brief questions. AECL was sold to
SNC-Lavalin in 2011, but we retained the management of nuclear waste and
Can you tell me what the yearly estimate would be for the responsibility
of managing nuclear waste?
Mr. McCauley: The management of radioactive waste and the clean-up
of contaminated sites are the responsibility of the Government of Canada.
Most of this responsibility derives from the Cold War era, which preceded
the creation of AECL, and the government decided to retain that
Senator Rivard: What is the annual cost of managing the waste?
Mr. McCauley: For the current year, it is $195 million.
Senator Rivard: We remember that nuclear power was popular at a
certain point. However, the accident at Chernobyl more than 25 years ago was
a first shock. It was said that the Russians had managed that situation
poorly and that it could have been avoided.
Subsequently the tsunami in Japan created such a shock that a lot of
countries are questioning nuclear energy and reconsidering coal or
SNC-Lavalin purchased the CANDU reactor department in 2011. Do you
remember whether SNC-Lavalin purchased it before or after the Japanese
M. Lafaille: Afterwards.
Senator Rivard: We know that selling CANDU reactors is not like
selling cars. Do you remember if SNC-Lavalin has sold any CANDU reactors to
other countries since 2011? Do you think that the accident in Japan will
discourage some countries from choosing nuclear energy and open up markets
for CANDU reactors?
Mr. Lafaille: Generally speaking, there are many conditions that
are considered in a decision as important as purchasing a nuclear reactor.
There is no doubt that the Fukushima issue affected a number of countries.
But there are also economic conditions to consider. There is the cost of
natural gas, the cost of coal. There are many factors to be considered.
As for your more specific question regarding Candu Energy or SNC-Lavalin,
since 2011, they have been very active internationally and have seized
opportunities in the United Kingdom, Romania, China and Argentina. They work
actively to promote their technology and to try to sell it. To my knowledge,
they have not yet concluded any contracts in that regard.
In certain niche markets where countries still wish to purchase nuclear
reactors, they are active. The Government of Canada is no longer
responsible, now; this is really their undertaking.
Senator Rivard: I agree with you, but on the other hand, when
SNC-Lavalin produces these CANDU reactors, with Canadian labour, there will
be important economic spinoffs for Canada. So it is to be hoped for that
other countries will continue to purchase nuclear reactors and that we will
not go back to the stone age, with coal.
Mr. Lafaille: I would like to add something. In the contract
between AECL and Candu Energy, royalties were supposed to be paid to the
federal government. So we have a vested interest in the success of this
The Chair: Two other senators would have some questions. If you
could answer briefly, that would be appreciated. But if a written answer is
necessary, you may do that also.
Senator Hervieux-Payette: There was a problem regarding insurance
coverage which was not sufficient for damages in the case of incidents. Has
that issue been resolved?
Mr. McCauley: A bill is currently being studied in Parliament with
respect to that.
Senator Hervieux-Payette: Will this increase the coverage?
Mr. McCauley: Yes, from $75 million to $1 billion.
Senator Hervieux-Payette: Mr. Walker, the École Polytechnique de
Montréal told us that it has a world-class research centre. Is this one of
your centres of excellence?
M. Walker: Yes, absolutely, it is one of our key partners in
Montreal. We cooperate with 35 universities throughout Canada.
Senator Hervieux-Payette: I asked you if it was a centre of
M. Walker: It is one of our many centres, in fact. We have
dealings with the École Polytechnique in the area of nuclear engineering and
nuclear chemistry, among others.
Senator Hervieux-Payette: Has the conflict with Argentina
regarding maintenance been resolved? There was an issue in Argentina with
regard to the maintenance of the CANDU reactor; I know that the Argentinians
were not very pleased with the service Canada provided.
Mr. Lafaille: You are probably referring to the renovation of the
CANDU reactor in Argentina. There is contract between Candu Energy and the
Argentinian government to rebuild that reactor.
To my knowledge, this is proceeding in a satisfactory manner. I think
that some time went by before the contract was signed; it was signed in 2011
and Candu Energy is now responsible for completing this project to rebuild
Senator Bellemare: The answer to my question could be long, and
you may send it to us in writing.
The private sector is going to manage operations; the government will
retain ownership, but the operations will be carried out by the private
sector and will be remunerated in keeping with performance. I wondered if
there were links with performance; at a given point, people want to perform
well, but how will you separate the risks from that?
Are you going to have a provision for risk management in the contract?
Sometimes short-term performance can increase medium and long-term risk, and
the government could be held responsible. I just want to ensure that there
will be some management of risk sharing.
Mr. Lafaille: That is an excellent question. That is a risk we
observed in the United States and in Great Britain, when we visited the
sites and spoke to the government people who dealt with the contracts. There
can be a specific incentive to deliver a project on time to make a profit,
but a project that is not subject to the same kind of incentive could be put
on the back burner, and on balance, the government could be the loser.
That is one of the real risks we are very much aware of. In order to
ensure that we will not be subject to this kind of game, there have to be
performance indicators in the contract linked to the overall management of
all of the research activities, so as to respect some minimal performance
Then we can look for specific projects where additional savings could be
realized and allow for more innovation. The point is to try to find a
balance between overall management and the management of certain specific
Senator Bellemare: Will the employees be staying there?
Mr. Lafaille: The employees will be transferred to the private
sector, but their expertise will still be required. These employees are
generally highly qualified to manage and operate the nuclear facility, and
the new operator will need them.
The Chair: Are they unionized?
Mr. Lafaille: Yes, there are several unions at AECL.
Senator Bellemare: And all of that is going to be transferred?
Mr. Lafaille: Yes, and Dr. Walker is in charge of the transition
The Chair: Thank you very much for being here. We have gone 15
minutes over the designated time, but you can see there's a lot of interest
in what you're doing. We know you are in a transition mode, and we look
forward to talking to you again as that becomes more definite.
I apologize for the delay, Treasury Board; we kept you waiting. However,
we're better informed now than we would have been if we hadn't.
In this second hour, we're pleased to welcome officials from Expenditure
Management Sector of the Treasury Board of Canada Secretariat, officials
with whom we have met before and we will look forward to continuing to meet
with: Bill Matthews, Assistant Secretary; Marcia Santiago, Executive
Director; and George Samiotis, Director.
Mr. Matthews, you have introductory remarks. We have been provided with a
deck of your slides.
Bill Matthews, Assistant Secretary, Expenditure Management Sector,
Treasury Board of Canada Secretariat: Good morning everyone, and thank
you. As you have already mentioned, I am joined by two colleagues to reply
to your questions. We will begin with a fairly brief presentation to give
you an overview of Supplementary Estimates (A) for 2014-15.
We will go through our usual presentation. At the end of it, if you are
agreeable, there are a lot of items in the Supplementary Estimates (A)
relating to different bridges. I thought I would turn it to Marcia to walk
through the various places, because they show up in different organizations,
depending on the bridge we're talking about.
I will give you the run-through of where it all shows up, if that's
The Chair: That is agreeable.
Mr. Matthews: I will start on slide 3. It's the usual structure in
terms of the document. Supplementary Estimates (A) has the major items, and
I will be spending time going through each of those on subsequent slides.
Also, at the front of the Supplementary Estimates (A) document, you will see
the largest changes to individual votes by percentage to give you a sense of
what is happening.
There is a section on new votes and authorities. I will highlight for you
there that we have a new organization appearing for the first time in the
estimates documents: The Windsor-Detroit Bridge Authority is receiving funds
for the first time, so that is in there.
Then we get into the details by organization. I will remind you that only
the organizations requesting funds show up in the supplementary estimates.
There are 16 of those. If you don't see a particular department in here, it
means there are no funds for that organization in Supplementary Estimates
The Chair: Sixteen out of how many?
Mr. Matthews: Sixteen out of 130.
The Chair: Thank you.
Mr. Matthews: I will also reminder senators that on the Treasury
Board of Canada Secretariat website, there is additional information on
statutory forecasts and information on planned spending by both strategic
outcome and program. We also have the budgetary expenditures by standard
objects and then transfers between organizations. That continues to be
online on the Treasury Board of Canada Secretariat website, if it's of
interest to you.
Slide number 4 is our usual explanation of budgetary, non-budgetary,
voted and statutory items. We do have a non- budgetary amount of $44.4
million in Supplementary Estimates (A) on the far right of that slide. A
reminder that non- budgetary are things like loans that will get paid back
to the fiscal framework, so there's really no long-term impact on the fiscal
framework if things go as planned. The $44.4 million in question here are
loans to Aboriginal claims groups to allow them to participate in existing
negotiations that are already under way for settlement. Again, those are
On the voted side, we have $2.4 billion in budgetary spending, and I will
go through the major items related to that spending. We have a small amount
of $11.4 million related to statutory, and that is contributions to employee
benefits. It is just $11.4 million, so unless there are questions, that's
all I will say about that this morning and we will focus on the big items.
With slide 5, my usual warning is it's too early in the year to compare
to previous years and then we do it anyway.
Then you will see Supplementary Estimates (A). I will flag for senators
that Supplementary Estimates (A) is $2.4 billion in voted. That is higher
than Supplementary Estimates (A) was last year, which was $1.1 billion. In
fact, if you go back in history, this $2.4 billion is really a return to
more normal levels. Supplementary Estimates (A) in 2013-14 was unusually
low, so you're seeing more of a return to previous levels. It was $2.1
million in 2012-13, and that's kind of the normal level.
The trend here, as we have discussed many times, is that statutory
spending is increasing. That relates mostly to the Health Transfer as well
as increases in our programs related to elderly benefits. The trend on voted
amounts is downward, and we will see if that trend continues as the year
Slide 6 is largely a pictorial representation of the same thing. What
we're showing on the far left of this slide is the 2013-14 total estimates
in billions, so that would include the mains, Supplementary Estimates (A),
(B) and (C), and we're comparing those to the Main Estimates and
Supplementary Estimates (A) for the current fiscal year, 2014-15.
You will see, like I mentioned on the previous slides, that government
transfers are up over last year's total. Public debt is basically the same
amount as it was for last year, and operating and capital is lower at this
point, but a reminder that we do have Supplementary Estimates (B) and (C)
still to come at a later date. We will see what that brings us.
On slides 7 and 8, we have the major voted items. I will walk you through
these. I suspect most of your questions will relate to these items.
The first item on this list is Employment and Social Development Canada,
$500 million. That is an annual amount that goes out to 2019-20 of $500
million. It replaces the Labour Market Development Agreements, so that's new
The second item on this list is the Jacques Cartier and Champlain
Bridges. As I mentioned, Marcia will walk us through the various places that
bridge funding shows up in this document, but this is money for repairs and
maintenance of the federal structures in Montreal, at $253.7 million. That
ties back to a Budget 2014 announcement of $378 million over two years. This
is the first piece of that.
The third item on this list is PPP Canada, so that's the P3 Canada
Investment Fund of $200 million. That relates to the sixth round of
applications for P3 Canada. Those are merit-based applications, and we're
happy to take questions on how that fund works, but it relates to a Budget
The next two items on this list, Atomic Energy of Canada Limited — I
understand they were here just before us — $195 million related to the lab
operations for medical isotopes as well as some infrastructure upgrades for
Chalk River, which are to meet ongoing safety requirements.
That's $195 million, as is the next item on this list, and that's not a
mistake. It is the same amount of $195 million but for different things.
This one is the Natural Resources Canada Nuclear Legacy Liabilities Program.
That's planned spending related to environmental liabilities. The vast
majority of nuclear cleanup costs relate to Chalk River, but there is some
for labs in Manitoba as well. That's $195 million.
Then you will see the Office of Infrastructure Canada, the new Building
Canada Fund, of $142.2 million.
Lastly on this slide, there is an item that you have seen before here:
Indian Affairs and Northern Development Canada: First Nations Water and
Wastewater Action Plan, $136.3 million. That relates to funding to develop
protocols and standards related to water and waste water, as well as some
projects to install indoor plumbing in some communities in northern
Flipping over to slide 8, just to continue this list, again an item you
have seen before, senators, with Foreign Affairs, Trade and Development.
This is the Canadian High Commission consolidation. This funding of $133.6
million relates to the renovations for the high commission and leasehold
extensions. Again, you will remember that we sold McDonald House for roughly
$565 million some time ago. This work to consolidate and prepare the high
commission and official residence is really funded out of the proceeds from
the sale of McDonald House, but the way parliamentary authorities work, the
money from the sale goes into the Consolidated Revenue Fund, and then to
spend it, we actually have to vote the department some money.
Second on this list is another item for Indian Affairs and Northern
Development. This relates to the remediation of federal contaminated sites,
$127.7 million. Indian Affairs is responsible for 112 contaminated sites,
but this funding actually relates primarily to two sites, the Faro and the
Giant mine sites in the northern part of the country. That funding relates
specifically to those two.
Then we have the Office of Infrastructure Canada, another bridge item,
the new bridge for the St. Lawrence, $119.8 million.
VIA Rail funding for incremental pension requirements is an item you have
seen before, so it is another top-up to the pension fund. We can speak about
why that is necessary, if that's of interest.
Lastly, there is the Government of Canada's final contribution to the
decontamination costs related to the Lac- Mégantic disaster, which is $95
million on that front.
Those are the major voted items. I suspect many of your questions will
relate to them, so I thought I would give you a bit of background.
Changing gears, on slide 9, we have spoken at this committee before about
something called the expenditure database, which is a database on the TBS
website where you can go and find spending history and projected spending.
It is searchable by department. It still exists, but we have renamed it. We
have added human resources data to that database, so if you actually went
there, you would see people management information from 2010-11 going
forward, employment by province, age of employees and average length of
tenure. Because we have gone beyond just spending data, we thought we needed
to rename it. It is now called the Treasury Board Secretariat InfoBase. If
you happen to be searching for it, we thought we should flag for you that we
have renamed it.
We will continue to add data to this database. You will see information
related to public accounts for the year most recently closed once it is
available, as well as information from the quarterly reports of departments
as they become available. In addition, we are still always searching for
ways to make it more usable and more searchable, so you may see some changes
on that front as well.
Lastly, just to wrap up on slide 10 before I turn it over to Marcia, we
have $2.4 billion in budgetary voted expenditures related to 16 departments
and agencies. As mentioned in previous appearances, these documents support
the appropriation bill you will be asked to vote on related to supplementary
With that, I will turn it over to Marcia to give us a walk-through of
where you find the various items on bridges.
Marcia Santiago, Executive Director, Expenditure Management Sector,
Treasury Board of Canada Secretariat: Mr. Chair, members of the
committee, with your permission I would like to go over the main items
regarding the federal bridges in this budget.
More specifically, three organizations are requesting supplementary votes
totalling more than $379 million, as the government announced in Budget
Most of these funds will be allocated to the Société Les Ponts Jacques
Cartier et Champlain Incorporée and to the Office of Infrastructure of
Canada for bridges and other federal structures in Montreal.
As has been widely reported, several of these structures are aging
rapidly and are in an advanced state of deterioration, especially the
First, Infrastructure Canada is requesting close to $120 million in these
supplementary estimates to begin work on the planned replacement of the
Champlain Bridge, specifically land acquisition, planning and procurement
for the project. Eventually, this work will include a new Nuns' Island
Bridge as well as reconstruction and widening of the highway, but the $120
million being requested is only for the portion of the funding that the
department intends to spend this fiscal year.
In addition, Jacques Cartier and Champlain Bridges Incorporated, the
Crown corporation, is requesting $254 million for operating costs, repair
and maintenance of existing structures. This includes urgently required
safety repairs on the Champlain Bridge and the construction of a temporary
bridge causeway to replace the Nuns' Island Bridge. There are also other
funds going toward structures maintained by the same Crown corporation, but
the majority of this funding is intended for Champlain and the Nuns' Island
Finally, an item for $5.6 million is included in these estimates for
activities to be undertaken in this fiscal year to establish the
Windsor-Detroit Bridge Authority, which is the new organization that Mr.
Matthews mentioned earlier. The transition of responsibilities from
Transport Canada is expected to take 12 to 18 months, following which time
the bridge authority will conclude planning activities and move on to
overseeing a public-private partnership, or P3, procurement process.
To sum up, these three items supporting federal bridges make up a
horizontal theme not normally captured in either the publication or in our
horizontal initiatives database posted online. However, as they represent
about 15 per cent of the authority sought in these estimates, we thought
this short summary could help in your study.
The Chair: Do you have a list of all the bridges that are
exclusively in Canada, not the ones at border crossings, which are federal
Mr. Matthews: I do not have an exclusive list. There are about 500
bridges, but the organizations that would maintain those are Parks Canada,
the National Capital Commission. Public Works is involved, as is Transport
Canada and its related Crown corporations. The major bridges receiving
funding that are not international in nature are the Montreal bridges we're
speaking about today, but there are many other small bridges.
The Chair: I'm familiar with the bridge across the harbour in
Saint John, New Brunswick, and I know how much the federal government wanted
to get out of that. Can I assume all the bridges here in Ottawa-Hull are all
federal government bridges?
Mr. Matthews: I'm not sure. I haven't got the exclusive list.
The Chair: Can I assume the bridge in Kelowna, British Columbia —
really like a floating bridge — is the federal government?
Mr. Matthews: Generally speaking, anything that's interprovincial
you can sort of assume is federal in nature.
The Chair: Like these bridges in Montreal.
Mr. Matthews: They're unique. Can I get you a list of all 500?
The Chair: That would be helpful.
Mr. Matthews: I don't think I can get all 500, but the major ones
I'm sure we can get for you.
The Chair: That would be helpful. See if you can include in that
why we're building a bridge to Nuns' Island. It seems most peculiar to me.
Mr. Matthews: You have to look back; it's historical. I'll
generalize. Some of the bridges relate to the Port of Montreal, a federally
owned property. Other works there are related to the construction of the St.
Lawrence Seaway, which was a federal project as well. You have to look to
history to understand why we own them.
The Chair: I'll get it from you later, not as a witness.
Senator Hervieux-Payette: It's being built now, but to have access
to the new bridge they have to —
The Chair: This is Nuns' Island?
Senator Hervieux-Payette: Yes, that's what you asked. They have to
deviate. They cannot use the old one.
Senator Bellemare: My first question is about Employment and
Social Development Canada and the $500 million labour market development
agreement, funds which, according to you, are included in Supplementary
Estimates (A). This is not new money as such, since that agreement expired
in 2014. Were these $500 million statutory previously? Because now, since
the agreement has expired and was renewed, the funds are in the
Mr. Matthews: Thank you for your question, senator.
The labour market development agreements were in place from 2007 to 2014.
You're right. These agreements are now over and have been replaced by the
Canada Job Fund. The Canada Job Fund funding is voted in nature.
Do you remember if it was statutory or voted?
Ms. Santiago: I can't.
Mr. Matthews: I can't recall if the predecessor was voted or
In the funding you've got $500 million; $490 million is grants and
contributions and will flow to the provinces, and roughly $9 million is for
the department for operations of these funds. This new arrangement is six
years in length, so you will see them out like this for each of the next six
years, $500 million a year.
Senator Bellemare: My second question is about the percentages. On
page 1 of 7 of Supplementary Estimates (A), we can see, as you said, the
increase which is now in percentage form of the spending authorities
proposed to date. I note that, in several cases, these percentages are quite
When we look at the real expenditures, we know that the government has
made a lot of efforts to reduce its expenses, and in the budget, when it is
tabled, it is clear that budgetary expenditures are still inferior to the
real expenses in total. Here, a few organizations have asked for additional
My question is the following: when we analyze budgetary expenditures over
time, do we see a real decrease in budgetary expenditures or, through the
supplements, do the departments increase the authorized votes so that
budgetary expenditures have changed little? Here we have figures for 2012-13
and 2013-14, but that is not a sufficiently long horizon to get a better
grasp of the evolution of budgetary expenditures.
Mr. Matthews: I thank you for the question. The figures in
Supplementary Estimates (A) are going to increase the figures in the main
The supplementary estimates certainly increase spending authorities over
what is in the Main Estimates. You'll see in many of these new items there
is a link back to which budget the funding was announced in. So you'll see
PPP Canada was Budget 2013. What we're dealing with here is a timing issue.
The vast majority of spending here was previously announced in budgets. The
odd time we hit urgent spending that was not foreseen in a budget, but
generally speaking it relates to a previous budget, so we're not increasing
spending over a budget.
Budget 2014-15, on an accrual basis, was forecasting government spending
of roughly $280 billion.
I know estimates are on a cash basis so it's different, but we are now
including Supplementary Estimates (A) at about $240 million or just under.
Last year, 2013-14, for total authorities I believe we were at about $260
million, so we're still under that. The spending in here is not spending
that was foreseen in the budget. It's spending plans that were included in
previous budgets and in fact the department is now ready to spend some
Senator Bellemare: Why was this not included in the Main
Mr. Matthews: It is the role of Treasury Board to include that in
the Main Estimates or the supplementary estimates. We have to convince the
minister responsible for Treasury Board that the department has already done
all of the planning to determine exactly how the money will be spent.
You can have an idea in a budget. We're going to spend X. That's fine.
Before it hits the estimates documents, you have to be able to come into
Treasury Board and say, "Here is in detail what we're going to spend; here
are our performance measures and how we will measure them." That sometimes
takes two or three years — not always, but it can.
Senator Hervieux-Payette: Does the second item, on page 4,
regarding the Jacques-Cartier and Champlain Bridges, not concern new bridges
at all, but current structures?
Mr. Matthews: Yes, it concerns existing bridges.
Marcia also mentions there are funds in another spot in the estimates for
the new bridge, but the funds I referred to on slide 7 are for the
maintenance of the infrastructure maintained by Jacques Cartier and
Champlain Bridges Incorporated.
Senator Herview-Payette: This morning on the news they said that
the Mercier Bridge was dangerous and that it will require a lot of work. We
have a certain responsibility regarding the Mercier Bridge in Montreal as
well. Does that mean that those repairs will be in a supplementary estimate
during the year, if there is an agreement on repairs? You do not even need
to be an engineer to see it, when you see the bridge, you can see the rust.
You have to say your prayers before crossing it.
I would like to know if we are going to revisit this file with a
supplementary estimate. I would like to know how the file evolves; what is
Mr. Matthews: For the senators who may be less familiar with the
Jacques Cartier and Champlain Bridges Incorporated, that corporation is
responsible for numerous pieces of infrastructure. I will run through the
list of what they're responsible for.
That corporation has responsibility for the Jacques Cartier Bridge, the
Champlain Bridge and the related ice control structure; the Nuns' Island
bridge, the existing one, not the temporary one; the Honoré-Mercier Bridge,
the Bonaventure Expressway; Highway 15; and Melocheville Tunnel. Those are
the main pieces of infrastructure that that corporation maintains.
As for the maintenance dollars that are being voted on here, the vast
majority is for the Champlain Bridge, but those maintenance dollars can be
used for any one of those infrastructure pieces. So if the bridge
corporation decides they need additional funding beyond what's here to do
maintenance work this year, they could come back on a future supplementary
estimates, but the breakdown of how this $253.6 million will be spent could
be across the various pieces of infrastructure.
You mentioned the Honoré-Mercier Bridge. I know there has been re-decking
work going on for a number of years, and that work is continuing. Let's not
forget this corporation has base funding in the Main Estimates, additional
funding in Supplementary Estimates (A); if more is needed, they could
conceivably come back in a future supplementary estimates, but I'm not aware
of any plans to do that.
Their Main Estimates funding in 2014-15 was $146.1 million. That is their
base, and we're topping that up through Supplementary Estimates (A) with an
additional $253.6 million.
That brings your year-to-date total up to around $400 million for that
On the next page, page 8, you can see the following: Office of
Infrastructure of Canada, new bridge for the St. Lawrence. Are they talking
about the new Champlain Bridge? Given the wording in the document, one
cannot tell whether this concerns the new Champlain Bridge: $119 million.
Mr. Matthews: It's a replacement for the Champlain Bridge. It's
the new bridge for the St. Lawrence, so it will be a replacement for the
I'm sure senators are aware that the initial intent was to bring that
bridge into service in 2021. That has been advanced to 2018 because of the
condition of the Champlain Bridge. That bridge also includes the new
permanent structure for Nuns' Island, so when we talk about the Champlain
Bridge, it's the big bridge to replace the Champlain as well as the
replacement of the existing Nuns' Island Bridge.
The temporary Nuns' Island Bridge, the causeway, is supposed to be in
service by 2015. That's not included in this part, so it's confusing.
Senator Hervieux-Payette: The Office of Infrastructure Canada just
made a calculation, but are they the ones that will be supervising? Will the
realization of the bridge be done by a private enterprise?
Mr. Matthews: The intent is to explore a private-public
partnership to construct it. That has been discussed. The Office of
Infrastructure Canada is getting the funding for this work. At a later date,
one could decide something different. If you think about the Windsor-Detroit
bridge, there has been a decision made to create a new authority for that
bridge. One could imagine the same thing happening for this one, but at this
stage, the Office of Infrastructure Canada is receiving the funding.
Senator Hervieux-Payette: You cannot confirm to us whether there
will be a request for proposal and interest in the qualification of firms
that will build that bridge. I was told it was going to happen within a few
Mr. Matthews: Regarding the actual proposal, I can't speak in
terms of time. I know they're well advanced in their work. The funding for
Infrastructure Canada this year relates to acquiring land because they will
need the buy land to put the new bridge on, moving some utilities around,
and the procurement process.
The Chair: We will have Infrastructure Canada here tomorrow.
Mr. Matthews: The funding supports the procurement process, but in
terms of timelines, I can't speak to later on.
Senator Eaton: I guess I feel very frustrated because I see three
items in your supplements, 44.4, all Aboriginal Affairs — 44.4 to repay
$136.3 million for waste water and $127.7 million for contaminated places.
It's always hard because we don't know what other departments are
spending. We get no overall feeling. It seems to be a little amount here and
there, out of Indian and Northern Affairs, out of Natural Resources, out of
How could we finally get a graph where we can see everything, all the
money that goes? Because this country is under constant scrutiny from places
like the United Nations and First Nations peoples themselves. We're not
spending enough money or giving enough money. There is too much oversight.
How does one gather, as a senator, whether they have a case or not? We
have these three wonderful estimates here that amount to close to $250
million or $300 million, but what do we put it against?
Mr. Matthews: In the Supplementary Estimates (A), those three
items you flagged all go to the same department. If you're looking for the
document page number in Supplementary Estimates (A), it's 2-7 in the English
version, and I'll make sure it's the same in the French version.
Senator Eaton: Is that the total amount that goes to First Nations
in a year?
Mr. Matthews: No, that's the total amount to that department.
In Supplementary Estimates (A), the funds that you have mentioned, the
three projects, are all going to one department.
In the French version, it is on page 2-3.
That gives you the profile for one department.
However, Mr. Chair, the senator has raised a point that she would like to
see the total funding for First Nations, and that does cross multiple
departments, Health Canada being the obvious one. We are trying to improve
our horizontal reporting to get at these things. I believe since the last
time we were here, we provided senators with a breakdown of First Nations
spending that crosses all departments, so it's something we're trying to do
Senator Eaton: I'm sorry. I didn't get that.
The Chair: This is information reflected in our report, and it is
there. We haven't adopted the report yet, but there is some information in
the report, which we appreciate your help on.
Mr. Matthews: It's a valid question.
Senator Callbeck: Thank you for being here and for your overview.
I want to ask about the Office of Infrastructure Canada on 2-13. Down at
the bottom, it says "Small Communities Fund" and the amount is $12
million. It says "Provincial-Territorial Infrastructure Component — Small
Communities Fund." Is that $12 million all going to small communities, in
other words, with populations less than 100,000?
Mr. Matthews: Under this fund there's a distinct carve-out for
communities with populations of less than 100,000, and that $12.7 million is
that piece, yes.
Senator Callbeck: That's in Supplementary Estimates (A). What is
the total amount in this New Building Canada Fund that will go to small
Mr. Matthews: The New Building Canada Fund promised about $53
billion over 10 years.
George Samiotis, Director, Treasury Board of Canada Secretariat:
The amount of $964 million is earmarked.
Senator Callbeck: For small communities?
The Chair: Over ten years, did you say?
Mr. Samiotis: Correct.
Senator Callbeck: There is a lot of concern being expressed in the
press about this program, certainly in the Atlantic area, that
municipalities still really don't know the details of all the criteria for
these projects. It is a big concern because we're into the construction
season right now, and they still haven't got all the details. That is what
I'm reading in the press.
Are there any agreements that have been signed in any of the provinces
with the feds?
Mr. Matthews: I believe there is one in Alberta. I'm recollecting
a project in Edmonton. I will turn to George.
So there is one signed in Alberta.
Mr. Samiotis: It's a light rail transit project in Edmonton.
Mr. Matthews: That being said, these agreements are difficult to
work out. It is federal-provincial-municipal. The questions on details and
how you apply are probably better asked to the department than to us.
Senator Callbeck: There are three here. There are national and
regional projects, and then there is the national infrastructure component.
Do there have to be three agreements with the provinces on this?
Mr. Matthews: There is more than one. There are three flavours of
First, there is the national infrastructure component, and that is not
allocated by province. Those are projects of national significance.
The second component is the provincial-territorial infrastructure. That
one is an allocation based by province, and the projects in that case are
jointly selected between the various levels of government. The criteria are
economic growth, clean environment and strong communities. Those are the
ones where you have to get agreement between the various levels of
government on what will be funded. I expect the comments you have seen in
the press relate to how to access the funds.
Then you have the small communities, which is another component as well.
Senator Callbeck: The other area I wanted to ask about is
Employment and Social Development, which is on page 2- 3. The $500 million
is going to the Canada job Fund. Part of that is for the Canada Job Grant.
Where does that stand right now? I know there was a lot of concern expressed
about that by the provinces; they didn't have the authority to contribute
and they weren't consulted. Has there been an agreement with the provinces?
Mr. Matthews: There are three components. The first is the Canada
Job Grant, and that is cost shared between the governments. There is an
agreement in principle, or an MOU, with all provinces and territories. Some
agreements have been finalized.
Ms. Santiago: As of the first week of May, four agreements have
been signed with Ontario, Manitoba, Alberta and B.C.
Senator Callbeck: That's a six-year.
The other question I should have asked was on Infrastructure as well.
With respect to the gas tax, is there money for gas tax in that?
Mr. Matthews: I'll have to get back to you on that one. Can we
come back to that later?
Senator Callbeck: Sure.
Senator Rivard: I would have a few questions concerning the
additional funds needed for pension funds at VIA Rail. I suppose that if we
have to add $101.6 million to the pension fund, the last actuarial forecast
must be over a billion. I suppose the answer is probably that the expected
deficit is going to be more than a billion dollars.
Mr. Matthews: A bit of background on VIA Rail before I get to that
specific question. VIA Rail is a Crown corporation and must follow the
private sector regulations in legislation for funding its pension plan. The
way that works, under the Pension Benefits Standards Act, is where you have
a deficit, you have five years to fund the deficit. We have seen an amount
for VIA Rail before and we will likely see a bit in the future, but going
If you look at VIA Rail's annual report and financial statements, they
show a liability of $43.7 million for their pension plan. That's down
significantly from the previous year.
We're expecting the contribution this year to be around $100 million for
the employer. Basically over the five years, two or three years back and a
couple of years forward, you will see the deficit made up. It's expected the
annual contribution from the federal government to make up that deficit will
be decreasing in future years because VIA's pension assets are performing
better since the recession. So payments are still required but they are
Senator Rivard: Is the current plan a defined benefit plan?
Mr. Matthews: The current system is defined contribution,
pre-determined benefits. There have been changes made to the plan to make it
more affordable. They have moved to a greater employee share of cost-sharing
in terms of premiums, but the actual arrangement in question here is defined
Senator Rivard: Currently, is the employer-employee contribution
rate approximately 50-50?
Mr. Matthews: It has moved towards 50 per cent employer-employee
as most Crowns have moved to a new cost- sharing arrangement.
Senator Rivard: They are not there yet. They are tending toward
50-50. As in most public pension funds, whether at the municipal, provincial
or federal levels, there are deficits caused by the old defined benefit
Barring a miracle, unless the stock market yields about ten per cent per
year for the next ten years, all public organizations are heading toward a
deficit that will have to be paid. We are also going to have to change the
defined benefit plans and especially the employer-employee percentage,
otherwise we are going to hit a wall. That was just a comment.
Mr. Matthews: Not all pension plans are the same in terms of how
they perform, so VIA is the only Crown corporation plan that required
funding from the federal government in terms of their pension plan.
The pressure on pension plan liabilities was around two things. The big
one was the drop in the stock market. Plans have recovered, but that takes
time to work its way through the system.
The second piece is the longevity of employees. Employees are living
longer, and that will have an impact over time.
These are long-term liabilities, so the stock market eventually does
correct itself. The gains or losses that were incurred during the recession
have worked their way through, and you'll see better performance.
Marcia has an answer on the gas tax.
Ms. Santiago: The short answer is no, there is nothing directly
for the gas tax in the supplementary estimates.
The Gas Tax Fund is a statutory payment of close to $2 billion that was
listed in our online annex on statutory forecasts in the Main Estimates.
However, Infrastructure Canada, in these supplementary estimates, is
getting something in the order of $44 million in operating costs. That
includes a small portion to administer the Gas Tax Fund.
Senator Chaput: I would like to refer you to page 2-10, regarding
the Indian Residential Schools Truth and Reconciliation Commission. We see
there were two transfers from Aboriginal Affairs and Northern Development
Canada allocated to the operational needs of the commission and to the
expenditures related to the production of reports.
These are additional requirements, and I presume the commission does not
spend all of these funds in the same year.
Mr. Matthews: You are correct. These represent transfers from
other organizations. The Indian Residential Schools Truth and Reconciliation
Commission — do you want to look at their base funding from the Main
These are transfers. It is not new money in terms of things requiring
voting by Parliament, because the amounts are new but Parliament does have
to approve transfers. These are transfers coming in from other organizations
which in effect supplement the Main Estimates of the organization. I have
just realized I'm staring right at their Main Estimates number in front of
To start the year, "Indian Residential Schools" at the top of the page,
if you look down to "Total Budgetary Expenditures," the first column says "Previous Estimates to Date." That would be the Main Estimates amount, and
now we're supplementing that with these transfers.
On the far right you get the "Proposed Authorities to Date," which is
the Main Estimates plus adjustments in supplementary estimates.
Senator Chaput: That is the total?
Mr. Matthews: That is the total, yes.
Senator Chaput: Is that for one year? Or for five years? Does it
recur year after year?
Mr. Matthews: In terms of the transfers?
Ms. Santiago: The mandate was extended. It was originally expected
to expire this June. That's why they started with only a partial amount of
money in mains, but it has been extended by one year until June 2015 to
allow time for the finalization and the translation of the report.
Senator Chaput: I now refer you to page 2-7, Indian Affairs and
Every year, there are additional requirements for the management of the
First Nations Water and Wastewater Action Plan. Does someone, somewhere,
ensure that the file is progressing and that there are results? Every year I
ask the same question, but I should really put it to the Department of
When I see this amount coming back every year for the renewal of the
action plan, I always wonder if there is someone who is checking the amounts
allocated to treatment and maintenance. Is someone examining the results? At
a certain point, will all of the First Nations have access to clean drinking
Mr. Matthews: Thank you for the question. You are correct, the
First Nations Water and Wastewater Action Plan was launched in 2008 and
In Budget 2014, the decision was made to extend the program for another
two years, so an additional $323.4 million over two years. You are seeing
part of that this fiscal year. The efforts are very much around not only
infrastructure but also capacity building, setting protocols and standards
and training. So it is not just building infrastructure.
If you are looking for performance information on how the program is
performing, I would say two things. The first is that the decision to
continue the program is a signal that they're getting results. You can look
to the department's Report on Plans and Priorities and Departmental
Performance Report; that's exactly what that is for is, to get information
on the progress they're making.
The Chair: We have gone over our time, but we have gained some
time. We want to thank you very much.
I want honourable senators to understand the point that was made by Mr.
Matthews that the previous two witnesses, AECL and Public Works; it was $195
million each. It is unfortunate it was the same number; some of the
questions sounded like people were assuming it is the same amount.
Mr. Matthews: You are right. It is the same dollar figure but two
different $195 million figures for two different purposes.
The Chair: We want to thank you. Senator Eaton was asking a
question with respect to total expenditures for Northern Development and
Aboriginal Affairs. We have that in our report that we will be reviewing,
but it is based on the information you were able to provide us.
We continue to have interest in these horizontal items so we can see how
much is going to various departments on a subject matter. We would encourage
you to continue to update that. It is $10.8 billion through various
We will be meeting this afternoon at 2:30 in room 160-S, and we're
starting Bill C-31 and the reports from other committees. We have two
committees coming: Legal and National Defence. What I would like to do is
look at the report that came up through Senator Eaton's question. It is the
second interim report, and it is the basis for main supply.
We have to get this report in. It's been circulated to everybody, and so
if you are happy with it, subject to any small typographical errors and
those changes, then we can adopt and file that one.
Senator Chaput: This afternoon?
The Chair: This afternoon. So bring that one with you. We can deal
with our report with respect to C-31 tomorrow evening.