Proceedings of the Standing Senate Committee on
National Finance

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 comments.

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 radioactive waste.

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 have.


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 stakeholders.

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 planned availability.

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 business model.

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 government.

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 model.

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 this autumn.

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 jobs.

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 that right?

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 contract?

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 security.

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 them.

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 material.

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 United States.

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 these reactors.

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 Smith.

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 work tomorrow?

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 right now?

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 sets.

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 economic growth.

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 Canada.

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 specific project?"

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 made.

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 industry.

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 that.

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 are down.

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 actual production?

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 or not.

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, finally?

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 laboratories.

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 that.

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 needs.

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 needs.

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 their reactor.

We also have strengths in decommissioning technologies. How do you deal with the decommissioning of contaminated buildings safely and economically, going forward?

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 map.

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 Canada?

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 materials.

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 environmental protection.

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 responsibility.

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 hydroelectricity.

SNC-Lavalin purchased the CANDU reactor department in 2011. Do you remember whether SNC-Lavalin purchased it before or after the Japanese disaster?

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 undertaking.

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 excellence.

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 the reactor.

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 standards.

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 projects.

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 currently.


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 agreeable.

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 (A).

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 loans.

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 goes on.

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 funding there.

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 2013 announcement.

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 Manitoba.

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 estimates.

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 2014.

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 Champlain Bridge.


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 replacement.

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 responsibility?

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 supplementary estimates?

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 statutory.

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 high.

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 amounts.

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 expenditures.


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 money.


Senator Bellemare: Why was this not included in the Main Estimates, then?

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 the process?


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 corporation.


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 Champlain Bridge.

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 months.

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 you.

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 better on.

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 communities?

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 funding.

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 down.

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 going down.


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 benefit.


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 plans.

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 Estimates?

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 me.

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 Northern Development.

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 Indian Affairs.

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 water?

Mr. Matthews: Thank you for the question. You are correct, the First Nations Water and Wastewater Action Plan was launched in 2008 and continues today.


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 departments.

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.

That is all for now.

(The committee adjourned.)