Proceedings of the Standing Senate Committee on
National Finance
Issue No. 6 - Evidence - April 20, 2016
OTTAWA, Wednesday, April 20, 2016
The Standing Senate Committee on National Finance met this day at 6:45 p.m. to examine the expenditures set out in the Main Estimates for the fiscal year ending March 31, 2017.
Senator Larry W. Smith (Chair) in the chair.
[English]
The Chair: Good evening everyone. Welcome to the Standing Senate Committee on National Finance. My name is Larry Smith, senator from Quebec, and I'm the chair of the committee.
[Translation]
This committee has the mandate to examine the federal estimates and government finance generally.
[English]
This evening we continue our study of the Main Estimates 2016-17. Let me introduce the other members of our committee. From Alberta, Senator Grant Mitchell.
[Translation]
Senator Diane Bellemare from Montreal, Quebec, is here, as is Senator Nicole Eaton from Toronto, Ontario.
[English]
From the Rock, where they just had 35 centimetres of snow and 100-kilometre winds, so she is happy to be here in Ottawa, Senator Marshall, former Auditor General of the Province of Newfoundland.
[Translation]
We have representatives from three federal bodies joining us this evening to discuss the 2016-17 Main Estimates.
[English]
From Natural Resources Canada we welcome Kami Ramcharan, Assistant Deputy Minister and Chief Financial Officer, Corporate Management and Services Sector. She is accompanied by two other officials, who may be called to the table to answer questions if need be.
From Environment and Climate Change Canada, we are pleased to have Carol Najm, Assistant Deputy Minister, Chief Financial Officer, Finance Branch; and Dan McDougall, Assistant Deputy Minister, Strategic Policy Branch. They too can count on a delegation of six specialists in the audience to help answer questions.
From Atomic Energy of Canada Limited we welcome Richard Sexton, Chief Transition Officer (Acting), Vice President, Decommissioning and Waste Management Oversight; and Shannon Quinn, Vice President, Science, Technology and Commercial Oversight.
Welcome to you all. I understand that each organization has an opening statement. We will begin with Natural Resources Canada, then Environment and Climate Change Canada, and Atomic Energy of Canada Limited. You're opening remarks will be followed by our questions.
Miss Ramcharan, the floor is yours.
Kami Ramcharan, Assistant Deputy Minister and Chief Financial Officer, Corporate Management and Services Sector, Natural Resources Canada: Thank you, chair. It's a pleasure to meet with the committee to discuss Natural Resources Canada's 2016-17 Main Estimates.
Let me take a moment to briefly outline what is in the Main Estimates for us this upcoming year. They reflect the government's focus on ensuring that our resource sectors remain a source of jobs, prosperity and opportunity in a world that values sustainable practices.
Our total authorities for 2016-17 amount to $1.592 billion, which includes $796.7 million for statutory payments; $450.2 million for operating expenses; $292.3 million for grants and contributions; and $53.3 million for capital expenditures.
NRCan's 2016-17 Main Estimates are $622 million less than its 2015-16 Main Estimates, which is roughly a 28.1 per cent reduction. The decrease is mainly related to our reduction in our statutory payments under the Atlantic Offshore Accord Acts, the restructuring of Atomic Energy of Canada Limited Nuclear Laboratories, and program designed to sunset or wind down at the end of 2015-16, such as the Clean Air Agenda.
The 2016-17 Main Estimates reflect a decrease to statutory authorities of $441.7 million and a decrease of voted appropriations of close to $180 million.
Our statutory payments within NRCan relate principally to the Atlantic Offshore Accord Acts, with additional authorities for contributions to employee benefit plans and the Minister of Natural Resource's salary and car allowance.
In the 2016-17 Main Estimates, the decrease is a result of the following key items: a decrease of $438.6 million for the Atlantic Offshore Accord Acts due to an anticipated decrease in royalty revenue as a result of changing production levels and pricing; a decrease of $3.1 million in contributions related to employment benefit plans mainly due to reduced salaries in 2016-17 as compared to 2015-16 related to sunsetting programs.
The Main Estimates voted appropriations are presented in three categories; operating expenditures, which includes funding for salaries and other operating expenditures such as travel, translation and acquired services, $450.2 million; our capital expenditures, vote 5, which includes acquisition and major repairs to buildings, machinery and equipment, $53.3 million including $44.8 million for the Federal Infrastructure Initiative; and our grants and contributions, vote 10, for transfer payment programs such as ecoENERGY for Biofuels and the Forest Innovation Program, for a total of $292.2 million.
High-level differences in voted appropriations from 2015-16 to 2016-17 Main Estimates of $180.3 million reflect the profile of spending under a range of items. We have reductions of approximately $298.8 million: $139.6 million related to the restructuring of AECL; $93.4 million related to the sunsetting of our Clean Air Agenda programs; $27.3 million related to our Port Hope Area Initiative spending profile; and $21.8 million related to our ecoENERGY for Biofuels program. This program is designed to have a declining incentive rate. That was expected. There is $13.6 million due to the reduction in the funding profile related to Wind Power Production Incentive Contribution Program, and $3 million related to other programs.
These decreases are offset by the following increases in requested authorities of $118.5 million: $44.8 million for the Federal Infrastructure Initiative; $4 million related to the renewal of the Targeted Geoscience Initiative; $3.3 million related to our Major Project Management Office; an increase of $40.2 million related to Sustainable Development Technology Canada for the Sustainable Development Tech Fund; an increase of $14.1 million related to Investments in the Forest Industry Transformation Program; an increase of $7.1 for enhancing national earthquake monitoring; and a net increase of $5 million for defining the outer limits of Canada's continental shelf in the Arctic Ocean — Mapping of the North Pole.
Subsequent to the release of the Main Estimates, Budget 2016 has provided additional funding as follows: $87.2 million over two years to support and update our facilities that support research in forestry, mining and minerals, earth sciences and mapping, as well as innovation and energy technology; $82.5 million over the next two years for the research, development and demonstration of clean energy technologies; $62.5 million over two years for recharging stations for electric cars, and refueling stations for vehicles powered by natural gas and hydrogen; $50 million to invest in technologies that will reduce greenhouse gas emissions from the oil and gas sector; and $2.5 million to support regional dialogues and studies that identify the most promising electricity infrastructure projects. We are also investing $128.8 million over five years to develop new energy efficiency programs and policies.
These investments will not only help support Natural Resources Canada continue our leading edge research but will also encourage job creation, economic growth and long-term prosperity across the country. The results of Budget 2016 really increase our operating reference levels to similar to that of last year in 2015-16.
Mr. Chair, Natural Resources Canada's 2016-2017 Main Estimates clearly demonstrate how this department is committed to delivering the Government of Canada's policy program and service delivery priorities, and doing so in a fiscally responsible manner.
Thank you again for the opportunity to appear before the committee.
Carol Najm, Assistant Deputy Minister and Chief Financial Officer, Finance Branch, Environment and Climate Change Canada: Thank you for inviting us to speak today. I'm here with my colleague Dan McDougall, the Assistant Deputy Minister of the Strategic Policy Branch.
[Translation]
We welcome the opportunity to discuss the 2016-17 Main Estimates for Environment and Climate Change Canada.
The department is a diverse, science-based organization responsible for the protection of our natural environment. The 2016-2017 Report on Plans and Priorities summarizes actions we will take to address climate change and ensure a clean and prosperous environment, while fostering a sustainable economy for present and future generations.
[English]
These Main Estimates represent the initial budget required to ensure the department has the resources to deliver on its mandate.
For Environment and Climate Change Canada, total planned spending for fiscal 2016-17 outlined in the Main Estimates is $902.1 million. This is a $59 million or 6 per cent reduction from last year's budget. This decrease is mainly attributable to funding that has sunset on March 31, 2016, for three initiatives that include: $90.9 million for the Clean Air Agenda; $15.6 million for the Meteorological Services of Canada Renewal; and $10.4 million for the Federal Contaminated Sites Action Plan. This decrease also includes $8.5 million due to a reprofiling of funds from 2016-17 to future years related to the Contaminated Sediment Remediation Projects.
These decreases are offset by an increase of $66.4 million for the following programs: $40.2 million for Sustainable Development Technology Canada to finance and support the development and demonstration of clean technologies that provide solutions to issues related to climate change, clean air, water and soil quality to deliver economic, environmental and health benefits to Canadians; $12.8 million for the renewal of the Species At Risk Act Program, used for several components, including assessment, listing, recovery plans, implementation, monitoring and evaluation activities; $10.7 million for budget 2015 Federal Infrastructure Initiative to enhance Environment and Climate Change Canada's services in the North, and to enhance access to wildlife areas. It also includes other small increases for various programs totalling $2.7 million.
Funding for priority initiatives included in the sunsetting programs noted above was also included in Budget 2016, and these include: supporting the development of a new pan-Canadian framework for clean growth and climate change; advancing domestic climate change and ensuring international cooperation to address climate change and moving towards a cleaner transportation sector; taking action to address air pollution; accelerating the cleanup of federal contaminated sites; and renewing our commitments to protecting the Great Lakes, the St. Lawrence River Basin and the Lake Winnipeg Basin. Funding for these initiatives will be reflected in future estimates documents.
[Translation]
We welcome your questions, and once again thank you for inviting us to appear before you today.
[English]
Richard Sexton, Chief Transition Officer (Acting), Vice President, Decommissioning and Waste Management Oversight, Atomic Energy of Canada Limited: It's a pleasure to be in front of the Standing Senate Committee on National Finance to discuss Atomic Energy of Canada Main Estimates for 2016-17. Our appearance in front of you is timely, indeed. Atomic Energy Canada Limited, or AECL, just successfully completed a very comprehensive restructuring process. Tonight, I would like to tell you a little bit more about our new roles and discuss how this impacts AECL's Main Estimates.
The restructuring of AECL, which was led by the government, was done in two phases. The first phase focused on AECL's CANDU reactor division which was sold to Candu Energy, a solely owned subsidiary of SNC-Lavalin, in 2011. The second phase of the restructuring focused on AECL's nuclear laboratory division, which delivers two main areas; conducting nuclear science and technology to support both the government and industry, and managing the government's radioactive waste decommissioning responsibilities. This liability is currently estimated at more than $7 billion.
I'll come back to those two areas shortly, but to give you an idea of the scale we are talking about, we have three main sites: Chalk River, Whiteshell lab, and PHAI and close to 3,400 employees.
In 2013, the government announced its intent to implement a government-owned — contractor-operated model frequently referred to as GoCo, at the nuclear laboratories. This model has been used in both the United States and United Kingdom in the management of these very large and complex nuclear sites.
Today, the day-to-day management of all of AECL's sites is under the responsibility of Canadian Nuclear Laboratories, which is a private-sector contractor. AECL, as a Crown corporation, continues to own all the assets, sites and liabilities. Over the last year, AECL has been rebuilt as an expert-base small organization to oversee the contractor and ensure value for money for Canada. Our role is to play a challenge function, provide direction on priorities, and oversee funding.
Coming back to the two principal missions for which AECL is responsible, as part of the restructuring, the government confirmed AECL's role to ensure nuclear science and technology, and manage Canada's radioactive waste and decommissioning liabilities.
The decommissioning and waste management work is required to disposition a significant liability that Canada currently has, which is the result of more than six decades of nuclear research and development activities at AECL sites. With the GoCo model, the objective is to advance all this work and efficiently reduce the liability for Canada. We are advancing this work because it reduces the risk, life cycle cost, and is best practice around the world. This increased work to reduce Canada's liability is in part a reflection of our increased budget.
The second principal mission is related to nuclear science and technology. There is recognition that having a strong nuclear science capability is necessary for Canada. Again, as part of the restructuring, it was recognized that having a modern nuclear laboratory is an important asset for Canada. So as part of our budget, there is an increase in funding to revitalize the facilities and infrastructure at the Chalk River laboratory facilities.
The last point I want to make is that the increase in our Main Estimates is not quite as large as it appears, since in previous years we received funding through other sources that did not appear on the Main Estimates. But there have been increases nonetheless, and a large part of those increases is attributable to the increase in funding for our decommissioning and waste management activities, and the revitalization of the Chalk River Laboratories. We believe this is a good thing for Canada.
To conclude, AECL has gone through a very important and comprehensive transformation. The Canadian GoCo model is in place. Early indications are positive. We now deliver our mandate through a long-term contract with the private sector, and we are very much focused on reducing the liabilities and building a world-class nuclear science and technology laboratory, and our Main Estimates reflect these priorities.
Thank you.
The Chair: Thank you very much, sir.
I would be remiss if I didn't introduce Senator Percy Mockler from New Brunswick, as well as Senator David Tkachuk, Chair of our Banking Committee.
Thank you, gentlemen, for dropping by. We had another committee meeting just before this one, so I apologize on behalf of my colleagues. People were tied up and everyone has a busy schedule.
Let's start with Senator Marshall.
Senator Marshall: My question is for Natural Resources. Last night the minister responsible for the Treasury Board attended our committee meeting. We were talking about the Main Estimates and how the budgetary decisions — a lot of them, or maybe all of them — aren't included in the estimates.
The Main Estimates show a significant decrease. You mentioned increases, and I think they were outlined in the budget document. Could you give us an update? Once you factor in the items that were covered in the budget, how will the Main Estimates be revised? Right now it's at $795 million. The amounts that you mentioned were quite significant. Will that bring it back up to what it was in previous years?
Ms. Ramcharan: Thank you very much for your question. It's difficult to say yes or no. If I just talk about our voted appropriations — I'll leave our statutory out of this — what we will see in our voted appropriations will be a little bit of a decrease because, as my colleague from AECL has mentioned, we transferred a number of our resources from NRCan to AECL to support the Nuclear Legacy Liabilities Program, Port Hope Area Initiative. Our budget levels will be fundamentally reduced because of that. It's not a reduction in government spending; it's just a transfer from one organization to another. There is no decrease there.
If I take that aside and talk about what Budget 2016 has provided for us, it will be pretty well at the same level. So that's on the voted appropriation.
For statutory, though, you will see a significant decrease. You're all aware of the price of oil and its impact on production. When oil prices are low, oil production is reduced by virtue of that scenario. So the statutory amounts within our Main Estimates, we're not expecting to see them increase this year. It's not voted, so it wouldn't be announced in the budget in terms of doing that. Our voted appropriations will be pretty well at the same levels as they were last year; however, there were some adjustments made related to the transfer to AECL.
Senator Marshall: If we look at some of the items mentioned specifically in the Growing the Middle Class document, there is $42 million there over five years to Parks Canada and Natural Resources Canada. It says: ". . . to continue work on developing new national parks and marine conservation areas . . . .'' Could you give us some insight into which parks and how they would have been selected?
Ms. Ramcharan: I can't speak to the parks per se. Hopefully, if Parks Canada came, you would be able to do that. What we do, from Natural Resources' perspective, is the research and the science associated with looking at those protected areas. We will support them. So the large amount, the $44 million, won't come fully to NRCan. We'll have a small portion of that. Most of it will come to Parks Canada in terms of the work we are doing. What we will do is support the underlying research, understanding the parks and associated —
Senator Marshall: Would you be looking at specific areas?
Ms. Ramcharan: We won't know right now, but we will be, and it's more related to the outskirts. It's more for the marine parks than it is for the national parks that we have.
Senator Marshall: Would you know now which provinces would be included?
Ms. Ramcharan: Unfortunately, I would not know.
Senator Marshall: You mentioned Atomic Energy. What is happening with Chalk River? You mentioned it in your opening remarks.
Mr. Sexton: As I mentioned, the site has undergone a transfer or a transition to a GoCo model. In terms of the missions being delivered there, they remain essentially unchanged. We still are operating a reactor. The facility is still undergoing some decommissioning work. It also has elements of building some infrastructure. So no significant changes based on the change to the GoCo, other than we're working with our contractor to reconfigure and set their priorities around probably a longer mission and a revitalized lab.
Senator Marshall: What would be the long-term plans for that? Would that remain with you or is that going somewhere else?
Mr. Sexton: This is a contract structure, so in terms of whether it will remain, for the foreseeable future we will always retain ownership of the facilities. In terms of going forward, the contract we have is essentially a 10-year contract. It has a 6-year step-out point.
Senator Marshall: You mentioned in your introductory remarks that the significant increase in your budget is partially attributable to revitalization of Chalk River. Did I misunderstand you?
Mr. Sexton: No. You're absolutely correct.
Senator Marshall: How much of the $968 million would that be?
Mr. Sexton: I think Shannon could probably answer that. It's not as simple an answer as I think Shannon would tell you.
Shannon Quinn, Vice President, Science, Technology and Commercial Oversight, Atomic Energy of Canada Limited: Maybe I'll start with the last part of your question and then go back to the broader angle.
Of the $969 million that you will see in the Main Estimates, $530 million of that is for the waste and decommissioning activities. The remainder, $439 million, is for nuclear lab operations. Of course, that has quite a broad spectrum of elements. It includes all of those monies associated with running a very complex and extensive nuclear site. It also includes the monies that go towards all of the science and technology that is done that supports the federal government as well as the Canadian nuclear industry and industry more broadly.
It also has an aspect of it related specifically, as you mentioned, to the renewal of that site, so it has a capital investment. That capital investment is going to bring that site as a whole up to current standards because we know that site has existed for over 60 years, and it does need some renewal in order to carry on delivering and enduring the science and technology missions for the Government of Canada.
Going back to the broader aspect of your question around what is intended for the Chalk River site, many of you are well aware that the government has made a decision to operate the National Research Universal reactor until March 31, 2018, at which time it will be put into a safe shutdown state and then moved into decommissioning mode. I think when people hear that they sometimes think that means it is either the end of active operations at the Chalk River site globally or that in some aspect it means a winding down of the science mission at the Chalk River laboratories, and that is absolutely not the case.
The science and technology that goes on at the laboratories is far more varied and extensive than just what is done at the reactor. There is no doubt that the NRU reactor has been a fundamental and central part of nuclear research and development in Canada. Even today, while the NRU is still operating, the majority of the science and development that happens at Chalk River does not rely directly on that NRU reactor. It spans areas as diverse as health, all the way through to research and development in non-proliferation and nuclear security that supports Canada in its role both nationally and internationally.
Senator Marshall: So the budget there now is $968 million. Is that what you would anticipate the budget to be in future years?
Ms. Quinn: Coming back to this notion of budgetary announcements, we expect this level of funding that you see in the Main Estimates is the level of funding we anticipate this current year. The funding does vary a little bit from year to year, primarily due to changes in the profile of spending related to the waste and decommissioning mission.
Senator Marshall: So you don't expect to see anything there for Supplementary Estimates (A), (B) or (C)? In some previous years, Atomic Energy was in the mains, sups (A), sups (B) and sups (C). This looks to be it for the year.
Ms. Quinn: That's right. Actually, what you see here is different than previous years. As Richard mentioned, what you see in terms of the change relates exactly to this, that historically, funds have come through a variety of sources so you would only see a portion in the Main Estimates. Following the restructuring, what we expect is that the funding we need for the year we get through Main Estimates.
The Chair: Can I ask a supplementary on your question, Senator Marshall?
Senator Marshall: Sure.
The Chair: With respect to the horizontal movement of money between other departments and yourselves, how much would that have been on average in the past years?
Secondly, in the restructuring the Treasury Board will do in terms of getting the budget out and then estimates moving forward, you have a $7 billion liability potentially. What fluctuation do you potentially see in that number? Would it not be reasonable to assume that supplementary estimates could come from the fact that you need to do more waste management or you're working on X number of contaminated sites and you will need more money? Isn't that a variable?
Mr. Sexton: I don't think it will be a variable like you might guess. The way we anticipate delivering the decommissioning and waste management mission is a slight increase in pace over the next 5 to 10 years. But it's not as if we would expect that scope in any one year to radically jump.
We are working with our contractor on a long-term plan to see what needs to be done and what time frame is reasonable. The estimates that we have looking out further account for what's a reasonable pace at delivering this work. I don't see a radical increase from year to year on the ability of the contractor to actually change their ability to deliver that work in a significantly different volume year on year.
Senator Marshall: You led right into my next question. I wanted you to provide some insight into the contaminated sites. A couple of weeks ago we had somebody here, I think from Transport Canada, to talk about contaminated sites. I see you're also responsible for — that would be radioactive waste, would it?
Mr. Sexton: Yes. It's all contained in there.
Senator Marshall: So how does that work? You're going to take over the Nuclear Legacy Liabilities Program. Do you have a master list of all the contaminated sites? How does it work?
Mr. Sexton: I would say AECL's liability, for the most part, is not hundreds of sites. It resides principally at three places. You have Chalk River, the largest; you have the Whiteshell lab, the second largest; and then, as I think was alluded to recently, the Port Hope liability was moved over to AECL. Those are a lot of individual sites, but they're all essentially in a geographic area, Port Hope and Port Granby.
Senator Marshall: How do you approach those? Do you do everything in one year, or is it phased in? You must have some sort of master plan.
Mr. Sexton: Well, AECL maintains a nuclear liability estimate, and that estimate actually has embedded in it a schedule by which time it will be delivered.
Senator Marshall: What's the liability? How much?
Mr. Sexton: It's estimated currently at over $7 billion. I'm just going to throw out that this is our contractor's proposal. It has about 122 buildings that are redundant. Many of those buildings have either radiological or hazardous materials. The contractor has proposed — and we'll see how this works — to disposition those buildings in about 10 years.
The estimate still needs some work, but it's built around building by building, process by process. There's quite an elaborate and robust process by which you estimate the cost for those facilities or areas that you are going to decontaminate.
Senator Marshall: The liability is $7 billion, so the $968 million that's included in the Main Estimates this year, will some of that be used for the contaminated sites?
Mr. Sexton: Absolutely.
Senator Marshall: Then you would expect to —
Mr. Sexton: Retire that?
Senator Marshall: Yes. Over the next 10 years you would expect funding to be provided every year, would you?
Mr. Sexton: Correct. As part of the overall estimate, there will always be an element, certainly for the next 10 years, that will be funding decommissioning and waste management, which is specifically focused to retire that liability.
The Chair: They said there was going to be about $500-plus million this year in the budget of $968 million.
Senator Marshall: Would this be like other contaminated sites where you might have new ones every year, or is this pretty well fixed?
Mr. Sexton: For the liabilities, there's some small element; there might be a few. I won't go into the details.
We know the sites. I think international experience — because I've worked in the States and the U.K. — would suggest that there are not new sites, but there's maybe new knowledge about what that liability is, where the contamination is, how far spread it is and how expensive it might be to disposition that.
Senator Eaton: Ms. Ramcharan, I have in my notes that in 2010 a program was set up to help the forestry industry become more competitive. You upped that with an additional $90 million over 2014. I think in today's estimates, you have another $14.1 million for the investments.
Can you tell me what has been achieved so far in terms of innovation and recreating the forestry industry? I have to admit that it's a subject that Senator Mockler and I studied under his chairmanship of the Forestry Committee, so it's something we're both keenly aware of and interested in.
Ms. Ramcharan: I wish I could have my colleague from Forestry here, but I don't. What I can do is give you a sense of the general areas that they've been focusing their efforts on in terms of transformation in the forest industry.
As you know, a lot of the funding that we have to support our partners, FPInnovations — it's an organization that is operating with cost shares from industry, province, as well as the federal government.
Senator Eaton: We're very familiar with FP.
Ms. Ramcharan: Some of the funding we have within the department goes to FPInnovations, but this program basically looks at dealing with things related to bioenergy, biomaterials, biochemical and the next generation of building products. You've heard about the tall wood buildings and the fact that they're building different structures. This program and the programs we have for forestry support those initiatives.
Senator Eaton: Talking about tall buildings and building codes, have you had conversations with the building code people?
Ms. Ramcharan: Not personally, no. That would be one of those things, looking at the standards they set. Part of the funding in these programs would speak to that.
Senator Eaton: Could find out for us? That was something that we found was holding the industry back in terms of construction in wood; our building codes are not up to where the construction industries are.
We saw the skating oval at the Vancouver Olympics; it was all made of wood. A lot of that cross-laminated timber had to be brought in from the United States because we're not making that in Canada. It would be interesting to see if they had talked to the building people.
What I find intriguing is you have given $14.1 million for transformation programs. On the other hand, with regard to market access and diversification, you've dropped from 61 last year to 48 this year and going down to 43. Why, in an area where you want to build up the competitiveness of a certain sector, would there be a decrease in that market accessibility and diversification fund?
Ms. Ramcharan: For the Forest Innovation Program, as well as the Expanding Market Opportunities Program, we see a $2 million decrease from 2015-16 to 2016-17 estimates, so not a significant decrease.
Senator Eaton: I have 48 to 43 here in my book. Perhaps I'm wrong.
Ms. Ramcharan: I'm not certain.
Senator Eaton: It's right here.
Ms. Ramcharan: Is that the results on plans and priorities and programs?
Senator Eaton: This is budgetary Main Estimates.
Ms. Ramcharan: Okay.
Senator Eaton: Not to worry. Tell me why you think there's a decrease.
Ms. Ramcharan: There have been no reductions to those programs. What we have is spending profiles for each of those programs. When we start the initiation of a program, we go to Treasury Board to seek our resources, and we identify a funding program.
These two programs are going to be sunsetted within the next two years, so you will see a natural decrease in terms of the resources. It's not that support isn't being continued for those two initiatives; it's just the nature of the funding profile and how we describe the program when we initially went to Treasury Board Secretariat, Treasury Board ministers, to get the funding.
Senator Eaton: Thank you. I can't say it's helpful, but it's an answer.
How long have you been mapping a net increase of $5 million for defining the outer limits of Canada's continental shelf in the Arctic Ocean? How long has that been going on? Has that started?
Ms. Ramcharan: I'll find my notes with regard to that.
Senator Eaton: Aren't we trying to deal with the Russians, trying to get that finalized? There are questions as to who owns the North Pole.
Ms. Ramcharan: It's related to that. We have been doing a number of different surveys. I have notes here that take us back to 2011, where we've been thinking about our scientific data related to the mapping of the North.
In 2013, we filed a partial submission with the Commission on the Limits of the Continental Shelf, delineating the outer limits of the extended continental shelf in the Atlantic Ocean. In 2014-15, we did surveys for the Eastern Arctic, completed using our CCGS italic; Louis S. St.-Laurent and CCGS Terry Fox. The 2014 survey had limited success because of the heavy ice conditions, but our 2015 survey surpassed all of its objectives.
We have received an extension on this program. We have one more year on this program to finalize the survey data, so we will be going out again this year, depending on how it goes. When you're mapping the North, you never can tell whether or not you'll get exactly what you're looking for, but that's all part of the science program that we've been developing over a number years in terms of trying to define those limits in preparation for our presentation to the commission.
Senator Eaton: Is there a deadline as to when you have to go to the commission?
Ms. Ramcharan: We need to file it with the commission in late 2018 or early 2019.
Senator Eaton: So you have time.
I have one question on clean air and biofuels. On the one hand those programs are sunsetting.
Ms. Ramcharan: Yes.
Senator Eaton: But in your 2016 budget, you've got support for clean energy technologies. Will that include biofuel or wind energy, or are those two things out the window now?
Ms. Ramcharan: I wouldn't suggest they're out the window. The biofuels program is a long-term program, and we've been doing that. It actually sunsets in 2017. We have ongoing funding.
Normally what happens is we don't announce new funding in a program that's ongoing. We'll wait until we see what the government decides nearing the end of that program. It's the general kind of flow for the biofuels program. You will recall that it's a significant program. Over $920 million has been paid to biofuel producers, so it's a very successful program from that perspective. We're continuing down that path.
Senator Eaton: When you say "very successful,'' what makes it successful? Are we seeing a certain percentage of biofuels in all the fuels we put in our cars? How is it judged successful?
Ms. Ramcharan: One of the ways you can suggest that it's successful is because we've seen that biofuel industry grow from 200 million litres a year and no biodiesel production in 2005 to more than an estimated 1.7 million litres of ethanol and 3 billion litres of biofuel. You see some change happening within the industry, so you can say that the program is producing some of the things it intended to achieve.
We haven't done an evaluation on this program that will talk about it in more depth, but usually when we talk about renewal of programs, especially long-term programs like that, we would have an evaluation. We would look at the relevance, the efficiency and the effectiveness of it and make a recommendation in terms of the ongoing support to go forward.
Senator Eaton: Will that be done next year when the money runs out?
Ms. Ramcharan: It will be done before the money runs out. Typically, we would undertake the evaluations. It could be under way right now. Unfortunately, I don't know for certain, but we would do it in advance of thinking about a renewal for a program. Even if a program wasn't being renewed, we would still evaluate the program to find out if it did achieve the intended objective so that we can give good advice to government.
Senator Eaton: Perhaps next year when you're back we'll find out.
Ms. Ramcharan: Yes.
Senator Eaton: Ms. Najm, how much will your name change cost you? You don't have to change letterhead or signs?
Ms. Najm: The direction we have been given is we will change those initiatives as we replenish new supplies.
Senator Eaton: That's great.
Senator Tkachuk: Thanks for your testimony. I have a couple questions on Natural Resources Canada. Under "Capital expenditures,'' you have $53.3 million for buildings, machinery, equipment, including $44.8 million for the Federal Infrastructure Initiative. Is that $44.8 million part of the $53.3 million or in addition to?
Ms. Ramcharan: It's part of the $53.3 million.
Senator Tkachuk: What would you normally spend on major repairs, building machinery and equipment over a year?
Ms. Ramcharan: Roughly, what is interesting about Natural Resources Canada is that we don't have a significant capital budget within our regular appropriations. So typically, depending on what we need to do, we would spend around $8 million per year, but that would cover all our scientific equipment, any major capital repairs for our buildings, vehicles, anything we consider a capital expenditure, any item over $10,000 and that has a life greater than a year.
Senator Tkachuk: You would spend about $8 million a year?
Ms. Ramcharan: Yes, prior to.
Senator Tkachuk: This year you will spend $53 million.
Ms. Ramcharan: Exactly.
Senator Tkachuk: You must be happy.
Ms. Ramcharan: I'm exceedingly happy. It's a welcome addition to get our labs and facilities where we do our research in better condition than they were before.
Senator Tkachuk: There was something called a "Clean Air Agenda.'' There is $93.4 million in one budget. In Environment, it was another $90.9 million. You have them sunsetting. What do you mean by "sunsetting''? Everything ends on March 30, so everything is sunsetting. Was there legislation to sunset? How was that different than any other program ending on March 30?
Ms. Ramcharan: Sometimes programs are announced for five years or two years. Then they are called "sunsetting,'' because at the end of two years and five years, we have had some programs that are twenty years in length. You're given resources for a specific, fixed time. Different from your regular resources, we call them A-base resources versus B-base resources versus C-base resources. We call our sunsetting program C-base resources. They could be considered B-base resources because they are not part of a permanent allocation. You get money coming into your organization for a specific purpose and time, which then sunsets. Our Clean Air Agenda was usually a five-year program; it sunset last year.
Senator Tkachuk: What did you spend the money on?
Ms. Ramcharan: What did we spend on our Clean Air Agenda? We would have spent it on a number of different initiatives.
Senator Tkachuk: You both had $90 million. One had a little more and one a little less. You both spent money on something out of that $180 million.
Ms. Ramcharan: We have programs like our ecoENERGY program, our innovation programs or clean energy innovation programs, so it will be spread over a number of initiatives. We have initiatives along with my colleague in ECCC and dialogues where we talk about climate change. We would do things on climate change, impacts and adaptations within our programs. A number of smaller programs covered under the Clean Air Agenda would be part of that.
Ms. Najm: There are nine departments involved in the Clean Air Agenda, and there are about eight different themes. Climate change is clearly one. International engagement is another, along with adaptation, clean transportation and clean energy. All of those themes are included in the $90 million for Environment Canada.
Senator Tkachuk: The $90 million that was spent over the last number of years, was that the same amount every year? Was it $90 million in each department?
Ms. Najm: The $90 million is for Environment and Climate Change Canada.
Senator Tkachuk: That was just your piece of the action.
Ms. Najm: Correct.
The Main Estimates for each department will show their share of that envelope. The Clean Air Agenda was implemented in 2006. It was renewed in 2011 at a lesser amount than in 2006. Right now, Budget 2016 provides for funding relative to the same level we have had in the past fiscal year.
Senator Tkachuk: Basically it's the same program with a different name, but the same challenges and needs are going on. So a study on environmental issues like climate change was all packaged over the last 10 years into that Clean Air Agenda, and now it's broken up into other parts of the departmental spending.
Ms. Ramcharan: Exactly, but some of it would continue. If I think about energy efficiency, it's an area that was identified in 2006 that continued in 2011. It's continuing in 2016 because we haven't finished all we can do with regard to that program.
It still continues, but we evolve it. As we learn more and see what is going on in the environment, we can focus our programs to address realtime issues.
Senator Tkachuk: I noticed an item in resources: $62.5 million over two years — $31 million a year — for recharging stations for electric cars and refueling stations for vehicles powered by natural gas and hydrogen. Is this going to be done with the private sector, or are you going to provide subsidies for energy companies to include plug-in stations at the local Petro-Canada? Or is this the government setting up their own plug-in stations across the country for the 10,000 cars that we have across Canada?
Ms. Ramcharan: The program is being designed right now. It was announced in Budget 2016. This is new money that we would not have had available before in Natural Resources Canada. It is meant to support the deployment of infrastructure for alternative transportation and fuel, so not just electrical charging. It includes charging infrastructure for electric vehicles, as well as natural gas and hydrogen refueling stations.
It's not for the government to create its own charging stations and for us to be owners of those charging stations, but it is for us to work through grants and contributions with other organizations in order to deploy that infrastructure.
Senator Tkachuk: How did you come up with $62.5 million? It seems to me there was no program. It was just a number, and then with this $62 million, "Here is what you should do with it.'' Is that what I'm hearing?
Ms. Ramcharan: By virtue of the programs we would have had under the Clean Air Agenda — our energy efficiency, biofuels, the fact that we would look at a number of different energy technologies associated with it — when we come up with what we identify as resources to propose, it's based on that research and analysis in terms of thinking about what could we do in terms of supporting the overall infrastructure for the use of electric vehicles, and know that we have a challenge with charging stations. It's to look at that. So we don't just come up with it. It's based on our actual analysis, research and experience that we have had over a number of years to develop that information.
Senator Tkachuk: Wouldn't the experience have been that if there is demand —enough cars to plug in and charge — someone would open up a charging station?
Ms. Ramcharan: It's an interesting question.
Senator Tkachuk: Or is this for research purposes? I don't want to let you off the hook. This is a very interesting thing. It is odd to me.
Dan McDougall, Assistant Deputy Minister, Strategic Policy Branch, Environment and Climate Change Canada: Perhaps I could add a little context that will help the consideration of it. This is one of the items that was identified by first ministers in the Vancouver Declaration when they met with the Prime Minister and the premiers to look at how to advance climate change. Within the Vancouver Declaration, there was an item on early action by the Government of Canada to help support what we're trying to do. Clearly the transportation sector in Canada is a significant source of emissions still — it's about 25 per cent of our overall emissions — and electrification of that sector can go a long way to help reduce those.
So the commitment is that we would work in collaboration with the provinces in this area to see what we can collectively do to stimulate the deployment of electric vehicles in Canada. Provinces themselves are doing a lot on this front. As you already know, a number of provinces have subsidy programs that they are rolling out. There is also work going on through SDTC and other entities to look at the research side of things. So it's kind of a part of the bigger picture happening on this.
This early money is going to help stimulate the deployment of this. It will be part of the ongoing work that we've got now for the next six months with some working groups that are looking at what the next steps are on this. How are we going to advance this?
Senator Tkachuk: Just so I'm clear, you think that if have plug-in stations, that will stimulate people to buy electrical cars. I just want to make sure that's what you said.
Mr. McDougall: "Yes'' would be the short answer. If you have more stations, people will buy more.
Senator Eaton: This is interesting. I was listening to them discussing it last week, but they still haven't found the solution. It can now take four to six hours to charge your car. They haven't come up with something you can plug-in and, five minutes later, you can drive your car.
Senator Mitchell: Yes, they have.
Senator Eaton: No, they haven't. Not in Toronto. Maybe in Alberta.
Senator Mitchell: Everywhere else in the world.
Senator Eaton: No, they still do not have places — it takes four to six hours to recharge the battery in someone's garage. That's what they're saying — the challenge is to get it. I was listening as this whole discussion on cars. It has to be done in five minutes, like a gas station, as opposed to four to six hours of plugging it in. Has that problem been confronted or thought about?
Mr. McDougall: As my colleague noted, this is not just on electric charging. It's broader than that. There are other fuels — hydrogen and other sources of emissions-free transportation would be part this as well.
Second, the technology continues to evolve quite significantly.
Senator Eaton: I know, but you're spending the money this year.
Mr. McDougall: Indeed. It's not just the private sector involved with this. The various vehicles take different rates of time to charge, depending on how they are set up. Some of them can charge at faster rates; some of them are slower, depending on the charging station.
Senator Marshall: I always like to look out for my own province, so are you contemplating charging stations in Newfoundland? I'd like to know. Is there something planned for Newfoundland?
Mr. McDougall: I'll leave it to my colleague setting up the program. It's not set up yet. This is an area of discussion amongst all of the provinces and territories.
Senator Marshall: All of the provinces.
Mr. McDougall: We do have a working group that will look at transportation issues. Low-emissions modes of transportation will be something that everybody will be interested in.
Will it end up being deployed in the same way right across the country? Absolutely not.
Senator Marshall: No, you wouldn't have the population.
Mr. McDougall: The circumstances in each province will dictate what happens.
Senator Marshall: I'm wondering if anything will be contemplated for the Avalon Peninsula. This is where most of the people live in Newfoundland. Have you developed it to the extent where you would have an idea as to where you would put your money?
Ms. Ramcharan: I don't think we are there yet. We just got the announcement in Budget 2016. We are developing and designing the program, just to make sure about what we're doing. We're looking for the best impact for the money.
Senator Marshall: You are speaking to the various provincial governments?
Ms. Ramcharan: Yes.
The Chair: As a follow-up to Senator Tkachuk's question, you piqued my interest when we talked about the $90.9 million for clean air and then you guys had $90 million for a similar project.
Then, Ms. Najm, you mentioned that you work with nine departments. Can you walk me how nine departments work together and actually get something completed? I'm not trying to be facetious and silly, but how do you set it up? I went through the plans and priorities, as have our other members. We want to see results and understand how you not only operate and do your business, but the type of results you get.
I have run some fairly large organizations, and you guys are much bigger than anything I ever ran. But the way this is presented, there are so many damn objectives and sub-objectives and activities. I just ask that question: How do you work together with nine different groups? What results did you get from the actual program you worked on with eight other groups?
Ms. Najm: It's a good question. It's not done easily; it takes a concerted effort.
There are theme leads. You will recall there were five or eight themes in the envelope. Each theme has a lead department. That lead department has the pen on the drafting of the program and connects with all the other departments. There is a lot of collaborative work.
In the past, when the Clean Air Agenda went for renewal, there was an evaluation. Environment Canada led a horizontal evaluation across the themes. So the evaluation results also looked at the results from each department collectively.
The Treasury Board, recognizing that this is a large horizontal initiative, has horizontal reporting on the initiative annually, which means that departments all report their budget against actuals annually, across the theme for the whole Clean Air Agenda.
The Chair: Is the whole Clean Air Agenda continuing on in phase 2 and phase 3? Is it a continuous program? If so, are you folks — between the two groups — able to say what your top three results were? What did you accomplish, year to date, in phase 1 or phase 2?
For us, it's not only just seeing how much you spend and how many FTEs you have — that's really boring. What is interesting is understanding what you are trying to achieve and the dynamic of nine groups being together, the horizontal element. We are getting more understanding as we go forward in time.
We would like for you to be able to enunciate those results so that simple parliamentarians can understand that and be your biggest advocates in the marketplace for you.
I also saw in the first presentation that Ms. Ramcharan made, she had a big piece of money for the restructuring of atomic energy in terms of Mr. Sexton's and Ms. Quinn's operations. I am trying to tie those things together so we can all understand how you fit together in terms of the horizontal action.
Mr. McDougall: A couple of comments, perhaps.
First off, we'd be pleased to get you a copy of the evaluation studies that have been done, rather than me trying to remember off the top of my head.
The Chair: Is there an executive summary?
Mr. McDougall: There is an executive summary. It's a great, easy-to-read report. It's very accessible.
The Chair: Is it in your Report on Plans and Priorities?
Mr. McDougall: It's done differently, because it's actually an evaluation of this one program.
The Chair: It's a single report, then.
Mr. McDougall: A single report for each of the departments and looking over how it has been done. That would be very useful for your committee to have and take a look at because it does deal with the challenge that you're talking about.
Working across nine departments is complex. When you add to that, though, and when you're dealing with something like climate change and air pollutants, it's not just the federal government. It's a national problem
Senator Eaton: Aboriginal Affairs is another one.
Mr. McDougall: Indeed. So you have to look at how you work intergovernmentally on this, as well. It ties into the action we are taking internationally, because we're only a small part of the problem and a small part of the solution. We all have to figure out how we're doing.
One of the elements on the Clean Air Agenda is dealing with international actions, as well. That was the funding that provided the support for our negotiators from NRCan and Environment and Climate Change Canada to participate over the last several years in the work leading up to the new Paris agreement on climate change. That's funded through the international program of this agenda as well.
It's large and complex. I would say in general that we're getting better at managing these programs across departments in the federal government. We're making stronger connections with provincial, territorial and indigenous organizations and governments as well. That's evidenced in the work we have going on now developing a pan- Canadian framework on climate change, which is supported from the federal perspective by the funding that we have before you now in the mains.
The Chair: I'm sure there will be other questions related to that to expand the discussion.
[Translation]
Senator Bellemare: I would like to continue along those same lines. Obviously, when we talk about the Department of the Environment and Climate Change, or even the Department of Natural Resources, it is not as if we were talking about a department of education or health, where services are being delivered.
When we look at the budgets, we see that these are departments with relatively large budgets compared to the subsidies allocated. These are departments where the people work there. You aren't there to transfer money, but to provide services, and that isn't entirely clear. When we look, we know that it is meteorology. Everyone knows it is meteorology, but what we are less familiar with is the connection with the provinces.
Could you please tell me a little more about the two departments: do they have any deliverables or services in common or joint productions? What do you do with these full-time equivalents between your department and the provinces, and how do you organize yourselves in order to be effective?
Mr. McDougall: I fully agree that we are not here simply to distribute funds. Actually, 60 per cent of our department is dedicated to scientific services. That is the basis of meteorology, science and climate change, in connection with other departments, including Natural Resources Canada. It is very important to keep in mind that we are a scientific department.
Then there are a lot of collaborative mechanisms between the departments at the federal level. I organize a weekly high-level meeting of deputy ministers to discuss climate change.
Senator Bellemare: At the federal level or the provincial level?
Mr. McDougall: At the federal level. There is a lot of collaboration. As I mentioned about the negotiations in Paris, there was a lot of collaboration with the provinces under the direction of all environment departments. We now have a climate change committee that includes all the provinces and territories, as well as the federal government. As for the Vancouver declaration signed by all the premiers, there are now four working groups focused on the major files that must help us reach our 2030 government-wide target.
Senator Bellemare: I have a question for Atomic Energy of Canada Limited as well. We see that the budget is increasing, as it is explained here. Perhaps you answered in English, but I would like an answer in French. You do not divide the budget between operating expenditures and capital expenditures. So in the allocation by strategic result, there are $326 million as unallocated funds to the program alignment architecture. Is that because there are contracts with private suppliers? What does this $326 million signify? How is the $968 million divided between the operating budget and capital budget?
The Chair: We know that $500 million or more are set aside for processing nuclear waste, right? You are saying that some $400 million are for the centre. Is that correct?
Ms. Quinn: Yes, $439 million are for lab activities. That includes scientific activities and also site operations, which are large. It is like a small city.
Senator Bellemare: Perhaps this is because I have a hard time visualizing what it is.
Ms. Quinn: So there are costs associated with this, and to the site renewal.
Senator Bellemare: How does risk spreading work with private contractors? Are there any? You grant contracts, so surely there are risks associated with this management. Are they funded? Is that part of the $968 million envelope? Is it taken by the contractor? Could you provide more detail?
[English]
Ms. Quinn: Undoubtedly there are risks. As we move to the new GoCo model, where we deliver our mandate as AECL, a Crown Corporation, through a large-scale, long-term contract, significant effort was put in place to mitigate those risks that we know can be associated with both the operations and entering into such a contract with the private sector.
I would say that the mitigation strategies are on two fronts. The first front was with respect to the terms and conditions of the GoCo contractual arrangement. There are terms within the contract that provide the levers to AECL to oversee that arrangement in a particular way and, where necessary, to make adjustments to the way the work is delivered and to have appropriate off-ramps and other strategies to address risks that might materialize.
The second front is related to AECL as an organization so that it has what it needs to properly exercise all those levers that were built into the contract. This comes back to the idea that Richard mentioned earlier that AECL was really reinvented as an organization, paying special attention to ensure that it was structured and staffed with the qualifications, expertise and experience to appropriately provide that oversight, foresee risks, put in place mitigation strategies in advance, and to the extent necessary to exercise all those levers in the contract to deal with any situations that might arise over the course of a long-term tenured contract.
Maybe Richard would also like to add something.
Mr. Sexton: I might answer the question in two ways. We talked a little bit about focusing on results. How does the government understand that it's getting value for money? The GoCo model has been used for these types of complex sites that have either a reinvigoration mission around the labs or in the area of cleanup and decommissioning and waste management. The GoCo model that's been used both in the U.S. and the U.K. is focused on results. That's the tenet of the model. That's why governments have elected to use that model.
In terms of risk sharing, this has a variety of risk-sharing elements. In some cases, there is a target price that the contractor agrees to execute, especially in the area of decommissioning. If you have sufficient data, sufficient knowledge of a site, you can have the contract agree to a target price.
In the case of Whiteshell, we've implemented a target price. That's a significant sharing or transfer of risk. I think the experience would suggest in this area that if you do too much transfer it doesn't work.
In the area of Chalk River, which is a much more complex site, when the government looked at how they would contract it, they elected not to go with a target price at this time for that scope of work because it was not sufficiently mature in terms of understanding the actual full scope of the work.
The Chair: Mr. Sexton, could you define what "target price'' means, please?
Mr. Sexton: I'm sorry.
The Chair: That would be helpful, just so we understand.
Mr. Sexton: It's quite simple. Let's say if we have a site and we say to our contractor, "We would like you to clean that site to a defined level,'' and they then calculate a schedule and cost as part of the bid. In this case, there were three or four contractors, and the government looked at that as part of the bid selection process.
The contractor essentially agrees to do this work for a particular price. If they come in less than that price, there's a sharing of that amount that comes in less; if it's above that target price, there's a sharing of that additional price. It's mostly around the fee that the contractor gets in a target price contract structure. The contractor is not at risk that they're not going to get paid for it; they're at risk that they're not going to get their fee.
The Chair: In the flour milling business you're selling metric tonnes and different businesses have different measures. If you have a $7 billion liability over a period of time and they're doing contractual cleanups for some measurement, and that measurement is equated in whatever the measurement is in dollars, what is the measurement? Is that too naive a question?
Mr. Sexton: No, it's a great question and it's a simple answer. First of all, we do not have a target price for the entire liability. We have a target price for one of the sites, or actually two, but I'll concentrate on one of them because it's much larger.
The measure is quite simple. When we've already agreed to an end state, which I'll say is clean, and when the site achieves that level, the contractor has achieved their scope of work. Literally, you could drive out and say there are no more buildings and the regulator has given their approval on whatever the end state would be. Sometimes there's some ongoing monitoring, but in terms of the liability to Canada, it's essentially been wiped off the books.
The Chair: Where does the contamination go? Is it recycled? What happens to it?
Mr. Sexton: In most cases, the material is removed from the surfaces or is put into some type of container, and that container is placed into a licensed, long-term disposal facility.
The Chair: You can dig a hole and put cement in it?
Mr. Sexton: It's a little more complicated than that. It is placed in a long-term disposal facility in most cases. We don't have a place for some of the material, and those are the materials that we have to continue to work on and find a long-term solution.
Senator Marshall: Do we ever ship any of the waste outside the country? Is this all done internally?
Mr. Sexton: No. In the case of Canada, a small amount of material is sent to the United States. In general, the material is processed, and then the companies that do this have to send the residual back; but it's in a very small, stable state. We might send a truckload and we get back a thimbleful.
Senator Marshall: When you go out and say the site is clean, would there be people within your organization who have that responsibility?
Mr. Sexton: No. That process is implemented through the regulations and requirements of the CNSC, the Canadian Nuclear Safety Commission. The contractor, CNL, is actually the licensee, so they have to go to the regulator and negotiate and work with the regulator to define the end state of the facility. More importantly, it's the regulator who verifies that that end point is achieved. We, as AECL, don't have sufficient resources to do that.
Senator Marshall: That answers another question I had with regard to what you do in the case of disputes. There would be no disputes. You have a regulator, and what the regulator says goes.
The Chair: NRCan gave money to reduce statutory payments, the restructuring of Atomic Energy of Canada Limited's nuclear laboratories. What is the connection between you folks and Atomic Energy of Canada?
Ms. Ramcharan: For the creation of the government-owned, contractor-operated model, Natural Resources Canada had the responsibility for working with AECL in terms of delivering that program, looking after the waste and decommissioning the cleanup of the Port Hope facility.
The Chair: These are scientists?
Mr. Sexton: I think most of the transfer that occurred from NRCan had to do with the Port Hope Area Initiative, which is being conducted in the municipalities of Port Hope and Port Granby. It's a legacy cleanup process. It had an estimate of $1.26 or $1.27 billion to clean it up. It has been going on for I think around 10 years. At the time the contract was delivered, that scope was given to CNL. At the same time, that responsibility, from a Canadian perspective, was transferred from NRCan to AECL.
The Chair: So the cleanup was the water in the port?
Mr. Sexton: No. Residual materials were used as part of uranium processing back in the 1940s, and it has been distributed throughout those municipalities. The cleanup process is to do two things: one, verify what the particular property might have. If it's above a specific level, it's retrieved, recovered and then placed in a long-term disposal facility associated with those two municipalities.
The Chair: I don't want to add levity to the discussion, but I guess I wouldn't want to buy land in those areas.
Senator Eaton: They have a huge school in Port Hope.
Mr. Sexton: The objective is to make sure that both of those municipalities —
The Chair: The sites are remediated.
Mr. Sexton: Yes.
I think this is supported by the CNSC. There is no imminent current health and safety concern associated with this material. It's more of this material being in the wrong place, and what we're doing is putting it in the right place.
The Chair: In the case of Port Hope, what percentage of work has been completed?
Mr. Sexton: It's hard to say. It has taken quite a bit to get to the point where work is physically being done. I'm happy to say it started this year. We're starting to build a near-surface disposal facility for the material. It has been a long journey to get to the point where we're starting work. The remaining scope of work, say we have about a billion left, that's about what's it's going to take to get that cleaned up. Most of that work is about moving dirt and making sure that the facilities that we build —
The Chair: If it was $1.2 billion and you have a billion to go, you've done about 20 per cent of the work?
Mr. Sexton: You could say that.
Senator Mitchell: I look at your mention of the problem of getting nine departments to work together, and I'm thinking you have the problem of getting nine senators to work together. Which is harder?
The Chair: I think you guys are doing a fantastic job.
Senator Mitchell: It augurs well for the nine departments. I'm a half-full guy on this subject.
I want to encourage you on your efforts on climate change. I think the next great state-of-the-art economies will come to those countries and economies that attack climate change and are successful in fixing it. If we don't do it, we have an infinite risk, economic and otherwise, that we have to deal with, so good for you.
I like the idea. I agree; I think Senator Smith is wise in these things. On the other hand, the positive thing about bringing nine groups together is that you're focusing resources on a single objective. That's very important for running a large organization, so way to be.
I have a question about the Science and Technology Development Fund. I notice that there's an increase in your department of $40.2 million and an increase in your department of $40.2. There is no chance this is the same, is there? Is it $80.4 million?
Ms. Najm: It's the latter, 80.4.
Senator Mitchell: Excellent.
The Chair: Are the offices right near each other?
Ms. Najm: Kami and I talk a lot. It is 50-50 in terms of we fund 50 per cent and NRCan funds 50 per cent.
To complicate things even more, with Budget 2016, there was a move SDTC to the new Minister of Innovation, Science and Economic Development. That will come through supplementary estimates to take it out of both of our estimates.
Senator Mitchell: I may be wrong, but I think SDTC started with $500 million allocation that was invested. Whether or not that's true, what are your total — I guess you would call them assets now — "made'' investments, as it were? How do you value all the money you've put out and what percentage of that is this $80 million increase?
Ms. Najm: I would have to get back to you with that detail. I don't have it with me, unless Kami has it.
Ms. Ramcharan: I do have some information on SDTC. The original fund, called the SD Tech Fund, received federal funding of $915 million, of which $550 million was provided in the form of grants and $365 million in the form of contributions. It's to support the development and demonstration of technologies focused on climate change, clean air, clean water and soil.
Senator Mitchell: In that case, what's the difference between a grant and a contribution?
Ms. Ramcharan: A contribution has a lot more terms associated with it. We have two different types of grants. You normally see grant programs where you give it to an organization. It can be an investment and you're not putting parameters specifically around that grant. It's identified to fund the organization and the organization uses it in the best way possible.
There are a lot more terms and conditions with the contribution. You would want to see more of a funding profile: "What do you plan to spend this year? What do you plan to spend it on? Is it in agreement with the original terms and conditions you set up?'' There's a lot more oversight and control with a contribution than with a grant.
Senator Mitchell: I'm very interested in the charging stations for electric cars and the refueling stations for natural gas and hydrogen vehicles. It's interesting to note recently that Toyota made a commitment not going to electric cars at all but going to hydrogen fuel cell cars, which essentially have electric engines. They can be refueled in three minutes and have current car-like range.
The Chair: Question.
Senator Mitchell: Thank you. I'm having a good time. This is like a target-rich environment for somebody concerned about climate change.
Are you making a bet on which it will go with this kind of investment? Are you doing more of one than the other, or are you going fifty-fifty? What is your sense? Will we go to hydrogen fuel in the long term or electric?
Mr. McDougall: This is not a case of government going in and trying to pick winners at the moment. Government's role in this will have to be sorted out as well. It's certainly part of a bigger picture that involves the private sector and all levels of government and ideally society. I heard somebody mention whether you have a charging station in your condo, for example. It's a private decision.
We're trying to do a few things now. We want to get the right incentives in place so that there's less perversity in the choices people are making. That's part of the work we're doing. This is part of the bigger package that we're looking at, not just how we can subsidize certain things in order to nudge things along, but also how we look at the package more generally.
One of the working groups we have established with the provinces and territories is on carbon pricing, which is a fundamental piece for getting the incentives right and giving people the freedom to make the right choices.
That's not going to be all of the solution. A number of other complementary measures have to happen. This falls into that category. At the moment it's structured, as was mentioned, with not just a single technology but with multiple technologies. The groups looking at this will be engaging the private sector and engaging other levels of government so we have more of a comprehensive picture of that that will inform even the early work on the program design.
We're under a fairly short time frame. First ministers have given six months to conclude this work. Ideally, the program design on this will be coincident with the direction that we have after this engagement process.
Senator Mitchell: The next question I have is the elephant in the room and keeps coming up in debate, and so on. It's a big challenge to meet the objective, even the old objective, which is the baseline. I'm not afraid of big challenges and I think this country is up to them. We've done it many times before. To be where we are today is an unbelievable realization of great people achieving great challenges.
But we need to know specifics. What portion of the reduction target is coming from where in each case, and how does it add up to the ultimate target? When will we see that? How much are you getting from transportation, from conservation, from new building codes or whatever?
Mr. McDougall: That's what this process is designed to achieve. I think my minister has been clear on this in her public statements in the committee yesterday and in the house. The issue is not so much targets but the plan in order to achieve them. This is a short process, over the next six months, working with all levels of government and engaging very knowledgeable stakeholders who have a lot to contribute do this, as well as the general citizenry of the country. We will be launching shortly an interactive website so everybody can contribute their ideas. We've mandated these working groups of officials to take into account those views that are coming through over this time period as well to get to the point that you're asking about, namely, what is the plan for achieving our 2030 target?
When the Prime Minister and President Obama met last month, they agreed that they would take some work that was committed to in the Paris agreement. In the Paris agreement, all countries agreed that by 2020 they will develop a long-term, low-carbon development strategy. Canada and the U.S. are now going to work together on that this year. So we're not just looking at the short term, but we'll be able to fit what's happening on our 2030 target into a longer- term low-carbon strategy. Because 2030 is kind of an artificial time point. What we really need to know is how we are fundamentally restructuring our economy so that we're getting to a very low-carbon society.
Senator Mitchell: Way to be. Thanks a lot.
Maybe we can have them back in December when it's all done.
The Chair: I think that's probably one of the questions we'll ask before we wrap this thing up tonight: the future, the rollout and maybe how we can understand how it will evolve.
[Translation]
Senator Mockler: My questions are for the Department of Natural Resources.
[English]
You mentioned capital expenditures. There was a previous question about your $53.3 million, including $44.8 million for the Federal Infrastructure Initiative. Can you give us a graph of where those expenditures will be made from province to province?
Ms. Ramcharan: I don't have it with me.
In terms of what we're planning, we have a plan, and how we will want to execute that can depend. For example, I could say we would plan to spend $5 million in British Columbia, depending on the ability to actually do that. Contracts might not get let properly. The work may not get done on time. I can give you a general plan by various sites in terms of where we're expecting to invest that money.
Senator Mockler: Absolutely. I'm from Atlantic Canada, New Brunswick.
Ms. Ramcharan: We plan to invest in Fredericton, as well as in Dartmouth.
Senator Mockler: The oldest forestry school in Canada is at UNB.
Ms. Ramcharan: Maybe I can clarify. With regard to the Federal Infrastructure Initiative, as Natural Resources Canada what we're spending is specifically on our facilities. We have 19 facilities.
Senator Mockler: I know that, and I can say they're well managed. We visited it when I was on the Agriculture and Foresty Committee, so I can attest to that. I know they brought to our attention a report called The Canadian Forest Sector: A Future Based on Innovation. I know that you have taken some of the recommendations, and there are a few I will ask you to revisit, if possible. I'm also touching a bit on the environment. Perhaps you could provide us with that.
With regard to the space laboratory, do you have any programs to help test seedlings in outer space in order to have an idea of its impact on growth and the quality of the fibre?
Ms. Ramcharan: I don't know the exact details, but I recall from a couple of years ago that we did put some samples up in space to see what they do. But I don't know the results of that. I do know that there was a bit of an initiative done. It's not something we do on a regular basis.
Senator Mockler: Correct.
Was that a project cost shared with the private sector or was it just from the government side of the operation?
Ms. Ramcharan: I can't remember exactly, but I think it was just that one of our research scientists had this thought, so it would not have been done in conjunction with the private sector. I think I can find out a little bit more and get back to you. I don't know the details.
Senator Mockler: Could you send us a report card, if possible, on that?
Ms. Ramcharan: Sure.
Senator Mockler: Also, if you have any links with the private sector, so cost-shared programs with the space laboratory. Hopefully one day we will be in a position to produce a square tree in order to add more value to Canadian forests.
When we talk about increasing energy efficiency by integrating the standards of the model of the National Energy Code of Canada for building, and the National Building Code — and this was touched on by Senator Eaton — is there any cooperation between the two? I see that you do have efficiency programs.
Have you had any discussion, or is it part of your new programs? I don't see many new programs, except in some areas. What about efficiency, including building codes, in order to enhance construction of non-residential construction vis-à-vis commercial and industrial, where we would use a lot more wood, which is basically good for the climate?
Mr. McDougall: There's actually a lot of collaboration between our two departments on that, on a number of fronts. One is in how we work and engage others in trying to advance these building codes. A lot of work is going on with provinces and municipalities on that front, and also through the new infrastructure spending that the federal government is providing for social housing and other areas. We're trying to make sure that the standards we're putting in place are robust as we're making new investments there.
There's a related angle that's perhaps a little different but kind of important. Our two departments are also working on how we can enhance the use of sinks in terms of carbon sequestration. Forestry is really important on that front. It's a critical area for Canada, and globally, to make sure that natural sequestration of carbon emissions is put in the forefront. It has spillover benefits in terms of how we manage our forests here in Canada. On that front, which is a bit unrelated, there is good collaboration there as well.
Senator Mockler: I'm going to touch a bit on both departments. The committee recommended that Natural Resources Canada continue to fund the Forest Communities Program for an extended five-year period. The committee further recommended that funding to the Canadian Model Forest Network be maintained at its current level. Is that part of the vote you're asking us to accept, or is it not there?
Ms. Ramcharan: These programs have been sunsetted and have not been renewed. We used to have programs related to forest communities, as well as the Model Forest Network. A number of years back those programs weren't renewed, so they're not part of our funding profile right now.
Senator Mockler: Canada is a leader in the world. I think it's important to note that Canada is a leader regarding best practices in forestry. We are the leaders, especially when it comes to CP, cut and plant; cut a tree, plant a tree. I was trying to determine whether or not we were encouraging more silviculture activities across the forests of Canada. Could you apprise the committee of that?
Ms. Ramcharan: The forest programs that we have will include aspects of silviculture and FPInnovations' work on that. But we don't have a specific program within CFS about planting trees. It's about looking at increasing the yield, looking at the growth, and those types of things. That's the normal kind of research that the Canadian Forest Service will continue to do, and contributes to that, but no specific programs as it relates to tree planting within the department.
Senator Mockler: We created a partnership with the provinces, universities and industry about a research centre dedicated to hardwood silviculture in the Maritime region. Is this still part of your budget for 2016-17?
Ms. Ramcharan: I don't know the answer to that. I can get back to you with the information on that.
Senator Mockler: That is important because that's the first in North America. It's a hardwood silviculture research centre and it's in the Maritimes.
Senator Marshall: I had asked questions of Natural Resources and Atomic Energy and I also have some for Environment. There are a grants and contributions. The first one is with regard to the grant in support of the Natural Areas Conservation Program for $22 million. Who does that go to? Is that just to one organization?
Ms. Najm: That money went to Nature Conservancy of Canada. In 2015-16, when the National Conservation Plan was approved, they got more money as part of that initiative.
Senator Marshall: What would the money be for?
Ms. Najm: It's to conserve wetlands. The Nature Conservancy of Canada has a program to fund wetland conservation that maximizes the use of federal dollars invested. They have been a great vehicle to reach our target in terms of maintaining wetlands.
Senator Marshall: Would the department know where exactly the money is going, what provinces, or is it just left up to the organization to decide?
Ms. Najm: It is left up to the organization to decide. There are requirements to publicly report how they use the money, and so we can get you that information.
Senator Marshall: It's not on a per capita basis or anything; it's just who they deem whoever should get it. Do they just decide where the money is going?
Ms. Najm: Similar to all of our programs, there are defined terms and conditions to meet the objectives of the program. Those terms and conditions have to be honoured by the recipient of the money and how they use it. So I don't believe it's per capita, but they do have defined criteria that they do use to distribute the money.
Senator Marshall: If I went on their website, I should be able to find out where it is by province.
Ms. Najm: I believe so.
Senator Marshall: Also, this is similar: the Habitat Stewardship Contribution Program, and that one is for $14 million. Would that go to one organization? Is that something where the money would be distributed?
Ms. Najm: Yes, it is distributed. It's meant to look at recovery of endangered, threatened and species of concern. There is a whole process for which projects can apply, and if they meet the terms and conditions of the program, they can have access to the money.
Senator Marshall: For that one, organizations would apply, and then you would decide who met the criteria and who should get it. But the first one we spoke about, it's already decided who's going to get the money.
Ms. Najm: The Nature Conservancy of Canada is the vehicle for which the government gives the money to that organization to then distribute.
Senator Marshall: Both grants and contributions would be subject to some sort of evaluation, would they?
Ms. Najm: Yes, as part of the program evaluation, programs receive money. It could be O&M money; it could be capital money or it could be grants and contributions. When they do the overall program evaluation to understand the results, they would look at all the vehicles of funding and which ones were more effective.
Senator Marshall: The biggest issue for me would be that sometimes the Atlantic provinces are forgotten. I was wondering if there would some sort of criteria that would require a certain proportion of funding going to all provinces, that each province and territory would be able to tap into the funding, and that the funding wouldn't be centred in the Central Canada.
Ms. Najm: These are all nationally run programs, and so they are accessible across the country.
Senator Marshall: Thank you very much.
Senator Eaton: Does your ministry have anything to do with pipeline approvals?
Ms. Najm: No. I believe you're making reference to the Canadian Environmental Assessment Agency that does the environmental assessments.
Senator Eaton: Does it report to you?
Ms. Najm: It reports through our minister, but it is a separate organization.
Senator Eaton: Its budget would not be in your estimates?
Ms. Najm: Correct. They would have their own Main Estimates.
Mr. McDougall: I would add that we are doing some work associated with that, though. From a scientific perspective, one of the commitments that the government has made in terms of interim measures on assessments is to look at upstream greenhouse gas impacts. Our scientists and officials in Environment and Climate Change Canada are doing that work and have recently published our methodology in the Canada Gazette for comment on how we are doing that.
Senator Eaton: Part of your general operating expenses is for the people that are on staff?
Mr. McDougall: Correct.
The Chair: It would be fascinating to have a session with you folks to explain to us how the interdepartmental relationships work because it would be interesting to see how many objectives you two folks work on. If you had to guess how many projects you work on on a yearly basis, any guess?
Mr. McDougall: I probably work more with NRCan than I do with my colleagues in my own department most of the time.
Senator Eaton: It would be nice to work out where we can get evaluations of programs, because we approve all this money but it's blind.
The Chair: It's hard sometimes to understand your plans and priorities and the way they are set up because there are a lot of activities. Activities are not objectives. Objectives are distinct, measurable. People are responsible for a time frame.
I'm not being critical. I'm just saying there is a mass of information in trying to understand it sometimes. I wonder what goes on within the organization in terms of people's ability to understand, because it can be quite complex in the way it's presented.
Ms. Najm: Just for information, evaluation reports are all posted on websites and available to the public. They are "by department.'' Part of the Treasury Board requirements is that once an evaluation report has been completed, it is posted on Internet sites.
The Chair: What is the delay from start to finish?
Ms. Najm: That depends on the project, but there are guidelines around that it should be within a certain time. The fact that the majority of those evaluations are linked to program renewal decisions influences how long.
Senator Eaton: Would they be timely?
Ms. Najm: They would be timely.
Mr. McDougall: In most instances — almost always — those evaluations will be done prior to the sunsetting date of the program. So when you're presented with budget information or the Main Estimates, the researchers have a look on the sites beforehand to see the evaluations that would have been done to influence the renewal decision.
Senator Eaton: I'm sure it would have been helpful, Ms. Ramcharan, had you had one of your people here who dealt — because you do the financial stuff — with actual programming or evaluation to help answer your questions.
Ms. Ramcharan: I do have two of my colleagues here if you had specific questions.
Senator Eaton: For instance, the forestry one and the building codes. What kind of innovations have you done? Why is there a decrease in market accessibility? What were the programs?
Ms. Ramcharan: I did look at the supplementary estimates. There is the area where we have our strategic outcomes and then we have sub-programs within that where you saw that decrease. It's not just related to one program in forestry. It's related to a number of them. So forestry is subsumed within the market access and diversification, but you would also see energy. Some of our Clean Air Agenda programs would also fit. That's why there was the difference of the numbers between the two years.
Senator Eaton: Thank you.
The Chair: What are your biggest challenges in the next 12 months? Who wants to go first?
Ms. Ramcharan: We got a number of new initiatives under Budget 2016. You know that all of our ministers' mandate letters are posted on the web. It's going to really focus on how we can make sure that we're delivering on those mandate letters and that we're achieving excellent results for Canadians.
The Chair: If there's one major challenge you have to overcome over the next 12 months, what is it?
Ms. Ramcharan: The major challenge was coming up with right kind of performance metrics in terms of how to explain our performance on those mandates.
The Chair: That's interesting because Treasury Board said the same thing last night with Minister Brison.
Ms. Ramcharan: I didn't listen to that one, sorry.
Ms. Najm: Environment Canada will be delivering on the pan-Canadian framework and having the action plan to get us to the targets.
I don't know, Dan, if you wanted to add anything.
Mr. McDougall: Yes, taking advantage of the opportunity that climate change provides.
The Chair: Mr. Sexton?
Mr. Sexton: I see it as the successful launching of the GoCo model. This is a first in Canada. We have a new model and a new contractor, so the way we deliver our work is through the contract. I think our challenge will be to make sure that we get alignment with our contractor.
The Chair: Which is SNC-Lavalin?
Mr. Sexton: No, it's actually a conglomerate. There are four companies associated. Four companies came together for a special purpose.
The Chair: Could you give us the names of the four companies and send them to our clerk?
Mr. Sexton: Absolutely.
The Chair: If I understand correctly, it's executing the contract. You were kind enough to be with us last year, and I think you were at the point in time then of formalizing the contract, if I understand correctly, year one of executing the contract to decommission and decontaminate a $7 billion obligation.
Mr. Sexton: And revitalize the lab.
The Chair: Right.
Senator Marshall: Could we also get a list of the contaminated sites? Is that possible?
Mr. Sexton: Again, they're not really sites. We could give you a general —
Senator Marshall: I know I didn't have the right terminology.
Mr. Sexton: The answer is yes. What we will give you is a high-level summary.
Senator Marshall: These are the ones you're saying you should have them pretty well looked after in about 10 years.
Mr. Sexton: A significant portion. The liability will probably take — well, we don't have the full estimate, but the current estimate is 70 years, so we're trying to pull that back. We don't know exactly where that will land.
Senator Marshall: I would like to see it.
The Chair: That would be fantastic.
We would like to thank you all. You can see that we're asking a lot of questions. Maybe they seem a little different to you. We're not only trying to understand the finances but also where you're going in your departments.
We had a great meeting with Minister Brison last night at our committee. Of course, we're aware of the fact that Treasury Board is trying to change the way reporting is done. We'll have a budget and then we'll have estimates. Ultimately the long-term opportunity would be to have a budget and then maybe not have Supplementary Estimates (A). You may have Supplementary Estimates (B) and (C), but it will be a much more streamlined way of understanding the numbers because you'll be coming to us probably in a month or two with Supplementary Estimates (A). Is that correct?
Ms. Ramcharan: Yes.
The Chair: That whole realignment will make a huge cultural change, a significant change to the operations of government. So we're anxiously continuing on in that vein to try to understand how you folks work.
We thank you very much for your time.
(The committee adjourned).