Estimates (11 May 2005)

Departmental Estimates

From Economy Committee Hansard - 11 May 2005

Department of Industry and Resources
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Mr. Stewart: Thank you, Mr. Chair. And, Mr. Minister, before I start I would like to say that I did not receive the answers to the questions that you referred to. I received a cover letter describing the answers to the questions but not the answers themselves. Other than the cover letter the envelope was empty, which is a little disappointing as I expected to have those before this opportunity to question you on them. And as a result we may have to insist on more time to come back to these estimates to do just that.

In any event, Mr. Minister, Im looking on page 88 in the Estimates document under (IR07), ethanol fuel tax rebate, up substantially. I wonder how is that explained, Mr. Minister.

Hon. Mr. Cline: Mr. Chair, first of all with respect to the answers to the questions, I forwarded to Mr. Stewart a letter dated May 9. And I certainly accept what Mr. Stewart is saying, that if indeed he says he didnt receive the attachments, then he didnt receive them Im sure. But nevertheless the letter does refer to all the attachments that were supposed to be attached. And obviously if he didnt get them, somebody has either forgotten to include them or for some reason they disappeared before he got the letter as sometimes happens and things get misfiled.

But in any event this is the first time its been brought to my attention. And certainly if I had received a phone call to my office when the letter was received, I would have very quickly made those attachments available, and in fact I have them with me today. But I do apologize if there was any error on the part of myself or my office with respect to the provision of the attachments. But as I say, I do have them here. And I realize that Mr. Stewart is quite correct, that if he gets them today and he wishes to ask questions about them, I fully appreciate that hell want to return to these matters on another day and ask me further questions. And I support his right to do that.

With respect to the estimate on the size of the ethanol rebate, the mandate is planned to come in on October 1. And therefore from October 1, 2005 to March 31, 2006 the remainder of the fiscal year we will be rebating in effect the gasoline tax on the ethanol blended portion of gasoline. And we estimate the cost of that is $4.87 million for that mandate of the point two five per cent for the remainder of the fiscal year. And the figure for this current year at 860 would relate to, I believe, the subsidy, the same type of subsidy that is on the ethanol produced by Pound-Maker, which is consumed in Saskatchewan through, I believe, the Husky gasoline stations.

So its just that there will be more ethanol produced and consumed in Saskatchewan. And the policy is that we dont charge the fuel tax on ethanol as distinct from gasoline because ethanol has been more expensive to produce, and were trying to kick-start the production of ethanol by doing that.

Mr. Stewart: Thank you, Mr. Minister. First of all, regarding the answers to the questions that I asked previously, I received the envelope this morning. I confess I didnt open it until this afternoon, but the envelope was sealed. And I accept that explanation that somebody just forgot to include the answers.

Mr. Minister, with regard to my previous questions about the ethanol fuel tax rebate, is the Husky plant the one thats coming on in October? And is that the only plant that will be producing, or where is this production going to come from?

Hon. Mr. Cline: Mr. Chair, in answer to the question, no they . . . The Weyburn plant, which is NorAmera at Weyburn, will come on stream, we believe, in September. And that will provide enough ethanol in addition to the Pound-Maker at Lanigan that you could have a mandate of point two five per cent ethanol in non-leaded gasoline. And Husky is scheduled to come into production in 2006. And that will provide enough ethanol that we could raise the mandated requirement to 7.5 per cent.

Mr. Stewart: Thank you, Mr. Minister. Does Crown . . . do you know if the government through any of its arms, Crown Investments Corporation or your department or any arm of the Government of Saskatchewan, have any financial involvement in the Husky Oil ethanol plant?

Hon. Mr. Cline: Mr. Chair, no. We have no involvement whatsoever in the Husky ethanol plant other than setting the regulatory environment to encourage ethanol, which is that we would rebate the fuel tax portion back to them as we would to any distributor and also mandate the use of ethanol which will benefit them. But theres no investment in Husky by the Government of Saskatchewan.

There is I believe $7 million going to them from the federal government as a result of their ethanol program whereby they provide some support. They also are providing some support to NorAmera in Weyburn, but theres no provincial involvement or money in either of those operations.

Mr. Stewart: Mr. Minister, continuing with the estimates, on page 88 under (IR07), under allocations, economic partnership agreements, I see thats up about $1 million from last years estimates. First of all, Mr. Minister, who are these economic partnerships with and what is the nature of them? And what have we done that cost an added $1 million this year?

Hon. Mr. Cline: The economic partnership agreement is the Western Economic Partnership Agreement with Western Economic Diversification, an arm of the federal government. And this is a $50 million fund whereby the federal government and the province each put up $25 million into the $50 million fund. And that money is to be expended over five years on various projects that have strategic economic benefit for Saskatchewan.

And the difference in the amount of money indicated is simply the cash that will be flowed through to projects in this fiscal year which will be estimated to be $1 million higher than last year. But the total amount that will be expended in WEPA [Western Economic Partnership Agreement] over the five years is still $50 million.

Its just that this year we see $6.3 million coming to fruition, whereas last fiscal year we estimate $5.3 million coming to fruition. In other words, thats the time at which the people that applied for the money to the WEPA committee actually have their ducks in order, if you will, to get the money to pay for their projects.

Mr. Stewart: Mr. Minister, I wonder if you could inform us as to which specific projects they would be.

Hon. Mr. Cline: Yes, Mr. Chair. Before I do that, actually I would like to send over to Mr. Stewart another copy of the letter I sent and the attachments which were supposed to be enclosed with it. And again I apologize for that.

The Chair: Just if I could, Mr. Minister, if you would forward them to the Chair. Well have copies made for all members of the committee.

Hon. Mr. Cline: Thank you, Mr. Chair. Perhaps the Page could bring them over and have copies provided to everyone.

In answer to the members question what sorts of things are being funded under WEPA? to give some examples, we have the Ethanol Council which is a group of Saskatchewan people who are trying to find ways to promote ethanol development in Saskatchewan, will be receiving $42,500. VESPERS [Very Sensitive Elemental and Structural Probe Employing Radiation from a Synchrotron] beamline, $150,000, I believe that will be a beamline at the synchrotron in Saskatoon. Ag-West Bio, $82,500. The Petroleum Technology Research Centre in Regina will receive $250,000. Ethanol Biomass will receive $275,000. The Saskatchewan Research Council Biosafety Level 3 facility will receive $626,000. Mounted Police National Heritage Centre, capital $500,000. Communities of Tomorrow, research institute in Regina, $700,000. The Canadian Light Source, $750,000.

Those are, you know, approximately one-third of what would be spent. I could go on with the complete list, but in terms of some examples the member asked for, thats the sort of thing that is funded under WEPA. And certainly Id be pleased to provide a complete list, Mr. Chair, to yourself and members of the committee.

Mr. Stewart: Thank you, Mr. Minister. That would be appreciated if we could have a copy of that list. I notice also under (IR07), petroleum research initiative, I presume that principally refers to the PTRC [Petroleum Technology Research Centre]. That amount was unchanged at $1 million in 2005-06 estimates. Would that include the $250,000 that we just heard that came from the western partnerships agreement program?

Hon. Mr. Cline: No, Mr. Chair, to the member. The money through WEPA would be in addition to the million dollars in the budget.

Mr. Stewart: Thank you, Mr. Minister. Ethanol fuel grants. Now is that Economic Partnership Agreement money? Is that all of what that entails, or is there provincial money in that? Can you explain that to us please.

Hon. Mr. Cline: Mr. Chair, I wonder if I might just ask the member to refer to the page and the line that hes looking at because we dont have that right in front of us.

Mr. Stewart: No, this is coming off the top of my head, Mr. Minister. Its for information only. We understand that there are ethanol fuel grants available for producers, and Im wondering if this is all under the Economic Partnership Agreement or is there something else as well.

Hon. Mr. Cline: Mr. Chair, to the member, we are funding the ethanol fuel tax rebate, which weve talked about already, to the tune of $4.875 million dollars. And then were funding some ethanol initiatives under the WEPA which Ive referred to in part at least. But Im not aware of any other ethanol fuel grants.

Mr. Stewart: Would that possibly be federal, Mr. Minister?

Hon. Mr. Cline: Its quite possible. The federal government does have I believe $100 million fund to promote ethanol development, and people have applied to them for funding for grants. And indeed both the Husky and the Weyburn ethanol plants as I indicated earlier are receiving money from the federal government. Others have applied, but we dont have any grants as such other than what Ive already described to the committee.

Mr. Stewart: Thank you, Mr. Minister. WEPA grants to ethanol producers, I understand that some projects have received them and some havent. Could you outline which ones have and which havent, and perhaps why those decisions were made?

Hon. Mr. Cline: Mr. Chair, the only grants Im familiar with coming from WEPA to ethanol projects are the Ethanol Council, which Ive referred to as receiving $42,500 from WEPA, and the ethanol biomass project in Nipawin is receiving $275,000 in this fiscal year upcoming, and it is scheduled to receive another $225,000 in 06-07. And other than that, Im not aware at the moment of any other ethanol grants coming from WEPA.

Mr. Stewart: Thank you, Mr. Chair. Ill turn the questioning back over to my colleague.

Ms. Bakken-Lackey then asked a series of questions. The next section of questions asked by Mr. Stewart starts at 39:04 in the video.

Mr. Stewart: Thank you, Mr. Chair. Mr. Minister, just starting to go through some of the answers that you provided to me and I appreciate that I see that on a chart here regarding Saskatchewans average weekly earnings by industry, oil and gas extraction has the largest negative change over 2004-2005.

It seems, at least as far as government revenues from the industry go, that were in a bit of an oil and gas boom. Im wondering why employment and salaries are off in the industry by 11.4 per cent.

Hon. Mr. Cline: Mr. Chair, these figures that have been provided are a comparison of February 04 and February 05 and so its a month-to-month comparison. And it could reflect simply, you know, less work done in that particular month because of weather or other conditions. And because its only a comparison of one month to one month, it may not be completely representative of what is happening across the piece.

But it is simply a reflection of an average wage. So you could have more part-time workers there. You could have fewer hours worked by employees in February 05 over 04 and thats about the best that I can do. It is simply a month-over-month comparison.

Mr. Stewart: Thank you, Mr. Minister. Although I can accept that oil and gas work some of that work is somewhat seasonal, mining however isnt, and I see under mining theres also a decrease in weekly earnings in dollars, about 3.9 per cent. And, you know, over this time period potash prices have been increasing, uranium prices have been increasing. Im wondering how we explain that one.

Hon. Mr. Cline: Well again these are averages. And you could have more people working in the mining sector but in some areas that were not paid as well as underground mining. For example we know that for 05 the amount of exploration and prospecting work alone is going to be roughly double what it was in 04, so one explanation could be that you have people working in some areas of mining this year more so than in other areas, and those areas may be lower paid than underground hardrock mining, for example, which might be the highest paid. So I dont know that thats the explanation, but Im just surmising that one of the things that is happening is that people are being hired to do additional jobs in mining so that more people working, but some of those jobs may not be the highest paying jobs.

Im not suggesting by the way that people were necessarily tramping all over the North in February, but there may have been people working in examining, you know, diamond . . . parts of kimberlite in February more so than last year. More people going through that kind of analysis.

And so I think that that probably is part of the explanation, that there are many more people working in the industry. But were moving rapidly beyond the people that are purely working in mining to people that are actually creating other industries you know, exploring for diamonds, gold, looking at samples, and so on. So that that certainly could be part of it.

Mr. Stewart: Thank you, Mr. Minister. Thats a good guess. I wonder, Mr. Minister, its two or three years since I was the critic and asked you these questions about changing the way that we stake claims in the North. I wondered if any progress has been made to streamlining that process. And if so, what?

Hon. Mr. Cline: Were in the process, Mr. Chair, of preparing a paper on online staking which we expect to be completed in about three months and which will be a public document. And we will be putting that out for consultation. And it is thought that British Columbia has gone to this system and that perhaps there is a reason for change in Saskatchewan as well.

But we do want to consult carefully with people because there are people for example that do staking on the ground that work in the North, and if we went to purely online staking, that would impact them in the sense that they might be put out of work. So we want to very carefully proceed. But nevertheless the main goal has to be to grow the economy and build up the mining sector as best we can. And so our decision will have to be guided by what system will most effectively do that.

Certainly there is no evidence at the present time that the staking system we have is preventing staking because theres actually a staking rush going on. But there will be an argument that this could be done more cheaply and efficiently, and were looking at it very carefully. The paper will be released as a public document and then we will be guided by the consultations in industry and indeed with all members of the legislature.

Mr. Stewart: Thank you, Mr. Minister. I applaud that. I certainly hope that increasing mining development in the province will be the main criteria for whatever decision is made with regard to staking of claims. And of course that could create far more employment in the North than what is currently achieved by our sort of archaic and old-fashioned staking method. And with that comment Ill turn the question back over to Ms. Bakken.

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