Estimates (27 April 2005)

Departmental Estimates

From Economy Committee Hansard - 27 April 2005

Department of Industry and Resources
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Mr. Stewart: Thank you, Mr. Chair. Mr. Minister, Id like to thank in advance the officials for being here today. We appreciate the contributions you make when we ask these questions. We understand that no minister, no matter how confident, can know all the answers, and we do appreciate your help.

Mr. Minister, at the recent Centennial Summit, one of the recommendations that came out of that was that the government enact a regulatory review and reform process. Has any progress been made on this, or is there anything actually planned in a concrete way?

Hon. Mr. Cline: Yes. Well I should say, Mr. Chair, to the member that we are actively examining the regulatory review file. And I should say there has been an ongoing process which goes back several years, I believe to approximately 1996 or 97. But I may have that date wrong.

But it started under Premier Romanow, where the government set a target of reducing the number of regulations by a certain percentage. I believe it was 25 per cent. And I believe that as of this year, we actually have in fact succeeded in reducing the overall number of regulations, since that review started, by 25 per cent. And Ill undertake, Mr. Chair, to get the exact numbers to yourself and members of the committee.

But weve been reflecting on this process, and my department officials have already advised me that perhaps what we should be proposing to government is not simply an examination of the number of regulations, but substantive review of the efficacy, if you will, or efficiency, if you will, of regulations. That is to look at the regulations with the view to not just reducing their number, but examining whether there are ways to make processes easier and simpler for people to transact business in Saskatchewan.

And so were in the process now, and I may ask my deputy minister to elaborate on the timing, but my understanding is were in the process now of a proposal being prepared that would come to me from my department, which I would then take to government and of course report to the legislature to enter into a more detailed review of the regulations. And so Im sorry its a bit vague, but we havent finished this proposal yet. But Ill ask my deputy minister if he can elaborate any further.

Mr. Spannier: Thank you. I think what were going to do, as the minister indicated, rather than looking at a numbers approach to regulations were going to look at the key sectors of our economy, i.e., mining, oil and gas, forestry, value-added, high tech, manufacturing, and specifically focus on the regulations within those sectors that are seen as impediments for further development in those sectors. So thats the approach were going to take. When can we expect some announcement of this? I would think within the next two months.

Mr. Stewart: Thank you. Mr. Chair, Mr. Minister, Saskatchewan has probably the highest proportion of business taxes not based on profit of any jurisdiction in North America; its by quite a bit, too. Not even really close, in my view, to other jurisdictions like Alberta and Ontario. Is this going to be addressed? Now Im talking about taxes like the PST [provincial sales tax] on legitimate business inputs, corporate capital tax, and property taxes. Those are taxes that businesses pay whether or not they make a nickel.

Hon. Mr. Cline: Well yes, were already taking action on this front. As the member knows, and as all members know, Mr. Chair, in the provincial budget that was introduced into the legislature toward the end of March, the Minister of Finance announced that we would have a business tax review. And that review is designed to answer the exact question that Mr. Stewart is raising that is, is there a way that we can change our business taxes to make them better in terms of economic development.

And although Saskatchewan is very close to the top of economic growth for Canada the last few years, we recognize that we can always do better. And while weve changed many business taxes quite dramatically, and I could certainly detail that for the committee, theres always improvements that could be made balancing off the need to grow the economy with the need to have adequate resources to pay for important public services like health care and education, which is the responsibility of the provincial government.

But we have embarked upon a review, and Im sure that all members of the committee would agree that now that weve appointed Mr. Vicq, Mr. Baldock, and the other, third member whose name escapes me at the moment, they will be consulting with the community. Theyre having hearings throughout the province, I believe, starting next month, and they will be listening to everyone including, of course, members of the legislature from both sides and then making recommendations to government.

So were not obviously prejudging what we should be doing in the area of business taxes because we have appointed a committee to look at this and to make recommendations, and were going to respect that process and listen to the public.

Then when we get the report in the fall, it will be the responsibility of the Minister of Finance to review the report and advise the cabinet of what changes should be proposed in the provincial budget. And cabinet will then, you know, consider the matter along with the government caucus, and the conclusions will be expressed next spring when the Minister of Finance presents the budget.

Mr. Stewart: Thank you, Mr. Minister. Mr. Chair, Mr. Minister, will that Baldock report be available to members of the legislature, the completed Baldock report, during the fall session coming up in 2005?

Hon. Mr. Cline: Im not sure about that because the . . . I would say that would be unlikely. If matters go as they did last time in the sense that, I believe the committee has been asked to report to the government in November or December. And of course its quite possible that the committee may need more time, so its quite possible theyll say, well its not ready till the middle of December or something like that. Its equally . . . I suppose its possible it might be available earlier. Say if it came in September, then I think the answer would be it would be available to members of the legislature in the November sitting.

But if it comes in November or approximately at the time of the sitting, Im not sure it would be available. Because the process would be that, once you receive the report, the Minister of Finance and his officials would want time to review the report. And some of the matters are highly technical in terms of revenues and formulas and so on.

Last time, Mr. Vicq reported on personal income taxes. The report came in. We had undertaken that it would be public, and this one will be public as well. But we also said that we would take time to review it, and I believe that took about a month for internal review because of course when we released it, I wanted to be in a position I was then the minister of Finance to also speak in an informed way about some of the issues. And so thats why I think the Minister of Finance would want some time to review it.

And then there would be a period of public discussion. Last time it was three or four months, and I would anticipate about the same prior to the budget. And then of course the answer comes along at budget time.

Mr. Stewart: Thank you, Mr. Minister. Mr. Chair, Mr. Minister, are you saying then that even if this report isnt completed until, say, mid-December, that the government will still have time to act in the 2006 budget to enact changes if any are recommended?

Hon. Mr. Cline: Well Im saying that I think the public will expect a response from government, so that the Minister of Finance, I would expect, will outline what the response will be in his 2006 budget. And it may be that, given the nature of the issue which is quite broad and complex, he may well say, here are some areas we are prepared to act on today; here are some areas where we need further discussion, consideration, evaluation; perhaps in some cases even negotiations with Ottawa over taxation matters. That certainly arises once in a while because they collect the income taxes, as members know.

But I cant say obviously what the response would be exactly because we dont know what the report will say. But the point Im making is, I think the expectation would be that the Minister of Finance would respond to the report in a substantive way at the time of the budget.

Mr. Stewart: All right, thank you, Mr. Minister. Mr. Chair, Mr. Minister, you say that the and naturally so that the government and the Minister of Finance will want to review this report before any action is taken or even before its made public. Will the minister give us assurance that the report thats made public will not be an edited version of the Vicq-Baldock report, that it will contain all of the suggestions and ideas that Vicq and Baldock and company come up with in their original report to the government?

Hon. Mr. Cline: Well I think that is the plan. I cant . . . Its not my department, so its not up to me to give that kind of assurance. But I think we can all rest assured that thats what will be done because it will be the report of Messrs. Vicq and his peers. So they will expect that the report will be public, and they wouldnt accept any doctoring or editing of their report by government. So I dont . . . I mean, Im quite sure, even though Im not in a position to give you that assurance, I think we can all rest assured that thats the way it will have to be.

Mr. Stewart: Thank you, Mr. Minister, Mr. Chair. Mr. Minister, at the end of the economic summit, of the centennial economic summit, you stood, Mr. Minister, and in your address you noted that you were moving away from most available hours. And Im pleased to see that that advice was taken. Have you, Mr. Minister, listened to other concerns and labour legislation that were presented at the summit? Is there any move to make labour regulations in this province more business friendly in any other manner?

Hon. Mr. Cline: Well I remember speaking at the end of the business summit, and I believe what I said was that we had heard a message about the most available hours. I dont know if I said that we were moving away from that issue or necessarily taking any steps at that time. I think that was up to the Minister of Labour and/or the Premier to speak on in that sense.

But I think I said we had heard a strong message about that issue although I also noted it was not a predominant issue as some had predicted it would be. At the summit it was one issue amongst many.

In terms of labour regulations generally, I mean, it is the province I suppose of the Minister of Labour. But I do appreciate that the labour environment is a factor to be considered in terms of economic growth. I believe that what we need to do is always try to take a balanced approach. And from my perspective, we hear criticisms from the business community that our laws are too labour friendly. But we also hear criticisms from the labour community that our laws are too business friendly. And I listen to a lot of criticism, some of it directed at me, that some of the things weve done are too friendly to business.

And since we get criticized from business about labour and labour about business, sometimes I think maybe were in the middle and doing the right things because we seem to be unable to keep either side completely happy, and perhaps that is just the fact of life that we have to live with.

Mr. Stewart: Thank you, Mr. Minister. Mr. Chair, Mr. Minister, did your department establish a baseline for how business felt about the investment and economic environment in this province both before and after the economic summit, and was there any change or improvement?

Hon. Mr. Cline: No, I dont think we established a baseline as such. But I mean, there are, there are places where one can look in order to see what is happening before and after any given event or time frame. Theres the Statistics Canada which puts out an estimation of investment intentions by business. Theres the Conference Board of Canada and so on. There are many agencies or the banks that put out forecasts for economic growth. Theres all kinds of ways to look at whats happening in the economy.

And the fact of the matter is that if you look at what Statistics Canada is saying, for example, this year as opposed to last year, Mr. Chair, they are saying that this year in Saskatchewan, the intentions for investment in the economy are rising from $7.5 billion in 2004 to $8.5 billion in 2005, and that is a 12.6 per cent increase.

Now when you have a 12.6 per cent increase in investment intentions which is the highest, by the way, increase of any province your economy is clearly on a roll. And I dont believe that thats as much to do with the economic summit. But certainly the business people I talk to and I talk to them frequently are very enthused about whats happening in the Saskatchewan economy. And, Mr. Chair, I hear that on a daily basis from various industries.

The one problem area we have of course is the farm sector, and there isnt a lot of happiness in the farm sector these days because theyve had some tough years. But when you move beyond that to the economy generally . . . I go to a lot of business events, and people are very upbeat. So its very positive, more positive today than it was before the summit, but I dont attribute that to the summit. I attribute that to a variety of factors.

But we certainly have overall obviously a very good business environment in Saskatchewan because were leading the nation in terms of investment intentions. And we had in 2004, 3.5 per cent growth in our economy, and the year before it was 4.5. So were doing very, very well.

Mr. Stewart: Thank you, Mr. Minister. Mr. Chair, Mr. Minister, Im sorry I was not at the economic summit, but I presume that there were a number of businesses and industry represented. I think I can likely take that for granted.

Does the government and your department in particular have any feeling of how satisfied business was by the conclusions at the summit?

Hon. Mr. Cline: Well I said at the summit, Mr. Chair, and I really meant it; I had never been at a conference or seminar, something of that nature and Ive been at many of them where there was more enthusiasm and general agreement that it was a very well organized, enjoyable, and informative and worthwhile summit.

I noted in my remarks, to general agreement with everyone there, that I had never been at a meeting before where not once did the chairperson have to say to people, you know, would you please keep the noise down, or would you please take your conversations outside the room? I mean, weve all been to meetings where that is said, because most of the time when the presenters were presenting the information they were presenting, everyone was paying very close attention because of the quality of the presentations. And there was wide representation from all sectors of the economy. And the presenters were very excellent. One of the reasons why the summit was so well received by those there was that it was very clearly a very honest exercise.

What do I mean by that? What I mean by that is that some of the presenters got up, and they were generally supportive of provincial government policies in their area. For example the oil and gas sector said, you know, generally speaking we think that the set of policies the government has are beneficial to allowing growth in this industry. Similarly the diamond people said, we think the government is doing the right things to develop a diamond mining sector in Saskatchewan. But in contrast of course, there were some who, I think, and I respect their views, they got up and said, the government isnt doing the job we think it should be doing in our area.

And so it was clearly a conference where people were free to get up and say what they wanted, and where what they said was not vetted or approved in any way by government. And I think people could see that. And the people that were at the conference had very respectful but frank exchanges of views. And you had the labour people and the business people and the farm people all sitting down together and trying to have a respectful dialogue about issues of economic development because everyone there had one goal in mind. And that goal was continuing to build our province to create more opportunities, and especially opportunities for young people.

And so it was, it was very, very well received, and we got many positive comments from the participants at the summit.

Mr. Stewart: Thank you, Mr. Minister. Mr. Chair, Mr. Minister, based on the feedback from the summit and the feedback that came out of the summit, has your department or your government taken any other measurers besides the business tax review that may impact on economic development in the province?

Hon. Mr. Cline: Yes. Very significantly, I think, Mr. Chair, I undertook on behalf of the Premier at the end of the summit to ask the Department of Industry and Resources to review our economic development strategy, the Partnership for Prosperity, which is a public document, in order to fully take into account what we had heard at the summit. We had heard suggestions, and we wanted to listen carefully to those and to update our economic development strategy.

And I would say that in any province or in our country, its important every so often to examine your policies and your strategy and to take into account any circumstances that may have occurred and to update. And so I undertook on behalf of the Premier that our department would do that. And in fact at the present time, we are in the process of preparing an economic development paper which I hope will be released later this year. But of course in preparing it, were going to be consulting with various stakeholders, and so were undertaking that process. But I think thats a very significant development.

As well, the Minister of Finance took into account many things we heard in the summit in preparing the last provincial budget. One of the emphases of the last provincial budget was education, training for young people. And in several ways more is being done in that area. And that is one of the major themes that emerged from the summit . . . was the need to ensure adequate training for the economy and adequate training for young people. And so we wanted to beef that up in the budget. And thats one example of what came out of the summit, although there are certainly others.

Mr. Stewart: Thank you, Mr. Minister. Mr. Chair, Mr. Minister, of the 10,000-odd jobs, job increase since last March, a year ago, that your department has talked about, can you, Mr. Minister, provide a breakdown of those jobs as to full time and part time?

Hon. Mr. Cline: Yes I can. We have those numbers. I dont have them in front of me right at the moment, but well see if we can get them. They are . . . Ill just take a second here.

Yes, perhaps what we might do is . . . Ill ask the officials to get those numbers, and maybe we could deal with another question while we get the numbers.

Mr. Stewart: Certainly, it may be related as well, Mr. Minister. Mr. Chair, Mr. Minister, could you, Mr. Minister, provide a breakdown of these jobs also by sector that is, manufacturing, agricultural, etc., retail, and so on?

Hon. Mr. Cline: Yes. Yes, we have that information. Ill just ask the officials to bring that forward as well.

Mr. Stewart: Thank you, Mr. Minister. Mr. Chair, Mr. Minister, also would the department have information regarding average salary of these positions?

Hon. Mr. Cline: Average salary. I dont believe we have that information available. We do have the sectors so many more jobs in construction, for example but we wouldnt have the salary for the new jobs that have been created in the last year. Although certainly we could get information as to the sorts of salaries in each sector, but not necessarily related to those very jobs. But they should be consistent.

Mr. Stewart: Thank you, Mr. Minister. Mr. Chair, Mr. Minister, I wonder if you could provide us some more detailed information on how the new growth tax incentives to the potash industry actually work and which taxes they affect and so on. I understand the potash industry is reasonably pleased with that initiative and kudos to your government for initiating it. Id just like to know more detail.

Hon. Mr. Cline: Yes, Id be happy to provide that detail, and then hopefully after that I can provide the numbers for the other questions.

What we did quite recently was to make two changes in the area of potash production. The first is that there is a base royalty tax on production of potash. And we said that if you expanded your production, that I believe its beyond 200,000 tonnes of expansion, then beyond that you would not pay the base royalty tax. So that would be a tax holiday. And the intent is of course to increase production.

Now I should say to anybody who may think the potash companies thereby dont have to pay any tax on their increased production, that that would not be the case. They still have to pay income taxes, they pay capital taxes, they pay sales taxes, and so on. But we have taken off one tax, and of course this followed extensive discussions with the industry, and they felt that if they got that tax holiday that would give them sufficient incentive to expand. And thats what theyre doing.

Weve had announcements of somewhere close to about 600 million, I believe, but I dont think that will be the end of the expansion. I think that companies will make other decisions in due course which will be announced.

Then the second part of it was an issue of capital depreciation. And essentially we said that if you invest in new capital construction, that is to expand the mine, for example, and youre building and buying equipment, that you can apply a depreciation rate of 120 per cent to that construction. And again that doesnt mean that we pay 120 per cent of the cost of the construction. As I understand it, it means at the end of the day by the time they pay their taxes that they might get a tax break of about 40 per cent of what they invest in an expansion. And our view was that if we give them an encouragement to spend money on expansion of the potash mines or retooling because we have to bear in mind that some of these mines are more than 40 years old then generally speaking well have an upgraded and expanding infrastructure for potash mining in Saskatchewan.

And of course one of the wonderful things about a potash mine which is very, very expensive to build . . . Well any mine is very expensive to build. Youre talking about hundreds of millions, and in some cases billions of dollars, to build a mine. But in the case of these kinds of investments, one of the wonderful things, I think, is once you have a mine, nobody ever picks up that mine and moves it to Calgary, for example. Its here. And so these are tremendous investments in our economy.

And so two things the holiday, the base tax holiday on the increased production, and then the enhanced depreciation support for capital investment. And those two things which actually follow on other changes weve made to encourage growth in the potash sector, they will, everyone agrees, spur a lot of economic activity in Saskatchewan. And our goal is to keep Saskatchewan the number one potash producer in the world. That is what we are, and that is what we intend to do. We want Saskatchewan to be the dominant world player in potash, and so were taking steps to ensure that that remains the case.

Now with that I should say that the information that the member asked for before . . . In terms of full-time employment, as of March of this year, last month, it was up by 10,600 from March of 2004. Part-time employment was up by 2,700 over the same period. So we had 10,600 more full-time jobs and 2,700 more part-time jobs, for a total of 13,300 new jobs in that year.

I can also tell the committee, Mr. Chair, that youth employment was up by 2,700 and employment . . . of those . . . Yes. It was 2,700 new youth jobs and, well obviously, the rest of the new jobs were people that were over the age of 25.

Okay. And then, the sectors where the increases in jobs occurred were: manufacturing was up by 1,700; construction was up by 2,000; transportation, warehousing, and utilities were increased by 2,300; retail and wholesale trade rose by 5,800; services by 3,100; and public administration by 2,900.

Now if you added all those up, theyd add up to more than the 13,300 jobs, because in a few sectors the numbers of people working went down. Agriculture went down by 2,100; real estate by 500; and the resource industries by 2,100.

Mr. Stewart: Thank you, Mr. Minister. Getting back to that and thank you for that answer and thank the officials as well you mentioned 2,900 public administration jobs. Can we pinpoint where those jobs are going, those positions are going? Is it . . . I presume that the vast majority of this is provincial government. I guess Im looking for some more information on that.

Hon. Mr. Cline: We dont have those numbers. But this number would, it would actually be all of the federal, provincial, municipal, and I think health board and education people in the province. And I think if you add up all those people for all three levels of government in, you know, the RMs [rural municipalities], the cities everybody youre talking about a figure of, Im sure its a couple of hundred thousand people.

And one thing Ive noticed about these numbers over the years is, last year I think at some time similar to this if you looked at the public administration numbers, theyd gone down by 1,200 or something like that. They seem to swing around a bit. But in our provincial government, I can tell you that there arent 2,100 more people. I think as a result of the budget, theres something like 175 new people. So where these 2,100 people are, I cant answer and we dont have that information. This is from Statistics Canada. They give us this global figure, but I can tell you that it reflects everybody in the public sector.

And the other thing that may be a bit misleading about the term, public administration, is it doesnt mean administrators. It can mean anybody a nurse in the hospital, a teacher. I mean, people that are delivering front-line services but they work in an area that is administered publicly. So thats the best I can do.

Mr. Stewart: Thank you, Mr. Minister. Mr. Chair, Mr. Minister. Mr. Minister, you mentioned the 120 per cent depreciation on new construction in the potash industry and that seems to be effective. Over how many years, or at what percentage per year, can a potash company take that depreciation?

Hon. Mr. Cline: Im going to have to ask someone. Ill ask Mr. Marshall perhaps to answer that question.

Mr. Marshall: They would be allowed to take a, to count any capital expenditures at 120 per cent against their expenses in calculating their tax liability. So basically their capital expenditures are grossed up.

Now they may not be able to use that to offset all tax liability in one year, but normally that would be the case and then they would just carry forward till it was used up.

Mr. Stewart: Thank you, sir. I think that answered my question. I wondered if it was like that or if it was just a maximum percentage per year over so many years.

Im gathering that if they spent a certain number in 2004 tax year, that they would be able to claim 120 per cent . . . or in 2005 tax year, theyd be able to claim 120 per cent of that particular number and it wouldnt be spread over several years.

Mr. Marshall: Only if they needed to, but thats correct. Normally they would be depreciating their capital at a rate of around 30 per cent, I believe. But I think its normally over three years, but now its basically counted immediately.

Mr. Stewart: Thank you. Mr. Chair, Mr. Minister, after the . . . since the success and I concede that this initiative to the potash industry appears that it will be successful and its a new growth in tax incentive so since the success or apparent success of that in the potash industry, will your department be looking at similar incentives in other industries?

Hon. Mr. Cline: Yes, we are constantly looking at similar incentives elsewhere, and certainly currently were doing that. I dont want to get into necessarily all the details of everything were doing today because we have some discussions ongoing that we hope to lead to positive announcements in the future.

But we have taken a similar approach, for example, really in oil and gas. And this goes back several years where a variety of changes have been made in oil and gas throughout the 1990s to attempt to incent more development. And I wont go into all the details unless the member wishes me to, Mr. Chair, but suffice it to say that we also have made changes to try to move oil and gas production up. And, you know, weve seen it doubled, so it seems to be working.

There are many other areas where tax changes have been made. There actually is a list I could provide the committee with that is three or four pages long of all of the business-friendly tax changes that have been made in the last 10 years. Its really quite amazing when you start looking at all of them. But to answer the members specific question, yes, we think we should seek ways to change taxes where we can to bring about more development, and this is what we have been doing. And certainly we will continue to do it in large and small ways.

Just to give an example of a small way, by the way. There was a time when aviation fuel tax was 7 cents per litre. And then that was reduced to three and a half cents per litre, and the idea was to try to build up the sale of aviation fuel in Saskatchewan. As an industry its a small industry, but nevertheless there are companies and employees that depend upon that industry for their livelihood.

And when we went to 3.5 cents per litre from 7, the consumption of aviation fuel in Saskatchewan did increase. That is, you got more large companies airlines coming in and refuelling in Saskatchewan instead of just in Winnipeg and Edmonton or Vancouver. And in the recent budget, the Minister of Finance announced that that aviation fuel tax went down to, I believe its one and a half cents per litre. And, you know, I believe that the result of that will be youll see that industry grow to some extent.

Now thats kind of a smaller example than obviously a potash mine, but nevertheless we are open to these kinds of approaches. And where industry and government can work together to demonstrate that the tax can be changed and even lowered, but we can have more activity which then generates more tax were quite open to that approach and have been taking it in some areas. And I would say we will be taking it, if we can, in a few other areas.

But I will also say this. It is usually very complex and time-consuming. I realize that to many people, and perhaps even to myself if I wasnt involved in this way, I might think, well if its that simple, just do it. But actually what happens is that, for the oil changes for example, discussions went back and forth on the latest changes.

Well, Mr. Chair, as you would know because you were the minister of Energy at the time, for a year and a half or two years, I think, you know, where they would model things suggested by the Department of Finance, and then and Industry and . . . well, Energy and Mines at that time and then they would make suggestions that similarly would have to be modelled at the government end. And my impression was that these things took a lot of time.

The discussions with the potash industry also took a lot of time. And it wasnt because anybody was dragging their heels. Both the industry people and the government people were doing a very diligent job, but theyre dealing with very complex matters.

And so, sorry to be so long-winded, Mr. Chair, but in answer to the members question, yes, we generally are looking for these approaches.

Mr. Stewart: Thank you, Mr. Minister. Mr. Chair, Mr. Minister, Im quite aware of the changes that were made to the oil and gas tax incentives during the 1990s, as I was the critic and Mr. Chair was the minister in those days. And we used to have healthy discussions about those things. And I think generally I was complimentary about them; I think that those were steps in the right direction.

Mr. Minister, in general has the corporate capital tax been considered for incentives, a reduction in corporate capital tax been considered specifically for incentives for industry to make, to enter into major construction projects in the province?

Hon. Mr. Cline: Yes. In fact for oil, the oil and gas sector, it was reduced from 3.6 to 2 per cent as part of the 2002 changes. These werent the most recent changes, but so certainly that approach was taken for them. And it will certainly be considered by the business tax review committee as well. They will be looking at the corporate capital tax.

And of course the other thing we did was we totally exempt businesses that have capital of under, it used to be $10 million, from the corporate capital tax. And we have increased that exemption to $15 million. And I believe consideration is being given to raising it to $20 million. But I dont know if any definite plan has been announced in that regard. But this has been publicly talked about in government circles as a long-term plan, in any event.

Mr. Stewart: Thank you, Mr. Minister. Mr. Chair, Mr. Minister, you mentioned agriculture more or less in passing. And agriculture is in a bit of a tailspin, and one of the problems of course is BSE [bovine spongiform encephalopathy]. And with the border closed to live cattle and beef from animals over 30 months of age, its creating a very difficult situation. And one of the obvious solutions to that is the establishment of a larger packing industry in Western Canada, and hopefully in Saskatchewan.

Im wondering if, Mr. Minister, you or your officials have been in discussions with groups wishing to build substantial-sized, competitive packing plants in Saskatchewan. And if so, are there offers of tax incentives on the table for these people? Clearly they have to compete with Alberta, where most of the packing industry is, and the vast majority of the feedlot industry. Its kind of a little bit like pushing a rope uphill to get them to come here anyway. Im just wondering if specific offers of tax incentives, and particularly on corporate capital tax, have been offered to these people who are willing to invest in the province.

Hon. Mr. Cline: Yes, Mr. Chair. Our department has been involved in discussions with various proponents of meat-packing development in Saskatchewan. And I should say that in doing so we are always acting in concert with the Department of Agriculture and Food, because of course in Saskatchewan, because of the large nature of the agriculture sector, we share the mandate of food production as part of industry with that department. But we have been involved in discussions with different proponents of meat packing and will continue to be so. And we do share the members desire that there be enhanced meat packing in Saskatchewan.

I dont want to, at the present time, discuss the details of, you know, anything that may be on the table. But suffice it to say that were doing everything that we can to try to pursue opportunities to grow the meat-packing sector in Saskatchewan. There are challenges, as I know the member is probably better aware than I am because he himself is experienced in the beef production industry, I believe.

The challenge of course being the huge consolidation of that industry in a few centres, and most notably in the United States. And the difficulty, when looking at this file, is that the players are so big and the economies of scale are such and the margin so small that there are challenges in terms of contemplating competing with some of these folks, especially in beef packing.

And then there is the frustration of not knowing when the American border is going to open to Canadian cattle, which will have the impact of . . . if we built, for example, in the short term, enhanced beef packing industry here and if the border opened and we were undercut by the big players in the US, it could be very difficult. And most people agree on that potential difficulty.

So its not an easy file, for sure. But nevertheless, were pursuing it and asking questions like, are there niche markets, particular cuts, you know, particular areas like organically fed cattle and this kind of thing where there could be some development. And I dont want to suggest that these things are impossible. Certainly, we have increased pork production in Saskatchewan. We would like to see continued healthy processing. But as I say, its a difficult file with a lot of challenges.

But to answer the question, yes, we are involved in discussions and we are seeking ways to grow this industry.

Mr. Stewart: Thank you, Mr. Minister. Mr. Chair, and Mr. Minister, without being specific and Im not asking you which companies or groups youve been talking with but there are, I know that there are a number of community-based organizations interested in building packing plants in the province if they can.

I guess what Im asking you is have you had and the answer to your last question leads into this, about the competitiveness of the industry and the size of the players in terms of economic clout have you had discussions with any major corporations already involved in the packing industry about building in this province?

Hon. Mr. Cline: Yes, we certainly have. When we have, you know, major players in the province already, I mean were certainly sure to not only include them in any specific discussions but we want to keep in touch with them on an ongoing basis to monitor the health of their sector and whats happening because its important from a jobs perspective and also very important from the point of view of the agricultural producer. So yes, we definitely talk to the large players that we already have in the province on a fairly regular basis.

Mr. Stewart: Thank you, Mr. Minister. Mr. Chair, I see that its nearly 4. If I can squeeze one more question in, I would like to do that.

Mr. Minister, irrigation is most likely considered to be an agricultural industry by your department or an agricultural venture by your department, but its very much related to economic development. And in fact thats how Alberta actually built their feedlot sector and their packing industry, is that they created incentives for irrigation some 40 years ago, and the irrigation areas were developed and the feedlots sprung up around them. And then, because they had the feedlot industry in the country, they got the packing industry.

Is your department involved in any way in trying to further develop the irrigation industry in this province?

Hon. Mr. Cline: Mr. Chair, no. The answer to that question is no. In this province it is clearly under the authority of the Department of Agriculture and Food and I dont believe we have any involvement in the area of irrigation, and I certainly personally have not.

Mr. Stewart: Thank you, Mr. Minister. And, Mr. Chair, Mr. Minister, I think my time is up and Id like to thank you, Mr. Minister, and particularly your officials for all the help that youve been today.

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