Madam Speaker: It has been moved by the honourable government House leader, seconded by--

Hon. James McCrae (Government House Leader): Oh, seconded by--I will have to re-move it, I guess-the honourable Minister of Natural Resources (Mr. Cummings)--

Motion agreed to.

When the committee last sat, it had been considering item 3. Industry Support Programs (a) Mineral Exploration Assistance Program on page 46 of the Estimates book.

Ms. MaryAnn Mihychuk (St. James): As I indicated yesterday, I had hoped to finish the Estimates yesterday. I do not intend to spend too long on this, but I do want to ask a few questions on the Mineral Exploration Assistance Program. The minister was in the process of explaining the funding for the MEAP program partially through the use of the Mining Community Reserve Fund. I am not sure that we concluded that section, so I would ask that we do that.

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Hon. David Newman (Minister of Energy and Mines): I think to answer the question--rather than giving you the edited abbreviated version, which I could attempt, I will give you the chapter and verse, the detailed explanation provided by the department.

At the end of 1995-96 the department had an allocation of $2 million for the Mineral Exploration Incentive Program. In preparing for the '96-97 Estimates review process and as part of implementing its new mining and petroleum investment strategy, the department proposed that the old cumbersome EIP program be cancelled and it be replaced by a new streamlined Mineral Exploration Assistance Program at a funding level of $3 million per year and a new Petroleum Exploration Assistance Program at a funding level of $1 million per year. To effect this change, $1 million was reallocated to the new PEAP from the old MEIP program; $1 million was reallocated to the new MEAP and an additional allocation of $2 million was needed to bring MEAP up to the full $3-million level.

The question was then, where would the additional $2 million come from? Given the size of the budget and my department, it would have meant of course program reductions and staff reductions to find the $2 million. Through a process of discussion involving the Department of Finance and legal counsel, the option of using the mining community reserve as a potential source of funding was examined. The first option was upon examining the provisions of The Mining Tax Act that deal with the mining community reserve, it was concluded that unless there is a direct link between the cost of an exploration project and the welfare and employment of persons residing in a mining community which may be adversely affected by the total or partial suspension or the closing down of mining operations attributable to the depletion of ore deposits, exploration projects could not be funded directly out of the reserve. It was concluded that funding projects directly out of the reserve would make MEAP too restrictive. For example, it would preclude projects in the target area of the Northern Superior Province.

Another option, which was the option exercised, was under Section 44(6) of the act; the Minister of Finance is allowed, with the approval of the Lieutenant Governor in Council, to transfer to revenue any amount from the reserve which exceeds $5 million. As of March 31, 1996, the balance in the reserve was $19.2 million. It was therefore determined that commencing in '96-97, $2 million per year over a three-year period would be transferred from the mining community reserve to revenue to offset the $2 million per year of incremental expenditure authority for MEAP. The consequence of that was that the net impact on the provincial budget was neutral, and of course the intent of the legislation was honoured and respected in the process and a reserve well in excess of $5 million was intact as well and continues to be intact.

Ms. Mihychuk: Can the minister tell us for the record what the balance of the Mining Community Reserve Fund is at the present time?

Mr. Newman: The uncommitted balance that has not already been spoken for is $14.2 million.

Ms. Mihychuk: The difference between the $19.2 million as of March 31, 1996, and the $14.2 is actually more than the $4 million. Can the minister explain why there is a discrepancy between those numbers?

Mr. Newman: Those involve the commitments into the future.

The total committed--maybe I will take a step back. The opening balance as of April 1, 1996, was $19,203,704.65. Then there was revenue, the interest, the investment return on the fund, for the period April 1, 1996, to March 19, 1997, of $2, 070, 251.12 less payments out from April 1 to March 19, 1997, totalling $783,820.14 for a closing balance as of March 19, 1997, of $20,490,135.63, and the committed amount that we are talking about is $6,276,570.15. Subtracting that from the closing balance of March 19, 1997, leaves an uncommitted balance of $14,213,565.48.

The breakdown of that $6.2 million is, first of all, the Prospectors Assistance Program. There is $100,000 which was in total committed to that originally, and the balance which has still been unpaid pursuant to that commitment is $13,458.01. So that is the first item.

The second item is the Sherridon tailings cleanup. The total committed there originally was $25,000, and the balance committed but unpaid is $6,430.23.

There is support related to the Prospectors Assistance Program for this year coming and the previous year. I should have mentioned the first item was with respect to the 1995-96 year--that was the $13,458.01--but the '96-97 and '97-98 commitment to the Prospectors Assistance Program still unspent is $216,653.58.

The other item is an engineering project respecting the Sherridon tailings, again, and the balance unspent on that out of an original commitment of $400,000 is $40,028.33. If you add those up, they would total $276,570.15 which is the amount that you are talking about in excess of the $6 million transferred to general revenue.

Ms. Mihychuk: Just for the record, the $2 million per year is coming in $2-million withdrawals rather than the full $6 million at one time. Is that correct?

Mr. Newman: It is committed as $6 million, but it comes in $2-million installments each fiscal year.

Ms. Mihychuk: Does the minister not believe that this allocation actually contravenes the purpose of the Mining Community Reserve Fund, which the minister actually read out, which is actually established to be used for the welfare and employment of persons residing in a mining community which may be adversely affected by the partial suspension, closing down, of mining operations attributable to the depletion of ore deposits?

That was the fundamental reason for establishing the fund. This is clearly a deviation, although I understand and I agree that you found a way to access the money, but, overall, the principle of the fund was to help communities that were experiencing downturns, which we know communities do experience, especially mining towns. Here we are using the money to subsidize exploration in areas well away from communities and mining communities.

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Mr. Newman: My answer to that question will not be in agreement with your characterization of it. I would suggest to you that confining the fund to the statutory amount of $5 million would be consistent with the intent of the legislation, and we are not doing that, because it is perceived that it is desirable to have a larger fund than was originally contemplated by that legislation as a minimum.

With respect to the expenditure of what could be called "surplus capital" in the fund, I would contend, with a great deal of conviction, that this is probably the best use of that fund and the best way to, in a long-term sustainable and directly beneficial way, spend that money for the benefit of the people in those communities.

Not only does exploration give the best chance for the finding of mines, we simply know of no better way to spend money to develop a mine than to have exploration done that is serious and focused and meets the approval of our department, but also associated with the exploration are jobs, are benefits to communities in the areas of exploration in the North.

Whether it is Lynn Lake, which was in desperate trouble and has been supported by the fund, or whether it is Flin Flon, it also contributes to the morale of the area, the spirit of the area, and that is also important in healthy and sustainable communities. So, no, I gave a great deal of agonized thought to this because I wanted to make sure that in my judgment the department was committed to a way of spending its money that was in the best interests of the northern communities. So I have come to the conclusion I just expressed to you with a great deal of thought and a great deal of conviction, and I think the decision made before I became minister is the correct one, and I heartily approve of it.

Ms. Mihychuk: The legislation, as I understand it, does identify $5 million as the minimum amount in the fund. I concur with the minister, $5 million these days does not seem sufficient for the purpose of the fund which I think was established for the reason of providing that cushion for the people that live in those towns. If you talk to families in Snow Lake, for example, how would this investment of $2 million in the Superior region help the people of Snow Lake when the mine closed down that year. Clearly the vision, the decision by the department to go into the Superior project, for example, was a wise one, but it is not, I would argue, going to create a new community in the Superior Province in the short term.

We will hope that this type of exploration leads to some prospects, leads to some mining development, but we are clearly in the early, early phases. This fund was to be used to rescue, to save communities already established. If I have a home in Snow Lake that I have invested $60,000, $70,000 in, and the town collapses, this money invested in the Superior project or in other projects is not going to help me as an individual with property in Snow Lake. So I would still argue that, although the government, the minister is complying with the regulations of the act, I believe you have betrayed the purpose, although this exploration may be worthwhile. I understand the department is desperately looking for funding. I would just like to put for the record that we do not concur with the use of this fund for the use of the Mineral Exploration Assistance Program because of its tenuous association with actual mining communities.

Mr. Newman: I just wanted to correct, for the record, no one should be under the impression that the exploration funding is going into the northern Superior Province alone. In fact, a minority of the funding is going there, and by far the most significant amounts are going into areas that I would say have a presence of well-established communities, and I would emphasize and single out Flin Flon, for example, where Hudson Bay Mining and Smelting is spending a great deal of money with its support from this program to try and find a mine to better ensure the continued success, indeed existence, of the mining operations in Flin Flon.

I also would invite--I think a useful discussion could take place as to whether or not that $5-million figure in the statute should be changed, and if you tell me that that should be, your party, the New Democratic Party, the official opposition would support an amendment to change that amount in some way that is more acceptable to myself and to you, I would welcome that disclosure of support and disclosure of an amount. That kind of change, when there is nonpartisan support for the protection of a community, we could perhaps do legislation like that without a great deal of difficulty. I think this is the sort of issue that deserves that kind of consideration because it is obvious that you are as sensitive to the damage, the hurt, the economic challenge that would be laid on people in any northern community who are now dependent significantly on the presence of a mine nearby to further success.

Ms. Mihychuk: I thank the minister for that opportunity and will pursue it, and hopefully we can come to a co-operative conclusion on what we see as a reasonable amount as a minimum or other changes to the Community Reserve Fund. We will take that suggestion and come back to the minister on that.

Mr. Newman: I welcome your addition of the words. If, for example, you were to agree that this were clearly a beneficial purpose, maybe there should be language in the statute to accommodate that and that again I would be pleased to explore with you.

Ms. Mihychuk: Very good. I just would also like to ask the minister if we could have an updated list of what companies, exploration companies are receiving funding from the MEAP and PEAP--well, we know what we are talking about--the incentive programs that are being offered for oil and gas exploration and for the mineral exploration.

Mr. Newman: We will definitely be pleased to provide that to you for both of those programs.

Ms. Mihychuk: One final question: Is it the intention of the department to continue with the petroleum incentive program in the next year, and does the minister believe that it concurs with the principles of sustainable development?

Mr. Newman: Yes.

The Acting Chairperson (Mrs. Render): 23.3. Industry Support Programs (a) Mineral Exploration Assistance Program $3 million--pass; (b) Petroleum Exploration Assistance Program $1 million--pass; (c) Manitoba Potash Project $304,900--pass; (d) Acid Rain Abatement Program, Flin Flon $138,600--pass.

Resolution 23.3: RESOLVED that there be granted to Her Majesty a sum not exceeding $4, 443,500 for Energy and Mines for the fiscal year ending the 31st day of March, 1998.

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The last item to be considered for the Estimates of the Department of Energy and Mines is 1. Administration and Finance (a) Minister's Salary. At this point we request that the minister's staff leave the table for the consideration of this item.

Item 23.1.(a) Minister's Salary $12,900--pass.

Resolution 23.1: RESOLVED that there be granted to Her Majesty a sum not exceeding $1,139,500 for Energy and Mines, Administration and Finance, for the fiscal year ending the 31st day of March, 1998.

That concludes the Estimates for the Department of Energy and Mines. We will recess briefly.

The committee recessed at 3:02 p.m.

The committee resumed at 3:08 p.m.