MR. CHAIRMAN: Good morning. I would like to call the Standing Committee on Economic Development to order. I would like to welcome today Mayor John Coady, the Mayor of the Cape Breton Regional Municipality, and also Mr. John Coleman who is President of the Industrial Cape Breton Board of Trade. We are presently holding a series of hearings looking at the coal industry in Cape Breton. Last meeting we heard from Mr. Drake who is president of the union in that area. So, I welcome you today gentlemen. I think what we will do is ask you to make a presentation to the committee. I think we will hear from each of you in turn and then we will have questions from the committee. So, Mayor Coady or Mr. Coleman, whoever is to go first, please proceed.
MAYOR JOHN COADY: Mr. Chairman, ladies and gentlemen, first of all thank you for the opportunity to present our views on mining in Cape Breton. I think in the interest of brevity, I will read the report that we have provided to you and, as you have indicated, Mr. Chairman, following Mr. Coleman's presentation, if we could get into a question and answer format or a discussion, it may be more beneficial to us all.
Over the past year the Devco situation has been at the forefront of our economic agenda. Our municipality has taken a strong supportive position on the potential of our mines to once again be a significant force in the rejuvenation of our economy. We are excited about the new plans for the industry and we are enthusiastic to tell the rest of the province about what is going on there. We think it is important that all Nova Scotians realize the significance of the current situation confronting Devco and the need for their provincial government to adopt a hands on approach to this Nova Scotia problem.
The recently announced approval of the Cape Breton Development Corporation's five year plan by the federal Cabinet is the first step in affirming the delicate but vital stability of the coal mining industry in Cape Breton. The injection of essential capital allows Devco to begin its challenging mandate of achieving commercial viability. While achievable, success could prove to be elusive unless there is a full commitment of all of the stakeholders to the necessary directions of the plan.
As one of these stakeholders, the Cape Breton Regional Municipality used Devco's consultative process to present its views on their corporate plan. We stressed the need for bold but responsible measures, including the pursuit of aggressive, new mining technologies modelled on the recommendations of the Boyd Report. We proposed a strong human resource component with enhanced training and the retention of a younger work force. We also supported the underlying philosophy of commercial viability and competitiveness for Cape Breton coal.
Essential to the industry's capacity to sustain itself, is the whole matter of the corporation's accumulated liabilities - the so-called social costs. It is important that people understand that liabilities in the order of $500 million have grown over the years, due primarily to the inception of a non-contributory company pension plan. Each year approximately $40 million must be taken from Devco's operating revenues to fund these liabilities. We proposed the establishment of a separate division within Devco to account for and pay off this debt.
In this regard, it should be stressed that we are talking here only of losses incurred prior to April 1, 1996, since the newly restructured Devco will be responsible from that date for all of its operating expenditures. Failing this, we see no alternative but for the federal government to assume these costs. Meanwhile, a fully contributory pension plan will be instituted to prevent any further debt accumulation. The creation of a non-contributory plan was a federal initiative which, today, is crippling the corporation with all their operating profits being erased annually because of the large contribution to debt reduction.
It is our contention that the crisis confronting our coal mining industry is, in reality, a community crisis. Not only does downsizing affect the lives of miners, their families and the mining communities, but it also directly impacts on the economy and the very fibre of the overall Cape Breton community. We do want to emphasize that despite the reassuring news of federal assistance, the coal situation remains critical, demanding supportive interventions and local solutions.
The historic problems confronting Cape Breton's stagnant economy have been well documented and need no further elaboration here. Our economy continues to be buoyed on our resource industries of coal and steel, defying global trends which dramatically shifted world economies to a more knowledge-based orientation. We find ourselves at times locked on the horns of a dilemma, unable or unwilling to let go of what we had for fear that the bottom will fall out of her, fearing lost jobs will not be replaced to accommodate an inadequately trained work force.
Many Cape Bretoners understand the directions of the new economy and are embracing it with surprising resolve. High-tech ventures are taking root throughout the Island, initiated primarily by young enterprising entrepreneurs. They take advantage of high-tech communication and a pristine lifestyle to make Cape Breton an accessible and competitive environment for business. But these new age industries could not survive in our communities without the presence of staple industries, like coal mining.
In our response to the originally proposed 800 layoffs at Devco, we attempted to place in perspective what these layoffs would have represented, in relative terms, to the economies of other metropolitan areas. Eight hundred layoffs in Cape Breton, for instance, would have equated to 42,000 layoffs in Toronto; 10,000 layoffs in Ottawa; and 3,300 layoffs here in Halifax. To bring the unemployment rates in those cities to the same level as our area would have meant that the same three metro areas would have to reduce their work force in
staggering proportions: in Toronto, 289,000; Ottawa-Hull, 75,000; and in Halifax, 22,500. Clearly, the enhanced benefit package and the reduced layoff numbers resulting from the new plan impact less severely on our struggling economy and alter these numbers. Nonetheless, we still realize a significant negative impact on our economy when the layoffs, presently envisioned, have their full effect.
The Cape Breton economy is best characterized as stagnant with an average unemployment rate hovering around 20 per cent, double the provincial average and two and one-half times the national average. The cumulative effect of both public and private downsizing, the downturn in the fishing industry, health and social assistance cuts, employment insurance reforms, education spending cuts, combined with increased taxation have already taken their toll on our economy. Over the past few years, National Sea Products has displaced 700 jobs; Micronav, 150; Maritime Tel. & Tel.'s rationalization reduced its payroll by 800 province-wide; the Department of Health projected 800 institutional health care jobs will disappear in Cape Breton as a result of provincial reform measures; and, unfortunately, the list grows.
Throughout our communities, we see daily evidence of the ripple effect of rationalizations. Informal responses from some local retail outlets suggest that business is off by 25 per cent. The Board of Trade speaks of uncertainty within the business community. There is a feeling that the current industrial situation has temporarily immobilized our local economy with everything being put on hold.
The recently announced Employment Insurance Program changes will have a further devastating effect on our people. Currently, unemployment insurance claims from Cape Breton represent 17.5 per cent of Nova Scotia's claims. Whereas, UI benefits make up 4 per cent of the total income for Nova Scotia, they represent 8 per cent, or twice the provincial norm, for our area. Clearly, proposed reductions in these transfer payments will destroy jobs disproportionately in our area as compared to other metropolitan areas, simply because there will be less money to spend.
Demographically, the profiles reveal further evidence of deterioration in our municipality. We have high unemployment, a shrinking labour force participation rate, and a declining and aging population. Recent statistics indicate that the participation rate for Cape Breton in 1993 stood at 50.7 per cent compared to 59.8 per cent provincially. This means that when one factors in those who have dropped out of the labour force or who have never been able to enter it, the real unemployment rate in Cape Breton is more in the order of 35 per cent to 40 per cent.
For the future, not all Nova Scotians are aware that the vast coal reserves estimated to provide more than 100 years of mining are owned by the people of this province. Bearing this in mind, the importance and appropriateness of provincial involvement is apparent. Nova Scotians own the resource and Nova Scotians should dictate how the resources are to be exploited.
The federal government has intimated that they intend to divest themselves from their longstanding involvement in the Cape Breton coal industry, while we in Cape Breton recognize the long-term dependence of the industry's relationship with Ottawa with most conceding that the dependency must be altered. We also know and cannot stress strongly enough that our coal mines could not be sustained in the short term without ongoing support and understanding at both the federal and provincial levels.
The Boyd Report, commissioned by Ottawa, presents an authentic, credible, well-documented strategy for the coal industry, giving renewed hope for our battered economy. To attain commercial viability, Boyd contended that Devco's industrial culture and the state of its technology had to be addressed. Upgraded management skills, improved work policies and labour relations were required to create a simplified production-oriented chain of command. When combined with appropriate technology, some downsizing and a multiple-entry gate system, profitability will result.
Of all of those impediments facing Devco, Boyd cited the human resource issue as the single most serious and fundamental problem. The corporation has been plagued by a history of strained labour management relations and administrative structure, wherein supervisory personnel had little, if any, capacity to manage and a senior management whose authority and credibility has been continuously circumvented through political influence. Enhanced management capability and a cooperative union-management atmosphere are prerequisites to a successful turnaround in the corporation's fortunes.
Interestingly, Boyd concluded that nothing at Prince or Phalen precludes the operation of a modern, highly-productive mine. The problem is not so much the availability of the resource and its accessibility as it is to the corporation's current operational efficiency. These problems are not insurmountable but require sensitive and cooperative attention.
Our residents have long recognized coal miners as valued members of the community and the mining industry as a vital cog in our economic wheel. In turn, the miner and the union, like all citizens, have an obligation to the greater community to contribute to its overall growth and to make prudent choices that will contribute to the long-term stability of our economy.
When this most recent crisis surfaced, many in Cape Breton were pessimistic and ready to concede the industry's demise but now we know differently. Commercial viability is within reach. A five year plan is in place to attain it. What is lacking is a province-wide acknowledgement that the coal mining industry can have a bright future and contribute to the province's growth. The local Cape Breton community has to know that it can count on the support of the provincial government and other regions of the province as it struggles to assist in the resolution of this crisis.
The establishment of a regional government in our area gives us the advantage of now being able to speak with a unified voice and to develop common strategies when dealing with economic issues. Leadership and vision are required and the tough decisions, whatever they might be, cannot be forged outside the community. If they are, local leadership is undermined and weakened, creating a void in terms of our ability to be accountable for our own future.
What is needed is positive energy and constructive input so as to make optimum use of the options available to us. Ultimately, there is but one option, to take responsibility for our own future. This will not be achievable, however, without your support.
The provincial government can be of great service by helping to strengthen the new regional government through tangible interventions and recognition. The Department of Economic Renewal can assist through the provision of programs that help supplement federal initiatives in Cape Breton. All economic interventions must be carefully coordinated and integrated to optimize their effort.
We made reference to the emergence of new technological ventures in Cape Breton. While they are essential, provincial government programs and job creation strategies can never lose sight of the ongoing importance of a staple industry such as coal. Like the municipality, the Province of Nova Scotia must be prepared to take a place at the table, making its views known and availing the other stakeholders of its resources and expertise. The window of opportunity for our coal industry is restricted. Timing is critical. A unified approach by all stakeholders is essential. The consequences of failure could be and would be devastating for us in Cape Breton.
For our part, the municipality is prepared to enter into the dialogue with stakeholders in support of a viable coal industry. On behalf of the elected municipal representatives of the people most directly affected by the future of coal mining in Cape Breton, we are committed to the realization of strategies that will make Devco a competitive, modern corporation. Thank you.
MR. CHAIRMAN: Thank you very much. Mr. Coleman.
MR. JOHN COLEMAN: The Industrial Cape Breton Board of Trade welcomes the invitation by the Economic Development Committee to present the board's views on the role the Cape Breton Development Corporation plays in the Cape Breton economy. Also included in our submission are reflections on community economic development and the role that local people must play in shaping policies that encourage development.
The Cape Breton Development Corporation was established in 1967 to deal with the threatened closure of the Sydney coalfields. Devco was established in response to recommendations made by J.R. Donald in his government commissioned study, The Cape Breton Coal Problem, 1966. Donald had given the coal industry 15 years. By 1983, there was to be no coal industry in Cape Breton.
At the time that Donald was carrying out his study in 1965 and early 1966, the Sydney coalfields, owned and operated by the Dominion Coal Company, produced 4 million tons of coal and employed 6,500 people. With the implementation of a pre-retirement leave plan, employment in the coal industry decreased dramatically and by 1974 stood at 3,500. However, the employment picture brightened in 1975, increasing to over 3,700 and gradually increasing in succeeding years. In the early 1980's, it fluctuated around 4,300 but then started to decline, reaching 3,500 in 1985; 2,980 in 1990; 2,550 in 1992; and 2,200 today. According to the five year Corporate Plan: 1996/97 - 2000/01, released May 9, 1996, employment will be further reduced to less than 1,500 by the year 2000. This workforce will be producing approximately 3.3 million tons of coal.
Now, coal miners have been concerned for many years about losing their jobs. They are well aware that their numbers can be cut substantially when unproductive pits are closed and state-of-the-art technology is introduced in the remaining mines. Increased investment in people and capital equipment has contributed to a significant increase in productivity; tons per man-shift were 2.2 in 1970, 4.2 in 1980, 8.8 in 1990, and 10.6 in 1995 and the five year corporate plan shows an increase in that trend.
For the CBDC to achieve commercial viability then this key fact of productivity will have to continue to improve. According to the Cape Breton Development Corporation's five year corporate plan, the government mandate to Devco management is to achieve commercial viability that the corporation, "must be able to compete with private sector companies and must be able to compete with alternative fuels.". This message is not new. Indeed, it was
emphasized in the Cape Breton Development Corporation's 1988-89 annual report that, "if the coal cannot be sold profitably, then it will not be mined.".
Community briefings in early May 1996 by Mr. Shannon, former President of the Cape Breton Development Corporation and now Chairman of the Board, and by Mr. David Dingwall, Minister of Health, made it clear that the five year corporate plan approved by the Government of Canada on May 7, 1996 must be achieved, otherwise, Cape Breton will not have a coal industry. The plan reflects not only Mr. Shannon's analysis but also that of various local organizations such as the regional government, local business, unions and church groups. The Board of Trade has no reason to doubt the strategy outlined in the corporate plan. We want the coal industry to be viable and we want displaced workers to be dealt with in an equitable manner. The Board of Trade believes that the five year plan offers hope on both fronts.
Although employment at the Cape Breton Development Corporation has been reduced substantially since the establishment of the corporation in 1967, nevertheless, it plays a major role in the economy. The local business community expects it to continue to be a major player in the economic future of Cape Breton. Any business that has a payroll in the vicinity of $100 million obviously is a major player in any local economy. The loss of such a payroll, without any offsets, would be devastating to the community, especially in an economy that is as fragile as that of Cape Breton.
Related financial data is also very revealing. The Cape Breton Development Corporation is forecasting revenues of $166 million by the year 2000. According to the corporation's annual report for the year ended March 31, 1995, the corporation's activities contributed some $212 million to the Cape Breton economy, comprising $103 million in wages and benefits, $49 million in pensions and approximately $60 million in goods and services involved in Cape Breton suppliers. All together, $240 million was injected into the Nova Scotia economy. If one assumed a modest multiplier of two, then an additional $240 million is generated in Nova Scotia as a result of the corporation's activities.
I am going to take a few minutes to perhaps just summarize those figures with a couple of transparencies. So, this is the employment trend. In 1966 to the forecasted 1999. So you have seen there has been quite a reduction in that span of time.
The productivity has increased quite substantially, as pointed out in the figures I quoted a few minutes ago. You can see the forecasted revenues for 1996-97 and the year 2000. The Cape Breton Development Corporation's activities contribute $240 million and, as I indicated, that is made up of $103 million in wages and benefits plus $49 million in pensions, plus $60 million in goods and services involving Cape Breton suppliers. For the total Nova Scotian economy, $240 million injected. If we assume a multiplier of two, and it is difficult to really know what multiplier figures to use, you hear different figures, all the way from one and one-half to four. So I think two is a fairly conservative number and a pretty safe one to use. I would think that, at least what I have heard in my experience, is that the multiplier of two would be quite acceptable to a number of economists. So then that would make a contribution of almost $0.5 billion to the Nova Scotia economy.
So much attention is paid to economic data that sometimes we overlook the importance that must be attached to intangibles, such as community involvement and labour management relations. It was therefore certainly welcomed by the business community when the Cape Breton Development Corporation took measures several years ago to improve communications within the corporation itself and with the local community. Mr. Shannon has continued and,
indeed, enhanced that activity. The most recent consultations with local government, business and church groups were most appropriate. It was certainly gratifying to see some of the suggestions from these groups incorporated into the five year plan.
[10:30 a.m.]
It is becoming increasingly clear to more and more members of the public, including the business community and especially to those of us from the Board of Trade who attended the consultative sessions, both prior to and following the approval by government of the five year corporate plan, that it is imperative that management and union develop a positive working relationship. As spelled out in the corporate plan, this can only be achieved if there is a full commitment to a quality management program, a management and supervisory skills development program, and the establishment of a quality management training program.
Mayor Coady referred to the industrial relations problem and it is the view of many people, including myself, that that is critical, that that has to be dealt with. I am not sure how you do it, but it has to be done.
A fractious labour/management climate has existed in the corporation for many years. The climate has to change. There is too much at stake. If such a climate continues, then the corporate plan will not succeed and every Cape Bretoner will be adversely affected. It is important to realize, then, that we are not just talking about a coal crisis but a community crisis. Therefore, it is certainly welcomed by the Board of Trade that the concern for labour/management relations is reflected in the corporate plan. For commercial viability to be achieved at the corporation, labour and management and the community must work together.
As the outgoing president of the Board of Trade, I will encourage our new president and his executive, along with our council, to continue to supply input and to monitor the affairs of the corporation. Of course, I will call upon members of the House, if there is anything you can do to try to improve labour/management relations at the corporation, please do it.
I just want to continue on Page 4 with Community Economic Development. If history has taught us anything in Cape Breton, it is that local people have to participate in the formation of policies that are designed to promote economic development. Local people have to be encouraged to create businesses because such businesses are more likely to succeed.
A Discussion Paper on Community Economic Development, published by the Nova Scotia Department of Economic Development in January 1993, describes community development as follows:
". . . a process that aims to improve the long-term economic viability of geographic sub-areas of the province. It involves managing economic change to effectively meet an area's needs and objectives through emphasis on self-help, participation, partnership and control. It is based on a `bottom-up' philosophy that relies on using the community's own resources -people, capital, management, creativity and pride - to improve economic well-being.".
It goes without saying that a corollary of the above description, therefore, is that organizations involved in the promotion of local development must work together. There is more evidence of this than ever before, and that is a good, positive sign in the community. Organizations such as the Board of Trade, Enterprise Cape Breton Corporation, the Cape
Breton Economic Development Authority, the regional municipality, the Economic Renewal Agency, the Business Development Bank of Canada and the University College of Cape Breton, are all working together to try to find solutions to our problems and promote the economic well-being of Cape Breton.
The precarious state of our traditional industries such as coal, steel and the fisheries, underlines the importance of diversification of the local economy. Progress has been made to widen the base of our economy. Examples of sectors of the economy that are experiencing growth are information technology, tourism, culture and entertainment. University College of Cape Breton, the only post-secondary degree/diploma granting institution in Cape Breton, is an important element in local development. It is hopeful that soon we will see the establishment of a technology enterprise centre at UCCB that will supply support services for budding entrepreneurs. It is also the view of many members of the community that we have not done enough to tap the potential of a very valuable resource - the Bras d'Or Lakes. Surely this resource can play a much larger role in the tourism and recreation industries.
Although it is possible to refer to areas that are experiencing economic growth, nevertheless, it must be stressed that other areas are suffering, and not only in coal, steel and fishing. Witness the struggle of IMP employees at the Northside Industrial Park to retain their high-tech enterprise. Indeed, members of the Board of Trade met with them about one week ago. They came to us, three of them, to see if there was anything that we could possibly do to try to retain that valuable resource in the Northside.
Look back a few months and recall what happened to Micronav, another high-tech business. Read in the May 22, 1996 issue of The Cape Breton Post about the forecasted substantial loss of employment and employment income in Cape Breton as a result of cutbacks in the Reserve Army. Talk to UCCB officials and learn how funding cuts, including a 7 per cent to 8 per cent cut in the operating grant for 1996-97, impacts the institution and students.
Attendance at the Board of Trade council meetings in the past six months would illustrate the time and energy that some council members have expended in attempting to save a Board of Trade project which began 11 years ago, Youth Employment Opportunities, a very successful academic upgrading and job readiness project, that may not survive beyond September 1996, because the sole funder, Human Resource Development Canada, is pulling out.
Hardly a week goes by that we don't read or hear about some new economic problem. Quite often the Board of Trade, a non-profit organization, is asked to help in solving the problem. It is one thing after another or, more accurately, as one person explained to me, one thing on top of another. How frustrating and how demoralizing. And perhaps the saddest thing of all is seeing our most valuable resource, our young people, leave the area in such great numbers.
Shortly after the announcement on the restructuring of the Cape Breton Development Corporation, the Board of Trade was asked in March, by a regional government official, if the mood of the business community could be ascertained. We found that the mood was sombre, to say the least. Examples of statements from business people were: "the events of late have had a devastating effect on the economy with the most piercing blow being a psychological one", and another one, "consumers in this area do not see any light at the end of the tunnel, and as a result sales are down", and again, "consumer confidence is at an all time low in our community", and finally, a statement so often heard, "decentralization of a
government department would greatly help our area", whether it is provincial or whether it is federal.
It is one thing to talk about this small business, this micro business, with two or three starting up and another one starting up, but really there has to be something major that takes place. There has to be an uplift for the community. There has to be something that will give people confidence.
Board of Trade members understand that these are difficult times for Canadians. The board supports efforts by governments to balance budgets. But when so many undesirable events occur in an area like Cape Breton, falling on top of deficit reduction measures, then the pain inflicted on people may be so great as to kill the patient. As one business person stated, "The future uncertainty in the area is crippling; we need to ensure that government balances their deficit reduction policies with those to stimulate the economy". Despite the many adversities facing us, our community's spirit will not be broken. Thank you.
MR. CHAIRMAN: Thank you very much. I will entertain questions now from members of the committee. I would ask that members please identify their name and their constituency, perhaps, and maybe who they are substituting for, because I know there are several members of the committee who could not be here today. I believe Mr. Manning MacDonald and Mr. Russell MacNeil are both in Ottawa appearing before the Senate committee on the same subject, as a number of other members have already done.
Dr. Hamm, we will start with you.
DR. JOHN HAMM: Thank you, Mayor Coady and Mr. Coleman, for excellent presentations. I have followed, as have other members in the House, this latest crisis in the Cape Breton coal industry and I come from an area, of course, and lived through a coal industry that literally dried up in my community and watched the terrific problems that it created for us. But I am optimistic that there will be an ongoing coal industry in Cape Breton.
I looked, with interest, at the figures that were presented in terms of productivity. There are many of those who haven't followed this issue carefully, who don't understand that there has been a tremendous improvement in the profitability and the efficiency of the Cape Breton coal industry. You look at those figures from 1970 of 2.2 tons per man, per shift, and you go back to 1870 and the figure was not unlike that. In other words, for 100 years the coal industry got along with an efficiency rate of something like 2 tons per man, per shift. Then, all of a sudden, you go up over the next 25 years and it increased by a factor of over four times. But we, ultimately, have to end up at a productivity rate of something in the order of 15 tons per man, perhaps somewhere between there and 15 and 20 before we have really a sustainable industry.
There have been some improvements, in my mind, to the Devco plan as the result of presentations and observations by many groups, including the UMW. The decision to continue to investigate and not to abandon the export market, I think, was a very positive thing and I think the result of the dialogue that went on over recent months. So, while no one is perhaps completely satisfied at where we are right now. The dialogue, in my mind, has been positive and has been productive. In my mind, the industry can only benefit if, in fact, what is being proposed here is a coming together of management and labour in the coal mining industry. If that does not occur, then the industry will not survive. There is no question, in my mind, that that is the case.
There has to be some accommodation of worker empowerment in the organization to allow this to happen. The union has made some very sensible suggestions to management and I would think that management would be well advised to follow some of the union suggestions. I think they are excellent and the union has made offers to management in terms of adjustments in working conditions and scheduling, which would improve the productivity. I think that has to happen to bring that productivity level up to the situation that, with today's prices, allows the industry to be self-sustaining. So, I think that process has got to be encouraged, the coming together of the workforce and the management. I am a little disappointed that it is not more advanced to this point than it is.
The other thing that has been ignored, in my mind, is the failure of the federal government to come to grips with their liability, particularly the pension liability and the environmental liability that they would have to assume, even if coal mining stopped in Cape Breton. I think their failure to do that is putting an added burden on an industry that, in my mind, if it were relieved of much of that liability would have no trouble surviving. So, I think efforts in that regard should be ongoing and can be carried on outside of the more local effort, and that is to bring management and labour close together. So, I think the presentations are apt and I think they could be described as right on the money.
The other thing, Mr. Coleman, you made reference, of course, to decentralized government services perhaps being delivered in Cape Breton. The one, of course, that occurs to all of us and one that has to be immediately decided, of course, is the gun registration centre. While that is a federal issue, to me it is a logical objective for elected people in Cape Breton and it is a logical objective for our provincial elected people to lobby in Ottawa to have that gun registration centre located in Cape Breton.
So I congratulate you on your presentations. I have no difficulty with either of them. I am not leading up to any great questioning, these are merely observations as to what you have said. What I would ask you is to give me your opinions as to how we, as provincial elected officials, can be a positive influence in having what we know has to happen and that is bringing management and labour closer together in the Cape Breton coal industry? In my mind, if that does not occur then the industry will not survive. What role can we play?
MR. COADY: Mr. Chairman, I guess first of all I would like to respond to Dr. Hamm's comments in terms of the issues that he has identified and indicate that certainly those issues which you have identified Dr. Hamm are very close to the core of what we have talked about for some time. The Cape Breton Regional Municipality undertook its own study of the Devco report and through that study identified a number of concerns that we had. Worker empowerment, obviously, would be one of those factors but, I guess, by worker empowerment, what we were getting at in our response to the federal government was that by restructuring their management process they would, in fact, empower workers to take responsibility for productivity and that productivity through that process could increase.
The liability factor is a major one. A $500 million liability is a major burden on the corporation and one which they cannot be expected to sustain for a long period of time. The plan that we had developed separated the social costs or the liability factor from the operational costs of the mining corporation and, in fact, set up two separate management streams. Our purpose in doing that was so that the coal management stream could focus primarily on its objective, which is to produce coal and increase productivity and retain jobs; secondly, so you could deal with the issue of the liability in a separate form but pay it down over a long period of time with revenues from coal production. We, in fact, did envision a
period in about five years' time when the liability factor would be absorbed but only by the separation process.
In our subsequent presentation to the Senate committee last week, we asked, in fact, that the Senate look at the possibility of the federal government assuming the liability in the long run and converting the $79 million loan to a nonrepayable loan, so that they would not have to carry that burden for a long period of time.
The offsets issue, I think, is crucial. I think it goes though way beyond the issue of gun registration. I have talked with people in the computer information industry who indicate to me that the projected number of jobs related to gun registration would be nowhere near the original 400 that we heard and, in fact, could be as low as from 100 down to 50, because of the computer involvement there.
So, I guess to me as a municipal leader, I don't want to see us focus on one particular issue. Decentralization has become a politically non-attractive word these days, so let's use another word like relocation or location of new government initiatives in regions of the province or in regions of the country. I think there is an obligation here on the Province of Nova Scotia, every bit as much as there is on the federal Government of Canada to look at the issue of job location to specified areas of the province which are economically depressed. I have maintained that for years, long before I got involved in local politics and I still do. I must clarify, I am not Halifax bashing when I say that when I come to the capital city and see what we have here that all Nova Scotians are paying for, I think that all Nova Scotians should be the beneficiaries, not just the people of Halifax. Certainly I would never advocate that we take action which would reduce employment opportunities in Halifax, but at the same time I think we should all, collectively, be looking at what is happening in private industry and how centralization is focusing on the Halifax core, and what is happening in government and how centralization is focusing there.
One of our councillors calls the high-tech highway the highway to hell, because it takes everything out of Cape Breton rather than focusing on giving us the opportunities to develop, which was initially promised. I heard a very interesting quote the other day from a gentleman who was speaking in Sydney, and he said that all of us who run on the information highway, or the high-tech highway, run the risk of becoming road kill unless we innovate and we take advantage of the opportunities that are there. I think that, in particular, applies to us. So I think there is a lot more than the issue of the gun registration centre. There need to be offsets in order to recreate, among Cape Bretoners, that feeling that there is an opportunity, that there is a future for those who wish to stay.
In a five year period - from 1990, I believe, until 1995 - over 2,600 young people left Cape Breton and never came back. Now, that is not unusual; young people leave homes all over the country. But they left Cape Breton because they didn't have the option. I guess, to me, all of us - the regional government, the provincial government and the federal government - have to work together to try to stem that flow and to provide those opportunities to our young people.
How do we do that? How do we bring the resources of the province, the regional government and the federal government, collectively, together to address not only Cape Breton's problems but regional disparity problems within the province and within the country? We make the argument nationally that this area of the country should be designated for special need and we in Cape Breton make the same argument provincially. I think we have to continue to do that. I don't know the answer.
The regional government that I had has, for the first time in municipal history in Cape Breton, created an economic development fund. Right now it is small; it is $0.25 million. But its purpose is to encourage initiative at the local level that we, as a regional government, can support. It is a first step, a start in what we believe is the right direction. As our budget grows globally, hopeful we will be able to put more funding into that to encourage local initiative, by community groups, to promote economic development and, therefore, job creation. So I guess all of us are trying, but I think we need to try that much harder.
If I can give one bit of advice, yes, it is good to focus on some initiatives that we can promote, but let's not put all of our energy into seeking one bureaucracy over another. Rather, let's try to convince government to change its philosophy and recognize that we need that regional help. Thank you.
MR. COLEMAN: If I could add to that, and I certainly want to reiterate the comments made by Mayor Coady. Whether you want to use the word decentralization, or whatever, all I am simply saying is that I think it is very important that somehow or other measures be taken to try to relocate a significant government department. Heavens, I can recall my old friend, Bill Woodfine, from St. F.X. University, writing on decentralization 15 or 20 years ago. We still talk about the same thing.
I also want to make reference to the question that you asked, how can you help. That is a very difficult question to try to answer, but with all due respect - and let me be very blunt - I think I can at least make one suggestion. We have a five year corporate plan in place. It has been approved by Cabinet. It is government policy. I think the time has come to get on with the job. Enough is enough. There has been enough criticism and I don't think it does anybody any good, whether in government or union or management or whatever, to try to score political points. It would be very nice to see an all-Party committee of this House perhaps make some positive statements, particularly with regard to the importance of trying to enhance labour/management relations.
Dr. Hamm, as you pointed out, and as Mayor Coady pointed out - and I am sure that most people are aware of this by now - this crucial issue of labour/management relations has to be resolved. If there were comments to be made from this House by three Parties, whether it is the NDP or the Conservatives or the Liberals, I am a very apolitical person and many people in the business community are. We sometimes get very frustrated. Please, be very careful about statements that are made with regard to the Cape Breton Development Corporation; maybe sometimes speak as a unified voice. This has to succeed. This is very important for the community.
DR. HAMM: I accept your remarks in terms of decentralization. The remarks that I made in identifying, perhaps, one potential government department to go to Cape Breton - when I go fishing with an empty creel, I look upon filling the creel one fish at a time, and that is the fish that I think is out there to be caught in the very near future. That is why I mentioned that one.
The other thing, too, I noticed within your presentations, you did not make any specific reference to the worry that I have that the Cape Breton coal industry depends now on the Prince Mine and the Phalen Mine and we all are aware of the difficulties that might continue to plague the Phalen Mine. You have not made an issue of a gradual development of the Donkin Mine. In my mind, since I feel there is an ongoing situation for the Cape Breton coal industry, there is ongoing viability if the Devco plan is followed up, but I am a little bit disappointed that there is not a suggestion there that, in fact, there is a gradual
development of the Donkin Mine. It goes into a very significant coal reserve. It would provide a protection for the coal industry if, in fact, the Phalen Mine continued to be problematic.
As well if, in fact, the plan that Mayor Coady put forward in that we could separate the present industry from the long-term liability; in fact, the present industry could generate, out of cash flow and profits, monies for a gradual development of the Donkin Mines without necessarily going for additional funding from government sources. With improving technology and with what is obviously going to be an ongoing requirement in the world for a supply of coal, it makes sense to me that we do not necessarily confine ourselves to those two mines, that we look at developing the Donkin Mine. The technology, I am quite sure over the next 5 to 10 years, will make the product that is available from Donkin very desirable. In other words, it will be able to be modified to meet a wide spectrum of requirements from the coal buying industry.
Would you just give me, perhaps, a brief summary of your thoughts about development of the Donkin Mine and the role that that plays into the long-term viability of the industry?
MR. COADY: I might indicate that in the study that we completed as a regional municipality, we did, in fact, call for the development of the Donkin Mine after a five year period, beginning with an exploratory mining process, not with more drilling or more core drilling, rather to go down to what is now the coal face. We had allocated the funding in the fifth year of our plan so that there would be exploratory mining carried out at Donkin, which could lead to the full development of the Donkin Mine at a later date, especially in recognition of the thought that the Phalen Mine could run into another major concern or a problem with respect to its structural integrity.
So, that is in the plan that we developed. I did not mention it here today because my focus today was, I guess, globally economic development concerns in Cape Breton as a fallout of the Devco situation. But, certainly, in the plan that we did for the federal government and Devco, we have addressed that and if you wish I can make a copy of that plan available to the committee.
[11:00 a.m.]
MR. COLEMAN: The regional government was able to acquire the services of a very well-known mining engineer, I think Mr. Farrell, John, I believe . . .
MR. COADY: Steve Farrell.
MR. COLEMAN: . . . who did some excellent work for the regional government and contributed significantly to the submission that was made that Mayor Coady is referring to. The Board of Trade didn't really have the resource to engage in such an endeavour, so I didn't make reference to that. Certainly, it would be nice if we could enhance the coal industry and if we could create more jobs. I suppose members of our council, the Board of Trade and myself, are trying to be very practical. We had various organizations who supplied input and some of that input was accepted which formed the five year corporate plan and the plan was passed. So we are saying, we have a plan; it is government policy; let's get on with the job.
So in the presentation here, for those two reasons, because we had the technical expertise that Mayor Coady was able to acquire and the fact that the plan has now been passed, that we have to get on with it and try to make this coal industry viable. Now, perhaps,
some time down the road it will be prudent for measures to be taken to try to develop that new mine, I just don't know.
MR. ROBERT CHISHOLM: Gentlemen, thank you for your comments, your presentations. I wanted to start by just saying to Mr. Coleman that with respect to getting on board with the five year plan, that I certainly would regret if you felt and others felt that any comments I had with respect to the five year plan were politically motivated. We have seen plans put in place by the Development Corporation and others with respect to the future of Devco and they have not been very successful.
There are a number of components of this plan, which I believe we need more information on and I feel that it is part of my role to continue to do what I can to get that additional information, because, believe you me, as a Nova Scotian and as a person who has the privilege of being a politician, an elected representative, I feel that it is my responsibility to ensure that the economic future of our province - and that includes Cape Breton - is protected, is built upon and that is my motivation. I have a number of concerns with the five year plan and I will continue to try to seek answers for that but it is in no way meant to set the coal industry back, it is just a little bit of scepticism, a little bit of cynicism that I have about assuming that just because we have a plan it is going to work.
With respect to what role we can play as a province, it was interesting - what day were we in Ottawa? - on Monday when I presented to the Senate committee, I got into a bit of a discussion with Senator MacEachen, which was interesting. He said, okay, you are vying for the Premiership of the province, let's suppose that you are Premier and he even gave me a vote of confidence, by the way, and suggested that it is almost time that we had a Chisholm as Premier. I thought that was very nice of him. (Interruptions) (Laughter) Anyway, with respect to the role the province has to play, I believe very strongly that the province does have a role, this is our resource, and that we must be involved. I think you gentlemen, both, probably heard us here in the Legislature after the announcement was made, all Parties talked about the need for the province to get directly involved. Some of us have been concerned that the province has not taken as assertive a role as it should.
Getting back to the Senate Committee, what I said to Senator MacEachen was, if I were to have that hat on, I would certainly commit myself and commit the province to stepping in very assertively on behalf of the interests of the Province of Nova Scotia with the federal government to ensure that their commitment to the coal industry and to the Province of Nova Scotia continues, and that we would very clearly take on what responsibility would be necessary in order to ensure the long-term viability of that industry. That was not a commitment that was made lightly.
Politically, I don't think decentralization is a bad term, Mayor Coady. I am not afraid at all to use it. I believe, and I think both of you said, that the benefits of government, of the administrative structure of government, the government as the employer, the government as the creator of aggregate demand, has to be spread out around for everyone to benefit as much as possible. The whole question of decentralizing government departments, that is a clear economic strategy that has been used in many other jurisdictions in this country and in this world for a long time. It works. I agree with you there. I think that we need to do that, especially in areas where unemployment is over 20 per cent, I think there needs to be that kind of concerted strategy put into place because you are right, you do need to have a stable economic base on which to build the micro-enterprises and to further expand the economy. So I think that is something that we need to move on.
There are a couple of things that I am going to now ask and you can certainly comment on what I have been rambling on about. One is, I am concerned, I agree and I don't think anybody would disagree with this whole question of labour/management relations and how important it is. I flagged this because it causes me some considerable concern because at the same time the five year plan talks about the need for better labour relations. The chairman of the board was in Ottawa at that Senate committee talking about the unacceptably high level of absenteeism. He talked about it being 20 per cent. At the same time, there was a newsletter put out under the signature of the new President, George White, which said that we have been able to bring absenteeism down to 10.8 per cent, I think it was. I think it is important that the management at Devco has some real responsibility to stop continuing the perception that we have a bunch of workers there that are trying to fool the system, that are playing the games.
The other thing is, that they have a collective agreement. I have a copy of the provisions here with respect to absenteeism, which lays out very clearly what absenteeism is and if people are found to be abusing sick leave or absenteeism or whatever, then they can be hauled on the carpet and finally they can be fired. It is very clearly laid out how that can be done. So I agree that there have to be some effort made and that wasn't a good indication what I heard last week and the week before, that things have changed all that much. But I am very hopeful, I think there is some work that can be done there. (Interruption)
If I may, Mr. Coleman, let me just finish up. The question of economic impact, I guess, I would like to see the province take a serious look at some of the issues that you have raised here and that others have raised. If we allowed the coal industry to go, what kind of impact would that be on the provincial economy and what impact would that have with respect to provincial and federal revenues? I think that is some of the data that needs to be pulled together so that Nova Scotians and Canadians understand what an important contribution the coal industry makes to this economy in the province and the country.
The last thing would be another reason why I am a little nervous about the five year plan and what is being proposed is that there is the proposal to bring natural gas on shore. I have seen two studies - and I think I talked to you about this, Mr. Coleman, maybe last year -that talked about natural gas as an alternative energy source for Nova Scotia Power, alternative to coal. I have not been able to get any further answers from the province. Right now, under this plan, the primary market for coal from Devco is Nova Scotia Power and is it, in fact, in the plan that natural gas is going to take the place of coal, and if so, has anybody looked at what kind of impact that is going to have on the province and on the industry?
I don't know, and I raise that because it is a concern that I have and I wondered if either one of you have heard anything more about it and share, at all, my concerns. That is my intervention at this point.
MR. COLEMAN: I can't help you on the natural gas but I just wanted to make the point, when we talked about labour/management relations, I think I was very careful in my paper, I pointed this out, that is a two way street in that the five year corporate plan spells it out quite clearly that there has to be a full commitment to a quality management program. Management also has to clean up their act with a management and supervisory skills development program and the establishment of a quality management training program. So the corporation, one would like to think, is well aware that management also has a very important role to play in that they have to try to improve their skills at managing people, managing coal miners. So I think it is important that we realize it is a two-way street. Quite often when we talk about labour/management problems, the focus sometimes might be too much on labour but there is the other side, too.
MR. COADY: First of all, with respect to Senator MacEachen's comments about a Chisholm as Premier, I can only assume that he was talking from a genealogical perspective rather than a partisan political one. (Laughter) I will put that on the table.
MR. CHISHOLM: I am glad you clarified that.
MR. COADY: I will let him know that I did that. Next time I am talking to him I will tell him I did that for him.
I guess the whole concept of a five year plan, to me, is that it is not cast in stone. I think that has to be essential and I think that has to be a principle of the whole process. There is a reporting commitment made in this five year plan and it calls for ongoing reports to the public and to the federal government with respect to the progress of the corporation in achieving the objectives of the five year plan. If you look at where we were on January 9, 1996 versus where we are now, I think we have come a heck of a long way. On January 9th we were looking at the closure of the Prince Mine for eight months of the year and a proposal to operate it on a four month a year basis which most of us, including the average miner, thought was impossible to do.
I want to say to the committee members - and I know some of you already have - if ever any of you have an opportunity to come to Cape Breton and tour the Prince Mine or the Phalen Mine, please avail yourselves of that opportunity. I certainly have done so on two occasions and I think it is a real eye-opener to get a miner's perspective of how mining is done and how it impacts on the everyday lives of miners to go down in a mine and see what they do and see what they go through in order to achieve the output levels that we are expecting of them or asking of them.
So, I guess to come back to the concept of the five year plan, there was one key word that was mentioned by both Mr. Shannon and Mr. Dingwall repetitively when the public announcement was made last month on the plan and that was not only that it be a self-sufficient mining process but that it be competitive. Mr. Dingwall was very careful to clarify that by competitive he meant that coal must be able to compete with other sources of energy. I took that to include natural gas because naturally that has been a concern. Ever since Nova Scotia Power was privatized, and I am not going to get into the philosophy of whether or not it should have been privatized, but ever since it was privatized, there is a very real fear in the minds of Cape Bretoners, and I think many Nova Scotians, that privatization meant that Nova Scotia Power could now look to whatever source it wished for its energy. Therefore, I think many of us became aware that in order to compete with those other sources, we had to put coal on a more sound footing. I hope that the plan does that.
Mr. Chisholm, you are correct in questioning the five year plan. When the day comes that we stop questioning the five year plan or we stop insisting that it be updated on an annual basis for the next five years, then we will be the losers and the mining community will be the losers as well.
As to the question of absenteeism, I guess the perspectives, everybody can put a different twist on that. I have heard so many arguments on what constitutes absenteeism and who is responsible for it that I have given up, quite literally, trying to figure out the issues there and I don't really see that as my role or even as, necessarily, the politicians' role. We should be insisting that principles of fairness apply here in interpreting that and hopefully if those principles do apply, then the corporation and the union will be able to work to bring down the concern about absenteeism.
When you look at absenteeism in hospitals, we have administrators questioning high levels of absenteeism and we have people telling us that that is directly related to the nature of the work that the staff carries out with heavy lifting and whatnot. So there are a lot of concerns about absenteeism in many perspectives.
Back to decentralization. I guess to me a perfect example of decentralization was the institution of the GST administration in Summerside. There, to me, it comes back to the very element of what I was talking about earlier. I don't think that any MP and any Cabinet Minister, in my experience in politics, has been successful in entirely relocating a federal government department to an area of Canada or a provincial government department to an area of the province but when new initiatives develop where the jobs are not already allocated, then it is fair ball and those opportunities are out there and they will be there in the future. Those are the types of things we can look for. So certainly I don't disagree with you that we can talk about decentralization or relocation or allocation of jobs, whatever we want to call it. Let's take the initiative to try to do it, as much provincially as federally. Not everything should go to Ottawa and God bless me, I get a little upset when I visit that capital every once in a while, nor within the Province of Nova Scotia should everything come to Halifax.
I think we have to look to our political leaders, be it the Premier, the Leader of the Opposition, the Leader of the NDP or any other Party that emerges, to make that kind of a statement but that takes courage on the part of the leadership, recognizing where a fair number of the practical grass roots votes come from. That is a tough issue for you people as politicians. I recognize that and that is why I focused my comments on new initiatives because I think there are opportunities there and not just for Cape Breton. I want to be fair about that. We are here representing the concerns of our people. If I were a member of a local council from Yarmouth or from Amherst, I would be making the same argument on behalf of those people.
MR. CHAIRMAN: I will allow you one follow-up question. I have several other people who wish to speak.
MR. CHISHOLM: I wanted to go back, just briefly, on the alternatives to coal because one of the things we have been trying to pull together is information on government "subsidies" to private oil, gas and mining companies in this country, how that compares, for example. The latest figures we were able to get hold of were from 1990 and it was like $830 million worth of, again, "subsidies", development tax credits and income tax relief and development of subsidies and so on.
That is a fair chunk of change that went to private development companies. With respect to natural gas, the point that we have made a few times is, number one, what kind of subsidies are going in by both the provincial and federal government to assist in the development of natural gas to come onshore and to potentially compete and take away that business from the coal industry.
What contribution is natural gas in the development of the natural gas industry going to make to the economy of Nova Scotia versus the economic impact that the coal industry has in Nova Scotia? I thought that you both raised those issues about trying to balance out and not taking this strictly stark commercial viability or bottom line view of the economy, that you have got to take into consideration the whole question, for example, of the depopulation of a region like Cape Breton. What contribution does that make to the overall economy to have
everybody living in Halifax or in Ottawa or Toronto? There is a price to pay for that and the government has a role to balance out those things, I think.
MR. CHAIRMAN: I wonder if you could, perhaps, wind up your question because I have several other members who would like to ask some questions and we are starting to get pressed for time.
MR. CHISHOLM: Okay. I guess that is the concern that I raise with respect to the development of natural gas, Mayor Coady. I will just leave that with you.
MR. CHAIRMAN: Dennis Richards.
MR. DENNIS RICHARDS: Thank you, Mr. Chairman. I want to indicate at the beginning that I am here today replacing Mr. Russell MacNeil from Cape Breton who is in Ottawa attending the Senate hearings on this issue. I would be the first to say that I am not a real expert in the Devco situation or the employment situation of Cape Breton, although I think I do have an appreciation of the employment picture throughout the complete province. Having been a regular traveller to Cape Breton for some 10 years in business, I do have a feel for a little bit of what is happening in that part of Nova Scotia.
I wanted to talk on two issues. First, with regard to the decentralization issue. Mayor Coady, in particular, I was pleased to hear your final statement on that because I had jotted down a couple of comments that when we are talking about decentralization of government services, and the principle of that sounds pretty nice and can we do that or can we not do that, I, personally, think moving a job from one part of Nova Scotia to another part of Nova Scotia does not solve a problem and in some ways it creates another problem. You may fix one thing to create another.
I share your view completely though that when it comes to new initiatives, that that is the role I believe government can be very aggressive toward. I believe that we can work together to try to create that kind of new situation where we are looking at new initiatives and whether they are federal or provincial initiatives. We should be supportive in every way possible to see that they are distributed fairly and equitably across the province in total and not just in one central location.
I don't see as a great solution to the employment status of Cape Breton moving jobs from another area of Nova Scotia. I think that can create more difficulties than it can solve but I would support your position entirely on the new issue.
I wanted to ask directly a question with regard to the labour/management relations issue on Devco. Perhaps Mr. Coleman might be prepared to speak a little more on this and Mayor Coady, too, for that matter.
You raised the issue, you say that we have got to work toward it and see whatever we can do. I wanted to ask specifically, what do you see the role of the provincial government in assisting to bring this issue if not to a close at least to a more fair arrangement? Maybe I can ask you to answer that and then I will follow from there.
MR. COLEMAN: As I said before, that is a difficult one to try to answer. Would it be too naive to expect that members of the Legislature, perhaps, might some day want to sit down in the same room as the President and Chairman of the Cape Breton Development Corporation and the leader of the UMW and perhaps several other unions and impress upon
everybody, on both sides, how important this is and please try to tone down their rhetoric; moral suasion of some sort or other. I know it is a free country that we are living in and people have freedom of speech but I think it is so vitally important and perhaps that is a way in which you can make a contribution.
MR. RICHARDS: I don't know if Mayor Coady has any response to that either, but I would be interested to hear what he might say.
MR. COADY: I don't have the answer to your question, obviously, Dennis, but I guess what I would say is two things: number one, I see the role of the province, (1) as a regulatory nature, because the province, in fact, does own the resource and I think they have to recognize that it is a provincial resource and the people of Nova Scotia have to understand the implications of that, so I think they can play a role there.
But I think that the role they play does not necessarily have to be that public in the sense that we all know that the province, through its Cabinet Ministers, through its Premier, can exercise influence with decision-makers in Ottawa that can make things happen more smoothly. If, in fact, the impression is given, if we find that labour/management relations don't improve, I would see it as being incumbent on the Premier and any Cabinet Minister whose portfolio encompasses jurisdiction over natural resources to speak to the federal government, to the federal Cabinet Minister responsible or other ministers, about the problem and insist that the government take action.
The type of statement that John mentions, that an all-Party committee could call on all sides, all labour representatives and management representatives to realize the importance of sound labour/management relations certainly can be helpful in raising the profile of the issue but, I guess, to me governments have persuasive methods that I am not fully aware of that they can put to use in terms of exercising influence.
I do want to come back to the issue of decentralization, since you raised it again. I don't want to create a misconception here. I believe in decentralization and I really don't care what form it comes in. If the Government of Nova Scotia or the federal government is desirous of moving an entire department to Cape Breton, we will take it, arms open and embrace it and make it work. What is the value of a job, I think, is what we have to ask ourselves and what impact does a job have on one area versus another? I can produce statistics for this committee which will confirm, whether you accept it or not, that the impact of a job in Cape Breton is much greater than the impact of a job in metro Halifax, mainly because of the employment rate in Cape Breton or the unemployment rate in Cape Breton versus that in metro Halifax.
The statistics that I quoted earlier related to the impact of the loss of 800 jobs outright; I will have those updated and make those available to the committee reflective of what Devco is proposing now. But let me tell you, the loss of a job in Cape Breton is much more significant than the loss of a job in metro Halifax to the overall economic scene. The creation of a job in Cape Breton is much more significant than the creation of a job in Halifax. To the individual who gets the job, it is every bit as important no matter where you live; to the base economy, it is more important in economically depressed areas.
Back to the new initiatives. Certainly, it is easier with new initiatives but if this government or any government of Nova Scotia or Canada has the political will - and I am not speaking from a naive perspective here, I realize the influence of politics and the nature of
politics - to recognize that relocation of jobs has a positive impact then I would applaud them for that, but I also recognize that it is much easier with new initiatives, definitely.
[11:30 a.m.]
MR. RICHARDS: I thank you for that. Certainly, the question of decentralization has been and probably will continue to be a bit of a hot topic of discussion. I think the principle of it is a fine one and an endorsable one. I do believe and share your view that the new initiative issue is much easier to resolve than moving a job that perhaps currently exists.
Just in closing, and I followed carefully both presentations as you were giving them this morning, I wanted to say thank you for both of them, I think they were quite enlightening in many regards, giving us specific data on the employment status as well as the situation with Devco. I wonder if I could just go back, first, to Mayor Coady's presentation on Devco. There is some alarming information contained in that. One of the things that struck me and you emphasized it, I think it is on Page 2, was with regard to the pension situation and the liability that it imposes on the corporation. You gave some reference as to what you might see there. Can you elaborate a little bit more on what you might think is the real solution to that? I don't want to say that that is the only problem, I know that it isn't but it is a significant one, nevertheless. Can you emphasize and strengthen, perhaps, your thinking of a solution there along with other areas of financial difficulty?
MR. COADY: I guess I should try to preface my response by saying that we have to recognize that political intervention in the affairs of Devco has been characteristic of the corporation since it was formed. We have in this room a previous employee of Devco who would know a fair amount about that and I am not going to ask him to comment on it right now. But for various reasons, federal politicians have intervened in decisions of Devco. Probably, the most characteristic is the pension issue. By setting up a process where the pensions were non-contributory, where in fact miners could work for their entire lifetime without being required to pay their share into a pension, Devco set up liabilities for itself. By the politicians intervening at various stages along the way to require pre-retirement programs to be initiated when crises arose, the debt load of Devco continued to expand beyond the ability of the income from coal sales to absorb that debt. That was recognized; although the politicians changed, the debt load continued to increase.
What we have today is a situation where, of the $500 million that they are carrying, a substantial portion of that debt load is related directly to the issue of non-contributory pensions. Because of that and because of the fact that that debt load was incurred, sometimes against the best advice of the administrative staff at Devco, incurred through political decision-making, our position is that those politicians or their successors should make the right decision now, and that would be to assume that debt load and take if off the books of Devco. Now, we are talking about the social debt load that they are carrying. If that were to happen, Devco could become a profit-making corporation tomorrow in terms of its output and in terms of its costs. They could carry the current social costs.
They would also have to mandate, obviously - I think as is part of the new plan - that the pension plan become contributory immediately and that no employee of Devco could work without paying into a pension. So I think there was enough political involvement in the process in the past to justify continuing involvement and I think we can make the argument, in the long run - hopefully successfully - that that debt load should be removed from Devco.
The other thing is, there is not a business out there, in my opinion, that will want to look at the possibility of running Devco as a private company in the future if it is going to be saddled with those historical debts, in the same way that the province would never have found an agreement with a private entrepreneur to run Sydney Steel if they had to carry those debts. If the federal government would recognize what the province recognized, I think Devco would be put on a much more sound financial footing.
MR. RICHARDS: I would like to just follow up, Mr. Chairman, if I may. So your feeling then, and your argument would be, that if the federal government were to take over the debt of the pension program, in itself, that that would put Devco on an even financial footing?
MR. COADY: I think our plan that we produced for Devco showed that we could, with the separation of the two issues and involvement from the federal government, put Devco's coal operations in the black in year one. The five year plan that the present corporation has shows a different picture, obviously, but again I can only come back to my assertion that I believe that dealing with this issue, by way of having the federal government assume it, would create a healthier company, would make it much more viable as a self-sustaining coal operation and, therefore, in the long run, bring Anne McLellan, the federal minister responsible, closer to her objective of having the company privatized.
MR. RICHARDS: Obviously, if that debt issue is resolved and then the caveat to that, that the pension program become a contributory program, how do you think that would be acceptable in terms of the employees of the corporation?
MR. COADY: I think that a large number of miners now are, in fact, contributing to a pension plan. There is still a significant number not doing so, but you have to look at the historical reason why. They have never been encouraged to contribute to a pension plan. Most people who work contribute to a pension plan and do so willingly. Miners, for reasons way beyond their control, were led to believe that they didn't have to contribute to one because, eventually, the federal government would come in and bail out the plant and, therefore, why would they? Why would you or I pay into a pension plan if we knew that 20 years down the road somebody was going to come in and pay us a pension anyway?
MR. RICHARDS: You are saying that this is a saleable issue then?
MR. COADY: Personally I think it is. Nothing is easy when you go to a miner, or any employee, and say, look, another portion of your income now has to be spent on a pension for the future. I guess, number one, what you have to do is somewhat like what the provincial government did with the municipalities in the last few years, and say, no more emergency funding, folks; it is gone, now make yourself viable. I think miners would accept that, providing they understood that in accepting it, they were also accepting a viable mining corporation which offered a secure future. I think they could, yes, and I guess you come back to Mr. Chisholm's point there, in terms of the viability of the five year plan. People have to accept that it can work and the reporting has to take place, as promised, so that it can be evaluated: is it working and, if it isn't, what has to be done to fix it?
MR. RICHARDS: I want to thank you very much, both of you gentlemen, for appearing today and thank you, Mr. Chairman, for giving me this opportunity.
MR. CHAIRMAN: Lila O'Connor and then Keith Colwell.
MRS. LILA O'CONNOR: Thank you very much and I certainly appreciate the two of you appearing. It has been very informative in my eyes. On the rhetoric of having everyone sit down together on the labour/management, I would like to say I could support that if I thought it would really happen. But I think those who are going to go out and talk the way they talk are going to do it whether we try to convince them not to.
I may have misunderstood you, but I think you have given every good reason why politicians should stay out of this, and they should have done it in the past. But being that we have been there, it is difficult to ask us to stay out once we have already been there. I have to support what you are saying; I think it is time that we might have to do away with the past debt on the plan in order to go forward into the future.
I believe after what miners have gone through this past year, that they should be in support of making a contribution toward their plan. Anyone who works has to think about the future and miners aren't any different in that. If you want to have something there for retirement or in years to come, you have to start contributing to it. You can't depend on the federal government always being there to bail you out. I think after what we have gone through this past year, that the federal government has been very slow in coming forward - I don't know if slow is the right word, but it has taken a while to work out something that is suitable for everyone. We have to be more aware of what is happening.
I don't know if you can answer this question or not, but you made a comment on the number of people who are going to be unemployed over this next year. How many are at retirement age? How many would be receiving a pension anyway, and how many people are really losing their jobs? I guess that is the only way I know how to ask it. If you have 500 people, are half of them ready to retire, so that we are really only looking at 250 people, or are there very few people ready for retirement and we have a larger concern than I think we do?
I would like to make a comment on the Donkin Mine. You have talked about it and you ended off by talking about going privatized. When we had Mr. Drake here two weeks ago, he was very much against the fact of the Donkin Mine, or even Devco, being considered privatized. I guess I feel that if the Donkin Mine is the future of the coal industry in Cape Breton, it doesn't really matter whether it is the federal government that is doing it or if it is a private company doing it, as long as it is done safely. That is the number one issue that he seemed to raise, and I support it. Anything that we do has to be done safely. You don't put anyone's life in jeopardy, I don't care what their position is or their job.
Unless I have missed something, it doesn't look like Devco is going to be trying to force Donkin to open in the next 5 or 10 years, and if you don't start doing something now, you aren't going to have it there when you need it. You can't wait until the industry is gone and then say, we need to open Donkin, which then takes two, three, four years to get ready. I feel it needs to be started now. If it is privatized, then we need to be out there looking for someone to come in and start. I don't know what your feelings are on that, but I would like to hear that.
MR. COLEMAN: Perhaps I will address your first question with regard to the numbers. I have figures here from the five year corporate plan. The human resource strategy that they are going to formulate will accommodate a workforce reduction of 658 employees. This the breakdown: normal attrition will be 121; severance will be 154; and early retirement -and there are two phases to this - Phase I is 230 and Phase II is 158. So it appears that you
have the great majority of workers who would be taken care of either through early retirement or severance.
MRS. O'CONNOR: So the workforce normally would have been reduced by 121 people.
MR. COLEMAN: Through normal attrition. But we are looking at a loss, of course, of about 700 jobs. What I am saying is that the majority of those will be looked after through early retirement.
MR. COADY: Just to clarify that, when we talk about normal attrition, keep in mind that if Devco wasn't downsizing, that wouldn't be a factor because they would be replacing those jobs. So the downsizing initiative happens here. We are talking about jobs. The other factor is that 60 jobs, which were lost prior to May 1st, are not factored into these numbers. So people losing jobs outright, it is about 215, and then you have your natural attrition and your early retirement, pre-retirement packages, for a total impact of 700.
The Donkin issue is a very tricky one. I can tell you. I met with the Minister of Natural Resources, the Honourable Anne McLellan, in Ottawa about two months ago to impress upon her our concern at the time that the Boyd Study seemed to point the direction in which you should go with respect to mining in Cape Breton, that is aggressively mine the Prince Mine and the Phalen Mine and get into multiple entry systems and change management structure and streamline acquisition of equipment and machinery and focus on one type of machinery rather than multiple different types, a lot of the arguments that a number of us recognize and that Mr. Drake was making as well.
But the Donkin issue, when I met with Minister MacLellan, was not even on the table. What was on the table was a viable coal mining industry and she made it abundantly clear that that was her focus and that was her direction. My words of privatize, I believe, are an extrapolation of that. She never did say to me openly that she wants a privatized industry. What she did say is a viable, competitive coal mining industry. I see that down the road, once you become viable and competitive, that opens the door to privatization.
Should Donkin be private? Will the federal government invest the money to develop it? My information is that they won't, that they don't have the resources and it is certainly not in the five year plan. If you ask Mr. Shannon or the president if it is in their five year plan, it isn't in their vision either. So, if Donkin is going to develop, unless there is a separate argument made apart from Devco and a viable coal mining industry now, apart from the five year plan, I think that an entirely different argument will have to be made to move Donkin along. I don't know if the political strength is there to acquire the federal funds that would be necessary to bring that about. I have heard a number of counter arguments to say that if that kind of federal money is going to be invested to bring Donkin along, perhaps it should be invested in encouraging new industry to come to Cape Breton versus moving into Donkin and that we should encourage private industry to move into Donkin to develop it. I don't know what the answer is there, I really don't.
I guess our focus has been, for the last number of months, how we can salvage the coal mining industry which presently exists and retain as many jobs as possible. Donkin becomes another issue for the future, as you have mentioned, and it is wise to look to the future and plan for it but I don't see any federal resolve right now to put more money into Donkin. If we are going to go in and say, let's make Devco viable by removing its historical debt, its
liabilities, and that is a $500 million factor, I don't know how we, at the same time, make the argument to invest many more millions of dollars into the development of Donkin.
MRS. O'CONNOR: No it is very difficult. Thank you very much.
MR. CHAIRMAN: Mr. Colwell.
MR. KEITH COLWELL: It is indeed very encouraging to see the municipality and Board of Trade together here today, working toward the same goal. I think that doesn't happen in our province often enough.
One thing that I have been concerned about because my background is in the industry rather than other parts of government or other occupations is, just a statement that was made in a meeting, that is relevant here, I feel, by a former mayor of the metro area. The mayor at the time got up and stated that - very proudly and as a business person I was sort of horrified at it at the time - 65-plus per cent of their tax base was arrived at from industry. Now that is fine when industry is going well and everything is going well, to supply the services to 95 per cent of the rest of the particular city that was being discussed. One thing, if you are going to get industry to come, which you are going to have to with the downsizing of your mine and the productivity levels you have to get to, you are going to have to downsize people and that is an unfortunate fact that has to happen. It is very unfortunate that it has to happen but if you are going to become economically viable, then you are going to have to have almost a 50 per cent increase in tons per man-hour or per day or per shift, however you want to measure it. You definitely have to attract other industry to your area. I think it is absolutely critical, for not only Cape Breton but all of Nova Scotia.
What sort of things has the municipality and the Board of Trade collaborated on, or will in the future, in your particular area to help create a better environment for business to come to Cape Breton? It is a world market today and we really have to compete. We are not competing with Halifax anymore, we are competing with Mexico, Brazil, Europe, you name it and we are competing with them today. What sort of things has the municipality and the Board of Trade worked together to sort of take those obstacles away?
MR. COADY: I guess I will respond and then certainly John can. First of all, we have looked to many partners in the municipality since we have become a regional government, besides the Board of Trade. I think one of our first initiatives, along with the creation of a regional government and just prior to it, was the creation of the Cape Breton County Economic Development Authority. We have done, through that body, a major strategic plan which identifies a number of areas that we believe need improving in order to create the climate for business to come to Cape Breton. We have earmarked in that plan, those initiatives which would focus on education, the University College of Cape Breton; those which would be the responsibility of the municipality, infrastructure, culturally-related things; and those which would be focused on particular types of industry, whether it be high-tech, whether it be in the computer field, communications, whichever.
So that type of work has been done and it has been very broadly accepted and applauded in the region. The regional government, given that it is cash strapped and in debt still has the objective which we have communicated with the Board of Trade on and have their endorsement on, to bring down the commercial tax rate in the urbanized areas of the municipality. For instance, as an example, we froze the commercial tax rate in our last budget while we raised everybody else's tax rate across the board. We were able to freeze the commercial rate in the urbanized areas.
Having done that, our objective now is to bring that rate down and, if I can give you an example of the impact of the rate, in what was the City of Sydney, the community of Sydney now, the commercial rate is $5.05 per $100 of assessment. In Burnside, which is attracting the most industry in the province, the rate is somewhere in the vicinity of $3.63 per $100 of assessment. So that is what our competition is. Our objective is to bring down that commercial rate for two reasons: number one, we want to attract more people, more business to the area; and number two, we want to encourage the commercial interests that are there to spend their profits creating new jobs or staying in business. We don't want to drive people out of business and that is what our tax rate has the potential to do.
So, in the upcoming budget, we will be defining three tax areas and attempting to initiate a gradual reduction in the commercial rate and we will do that. That is our objective. We are focused on that but it is not an easy task to accomplish, given that we are $13.5 million in debt; we have made an arrangement with the province to pay that off over the 5 year to 10 year period. So while we are trying to pay down a debt, we are also trying to bring down the commercial tax rate so we can compete with the rest of the province. We have had the endorsement, as I said, of the Board of Trade on that initiative. John can address the rest of it, if he would.
MR. COLEMAN: Well, I think, John, you did a very good job answering that question. It is interesting to note that when we had five candidates or so, I think, running for the mayor of the new regional government, and there were a series of debates, that the Cape Breton Board of Trade sponsored, I think probably by far the most successful debate. We brought together between 250, I think, and 280 members of the community to witness that. So, we do have a good working relationship. The business community has supplied input to the Cape Breton County Economic Development Authority action plan. Last week, for instance, members of the Board of Trade, including myself, made ourselves available to talk with potential investors. When we get a call from, whether it is ECBC or from the Cape Breton County Economic Development Authority, if we could have some business people go to a meeting with someone who might be interested in establishing in the area, we do that.
At the present time, I make reference in my submission to the difficulty that we are now having trying to salvage a youth employment opportunities program that we have sponsored now for 11 years. We hope that we can extend this beyond September by entering into an arrangement with the school board, where they will, perhaps, make a contribution in kind, for example, a facility available to us.
The Board of Trade may be entering very shortly - and, indeed, we signed off on it just recently - a 17 week - and it may go beyond that - program with an organization in Sydney called the Atlantic Action Coastal Program where we try to have business be made more aware of the environment. This will be a program that will be sponsored financially by Industry Canada but we hope to sponsor that sort of thing. We will look after part of the administration of that.
I made this point in my presentation, that I think, probably, more so than ever before, this past year, these last couple of years, we see more cooperation now between both the public and private sector than ever before. That includes regional government. We have worked together, I think, quite successfully over the last year or so.
MR. CHAIRMAN: Thank you. We are running quite short of time. I have two more people who would like to ask questions so perhaps I will move on. If it is agreeable to the committee, perhaps we may run a minute or two longer than 12:00 o'clock. Mr. Alfie MacLeod.
MR. ALFRED MACLEOD: Mr. Chairman, I will try to be brief. First and foremost, I would like to thank both of you for coming here today and giving your presentations. It certainly was quite interesting. I had read the brief that the county had submitted to the Senate Committee and I have seen some of the things they have done. I want to congratulate you on the fact that you were able to get someone as knowledgeable as Steve Farrell to do that work because I think he brings a lot of credibility to the process. I think that is good for the Island of Cape Breton.
There are a few things that I would like to say. I guess I am the past employee of Devco that the mayor mentioned. I worked at Devco for 19 years in various capacities. I have worked underground; I worked in the quality control department as a lab tech when the testing was done on the coal that was at Donkin; I worked as a training coordinator which touches on some of the things Mr. Coleman mentioned; I have worked as a safety coordinator. The one thing that I am not is an engineer and I am not an accountant so I have no expertise in those areas and I would not pretend to.
There are a few things that I think have been brought out today that I would like to just go a little further on. One, the question was asked about pensions and how many people were actually losing their job. I just want to make sure that everybody realizes that we are still talking about 700 jobs being displaced, regardless of how many people are going to go on pensions.
Pensions over the years at Devco have been used as a downsizing tool which has created a false economy on the island, in my opinion, because when you have young children and young people going to look for work, they cannot apply for a pre-retirement leave or a pension, they have to apply for jobs. This tool has been used and it has been used by politicians of all political stripes to downsize the industry but it still has (Interruption) Well, maybe not of all political stripes but if they had the chance I am sure it would have been even worse. (Laughter)
With that being said, it has created a false economy and it is not an economy that is healthy for the island. The figures that the mayor has put forward show the impact of a job being lost and that is what we are talking about here. These are more than just names and cheque numbers. These are real people's lives that we are dealing with.
[12:00 p.m.]
Mr. Coleman brought it forward in his presentation, about the management relationships with the company. It is a two-sided sword, there is no question about that. My worry, after being almost on both sides of that coin, is that we have a tendency to always change the coach, but we never change some of the players.
I wonder if there are any comments that would be made on either side. I am hopeful, by the way, having worked with George White in the past when he was an employee at Devco and a mine manager, that he will be more in the line of demanding the truth than hearing what is comfortable as president, and that seems to have been a problem in the past. I say that with great conviction, but sometimes when you sit up at the top, people just tell you what they think you want to hear rather than what is really going on and that has been part of the labour relations problem in Devco.
One of the things that was mentioned, and I would like to hear the comments of both of you on this, is that there was going to be, in this new a five year plan, regular reporting done. I think that the first step to make this a real and positive step would have that reporting done by an outside firm rather than done internally because, I think, it would bring a lot more credibility to the process. I would like to hear the comments that you two gentlemen would have on that.
MR. COADY: Through you, Mr. Chairman, I have not personally given a lot of thought to the issue of whether the report should be done by an outside firm or by Devco itself. I guess there may be some value in asking an unbiased third party to assess the success of the corporation in achieving its objectives along the way. I think that the people who head up the corporation ultimately have to be held accountable to decision-makers for the decisions that they make along the way. If it is some sort of quasi-judicial system that is set up or if it is a audit by an outside firm, my concern is that we get to the word that you mentioned earlier, the truth. Some process has to be put in place to get us there.
I would hope that, given what we have gone through, the agonizing time that we have gone through, for the past number of months, that the leaders of the corporation and the employees themselves would all be seeking to get at that truth, because that is the only thing that is going to save us in their operations.
It is immaterial to me, to be quite truthful with you, whether that reporting process is conducted by an impartial third party or whether it is the corporation's decision-makers reporting to some sort of a body. My concern is that, regardless which process, there has to be accountability which is accepted by the public as accountability. If that is achieved by a third party or by some sort of other process that would make, I think, all the players quite happy, but it has to be real accountability.
MR. CHAIRMAN: Mr. Coleman, did you want a quick comment on that?
MR. COLEMAN: I do not really have too much more to say on that, except to concur with Mayor Coady's comments. I really have not been made aware of the details of the process that will be used. I think the bottom line is, regardless who does it, they have to be accurate indicators and accurate figures that we see. As I say, I have really very little to say on that that would expand on what John has said.
MR. CHAIRMAN: One quick final question.
MR. MACLEOD: One quick one? I do not know if I can do such a thing but I will try.
I would agree with Mayor Coady and Mr. Coleman that truth and accountability are big factors in this. I guess one thing that I have sensed, and you have probably noticed yourself over the years, is that a report such as this generated by one part of the corporation may not be looked on, or even believed, by another part of the population of the corporation. So, that is why I bring up that aspect.
The other thing that has concerned me, and we talked a little bit about it, is we are putting all our eggs in one basket. This corporate plan that is developed right now, the five year plan that Mr. Coleman said that we should get on with and work with, if we do not keep on shaping and moulding this, because that is the way the five year plans have worked over the years, they have been upgraded and upgraded; because if, indeed, Phalen has one more problem, if we have another major rock outburst or a roof problem, or we have more flooding
like we had a week ago Sunday, the corporation's five year plan rushes out the door in a flood of water. Then we are faced with the question of where do we go from here? We will not be looking at 700 people being unemployed, we will be looking at 2,100 people being unemployed because the industry's future can well dissolve that quickly.
So, when there is a lot of talk around the table here about what is going to happen with offshore gas coming onshore, or with the viability and accessibility of Donkin, those are the reasons that those questions are brought forward. A lot of people are very concerned with the history and the background of the Phalen colliery that we are going to be into major problems, so we have to look at that and we have to deal with it more now than later. So, I look on Donkin, and discussions of Donkin, more like an insurance policy rather than a step in the wrong direction.
That being said, I think it is important that we all realize that Devco has been a major part of the life of Cape Breton Island but, certainly, of the economy of Nova Scotia. I would like to go back to the one thing we touched on a little bit. We say the politicians may not have a role in this and, to some degree, I think that might be right. But, on the other side of that coin, our job is to do the best we can for the people who have put us in these positions regardless if it is municipal, provincial or federal.
I just want to go on record as saying that we are more than willing to do whatever it takes to make it a viable industry, to make it an industry that we can all be proud to support. Anything that I can do through the graces of the Mayor's Office, or with the industrial Board of Trade, or as a provincial representative representing part of Cape Breton Island, I certainly would be there to do that.
MR. COADY: Mr. Chairman, in terms of the issue of Phalen and its future, and the role of Donkin, I guess the other twist on that is the whole issue of the Prince Mine. We insisted, all along, that the Prince Mine must be recognized as separate and potentially viable, regardless of what happens to the Phalen Mine. For years, and especially in its original plan, the future of Prince was tied directly to production at Phalen.
One thing that this new plan does is separate that out and clearly now recognizes that Prince can continue to operate regardless of what happens to Phalen. I think that is important in the long run. If Phalen goes down, the belief was that then mining has gone in Cape Breton. I do not think we have to accept that argument and I do not think we should. In fact, if something does happen to Phalen, God forbid, but if something does, this plan that is now in place, and certainly the plan that the Cape Breton Regional Municipality put forth, envisioned that mining could still continue through the Prince Mine and that there will be a market for its coal. But, certainly, the comments with respect to what happens to Donkin are very valid, and it has to, in the future, play a role if we are going to have a continued viable mining industry on the Island.
MR. CHAIRMAN: Mr. Fogarty.
MR. GERALD FOGARTY: Mr. Chairman, I would just like to get from Mayor Coady, if I might, his feeling of the amount of money it would cost to start up Donkin? We heard from Mr. Drake, two weeks ago representing the UMWA, that an estimated figure of $400 million to start up Donkin is inflated, it is more like $100 million, maybe less than $100 million. Now, that is quite a wide spread, Mayor Coady. Do you have any position on this? How much would it cost to get Donkin going?
MR. COADY: I cannot answer the question directly, Mr. Fogarty. I do not know what it would cost to get Donkin going. I know that the regional municipality originally endorsed the concept that was put forward by Mr. Drake, to start the type of mining that he advocated. When he talks about starting Donkin up for $100 million or less, what he is talking about is a graduated start-up of Donkin, not a full fledged operation of the mine. As I recall, I think he had somewhere around 150 miners who would be in there producing coal. That may well be true. I do not know if his figures are right or wrong and I am not going to question him on that. The figure that I have heard is probably closer to the figures that you were using there of anywhere from $250 million upward to make the mine fully operational.
I guess what we are saying is that we produced a plan that said we could start the process after year five. But, our plan was not fully accepted. So, we will go with the plan that is there for now.
MR. FOGARTY: One final question, would it be fair to say that you consider that the federal government should give priority to addressing the pension liability in the order of $500 million? That should take precedence over any amount that it would cost, whether it be $100 million to $400 million to start up Donkin.
MR. COADY: I would not want to put it in a statement of one versus the other. I am not suggesting that for a moment. What I am saying is that if you wanted to do one thing that would guarantee the future viability of Devco as a coal mining operation, relieve it of that historical burden that it is carrying, if you decide that developing Donkin is your priority, then you are going to have to find the capital dollars to invest in that. What the minister, the Honourable Anne McLellan, has said is very clear, that the federal government is getting out of the mining business. Now, if we take her at her word and if they are getting out of the mining business, personally, I don't think that the federal dollars are going to be there. We can lobby and we can fight for them but I guess the issue there will depend on her power versus the regional minister's power and whether or not you can work out a compromise or a conciliatory agreement between those two. I am not going to get into the issue of who is the most powerful minister.
MR. CHAIRMAN: I have Mr. Casey wanting to ask a question. But I want to conclude in another two or three minutes because we are now in overtime. Mr. Casey, very quickly, and then from Dr. Hamm, I will accept a comment.
MR. JOSEPH CASEY: Mr. Chairman, Mayor Coady, Mr. Coleman, I just have a question or two to ask, I could ask lots of them but our time is running out. Do I sense that there could be not a total labour harmony in this area within the next five years or during this five year period? Are we anticipating any problems that way in the mines? That being one question, I would ask.
I come from an area where we have a lot of unemployed people, it is a pretty high rate where I come from and I know our people would be awfully glad to have jobs. I was just talking to one of my scallop fishermen, a captain of a boat, a $1 million boat - just to give you some idea of what we are facing - a four man crew, a 250 horsepower motor, he is catching seven pounds of scallops in the Bay of Fundy per hour and a four man crew to pay and he is getting $7.00 a pound for the scallops. So this is the situation we are faced with, so I can understand exactly what you are talking about.
What would the wages be of a man working in a mine on regular labour, I don't mean having a skill of any kind except being a labourer? I am just trying to compare that with some of the problems we have back home. That is all I will ask, because our time is running out.
MR. COADY: Mr. Chairman, I could take a stab, I have heard that the average miner's salary is around $40,000 a year. Now, whether that is a correct figure or not, I am not about to say here. (Interruption) Per year, the average miner. Now, you can add overtime, you can add bonus, whatever you wish, that depends on how hard the miners are willing to work.
What I would like to say is let's not confuse disharmony between labour and management with an unwillingness to work. I don't know if you were meaning to imply that or not, Mr. Casey, but . . .
MR. CASEY: I don't mean that, no.
MR. COADY: No, because it is very important that people understand, miners want to work, but they want to work in an environment that they feel is safe and they also want some degree of security with respect to the longevity of their job.
MR. CHAIRMAN: I am going to allow Dr. Hamm a final comment here and then we should conclude, we are on overtime here.
DR. HAMM: Just a quick comment, as a follow-up to what Mayor Coady had said. In terms of a package that would be saleable, my appreciation of the situation if, in fact, the federal government would assume the liabilities of Devco, then Devco would actually finance on its own, the development of the Donkin Mine. In other words, that would be a package that would be saleable, I am sure, to the federal minister who said that they are not going to finance it, but Devco in itself, if it was relieved of that financial burden of some $40 million a year of looking after those liabilities could, in fact, finance on its own; in other words, it would be investing in its own future. I think that would be a saleable package.
MR. COADY: The tough part of it would be getting the federal government to agree to assume the liability.
DR. HAMM: Yes.
MR. CHAIRMAN: Thank you very much. I think that will conclude this session of the Economic Development Committee. I want to thank our witnesses who have appeared. We ended up spending more time than we planned. Their presentations were excellent and we thank you very much for coming and making them to us.
From a personal point of view, I was particularly struck, if I may say, with Mr. Coleman's remarks when he talked about the effect on the economy. My understanding is that the possibility that this five year plan may start to give some hope that you have some stability, because I think the difference between stability and uncertainty, if you have uncertainty or despair then there can be no economic development and no hope for the economy to build. So it is my understanding from some of your comments, this five year plan has the promise that perhaps it can lead to some stability and some hope for the future.
MR. COADY: Could I add just one little suggestion, Mr. Chairman, and I say this with all sincerity. A lady in Cape Breton by the name of Joan Weeks, who heads up a group known as Focus Atlantic has developed an excellent video featuring the Men of the Deeps and mining in the mine in Cape Breton, showing scenes of mining and how it works. Your committee might very well be advised if they wish, as I did with the Senate committee, to order some copies of that from her. I think that the members of your committee who have not been in a mine would have a much greater appreciation of what mining is all about, just in case you don't get the opportunity to go underground.
MR. CHAIRMAN: Thank you very much. Perhaps we could see if we could get a copy of that.
Our next session will be on June 27th, at which time we will be having witnesses from Devco. Thank you.
[The committee adjourned at 12:17 p.m.]
