ELECTION ’93 — MINING FOR ANSWERS — Reform’s Manning

In preparation for the Oct. 25 federal election, The Northern Miner has asked representatives of four of the main political parties to respond to a series of questions pertaining to mining. All representatives were asked the same five questions, which were devised with the assistance of The Mining Association of Canada, The Prospectors and Developers Association of Canada (PDAC) and Watts, Griffis and McOuat. The following is an interview with Preston Manning, leader of the Reform Party of Canada:

* Do you support the retention of a federal department responsible for mines?

What we have advocated as part of our general reducing of the overall cost of federal government is a major downsizing of the federal cabinet. We’ve proposed rolling together a lot of the federal natural resource departments into a single federal Department of Natural Resources. At the same time, a lot of the duplication should be cleared between the federal and provincial jurisdictions in all the resource areas: energy, mines, forestry, agriculture and fisheries. So what we really propose is a single federal Department of Natural Resources and a lot clearer differentiation between the federal and provincial departments. cents Editor’s note: Early this past summer, the federal government merged EMR Canada and Forestry Canada to create Natural Resources Canada.]

* Although the matter falls within provincial jurisdiction, does your party support the decision by British Columbia’s NDP government to transform the Tatshenshini-Alsek wilderness area into a park and thereby prevent Geddes Resources from mining the $8.5-billion copper-gold deposit known as Windy Craggy? How do you blend the concerns of environmentalists and the under-informed public with those of the mining community?

Firstly — this goes without saying, but I guess it’s a starting point — what is desirable is some kind of balance between environmental protection and economic development. We feel that includes, yes, requiring environmental impact assessments of economic properties, but the other side of that equation is requiring economic impact statements on environmental protection proposals. Environmentalists should be required to demonstrate that the economic consequences of what they are proposing are in the public interest. I do think that if this balance can be achieved between environmental and economic impacts, it would be easier — not just for quasi-judicial regulatory authorities but for the public — to make the judgment between the trade-off.

The other thing we have advocated — we did this when there was a prospect of overhauling the Constitution — is that rather than talking about the division of power regarding environment in the Constitution, what really needs to be talked about is the “integration” of powers. We would like to see both federal and provincial governments delegate their regulatory powers over the environment to 1-window agencies, quasi-judicial and third parties, which would then have all the jurisdiction in that one agency to give all the approvals required. Then companies wouldn’t have to receive half their approvals from the provincial government or go through the court system, eternally challenging the jurisdictional aspects. You have to keep the results from being whip-sawed between the two levels. So, I guess the two things we think might help these types of situation, if the aim is to achieve balance, is to get the economic and environmental demands out on the table and aim towards a 1-window regulation by combining jurisdictions. I don’t have a background in the mining industry; my background, before I got involved in this political thing, was with a small management consulting firm doing a lot of work in the energy sector in Alberta. And the same problem is encountered there — the energy mega-projects run into conflicting environmental and economic interests and the regulatory system is unable to balance these interests. And if you get a decision, it’s still split between jurisdictions, so you never know where you are. So I know the nature of the problem.

I’m not that familiar with the details of Windy Craggy. Perhaps you could fill me in . . . Well, I don’t know what you could say after the fact. It’s just the same with these dams that get half-built and then people decided that they shouldn’t be done. By allowing people to get halfway into anything and then changing the rules, the net effect, of course, is just to discourage investment. The only way I can see that being prevented is by creating a better regulatory system which takes everything into account at the front end and doesn’t get changed on political or special interest grounds. * Most provinces require mining companies to pre-plan for mine reclamation by setting aside money in trust funds for several years. While these companies support reclamation plans to safeguard the environment, the requirements drain investment capital resources when they are most needed to start up new mining enterprises. Do you support the mining industry’s call for federal tax changes to allow companies both to protect the environment and allow funds to accumulate and earn interest free of tax, similar to a registered retirement savings plan (RRSP)?

We haven’t really examined this in detail, but I think we’d look favorably on the principal involved here. Our policies are developed through a long process of resolutions which we channel through our constituency organization, particularly the ones in natural resource areas. Then a big convention is held where these considerations are debated. This particular concern has not been dealt with, but we have supported an agricultural safety net program which is, in essence, an industrial-type RRSP scheme, so we’ve supported a policy that incorporates that principal. I think that idea would be fairly well-received, particularly if tied to environmental protection. * Will your government reintroduce flow-through share funding or other tax incentives to generate much-needed investment in mineral exploration? Our preference would be to get government spending under control to the point where we could offer general tax relief and a general lowering of the taxation levels in this country. We much prefer that to getting into special tax concessions on a sectoral, or even a company-by-company, basis. We are really serious about that. One of the biggest issues we will be pushing in the federal election, to the extent that we can, is overspending by the federal government — I am referring to the deficit and debt and tax levels which go along with that. I unveiled the first phase of our deficit reduction plan at the joint meeting of the PDAC and the Canadian Club. We have a specific proposal to cut about $19-20 billion out of the federal budget per year over a 3-year period. That’s designed to reduce the deficit to zero in three years. If it can be cut to that level, then Canadians can have a big discussion about some form of tax relief which would make our tax levels a little more competitive with our big trading partners. That would be our preference, as opposed to getting into sector-by-sector tax concessions. Now, I know the pressure to do this is in the circumstance where there is absolutely no sign of general tax relief at all, and so almost every sector is looking for some way of at least getting some targeted tax relief. But our preference would be to go the general route.

* Canada’s mining sector provides some 400,000 direct and indirect jobs and contributes 19% to our gross national product. What steps can we take to halt the erosion and possible fatal decline of Canada’s mining industry? If we fail, with what can we replace it? Where do you think the industry has been falling down on the job?

We think the biggest single thing to be done — and this is for all the primary industries — is to get the cost of government down in this country. The cost of government is just too high; it is pricing us out of all kinds of markets. It’s not just the tax levels; everytime there’s any kind of boom in any primary industry, the government rushes in to try to cut the peak off whatever is going on. It’s driven by this insatiable appetite for tax levels. The second major requirement is streamlining, that is aiming for 1-window, ecosystem-based regulations. Environmental protection suffers from this patchwork of layers on layers of regulations — and it creates a cost to the developer, in terms of uncertainty.

What mining companies can do is present dummy profit-and-loss statements whenever they make presentations to politicians. A lot of modern politicians have no idea exactly where and how you make your money and how the government can screw it up, nor do they understand what your costs are and what the government can do to help. A lot of energy companies and mining companies, when the political guys come around, give them a tour of the plant and spend 80% of the time on the technology (all of which I myself find fascinating), but I think the biggest single thing you want to communicate is: “This is how we make our money. This is where we sell. This is our cost structure and here’s the six points where what you guys do either adds to our costs or wrecks our market.” I think there’s an education job which has to be done on the economics.

I think there is more the industry can do to show that the accumulated cost of government in this country — or rather, the cost of doing business under this huge weight of four or five levels of government — is what’s making us uncompetitive in comparison to other countries. The public in this country sees no connection between the deficit and the debt, on the one hand, and jobs on the other. They think they are two separate issues. If industry were to say, “The reason we are not investing more, or doing more in job creation or private sector activity, is because of this weight of the debt and the deficit and the tax levels in Canada, and we anticipate this will continue to be the biggest single deterrent to us doing anything projectwise or jobwise” — that would probably be effective. The heads of mining companies should stand up and say: “The reason I can’t do project X is because it just no longer makes economic sense in this country; we’re carrying too much tax.” On the positive side, I’ve seen the figures on the decline in capital investments and job creation in mining and other primary industries. I do think there is a future for primary industries; I’m not all doom and gloom. I really think there is a future, and Canadian-based companies are going to do their thing. My preference would be that they do their thing here, but they’ll do their thing internationally and bring some marketing and research stuff back here.

— Lisa Murray is a 7-year veteran of politics at the federal, provincial, municipal and consular levels. She is currently at Watts, Griffis and McOuat.