Notes for Remarks for Roy Cullen, M.P.

To the

Mining Association of Canada

Chateau Laurier Hotel, Ottawa

November 19th, 2003

It is a great pleasure to be with you here today to participate in your Annual Meeting.

As it is for the mining industry, so it is for politicians like myself - times of change. The landscape here in Ottawa is changing dramatically with a new Prime Minister-elect in Paul Martin. This past weekend the Liberal Party of Canada had an historic and re-energizing leadership convention. We selected our new leader and in doing so embarked on a new journey. We are about to see a change in direction of our government - and in the way the federal government operates. With change comes both challenges and opportunities.

I have been asked to comment on two subjects -

1. what directional changes are we likely to witness under a Paul Martin government? And
2. how, under a Paul Martin government, the role of M.P.'s might change;

After that, I will try to decipher what this all means to the natural resource sector - and the mining industry specifically.

Not professing to own a crystal ball, allow me, however, to tip toe into the pool.

Firstly, what directional changes are we likely to witness?

Let me paint a picture as I see it.

The first order of business will be to rein in expenditure and take stock of the fiscal situation. New priorities will displace lesser priorities. The new deal for cities, for example, will be costly and will have to be phased-in over time I suspect.

Program review will become a permanent fixture. I would hope that we could move to a 'zero base' approach and examine each and every federal program and service to ensure they are relevant, effective & efficient, and aligned with the new set of priorities. The Treasury Board will play a more assertive role in resource allocation decisions, and controllership will be the order of the day. Program managers will be held accountable for results and financial performance. The politics of achievement will permeate decision-making as will ethics in government.

The Cabinet decision-making process will be changed and unfunded Memoranda to Cabinet, or MC`s, will become a thing of the past.

This strengthened accountability will result in improved horizontal management. I am sure that the mining industry has witnessed policy development that is disjointed and lacking in cohesion. This must improve. The Kyoto Accord might serve as a case in point. Decisions in this area had, and will have, a variety of impacts. The Accord, in addition to environmental impacts, has tax policy implications, industry competitiveness issues, and foreign policy ramifications, to name a few. These matters need to be dealt with concurrently and holistically. Government may need to be restructured to achieve better horizontal management.

Paul Martin was instrumental in the creation of the Finance Minister Group of 20 - recognizing the importance of emerging economies like China and India. As Prime Minister he will promote a First Ministers G-20.

Paul Martin will forge a much-needed new relationship with the U.S.A. A group of us had a policy roundtable session with Paul Martin on the topic of Canada-U.S.A. relationships a number of months ago. Without giving away what we recommended to Paul, I know that under his leadership our approach to the U.S.A. will be more strategic and focus on mutual issues, problems and opportunities. It will be characterized by a comprehensive and two-way approach to a basket of issues.

Paul Martin is committed to dealing with western alienation. As someone who lived in British Columbia for twelve years I have had the opportunity to discuss the attitude of westerners with him on one or two occasions and I am convinced that he is very serious about including western Canadians more fully in the politics and policies of the nation. Implementing, and improving upon, the way in which we tax the natural resource sector as represented by Bill C-48, may be a first order of business! We will work on that one!

Relations with the provinces and territories will be improved - I think we are seeing some evidence of this happening already.

Paul Martin's government will invest in our nation's infrastructure - our physical, scientific and human capital. The envelope on Public-Private Partnerships (or PPP's) will be expanded and optimized wherever possible. His government will continue to promote and encourage research and innovation so that Canada is ahead of the curve in technology development and implementation. The formation of a richer diversity of risk capital pools will receive more attention.

Paul Martin's government will protect universal and quality healthcare and assist Canadians with disabilities. Under his leadership, our record on overseas development assistance will improve, and debt relief for the poorest countries with good governance regimes will continue to receive his government's full attention.

Working with the provinces, there will be a new deal for Canada's cities, but this may not happen overnight.

And Paul Martin will follow through on his commitment to tackle the democratic deficit.

A few words now on how he will slay the democratic deficit dragon!

Paul Martin is a consensus builder. He likes debate and discussion on public policies (some would call him a policy 'wonk!) and he values the views of M.P.'s and his caucus colleagues. Paul Martin doesn't pretend to have all the answers. He believes that better decisions are obtained when the views of elected representatives are considered. He indicated at our first meeting last Saturday, following the leadership convention, that caucus will participate in the identification of priorities for the Speech from the Throne that will in all likelihood will be delivered in early February next year. This will be a whole new experience for those of us in caucus!

As a businessman, Paul Martin will focus on results - the Politics of Achievement, as he likes to call it.

To get there, the role of the M.P. will be enhanced under Paul Martin's leadership. M.P.'s will have a more significant role to play in the development of public policies. I believe the result of this will be that the influence of the bureaucracy will be less, and Ministers will be required to 'sell' their new policies and convince caucus and other M.P.'s of their need. On the government side, it is possible, for example, that all new policies, programs and legislation will be vetted through either the caucus committee on economic development or the caucus committee on social policy.

It would appear that Paul Martin will enhance and enlarge the role of Parliamentary Secretaries in his government. He should model this after the way he defined the role of his Parliamentary Secretaries when he was Minister of Finance. As his P.S., I was fully briefed, I was invited to all the meetings with the Department without exception, and I was encouraged to participate fully in the business at hand.

At a time when there are a number of caucus members who are 'cabinet minister wannabees' (I suppose I should include myself in this group!) the power may be shifting away from the PMO and Ministers to backbenchers, parliamentary committees and parliamentary secretaries! This will be a positive development.

Will it mean that government decisions will be slower in coming? I think the reality is that this might happen in some cases- but we will have better decisions - decisions with 'buy-in'. Look at Paul Martin's eight budgets. They were all painstakingly developed with input from many sources. I can attest to that as I worked with Paul Martin on Budget 2000 and the 2000 mini-budget. If my recollection is correct there were some twenty-five drafts of the budget speech! This followed countless all day and all weekend meetings with officials in the Finance Department examining countless scenarios and budget policy options.

The budgets were all delivered on time and I think you might agree they were good budgets. So timely and quality decisions can be achieved.

Paul Martin's commitment to excellence will guide the new administration - he will demand it.

As someone who was first elected in 1996 - I have witnessed the growing concentration of power in the Office of the Prime Minister; together with the concurrent diminishment in the contribution that backbench Members of Parliament are able to make to the policy-making process.

I am a believer in the need for the executive branch to govern, but I believe also in the rightful role for M.P.'s to participate in the decision-making process of government.

The House of Commons has more recently begun to exercise some of the powers that have always been there, but not always employed. A case-in-point was the more recent passage by the House of Commons of the motion to have chairs of standing committees of the House elected by secret ballot - thereby allowing members on the government side to vote according to their own wishes rather than adopting the candidate put forward by the Whip. Caucus is now playing a key role in the selection of committee chairs. It is one's peers who recommend who should chair the various committees - including Caucus Committee chairs - that also heretofore were selected by the Prime Minister.

The point is that to some extent Canada's parliament has not been exercising the powers that it already possesses. This is true but it is not, in my view, the whole story.

Paul Martin, has been attacking the democratic deficit that has developed - and he is as right on this point as he was when he began his assault on the huge fiscal deficit that we inherited when we came into office in 1993.

We need to give back some 'power to the people', through their elected representatives. We need to do this without upsetting the careful balance that is needed between the need for the executive branch to govern, and the need for elected representatives to be duly engaged in the democratic decision-making process.

A lack of confidence in public institutions witnesses itself in voter apathy here in Canada and elsewhere.

We need to restore public confidence in parliament if we are to re-engage Canadians in the democratic process. Hence the requirement to assault the so-called 'democratic deficit'.

I would like to focus on three main areas of reform today -

1. the need to 'tier' or categorize government legislation so that government MP's have more latitude when they vote in the House;
2. the treatment of private members' business; and,
3. the process covering government appointments.

What do I mean by the need to 'tier' or categorize government legislation? Well, currently government members are usually requested by the party Whip to support all government legislation in the House. In the British parliament they have a system that is called the Three-Line Whip. We used to have the same system in Canada.

Under this system, votes are categorized according to their importance to the government's mandate -

For legislation in the 1st Tier, government members would be free to vote as they choose. This would cover legislation that the government would prefer to have pass the House, but not considered a priority.

Votes on legislation in the 2nd Tier would be accompanied by a recommendation by the government that the specific legislation being voted on was a very important policy initiative; however, the vote would not be considered a matter of confidence. Government members would be free to vote as they wish without facing the prospect of a dissolution of the House and a possible election.

And finally, 3rd Tier legislation would be limited to key matters such as the Budget. Members of Parliament would be expected to vote along party lines as the vote would be considered to be an expression of confidence or otherwise in the government.

Currently, the criteria which determines whether or not a vote in the House of Commons is one of confidence or not is not determined by the substance of the legislation or its origin; but rather whether or not the Prime Minister has made a public comment about whether or not an upcoming vote is a matter of confidence or not. It is not a legal or procedural question. It becomes a political question and a vote in the House is de facto a confidence matter if the Prime Minister so deems it! This has to change.

A case in point is the political financing legislation that was passed the House of Commons earlier this year. The Prime Minister stated publicly that this vote was one of confidence or otherwise in the government. The reason (other than internal politics within the caucus) offered - is that there was a mention of the government's intention to introduce such legislation in the September 30, 2002 Speech From The Throne.

In that speech by Canada's Governor-General on this topic, the following was said -
"…the government will introduce legislative changes to the financing of political parties and candidates for office."

That was the only reference! The political financing legislation was a voluminous document severely limiting donations to political parties by unions and corporations; but because there was a brief reference to the financing of political parties in the Throne Speech, voting for this detailed legislation has been deemed by the Prime Minister to be a matter of confidence!

I should point out that I was the only member of our Liberal Caucus to vote against this Bill at report stage. I stayed away from the 3rd reading vote.

But this is why we must introduce a system like the British Three-Line Whip.
The way in which private members' business is handled in the House of Commons needs considerable attention and improvement also.

My Private Members' bill, Bill C 212, which is an act respecting user fees, had passed the House of Commons (unanimously - at all three stages - which is I believe without precedent), and was in the Senate, having passed second reading, and at the Senate Standing Committee on National Finance, when Prime Minister Chretien prorogued Parliament on November 14th.

When Parliament resumes in January or February next year, my Bill will be re-started in the Senate. It will not have to go through the House of Commons again. It will, however, have to be passed in the Senate before the writ is dropped for the next election, probably in late April next year, or it will die on the order paper. We will therefore have about two months to get the Bill through the Senate.

Only 1% of private members' bills are passed into law. This statistic has to change also - the 'not invented here' syndrome should become a thing of the past.

Paul Martin has been very supportive of Bill C-212. It speaks to the enhanced accountability that he strives for; and I believe it highlights for Paul Martin what a backbench M.P. can accomplish if he or she puts their mind to it. Paul was the first to call to congratulate me when the House of Commons adopted my Bill. Prior to the 3rd reading of the Bill in the House, I had had a very frank discussion with him about the Bill. We had discussed the Bill before, but I wanted to be doubly sure ensure that he supported the Bill because I was confident that it would be his administration that would be responsible for enacting and implementing this legislation

I first tabled the Bill (then as Bill C-455) in May of 2002. I had had it drafted at least one year prior to that. It has taken until now for the Bill to advance to the stage it is at - and only because it was pulled from the hat and deemed votable by the Committee of the House.

My bill is designed to bring greater transparency and accountability and parliamentary oversight to federal government departments and agencies when they attempt to recover costs through user fees. I believe that this is important because user fees have grown to some $4 billion per year and they are a form of taxation. It is my view also that the passage of my bill will bring user fees more in line with the government's recently announced Smart Regulation initiative. This will encourage more innovation in Canada.

The long and somewhat complicated process to get my Bill to this stage leads me to believe that there must be a better way!

Paul Martin has proposed a process for private members' business where success is determined by members themselves, and not by lottery.

In my view this approach makes more sense - having one's peers decide which items will survive - not the results of the draw from a hat!

Now a brief comment on the government appointments process. The Prime Minister has wide latitude in the appointment of a variety of individuals - from judges to C.E.O.'s and directors of crown corporations, to appointments to commissions and agencies. Paul Martin has indicated that the appropriate parliamentary standing committee - before final confirmation - will review senior government appointments. Currently new appointments are referred to committee after the appointment has been made. I think you will agree that the current process is somewhat of a waste of time.

Paul Martin has signaled other changes that could further enhance the role of the backbench MP. For example, more bills could be referred to committee at first reading. This would give individual committee members more opportunities and latitude to introduce amendments to government legislation - before positions are hardened and the government creates the impression that it is capitulating under pressure to improve the law. Another improvement would be to encourage committees to initiate legislation rather than always be responding to legislation introduced by the government. This would encourage a 'bottom-up' process in lieu of a 'top-down' exercise in all cases. When I served as Parliamentary Secretary to Paul Martin he encouraged me to work with the Chair of the House of Commons Standing Committee on Finance and initiate legislation at the committee level. We tried, but concluded that much of the finance legislation is largely technical in nature. I suggested that the committee develop user fee legislation - but for a variety of reasons we were unable to pull this off. But the point is - Paul Martin is very interested in 'bottom-up' initiatives.

What does all this mean for the mining industry?

It is difficult to say.

You will have a government that is willing to listen - one with a non-confrontational style.

You will have a Prime Minister with business experience - someone who understands your challenges and opportunities.

You will need to convince the Canadian public and the government that your agenda is aligned with the agenda of the government.

You will need to get your message to M.P.`s - M.P.`s who will have more influence in government decision-making.

While it is true that our economy in Canada is undergoing an evolutionary change - as our dependence on the natural resource economy is evolving, coupled with the emergence of a number of other growing sectors - sectors like telecommunications, information technology, and life sciences to name a few.

We need to remind Canadians, however, that our economy, as reflected in exports and our balance of trade; and reflected in the dependence of many rural communities on the natural resource sector and its positive impact on our urban economies - our economy is still heavily dependent on our natural resource sector.

Let me describe a case in point to highlight the interconnectedness of our rural and urban economies. In the post Bre-X world, the equity financing of mining projects on Bay Street took somewhat of a nose-dive. Look at the financial press today, however. What a difference a few years makes! Merger and acquisition activity in the mining sector is up, equity financings are occurring at a record pace. And guess what - lawyers are being hired in Toronto- so are financial analysts at the major investment banking companies. This type of employment activity generates spin off effects - more publishing and printing, travel, and the list goes on.

Collectively, we need to tell this story better and de-bunk the myth that economic activity and job creation in the mining industry, and other natural resource industries, is limited to rural and remote Canada. It is simply not the case. This Mining Association did some good work on this relationship some years back (i.e. linking the rural and urban mining industry economies) - it seems to me this work needs to be dusted off and updated.

There are some other myths that need to be de-bunked. Like -

· The natural resource sector is 'low-tech';
· Big business, like Canada's major mining companies, are not job creating sectors; and,
· Because he mining industry is environmentally 'challenged' it is a sunset industry.

Let me go to the first point. I have been on more plant and mill tours than I care to admit and I will say without reservation that some of the very best and latest technology I have witnessed has been in paper mills, underground mines and oil refineries. You in your industry have nothing to be ashamed of - and much to be proud of.

Paul Martin understands how high-tech can be imbedded in the resource sector. It was he, after all, who pioneered an advanced loading and unloading system for wheat and coal at CSL. This allowed the company to compete and prosper internationally.

With respect to job creation, what about all the outsourcing and contracting that is farmed out by natural resource companies. Don't these jobs count? Of course they do, but how quickly people can forget!

Now on the last point - the moment one begins to extract natural resources, be they trees, ores or petroleum - one will be presented with a number of environmental challenges. Those of you in the mining industry realize and accept that some of the extraction and processing practices of the past were not environmentally acceptable - and you have cleaned up your act so to speak. Canada currently is a global environmental leader and home of some the best environmental practices. Can more be done? Of course it can. We can all do better.

But I am sure I am speaking to the converted. We need to get the message out better to the public at large. Public attitudes can seriously influence public policies. An educated public works better for your industry; and it works better for enlightened public policies in this country.

I hope my comments have been useful and I look forward to trying to answer any questions that you may have.

Thank you.