STANDING COMMITTEE ON
ABORIGINAL AFFAIRS, NORTHERN DEVELOPMENT AND NATURAL RESOURCES
COMITÉ PERMANENT DES
AFFAIRES AUTOCHTONES, DU DÉVELOPPEMENT DU GRAND NORD ET DES RESSOURCES
[Recorded by Electronic Apparatus]
Tuesday, March 20, 2001
The Chair (Ms. Nancy Karetak-Lindell (Nunavut,
Lib.)): Good morning, colleagues. I'd like
to call the meeting to
order for this Tuesday morning.
The order of the day concerns Bill C-3, an act to
amend the Eldorado Nuclear Limited Reorganization and
Divestiture Act and the Petro-Canada Public
We have the Minister of Natural Resources, the
Honourable Ralph Goodale, before us.
I'll turn the floor over
to you, sir.
Hon. Ralph Goodale (Minister of Natural Resources):
Madam Chair, it's good to be back again so
quickly with this committee. I thank you and all
committee members for your consideration of the
previous piece of legislation that was presented to
this committee in the form of Bill C-4. Today the
subject is Bill C-3.
I have with me Mr. Peter Brown,
with the uranium and radioactive waste division of
Natural Resources Canada, and Mr. Don Cunningham,
an economist with the energy sector of my department.
I would also point out, Madam Chair, that in the room
today are representatives of the companies that
are, of course, the subject matter of this legislation.
Mr. Garry Chad, senior vice-president, law,
regulatory affairs and corporate secretary of Cameco
Corporation, is here, together with Robert
McCaskill, senior vice-president of Petro-Canada,
and Mr. Robert Andras, senior director of corporate
communications for Petro-Canada.
I understand the
committee will be speaking to them directly after you
finish with me. In the course of the next hour or so
during my presentation to the committee, if there are
particular items those gentlemen might be able to
answer better than I can, I might defer to them because
I know they'll be coming up next on your agenda.
I'm very pleased to be bringing Bill C-3 to the
standing committee at this time. The strong
performance of the Canadian economy is due in no small
part to the strong performance of Canada's resource
industries. Canadian resource companies are showing
that not only can they succeed in the knowledge-based
economy of the 21st century, they are indeed a dynamic
and vital element of that knowledge-based economy.
However, we cannot take a prosperous resource sector
for granted. It is important that Canadian resource
companies have the ability to make strategic decisions
and to better position themselves in the domestic and
The legislative amendments proposed in Bill C-3 will
allow two of our major performers in the natural
resource sector, Cameco Corporation and Petro-Canada,
to maintain their record of economic growth and
environmental stewardship by removing unnecessary
restrictions that are constraining the ability of these
companies to attract new investment capital and to
forge new strategic alliances.
At one time both companies were, as you know, crown
corporations. The Government of Canada had sold all of
its shares in Cameco by 1995. Although the government
still holds an 18% interest in Petro-Canada, it is a
passive interest, and the government does not influence
the management of the company.
At the time of privatization, certain ownership
restrictions were placed on both companies. While
these restrictions were implemented for good reasons at
the time, some of them have outlived their usefulness
and are now in fact preventing these companies from
taking advantage of new business opportunities.
Specifically, Bill C-3 proposes to modify existing
restrictions on the ownership of shares and the
disposal of assets in the Petro-Canada Public
Participation Act. Bill C-3 also proposes to amend the
share-ownership provisions of the Eldorado Nuclear
Limited Reorganization and Divestiture Act, which of
course is the governing legislation for Cameco.
In the case of Petro-Canada, Bill C-3 will increase
the limit on individual ownership of shares from 10% to
25% limit on the number of shares that can be
collectively owned by non-residents of Canada will be
eliminated. The new 20% limit on individual share
ownership of Petro-Canada regardless of the
individual's origin will prevent the possibility of an
outright takeover by a large multinational.
To provide Petro-Canada with greater flexibility to
manage its asset portfolio, the existing prohibition on
the sale, transfer, or disposal of all or substantially
all the company's upstream or downstream assets will be
replaced with a similar prohibition that will not draw
that distinction between upstream and downstream.
Upstream assets refer to the realm of exploration and
production, while downstream assets involve refining
and marketing. The prohibition will refer generically
to all assets taken together. Retaining a variant of
the original asset disposal restrictions will provide
the company with new flexibility, but it will prevent
the company from winding up its activities through an
outright sale of all its assets.
In the case of Cameco, Bill C-3 will ease but not
eliminate the current foreign ownership restrictions.
The limit on individual,
non-resident share ownership will be increased from 5%
to 15%. The limit on aggregate non-resident share
ownership will be increased to 25% from the current
20%. The ownership limit for an individual Canadian
shareholder will remain at the current 25%.
Bill C-3 has the support of both companies, which view
the current restrictions as being unfair since those
restrictions do not apply to the companies with whom
they compete within their respective industries. The
bill will, I believe, be welcomed by the investment
community in Canada and abroad. At the same time, it
preserves the Canadian status of both Petro-Canada and
Cameco. Their headquarters will remain in Canada, and
a majority of their directors will remain Canadian.
I want to assure you that the changes being proposed
for Petro-Canada will have no impact on the price of
refined petroleum products. Oil prices are mainly set
by supply and demand conditions in the world market,
not by the share ownership rules specific to one
company in the Canadian petroleum industry. I can also
assure you that the proposed amendments will not reduce
the high degree of competition that currently exists in
the Canadian petroleum industry.
Nor does the bill signal an imminent decision on the
part of the Government of Canada to divest itself of
its interest in Petro-Canada, that remaining 18% I
referred to. Although the government shareholdings in
Petro-Canada no longer serve a public policy objective,
we intend to sell our shares only when market
conditions and other factors are right. That means
that the decision to divest will occur when conditions
are such as to maximize the return to the taxpayer.
The changes to the Cameco legislation will not alter
in any way Canada's commitment to nuclear
non-proliferation and safety.
Uranium is a proscribed substance with strategic
significance, and the Government of Canada's uranium
export policy is subject to an overriding commitment to
nuclear non-proliferation and safety under regulations
made pursuant to the Nuclear Safety and Control Act and
permits under the Export and Import Permits Act.
Canadian nuclear materials, equipment, and technology
are not to be used in connection with the production of
nuclear explosive devices. In addition to requiring
that all trading partners in nuclear material have
ratified the treaty on the non-proliferation of nuclear
weapons, the Government of Canada also exercises
control through specific nuclear cooperation agreements
with trading partners, which we enter into in relation
to all of those who do business with us in the nuclear
The Government of Canada continues to believe in the
need for some restrictions on foreign ownership of
uranium. Although the changes to the Cameco
legislation give the company increased agility and
better global positioning, they continue to ensure that
the company will remain Canadian owned and Canadian
I would point out that there is, of course, another
governmental shareholder with respect to Cameco, that
being the Government of Saskatchewan, and the
Government of Saskatchewan has indicated that it fully
supports the legislative amendments we are putting
Madam Chair, I believe this bill is clearly an example
of good governance, modern governance, and I would ask
the members of the committee to join with me in
supporting Bill C-3 at the earliest opportunity.
Thank you very much.
The Chair: Thank you very much.
I shall turn the questioning over to Mr. Chatters.
Mr. David Chatters (Athabasca, Canadian Alliance):
Thank you, Madam Chairman, and thank you once again for
coming before the committee, Minister.
This particular bill is one of those rare occasions
when we as opposition will wholeheartedly support—
Mr. Ralph Goodale: Hear, hear. Carried.
Mr. David Chatters: —providing, of course—
Mr. Ralph Goodale: Oh, I knew there was a shoe to
Mr. David Chatters: —that it is a means to an
end. Certainly I disagree with your statement that the
government's ownership of Petro-Canada is passive, in
no way affects the management of the company. I don't
think it can help it, because certainly Petro-Canada
remains somewhat handcuffed—less so after this bill of
course—in operating in a very competitive marketplace
and in a global economy. It's important that
Petro-Canada be freed of those handcuffs to be able to
But then, Mr. Minister, if conditions aren't
right for the Government of Canada to dispose of its
remaining assets in Petro-Canada today, when in the
world will they be right? We're sitting at record
prices in the energy industry and near record share
prices for Petro-Canada. What could possibly be better
conditions than we have right now to finish the
privatization of Petro-Canada we started many years
Mr. Ralph Goodale: Mr. Chatters, first of all,
thank you for your indication of at least support in
On your first comment about the impact the
government's shareholder position has upon
Petro-Canada, when I indicated that our position was a
passive one, the point I was trying to make is that we
do not influence or seek to influence the management
decisions of the company. That is entirely up to
Whether investors in the general marketplace take a
favourable or unfavourable view of the government's
holding a certain shareholder position, that is, I
guess, a bit of a philosophical argument we could have
on another occasion. But the objective of this bill is
to provide the company with more agility and
flexibility in the marketplace, and I think it will be
a step in the right direction.
As for timing with respect to the disposal of the
government's remaining 18% stake in Petro-Canada,
that's a delicate judgment call to make. I think it
would be inappropriate for me to speculate on that in a
public forum other than to repeat the basic principle,
that our objective here is to make certain the position
of the taxpayer is
appropriate judgment call will be made at the
appropriate time. I think any other comment by me
about factors that might influence the government's
decision would be inappropriate, but our objective is
clear, and that is maximizing the return to the
shareholder, which is in this case the taxpayer of
Mr. Dave Chatters: We would certainly support that
position. I recognize the sensitivity of making such
statements, but I would urge you, as minister, and the
government to move as quickly as possible. Discounting
the history and how Petro-Canada was created and the
conditions under which it was created, certainly in
February Petro-Canada shares were at $36.70. Today
they're at $35.52. The market is very healthy, and the
chances of reaping a pretty substantial return are
pretty good today. I would urge the government to move
quickly and to do this while the market is at the peak
and we can maximize those returns.
Mr. Ralph Goodale: I hear your point.
Mr. Dave Chatters: Thank you, Madam Chair.
The Chair: Mr. Godfrey.
Mr. John Godfrey (Don Valley West, Lib.): I want
to talk about Petro-Canada as well, Minister. We've
eliminated any aggregate foreign ownership
restrictions. While it's true that no one large
multinational could take over, because it couldn't own
more than 20%, nothing in the legislation would
preclude two or three of them getting together to own
collectively 60% of the....
Mr. Ralph Goodale: I think I have the right
technical answer for you, Mr. Godfrey, on that
question, but we'll just check with the legal counsel
on the point to make sure we're absolutely precise
For the record, Madam Chair, this is Anne-Marie
Fortin, legal counsel at Natural Resources Canada.
The Chair: Thank you.
Ms. Anne-Marie Fortin (Counsel, Legal Services,
Resources Canada): Thank you.
The way the bill is structured, the prohibition would
still apply to affiliated companies. However, if you
were dealing with a consortium that was not of
affiliated corporations, the prohibition would not
apply. But it certainly would apply to affiliated
companies, sister companies, or parent companies.
Mr. John Godfrey: So in other words, an industry
that—how should I describe it?—has not been a
stranger to the principle of collusion in other
areas—the “seven sisters” and so on—might
technically decide to get three of them together and
take over Petro-Canada, and nothing in the law would
Mr. Ralph Goodale: Mr. Godfrey, they would have to
comply with the individual restriction requirements,
but if they were totally arm's length enterprises, that
Mr. John Godfrey: Okay.
That leads me to the public policy point you referred
to. You said in your remarks that it was no longer a
matter of public policy to continue with the original
purpose of Petro-Canada. Let me try to summarize it,
and correct me if I have it wrong.
When it was created, the first idea was that we should
have a window into the oil business, so that we had a
fully integrated oil company whose workings we
understood because we were part owner. That was the
first public policy interest. I suppose a secondary
public policy interest was that it might be useful to
have an oil company headquartered in this country, an
international oil company that was in some sense a
The argument I thought I heard you make was that those
sorts of policy considerations.... I'd be interested
in hearing how the rationale has changed for those two
points. That's the first question.
As for the second one, I heard you say as well that
other companies were not so restricted. But it seems
to me, as I look around the world, that there are
plenty of examples—from France, Italy, the
Netherlands, Britain, Mexico—where it is a matter of
public policy to have a controlled international
company headquartered in those countries. In effect,
that's also the situation in the United States.
that's the case, if those companies clearly
headquartered in specific countries serve as national
champions and represent the interests of those
countries, and if it's useful for them to do so, why is
it still not useful for Canada to have something that
looks a bit like a national champion and has some
restrictions on foreign ownership?
Those are my two sets of questions.
Mr. Ralph Goodale: Mr. Godfrey, on your
general points, Petro-Canada needs to be an agile
player in the marketplace in order to be able to pursue
corporate opportunities, to consider strategic
alliances, to deal with its assets in the context of
those strategic alliances, to grow, and to thrive.
Quite frankly, I think it has performed remarkably well
within the limitations imposed upon it over the last
number of years. But it has found, from practical
experience, that the limitations that are presently
imposed prevent it from being as vigorous and as robust
a player in the marketplace as it might wish to be. It
sometimes finds that transactional opportunities slip
It seems to me that it is good for
not only Petro-Canada but also our country to have a major
international player headquartered in Canada, with the
majority of its directors being Canadian residents.
And I would re-emphasize
that those two conditions continue
We can leave limitations attached to Petro-Canada and
be satisfied with the company continuing to try to do
as well as it can, subject to its limitations, or we
can remove those limitations that are impediments in
the market, and we can allow it to become even more
successful for Canada in the future.
I guess it boils down to a judgment call as to whether
or not we think we advance our national interests and
the ultimate success of Petro-Canada by keeping it
restricted and limited, or whether we provide it with
the same tools virtually everybody else has, especially
the companies against which it competes directly. We
can provide it with the same tools that virtually all
of those companies have so Petro-Canada can succeed in
a larger arena.
Mr. John Godfrey: Let me just finish with this.
Companies whose shares are
really controlled in certain countries—Royal
Dutch/Shell in England and Holland, Total Fina
in France, and Exxon in the United States—in effect
restrictions. That's what it comes down to. They are
dominated by one country or two countries. Are they
finding they could be more flexible if they weren't?
How can you have it both ways?
Mr. Ralph Goodale: But they're not restricted by
legislated limitations. That's what we've chosen to do
in the case of Petro-Canada, and it's those legislated
limitations that put Petro-Canada at a decided
disadvantage in the marketplace when Petro-Canada is
compared to some of those very companies you've
Mr. John Godfrey: How does ownership and—
The Chair: Excuse me, John, but you're over our
time limit here.
Mr. Serge Cardin (Sherbrooke, BQ): Madam Chair, Mr. Minister,
First, it is difficult to be against the increase of foreign
participation in Petro-Canada, given that we in Quebec already
consider that it belongs to foreign interests. Nevertheless, I
would like to point out what Mr. Jean-Paul Gagné wrote in the
February 2001 issue of Le Journal des affaires. Regarding Petro-
Canada he said:
This corporation was created in 1975 by the government of Pierre
Elliot Trudeau, reportedly to acquire a significant player in the
petroleum industry, which was and still is dominated by foreign
multinationals, and to better understand that industry. At the same
time a maple leaf could be draped over a wide network of gasoline
outlets all across Canada.
I am not the person who said that; it was Mr. Gagné in Le Journal
In fact we know that in 1991 it was privatised, and moreover
to better understand the petroleum industry, the Liberal Party set
up a committee in 1998 which made a number of recommendations,
several of which dealt with competition. You told us earlier that
will not reduce competition, but we know that the report of the
Liberal committee informed us that the problem with petroleum
products and their price is one of competition, at the
international, national and regional levels. Therefore, there were
Moreover, when we see individual participation increasing from 10
to 20 per cent, we would almost be inclined to think that the
intention of the Canadian government might be to sell its 18 per
cent directly to foreign interests. It would thus be losing a
little more control over competition. Indeed, the government had
mandated the Conference Board to study the problem of oil product
prices, and again the problem of competition was put to one side.
Let me give the example of refiners and distributors who control
overall activity. At one point they even tried to get rid of all
independents. Quebec had taken a position: it had set a limit on
the floor price in order to enable independents to survive. But
apart from participation and ownership, which may perhaps go to
foreign corporations, the fact remains that in the petroleum
industry there is still a problem of competition. But if you state
that this will not reduce competition, then how will it improve the
Mr. Ralph Goodale: It seems to me that the
competition issue is a separate one. I think you're
referring to downstream competition at the retail end
of the marketing chain.
I don't have it right in front of me at the moment,
but I believe the Conference Board of Canada made
reference in its report to some further work
potentially being useful in analysing the market
interface between the large integrated companies on the
one hand and the independent operators on the other.
That may well be a field of investigation that should
In fact, over the course of the last
number of years an effort has been made from time to
time to stimulate that kind of examination—the market
behaviour of the larger integrated companies versus the
activities of the smaller independent operators.
Unfortunately, every time an effort has been made to
launch that kind of study or examination, the process
has foundered on the point that the various sides that
would be involved in that kind of an examination could
never agree on an independent and impartial third party
to conduct that kind of work.
I think that may well be a very important issue,
Monsieur Cardin, but it's a separate issue from this
one. It seems to me that the corporate ownership issue
vis-à-vis Petro-Canada would not bear upon the question
you have just referred to. It is a separate question,
and it may well be a very valid question, but the
corporate ownership structure of Petro-Canada does not,
in my view, directly relate to that downstream
competition issue that you raise. It may well be that
the issue should be examined not in relation to
Petro-Canada, per se, but in relation to the question of
how the integrated companies interact in the
marketplace with the independents. But it is a
separate question from that which is being dealt with
in this bill.
Mr. Serge Cardin: Do I still have some time left?
The Chair: You have one minute, actually.
Mr. Serge Cardin: The parliamentary committee which had
discussed Petro-Canada and the gasoline industry in 1998 issued a
warning in its conclusions against a possible merger of Petro-
Canada and foreign petroleum companies. We read in this morning's
newspapers that there is a shortfall in oil production in the
United States. They even want to go into Alaska, which is another
problem. But this leads me to ask the following: was the intent
behind the bill by the government really to go to 20 per cent so as
to be able to sell its shares as a whole to foreign corporations?
Mr. Ralph Goodale: No, Mr. Cardin, the objective
is to give Petro-Canada the presence, the corporate
tools, and the corporate capacity to function in the
international marketplace on more of a par with the
companies against which it has to compete. There are
many reasons, both legal and market-based,
why it is likely, in this new, changed
state of affairs described in Bill C-3, that Petro-Canada
would remain majority-owned and -controlled by
First of all, there is, of course, the proposed 20%
individual ownership limit, which would effectively
block a takeover by one of the big multinational
Second, in the marketplace today, there is a much
higher degree of investor interest in Petro-Canada from
Canadians than from foreigners. The current
legislation permits foreign ownership up to 25%—that
is the restriction we propose to remove—but foreign
ownership at the present time doesn't exceed 16%. So
obviously the existing level of foreign interest is
substantially below what the law today actually allows.
Third, as I mentioned, under the legislation,
Petro-Canada would not be able to divest of all or
substantially all of its assets to any buyer, domestic
Fourth, as I've also mentioned, under the rules
that apply to Petro-Canada, as well as to Cameco,
its head office would need to remain in Canada, a
majority of its board of directors would need to remain
Canadian residents, and so forth. The head office is
in Calgary in the case of Petro-Canada, and the head
office in the case of Cameco is in Saskatoon. Those
restrictions continue to apply.
I think what we're
trying to strike here is a very reasonable balance,
modernizing the rules applicable to these two companies
so they can function successfully in the contemporary
marketplace and at the same time retain
their essential Canadian characteristics.
The Chair: Mr. Comartin, please.
Mr. Joe Comartin (Windsor—St. Clair, NDP): Thank
you, Madam Chair.
Mr. Minister, I have
two questions. Let me ask them in this order.
The sense I'm being left with today is that
consideration for the sale of the balance of
Petro-Canada by the government would be
directed—I think it's what I'm hearing—primarily
out of the concern for the financial interest that we
would reap upon its sale. But in your response to Mr.
Chatters and Mr. Godfrey, I think you've left open some
other considerations. Are there in fact other
considerations, or is it simply going to be how much we
can get for it?
Mr. Ralph Goodale: That is certainly the driving
consideration. Taxpayers have been
called upon over the years to make
a substantial investment. Over the long term, the
investment has turned out to be a positive one. The
stake we continue to own at 18% is not one that
influences the management or the decision-making of the
corporation. Accordingly, we have said for some time
now that we would be proposing to dispose of that
remaining stake, and the timing of that and the terms
and conditions applicable to that would depend, in our
judgment, on when we can maximize the return to the
Mr. Joe Comartin: But I understand there are some
secondary considerations, and if so, what are they?
Mr. Ralph Goodale: There are none
that I would draw to the attention of the committee.
The consideration that will be the decision-making
driver will be the return to the shareholder. I'm not
quite sure what other factors you might be referring to
here, but I know of none.
Mr. Joe Comartin: I'm sorry, I was left with the
impression that there were some other ones.
Mr. Ralph Goodale: I didn't mean to
leave that impression.
Mr. Joe Comartin: So then going back to Mr.
Chatters' question, I understand the inability on your
part to disclose what dollar the share has to go to for
the country to in effect divest itself of this asset,
but let me ask you this: Without disclosing what it
is, is there in fact a target? Does the ministry or
the department have a target that the shares have to
get to before we'll divest?
Mr. Ralph Goodale: None that I'm aware
of. It is a judgment call about when one maximizes
one's market position.
I would point out that while Natural Resources Canada
obviously has a very active interest in resource
companies, it is actually the Minister of Finance who
is the shareholder.
There will be lots of consultation, I am sure, between
the Department of Finance, the Department of Natural
Resources, other relevant agencies of government, and
perhaps some external financial advisers in terms of
when is the most propitious time to move. But
technically speaking, it is the Minister of Finance who
is the shareholder.
The Chair: You have four minutes left, Mr. Comartin.
Mr. Joe Comartin: Perhaps we should have the
Minister of Finance here at some point to ask him the
I suppose I should indicate for the record that
obviously our party is not in favour of this sale
whatsoever, given that we were instrumental in seeing
that the government took it on in the first place. But
let me leave that and go to another point.
If the sale does occur, is it the intent of the
government at this time to maintain the restrictions in
terms of Canadian ownership, the head office
here, and the number of directors? Is it still the
intent that all those restrictions will remain in
Mr. Ralph Goodale: Yes.
Mr. Joe Comartin: Those are all my questions,
The Chair: Thank you. Mr. Keddy.
Mr. Gerald Keddy (South Shore, PC): Thank you,
I'm going to write that down, that the
restrictions will remain in place. I don't know if you
can do that or not.
I have two questions for the minister. The first
question is on Petro-Canada. According to your answer
to Mr. Comartin's statement or previous question, there
is no plan, then, for divestiture of Petro-Canada.
Certainly, unlike my colleague, our party would support
the divestiture of Petro-Canada, and I would like to
see some type of clear and concise plan put in place.
Although the shares may or may not be up for sale at
some date in the future, what the minister just stated
was that there's no plan now for the shares to max out
or to reach a certain peak. Certainly I think most of
us would agree that you would get a favourable return
on your investment now.
You can comment on that or not, but really my question
is on Cameco and its foreign ownership provisions.
Does the minister see that this opens Cameco? I look
at Cameco as a totally separate issue, and it is, but
certainly there's much more not only national interest
but international interest in Canada maintaining
control of Cameco and uranium supplies. Would you see
the changes brought to the legislation opening Cameco
up for foreign ownership at some point in the future?
Mr. Ralph Goodale: No, I wouldn't. As you will
note, the provisions in Bill C-3 that relate to Cameco
are more modest than those that relate to Petro-Canada.
There is remaining a Canadian policy interest in
respect of foreign ownership with respect to
So I don't believe these amendments do what you
suggest they do, and there's no intention to go beyond these
Mr. Gerald Keddy: That's certainly the answer I
want to hear. I just have some question on the
amendments where you're allowing 15% foreign ownership
and there is some restriction on voting. It's not
saying a foreign company or foreign corporation can't own
the shares, and, the way I read it, can't own all the
shares of Cameco Corporation. They have to be
resident of Canada, and that's a different situation.
not trying to split hairs. It's just the legislation as
I read it.
The Chair: Minister, we have about four minutes.
Mr. Ralph Goodale: Could I ask Dr. Brown to
respond to that point?
Mr. Gerald Keddy: Sure.
The Chair: Mr. Brown.
Mr. Peter Brown (Director, Uranium and
Radioactive Waste Division, Natural
Resources Canada): Thank you.
If I understand the point correctly, it's a question
of foreign ownership of Cameco.
Mr. Gerald Keddy: Yes.
Mr. Peter Brown: The foreign ownership has gone
from 20% to 25%, but that 25% is prorated, so it will
only be 25%. So there's clearly an intent and a
reality there that it will remain in Canadian
The Chair: Mr. Keddy, you have three minutes left.
Mr. Gerald Keddy: I have one more point. This is
my final question.
On the Cameco shares, you're satisfied that's there in
the legislation as it's written now. I'm not sure that
I am. I think the legislation could be interpreted to
mean that you could have one or more foreign
corporations owning more, for a total of more than 25%.
It's spelled out two different ways.
Mr. Ralph Goodale: That's clearly not the
intention. You having raised the point, I'll ask our
legal officers to make sure that the point is clear,
because the situation you've described is not the
Mr. Gerald Keddy: Okay. Thank you.
The Chair: Mr. Minister, are you going to get
someone to clarify that or are you going to get back to
Mr. Ralph Goodale: I'll ask the legal counsel to
deal with it and report back to the committee, Madam
Chair. Just to be absolutely clear, Mr. Keddy wants
the assurance that the foreign ownership limit of 25%
with respect to Cameco cannot be circumvented in some way.
Mr. Gerald Keddy: Exactly—by one or more, or
groups of, foreign owners.
Mr. Ralph Goodale: All right. We'll double-check
that point, Madam Chair, and report back to the
The Chair: Thank you.
Monsieur Serré has something to
Mr. Benoît Serré (Timiskaming—Cochrane, Lib.): Do
you think we could
have that by Tuesday?
Mr. Ralph Goodale: We'll try to do that later
today, if we can.
The Chair: Thank
you, Mr. Keddy.
We've finished our seven-minute round,
so we'll now start the three minutes each, going back
Mr. St-Julien, please.
Mr. Guy St-Julien (Abitibi—Baie-James—Nunavik, Lib.): Thank
you, Madam Chair. I have one comment and I would also like to put
a question to the minister.
In answer to the statement by the Bloc member who said with
respect to foreign ownership that he considered Petro-Canada as a
foreign corporation, I hope he also considers that he was elected
as a Canadian member of parliament, with all the benefits being
paid for by Canadian taxpayers as a whole.
He also mentioned that there was a parliamentary committee on
a report tabled by the Liberals. It should be pointed out to him
that the particular committee in 1998 was made up only of Liberal
members and was not a parliamentary committee of the House of
Mr. Minister, what is the value in Canadian dollars of 18 per
cent of Petro-Canada?
Mr. Ralph Goodale: In very broad terms, Mr.
St.-Julien, if one simply multiplies the number of
shares by stock market prices that have been quoted in
recent days, that would give you a value somewhere in
the order of $1.7 billion to $1.8 billion.
Mr. Guy St-Julien: Thank you.
Mr. Ralph Goodale: And I'm not speculating.
Mr. Guy St-Julien: I see. Indeed, it is not yet 4:00 pm and
the Stock Exchange closes at 4:00 pm. In any event, Mr. Minister,
in your press release of February 2, you mentioned the following on
page 2, and I would like to take this opportunity since you are
accompanied by Mr. McCaskill, Senior Vice-President of Petro-Canada
and Mr. Andras, Senior Director of Corporate Communications.
Changes to Petro-Canada's ownership restrictions will have no
bearing on the price of refined products, including gasoline.
Refined product prices mainly reflect the world price of crude oil,
processing, distribution and retailing margins, and federal and
Given that Petro-Canada belongs to us and that you have
already written to the Competition Bureau requesting that the
corporation be more transparent in displaying prices at the pump,
I find it strange that Petro-Canada, which is making billions of
dollars and belongs to the Canadian taxpayer, today in the year
2001 is today using a 1999 piece of information telling people that
taxes account for 51 per cent. I have here the figures for the
price of gas paid by Canadian taxpayers, as given in the just
published March 13 2001 issue of Infoprix, which indicate the
opposite: the average in Quebec is about 43.2 cents for gas, and
taxes account for about 32 cents.
Is Petro-Canada going to change that information item which is
misleading for consumers? Is there anything preventing Petro-Canada
from displaying the pump price of a litre of gas excluding taxes or
indicating on the receipt how much the consumer is paying in taxes?
These various taxes are not indicated on the receipt. There are
only two taxes shown. In fact there are four types of taxes levied,
or even five in some places such as Montreal. What is there
preventing Petro-Canada from clearly indicating this? Canadian
taxpayers own 18 per cent of Petro-Canada, amounting to $1.7
billion. You are telling them to be more transparent, and these
people sitting here in this room listening to us don't even talk to
us and seem incapable of showing any respect for the Canadian
consumer. I want them to change that attitude and take a different
The Chair: Perhaps you would give a very short answer,
Minister. He has used up his three minutes already.
Mr. Ralph Goodale: Mr. St-Julien, I'll make a
couple of points. The $1.7 million to $1.8 billion value
that I referred to is of course shareholder value
with respect to 18% of the company. That is not a
profit margin figure. That is the shareholder value
Second, on your point about transparency, and I
would make this observation with respect to everybody
who is retailing petroleum products whether that be
Petro-Canada or anybody else in the marketplace, when
prices are generally as high as they have been over the
last number of months, when they are subject to sudden
changes that from the consumer's point of view may be
difficult to understand, and from the consumer's point of
view the timing of price changes may be questionable,
I think retailers, whoever they may be, have an
important opportunity and indeed an important
obligation to thoroughly and accurately inform their
customers about why the prices are where they are, and,
when changes occur, why those changes have occurred.
In some cases, retailing companies have tried to
do that with stickers or decals that are attached to
the gas pumps. Others have, on occasion, I understand,
tried to do that by including some type of printout
that appears on the receipt or the stub that you get at
the cash register. Of course, that doesn't work if
you're buying with a credit card because that
information is generally not available on those forms.
The Chair: Mr. Minister—
Mr. Ralph Goodale: One sentence, Madam Chair, and
The Chair: Fine.
Mr. Ralph Goodale: I wouldn't necessarily agree
with Mr. St-Julien's specific comment vis-à-vis
Petro-Canada, but I would agree with his general point
that all retailers should do a better job of informing
all petroleum product customers about what they are
paying and how much of that is tax, what kind of a tax
it is, and to which government it goes.
The Chair: All right. Thank you so much.
I have three more people who want to present questions
to the minister, and I know the hour with the minister
is coming up very quickly. I'll turn the questioning
over to Mr. Vellacott.
Mr. Maurice Vellacott (Saskatoon—Wanuskewin,
Canadian Alliance): Thank you, Madam Chair.
As my Canadian Alliance colleague had indicated
before, Mr. Goodale, we are in support of this and
I reiterate that. My caveat, though—and
you'd expect something of a qualifier, I assume—is
that I would
say the best protection against a foreign
“takeover”, which at least has been alluded to by some, is
a strong Canadian dollar. To allay the concerns of
Mr. Godfrey or others who have brought this issue up
about foreign takeover concerns, could you convince—I
say this slightly tongue in cheek—your colleague, the
Minister of Finance, to pursue a fiscal policy that
strengthens our Canadian dollar so that this is no
longer an issue?
Mr. Ralph Goodale: Mr. Vellacott, obviously I'm a
very strong supporter of the fiscal policy of the
government. The fact that we have implemented tax cuts
that will add up to $100 billion over the next five
years and have done it before the Americans have
been able to do it; the fact that our economy according
to all of the international indicators will rank in the
top ranks of the G-8 or G-7 countries this year in
terms of growth, in terms of job creation—all those
are very strong indicators of a very healthy Canadian
economic situation. It's one in which we should be able to
enjoy sustained growth and one in which we should be
able to cope more effectively than most with external
factors—for example, the downturn in the United
I believe the fiscal policy of the government is on
the right course. As with the Minister of Finance,
none of us is allowed to comment on the value of the
dollar. Sometimes we wish we could, but we can't.
Mr. Maurice Vellacott: Okay.
I would just say, to follow up, that
maybe Mr. Godfrey or others who brought
that up in collaboration with you can try to urge upon
the minister to have a fiscal policy that strengthens
the Canadian dollar, and together, in tag team, you can
have that done.
The Chair: Thank you. Mr. Godfrey.
Mr. John Godfrey: Madam Chair, I think it was Mr. Finlay.
The Chair: Mr. Finlay.
Mr. John Finlay (Oxford, Lib.): Thank you, Madam
Mr. Minister, I'm going to go back to Mr. Godfrey's
question because I remember going through the trauma of
the national energy policy. And Petro-Canada is the
only vestige of that rather, in my view, far-sighted
policy, because we were struggling with an oil shortage
and we were getting no assurance from the U.S. that
we'd get any oil up the east coast. We therefore
built some pipelines to make sure we could get Canadian oil
to Montreal and to points east.
It seems to me we control foreign ownership of Air
Canada, the banks, and the media companies. We do that,
I guess, because we feel there's a strategic interest
in ownership of those assets for this country.
Now, are we saying that oil is not therefore any
more in the modern world that kind of asset? What
about natural gas? Is that protected too? I don't
know for sure.
We have another resource that's looming very much on
the horizon, of course, and that's water. Does that
fall into the Air Canada, banks, media group, or does
that fall into the modern Petro-Canada group, which, it
seems to me, is not being protected in the same way?
Mr. Ralph Goodale: Mr. Finlay, first of all, the
government has made very clear its position with respect
to our water resources. You will recall the
initiatives undertaken by the Minister of Foreign
Affairs and the Minister of the Environment working
with their provincial counterparts to make sure that
Canadian interest with respect to fresh water is
With respect to the other sectors that you
mentioned, media and so forth, I think the distinction
here is that the examples you gave were largely
sectoral examples—the transportation sector, the media
sector, and so forth—compared with what we have before us
today, which is company-specific. The issue here is
trying as well as we can to level the playing field for
Petro-Canada and for Cameco in relation to the
competition that they have to meet face to face in the
marketplace. If they are subject to restrictions that
the guy around the corner is not subject to, then they
are not going to be able to be as agile and as
successful in the marketplace as that guy around the
If the same rules apply across the board, across the
sector, then that's a different kettle of fish. But in
this case, you've got one company that's trying to deal
with all of the others with one arm tied behind its
back. That's the issue that we're trying to address in
this legislation. We're trying to put Petro-Canada and
for that matter Cameco...but I don't mean to mix oil and
gas with uranium. Specifically with respect to
Petro-Canada, we're trying to put Petro-Canada on a
more level playing field with the other major players
in the marketplace with whom it has to compete.
Mr. John Finlay: So you're telling me—
The Chair: I'm sorry, your three minutes are up,
Mr. Serge Cardin: Earlier, Mr. Keddy asked about the limit of
25 per cent of votes cast at a meeting. We can see that in
shareholders' meetings the government always wants to ensure that
policy is not necessarily determined by non-residents. Non-
residents are therefore limited to 25 per cent.
However, in the case of Petro-Canada, the 25 per cent limit is
dropped. This would mean that at a shareholders' meeting, there
could be a vote on policy which may not be in the best interests of
Canada in terms of energy policy affecting gasoline.
Mr. Ralph Goodale: I'm sorry, Mr. Cardin, but could
you repeat the last part of your question for me?
The Chair: Mr. Cardin.
Mr. Serge Cardin: I was wondering about the fact that the
limit of 25 per cent of votes cast at a shareholders' meeting was
dropped in the case of Petro-Canada. Practically speaking, at a
shareholders' meeting policies could be adopted on the Petro-
Canada's petroleum management practices which could meet the needs
of non-residents but not necessarily those of Quebeckers and other
Dropping the 25 per cent limit gives greater foreign
participation or control over a board's decisions.
Mr. Ralph Goodale: I'm still not sure I fully
understand your point, Monsieur Cardin.
It is proposed with respect to Petro-Canada
We're talking about Petro-Canada here, right? Or
were you referring to Cameco? Because Mr. Keddy's
point was about Cameco.
Mr. Serge Cardin: At the beginning of my comments, I referred
to Mr. Keddy's question about the 25 per cent limit on the total
number of votes cast at a board meeting. There is a 25 per cent
limit on non-residents' votes. Is that correct? In the case of
Petro-Canada this limit, which did in fact exist, has been dropped.
Mr. Ralph Goodale: That's correct.
Mr. Serge Cardin: I see.
Mr. Ralph Goodale: Bill C-3 would make that
change. That's correct.
Mr. Serge Cardin: That's right. I can understand that there
could be a wish to retain some Canadian control over decisions by
limiting voting rights to 25 per cent in the case of Cameco, but
the 25 per cent limit is dropped in he case of Petro-Canada. So,
practically speaking, at a shareholders' meeting where there might
be a significant number of non-residents attending, their decision
could be very different from that of the board, where the majority
of members would be Canadian.
The Chair: A very short answer, please.
Mr. Ralph Goodale: Well, Mr. Cardin, I would point
out that at the moment the 25% limitation applies, and
the amount of foreign participation is in fact only
16%. So even under the existing rules there is more
Canadian investor interest in Petro-Canada than there
is foreign investor interest.
Second, the 20% individual ownership limit would
continue to apply. Third, the directors of the
company would continue to be a majority of Canadian
So with those qualifiers in
place—the location of the head office being Canadian, a
majority of the board of directors being Canadian, the
limitation on individual share ownership at 20%, and the
fact that stock market behaviour up to now has not
moved foreign participation up to the limit that's
available even now—I think everything tends to indicate that
Petro-Canada will very likely remain majority-owned and
-controlled by Canadians. The limitations that are
presently in the act I think unrealistically restrict
Petro-Canada from being as effective a player in the
marketplace as it could be if we removed those
restrictions, as is proposed by this legislation.
The Chair: Thank you, Mr. Minister.
We'll go to Mr. Godfrey for the last question to the
Mr. John Godfrey: As you gather, Minister, I have
a problem with the elimination of the 25%. For
example, you suggest it's only 16% today. Well, if
it's not a problem, then why wouldn't we leave it at
25%? That would be the first question, because it
doesn't seem to be hindering anything.
Secondly, you say most of our restrictions on
strategic industries are sectoral. Well, I beg to
differ. We have the example of Cameco that is
company specific. We have the example of Air Canada
that is company specific.
Mr. Ralph Goodale: No, the question Mr. Finlay
asked me was sectoral.
Mr. John Godfrey: Right, but there are two
examples before us of company-specific pieces of
Mr. Ralph Goodale: Yes.
Mr. John Godfrey: Third, when I asked the
question about what the two reasons are, the first one
clearly seemed to be that it might have some impact on
share price. That is to say, because there is a
restriction, it may ultimately affect the value of
the shares that we put into the market, because they're
not as free as they might otherwise be, I suppose. I
thought I heard you say that.
But the second one has me completely baffled, and
that's the connection between ownership on the one hand
and effective marketing on the other. I don't
understand why ownership restrictions actually prevent
any company from being an effective marketer
internationally, unless there is some sort of an
implication that, unless we sell out to majority
foreign ownership, it might have some positive effect
on marketing. So the nexus between....
Mr. Ralph Goodale: No, I was referring to capital
markets, Mr. Godfrey.
Mr. John Godfrey: All right, capital markets.
My final point is that what I think we're dealing with
is a very important public policy issue, and that is
the notion of which things are strategic to Canada and
which ones are not. I think there is a case to be made
that oil is a strategic asset, particularly in times of
crisis. I think the history of the last twenty or
thirty years would bear me out.
It's not that I wish to stop
this legislation. I just think there is need for a
more thorough examination of this specific ownership
issue, and a decision by us collectively as
parliamentarians, in terms of the idea that this is not
a sufficiently strategic asset in the way Air Canada,
the banks, the media, and Cameco are. I'd like to be
fully satisfied that we're comfortable doing this.
Personally, I'm afraid I haven't been fully satisfied.
That's my only point, but maybe I'm being unfair.
Mr. Ralph Goodale: Mr. Godfrey, I understand the
point you're making. Obviously we're turning a corner
here compared with what the attitude would have been
toward Petro-Canada twenty years ago or so. It is a
shift in direction, but because the government's
participation has declined over time, obviously we are
not now in the position of an active shareholder
directing the affairs of the company. The 18% stake is
not one whereby we influence or seek to influence the
management of the company. Therefore, both legal and
economic circumstances have changed since the time when
Petro-Canada was first created.
It has proven to be a strong player in the Canadian
oil and gas industry. It seems to me that it can, in
the future, be an even stronger player due to
opportunities having to do with corporate structure,
asset management, resource development, and
exploration, for which it needs the capacity to be an
effective raiser of market capital. If Petro-Canada is
going to be a large and significant player in the
future—as I believe it can be—then I believe it is
important for us to facilitate the way in which it can
approach those capital markets to raise the funds that
are necessary to enter into strategic alliances and to
organize its asset base.
The people in the business with whom it may be
competing for those new future ventures do not have the
limitations upon them that Petro-Canada has upon it. If
we leave the restrictions in place, the net result will
be that Petro-Canada is probably maxed out in terms of its
performance. The others will continue to grow,
change, and adapt to future market circumstances, but
we're essentially saying to Petro-Canada, “You stay
stuck in the mould you're in today”.
One could adopt that position, Mr. Godfrey. There
may be valid, broad policy considerations for one to
move in that direction. But, quite frankly, my view is
that we don't have to have an inferiority complex about
how good Petro-Canada can be. If we remove the
limitations that are there, I believe it will flourish.
I think it will do very well. It'll be a very good
competitor in those capital markets. It will grow and
expand, and it will continue to be fundamentally
Canadian in its character. I don't think we have to
build fences around it to make sure that is the case.
It's a corporate success story for Canada, and I think
that in the future it can be an even bigger and better
corporate, and Canadian, success story, and I
think that nature will continue.
The Chair: Thank you, Mr. Minister.
Mr. Ralph Goodale: Madam Chair, I now have the
technical answer to the question Mr. Keddy raised.
It's not very long, and if members would like me to
read that into the record, I would be happy to do it.
I believe the answer to his question would be found in
proposed paragraph 5(1)(c) of the legislation.
It provides that voting rights attached to securities
held or controlled directly or indirectly by
non-residents will be pro-rated so that the counting of
those votes at any given time will be limited to a
maximum of 25% of the outstanding securities.
That, I think, is the precise
technical answer to the point Mr. Keddy raised, and it
is found in proposed paragraph 5(1)(c). If the point
is not sufficiently clear in proposed paragraph
5(1)(c), our legal counsel could consider language that
would make the point absolutely crystal clear, but I
think the intention is clear here. I think proposed
paragraph 5(1)(c) does it, but I would defer to legal
counsel to suggest any technical changes that might
make the point clear to Mr. Keddy's satisfaction.
The Chair: Thank you very much, Mr.
That concludes our session with the minister.
I would like to mention to members that
if they so wish, we can have three more witnesses
appear before us from Petro-Canada and Cameco
themselves. I bring before the committee members
the suggestion that we ask them to come to the table for a
question and answer session.
Mr. David Chatters: I would support that, Madam
Mr. John Godfrey: Do you mean in the future or
The Chair: Right now.
I want to thank you very much,
Mr. Minister, for coming before
Mr. Ralph Goodale: Thank you, Madam Chair, and
thank you to the members of the committee.
The Chair: Before I invite the next
witnesses to appear before the committee, we'll take a
The Chair: I'd just like to get a clarification
from the members on how they would like to proceed.
We're into the three-minute round for one side and then
the Liberal side. If you want to continue with that,
we can just do the three-minute round.
I'll start with Mr. Chatters.
Mr. Dave Chatters: Are the witnesses going to
make a presentation first, or are we just going to
go right to questioning?
Mr. Robert W. McCaskill (Senior Vice-President,
Petro-Canada Inc.): I'd be happy to make a
The Chair: I'll give you a few minutes to
introduce yourselves and which company you're
representing. Mr. McCaskill, perhaps you'd like to
Mr. Robert McCaskill: Thank you, Madam Chair.
My name's Bob McCaskill. I'm senior vice-president of
Petro-Canada. I'm responsible for legal matters,
regulatory matters, and governmental affairs.
With me is Rob Andras, who's our senior
director of corporate communications, and he has
specific responsibility for governmental affairs.
Our CEO, Ron Brenneman, asked me to express to the
committee his regret that he was not able to be here
today. This legislation is very important to
Petro-Canada, and it enjoys the support of the company.
Unfortunately, we had some other commitments that
involved some international travel for our CEO. These
arrangements came together rather recently and also the
requirement of the committee to have witnesses, so he
wasn't able to be here. He asked me to send his
regrets to the committee.
I'm happy to offer our perspective on the bill. We're
very proud of the success Petro-Canada has enjoyed
since 1991 at the time of privatization. We think
we are ready now to make these changes in the ownership
restrictions, and that will contribute to continued
success in the future.
I'm sure the members of the committee will be well
aware of the extent and the pace of consolidation in
the oil and gas industry. We can talk about some of
the mega-mergers that have happened. There's a program
going on right now of continued consolidation of
companies in the oil patch in western Canada, and it's
important for us to be able to participate in those
changes. These ownership restrictions have been
somewhat of an impediment to us entering into
business combinations and merger and acquisition
activity. Our currency, our shares that we can use for
that kind of activity, has suffered from a discount,
which the market attributes to these ownership
restrictions. So we're very much in favour of the
thrust of this bill to remove the foreign ownership
restriction and increase the individual ownership to
With regard to the “all or substantially all”
provision, again, I think that was put in place in the
first place as an enforcement mechanism for the
ownership restrictions. It has proven to be
a substantive impediment as well in terms of
building alliances with other companies, so the removal
of that provision will be beneficial to the company as
I can assure the committee that Petro-Canada remains
committed to being a Canadian company. We consider
ourselves and we hold ourselves out to be Canada's gas
station. That's a very important part of our identity,
our marketing, and our brand equity.
The resources in which we will be investing more than $1
billion a year over the next few years
are very much Canadian. They are located in
Canada, whether we're talking about the east coast
offshore, the Mackenzie Valley, or the conventional
oil patch in western Canada, B.C. and
So I would echo the statements of the minister about a
more level playing field. We think these changes will
enhance our ability to position ourselves as a Canadian
flagship participant in the oil and gas industry.
I'd be happy to answer any questions.
The Chair: Thank you, Mr. McCaskill.
Mr. Gary Chad, you have a couple of minutes to give an
Mr. Gary Chad (Senior Vice-President, Law,
Regulatory Affairs and Corporate Secretary, Cameco):
Thank you, Madam Chair and members of the committee.
I'd like to pass on the regrets of our CEO, Bernard
Michel, who intended to be here and had organized
his schedule to be here, he thought last week, but the
scheduling for this week did not allow him to be here.
This is an important piece of legislation for Cameco
Corporation too, and it has the complete support of the
company. Cameco is asking for these modest amendments
to its foreign ownership restrictions to enhance our
competitive position as well. We are a Canadian
company, and by virtue of this act, as it's been stated
here today, we must retain our registered and head
office operations in Saskatchewan.
Our current individual non-resident ownership
restriction is a handicap to Cameco's business
strategy, which is to dominate the world's uranium
industry. Increasing the percentage from 5% to 15%
gives us flexibility to issue equity in assets
acquisitions. The share currency we have for this type
of deal would increase from a value of approximately
$85 million at today's share prices to approximately
$250 million, and that's the type of currency we would
need to enter into these types of acquisitions. It's a
significant disability today, at a time when our
industry is undergoing consolidation internationally.
Cameco wishes to take advantage of that consolidation
to improve our position.
The second reason is again flexibility and the ability
to finance and raise capital more easily through
private placements. These restrictions would ease our
ability to do that as well. It should increase the
demand for our shares in the large U.S. market. Any
increase in demand for our shares should transfer into
higher share prices, and that would be beneficial to
Cameco's Canadian shareholders, many of whom are
investment and pension funds. Cameco remains a strong
Canadian company with a desire to maintain its strong
competitive position, and it is dedicated to protection
of the environment and responsible management.
Those are my remarks, Madam Chair.
The Chair: Thank you very much.
Mr. Robert McCaskill: Madam Chair, Mr. Godfrey had
a question earlier this morning that I may be able to
be helpful on. It had to do with the ability of
companies in combination acquiring Petro-Canada, each
owning a percentage, and I'd be happy to—
The Chair: He's actually due for a question in a
few minutes—but did you want him to go ahead?
Mr. David Chatters: It doesn't matter.
Mr. Robert McCaskill: We could do this off the
record here or—
Mr. David Chatters: Go ahead.
Mr. Robert McCaskill: I would just observe that
the proposed change limits individual ownership to 20%
for any one person together with the associates of that
person, and the Petro-Canada Public Participation Act
defined associates for the purpose of that provision.
I'll refer to subsection 9(5), which says:
for the purposes of this section, a person is an
associate of another person if...
Then we have paragraphs 9(5)(a) to (h) giving
different categories, including the case where one
corporation is controlled by another corporation, and
things like that. But the part I would draw your
attention to is paragraph 9(5)(g), which says a person
is an associate of another person if
both, in the reasonable opinion of the directors
of Petro-Canada, are parties to an agreement or
arrangement a purpose of which is to require them to
act in concert with respect to their interests, direct
or indirect, in Petro-Canada or are otherwise acting in
concert with respect to those interests;
So it's quite a broad definition as to whether or not
two or more companies could be attempting to acquire
the company as a group. I thought that might be
helpful to you.
Mr. John Godfrey: Thank you.
The Chair: Mr. Chatters.
Mr. David Chatters: Thank you, Madam Chair.
We seem to be deteriorating somewhat into an
ideological discussion here this morning, and we are
supporting this bill on an ideological basis because we
like the direction it's going. It appears that others
may be supporting it because the whip says they have
I'd like to pursue that angle just a little more.
You've explained why this bill is good for Petro-Canada
and Cameco. I'd like you to go a step further and
explain to us why the direction we're going—and I
assume at some point that is to privatize Petro-Canada,
as we already have Cameco—is in the Canadian public
interest? How does that serve the public in this
better than Petro-Canada remaining a crown
corporation—or for Cameco the same? I'd like to hear
your opinion on that.
The Chair: Mr. McCaskill.
Mr. Robert McCaskill: I'm not here as an expert
on the public interest. I'm here as an officer of a
company who cares very much about ensuring that our
company performs at its best.
We are committed to value-based management. We are
committed to obtaining the best future for our company
and its shareholders. And it is on that basis we
believe that if we are going to be successful, we need
to have the flexibility to grow, to reduce our unit
costs, so that we're competitive, to give us the kind
of size that will enable us to participate in projects
that are extremely capital-intensive, in which
companies like Petro-Canada would not be welcomed as
joint venture partners if we did not have the strength
and size to make our other partners confident we could
carry our share in those projects.
Making our company stronger, I believe, will result in
a higher rate of exploitation of our resources in this
country, and it will increase the supplies of oil and
gas available to Canadians, and indeed for export to
the benefit of Canadians. We have not had for many
years a particular mandate focused on the public
interest. It's about building a strong and effective
company, and we happen to believe that is in the public
Mr. David Chatters: I'm a little disappointed with
the answer, but it went some way. You have to
recognize that all of us around this table are seized
of nothing but the public interest.
Mr. Robert McCaskill: Absolutely.
Mr. David Chatters: So we essentially couldn't
give a hoot about Petro-Canada and its interests—we
are the opposite from you. But you have to bring the
two together at some point for us to support this bill
and the direction it's going. I think you went there to
some degree at the end. I recognize your reluctance to
go down the public interest road, but I think the story
of Petro-Canada, from its creation under the National
Energy Program and then its move toward privatization,
happened for a
reason. That was more or less where I was going with that
one, but I nonetheless accept the answer you gave.
Thank you very much. Thank you, Madam Chair.
The Chair: Mr. Godfrey, did you want to add to
your previous question?
Mr. John Godfrey: Yes. I want to return to the
nexus between ownership and capital markets, which I now
understand more clearly, thanks to the minister.
My question has two parts. First of all, you present
this notion that you're competing with one hand tied
behind your back because of these ownership
restrictions. However, can you think of any of your
international competitors, such as BP, Petrofina,
Total, Royal Dutch Shell, or the Italian national
oil company, that have a formal provision that stipulates
25% ownership? Or is that through the effective use of
rules and the way they have set themselves up, they are
dominated through ownership either by the government or
by nationals of that country? Can you think of any?
That's my first question.
Secondly, if you can think of some examples,
how has that restricted their ability to raise capital
in foreign markets? If it hasn't, what is it about us
that makes this necessary? What's the difference?
So to repeat the first question, can you think of
some country where there are some ownership
restrictions? Secondly, how has this restricted their
ability to raise capital internationally?
The Chair: Mr. McCaskill.
Mr. Robert McCaskill: First of all, let me be
clear as to the fact that the restrictions that apply
to us are very real and have very practical
implications. We have experienced them. For example,
if we wanted to acquire an international company and we
said to their shareholders that we would give them
shares in Petro-Canada in exchange for this company,
then we would have a couple of things to worry about.
One is that this acquisition, if it's of any size—and
if it isn't of size, it's probably not a strategic
transaction, so we would want it to be of size—would
put us over the 25% foreign ownership limit, so our
ability to make a transaction like that is limited.
Now, there is nothing like that I am aware of that
obtains for the major multinationals. It's not for me
to comment on their affairs, but when I think about the
kinds of restrictions they have, one thing is very
clear. As a general rule these companies are so big
and so powerful—indeed, larger than most national
economies in the world—that the ability of any
government to restrain them has not been evident over
the past few years. Even with antitrust legislation in
North America and Europe, these huge combinations are
going ahead, and that makes them formidable competitors
for us. Indeed, we are competing with them to some
degree in accessing the land and the opportunities here
I could give you other practical examples. Even in
Canada, if we were to combine with another company that
had a significant individual shareholder—not a person
but a major institution, say—our decision to buy a
company like that using our shares could have the
result that this individual shareholder would float up
above the 10% restriction.
The fact that we have these restrictions—and people
become aware of these restrictions as soon as we start
talking to them—chills interest in making transactions
with us. Foreign owners don't particularly want what
we use as currency, our shares, as payment for their
companies because our shares come burdened with both
the ceiling on foreign ownership and the ceiling on
individual ownership. That's a complication that is
not attractive to people who have alternatives, nor is
it attractive to the capital markets, who would rather
have plain vanilla shares without any complications
attached to them.
Mr. John Godfrey: Let me just say that I find this
extremely helpful. What I guess it means is that this
still limits your ability to swap shares because you
can never go above 20%. It limits the size of any
potential deal you might want to make.
Mr. Robert McCaskill: It depends on the ownership
of the company we are dealing with. If it's a big
company with a large-percentage shareholder, then yes
indeed, that can fetter us. Raising the limit from 10%
to 20% would double the opportunities that may arise
in the future.
Mr. John Godfrey: Thanks a lot.
The Chair: Thank you.
Mr. Serge Cardin: Thank you, Madam Chair. My question is to
You said at the beginning that you agreed 100 per cent with
the bill. One clause of the bill stipulates that at shareholders'
meetings non-residents' votes are to be limited to 25 per cent. No
doubt you agree with that. What is the point of that? How does that
I should tell you immediately that I am going to ask
Mr. McCaskill the same question. I am going to ask him why he is in
favour of removing the 25 per cent limit.
The Chair: Mr. Chad.
Mr. Gary Chad: We think that limiting foreign
ownership in uranium exploitation assists us because
there are other policies of the Canadian government
that assist Cameco and depend on limitation. In terms
of foreign investment, there's a policy on ownership of
uranium mines that states before a uranium mine can go
into production it has to be 51% Canadian-controlled.
As a result, we have to keep an eye on the percentage
of foreign investment in Cameco to make sure we are in
compliance with that policy.
We support those sorts of protections for Canadian
industry because the uranium industry worldwide isn't
necessarily a level playing field. There are markets
we can't get into in other countries because of
government ownership of all the assets, so we like the
support of the Canadian government. Therefore, limiting
foreign ownership is consistent with the interests of
The Chair: Did you also want Mr. McCaskill to answer
Mr. Serge Cardin: Yes.
The Chair: Mr. McCaskill?
Mr. Robert McCaskill: The effect of the
legislation, as the minister said earlier, is going to
be that we will not be keeping track of who shows up
and where the votes come from at our annual meeting as
we have done in the past.
I would, though, try to characterize one aspect of the
nature of the people and institutions who choose to
invest in Petro-Canada. Whether they are life
insurance companies, pension funds, or individual
investors, they are interested in share appreciation,
dividends, and the success of the company.
When we have had issues we have taken to our
shareholder meeting—as has happened in the past, and
we have consulted with some of the major investors in
the company—their preoccupation has inevitably been
whether this was good for Petro-Canada. They asked, is
this going to make the company stronger and more
valuable and thereby enhance the value of the shares
I have in it? That is their bias, and they do not
have any kind of national or political agenda attached
So we would expect that we will continue to have
representation at our shareholders meetings by parties
who are interested in the well-being of Petro-Canada
and that will be reflected in the kinds of decisions
that are made at shareholders meetings. I hope that's
responsive to your question.
The Chair: Thank you.
I don't have anyone else on
the witness list wanting to ask questions, and I'm
sorry I didn't give an opportunity to Mr. Andras. If
that's all right with you, then we'll excuse the
Thank you very much for the question and
answer session. I'd like to give the committee members
an opportunity to discuss future business if they would
so like. Thank you.
I'd like to ask the committee members if they
would like to discuss this in camera. Mr. Serré.
Mr. Benoît Serré: I don't think we need to go in
I would like to suggest that at the next meeting on
Thursday we go clause by clause on Bill C-3. I would
make the suggestion.... I know we cannot force anyone
to do this, but just for the good conduct of the
committee, if members of the opposition have amendments
they would like to bring to this bill and for that
matter any other bill in the future, I would really
appreciate it if you would provide us with a copy of
the amendments 24 hours ahead of time. I think that
would serve two purposes.
First of all, it would give us time to respond. It
would accelerate the clause-by-clause study of the
bill. It also might—there's a remote chance—give us an
opportunity to approve and support the amendments.
Sometimes we turn down an amendment because we're not
sure what the legal implications are, or what it could
mean to the bill itself, so if we have the amendment 24
hours ahead of time, we could pass it to legal counsel
and maybe be able to support some amendments that
otherwise we might have to defeat.
The Chair: I would like to add to this that I
think it would also give an opportunity to get the
translation done if the person submitting it has not
already had it translated.
Mr. Chatters, you have something to add?
Mr. David Chatters: I would suggest that we
would be open to cooperating on that, as long as the
committee and the parliamentary secretary provide the
flexibility in timing on the clause-by-clause. It
allows us time to present the amendment that far ahead
of time. This bill is a bit unique, because we are
supporting it. We are not proposing amendments, but if
we were proposing amendments, coming out of hearing
what the witnesses had said today, it would be
difficult to meet that deadline and do clause-by-clause
on Thursday. So we need some flexibility there as
The Chair: So the general consensus is that
we will do clause-by-clause Thursday at 11 a.m.
Since we don't have any bills before us after these
two, as far as I understand, I would like to get some
direction from the committee as to what future business
they would like to see the committee handle. Mr.
Mr. Maurice Vellacott: I had my motion before the
committee, and I'm sure that everybody has received
copies in French and English. In the motion I
need to change “minister” to the plural. Jim and I had a
bit of discussion on that, and I realized his point
there. I'm moving that the “ministers” appear before
the committee at the earliest possible time to discuss
the estimates. My understanding is it's some time
before the end of May that it has to be recorded. Is
it the end of May?
The Chair: My understanding was that part III of
the estimates would be available after March 31. Are
you talking about both ministers?
Mr. Maurice Vellacott: Yes, I would be at this
point. So I guess I'm making that a change by
consensus, if that's not a problem. The motion
submitted earlier was in time, so it's been in
everybody's possession for a while, but it would be the
aboriginal affairs minister and also the natural
The Chair: When those estimates are available, I
don't think the ministers have any problem with
appearing before the committee.
Mr. Maurice Vellacott: So we have only until May
31, is that correct then, to have the minister appear?
That's my understanding.
The Chair: Yes, Mr. Vellacott.
Mr. Maurice Vellacott: So do I need to put that in
as a clause in here, or are we all just operating under
the assumption that it would be before May 31?
The Chair: I think there's consensus to go ahead
Mr. John Godfrey: One supportive comment might be
that what we might want to do when we get part III of
the estimates—and I don't mean to restrict
anybody's ability—is to agree beforehand to zero in on
one or two programs or areas where we can be more
effective if we do some research rather than us
just.... But I don't want to put that restriction in
until we see part III of the estimates. We may decide
to zero in on collectively one or two points and see
what we can get out of them.
The Chair: Point taken.
Mr. Maurice Vellacott: Is that a motion for a
vote today or at this point?
The Chair: Did the members want to have a copy of
that before they vote on it?
Mr. Maurice Vellacott: They have it, I think—not
the part III, but they have a copy of the motion, I think.
The Chair: Would you like the motion read out?
Mr. Benoît Serré: Please.
The Chair: You made an amendment you added—-
Mr. Maurice Vellacott: I moved that the
ministers, plural, appear before the committee at the earliest
possible time to discuss the estimates, and it was
translated into French. It was actually moved back on
February 27, so it's been some weeks now. I believe
everybody has a copy of that. I wanted, by the
consent of the committee, to have it plural so both
ministers appear at the earliest possible time.
The Chair: I think the amendment to that also was
once we've received part III of the estimates.
Mr. Maurice Vellacott: Which is to come within a
week or two, isn't it? That should be coming to us
within about a week. Is that correct, a week, or a week
and a half?
Mr. John Godfrey: Is that when we think part III
Mr. Maurice Vellacott: I believe.
Mr. John Godfrey: Why don't you just put after
the receipt of part III of the estimates?
The Chair: After March 31.
Mr. Maurice Vellacott: Okay, after receipt, and I
assume prior to May 31, because we have to report back.
The Chair: Do the committee members want the
amended motion read, or do we have a consensus?
Mr. John Finlay: I think we probably have a
consensus, Madam Chair. I spoke with the
Minister of Indian Affairs and Northern Development,
and he said he'd be delighted to appear once the
estimates are here. The date would have to be arranged.
That is, there are other priorities.
The Chair: My understanding now is that we've
all agreed that we will request both ministers to come
after we've received part III of the estimates and that
he should appear before May 31. Agreed?
Some hon. members: Agreed.
The Chair: I also have information before me that
there is government legislation coming before the
summer break on the Kanesatake Band governance
agreement. It's being introduced in the Senate this
week. So I want the committee to be aware that this
legislation will be coming forward.
Mr. Serré, Mr. Finlay, did you want to add anything
Mr. Benoît Serré: Could you repeat what's coming
from the Senate?
The Chair: Mr. Serré, I understand that something
on the Kanesatake Band governance agreement is being
introduced in the Senate this week. I wondered
if Mr. Finlay had anything to add to that one.
Mr. John Finlay: I think it's going to the
Senate because they don't have work to do and they want
something to do, whereas I guess we have something to
do. It was originally thought that I would present it
to the House this morning. However, that was withdrawn.
It's going to go to the Senate first, and then we'll
The Chair: Okay. So that's another item that will
Mr. Maurice Vellacott: The honourable member says
he has some knitting he can send over there.
The Chair: No comment on that.
Is there anything else that the members want to
bring forward? I know Mr. St-Julien had talked about
housing. Did you want to have the steering committee
meet next week?
I know we've been having trouble getting the steering
committee together. I want to give the members a
little bit of warning that we might want to meet
Thursday, after clause-by-clause. I don't anticipate
that clause-by-clause will take up much time, and we'll
meet to discuss future business in more detail.
Mr. David Chatters: I would like to ask the
parliamentary secretary to the Minister of Indian
Affairs and Northern Development, in discussions with
the minister recently, he suggested that he was
bringing a major piece of legislation to the committee
that would occupy our time for some months to come. I
wonder when that would happen. There's no use planning
other studies on housing or anything else if we're
going to be seized with this responsibility.
Mr. John Finlay: I'll undertake to
find that out.
I think you're right. I've heard of it also. However,
the one this morning was here and then gone, and there
must be some reason for that.
Mr. David Chatters: Okay.
Mr. John Finlay: I'll find out.
The Chair: Mr. Godfrey.
Mr. John Godfrey: What would be useful would be to
find out from the minister the total package over a
certain period of time, including things that might go
to the Senate or any other part of the system, because
we want to get a notion of the total policy regime.
The Chair: Okay. What we'll try to do before the
steering committee on Thursday is get some definite
ideas on the timing of the legislation that we think
will be coming from the Minister of Indian Affairs and
Mr. Benoît Serré: I have a comment on future
First of all, if we go into native housing, I think we
should be careful not to reinvent the wheel. As you
are well aware, there have
been many committees on that subject, and we
should be very focused and look for concrete solutions
instead of studying it from A to Z again.
On the future business and bills coming out of the
different departments, it is my experience that it's
pretty difficult for a minister. There are general
guidelines as to bills that might be coming up, but
these things have a tendency to change priority as they
work through cabinet, and sometimes they are postponed.
So on Thursday I don't think you should expect to have
a definite timeframe from either one of the ministers,
but I know down the line there will be another bill
coming out from our department. It could be as soon as
a couple of months, or it could be next fall. I don't
It's pretty difficult, and I think we should at least
tentatively schedule some other business for the
committee, with the willingness that if
there's a bill that comes before the committee that's
important, it should take priority.
The Chair: As a point of clarification, at the
beginning of our committee meetings we also said that
if we had some time, there were issues that you wanted
to understand and on which you wanted briefings
available. We might want to take advantage of those
opportunities where we might find a Tuesday or a
Thursday available, and if there was some area on which
you wished to have a briefing, then I would suggest
that this is the time to bring that request forward so
that the clerk and the researchers could have ample
time to make sure those people are available.
Mr. Maurice Vellacott: I would have one
suggestion, whether or not it's brought forward in the
way of a formal motion, on a letter that our clerk
received from first nations veterans respecting their
wanting to appear before the committee. I think it
would be very good for us to receive a briefing on
veterans affairs prior
to setting up for them to come in, or at the same time as
we have witnesses.
I guess it would be veterans affairs. It would really
be two departments here. It's aboriginal and veterans
affairs. I guess they'd have to merge and bring
witnesses from both departments on this. That would be
Is there a possibility to entertain having these
individuals: Perry Bellegarde and Larry Whiteduck?
The veterans' coordinator writes the letter.
Are we going to have them come forward, or is there
some openness to that?
The Chair: Mr. Godfrey.
Mr. John Godfrey: I think it's really important
not to preclude the possibility of those folks
appearing, but given the limited amount of time we
have, that we use it as strategically as possible.
Undoubtedly if we were driven by, as it were, the
demand side, people who wish to come forward with
specific things, we could be quite busy the whole time,
but it would not add up to a major piece of work; it
would be a series of meetings.
Before we issue invitations to folks, one of the
things we might want to think about on Thursday at the
steering committee is the broad strategic issues for
both departments, whether it's climate change and
alternative fuels, and that whole file, for example, or
whether it's housing, or governance, or whatever
else—just the big issues, never mind legislation and
all that sort of stuff. We'd figure out, first,
will there be pieces of legislation that will be
dealing with these things so we'll have a chance to
discuss them? In that case, we can take those off the
table because that's going to happen anyway.
If it looks like there may not be an appropriate forum
caused by legislation, maybe what we can do is use some
of these spots that are available and take an hour or
two to have a general review of whatever these broad
strategic things are before we commit to undertaking a
major study, because after that we'll have a better
sense of whether there's a real job to be done, whether
this is a good time because we can add value because
people are thinking about it, or whether it's
interesting but we should move on.
So my thought would be to take advantage in the early
days of those first sessions to look at some of these
very big issues. If we keep our
eye on the big picture....
Reacting to the veterans affairs piece, my difficulty
is that it's interesting, but it's not central to the
major problems. As well, there are other venues for
it to be discussed in.
The Chair: Mr. Chatters.
Mr. David Chatters: I would support what Mr.
Godfrey is saying. I would appreciate briefings by the
department, both on the climate change file since the
collapse of the talks and what's happening in that, and
also on this concept of a continental energy
policy and what that actually means.
Mr. John Godfrey: Those would be huge.
Mr. David Chatters: If we have some time before
we're seized with this major Indian affairs issue that
seems to be coming down the pipeline, those would be
areas I would be interested in, from my natural
The Chair: Mr. Comartin.
Mr. Joe Comartin: I'd like to echo that with
regard to climate change and the whole issue of that
continental policy, but if we're going to get a
briefing, I would like some specific information on
where we're at in terms of the development of the tar
sands, and some perspective on what it would involve,
even though this is international, in terms of the
Americans developing those oil resources in Alaska.
The Chair: I would then invite the members, if
they have any others that were not discussed today, to
make sure they bring their ideas on Thursday. We will
go clause by clause on Thursday at 11 a.m., which I
don't expect will take too long, and then we'll get
into a more thorough discussion as to how we're going
to do our work outline.
Thank you. The meeting is adjourned to the call of