STANDING COMMITTEE ON ABORIGINAL AFFAIRS, NORTHERN DEVELOPMENT AND NATURAL RESOURCES

COMITÉ PERMANENT DES AFFAIRES AUTOCHTONES, DU DÉVELOPPEMENT DU GRAND NORD ET DES RESSOURCES NATURELLES

EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, March 20, 2001

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[English]

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 Participation Act.

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 global marketplace.

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.

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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 20%. The 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.

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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 field.

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 controlled.

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 forward here.

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 fall.

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 do that.

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 ago?

Mr. Ralph Goodale: Mr. Chatters, first of all, thank you for your indication of at least support in principle.

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 management.

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 maximized.

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So the 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 Canada.

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 here.

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, Natural 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 prevent that.

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 is correct.

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 national champion.

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 oil company headquartered in those countries. In effect, that's also the situation in the United States.

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If 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 away.

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 to apply.

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.

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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 have ownership 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 referred to.

Mr. John Godfrey: How does ownership and—

The Chair: Excuse me, John, but you're over our time limit here.

Mr. Cardin.

[Translation]

Mr. Serge Cardin (Sherbrooke, BQ): Madam Chair, Mr. Minister, good morning.

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 des affaires.

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 significant problems.

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 situation?

[English]

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 be pursued.

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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.

[Translation]

Mr. Serge Cardin: Do I still have some time left?

[English]

The Chair: You have one minute, actually.

[Translation]

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?

[English]

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 Canadians.

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 companies.

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 or foreign.

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.

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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 shareholder.

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 same questions.

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 place?

Mr. Ralph Goodale: Yes.

Mr. Joe Comartin: Those are all my questions, Madam Chair.

The Chair: Thank you. Mr. Keddy.

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Mr. Gerald Keddy (South Shore, PC): Thank you, Madam Chair.

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 uranium.

So I don't believe these amendments do what you suggest they do, and there's no intention to go beyond these amendments.

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.

I'm 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 ownership.

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 intention.

Mr. Gerald Keddy: Okay. Thank you.

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The Chair: Mr. Minister, are you going to get someone to clarify that or are you going to get back to us?

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 committee.

The Chair: Thank you.

Monsieur Serré has something to add.

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 and forth.

Mr. St-Julien, please.

[Translation]

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 Commons.

Mr. Minister, what is the value in Canadian dollars of 18 per cent of Petro-Canada?

[English]

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.

[Translation]

Mr. Guy St-Julien: Thank you.

[English]

Mr. Ralph Goodale: And I'm not speculating.

[Translation]

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 provincial taxes.

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 approach occasionally.

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[English]

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 approximated.

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 I'll conclude.

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 States.

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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.

Thank you.

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 Chair.

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 properly safeguarded.

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 corner.

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. Finlay.

Mr. Cardin.

[Translation]

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.

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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.

[English]

Mr. Ralph Goodale: I'm sorry, Mr. Cardin, but could you repeat the last part of your question for me?

The Chair: Mr. Cardin.

[Translation]

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 Canadians.

Dropping the 25 per cent limit gives greater foreign participation or control over a board's decisions.

[English]

Mr. Ralph Goodale: I'm still not sure I fully understand your point, Monsieur Cardin. It is proposed with respect to Petro-Canada that....

We're talking about Petro-Canada here, right? Or were you referring to Cameco? Because Mr. Keddy's point was about Cameco.

[Translation]

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.

[English]

Mr. Ralph Goodale: That's correct.

[Translation]

Mr. Serge Cardin: I see.

[English]

Mr. Ralph Goodale: Bill C-3 would make that change. That's correct.

[Translation]

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.

[English]

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 residents.

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.

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The Chair: Thank you, Mr. Minister.

We'll go to Mr. Godfrey for the last question to the minister.

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 legislation.

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.

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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. Minister.

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 Chairman.

Mr. John Godfrey: Do you mean in the future or right now?

The Chair: Right now.

I want to thank you very much, Mr. Minister, for coming before us again.

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 short break.

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• 1220

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 presentation first.

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 start.

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 20%.

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 well.

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 Alberta. 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.

• 1225

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 introductory statement.

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. McGaskill.

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.

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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 to.

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 interest.

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.

• 1235

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 in Canada.

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.

• 1240

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. Cardin?

[Translation]

Mr. Serge Cardin: Thank you, Madam Chair. My question is to Mr. Chad.

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 improve things?

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.

[English]

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 company.

The Chair: Did you also want Mr. McCaskill to answer the question?

[Translation]

Mr. Serge Cardin: Yes.

[English]

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 to that.

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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 witnesses.

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 camera.

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 well.

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. Vellacott.

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 resources minister.

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.

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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 with it.

Mr. Godfrey.

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 comes?

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. Finlay.

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 to that?

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 get it.

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The Chair: Okay. So that's another item that will be coming.

Mr. Vellacott.

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. Chatters.

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 Northern Development.

Mr. Serré.

Mr. Benoît Serré: I have a comment on future business.

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 know.

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. Vellacott.

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 one suggestion.

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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 resources perspective.

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 the chair.