Panel Report

...a lot of money comes out of our land and doesn't come to us but it goes in the south.

E. Adam, Elder, Fond du Lac First Nation, Transcript of Midwest Public Hearings, Fond du Lac, Saskatchewan, June 6, 1996, p. 62.

5.1 Royalties, Fees and Taxes

The primary benefits of the Midwest Project to the people of Canada, and of Saskatchewan in particular, would be from the royalties and taxes paid to governments. The other major benefits -- increased employment and business opportunities -- would accrue more locally. In the absence of such direct benefits, it would be difficult to justify the environmental damage and long-term risks that accompany this project.

For the Midwest Project, Cogema has estimated that the basic royalties [Basic royalties, at a rate of 5 per cent of sales, are reduced by a 1 per cent Saskatchewan Resource Credit to give a net rate of 4 per cent on sales.] payable to the province of Saskatchewan would be from $25.3- to $40.5-million, while the Corporate Capital Taxes, also payable to the province, have been estimated to be between $25.1- and $38.8-million. [The Midwest Project Environmental Impact Statement, Supplementary Information, Cogema Resources Inc., May, 1996, pp. 1-5.] Provincial sales taxes (at 9 per cent) on a wide range of goods and services would provide approximately $22.5-million [With the new sales tax rate of 7 per cent, the amount would be approximately $17.5-million.] and surface lease fees would be approximately $2.4-million. The province, therefore, could realize from $75- to $100-million in royalties, fees and taxes over the lifetime of the project. These projections would rise if favourable market conditions were to increase the profitability of the owner companies sufficiently to trigger the payment of graduated royalties. [Graduated royalties, calculated on the basis of operating profit as a percentage of capital investment, are collected only when the operating profit exceeds 15 per cent of the capital investment. For details, see: Final Report, Saskatchewan Environment and Resource Management, May, 1996, Section 2, pp. 74-75.]

In addition, it is estimated that municipal and business taxes amounting to approximately $800,000 would be paid into the Northern Revenue Sharing Trust Account [The Northern Revenue Sharing Trust Account collects school and municipal property taxes on behalf of all but the northern towns and villages and remits these revenues to school boards or hamlets for their use and control. See Final Report, Saskatchewan Environment and Resource Management, May, 1996, Section 2, p. 81.] and that the province would receive about $10.2-million from payroll taxes.¹ [0 The Midwest Project Environmental Impact Statement, Supplementary Information, Cogema Resources Inc., May, 1996, Table 1.1, p. 1-5.]

It is more difficult to predict the income of the federal government from this project because Corporate Income Taxes would be paid by the owner companies on their overall profits from this and other projects. However, it is estimated that the Government of Canada would receive about $2.6-million in the form of Large Corporations Tax and $27.2-million from payroll taxes.¹ [1 Ibid.]

The Midwest Project would also pay an estimated $3.9-million for regulatory services provided by the Atomic Energy Control Board.¹ [2 Ibid.] However, this amount, based on cost recovery, would not contribute any net benefit to the public treasury.

In summary, it therefore appears that the Midwest Project has the potential for providing substantial net benefits to the two levels of government. If the estimates prove to be correct, the additional public income due to this project could range from $115- to $145-million.¹ [3 Ibid.]

5.2 Employment and Business Opportunities

The Uranium mining in northern Saskatchewan has had a major impact on the success of the Prince Albert Development Corporation, and the Corporation fully supports the efforts of Comega Resources in relation to the Midwest mine project.

T. Ives, Prince Albert Development Corporation, Transcript of Midwest Public Hearings, Saskatoon, Saskatchewan, May 31, 1996, p. 35.

Employment and business opportunities have a direct impact on the local communities from which the employees and contractors come. During public hearings in northern Saskatchewan, it was evident that employment for northern residents is an issue of almost universal interest. Cogema indicated that the Midwest Project would provide a total of approximately 300 person-years of work¹ [4 Ibid, Section 3, Attachment A, Table 1.] during the development of the mine and the construction of surface facilities. At full production, work would be provided for 122 employees over a six-year period. Of these 122 workers, it is estimated that 77 would be transfers from McClean Lake and that the remaining 45 would be new hires.¹ [5 The Midwest Project Environmental Impact Statement, Supplementary Information, Cogema Resources Inc., May, 1996, Section 3, Table 1, p. 2.]

Midwest is really an extension of the McClean Lake project and, in essence, extends the benefits of McClean Lake for an additional six years.

D. Martz, InterGroup Consultants, Transcript of Midwest Public Hearings, Saskatoon, Saskatchewan, May 29, 1996, p. 28.

During the hearings, Cogema made a commitment to maximize the employment of northern people, with priority to be given to residents of the Athabasca region. The total salaries and benefits are estimated to be about $100-million, with $16-million going to Athabasca residents and $24-million to other residents of Northern Saskatchewan.¹ [6 A. Marvy, Transcript of Midwest Public Hearings, Saskatoon, Saskatchewan, May 27, 1996, p. 9.]

As members of the Fond du Lac First Nation have been identified as living in one of the primary impact communities our people expect to receive first priority ... with respect to available jobs, training and business that will necessarily come with the Midwest development.

C. Isadore, Chief, Fond du Lac First Nation, Transcript of Midwest Public Hearings, Fond du Lac, Saskatchewan, June 6, 1996, p. 10.

In addition to direct employment, there would be an opportunity for businesses to provide a wide range of goods and services. The amount to be spent on the purchase of goods and services in the north is estimated to be $30- to 45-million, or about 15 per cent of the total expected expenditures. Although this is a substantial amount, efforts should be made by Cogema to increase the business it does with northern companies. As northern business expertise increases, it would not be unreasonable to establish a goal of obtaining at least 35 per cent of all required goods and services from northern companies.

The targets for northern employment in these projects are established by the human resource development agreements which are part of the surface lease agreements signed between the mining companies and the province. During the hearings, a former personnel officer from Cogema's mine at Cluff Lake reported that the target of 50 per cent northern employees was initially considered to be an almost impossible goal to achieve.¹ [7 C. Gitzel, Transcript of Midwest Public Hearings, Saskatoon, Saskatchewan, June 15, 1996, p. 32.] Despite this, the company accepted the challenge and it was not too long before its workforce was over 50 per cent northerners, a situation which still persists. In fact, the current workforce at Cluff Lake is close to 60 per cent northerners. In recent times, however, the population of northern Saskatchewan has increased and the level of education is improving because of new high schools in several communities and the introduction of initiatives such as the Multi-Party Training Plan. [The Multi-Party Training Plan is described in The Government's Position on Proposed Uranium Mining Developments in Northern Saskatchewan, Government of Saskatchewan, December, 1993, p. 31.] With an increase in educational levels and an increase in the available labour force, it is appropriate to expect a corresponding increase in the participation of northerners, both as employees and as providers of goods and services. The panel is of the opinion that the target for northern participation expressed in the human resources development agreement for the Midwest Project should be 67 per cent and that this requirement should also apply to all contractors.

And the trades that we identified, all of our apprenticeship training, will be offered first to Northerners.

L. Bear, Comega Resources, Transcript of Midwest Public Hearings, Saskatoon, Saskatchewan, May 29, 1996, p. 33.

There are at least two reasons to believe that a goal of 67 per cent northern participation is attainable for the Midwest Project:

• since mine development will not begin until the year 2000, there is ample time to provide training for prospective employees; and
• the President of Cogema Resources Inc. reported that one of its parent company's mines in Niger has a workforce consisting of almost 100 per cent local people. [M. Poissonnet, Transcript of Midwest Public Hearings, Saskatoon, Saskatchewan, May 29, 1996, p. 54.] If it can be done in Niger, it should also be possible to do it in Saskatchewan.

So, whether the threshold is officially increased or not we will try - we will always try to do better. Now, if there were officially a threshold of 60, 75 (%), whatever, we would not necessarily be able to achieve that or it may take some time.

M. Poissonnet, President, Comega Resources, Transcript of Midwest Public Hearings, Fond du Lac, Saskatchewan, June 6, 1996. p. 86.

During hearings in the Athabasca Region, concerns were expressed about the way in which some employees had been dismissed from their jobs. For example, in one case, it was alleged that an aboriginal worker had been fired for a particular offence, while a non-aboriginal worker had been given only a warning for a similar offence. It is not the panel's function to serve as arbitrator for individual grievances, but it is apparent that northern participation in the workforce is more likely to increase if potential employees believe that they will be treated fairly and not experience discrimination in the workplace.

In one community, an elder noted that most of the people from the Athabasca Basin are Catholics, but that no recognition is given to their wish to observe Sunday as a day of rest. [L. Benoanie, Elder, Hatchet Lake Band, Transcript of Midwest Public Hearings, Wollaston Lake, Saskatchewan, June 8, 1996, p. 66.] While the seven-day-in, seven-day-out schedule might not allow much flexibility for religious practices, employers should be sensitive to the religious and cultural customs of their employees. Attempts should be made to decrease, whenever possible, workplace conflicts with personal religious or cultural practices.

We have noted with approval that Cogema has begun to employ counsellors from the northern communities who can speak aboriginal languages and who are familiar with northern culture. We also are of the opinion that all employees, including contractors, should be given cross-cultural sensitivity training at fairly frequent intervals.

Counselling is provided in family problems, money management, drug and alcohol counselling, court appearances, education pursuits, job-related matters, absenteeism, career focusing, staffing action.

J. Whitehawk, Comega Resources Inc., Transcript of Midwest Public Hearings, Saskatoon, Saskatchewan, May 29, 1996, p. 19.

5.3 Benefits to Northern Saskatchewan

During public hearings in both the northern and the southern parts of the province, many presenters commented on the potential benefits of this project to the people of northern Saskatchewan. There seemed to be universal consensus that the project, if approved, should bring some special benefits to the people of northern Saskatchewan. It was clear that many presenters meant that these benefits should go beyond enhanced employment and business opportunities.

It has been said that in our treaties we gave up our ownership right to a larger portion of our land, but we did not give up either our right to govern ourselves or the right to make our living from the resources that the land can provide.

C. Isadore, Chief, Fond du Lac First Nation, Transcript of Midwest Public Hearings, Fond du Lac, Saskatchewan, June 6, 1996, p. 9

In response to our report on the McArthur River Project, released in February, 1997, the Premier of Saskatchewan and six provincial cabinet ministers met with northern leaders on May 12, 1997, to initiate a discussion of revenue sharing and other related issues. [Government and northern leaders meet to discuss issues, News Release, Executive Council, Government of Saskatchewan, May 12, 1997.] Following this initial meeting, the Provincial Minister of Intergovernmental and Aboriginal Affairs, the Minister of Indian and Northern Affairs Canada, and the Chief of the Federation of Saskatchewan Indian Nations signed a tripartite Fiscal Table agreement on August 5, 1997. The purpose of this agreement is to negotiate arrangements on several related financial issues including off-loading, taxation, self-government financing and revenue sharing.

The Province sees this dialogue with northern leaders process as leading to a northern strategy that fully reflects the social and economic priorities of northern people.

T. Penikett, Province of Saskatchewan, Transcript of Supplementary Public Hearings for Midwest and Cigar Lake, La Ronge, Saskatchewan, August 28, 1997, p. 93.

We realize that these discussions will be complicated by the several levels of government involved and by the variety of interrelated issues that will require attention. Despite these complexities, two facts are clear: the region contains mineral deposits that are capable of producing great wealth; and the people of the region are living in impoverished conditions. This dichotomy must be resolved by governments acting together. There is a need for the federal and provincial governments, in cooperation with leaders from the northern communities, to jointly develop a program of revenue sharing, which would ensure that economic benefits derived from the uranium mines are used to improve the lot of northern people.

We are pleased to note the progress that has been made by the Province of Saskatchewan to develop a Northern Strategy, which is intended to reflect the social and economic priorities of northern people. This initiative, along with the previously mentioned Fiscal Table negotiations, should be encouraged and brought to fruition as quickly as possible. [T. Penikett, Submission of the Government of Saskatchewan to the Federal-Provincial Review Panel on Proposed Cigar Lake and Midwest Uranium Mine Developments, La Ronge, Saskatchewan, August 28, 1997.] Many northerners expressed the opinion that no more uranium ore should be removed from the region until programs such as these have been implemented. We are in substantial agreement with this sentiment.

5.4 Conclusions and Recommendations

It is estimated that the Midwest Project will produce additional public income in the form of taxes and royalties of $115- to $145-million. The development phase of the project would provide approximately 300 person years of work. At full production, the project would require 122 employees over a six-year period. In addition to direct employment, there will be an opportunity for businesses to provide a substantial range of goods and services.

It is recommended that the target for northern participation in the workforce for this project, if it is approved, be set at 67 per cent, and that a goal of obtaining at least 35 per cent of all goods and services from northern companies be established.

It is also recommended that the federal and provincial governments, in conjunction with representatives of the northern people, develop an economic strategy for the north to ensure that the people of northern Saskatchewan, and of the Athabasca Basin in particular, are major beneficiaries of this project. Agreement on the strategy should be in place before the resource is further depleted.