House of Commons Debates
OFFICIAL REPORT (HANSARD)
Thursday, March 1, 2007
Debate on Bloc opposition motion:
That the House denounce the laisser-faire attitude of the government that prevailed in its negotiations with Boeing, regret the fact that Quebec did not get its fair share of the economic spin-offs of this contract given the significance of its aeronautics industry, nearly 60%, and call on the government to provide fair regional distribution of economic spin-offs for all future contracts.
Hon. Scott Brison (Kings—Hants, Lib.):
Mr. Speaker, I will be splitting my time with the hon. member for Bourassa.
I will focus my comments today on the industrial benefit side of this.
Canada has the fourth largest aerospace industry in the world. Our industry employs 107,000 people across Canada. The sector grosses $21.7 billion per year, providing a direct contribution of 1.85% to Canada's GDP. This sector contributes $1.1 billion every year to invest in research and development and it creates thousands of Canadian jobs.
It is important to recognize the importance of that research and development. The research and development jobs are the ones that generate the most economic benefit, that create the most sustainable aerospace industry and that contribute to Canada's competitiveness the greatest.
I agree that the government needs to provide fair regional distribution of economic spin-offs across Canada. I also agree that it is important for the government to fight to get the best possible industrial benefit from defence and aerospace and government procurement in general.
Canada has a vibrant aerospace and defence industrial complex and it is one that is dispersed across Canada. There is an extremely strong industry in Quebec. We have in Nova Scotia, for instance, a significant infrastructure of small and medium size firms with expertise in military, aviation, defence systems, electronic assemblies, firms like IMP Aerospace , xwave, as well as Pratt & Whitney Canada which is located in Nova Scotia, employing over 3,500 people with over $300 million in annual revenues.
In places like Newfoundland, to give an example, Peter Kiewit Sons Co. Ltd., PKS, in Marystown, Newfoundland, is a perfect example of a firm with the skills and expertise and is participating in a $2.1 billion procurement bid through the Department of National Defence.
I know something about defence procurement because when I was minister of public works we were directly involved in defence procurement, working with defence, working with the then minister of industry and now the Minister of International Trade, and we fought for strong industrial benefits for the Canadian industry.
I have to say that the present government has failed Canadians in not finding the best possible combination of industrial benefits for Canada when it negotiated this deal.
It was the Liberal government in the 2005 budget that made the single largest investment in the Canadian armed forces of almost $13 billion. It was the single largest investment in 20 years, spanning both the Liberal government and the previous Progressive Conservative government. It was during my time in public works that we were actually involved in implementing some of those investments.
During that time, we recognized the importance of in-service support. In-service support is the area that our aerospace industry and our defence industry have probably contributed most to the industrial sector and it is the area in which we probably do best across Canada. It is the area in which the government has failed Canadians the greatest in terms of the industry.
I want to talk a bit about why it is important. To provide the long term industrial benefit and in-service support, the government needed to negotiate up front with the original equipment manufacturer, Boeing in this case, to attain the intellectual property to allow our Canadian industry to participate in the service of these airplanes over their life. The government failed to do that. That was a significant departure from our tradition and the traditions of successive governments in demanding and purchasing that intellectual property, such that Canadian industry could participate in the long term support of the aircraft.
It was that vigilance of previous governments in purchasing the intellectual property that enabled a Canadian industry and in-service support to develop and flourish.
In a February 2007 article in FrontLine defence magazine, written by Ken Rowe, the chairman and CEO of IMP Aerospace, one of the largest providers of in-service support in Canada, made the following comments about the government's decisions on defence procurement and industrial benefit. He stated:
Canadian companies will be denied the ability to directly and independently support DND on these programs.
Further on in the article he states:
The years invested in building this component of the Canadian industrial base are being jeopardized by the current ISS procurement strategy by placing Canada's world class Aerospace ISS industry under the control of foreign American companies.
Overall, this new process is not only a threat to thousands of Canadian jobs but also increases the sovereignty and security risks to Canada by reducing our independent capability to maintain our own military assets.
The fact is that we expect our defence decisions and industrial strategy to be made in Ottawa, not in Washington and not at the Pentagon. The government has eroded Canada's economic sovereignty by not providing the kind of vigilance at the negotiation stage to ensure we achieved the intellectual property that Canadian companies would benefit from for the next 20 years in providing the kind of support that has built a Canadian industry that is recognized internationally.
The government talks about standing up for Canada. It has failed to stand up for Canada. It has stood up for the U.S. aerospace industry. It is important to recognize that there was a stop production order issued by Boeing earlier this year for the C-17. According to the Boeing press release, this stop production order was “due to the lack of U.S. government orders for the C-17”. We are buying the technology that the U.S. no longer wants and, in the process, we are helping support the U.S. industrial base.
The press release further states:
This action will ultimately affect the 5,500 Boeing jobs...directly tied to the C-17, and the program's nationwide supplier workforce that totals more than 25,000 people.
The government is talking about ISS support, in-service support creating 25,000 American jobs, when it could have negotiated more professionally to defend Canadian jobs and ensure, as the Liberal government and previous governments had, that we have intellectual property here in Canada and those in-service support jobs would be here in Canada.
The government dropped the ball because of its laissez-faire approach. It believes there is no role for a government in creating an industrial strategy for the country. It does not believe that defence procurement or government procurement can be used to create growth and opportunity for Canadians. It is actually failing to create the kinds of opportunities for Canadians that previous governments had the foresight and wisdom to do.
Furthermore, this deal is not ITAR compliant, which means that Canadian citizens with dual citizenship in the 25 countries that are currently ITAR listed in the U.S. will not be able to work on these contracts. Some of the members of Parliament in the House who were elected by Canadians would not be allowed to work on these contracts because of the government's failure to stand up for Canada. The families of these members of Parliament would not be able to work on these contracts because the government did not have the guts to stand up and defend Canadian sovereignty in a contract negotiation as massive as this one.
As I mentioned earlier, the member for Bourassa will be speaking in a moment and covering further points on this.
The notion of national defence is to preserve and strengthen Canada's role in the world and to defend its sovereignty. The idea that we have a Conservative government and a prime minister that would actually diminish Canada's economic sovereignty as part of its approach to defence procurement is shocking.
We must recognize the importance of preserving and strengthening Canada's industrial base. Manufacturing jobs across Canada are being lost, whether it is in the auto sector or the food sector: 500 jobs lost at Hershey in Smiths Falls; the closure of the Maple Leaf plant; 300 jobs lost when Canard closed; and 2,000 Chrysler jobs lost under the government. It is because of its laissez-faire approach and the fact that it does not believe government has a role in helping create long term economic opportunities. The government is wrong and Canadians realize it is wrong and this deal was wrong.
Mr. John Cannis (Scarborough Centre, Lib.):
Mr. Speaker, I want to pick up on a point and ask the hon. member a question.
It is like the Conservatives made a deal and they are trying to negotiate afterward. Does the hon. member not agree that we are not just losing jobs, but we are losing skills, technology and Canada's future? Once we lose the brains of Canada, how do we get them back?
Does the hon. member not draw a parallel to this agreement with respect to the extension of the mission in Afghanistan and the so-called caveats where the Conservatives committed first and are now trying to negotiate afterward, which is a little bit too late? Is it not normal to negotiate first and then commit? For example, should we not negotiate a good deal on military procurement before we give out the contracts? Could he elaborate on that?
Hon. Scott Brison:
Mr. Speaker, the hon. member is quite right. The principle of negotiation is that one does not try to negotiate after the deal is signed.
When I look across I see the Minister of International Trade who I worked with closely when he was minister of industry in the previous government which recognized the importance of defence procurement as part of a long term industrial strategy. At that time we were fighting to ensure that direct industrial benefits, not just indirect industrial benefits, would play a larger role in our defence procurement, and furthermore, that the research and development and intellectual property side of it would be more prominent than it is in this deal.
The fact is that these C-17 aircraft will be serviced exclusively by the original equipment manufacturer, Boeing. In the past, we always fought to ensure that Canadian companies and contractors would supply the in-service support. That decision and that approach helped build an internationally recognized global expertise sector here in Canada.
The present government has reversed that decision and has taken a laissez-faire approach that is hurting Canada's aerospace industry.
Mr. Paul Crête (Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, BQ):
Mr. Speaker, is it not surprising for my colleague to see that a government gives $9 billion in contracts, including a $3.4 billion contract to Boeing, while letting the company decide on its own where to invest the money from the contract, as long as there are spinoffs for Canada? Is the government not surrendering its responsibility? Should it not commit to respecting the current distribution of aerospace industries in Canada?
Hon. Scott Brison:
Mr. Speaker, when our government was in power we had chosen a very different approach because it is very important to make sure that the benefits are distributed throughout the country.
This government chose a laisser-faire approach. I find it strange that a government that is supposedly defending Canada and our sovereignty could act this way.
It is a complete departure from past governments. I would think that past Progressive Conservative and Liberal governments did work with regional agencies. We worked with regional industrial agencies in ACOA, the agency in Quebec and the agency in western Canada as we worked with Industry Canada to ensure regional benefits. That was part of the approach of successive governments, both Progressive Conservative and Liberal governments. They worked with a similar approach, using regional development agencies, to ensure regional benefits were distributed fairly.
The present government has thrown that away because it does not believe that government has a role in ensuring strong regional industrial benefits. I believe that departure will cost Canadians dearly in the future.