Industry Committee on May 30th, 2007

[Maxime Bernier, Conservative, Beauce, QC]

Thank you for your question.

On the first part of the question, on the 22 recommendations, I can assure you this government will follow 21 recommendations over 22. I think it's an important response from the government.

In the last budget we provided tax incentives to the manufacturing sector, such as the capital cost allowance. I said that previously.

We're investing in critical infrastructure. You asked us to invest in infrastructure because it's important and it's basic. If we don't have good infrastructure, goods cannot move across this country, as well as north to south or south to north. We're going to have an investment of $16 billion in critical infrastructure over a couple of years.

We also have a policy to improve and ensure that entrepreneurs will be able to have access to talented and skilled labour. We acknowledge that it's important.

We will be sure that the regulatory framework has an impact on entrepreneurs. If it takes time to fill out some forms and there are little details about regulation, it's not efficient. We want entrepreneurs to do what they do best, which is to create jobs and to be entrepreneurs, not to work for the federal government.

We're going to have a regulatory framework that is more competitive. We have a goal to cut the regulations in this country by 20%. I think it's something important. We want to have more efficient regulations.

We're also supporting technology, excellence, and innovation. I'm going to bridge the second question on innovation.

But before I do that, as you know, the paper burden for entrepreneurs is very important. The 20% cut is on the paper burden, not on regulation. I only want to be precise about that.

We will be supporting technology and excellence. How are we going to do that? We'll do it through the new science and technology strategy that we launched two weeks ago. I had the privilege to launch it with the Prime Minister and the finance minister.

We are investing $9.3 billion this year, and it's another important step for our government. In Budget 2007, as a government, we've said we're going to have new investment in science and technology of up to $1.3 billion over a couple of years. Science and technology is very important.

For your information, the most important thing in our strategy, the vision of our strategy, is very simple. Our vision is to have more innovation in this country.

What is innovation? Innovation is two things. First you must have a new idea, and, second, you must have an idea that is concrete and will solve a problem in the marketplace.

What can the government do to be sure that we have new ideas in this country? We must give the entrepreneurs all the tools they need to have, and we have the fiscal tool for that. We also want to be sure that when entrepreneurs bring new ideas into this market they are going to be able to keep the profits from these ideas in their pockets, without having to pay too much tax.

[The Chair, Conservative, James Rajotte]

Thank you, Minister.

I wanted to thank Mr. Brison for bringing cookies for everyone on the committee except for me. I don't know if it's a sign about my weight or something.

Anyway, we'll move on.

Monsieur Bachand, welcome to the committee.

[Claude Bachand, Bloc, Saint-Jean, QC]

Thank you.

I want to tell you that I gave the last cookie to the minister instead of the chair. I'm sorry.

Now, here comes the poisoned question.

Your tone surprised me earlier, when you announced that you had brought in a $900 million program through Technology Partnerships Canada. You were quite forceful as well when you made your comments; so, I would like you to confirm what you said. You mentioned that you will be ensuring that there are spinoffs for industry, because this is taxpayers' money.

Did I understand you correctly, in terms of both your actual words and the tone of what you said earlier?

[Maxime Bernier, Conservative, Beauce, QC]

I will clarify my comments, as I may have been unclear earlier.

This is a $900 million program to be rolled out over a five-year period. It is for research and development in the Canadian aerospace, defence, security and space industries. These industry sectors are subject to ongoing competition from other companies across the globe that also benefit from government support.

In order to support these businesses as we have done in the past, we have set up a new program under which the government will be making refundable contributions to the aerospace industries. This is a more transparent program, because the refunds will be put up on the Internet twice a year. The former program had come under quite a lot of criticism because of its lack of transparency.

Under this new program, refunds of monies allocated to the aerospace and defence industries will be carried out over a shorter period—an average of 15 years, as opposed to 22 or 23 years. In addition, these refunds will be based on the profitability of the individual company, rather than on the success of the initial R&D funding.

We are proud of this program. The fact is a government rarely receives congratulations from the Canadian Taxpayers Federation.

The Canadian taxpayers association says it is a good program, it's transparent, and they're going to be able to follow this.

They are also sure that the investment this government is making for the industry will be profitable for all Canadians.

[Claude Bachand, Bloc, Saint-Jean, QC]

Fine.

Minister, I find your behaviour contradictory. You do not apply the same philosophy to economic spinoffs associated with military procurement in the aerospace industry. Some $14 billion in contracts have been announced for the aerospace industry. I am referring to the C-17s, Chinooks and Lockheed Martin, not to mentioned the research and development aircraft that may be coming on stream.

Why have you taken such a firm stance with respect to the $900 million, when you are letting Boeing and Lockheed Martin decide how to invest the money they're receiving? I would remind you that we are talking about military procurement contracts in the amount of $14 billion, that are also being paid for with taxpayers' money. And yet, you have not applied the same philosophy. You will be distributing that $900 million all across Canada, whereas for these military procurement contracts, you are leaving it up to people in the industry to decide what they want to do with the money.

It seems to me that the $900 million you referred to is almost a consolation prize, compared to the economic spinoffs that are being lost in Canada, particularly in Quebec. Quebec should have received $8.4 billion, because 60 per cent of the industries are located there.

So, there is a double standard here. As a Quebecker, I have a lot of trouble with that, because Quebeckers are the ones who are losing out. At the same time, you are a Quebecker. You should understand what this means. You should be standing firm to defend Quebec, but you are not.

[Maxime Bernier, Conservative, Beauce, QC]

I am pleased to say…

[Claude Bachand, Bloc, Saint-Jean, QC]

I told you it was a poisoned cookie.

[Maxime Bernier, Conservative, Beauce, QC]

I am pleased to be able to say that I stand up every day to defend Canadians and Quebeckers, and that I advocate the purchase of military equipment, by Quebeckers and Canadians, that jibes with our needs. We are not about to send our Armed Forces personnel overseas to fight for democracy and human rights without giving them the equipment they need.

Military procurement results in industrial spinoffs. Without that procurement, there are no economic spinoffs. I just want to point out to my colleague that the Bloc Québécois' program does not advocate either military procurement or a strong Canadian army presence. So, if we relied on your program, no investments whatsoever would be made and there would be no economic spinoffs.

[Claude Bachand, Bloc, Saint-Jean, QC]

Does that mean you should just sit back and twiddle your thumbs, and say you're against investing in Quebec? That just doesn't work. Quebeckers are paying 25 per cent of the cost of that equipment.

[Maxime Bernier, Conservative, Beauce, QC]

I'm coming to that. Let me finish my answer.

We believe in the military, and we said that during the election campaign. We are just doing what we told Canadians we would do. We are investing in the Canadian Armed Forces, but at the same time, we are ensuring that every dollar that is invested abroad to purchase equipment or aircraft such as the Boeings or Lockheed Martins will produce a dollar of economic spinoffs here in Canada. Are we giving priority to one region over another? Are we engaging in political interference? No.

Those economic spinoffs will be on merit. Unlike you, I am confident that the aerospace industry in Montreal and Quebec generally will succeed in properly positioning itself. Indeed, I meet regularly with representatives of that industry. In a few weeks time, I will be heading to Paris, at the head of a Canadian mission that includes business people from every region of the country. That mission has three specific goals. We want to ensure that there will be foreign investments in Canada in the aerospace and defence industries. So, we need to ensure that the parent corporations of these companies in Canada can choose Canada for their projects and that our businesses can use their know-how with Lockheed Martin and Boeing in relation to specific procurement contracts. I will be acting as facilitator between Quebec and Canadian companies and those that have won contracts.

I want to ensure that companies here in Canada benefit from this military procurement. And they will benefit, because our policy will be respected. And I want you to know that all major industrialized countries have such a policy. The companies we are awarding contracts to are used to providing economic spinoffs. And there will be positive economic spinoffs for Canada over a long period of time.

[The Chair, Conservative, James Rajotte]

Thank you.

We'll go to Mr. Arthur.

[André Arthur, Independent, Portneuf—Jacques-Cartier, QC]

Thank you, Mr. Chairman.

Good afternoon, Minister. Having spent 35 years of my life trying to make a living in an industry that is very tightly regulated by the Canadian government and the CRTC, and having noted that, in terms of broadcasting, CRTC regulations have pulled us into a spiral of large company monopolies and service of increasingly lower quality, at the expense of radio and television artists and sponsors, I was particularly proud and happy to support your plan to deregulate local telephone service, as well as the CRTC directive that market forces be allowed to operate wherever possible. You don't need to convince me that this is a useful measure. I believe it was not only an essential move, but a courageous one.

Mr. Brison talked about how difficult it is to provide telephone service at lower cost in rural areas. There is no connection between the two issues, and constantly harping on the CRTC ruling of April 30, which was made in accordance with current legislation and in the absence of deregulation, is unreasonable, in my view.

Mr. Bernier, have you attempted to forecast when the major Canadian markets will start to benefit from deregulation? Our anglophone colleagues have a habit of saying “the proof of the cooking is in the pudding“, and I would therefore like to know when the results of deregulation will become clear.

[Maxime Bernier, Conservative, Beauce, QC]

Thank you for your question. I am very pleased to have received your support for deregulation of local telephone service. Canadian consumers are already benefiting from that deregulation. Why? Because we have done away with regulations relating to winback offers.

In a capitalist, free-enterprise system, businesses operating in all industry sectors must have the right to offer their products and promote those products. These regulations prevented some telephone industry players, when they lost a client, from making a counteroffer. They had to wait several months. Those regulations were contrary to the interests of consumers, because when someone decided to leave a company, that same company could not make him a better offer. As a result, the consumer ended up paying a little more.

Since our reforms were introduced last April, those regulations are no longer on the books. I can assure you that in the major urban centres, when a Canadian consumer decides to stop dealing with a former monopoly in order to give his business to another industry player, he is offered benefits that he would not have received otherwise. Ultimately, the consumer is free to stay with the former monopoly or deal with a competitor. There is competition in the urban centres, which has a direct impact on prices and on the product offer. When a company is able to make a counteroffer, that counteroffer is not necessarily based on price; it may have more to do with the quality of its various services.

So, there is an immediate impact on consumers. To my knowledge, several large companies have asked that local services be deregulated in the major urban centres. I can tell you with absolute certainty that at least one urban centre's market in Canada will be deregulated before the end of the year. In the coming months, we will gradually see that deregulation occurring in the major urban centres. Before the end of this year, we should be seeing the benefits of increased competition in the urban centres.

[André Arthur, Independent, Portneuf—Jacques-Cartier, QC]

You may conduct some quite lengthy studies—and I hope you will—on how to reduce the administrative and bureaucratic burden for businesses, so that they can be more competitive and more profitable. However, there is one very simple way of tackling that issue: cut back Statistics Canada's ability to harass businesses by repeatedly asking them questions and getting them to fill out questionnaires.

Are you able to give us assurances today that Statistics Canada's budget for such activities will be curtailed?

[The Chair, Conservative, James Rajotte]

Okay, Monsieur Arthur, question.

Just a brief response, Minister.

[Maxime Bernier, Conservative, Beauce, QC]

I can assure you, as one representative of a responsible government, that expenditures are made on the basis of Canadians' priorities. We will take a look at Statistics Canada's budget, along with the budgets of all other government organizations, as part of the rigourous annual analysis involved in preparing a budget and determining the budgets to be allocated to the different departments.

[The Chair, Conservative, James Rajotte]

Mr. Masse.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair.

Mr. Minister, the Canadian Tourism Commission did not receive any new allocated funding in the estimates. We've been facing a crisis in tourism. We're down to 1972 levels in terms of vehicular traffic from the United States coming over to Canada. That's hitting many communities in Ontario, British Columbia, even Nova Scotia, especially with the western hemisphere travel initiative coming into play—that's the passport requirement—and the utter confusion that's out there. There are several laws that actually have been put in play in the United States, but there is still no final resolution as to what's going to happen and timelines and deadlines, aside from the original one, which is implementation very soon.

So given the fact that we have had such a challenge with regard to tourism, why are we not looking at providing the appropriate funds for the Canadian Tourism Commission to at least market to the American markets in a way that's effective? This is a state-sponsored structural change between our two nations, by the introduction of passports. Why has there been literally silence from your department to provide the appropriate resources to deal with this issue?

[Maxime Bernier, Conservative, Beauce, QC]

Tourism is extremely important. Our government is conscious of that fact, because I am lucky to have the assistance of Mr. Gerry Ritz, the Secretary of State for Small Business and Tourism. He regularly consults his colleagues in the provinces, as I did back in December of 2006, when I met with all the ministers responsible for tourism in Canada. They were pleased to know that in 2005-06, our government had invested more than $400 million in the tourism industry.

Following my meeting with the provincial ministers, Mr. Ritz also had discussions with his colleagues about the challenges currently facing the tourism industry. We agreed that the 2010 Winter Olympic Games, which will be taking place here in Canada, are a very important event. We believe that Canada should take advantage of the visibility that comes with hosting the Winter Games. We will need to promote all the regions of Canada as choice tourist destinations.

Another important event is the 400th anniversary of the founding of Quebec City. We will also be ensuring that this event has high visibility, in order to attract as many visitors as possible to Canada.

The Olympic Games are a priority for the Canadian Tourism Commission, and I am very pleased about that. There are obvious economic spinoffs associated with the tourism industry.

[Brian Masse, NDP, Windsor West, ON]

But I'm asking, Mr. Minister, about your funding allocation.

I understand the importance, and anybody watching this understands the importance, of the Quebec celebrations, and I don't think anybody is going to object to that. We all understand that, but what I'm asking you is why hasn't there been an allocated budgetary increase to deal with the depreciation of American visitation into this country, which is costing Canadian jobs? This has been compounded in this summer festival season by your government's bungling of the actual replacement of the sponsorship file with regard to festivals and funding of those things. Why has there not been an appropriate increase in that actual budget to the Canadian Tourism Commission?

I understand the value of those festivals--most Canadians do--but what I'd like to see is an increase. I'd like to understand where you're at with that. If you're not going to increase it, that's fine; just say it's not worth it.

[The Chair, Conservative, James Rajotte]

Minister, you have about a minute for an answer.

[Maxime Bernier, Conservative, Beauce, QC]

Our government did not cut the funding of the Canadian Tourism Commission, which shows that we believe in it. We want the Commission to allocate its funds as effectively as possible.

As you know, the government's budget is reviewed every year. Over the next budget cycle, we will be considering the views of all stakeholders, including those in the tourism industry. I can assure you that Minister Ritz will definitely be holding consultations with all stakeholders, to ensure that the Commission can continue to fulfill its role in future years.

[The Chair, Conservative, James Rajotte]

Thank you, Minister.

We've reached almost five o'clock, so we're at the time you have to leave. Now, I do have two members on the list who have asked to ask questions, but you've already stayed 15 minutes past your time, for which we're very appreciative. Perhaps members could submit those questions and we could have them answered in written form.

[Gerry Byrne, Liberal, Humber—St. Barbe—Baie Verte, NL]

Mr. Chair, if the minister agreed to stay for those two questions, it would be very helpful to the committee I think.

[The Chair, Conservative, James Rajotte]

Minister, we've already imposed on your time, but it's—