All right. Now--
Evidence of meeting #24 for National Defence in the 40th Parliament, 3rd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was aircraft.
A recording is available from Parliament.
Evidence of meeting #24 for National Defence in the 40th Parliament, 3rd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was aircraft.
A recording is available from Parliament.
2:20 p.m.
Liberal
2:20 p.m.
Voices
Oh, oh!
2:20 p.m.
An hon. member
Debate.
2:20 p.m.
Liberal
The Vice-Chair Liberal Bryon Wilfert
Mr. Bachand, you have seven minutes to ask your questions.
I would remind everyone to go through the chair with both the questions and the answers. Thank you very much.
Monsieur Bachand.
2:20 p.m.
Bloc
Claude Bachand Bloc Saint-Jean, QC
Thank you, Mr. Chair.
I would like to welcome the industry representatives.
My first question is about certainty and stability. If I read between the lines, the message seems quite clear. You don't want us to talk about competitive bidding; nor do you want the project to be reviewed in the event of a government change in Ottawa. Is my interpretation correct?
2:20 p.m.
Vice-President, Government Affairs, Pratt & Whitney Canada
I will begin by answering your questions. Afterwards, Paul can talk about the impact because he is currently in negotiations.
I have an IBR contract with Pratt & Whitney Canada. The field is competitive. People from Italy, France and around the world manufacture engines or parts. Companies like certainty. They like to know that the future will not bring changes. So, in the case of a country that has already signed a contract, the companies that want to continue working will just say they know that that country will buy airplanes, but they do not know whether that other country will. They will gauge their chances of working in those other countries.
Paul, would you like to add something?
2:20 p.m.
President, Avcorp Industries Inc.
Mr. Chair, the certainty issue certainly helps in the extension of contracts, the continuance of contracts. What's key at this point is that obviously everybody is aware that this program is in existence and it's going well. If there's any lingering uncertainty about Canada's commitment to the program, then the primes—again, Lockheed Martin—are going to be less desirous of putting work into Canada.
Their biggest challenge is that, yes, there are a number of countries participating in this and they all want what they see to be their fair share. The fact that Canada has been involved early on means that we've done better than anybody else on this program to date in terms of the work content so far. To stay in that position, we need to put the pedal to the metal and get involved in growing the production base, not just the development base, for the contracts.
2:20 p.m.
Bloc
Claude Bachand Bloc Saint-Jean, QC
Mr. Lajeunesse, that brings me to your way of measuring benefits. Are you planning on using the same method for all of Canada? If the contract is worth $16 billion, do you think that the benefits should be at least $16 billion? Do you see a geographic component in that? For example, if we, as members of the Bloc Québécois, claim to have 55% of the industry, we would also like to get 55% of the spinoffs. What is your view of the measurable process?
2:25 p.m.
President and Chief Executive Officer, Aerospace Industries Association of Canada
First, in order to have a measurable process, we must have an objective. As the ministers and deputy ministers explained this morning, the purchasing objective seems to be $12 billion. If we set a $12-billion goal, we will then have to determine what the targets will be in the next few years for aircraft maintenance and sales abroad. We will want to know where we are at every three to six months, as needed. For example, we could meet in six months and announce that we have $2.6 billion, and that we will have $5.7 billion in a year. This way, members of the industry, the public, journalists, the press, media, and so on, will be able to see if we are moving towards that objective. In my opinion, the only way to succeed is to make public our progress towards achieving the objectives.
2:25 p.m.
Bloc
Claude Bachand Bloc Saint-Jean, QC
Mr. Chair, I have the following concern. I'm worried that, if the government agrees to implement a measurable process, the economic spinoffs will be lacking as the project develops.
You were here this morning. There have not been many comments on the bidding process. Concerns have rather been raised on the economic benefits. For example, if taxpayers invest $16 billion in the project, they will definitely expect the same amount to be generated in economic benefits. The minister told us—and you seem to agree—that it was not the normal way of doing things, given that the memorandum of understanding states that economic benefits policies must not be taken into account. The possibility of reaching up to 3,000 or 5,000 platforms should have been considered instead. That's where the novelty lies.
Meanwhile, as long as there is no contractual obligation, there is a risk, you will agree. If you realize that things are not developing at the speed that you expect them to develop, your measures do not allow you to revisit a contract and tell the others that they have obligations.
Isn't there a way to establish a two-track approach that says that we are competitive and that we want to have access to 5,000 aircraft, but that we are asking for a minimum of economic benefits? In your opinion, would such a hybrid formula work?
2:25 p.m.
President and Chief Executive Officer, Aerospace Industries Association of Canada
The deputy ministers were asked that question this morning. They answered that an approach like that would create problems for them. I personally believe that having to provide a progress report will allow the public to know what is happening and the government to take action. Governments have fairly effective ways that allow them to step in if it turns out that obligations are not being met.
2:25 p.m.
Bloc
Claude Bachand Bloc Saint-Jean, QC
Could we examine the possibility of a hybrid formula? I don't like the idea of leaving it solely in the hands of Lockheed Martin. If Lockheed Martin does not address some of the needs, we have no other options.
I would like us to discuss a minimum benefits formula in future meetings, if possible.
2:25 p.m.
Liberal
2:25 p.m.
NDP
Jack Harris NDP St. John's East, NL
Thank you, Chair.
Welcome, gentlemen. We appreciate your comments.
My first question is for Monsieur Lajeunesse. We get it, as a committee, and we've heard from you and your organization talking about the IRBs. The concern that I recall hearing was that you like the IRB program, but the real problem is that you're not getting the value-added stuff. There is no mechanism to ensure that you're getting the high end that makes more money for you and helps develop the industry. If we can't get that in smaller contracts, perhaps less sophisticated ones, how can we have the kind of confidence that I'm hearing from you all when we're talking about this open-ended field here where we have no guarantees at all, and yet we're committed to spending considerable amounts of public money?
There seems to be a bit of a disconnect in the theory here. I recognize the opportunity and it's exciting if you're there to pounce on it, but there's no guarantee of success of course, and it seems to me you can't have it both ways. Why is it that this is okay for this contract and yet you're concerned about how IRB operates?
2:30 p.m.
President and Chief Executive Officer, Aerospace Industries Association of Canada
Mr. Chair, we've had concerns with the IRB programs. We've expressed them, and Minister Clement, last year, about six months after he came into office, was able to make amendments to that program that made it much better. It had not been changed in 23 years, so certainly we were quite pleased to see these changes in the IRB programs that he was able to bring in. On that front, we feel much more comfortable than we did before he made those changes.
With regard to the commitments, again, if we set a bar at $12 billion for this program for the purchase of the planes and whatever else goes with the purchase of the planes.... Don't forget the $9 billion is not only for the aircraft but is also for the infrastructure, the weapons, the logistic support and so on. If we look at the $12 billion, we feel that if we have a public accounting of the progress toward meeting that goal, it will have an impact and we will see the goal being attained.
2:30 p.m.
NDP
Jack Harris NDP St. John's East, NL
I hear what you're saying; however, we are seeking, as Mr. Kalil says, more than our share in terms of what we're contributing to the program. We can't change our mind, so what would the accounting do along the way? You're suggesting that if we had this process of accounting along the way—and I don't disagree with that—we would know whether it was working or not. But we can't change our mind, so what are you suggesting here?