Mr. Speaker, I would like to respond to private member's Bill C-213, put forward by my hon. colleague, the member for Lévis-et-Chutes-de-la-Chaudière. This is essentially a money bill. We could even call it a subsidy bill. The first time this bill was debated at second reading the hon. member argued that one way to promote the Canadian shipbuilding industry would be to improve the loan guarantee program of the Export Development Corporation.
There is a myth that loan guarantee programs are free of cost. This is not true. In fact, in 1998 in the U.S. the costs to the government were roughly $3 billion for contingent liabilities and almost $2 billion on default payments. Based on the experience in the U.S. it would be very costly to set this up. I have talked about this many times before. Taxpayers have told us repeatedly that they do not want more programming. They want tax cuts.
The hon. member also contends that if ships built in Canadian shipyards were exempted from the regulations relating to lease financing, the existing depreciation rates for ships would apply without any restrictions. In consequence, according to him, the tax disadvantage that prevents ownership or lease financing of ships would be eliminated.
The fact is that the shipbuilding industry already has access to the accelerated capital cost allowances, known as CCA. These are more generous than for any other industry and even more generous than tax credits in the U.S.
Furthermore there cannot be both an accelerated CCA and an exemption from leasing regulations. If such a thing were permitted, the cost of a ship could be written off more than once and this would constitute a tax shelter. This is just the kind of situation the current leasing regulations help us to avoid. Moreover, lease financing is contrary to the specified leasing property rules in the Income Tax Act.
The third measure in Bill C-213 is another subsidy, just like the loan guarantees and the exemption from leasing regulations. It would amount to creating on a national basis the same type of program that Quebec set up in 1996-97. Quebec decided to complement the federal shipbuilding policy by creating its own program. I would strongly encourage the other provinces to follow Quebec's example.
These tools are not only subsidies. They are the tools of the past. As we enter the 21st century, the way to take charge of the future is not by returning to the past by way of government subsidies that have proven so disastrous to Canada by nurturing uncompetitive industries. Instead, it is by investing in innovation, by training smart workers and giving them upgraded equipment and production techniques to do the job right, and by forging alliances that will lead industries in the pursuit of excellence.
Canada's shipbuilding and repair industry is quite a small one by world standards accounting for only .04% of the global market share and not the .4% as stated by the hon. member for Fundy—Royal in yesterday's debate. If the industry says it needs to reach only 1% of the world market, this would mean that the industry would have to increase its current share by 25-fold.
The top three shipbuilding and repair nations in the world today are Korea, Japan and China. Together they account for more than 75% of the global market. I think members realize that even the most generous subsidies will not enable the Canadian shipbuilding and repair industry to be competitive in these conditions.
The government's shipbuilding policy does not rely on subsidies. Instead it concentrates on the areas that can make a real difference and that use taxpayers' money wisely.
The acquisition of ships, their repair and refit in Canada by the federal government is done on a competitive basis but is restricted to Canadian sources.
Tax measures such as the accelerated capital cost allowance on new ships built in Canada allow purchasers to write off 100% of the entire cost of the ship over a mere four years.
We have in place a 25% tariff on all non-NAFTA foreign built ships of more than 100 tonnes that enter Canadian waters with the exception of fishing vessels over 100 feet in length.
In response to the shipbuilding and repair industry's conditions, the government spent $198 million on an industry led rationalization process between 1986 and 1993. This money was given directly to the industry for upgrading facilities and assisting displaced workers adjustment programs because the industry itself decided it was necessary to reduce its capacity so that the remaining shipyards could survive and continue to be competitive.
At present, shipyards in Canada employ some 4,950 Canadians. Under the federal government's procurement policy, yards have received more than $8 billion in federal shipbuilding and repair national contracts tendered through the competitive bidding process in the last 10 years.
Canada's research and development tax credit system provides more than $1.3 billion a year to companies that carry out R and D. This source of financing is available to the shipbuilding and repair sector as it is to any other sector.
The federal Export Development Corporation promotes export sales of Canadian products, including ships. For ships alone, this assistance provided on commercial terms has grown from $3.5 million in 1996 to more than $130 million in 1999.
Yes we should be doing all we can in an intelligent way to foster shipbuilding and repair in Canada, but surely this is a shared responsibility. Provinces also have a role to play. Currently only two have set up programs to complement the federal package: Quebec and Nova Scotia. Others may want to follow suit. The members for Fundy—Royal and Saint John if they are serious may want to get their cousins in New Brunswick to follow the Quebec and Nova Scotia lead. Maybe they should put their money up first and complement the Canadian shipbuilding policy.
Just a few minutes ago the member for Fundy—Royal was taking all his credits. He also may want to take credit for when the government was negotiating those agreements and giving everything away, it also allowed the Jones Act to continue in the United States. Now he says it needs to be changed. In other words, after he has given everything away, he now wants to go and resolve it. He might want to take credit for that in all his future speeches.
Our shipbuilding policy is very clear. We have purchased in Canada. We have an accelerated capital cost allowance write-off. We have a 25% tariff on all non-NAFTA foreign built ships. The Export Development Corporation is working with the industry. The more co-operation we get from the shipbuilding provinces, the sweeter the package might be.