Mr. Speaker, I thank you for the opportunity to speak on this motion. I would like to read the motion at this time. It states:
That this House condemn the government for its inability to defend the workers at the General Motors plant in Boisbriand and thus allowing the vehicle assembly sector of the Quebec auto industry to disappear.
I would like to thank the Bloc Quebecois for bringing this motion forward and for allowing us to have debate on it, which I would like to expand to include the entire auto industry in Canada.
I certainly understand the concerns of the Bloc Quebecois. Any time any plant closes in a local community it is a concern to all of us in the House. We need though to question what went wrong and whether or not it was government policies that contributed to the plant closure. We need to talk about the auto industry in general and move beyond generalities as to what should be done.
I understand that Quebec in particular has been hard hit by the auto industry restructuring. That has been eloquently stated by members of the Bloc. A year ago we were all concerned about the GM plant in Sainte-Thérèse, today it is Boisbriand. As the industry critic pointed out, it is the most important plant in Quebec.
The auto industry is certainly an important one for Canada and especially for Ontario and Quebec. The Canadian Alliance would like to see the entire industry, parts and vehicle manufacturing stay healthy and even grow over the next decade.
However I will not be able to support the motion today for two reasons. They fall under the general subject that we cannot have government interfering in the marketplace in terms of one plant closing. I know sometimes that sounds harsh but that is just reality and it is important for us to deal with it at the front rather than to somehow intimate that we can politically prevent a plant from closing and then give people false hopes. Giving people false hopes is the worse thing we can do.
I was hoping for more specifics on the motion and more substance from the Bloc as to what it wants the government to do. It is calling upon the government to take immediate action. It is calling on the minister to go to Detroit.
As an opposition member, I would like to hold the government to the fire on any subject but I do not know what the Bloc wants the minister to do when he goes to Detroit. If GM wants to close a plant, these questions are good questions, but they are questions for GM. I do not see what the Minister of Industry, quite frankly as an opposition member, will do by going to Detroit to lobby to keep the plant open. I hope that Bloc members in their further speeches will elucidate on what they expect the minister and the government to do.
There are two specific reasons. First, the motion does suggest some form of corporate subsidy or corporate interference by the government and of course we in the Canadian Alliance certainly oppose that. Second, by pointing to a specific plant rather than the general auto industry, it also suggests adopting a regional approach to industrial policy to assist one plant in one location.
As you probably know, Mr. Speaker, being the wise man that you are, the Canadian Alliance does not support corporate welfare and is very skeptical of the current government's regional development policies.
Instead what we argue for is a more comprehensive and aggressive approach which is tax cuts coupled with a concerted effort by the government to get out of the marketplace. This in our view would be a better solution to the problem of plant closings in Canada and to the general economic problems of low productivity, which the minister has pointed out that we have suffered for a decade now.
I would now like to turn to the particulars of the GM plant in Boisbriand. It is my understanding that the plant is geared to making rear-wheel drive cars and the demand for these types of cars in North America is extremely low. According to the Montreal Gazette of October 16, 2001, GM Canada has made a business decision that retooling the Boisbriand plant would be much more costly than just letting it close. Therefore I believe 1,200 workers will likely lose their jobs in September.
I also understand from news reports that the Canadian Autoworkers union as well as other labour groups have put up quite a fight to keep the plant open, as they should.
According to the Quebec head of the CAW “There are 5,000 jobs in auto parts in Quebec and many of them will be lost with the announcement of the closure of the Boisbriand plant”.
The lobbying efforts have been somewhat successful according to an article in the Prince George Citizen as part of GM Canada's commitment to offset the jobs that will be lost when the plant closes. A deal has been struck with an auto parts maker in Magog that will help create 800 jobs. However Boisbriand is not alone.
Without a doubt there is quite a bit of bad news concerning the auto industry in Canada in general. GM Canada is expected to cut more than 1,000 jobs at its engine and transmission plant in St. Catherine's Ontario. Ford and Chrysler have threatened to do the same thing. Just three years ago Canada was the world's fourth largest vehicle manufacturer. Unfortunately now we have fallen into seventh place.
However at the same time there is also good news. First, the most recent Financial Post 500 listing, GM Canada is ranked as the second largest company in Canada, Ford ranks third and DaimlerChrysler ranks ninth. In 2000, GM Canada had revenues of $42 billion. My guess is that this ranking will change quite substantially when the new list is published because Nortel Networks ranked number one in 2000.
Second, car sales in Canada were up 17% in February. Just this week GM announced that it would increase production at 12 plants across North America because of stronger than expected consumer demand and a moderate recovery in sales to rental car companies.
Finally, Buzz Hargrove himself feels confident enough in this sector that, when the CAW sits down with the big three in contracting bargaining this fall, he is expected to demand more money and better benefits.
In fact it seems as if the entire Canadian auto industry is a bit schizophrenic at the moment. To quote from the recent National Post series on the auto sector, it said:
The big question--and it's one that divides industry watchers--is whether these current problems [in the Canadian auto industry] are temporary, or foreshadow a permanent downturn in a sector crucial to the Canadian economy.
We should consider the following statistics. Canada has expanded its auto vehicle production in 2001 from two million to three million vehicles, while its market share has remained static at 16%. GM, Ford and DaimlerChrysler are all openly discussing plant closings, but just yesterday David Dodge presented a very rosy picture of the Canadian economy, so much so that the Bank of Canada will now be raising interest rates.
Toyota is increasing production of its Corolla and Camry in Cambridge and Honda has also increased production in Alliston, Ontario. This really does present a dual picture of the auto sector. What is happening here? It is difficult to get a good read on the auto industry at this time since it is performing so well by industry analysts, yet these reviews are mixed, as are the signals being sent by the big three automakers.
I would thus suggest that since it is difficult for industry analysts to predict the future of the auto sector in Canada, it would not be wise for politicians from this place to predict how the next couple of years will shake out in the auto industry. How can we ensure that the auto sector will gain back some strength in Canada? For the Canadian Alliance that is a question and a matter for broader economic policy, not for government interference to prevent one plant from closing.
That brings me back to General Motors Canada. The president of General Motors recently spearheaded what many believe will be an aggressive campaign by some vehicle manufacturers in Canada for tax incentives. Last week the president threatened that Canadian plants could be prime targets unless important public policy changes were made quickly. He laid out a five point program of public policy changes he believed would stop the decline and put the auto industry on a competitive footing.
To summarize his points, he would first like a tax credit of five per cent of the value of new automotive investments, and another credit of up to five per cent for large companies based on employment with more than 5,000 people. He has suggested other tax breaks for training and rebates of EI and workers' compensation costs. This is all apparently to prevent a flow of jobs from Ontario to Mexico, he suggests.
Of course such a plan would exclude Toyota and Honda. Honda Canada Inc. and Toyota Canada Inc. each employ fewer than 5,000 people and therefore would not qualify for an investment tax credit under the proposed draft. To many of us here on the Alliance benches this is not fair and this request from GM Canada frankly sounds very similar to corporate welfare.
As we all know, giving subsidies to business, better known as corporate welfare, simply does not work. It offers no solution. To quote the Minister of Finance in his budget speech of 1995, he said:
--across government, we are taking major action...to substantially reduce subsidies to business. These subsidies do not create long-lasting jobs. Nobody has made that case more strongly than business itself.
We must then look at the Liberal record of corporate welfare. On June 22, 1999, Pratt & Whitney Canada Inc. received $154 million from Technology Partnerships Canada. The press release stated that “[This government contribution] will help to safeguard jobs in our domestic operations by retaining value-added work in Canada”.
Nevertheless on October 24, 1999, less than two months later, Pratt & Whitney Canada issued another press release announcing 300 job cuts in Canada and a further 400 job cuts at unspecified locations worldwide, jobs the TPC grant was intended to help keep. It was the same story with de Havilland in the fall of 1997. TPC invested $57 million into de Havilland which then decided to lay off 450 employees in Downsview, Ontario. Corporate welfare, the business of picking winners and losers, does not work.
It is the same with the government's regional development policies. I will paraphrase from the Atlantic Institute for Market Studies which said that far from boosting economic growth, economic development programs or regional transfers have politicized the economy. They have caused firms to focus on political connections rather than increased competitiveness. They have supported outmoded and often dangerous and environmentally hostile economic activities. They have driven out private sector investment, inflated regional costs and reduced incentives to work for further education and training.
The Canadian Alliance urges the government not to resort to government interference in the marketplace through corporate welfare or regional grants. It should instead pursue tax cuts to individuals and corporations more aggressively to create the general economic climate needed to sustain jobs in the long term. Surely money in the pockets of GM workers and the company would be better spent than money in the hands of bureaucrats or the Minister of Industry.
Canada's economic performance when measured against that of other G-7 countries continues to be of great concern to us in the opposition. We in the Alliance are worried that having the highest personal income tax burden in the G-7 and the highest corporate income tax rate in the OECD is having a negative effect on research and capital investment, thus causing the decline in productivity the Minister of Industry has pointed to. Despite some of the highest R and D tax credits in the world Canada is seeing declining productivity and a long term economic decline. In the world competitiveness ranking Canada fell from sixth place in 1997 to ninth place in 2001. This is serious. It must be addressed by the government and its general economic policies
What should the government do about the auto industry? In terms of the motion I would like to see more suggestions from the Bloc. If a company decides to close a plant as GM has, what do Bloc members think the government should do? Do they want the government to interfere in the marketplace in a specific region? That is not the answer.
What do we in my party think the government ought to do? It should reduce corporate taxes. At industry committee meetings following September 11 when most of the major industries appeared before us the auto industry was the main one. Auto industry representatives repeated over and over that they wanted reduced corporate taxes in Canada because for them the North American market is an integrated market. Representatives from Windsor and Detroit said they look at the area as one region. They do not look at it as two countries in economic terms. They look at it as one economic region. We must look at it that way as well.
Representatives wanted our corporate taxes to be in line with the those of United States. The Canadian Vehicle Manufacturers Association wanted the removal of nuisance taxes like the air conditioning tax. Auto industry representatives wanted reduced personal taxes so we could put more income in the hands of people and allow them to purchase consumer goods like cars. They asked for the elimination of the $1.3 billion capital tax on innovation.
I encourage the minister to seriously look at this proposal and state today whether he supports it. It is not only the official opposition that has supported the idea. The present secretary of state for science and technology put the idea in the finance committee report and made a specific recommendation. I applaud him for that. The government should follow up on the suggestion of its own members.
In terms of political considerations we must recognize above all that we not only want an open border. Industry representatives also brought up the issue of border security and ensuring that in the wake of September 11 the United States can feel confident in our perimeter measures. Some have suggested a North American security perimeter. Although this is something we should not completely endorse at this time, we should certainly look at it.
I hope I have put forth the Canadian Alliance view that we should look at the auto industry in general. We should look at what the government can do not by interfering specifically in the marketplace or with one plant but by creating the general economic environment needed to ensure we keep long lasting jobs in Canada.
