House of Commons Hansard #99 of the 40th Parliament, 3rd Session. (The original version is on Parliament's site.) The word of the day was aircraft.

Topics

Opposition Motion—National Defence
Business of Supply
Government Orders

10:30 a.m.

NDP

The Acting Speaker Denise Savoie

Order, please. The hon. member will have all day to correct any inaccuracies he feels are uttered. I would ask the hon. member to wait his turn until he is recognized.

The hon. member for Hamilton Mountain on questions and comments.

Opposition Motion—National Defence
Business of Supply
Government Orders

10:30 a.m.

NDP

Chris Charlton Hamilton Mountain, ON

Madam Speaker, at the end of the day, this is all about accountability. We are talking about the single largest defence equipment purchase ever and we need to be accountable for tax dollars spent.

When we are talking about signing a deal for $9 billion for 65 new F-35 fighter jets, Australia paid $6 billion and is getting 100 jets. Because we did not actively search for the lowest price, Canadians end up paying more than double the price per unit. Had we bought the 65 F-35s at the Australian price tag, we would have saved $5.1 billion.

I will give three quick examples of where the $5.1 billion might have been spent: 325,421 seniors could have received the guaranteed income supplement; 7,467 new hybrid buses could have been purchased; or 815,869 unemployed workers could have received EI. Would that not have been money better spent than overpaying for the F-35 jets?

Opposition Motion—National Defence
Business of Supply
Government Orders

10:30 a.m.

Liberal

Dominic LeBlanc Beauséjour, NB

Madam Speaker, the member for Hamilton Mountain is absolutely right. She has identified some very worthy expenditures that, in our view, could be funded from some of the savings of holding an open Canadian competitive process. We believe that at least $3 billion of savings could be found by having a open competitive process, not to mention the jobs that would be created in the aerospace industry, which my colleague from Westmount—Ville-Marie, I am sure, will be addressing.

The member for Hamilton Mountain outlined some priorities that are worthy of funding. The Liberal family care plan, for example, is one that for us that is very important to help families look after children that may be ill or aging parents. I can think of small craft harbours in my riding of Beauséjour that require funding. I can think of some of the cuts that the government has made to ACOA, for example, job creation measures in small rural communities that I represent. The arena in Richibucto burned down a year and a half ago and the government has not come forward with funding to replace what is a big regional hockey rink for families in the northern part of my riding in a remote small town.

If I am being asked whether we should waste money on a reckless process because there is an ideological bent in the Conservative government or should we look at other priorities of Canadians, the member for Hamilton Mountain is absolutely right.

Opposition Motion—National Defence
Business of Supply
Government Orders

10:35 a.m.

Liberal

Marc Garneau Westmount—Ville-Marie, QC

Madam Speaker, I first want to thank my colleague from Beauséjour for his excellent contribution to this debate. I am happy to add my own contribution for several important reasons.

First, I am a former member of the military and I know how the government should ordinarily go about purchasing equipment. Second, equipment purchases often have a huge dollar value, and as a responsible government, we must ensure that we spend taxpayers' money wisely, especially when we have unprecedented budget deficits and a growing national debt under this Conservative government.

It is irresponsible to spend taxpayers' money unwisely, which is clearly what the government is doing in purchasing these F-35 fighter jets. My party certainly recognizes that Canada needs to replace the CF-18s, which will reach the end of their useful life by the end of this decade. It is our duty to make sure our military personnel are properly equipped for the demanding work they do. I hope everyone is in agreement on this.

So how should we proceed? Certainly not in the way this government has decided to proceed.

There is a very well established procedure within the Government of Canada when it comes to purchasing equipment. I was myself involved in using this procedure during my career as an engineer in the Canadian navy.

This acquisition procedure is a tried and true process, which has proven over time to be the best process when it comes to making expensive government purchases

It is not unlike the process that we ourselves, perhaps more informally, use as simple citizens when we make purchases, particularly big purchases, in our own lives from time to time, such as buying a new car or putting a new roof on our home. Obviously most Canadians are careful when they spend their own money.

Therefore the question is: Why can this government not be careful in spending the taxpayer's money?

Let me take the House through the normal acquisition process, and I am sure it will agree with me that this is the proper way to replace our current fighter jets.

First, we have to recognize that our fighter aircraft are aging, the technology they use is outdated, maintenance costs are increasing, and so on. In short, it is time we replaced them with more modern equipment. As well, the roles our fighter jets are expected to play may have changed. We therefore need a new model that can handle these new roles.

This brings me to the second step in the process: defining roles. Yes, we need fighter jets, but why? What are their missions? The answer may seem obvious, but we also need to ask this question: who is the enemy? We have to recognize the primary role these jets play, which is to help us protect our territory, but we also have to consider our alliances with NORAD and NATO, in particular, and the missions we could be asked to take part in because of those alliances. In short, why do we want these fighter jets?

Third, once we have defined the roles we expect of our fighter jets, we undertake the task of defining the technical requirements for this new fighter aircraft, its performance capabilities: how fast it can fly, its endurance between refuelings, its capability to operate with other aircraft from other nations, the amount of payload it can carry, particularly weapons payloads, its manoeuvrability, its survivability and so on.

Once that is defined, we go shopping. We put out an RFP, a request for proposals, and we wait for the bids to come in. We typically involve three government departments, PWGSC that manages the contract, DND that defined the initial requirements and then goes out and evaluates the bidders, and finally Industry Canada that addresses the issue of industrial and regional benefits.

Let me take a bit of time to talk about Industry Canada's role because it is a very important one for Canadians to understand. Industry Canada has a responsibility that could be summarized as follows: when Canada spends billions of dollars offshore purchasing equipment like fighter jets, we also negotiate important offsets with the winning contractor.

Those offsets are in fact guaranteed, and they require the winning contractor to provide business to Canadian companies in an amount equivalent to the value of the contract. This is allowed to occur over a certain period of time, and typically Canada tries to ensure some regional distribution whenever this is feasible.

What is also important to remember is that these offsets can offer the opportunity to transfer intellectual property to Canada, thus building capacity in our aerospace industry. This transfer of intellectual property can be particularly important for the in-service support, or ISS, of the equipment we are purchasing.

When the Liberal government purchased the CF-18s in the early 1980s, it was far-sighted enough to insist on the transfer of intellectual property that would allow Canada to undertake its own maintenance of the aircraft during its lifetime. As we all know, lifetime maintenance costs are usually greater than the initial acquisition costs. This was a very smart move on the part of the then-Liberal government, because it allowed a Canadian company to build expertise in the maintenance of a top-of-the-line fighter aircraft.

Let us go back to our process. Once the bidders on a contract are evaluated, both in terms of performance requirements and the offsets they are prepared to offer, we are then in a position to select the best aircraft for Canada, the best aircraft for the defined missions, and the best industrial and regional benefits for the Canadian aerospace industry.

Why are they the best? Why is this the best way of going about it? In one word, it is because it is a competition. By definition, when a competition is held, the best deal is found. Everybody knows that.

Let us now look at what is happening with the current government and its intention to purchase the F-35. Did it hold a competition? Clearly not. First the Minister of Industry told us in 2008 that we would hold a competition. Then earlier this year we had the Minister of National Defence tell us, yes, the government was going to hold a competition based on the high-level requirements that were presented in the spring of this year.

Then on a quiet summer morning in July, the government announced that it had held a competition based on a high-level requirements list it issued in the spring and that the F-35 was the clear winner.

In actual fact the Minister of National Defence contradicted this on many occasions when he said in this House of Commons that the real competition took place about 10 years ago, back in the late 1990s, a competition that we all know was not a Canadian competition but a competition run by the Pentagon to choose its new joint strike fighter.

Were other jet fighter manufacturers invited to respond? No. Even though companies like Boeing, which makes the Super Hornet, or Dassault, which makes the Rafale, believe that they meet the requirements issued by the government last spring.

Now we have a fighter jet that is still in development and that could cost us a fortune to maintain. The Pentagon is worried. The Norwegians are worried. The British are worried. The Dutch are worried. The Australians are worried. Here is an excerpt from ABC News on November 5.

Australia's biggest defence purchase is under a new cloud over reports the Pentagon is preparing to reveal a cost blow-out and even more delays with the F-35 Joint Strike Fighter. The US-based program has been beset with problems and the Defence Department is putting it through an extensive and thorough review. Critics of the aircraft say each one will easily cost Australia more than $100 million.

There are many other quotes that I could give, from respected authorities who have also corroborated the fact that this airplane is not yet out of the woods. It still has further development to undergo. It still requires further design modifications, which raises the possibility that this aircraft could be very expensive to maintain throughout its life.

That is the situation, and I hope it is not as dire as some critics of the program have made it out to be. What is clear, though, is that this government's message that everything is just great rings false.

We have reason to be concerned about a government that has an annoying tendency to award military contracts without holding an open competition. The Auditor General talked about this in connection with the Chinook helicopters.

The government is being irresponsible with Canadian taxpayers' money. We have pointed this out. We must go out for a fair competition.

Opposition Motion—National Defence
Business of Supply
Government Orders

10:45 a.m.

Conservative

Steven Blaney Lévis—Bellechasse, QC

Madam Speaker, the government's commitment to go ahead with the purchase of 65 F-35s will help create thousands of high quality jobs and generate investment of billions of dollars in our manufacturing sector at a critical time for our economy, now and in the future.

That is according to Gilles Labbé, from Héroux-Devtek, a Quebec aerospace company. Pratt & Whitney said the same thing, as did Marc Parent, from AIAC. Quebec's aerospace industry leaders are telling us that this project is a windfall for Quebec's aerospace sector.

What will the hon. member from Montreal say to Quebec companies that are working so hard on this project that is so very important to Canada as a whole? What will he say to these companies and workers who will be denied these economic spinoffs because of an irresponsible approach that compromises our security? We would not know what to do without planes. What does he have to say to our workers as an elected member from Montreal? Why is he abandoning Quebec's aerospace industry?

Opposition Motion—National Defence
Business of Supply
Government Orders

10:45 a.m.

Liberal

Marc Garneau Westmount—Ville-Marie, QC

Madam Speaker, I will answer by reiterating what I said in my speech. First, we have a responsibility to the taxpayers of this country. We can, through an open bidding process, secure the best price for the Canadian taxpayer and not spend more than is absolutely necessary for new fighter jets.

Second, I can assure the hon. member for Lévis—Bellechasse that the guaranteed spinoffs for Canada and Quebec's aerospace industry will be just as good as if not better than what is being offered in the F-35 purchase, which offers absolutely no guarantees. Open bidding is the best way to proceed.

Opposition Motion—National Defence
Business of Supply
Government Orders

10:45 a.m.

NDP

Claude Gravelle Nickel Belt, ON

Madam Speaker, I would like the hon. opposition member to explain to Parliament why there is such a big difference in the price of the planes. Australia is paying $60 million for each F-35, while Canada is paying $138.5 million for the same thing. Why is there such a big difference in the price of the planes?

Opposition Motion—National Defence
Business of Supply
Government Orders

10:45 a.m.

Liberal

Marc Garneau Westmount—Ville-Marie, QC

Madam Speaker, I thank my colleague for the question. The cost of the aircraft is based in part on the method used to calculate it. Are we simply talking about the units or other equipment for the aircraft? The simulators, spare parts and infrastructure that go along with the purchase of aircraft also have a price tag. Naturally, the opposition does not have access to the figures, which the government is carefully guarding. Therefore, I cannot give a definitive answer the member's question about why the price differs according to the country.

Opposition Motion—National Defence
Business of Supply
Government Orders

10:45 a.m.

Liberal

Scott Simms Bonavista—Gander—Grand Falls—Windsor, NL

Madam Speaker, I want to congratulate my colleague on his speech. Certainly he outlines, quite rightly, the potential that this could hold under a true competition.

However I would like him to comment on what seemingly, because of this debate, is a very bizarre circumstance when it comes to the fighters themselves. Juxtapose that with the situation with search and rescue, where we have been meandering back and forth from department to department on whether there is a competition or not.

I was wondering if he would like to comment on that. Seemingly there is a lot of confusion there, but when it comes to the fighters, there is no problem. It seems to be very efficient when it comes to that announcement.

Opposition Motion—National Defence
Business of Supply
Government Orders

10:50 a.m.

Liberal

Marc Garneau Westmount—Ville-Marie, QC

I thank my colleague for an excellent question.

Certainly the issue of fixed-wing search and rescue aircraft to replace the very old Buffalo aircraft is one that has been kind of hidden from the scene by the government.

Obviously everybody recognizes the important of search and rescue, but at one time the rumour was certainly there that again DND, the defence department, had made its decision. It had its favourite search and rescue fixed-wing aircraft, which was from another country. It did not really want to have a competition, even though there are Canadian companies that would like to bid in this. Therefore, we do not really know what the situation is--

Opposition Motion—National Defence
Business of Supply
Government Orders

10:50 a.m.

NDP

The Acting Speaker Denise Savoie

Resuming debate, the hon. Minister of Industry.

Opposition Motion—National Defence
Business of Supply
Government Orders

10:50 a.m.

Parry Sound—Muskoka
Ontario

Conservative

Tony Clement Minister of Industry

Madam President, I am pleased to speak today about opportunities for Canadian businesses.

On the subject of the F-35 Lightning II joint strike fighter aircraft, of course, the government's decision that it intended to acquire the 65 F-35s was announced on July 16. I was present, along with the Minister of National Defence and the Minister of Public Works and Government Services. It also goes without saying that this is the largest defence program ever undertaken, and certainly as Canada's Minister of Industry I can tell the House that Canada's aerospace sector is engaged.

However, the Liberal Party's position of scrapping the F-35 program does not help our men and women in uniform. It does not help the Canadian aerospace industry, which should benefit from this project for the next 45 years.

According to industry representatives, this position could, in fact, hurt the Canadian aerospace industry. This prospect has not stopped the Liberal Party from disregarding the facts and maintaining its partisan attitude.

The bottom line is that the F-35 is the right aircraft for the job and this is the right program to keep Canada at the forefront of the global aerospace and defence industry.

I will give a bit of background, if I might. In 1997, Canada signed on to an international consortium to develop the Lockheed Martin Lightning II, as it was then called. It did so after an exhaustive consideration of the alternatives for a CF-18 replacement at the end of this decade.

Our predecessors chose the Lightning because they believed it to be the best aircraft for Canada, a measure that we supported because it was and continues to be the right thing to do.

The F-35 is the single largest fighter aircraft program in history. This program is a multinational effort to build an affordable, multi-role and stealthy fighter aircraft. Total production may reach 5,000 aircraft worldwide.

The program is unique in terms of the access offered to Canadian industry to participate in the production and sustainment of this entire volume of aircraft.

Our government seeks to apply the most effective industrial benefits practices for its major defence procurements, as illustrated through the F-35 industrial participation model and as recently done through my updated IRB policy.

I can tell the House that we are committed to leveraging major investments in military equipment to encourage long-term industrial development and significant economic activity in Canada. Canada's early engagement on the F-35 has positioned Canadian industry for long-term work on the world's largest defence program.

The unique nature of the F-35 international co-operative development program required a different approach to industrial benefits. I think that is absolutely clear.

In order to facilitate the F-35 program's industrial participation approach, the federal government signed industrial participation plans with each of the F-35 prime contractors; that is Lockheed Martin, of course, but also Pratt & Whitney and the GE Rolls-Royce Fighter Engine Team.

These agreements identify opportunities for Canadian companies to develop technologies for the JSF program, the F-35 program.

The plans also include strategic opportunities awarded to Canadian companies that are determined to offer best value to the program.

Canadian companies have demonstrated that they can offer best value to the F-35 program in these technology areas. Therefore, the F-35 primes, the prime contractors, were able to award work packages to Canadian firms.

The value of these potential benefits is regularly updated to reflect new opportunities that arise, and this will include future sustainment and follow-on development opportunities.

Thanks to Canada's early involvement in this program, Canadian firms have already benefited from long-lasting, high-quality business opportunities by direct involvement in the design of the F-35 parts and subsystems.

Early engagement has allowed our companies to build on Canadian strengths, as well as establish new strategic capabilities in Canada.

The scope of the opportunities is, of course, tremendous since Canadian companies will be able to provide products and services for not only Canada's fleet of 65 fighters, but also for the entire global F-35 value chain. As I mentioned, that translates to work involving as many as 5,000 aircraft that are expected to be built for customers around the world.

Of course, this opportunity will create jobs across our nation over the next 40 years. That is a whole career's worth of work for today's engineering graduates.

What is more, Canada is also well placed to benefit from future investments in areas such as maintenance, repair, training and simulation. Over the next four decades, Canadian companies will have the opportunity to export their expertise and contribute to the sustainment and operation of the thousands of aircraft that will be produced over the lifespan of the project.

In case, Madam Speaker, you are worried that all the benefits of our support of this program come only in the future, let me assure you that our investments have already paid dividends.

To secure our participation in the international partnership, approximately $168 million in payments have been made by the Government of Canada to the F-35 program. But as a result of our participation, more than $350 million in contracts have been awarded to Canadian companies, research laboratories and universities, even prior to making our intention to proceed.

That means we have already seen a two-to-one return on our investment, and that is just the beginning.

Currently, over 85 companies have identified industrial participation opportunities, and over 60 companies have confirmed contracts. Of course, these numbers are expected to grow by the time the F-35 enters full production in 2015.

It also should be noted that opportunities are expected to benefit small and medium-sized enterprises across our country, not just the large ones.

Under this program, Canadian industry has a unique opportunity to participate in the production and maintenance of this series of aircraft.

This is a large-scale initiative. Canadian businesses will have the opportunity to supply goods and services not only to the fleet of 65 fighter jets in Canada, but also to the entire global supply chain for the joint strike fighter.

As this represents up to 5,000 aircraft, jobs will be created and maintained throughout Canada during the expected 40-year life span of the F-35 aircraft.

The government's participation in the JSF program, the F-35 program, has led to real results, allowing Canada's world-class firms to create highly skilled, well-paying jobs for Canadians. I will give some examples.

This summer, Avcorp Industries of Delta, B.C. announced the signing of an agreement with BAE Systems for the production of carrier variant outboard wings for the F-35 commencing this year with potential deliveries through 2023. The hon. Minister of State for Western Economic Diversification was there for that announcement as well. According to Avcorp, this contract may result in the delivery of up to 340 shipsets of the outboard wings, representing in excess of $500 million in revenues over the 10 to 15 years of production and creating approximately 75 direct and indirect jobs.

Another example of a Canadian success story is Composites Atlantic of Lunenburg, Nova Scotia. This company is manufacturing composite fuselage panels for the F-35. It has earned a reputation as a leader in the design, testing and manufacture of advance composites for a wide range of industries, including space, defence and commercial industries.

Yet another example is in Dorval, Quebec. Héroux Devtek Aerostructure Division has been awarded 43 different structural components, while the landing gear division in Longueuil, Quebec will have the responsibility for the engineering, development and manufacture for eight models of F-35 door lock assemblies.

In Winnipeg, Bristol Aerospace is producing horizontal tail components for the F-35. Bristol officials have said that employment at their company may increase by as many as 100 people as the contract awards grow. According to the company, $11 million has already been awarded and millions more are to come. Due to this success, Bristol has been working on a $120 million upgrade to its Winnipeg plant to prepare for the F-35 work.

The Prime Minister, the Minister of Public Safety and I visited the Bristol plant just last month. We met and shook hands with the exceptionally skilled and committed workers who work there on behalf of their company and on behalf of Canada as well. Indeed the women and men of Canada's aerospace industry are some of Canada's greatest strategic assets.

My colleagues and I have participated in other events across the country to highlight the benefits of Canada's participation in the F-35 program. Ministers and government MPs have visited companies across the country, including NGRAIN in Vancouver, Honeywell and Goodrich in Ontario, and Esterline CMC Electronics and Pratt & Whitney Canada in Quebec.

I should inform the House that after I complete my speech and answer questions and comments, I will be visiting GasTOPS, a company in Vanier, here in Ottawa, that is producing the debris sensors for the F-35. I am looking forward to meeting the workers and discussing with them how the F-35 is a great opportunity for new jobs and new opportunities right here in Ottawa and Vanier.

No other aerospace and defence program would provide Canadian industry with access to participate in the production and sustainment of between 3,000 and 5,000 aircraft. This represents a huge pool of opportunity for Canadian employers. Canadian companies have already proven to be competitive in the F-35 program by offering innovative technologies at competitive prices.

In addition to the over 3,100 partner aircraft, Lockheed forecasts export sales of more than 2,000 additional aircraft to non-partner countries, and of course Canadian companies will benefit from those sales.

Naturally, the industry is behind the program all the way. When will the Liberal Party stop playing petty politics and support the Canadian aerospace industry?

As a point of comparison, the F-16 itself had a production run of over 4,400 units. With the F-35 expected to replace the F-16 and the F-18 and many other platforms, the market potential for the F-35 is very evident.

By competing for this high-value work at the beginning of a multi-year, multi-billion dollar program for an international market, Canadian companies will not only contribute to their success in the short term, but will also see significant opportunities for decades to come. Canadian businesses, research laboratories and universities have been participating in the design and development of the aircraft and its systems, and are taking part in a supply chain that is producing a state-of-the-art aircraft that is expected to capture over 70% of the fighter aircraft market as the program reaches peak production.

Canadian participation in this program has been and will continue to be an integral aspect of our aerospace and defence industries' success now and in the future. Put simply, the F-35 program brings significant benefits to Canada and Canadian industries. It gives Canadians a rare opportunity to take part in the global supply chains that will shape business relationships in the aerospace and defence sectors for decades to come. It will create high-value jobs for the men and women of Canada's world-leading aerospace industry, and will sustain that work for decades to come. It will create work that will be there for students graduating today and for their children too. These are real opportunities and real benefits for communities across this great nation.

With the economic recovery still fragile, the hard-working men and women of Canada's aerospace industry can rest assured that this government is on their side.

The Liberal Party's position is forcing it to choose between two options: ground the Canadian air force when the CF-18s reach the end of their useful life, or purchase an aircraft other than the one that it used Canadian taxpayers' money to develop. Which option will it choose?

Opposition Motion—National Defence
Business of Supply
Government Orders

11:05 a.m.

NDP

Chris Charlton Hamilton Mountain, ON

Madam Speaker, I listened carefully to the minister's speech and the glowing reports about the potential jobs and the potential production, all to the benefit of Canadians.

I am from Hamilton Mountain and in our community, the minister just is not credible anymore after what we have seen at U.S. Steel, where apparently a foreign takeover was supposed to guarantee jobs, was supposed to guarantee production. Not only did we see huge layoffs, but now workers are being locked out, and here we are again, signing another deal with absolutely no accountability, absolutely no transparency.

Lockheed Martin is under no commitment to spend dollar for dollar the value of the contract in Canada. There is no guarantee of any kind of return for Canadian industry, so how can the minister stand in this House and tell us with certainty that this is a good deal for Canadians because it will create jobs and will protect production?

Opposition Motion—National Defence
Business of Supply
Government Orders

11:05 a.m.

Conservative

Tony Clement Parry Sound—Muskoka, ON

Madam Speaker, this is the problem with NDP math. She thinks it is a better idea--

Opposition Motion—National Defence
Business of Supply
Government Orders

11:05 a.m.

NDP

Chris Charlton Hamilton Mountain, ON

Come to Hamilton.