Shipbuilding Act 1999

An Act to promote shipbuilding, 1999

This bill was last introduced in the 36th Parliament, 2nd Session, which ended in October 2000.

Sponsor

Antoine Dubé  Bloc

Introduced as a private member’s bill. (These don’t often become law.)

Status

Not active
(This bill did not become law.)

Elsewhere

All sorts of information on this bill is available at LEGISinfo, provided by the Library of Parliament.

Canada-EFTA Free Trade Agreement Implementation ActGovernment Orders

March 23rd, 2009 / 1:05 p.m.
See context

Bloc

Serge Cardin Bloc Sherbrooke, QC

The members of this House know the Bloc Québécois' position on this Free Trade Agreement between Canada and the States of the European Free Trade Association. In our opinion, the agreement would benefit Quebec. And knowing that the Bloc Québécois defends Quebec's interests, members understand that we will support this agreement.

Today, I would like to come back to the shipbuilding industry in particular. Some things have happened in the history of shipbuilding, and some things have not been done.

For 25 years, the Conservatives and the Liberals have shared power more or less equally. However, I would like to refer to an article that appeared in the Canadian Press on November 11, 2008 about comments made by Denise Verreault. I quote:

The president of Groupe maritime Verreault, Denise Verreault, did not mince words yesterday as she condemned what she called politicians' “lack of vision” on the marine industry.

Speaking at the Institut maritime de Rimouski..., Ms. Verreault said that “politicians could not see further than the end of their own noses or...the next election” when it came to shipping.

For more than 25 years, the CEO of this company based in Les Méchins has criticized the fact that Canada has no marine policy, even though shipping will double by 2020.

“Quite simply, there is no political will or vision. The shipping lobby is not as strong as the trucking lobby. The marine industry needs a single association that is very strong, instead of a number of groups. Our politicians think that ships are a vanishing breed and that as a mode of transportation, shipping is too slow. The hidden costs alone of just-in-time trucking are phenomenal, not to mention the environmental impacts,” said Ms. Verreault, honorary chair of the 27th funding campaign for the Institut maritime du Québec.

We can see that Ms. Verreault was talking about a 25-year period, and we can say that she was referring as much to the Conservative government as to the Liberal government of the time.

There was another very interesting article this morning in the newspapers, about comments made by the member for Bourassa. In a Canadian Press report, we can read:

But to win Quebeckers' hearts, the Liberals will have to rely on more than just their leader's relative popularity. [The member for Bourassa] therefore announced the appointment of two new campaign co-chairs: Gaspé businesswoman Denise Verreault and [other people, of course].

Should anything be inferred from what Ms. Verreault said in November 2008 and her current involvement with the Liberal Party? It is clear from her comments that she condemns the Conservative government for its lack of action with respect to the shipbuilding industry. We also know that she condemned the Liberal government of the day for its lack of action with respect to the shipbuilding industry.

At present, the fundamental problem facing the shipbuilding industry is not necessarily an international trade one, but rather a problem with the industry per se. The fact is that our industry has been neglected for many years, while other countries were heavily subsidizing theirs.

The suggested time frame in the accord is 18 years, that is an initial three year waiting period, followed by a progressive phase-out over 15 years to ensure that the trade can really be considered as free trade, with no extra costs.

What matters is to know what the Conservative government will do and, particularly, given Ms. Verreault's involvement, what the Liberals will do in the next election campaign. I want to know whether Ms. Verreault's efforts will have been all for naught, in the sense that, come an election, she will realize that the platforms include no shipbuilding policy, even though, as we know, such a policy is needed.

What I would like to hear today from Conservative members, and of course from the Liberals and even the NDP, is what they suggest as policy for the shipbuilding industry. It was primarily the shipbuilding industry that caused negotiations to last more than 10 years and people to fail to agree. What could these parties advocate or do to come up with innovative options for the shipbuilding industry? These are main points that must become clear through today's debate. We have to know what the government is going to do and what a party that, as we saw clearly on the weekend, was all energized to potentially form the next government, will commit to doing for the shipbuilding industry. Of course, we must not forget that Ms. Verreault is there, probably to provide strong suggestions.

I would still like to raise a number of points. I do not know whether I will have the time to list them all, but the Bloc has proposed a lot of things specifically to enable the shipbuilding industry to improve.

We must not forget that the shipbuilding industry has some very special features, features unique to it, which must be taken into account in working to ensure its development.

The government must realize that, because of the high cost of its products, the industry needs special financial arrangements for sales contracts. Because its products' value often constitutes the lion's share of the buyer's assets, the industry needs special financial regulations.

Because of the significant investments involved in producing the first of a line of ships, the industry must share the risks it faces in research and development and requires special credit access facilities.

There is also the matter of instability. Shipyards regularly do not operate for a number of months between contracts. Because of its instability and the high fixed costs of its considerable capitalization, the industry must have access to a substantial line of credit.

As it is also excluded from most trade agreements, the industry's international environment involves governmental subsidies, protectionism and buy-domestic policies.

Measures offering protection and support are needed to permit fair competition. Because contracts from DND and the Coast Guard are important to the industry, it needs a government purchasing policy that contributes to its development.

Since Canadian shipowners make up its main clientele, the industry needs a policy that promotes the development of domestic marine transportation, in other words, cabotage. Since the law of the sea is inadequate and does nothing to force companies to replace those dangerous, polluting scrap heaps, those poison ships, the industry therefore needs initiatives to modernize international shipping.

In order to bring in a real marine policy, the Bloc Québécois is proposing measures to ensure the development of this industry, which is of strategic importance to Quebec. It is also essential to ensure the protection and safety of the environment. Many of these measures could help the industry. I would remind the House that the federal government has not supported shipbuilding since 1988. Not only are the few aid measures still available very poorly adapted to the shipbuilding industry, but the federal government has even penalized the provinces that have instituted innovative measures, such as the refundable tax credit in Quebec, which for some years was considered by Ottawa to be taxable income under the Income Tax Act. That allowed it to claw back 20% to 25% of the assistance paid by Quebec to the industry.

In any discussion of financing, insurance or loan guarantees involved in sales contracts, it is important to note that purchasing a ship or an oil rig is a multi-million-dollar investment. Access to credit at favourable interest rates is a critical factor for the buyer. Through EDC, the federal government should set up a sales contract financing program to finance the purchase, repair and conversion of ships in Canadian shipyards. The program should provide funds for a significant portion of the value of the contract—perhaps 87.5%—at private market interest rates to low-risk companies that are in good shape. The program should be offered to both domestic and foreign buyers.

One issue is loans and loan guarantees for shipyards that have to invest or provide a financial guarantee in order to bid on new contracts. The tax rules for financial lease agreements have to be improved. We must bear in mind that under these lease agreements, the ship buyer does not take immediate possession. The buyer rents the vessel for several years and does not take possession until some time later. Because the buyer does not own the ship, tax rules allowing him or her to write off depreciation against taxable income do not apply. The government should improve the tax rules that apply to lease agreements for buyers of ships built or refurbished in Canada.

There should also be refundable tax credits for ship owners. The government should provide a tax credit to ship owners who sign shipbuilding or rebuilding contracts with Canadian shipyards. Because operating a ship is typically not profitable during the early years—all income ends up financing the initial investment—the credit should be refundable.

I want to point out that, in 1999, Antoine Dubé, who was the Bloc Québécois member for Lévis, introduced Bill C-213, which contained measures similar to those I just discussed. In 2000, after the bill was introduced, KPMG conducted a study for the Shipbuilding Association of Canada. It showed that, with respect to the 16 shipbuilding contracts between Canadian ship owners and foreign builders in 1999, these measures alone—none of them subsidies—would have, in a worst-case scenario, kept four to six contracts here in Canada, resulting in an additional $100 million to $150 million in annual sales. Their best-case scenario showed that some contracts for foreign ship owners—for the construction of drilling platforms worth from $300 million to over $1 billion—could have ended up in Canada.

The government must systematically favour Canadian companies for purchases to meet military requirements or those of the Coast Guard, and for offshore investments, drilling rigs and, eventually, wind turbines. A few announcements have been made, but more needs to be done.

In establishing its purchasing criteria, the government has to put a stop to discriminatory rules that offload transportation costs onto the shipyards, penalizing those in Quebec more than those in the maritime provinces.

It must also take measures focusing on water transport within Canada. While international seaborne shipping is growing at an exponential rate, domestic shipping, or cabotage, is growing at a slower rate. But Canadian shipping companies make much better customers for our shipyards than foreign companies. Environmentally as well as from an energy standpoint, shipping is the most logical choice and should rapidly become increasingly popular, given growing concerns about climate change and depletion of fossil fuels. In a nutshell, far from being a thing of the past, shipping is a forward-looking transportation mode.

Why do several government practices limit the development of cabotage for the transport of freight? Dredging and icebreaking expenses incurred by the government along the St. Lawrence River are entirely offloaded onto shipping companies. Conversely, the cost of maintaining roads is shared among all taxpayers, instead of being paid by truckers. Such an injustice hinders the competitive capacity of water transportation in comparison to land transportation.

The government should also eliminate the fees charged marine transportation companies that practice cabotage. It should also put in place a major investment program for port infrastructure focusing on the infrastructure needed to develop intermodal transport. In addition, the government should bring up to standard all the ports it left to crumble given that it is responsible for ensuring the best possible use of its own infrastructure. The government should also strengthen the Coastal Trading Act to support Canadian shipping and to ensure that foreign carriers that practice cabotage are subject to Canadian laws, especially those governing working conditions.

As for measures pertaining to international marine transport, we should oppose flags of convenience. Canada must ratify the UN convention on ship registration and lobby internationally for its implementation. We must fight poison ships by strengthening international marine law and creating an agency such as ICAO for marine transport.

This is not an exhaustive list, but it does show both the Conservative and Liberal members that it is possible to put in place measures to foster the development and competitiveness of the shipbuilding industry and the marine industry in general. Today, I would like to know what is the position of the Conservative, Liberal and NDP members, and the measures they are proposing to entrepreneurs and employees in the marine industry. I would like to know and I am certain that Ms. Denise Verreault would also be interested.