Bill C-10 (Historical)

An Act to amend the Air Canada Public Participation Act and to provide for certain other measures

This enactment amends the Air Canada Public Participation Act to provide that Air Canada’s articles of continuance contain a requirement that it carry out aircraft maintenance activities in Ontario, Quebec and Manitoba and to provide for certain other measures related to that obligation.

Air Canada Public Participation Act

[Michelle Rempel, Conservative, Calgary Nose Hill, AB]

Madam Speaker, I will be sharing my time with the member for Huron—Bruce.

I am really impressed that the Liberals have been able to bring the debate about Bombardier and government intervention to the House in a bill that does not mention Bombardier at all.

My colleague, the opposition critic for transport, outlined what the bill is all about. In her speech last week, she outlined the curious timing of various announcements around Air Canada's order for the Bombardier C Series aircraft. The same day Air Canada made its announcement to purchase these airplanes, the Minister of Transport announced that he would lessen Air Canada's obligation under the Air Canada Public Participation Act. Then the minister put the bill we are debating on the Notice Paper, and on March 14, Air Canada made an announcement, and so on and so forth.

Let us just call a spade a spade. What we are talking about here is that the bill is quid pro quo for Air Canada buying the C Series aircraft.

I wish we were just having a simple debate about what the government is going to do, if anything, for Bombardier, because since the dawn of time, this has been an issue that is essentially about robbing Peter to pay Paul, with Peter being western Canada and Paul being Bombardier.

I have a few questions with respect to this bill.

There was a report that was completed in, I believe it was the middle of 2015, around the transportation industry. Air Canada put forward a series of recommendations on different legislation or requirements that could be put in place to make its industry more competitive internationally. It is quite a thick document, over 95 pages long. It put forward, actually I counted 66 recommendations to do just that. What is in this bill is a very small component of that.

My big concern is that I do not understand the impact this would have on western Canada, specifically Winnipeg's aerospace sector. There has been so much effort put into building up Winnipeg's aerospace sector by various different levels of government. It is arguably a success. What would this bill do for that? That is my concern.

This bill would actually remove the requirement for Air Canada to have its maintenance jobs located in the places that it does right now. However, for the purposes of my speech, I am going to talk about Winnipeg.

Manitoba, I believe, dropped its litigation against Air Canada in return for the building of a centre of excellence, as many of my Liberal colleagues have talked about today. However, what would happen, when the bill passes, if Air Canada decided to, let us say in five years, close down the centre of excellence, or what if it did not exactly comply with how many jobs it is touting? Frankly, we have not even heard what type of jobs are going to be created through this centre of excellence.

For me, this is a terrible example of government intervention run amok, because by trying to use this quid pro quo bill to bolster Bombardier, it is going to have a huge unintended consequence on the aerospace sector in Winnipeg, and this is in an academic exercise. If we talk to the employees of Aveos, I think that they would probably have something to say about this. There is a really good article that I got from CJOB. As a former Winnipegger, I have to give a shout-out to one of my favourite radio stations. Employees were saying that they do not understand why a centre of excellence is needed for aircraft maintenance, that they already are a centre of excellence for aircraft maintenance.

I really like this quote:

We know that, for people that lost their jobs, they’re not entirely happy because they lost good, well paying jobs. But right now we don’t have any of those jobs. Now we’re getting 150 back, and we think we can grow that starting in 2017 to a higher number of jobs.

The article talks about how many of these jobs moved to El Salvador when Aveos closed:

Quebec was suing the airline after the closure of Aveos Fleet Performance in 2012, which led to 2600 employees in three provinces lose their jobs, including more than 400 Manitobans. Those jobs went to El Salvador.

Why would the Liberals not bring forward the issue of Bombardier to study? They voted down a study at industry committee to have Bombardier executives come and talk about their needs. I have read things like one of Bombardier's vice presidents saying that they do not need a backup plan because what is secured is already more than they require.

As a legislator who is responsible for voting on public policy that impacts the jobs of people', these things would be good to know. My suggestion for the Liberals is this. Rather than simply tabling the bill and ignoring the fact that many jobs are on the line in western Canada, which always gets the short end of the stick when we talk about Bombardier, they should be bringing that forward for us to discuss. This is not the right option at this point in time.

Since we are talking about Bombardier, what I do not understand is that the government is bringing forward legislation essentially to prop up Bombardier, when over 100,000 people are out of work in Alberta right now. The Liberals are going out of their way to ensure that there is quid pro quo for a company that is going to receive orders for an aircraft. They are changing legislation to ensure there cannot be countersuits for Air Canada offshoring some of its jobs, as there has been in the past. They are doing all of this, but have we heard one thing about them making the regulatory environment better for the energy sector? No, we have heard the opposite.

We heard they would change the regulatory environment for the energy sector such that it would become a lot less clearer for investors looking at new projects. What else did they say? They said that they would look at a carbon tax and put more burden on investment in that area. They went out of their way to say even that if a major energy infrastructure project like energy east went through the review process and got a green light, they did not know if cabinet would approve it.

Also relevant to the bill, the Liberals have not talked about retaining skilled labour. In western Canada, one of its key determinants to economic growth is the retention and attraction of skilled labour. It does not matter what industry we talk about. In fact, Economic Development Winnipeg in its brief about the aerospace sector talks about the skilled labour workforce, a very specialized workforce. What happens if these jobs disappear? How does that impact other companies in the area?

It is the same thing with the energy sector. The Liberals have not talked at all about how they will ensure that people in Alberta stay in Alberta. If there is an opportunity to see new projects in the future, investors will see that all the people with expertise with this awesome, world-class infrastructure of talent have moved away and maybe think they should not build there.

The bill is so short-sighted. It shows the Liberal approach to dealing with economic issues. First, look at a squeaky wheel company in Montreal. I am not saying it is not important to the Canadian economy, but we should have a debate if we are to talk about legislative measures on how we support it. Let us talk about Bombardier. The second component is where is the discussion on western Canadian jobs both in the aerospace sector and energy sector? We are not seeing that.

It is incumbent upon the Liberals to look at what they are doing here. The bill should be called the “quid quo pro bill”. We should be voting on it as such. There is no guarantee that these jobs will stay in Winnipeg and we have no information on what this would do for the aerospace sector as a whole. They should also talk about why they have not raised this for the over 100,000 people who are out of work in my province. This is crazy and I really hope the Liberals reconsider their priorities in future legislation.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Madam Speaker, I thank the hon. member for joining me in noticing the way the western Canadian aerospace industry has been left out of the discussion. We should be taking a more comprehensive approach and trying to develop an aerospace strategy for the country that involves all of its regions, rather than engaging in these kinds of one-off deals.

Part of the narrative that we are hearing from the government side has to do with this happy coincidence of Air Canada just happening to make an order for Bombardier jets and provincial governments just happening to drop their lawsuits. Is the time not propice, which I think was the French word used earlier by the parliamentary secretary, to bring these changes forward?

I do not know if it is sunny ways sort of occluding the government's view of how negotiations actually happen or if there is something more cynical at work. However, could the member comment on how a changing government and a government that is willing to gut the Air Canada Public Participation Act changes the bargaining position of provincial governments that, heretofore, had a case to make in court and no longer do? Of course, they are willing to sign up for a centre of excellence, because it is the best they can get in a context where the federal government is selling them out.

[Michelle Rempel, Conservative, Calgary Nose Hill, AB]

Madam Speaker, I have two points in answer to my colleague's question.

First, yes, this bill would allow Air Canada to set up a centre of excellence, but it would remove the legal recourse for provinces to take Air Canada to court should it offshore its maintenance jobs. That is a problem.

He also raised a very interesting point in terms of looking at a strategy for the competitiveness of our aerospace sector in general, things like how we can ensure that small and medium-sized enterprises are certified and ready to get into the supply chain of OEMs, or how we can retain and attract the best and brightest labour from around the world to ensure that have innovation, that we have receptor capacity such that technology developed in Canada is manufactured in Canada, and companies are started in Canada.

There are so many things the government could be doing, but instead it has chosen the quid pro quo bill.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Madam Speaker, I want to acknowledge the experience my colleague brings to this conversation as the former Minister of State for Western Economic Diversification, and the importance of legislation as it pertains to retaining skilled expertise in our country.

Taking that into consideration, would she be willing to comment on the very narrow focus of this legislation? We know the minister has in his hand the Emerson report, in which Air Canada made a number of recommendations on what could be done to ensure it was more competitive. Would she be willing to comment on that?

[Michelle Rempel, Conservative, Calgary Nose Hill, AB]

Madam Speaker, I would gladly comment on that. In fact, I have the recommendations in my hand. There are over 66 of them. Many of them have to do with taxation structure, building global hubs, and developing strong airport infrastructure. I think there are over two dozen on that. I think there are also two dozen on an efficient regulatory system. There are quite a few.

There are so many recommendations that the government could look at that would benefit other industries as well and bolster things like the Winnipeg aerospace sector. Instead, again it puts forward, as the short title, the quid pro quo bill.

[Ben Lobb, Conservative, Huron—Bruce, ON]

Madam Speaker, it is a pleasure to rise today in the House to speak to the bill.

I like Air Canada. I fly it whenever I can. I generally support what it has done. Therefore, I am not just any Air Canada person up here speaking.

How did we get to this point? Many roads and paths have brought us to this point. However, one of the biggest impacts to Air Canada in recent times, certainly in the last decade, and we do not need to go too much further than back to 2008-09, was when we saw sky-high fuel prices in the midst of an economic downturn. That caused many problems for Air Canada, and many other corporations as well in North America. Pension solvency was a huge issue, as were massive debt load, and many other issues.

If we take a look back almost 10 years now, that really put Air Canada in a make-or-break situation. I give it full credit for what it has done in the last decade. It has turned a company that is over 70 years old around and has a 40% top-line revenue growth. Therefore, it is obviously doing many things correctly, and I congratulate it on that.

There is one thing that would be tremendously helpful. We have heard this today and have heard it in the past. When I was at the technical briefing some weeks ago, I was not quite sure if this bill passed all of the litmus or smell tests that we would like to see in a bill. It would be great if the minister would turn over the correspondence he has had with Air Canada, Bombardier, and the Government of Quebec, so we can understand the timelines we are now looking at. I do not know if it is coincidence, but certainly many things have happened in a very short period of time that have caused the raising of a Spockian eyebrow.

I give full credit to Air Canada for turning around its finances. Its 2015 annual finances were reported a little while ago. It showed record profits of $1.22 billion in net income for 2015. In 2014, its previous record, it showed $531 million of net income. Therefore, many things have fallen into place for that to occur.

Another accounting and reporting term Air Canada uses is EBITDAR. I always refer to it as EBITDA, which is earnings before interest, taxes, depreciation, and amortization. I guess the aviation industry adds an “R” to its reporting for restructuring. That was also a record $2.5 billion.

Another great number that is working in Air Canada's favour is the cost per available seat mile, which was another record.

In addition to that is the average projected fuel cost, which plays a huge part in the success or failure of an airline's finances. I believe Air Canada is projecting about 52¢ a litre, if memory serves me correctly, compared to last year which was over 60¢ a litre. If we compare that to 2008-09, the numbers are really good.

Therefore, a lot of things are trending in the right direction for Air Canada and its finances. In fact, everything is going so well that it has also announced it will repurchase up to 10 million shares, with the option of repurchasing an additional 5 million shares. Those shares are close to $9 per share. Therefore, there is some available capital to Air Canada at this point in time.

I want to read directly from Air Canada's media room site with respect to its expense side and what it experienced in 2015. This highlights one of the points that I think many members are scratching their head over with respect to the argument of where, when and how we should perform maintenance.

It states, “Aircraft maintenance expense to increase $250 million from the full year 2015...”. If we read that on its own, we would think that it is making a point here. However, if we read further, it states, “...of which approximately $100 million is estimated to be due to the weaker Canadian dollar when compared to the U.S. dollar.” That means it is performing maintenance contracts around the world and when it brings all of those financials back home, there will be a $100 million negative impact on that, which would also raise an eyebrow.

In addition, the remaining increase is mainly due to higher end-of-lease maintenance provisions, which is due to fewer lease extensions in 2016 versus 2015, the impact of a higher number of operating leases, an increase to maintenance expenses to the Boeing 787 aircraft, and the fly-by-hour arrangements that they have.

My point is that in doing business in Canada, if the maintenance of Canadian labour were such a burden, we would have certainly seen this in the 2014 annual report and in the 2015 annual report, where the CEO or the CFO would have made explicit mention of these high costs. In addition to that, CEOs travel the country, go to conferences, and make presentations to investors and industry. I am not criticizing the CEO, because he has done a fine job of the economic and operational performance of the company, but I would think that the long-term concern for high labour costs would have to come up in a presentation or an official document that the company sends out in annual or quarterly reports. We do not see that, and I am not the first to mention this point. Today the narrative is certainly not being made for these high costs.

I go back to my time when I worked in the automotive parts sector. In 2000 we started seeing these problems on a competitive front, and 15 years later we are still seeing them. In annual reports we would see the CEO and the CFO always commenting about the lower labour rates in developing countries.

Also, today I have heard other members, mainly government members, saying that this would unshackle Air Canada, that it would now be able to become competitive around the world on maintenance, etc., which is fine. However, what I would say goes back to the review of the Canada Transportation Act. It is that we cannot do just one thing on competitiveness. This is just picking a low-hanging fruit while neglecting all the other issues that would allow the aviation industry here in Canada, and the airline industry more specifically, to be extremely successful.

One key component that is a long-standing issue is traffic rights—landing slots or spots—and the issues around the protectionist nature that we have in this country.

As an example, Air Canada flies to Dubai every day. It flies from Dubai back to Canada every day. We would think that reciprocity would be extended to the Emirates airline so that it would be able to fly every day into Pearson and every day from Pearson back to Dubai. My research indicates to me that it is only three days a week.

It is the same with the major airline out of Qatar. It has three flights a week from Qatar to Montreal and vice versa. Why not include landing slots? Why not make it available? Air Canada has increased the number of flights to Dubai. Why not reciprocate? This is all about competition. It is all about thinking about the consumers, the travellers, and letting them have choice. That is just one example.

The review act actually mentions that there should be seven days a week for flights to those countries, so I lay that out for consideration.

I have talked about timing. Others have talked about Aveos. I would be interested as well to hear if the union, which just ratified an agreement on behalf of 7,500 members, was aware of this legislation coming forward. I am sure they would have some interesting comments for the public on that point.

As for getting it cheaper elsewhere, I do not believe that. I know that the company I used to work for, Wescast, dealt with China, South Korea, and Mexico. We dealt with all these, but where do they go now to get world-class R and D work? Right in Ontario, because we have the know-how.

[Kate Young, Liberal, Parliamentary Secretary to the Minister of Transport]

Madam Speaker, I want to take the time to reiterate that the government wants to ensure that the changes to the act would continue to require Air Canada to carry out aircraft maintenance in certain Canadian regions, and this proposed legislation maintains that commitment.

The act currently refers to the City of Winnipeg, the City of Mississauga, and the Montreal Urban Community. I take note that the Montreal Urban Community, which no longer exists as a jurisdiction, did not include all of greater Montreal. For example, it did not include Mirabel. Also, Air Canada's activities extend throughout the greater Toronto area, not just Mississauga. There have been a number of changes, and these changes to the act would enforce the requirement that jobs stay within Canada.

[Ben Lobb, Conservative, Huron—Bruce, ON]

Madam Speaker, I would call that, at the very best, a technical amendment of very little subsequent consequence, so what is the urgency? If that is one of the only things that we need to change with this bill, why waste all this debate on one little line in the legislation? Why not tell Air Canada that we will do this, but we also want to have a much larger bill that has many more benefits that would dovetail in with what the review said.

Why do this little bit and then tell us that next year we are going to do another one? We know there are four years to a mandate, and there is really only one chance to do a piece of legislation like this. That is not going to work. This is going to be post-2019.

We should have waited. We should have done a lot more to help make aviation in this country competitive.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Madam Speaker, part of the issue around Bill C-10 is really about the nature of a deal and the worth of a deal.

In 1989, when Air Canada was privatized, there was a deal made with Canadians that we would continue to enjoy the benefits of having a major aerospace company that was Canadian, which meant doing the work in Canada. We have heard a lot from the government about how deals cannot be broken, how the deal is sacrosanct, and asking what the word of the Government of Canada would be worth if we went back on a deal. Well, what kind of responsible conviction is it that allows the government to break a deal with Canadian workers while not being willing to say no to a country with a terrible human rights record and selling that country arms? What kind of responsible conviction is that?

[Ben Lobb, Conservative, Huron—Bruce, ON]

Madam Speaker, all I will say is we will get no better results than we will get from the people who are currently doing the job today. The people who are doing those jobs are the centre of excellence. It is fine if the company wants to move 20 miles, but if it thinks it is going to move to a place in my riding, for example, where are all the workers going to come from? The skill is in those communities. Let them do the work and let them do it well.

[The Assistant Deputy Speaker, NDP, Carol Hughes]

The hon. member will have approximately two minutes when we resume debate on this matter.

The House resumed consideration of the motion that Bill C-10, An Act to amend the Air Canada Public Participation Act and to provide for certain other measures, be read the second time and referred to a committee, and of the amendment.

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

Mr. Speaker, first, I would like to mention that I will share my time with my hon. colleague from Elmwood—Transcona. He will have an opportunity to speak to this very important bill, which will have a real impact on people's lives.

Most days, I am pleased to rise in the House and participate in debates with my parliamentary colleagues. Today is a bit different. Today, I feel bitter and disappointed about a major decision made by the Liberal government that is the culmination of betrayal, deceit, and a lack of trust. This Liberal government is letting down 2,600 families across Canada, including 1,700 in the Montreal area. These families are being completely rejected by this Liberal government and Bill C-10. They are being left high and dry.

I will try to give a little bit of background. The Air Canada Public Participation Act took effect in 1988 and set out the conditions for the privatization of Air Canada, which took place the following year in 1989. Section 6 of the act specifically states that maintenance on Air Canada aircraft must be carried out in three specific cities in Canada: Winnipeg, Mississauga, and Montreal. That worked for years. Air Canada complied with the act, awarding a contract to a subcontractor in the Montreal region named Aveos, which went bankrupt in 2012. That is where things start to get complicated. Aveos went bankrupt and disappeared, but Air Canada did not find a replacement. On the contrary, Air Canada took advantage of the situation and relocated those jobs to various countries around the world, such as the United States and countries in Europe and Asia. These 2,600 workers lost their jobs, even though they were guaranteed by a federal law duly passed by the House of Commons and applied for years.

The Conservative government of the day stood by and did nothing to enforce the law, but the Liberals wanted to demonstrate their support for the workers as well as their camaraderie and solidarity. We even saw the current Prime Minister, the member for Papineau, demonstrate with unionized workers on Parliament Hill chanting “So-so-so-solidarity” and demanding that the Conservative government of the day enforce the law. His argument, a good one, was that the least a law-and-order government could do was enforce the law, particularly when doing so would save good, well-paid jobs in a high-tech sector.

As soon as the Liberals took over, they changed their tune. So long “So-so-so-solidarity”, hello “Relocate; forget about our good jobs; who cares about the aerospace sector?” The government is basically telling these people that their jobs are gone for good.

When they came to power, the Liberals realized they did not have to enforce the law because they could just change it. That makes things much easier, for sure. There is no need to enforce the law when it can be changed so that Air Canada is no longer required to carry out aircraft maintenance in Canada.

We have to wonder whether that is the Liberal plan for job creation, namely eliminating the good jobs we have here in Quebec, in Mississauga, and in Winnipeg and shipping them off to the United States and Europe, because that is what will happen under Bill C-10. This bill means abandoning the workers represented by the International Association of Machinists and Aerospace Workers, supported by the FTQ. They took their case to the Quebec Superior Court, which ruled in their favour in 2013. Air Canada appealed that decision, and the case went to the Quebec Court of Appeal. In 2015 the Quebec Court of Appeal also ruled in favour of the workers.

I would like to quote Justice Marie-France Bich, of the Quebec Court of Appeal:

From the moment that Air Canada decided to close this centre [the Aveos centre in Montreal] or reduce its activities in such a way that they were no longer at the same level as they had been in 1988, it broke the law.

This could not be any clearer. Bill C-10 threatens to pull the rug out from under the workers by making it that much harder to take this kind of legal action. When they are arguing their case before the Supreme Court, if section 6 of the act is amended, there will be a whole new legal framework. The changes to the Air Canada Public Participation Act set out in Bill C-10 are extremely weak, or virtually non-existent, in terms of Air Canada's obligations.

There is no longer any requirement to keep jobs in this country, let alone a minimum of jobs, a certain volume of work, or a percentage of tasks that must be carried out in Canada.

In short, they are giving Air Canada a blank cheque. The government wants to provide flexibility, but before long Air Canada will be doing contortions to outsource the good jobs that we have in Canada. I am saddened to know that our government is not giving a second thought to the lives of 2,600 families and is prepared to cynically abandon them after publicly supporting them. That is sad.

I am rising in the House of Commons today with a sad story of employees at Air Canada who lost their jobs in 2012. We are talking about 2,600 families around the country. Air Canada had the legal obligation to do the maintenance of its planes in Canada, especially in Winnipeg, Mississauga, and Montreal. Now it can do whatever it wants.

When the Liberals were in the opposition, they stood outside this building with the workers, with the union, singing “solidarity, brothers and sisters”, saying that they would support the union's jobs because they were good jobs. They were asking the Conservative government to apply the 1988 law about Air Canada.

When they gained power, it was like some magic appeared, and the Liberals changed their mind completely. Now they are singing another song. It is no longer “solidarity forever”, but “job creation for United States, Europe, or Asia.” With Bill C-10, there would be no more legal obligation for Air Canada to keep those good jobs in Canada. Air Canada would have a blank cheque; it could do whatever it wants.

It is sad because the workers and their union, the machinists and in Quebec the QFL, went to court and won twice. They won in the Superior Court and in the Court of Appeal of Quebec. The decision of the judges was crystal clear that Air Canada was not respecting its legal obligation about the maintenance of its planes. Now the Liberals want to change the law and that might have a profound and brutal impact on the legal pursuits in the Supreme Court of Canada of those hundreds of workers.

Now the Liberals are saying they do not want to help them anymore, that Air Canada can do whatever it wants, and workers can find another job. However, aerospace is a very important sector in our economy, especially in the Montreal area.

We do not agree with the Minister of Transport's argument that Air Canada will create jobs by buying Bombardier's C Series aircraft. That is comparing apples and oranges. If Air Canada buys the C Series, it will be because it is a good aircraft and they need it.

We refuse to pit the aircraft manufacturing sector against the aircraft maintenance sector. We can and should support both. The Liberals should understand this. They should be ashamed that they are giving up hundreds of good jobs and sending them abroad. We are asking them to finally listen to reason and to withdraw Bill C-10.

[Kate Young, Liberal, Parliamentary Secretary to the Minister of Transport]

Mr. Speaker, I think the hon. member and I can agree that our aerospace industry is very important, but he has forgotten some of the key points to the changes to this act and what this would do.

Quebec has estimated that the creation of the centre of excellence in Montreal alone could produce 1,000 jobs over 15 years, while the manufacturing of Air Canada's C Series aircraft could create an additional 300 jobs.

Air Canada also intends to support the creation of 150 jobs in Manitoba with the possibility of expanding beyond that.

It is obvious the opposition is not understanding the positive impact that the changes to the act would have.

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

Mr. Speaker, my colleague does not have the facts right. First, the centre of excellence is not in Montreal. It is supposed to be in Trois-Rivières. She needs to have the right city first.

By the way, Bill C-10 has nothing to do with the fact that Air Canada will buy Bombardier's C Series, and that is a good thing They are good jets. However, we are talking about legislation that will change the law about the maintenance of airplanes. They are two different things. We should not compare bananas with oranges, or apples or whatever fruit.

Regarding the excellency centre in Trois-Rivières, it maybe will do the maintenance for the C Series in 15 or 20 years, but we have absolutely no guarantee about job creation there.

We are talking about real families and real jobs that the Liberals are abandoning right now, and that is bad.