Government Operations Committee on Feb. 15th, 2007

[Michael Fortier]

That is correct. That responsibility lies with the Minister of Industry. However, I can tell you that this is the first time in the recent history of Canada that a government has insisted so systematically with a foreign supplier that the spinoffs for Canada go to a particular industry. Over the years, we have seen some laxness on the part of previous governments, which, to some extent, let foreign manufacturers invest as they chose.

As we have often said, when we are talking about spending so many billions of dollars abroad, because we are purchasing goods that unfortunately are not manufactured in Canada, it is important that the same amount of money come back to the country and come back to this particular industry. We are not going to move an inch on this.

With respect to regional spinoffs, Boeing or the other countries that get contracts will negotiate contracts privately with Canadian suppliers. We want to create an even stronger industry, and we are very hopeful that ultimately, the industry will be even more dynamic.

[Louise Thibault, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

So you are not taking into account the existing regional configuration. In this particular case, Quebec counted for one of the highest percentages in this industry. In the case of the automobile or garment industry, this may be true of a different region. But you have no desire to make this demand.

I had thought that as the minister, you had started doing that, and that your approach had been changed. I can tell you that regional economic spinoffs are essential for Quebec and for the others, because we are talking about jobs. When I am told that the market will regulate itself, I do not find that satisfactory in any way whatsoever.

Do I have any time left, Madam Chair?

[The Chair, Liberal, Diane Marleau]

Your time is up.

The witness may answer the question later.

Mr. Moore.

[James Moore, Conservative, Port Moody—Westwood—Port Coquitlam, BC]

The minister may answer the question during my time.

[Michael Fortier]

As far as spinoffs go, it is not up to the Government of Canada to play the role of a police officer and to control all these investments.

However, when the Government of Canada itself takes concrete action... You were talking about Montreal, and I am pleased to remind you that in December I announced, on behalf of the government, the largest investment under the TPC program in the history of the country: $350 million to Pratt & Whitney, in Montreal. In that case, the government decided to invest in a particular industry in a particular location. So, we have made some choices, and we are acting accordingly.

With respect to economic spinoffs and the amounts that Boeing or others will have to invest in Canada, I would say that they already have their networks of suppliers. They already know where the centres of excellence are located. I am quite hopeful that the industry will be become more dynamic as a result of this exercise throughout the country.

[James Moore, Conservative, Port Moody—Westwood—Port Coquitlam, BC]

My question is about military equipment and the contract for the Boeing C-17. I heard Mr. Coderre, the member for Bourassa and the Liberal Party defence critic, say on the Mike Duffy show a few weeks ago that if his party could, it would tear up that contract and start over again.

What would the consequences of such an action be for our system? How much would that cost taxpayers?

[Michael Fortier]

It would cost a great deal of money, Mr. Moore. First of all, we would have to pay significant damages to the manufacturer, but in addition, I must tell you that we are talking about equipment that the Canadian Forces absolutely need. As you know, we are in a theatre where there are many challenges, in Afghanistan. If the Canadian Forces had had the equipment they so badly needed, equipment they have been calling for for years, we would not be in the situation which we find ourselves in today.

I was explaining to Ms. Thibault the other very negative impact of a hypothetical cancellation, because we are talking about a purely hypothetical cancellation of the contract. The transaction between PWGSC and Boeing is an excellent deal for Canadian taxpayers. We are right to be proud of it and to be proud of the team headed by Mr. Marshall. So for all these reasons, I think cancelling the contract would be disastrous.

[James Moore, Conservative, Port Moody—Westwood—Port Coquitlam, BC]

Are there any other contracts coming for the members of our armed forces, and what structure will be used for them? Will they take the same form?

[Michael Fortier]

As you know, we recently announced that for the 16 tactical aircraft and the helicopters, we were going to begin negotiations with American manufacturers. This equipment is necessary in the current circumstances: the Canadian armed forces have essentially been deprived of the equipment they needed to do the heroic work they do for all Canadians throughout the world, particularly in Afghanistan at the moment.

[James Moore, Conservative, Port Moody—Westwood—Port Coquitlam, BC]

You mentioned briefly one issue that I know you and the department have been working on. That is the issue of real estate and the exposure that exists for taxpayers, given the state of government buildings.

I was actually reading speeches from Scott Brison when he was the Minister of Public Works and Government Services just a couple of years ago, and the figure he consistently used was $3 billion of exposure to taxpayers; now I often see $3.5 billion to $4 billion. Just in the last couple of years, there has been this escalation of the exposure of taxpayers for federal government buildings that are so dilapidated.

Could you speak to this committee about the need for addressing this issue?

[Michael Fortier]

Thank you for the question. I did raise it in my notes, because I believe this is one of the issues the committee wanted to discuss with me.

I am very much concerned. I suppose that at the time Mr. Brison was as well. The $3 billion recap number that he threw out there has since ballooned to close to $4 billion. Because of the average age of our portfolio, which is closing in on 50, the less money we spend on these buildings, the more expensive it's going to be.

I have grave concerns about the state of our buildings; that is why I asked the department last summer to retain advisers to help us figure out the best approach to resolving these issues. These issues are very significant. I don't think we can wait much longer before we put the first building block on the ground--no pun intended--and address this issue smack-on.

In my opinion, this is not a partisan issue at all. It is a bipartisan issue and it's an issue that should concern all Canadians. We basically have neglected our real estate portfolio over many years; we've acted like absentee owners, and this is unacceptable.

[James Moore, Conservative, Port Moody—Westwood—Port Coquitlam, BC]

I'm almost out of time. For many members of Parliament and communities across the country, the presence of federal government buildings is....

Prince George is not a small community. I lived there for two years. It is not a small town, but relative to Canada's big cities.... In downtown Prince George the provincial government offices, the provincial court offices, and the federal government building were really an anchor for economic development around them.

The smaller the community is, the more important is the presence of post offices, and so on. Is the sensitivity of small communities something the department has taken into consideration and recognized?

[Michael Fortier]

Most definitely, Mr. Moore. Only a sampling of the assets was considered by the experts, and they were mostly, if not all, in large urban areas. Although our footprint is across the country, the government owns 372 buildings, as distinct from lands, which are owned by Canada Lands. These are buildings; however, the 40 buildings studied by these experts were all in urban areas, and not in small communities at all.

[The Chair, Liberal, Diane Marleau]

Thank you very much.

Mrs. Nash is next.

[Peggy Nash, NDP, Parkdale—High Park, ON]

Thank you, Madam Chair.

It's good to see you again, Mr. Minister. Thank you for being here.

On procurement, I think we all welcome a strategy for green procurement, and since the environment has jumped to the top of everyone's agenda, it's important that our federal purchases and federal buildings be as energy-efficient as possible.

In your remarks, you said that as well as environmental performance, the criteria include price, performance, availability, and quality. You said most of the jobs resulting from procurement go to Canada, but is that kind of job creation--investing in Canadian businesses, investing in jobs--an explicit criterion in our procurement strategy?

[Michael Fortier]

Do you mean of job creation?

[Peggy Nash, NDP, Parkdale—High Park, ON]

Yes.

[Michael Fortier]

Well, we've discussed this in the past. It goes without saying that if you're buying most of your goods and services here in Canada, you're obviously breathing oxygen into the economy. Given that we spend so much as a government, I'm in favour of buying as much as we can up here in Canada. If we do, we're going to be helping small, medium, and larger corporations add employees and create wealth in their communities. I'm in favour of that, for sure.

[Peggy Nash, NDP, Parkdale—High Park, ON]

Is that an explicit criterion when the government goes searching for anything from military purchases--and I appreciate that defence is a separate beast--to uniforms, vehicles, other civilian vehicles, furniture, and that kind of thing? Is it an explicit criterion in our search?

[Michael Fortier]

We are subject to various trade agreements, as you know, so we're always proud when we hear about Canadian companies that succeed overseas. There are other companies overseas that also succeed overseas, and sometimes over here. We open our procurement in a large number of cases to basically everybody, but the net result is that a very large majority of the folks who win these RFPs are Canadian.

[Peggy Nash, NDP, Parkdale—High Park, ON]

Aside from defence, what is the largest source of foreign contracts? What kinds of procurement, would you say?

[Michael Fortier]

You are asking about foreign contracts?

[Peggy Nash, NDP, Parkdale—High Park, ON]

Yes.

[Michael Fortier]

That's a good question.

Do we know that offhand, Mr. Marshall?

[David Marshall, Deputy Minister, Department of Public Works and Government Services]

Not really; it's not very large, but it's very hard to track, because of course we deal with foreign companies that are almost household names in Canada--IBM and so on--so it's hard to know exactly where.