Thank you, Mr. Chair.
Welcome back, everyone.
I would just remind those who are tuning in for perhaps the first time that what we're discussing here is that the Conservatives put forward a motion this morning to release the contracts with the main players, for which the government has signed large taxpayer subsidies for EV battery assembly plants, mainly for the assembly of parts that are made in China for Volkswagen, Stellantis and Northvolt. The latest one is with Honda, although I understand that it is an MOU; it's not a formal contract the way the others are.
For a while, we've had a number of players, both from within the company and from the Korean government, stating that there are two phases. There's the construction phase for the Stellantis contract in Windsor and for the Volkswagen contract in St. Thomas, Ontario. Then there is what's called a production subsidy contract, a separate contract that subsidizes the production of every battery produced in those plants. For the production subsidy, for every battery, the taxpayer will pay a certain percentage of the cost.
As we know, in the public statements the Liberal government has made over the last year or so on some of these contracts, they've claimed that both the construction jobs and the jobs that will be permanent in the plants will be held by Canadians. This process around the Stellantis plant actually started in the fall when the South Korean ambassador went to Windsor and said they were trying to make sure there was room to house 1,600 workers involved in either the construction of the facility or the permanent running of it. Those are jobs for workers from South Korea, not Canada. That's out of a total of about 2,300 construction jobs and supposedly 2,500 jobs at the Stellantis plant once it opens. The cost of those plants is quite high. An estimated $15 billion of taxpayer money will be going into production subsidies for the Stellantis plant in Windsor once it starts producing batteries. Half a billion dollars of taxpayer money is going to go into the construction of that particular facility. In the case of Volkswagen, $778 million is going into the construction.
Members of the government have accused us at various times, whether in the House of Commons or in this committee, of making this stuff up, but this all started with the South Korean ambassador saying that they needed a place to put 1,600 people. This isn't something we made up; it's indeed what he said. On November 16, 2023—and this is a quote from a newspaper article—“Chief Bellaire and members of the Windsor Police Service were honoured to be visited by His Excellence, Ambassador Woongsoon Lim and his colleagues from the Republic of Korea,” who said, “With the new [LG Energy] Solutions battery plant being built, we expect approximately 1,600 South Koreans traveling to work and live in our community in 2024.” So this isn't one, as was claimed initially by the government, or just a few, as some of the Liberal MPs have claimed.
I'll give you this quote from one of the local business development people that goes back as far as August 18, 2023:
LG asked us to put together a group of local developers and investors to present their needs for the next one to three years, said Invest WindsorEssex vice president of investment attraction and strategic initiative, Joe Goncalves.
I quote Joe Goncalves:
They're expecting from 600 to 1,000 workers will be coming to set up equipment. Another 300 to 500 people will be coming from LG to run the facility here. The specialized workforce was needed to set up the half-dozen buildings on the NextStar battery plant site and they will come from South Korea. There will be a lot of need for housing. They wanted to let the community know early what the numbers would be and the types of housing and workers.
I don't know about you, but over the years, off and on in my interaction with governments—and I did serve for a few years in the dark ages for the foreign minister of Canada in the Mulroney government—I never met, or rarely met, a diplomat who freelanced who went out on his own making stuff up. They usually went at the behest of the government and businesses.
For those who said that this is nothing, you say that more than $15 billion of taxpayer money is going into an auto plant where, of the 2,300 construction workers and a similar number of supposedly permanent workers once it's open, 1,600 of them are going to be coming from South Korea. That's what started this whole controversy last year.
The government disputed that, and we began a process in December in this committee, which examines government expenditures, to ask for the release of those contracts. The reason we asked for it is that construction had already started. The money had already started being spent in the Stellantis case on construction, so half a billion dollars of taxpayer money was already going into that. Officials from the Korean government were saying something different from what the government was saying publicly.
The head of NextStar at one point verified that those were sort of the numbers. It would be up to 600 people to 1,000 people coming in from Korea to oversee 600 local construction workers. Again, in the House, one of the Liberal ministers said that there would only be one work permit issued. Subsequently, we learned that, in addition to what the ambassador had said, on the ground things were clearly much different from what was being said by the Liberal government about what was happening in the Stellantis construction.
The letter dated April 10, not that long ago, to the Prime Minister from Sean Strickland, the executive director of the Canada's Building Trades Unions, condemned the Prime Minister for the lax contract that was allowing this to happen.
In fact, in his letter, he wrote, “We are writing to request your personal intervention”. Prior to this letter, the Prime Minister had had a visit there. “We are writing to ask for your personal intervention to resolve the ongoing use of international workers in the construction of the Stellantis NextStar EV Battery Plant in Windsor.”
They went on to say that they have been negotiating, talking and trying to work with Stellantis to get an MOU to ensure that good, local Canadian tradespeople were being hired for the construction. Their responsibility is the construction phase, but their best efforts had not borne any fruit.
In fact, he said, “Despite our best efforts at negotiating a resolution, without public or media commentary”. In other words, the union went to Stellantis in good conscience, and all due respect, and said they should have a private conversation to make sure that what they were seeing didn't continue in the hiring of workers who were doing non-specialty jobs and coming in from abroad when, according to the union, 180 tradespeople in their union who are unemployed and looking for work could qualify for these jobs. They said they were not going to the media. They were just going to try to have a legitimate, good business discussion.
In spite of that goodwill, “LG and Stellantis continue to use international workers through subcontractors for work which our members are ready and able to perform”. It went on to say that, as I mentioned, “180 local skilled trades workers in Essex, Kent region, millwrights and ironworkers are underemployed, and in some cases unemployed, and available to perform this work. In fact, Canadian workers are being replaced by international workers at an increasing pace on work that had previously been assigned to Canadian workers.”
What the union is saying here is that there were actually Canadian tradespeople working on the site, but they've been replaced by people from outside the country, otherwise known as foreign replacement workers displacing Canadian unionized trade skills people in helping to build this plant.
They say that, as of April 10, “Fifty additional international workers are expected to arrive and begin work that was previously indicated would be performed by Canadian workers.” That's right in the letter to the Prime Minister. Apparently, what the government is saying publicly is not what's happening on the ground. The union went on to say, “Canadian workers are being sidelined without consequence.” There's no penalty. Government's putting half a billion dollars of taxpayer money into this construction. It's okay if you take Canadian tradespeople out of the construction of this and replace them with people from South Korea. I'm even told, through sources through the union, that some of them who are actually on the ground are coming from Mexico and not South Korea and replacing in not specialty jobs. These jobs are for forklift operators or general construction. They're replacing them.
In fact, the union went on to make the accusation that, “This is a slap in the face to Canadian workers and utterly unacceptable”. This is particularly, as they recognize, when “shareholders stand to benefit from more than $15 billion” of tax incentives from the Canadian government.
Just so the people watching understand what that tax incentive is, it's in response to a bill that President Biden passed through the U.S. Congress called the Inflation Reduction Act, which actually spends a lot of money. Spending money doesn't actually reduce inflation. It increases it. The misnomer of the bill aside, it sets out the subsidy that the U.S. taxpayer would pay for battery assembly of EV batteries in the United States. It sets out that any batteries made between now, when a contract is signed, last year....
I shouldn't say “made”. They're not made. They're assembled. Over 90% of the parts for EV batteries currently come from China, helping out that economy. They get assembled here, in Ontario, and then are subsidized between now and the end of 2029. Can you guess by how much? How much do you think it would be reasonable for the taxpayer to pay companies that have more revenue than the Government of Canada and subsidize the assembly of Chinese battery parts in an EV battery in Canada? I can tell you. I'm seeing puzzled faces around the committee table. The answer is 100%, if you can believe it.
That's between now and the end of 2029.
Some things in life.... Occasionally, somebody asks me a question and I say, twist my rubber arm. I think, twist my rubber arm, why don't you come here and set up a battery assembly plant where you can bring in foreign replacement workers, and the Canadian taxpayer will pay 100% of the cost of that assembly. That's a tough business decision to make when that means that the battery—and I don't know if people watching understand this—in an EV takes up 30% to 40% of the manufacturing cost of any EV. In other words, between now and the end of 2029, the great negotiating skills of this Liberal government see 100% of those costs being borne by the taxpayer, meaning 100% profit for these auto companies that are larger in revenue than the Government of Canada.
Now, if that's not enough, I know in the Volkswagen case, for example—I'm not sure that this is the case in Stellantis—Volkswagen doesn't assemble any cars in Canada and has no plan to. So Volkswagen's going to put all those batteries on a truck and ship them to their plant in Tennessee, assemble them there, and sell the cars in the United States.
Let's put it another way. The Canadian taxpayers are making sure that Volkswagen gets a clear 40% profit on the sale of their EVs, paid for by the taxpayer in Canada, for cars that will be assembled in the United States and sold in the United States. That's a hundred per cent. Now, not to be outdone, of course, they didn't want to take it too far, so in 2030 the contracts in the IRA, which these mirror, makes that 30%, down to 75%. So there's a bargain. Volkswagen and Stellantis only have to cough up 25% of the cost after five or six years of manufacturing batteries. After all of that, they then do 25% of the cost and then wait for it in 2030, 2031, when it's 50%.
We're shortly getting to a parity thing here, and in 2032, finally, they're paying 75%, but the Canadian taxpayer is still paying 25% of the cost of those batteries. And somehow the Liberal Minister of Innovation, Science and Industry thinks that he negotiated a great deal. He thinks that, if it wasn't for his efforts, Volkswagen and Stellantis wouldn't have been willing to come here to have the Government of Canada pay 100% of the cost of assembling the batteries. They must have been asking for 110% of the cost, and he got them down to 100%. Way to go. That is the basis of this so, even in that extreme, we've got the union writing and saying, even in that extreme you don't have to employ Canadians. So they say, on the ground, the real experience—not as some of the local MPs have claimed—the union is putting in this letter is that these are not about knowledge transfer, these construction jobs, or specialized knowledge. The union says, “It's a brazen displacement of Canadian workers in favour of international workers by major international corporations thumbing their noses at both the Government of Canada, taxpayers, and our skills trade workers. For our members in Essex-Kent, the current state of affairs is intolerable. As such, the Canadian Executive Board has authorized us to use all necessary measures required to remedy the situation.”
So what happened after this letter went to the Prime Minister and they started to kick up a fuss and threatened to go to the media? LG and Stellantis said, let's sit down. Maybe we could have another chat. My understanding is they did and it resulted in what kind of MOU between Stellantis and the Building Trades Unions? My understanding is none. Zero. So the issue continues because the government's now claiming that the one job is now 72 jobs only, so it's okay.
As it escalates, maybe the government can explain what the acceptable level of foreign replacement workers would be that would justify this. It was one. Apparently, when that didn't turn out to be true, they decided it would be be 72. However, the union says in their letter that there are another 50 coming.
Now, let me understand what's going on in terms of this. If you don't think the union is right and you think that, for some reason, the union has an agenda that's different from the Liberal government, there are these job postings all over the place.
These are not specialized jobs. Material handler, Korean—