Government Operations Committee on Feb. 15th, 2022

[The Chair, Conservative, Robert Gordon Kitchen]

Thank you.

We'll now go to Mr. Kusmierczyk, for five minutes.

[Irek Kusmierczyk, Liberal, Windsor—Tecumseh, ON]

Thank you very much, Mr. Chair.

I really do appreciate the conversation and the responses we've heard today. Thank you very much for your testimony.

Besides increasing the naval capacity of Canada, some of the parallel goals or aims of the national shipbuilding strategy are to restore shipbuilding to rebuild the marine industry, the blue economy in some sense, and to create jobs as well. We see that in our community, in our region, with a company called Hike Metal, which is a small shipbuilder and supplier out of Wheatley, not too far from Windsor.

Other than distributing economic benefits to different regions, do you see other advantages for increasing the number of shipyards with the capacity to build, for example, icebreakers and other ships?

[Andrew Hayes]

I'll ask Mr. Swales to add to my answer. Obviously we have three coasts, and the ability to operate in the west, the east and the north is becoming even more important as we are seeing shipping lanes expand in the north and that sort of thing. Having a shipbuilding environment here in Canada is a reasonable undertaking. At this point in time, the balance of getting ships in a timely way with the economic benefits and with the objective of getting a sustainable shipbuilding economy going is a challenge.

Mr. Swales, would you like to add to that?

[Nicholas Swales]

I would add two points. One is that we did see in the late 1990s and early 2000s the impact of a boom-and-bust cycle on shipbuilding, the cost it can incur and the time it can take to rebuild in order to meet the underlying policy statement, which is that government ships will be built in Canada, broadly speaking. If we're going to have that policy, it makes sense to have the capacity to implement it.

The other thing I would add is that we need to remember the shipbuilding strategy. While our report talked about the large ships, it does have two other components to it: small ship construction and repair, refit, and maintenance. There is a lot of other activity going on through the strategy that requires an industry to support it or undertake it.

[Irek Kusmierczyk, Liberal, Windsor—Tecumseh, ON]

In looking at Canada's fighter force, you talked about some of the HR concerns and the challenge with recruiting and retaining talent. I know that's outside the scope of the shipbuilding report that you provided, but is there a sense that we're seeing an influx of talent technicians as a result of the fact that we've expanded the number of shipyards now and because of the national shipbuilding strategy? Again, I know it's outside the scope of the report, but is that something you've picked up on? Are we seeing, for example, local colleges pumping out or turning out new graduates specifically in shipbuilding with those technical skills?

[Andrew Hayes]

I'll start off with the comment that Mr. Swales made a bit earlier about the fact that in the forces there might still be a problem, based on their public reporting for recruitment and retention. I think your question expands into whether jobs are being created and whether the various regions are benefiting from that. Mr. Swales may have a view on that.

[Nicholas Swales]

I would say two things. One is that through looking at the idea that there's a need to maintain the workforce, clearly that workforce has been developed. The other aspect is about one of the economic benefits that was required by the shipbuilding strategy. This is not something we talked about in the report, but it's a feature: Companies were required to invest in building that workforce. Some of the economic benefits were specifically targeted at that activity.

[Irek Kusmierczyk, Liberal, Windsor—Tecumseh, ON]

Mr. Chair, how much time do I have?

[The Chair, Conservative, Robert Gordon Kitchen]

You have eight seconds.

[Irek Kusmierczyk, Liberal, Windsor—Tecumseh, ON]

Okay. I will yield.

[The Chair, Conservative, Robert Gordon Kitchen]

Thank you very much.

We'll now go to Ms. Vignola.

Ms. Vignola, we'll give you an extra eight seconds. You have two and a half minutes.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Thank you, Mr. Chair.

In your audit of the National Shipbuilding Strategy, you mention that the government had taken steps to extend the useful life of its aging ships, but that you hadn't made any recommendations in this regard.

Since essential services have been delayed due to aging ships, why has your office not made recommendations?

[Andrew Hayes]

Mr. Swales, do you have a comment on that?

[Nicholas Swales]

That's basically because our comment was about the need for timely replacement of ships. Life extension was essential, but the real challenge is to make sure that the new ships arrive on time.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Okay.

In your audit, you also mentioned that you hadn't verified whether the ships that would be built would provide the expected capacities.

Why is that?

[Andrew Hayes]

I would ask Mr. Swales to answer that question.

[Nicholas Swales]

Our audit focused on delivery times, on whether the ships would be delivered on time. At the time of the audit, almost no ships had been delivered. The process of confirming whether the new vessels had the expected capacities wasn't really possible for the vast majority of ships.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

What resources would your office need to evaluate the National Shipbuilding Strategy as a whole and to ensure that all the objectives of the strategy are indeed met?

[Andrew Hayes]

I think we have the capacity internally to do the assessment. The question is whether progress has been made so that we can do all of this work.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Okay.

Thank you, gentlemen.

[The Chair, Conservative, Robert Gordon Kitchen]

Thank you very much.

We'll now go to Mr. Johns. As Ms. Vignola still had 10 seconds, we'll add that to Mr. Johns' time.

Mr. Johns, you have two minutes and forty seconds.

[Gord Johns, NDP, Courtenay—Alberni, BC]

Thanks.

I'm going to go right back to capacity. You touched on small ships a couple of minutes ago. Here we are. We talked about Port Alberni, where the Port Alberni Port Authority is actively trying to get federal investment to build more dry dock space to build capacity.

What we've learned and what we've been hearing at this committee is that countries that have invested in long-term strategies for shipbuilding have much lower costs overall when it comes to shipbuilding.

Do you see potential for the government to create funding programs, so that they can invest in building capacity? Overall, it would help deal with some of the timing on delivery schedules and costs.

[Andrew Hayes]

That's a matter of policy. It would be a good question for the government.

I'll add that the idea of reducing costs by not having a boom and bust cycle is one of the objectives from before this procurement strategy was even implemented.

Your question ties to the second and third objectives of having a sustainable marine industry in Canada and having economic benefits realized for Canada.

[Gord Johns, NDP, Courtenay—Alberni, BC]

Right now, the markets where these ships are being built are very expensive when it comes to housing and the cost of living. Other countries, such as Norway, Finland and Sweden, have decided to invest in rural, coastal, communities and expand their shipbuilding capacity in those areas, because it's more affordable for people to live there.

As a long-term strategy, do you see that as an advantage that we should be looking at in Canada?

[Andrew Hayes]

Your question makes me think of the focus that we place as an office on evaluating and examining how the government is achieving the sustainable development goals, which would include infrastructure and spreading out benefits across the country.

At this point, we look at what the government has committed to, but that lens is something that comes through to me when you're asking that question.