Industry Committee on Oct. 24th, 2006

[Jorge Garcia-Orgales]

The World Economic Forum report on global competitiveness put Canada at number 27 over 58 countries in unique products and processes, meaning we won't be able to compete in things that are originally from Canada.

Research and development in Canada is quite important. We think that instead of general tax cuts, there will have to be tax incentives for research and development as well as implementation of those new processes and products from the shop floor. In that sense, we call for a more energetic policy by the federal government to use the tax system to create incentives for research and development in Canada and for implementation of the research and development in our country.

[The Chair, Conservative, James Rajotte]

Okay.

I have Mr. Georgetti.

[Ken Georgetti]

It's a quick point, Mr. Masse.

The other area where there is a huge shortfall is venture capital in this country. The largest supplier of venture capital in Canada right now is money that is controlled by the labour movement, coincidentally. But there needs to be a lot more. Once the product is developed in the garage, or wherever they do it, there is a huge shortage of venture capital. The ability for venture capital to lift them into the development and research stage, where they start to go into production, is unavailable to most Canadian investors. In fact, they go to the U.S. and other places, where ultimately those products get exported back to our country.

[The Chair, Conservative, James Rajotte]

Thank you.

We'll go now to Monsieur Lapierre.

[Jean Lapierre, Liberal, Outremont, QC]

Thank you, Mr. Chair.

Welcome, madam, gentlemen. I'm going to address three or four points.

Mr. Vaudreuil, we've heard a lot today about manpower training and so on. At some point, someone said that the problems would be eliminated if everything was transferred to the province. Everything has been transferred. Furthermore, my colleague here signed other agreements with other provinces in the last months of the last government.

It was said that this total transfer would make things more efficient, that it would be more consistent with the reality, closer to the workers, that it would avoid duplication, and so on.

Has it solved the basic problems or only the administrative problems?

[François Vaudreuil]

As a member of the board of directors of the Commission of Labour Market Partners since 1998, since the Canada-Quebec agreement, I can say that there has been considerable progress. Trust me: it's not from an administrative standpoint, but rather an operational one. In that respect, what's been done is quite simply incredible.

However, as I said earlier, the needs are so great that granting more out of the employment insurance account would be welcome.

[Jean Lapierre, Liberal, Outremont, QC]

So, in concrete terms, you think this arrangement is a more effective vehicle.

[François Vaudreuil]

I think it's a model. I've observed what happened in France, Belgium and a number of other countries, and I have concluded that the Quebec model really works very well.

Furthermore, do we hear any negative comments on these questions from the Quebec labour federations or management associations? Never. In my view, Quebec is one of the best places for social dialogue. It brings together employers, unions, the education community and Emploi-Québec. This is an excellent arrangement, an excellent vehicle.

[Jean Lapierre, Liberal, Outremont, QC]

With respect to industrial policy, in principle, there should be one in a number of sectors, in particular in the aerospace industry. There are comprehensive or sectoral industrial policies. Again today, 485 lay-offs were announced at Bombardier, 200 more are to come, and so on.

You talk about a plan. Mr. Georgetti, I've been hearing speeches on industrial policy for many years now. We've managed to invent a few, including one just before the election on the aerospace industry. It was tabled, but it's now in limbo.

When you talk about a plan, do you mean a sectoral plan? We get the impression that circumstances in the manufacturing sector are completely different from one another. A single plan can't cover everything. To determine what aid measures should be adopted, we should proceed sector by sector. Quebec made an attempt at that when Claude Béchard published his document. It amounted to a lot of verbiage and served no purpose.

Is there a model, in a sector or in a country, that we could draw on? I've been interested in politics for at least 25 years, and no one's ever come up with anything in this area.

[An hon. member]

What are we talking about here?

[Jean Lapierre, Liberal, Outremont, QC]

About his great economic policy, which was so long.

[An hon. member]

The Quebec Advantage?

[Jean Lapierre, Liberal, Outremont, QC]

Yes. That thing only lasted one day.

[An hon. member]

But it circulated for longer.

[Jean Lapierre, Liberal, Outremont, QC]

Yes, but nothing came of it.

[François Vaudreuil]

The problem with the Quebec Advantage, and thus of Claude Béchard's policy, is like the problem with the Lussier Report, and here I'm talking about the deadlines set. Although the labour and management associations were consulted, they had trouble setting priorities, which resulted in an accumulation of information.

As for industrial policy, science, the universities and our own experience point to a genuine partnership, participation by workers and participatory management. In the United States, for example, it has been observed that 70 percent of business change models have been unsuccessful. I'm not saying that; it's the HEC. The objectives set have not been achieved. I think we have to learn a lesson from those experiments in work place change management.

The government has to adopt a policy designed to support the parties and develop employment. In my humble view, we should focus on that aspect in order to improve productivity and make our businesses competitive. In that way, it will be possible to preserve jobs and create others that are also of high quality.

[Jean Lapierre, Liberal, Outremont, QC]

I'd like to go back...

It's over? You scarcely have the time to get warmed up and it's already time to stop.

[The Chair, Conservative, James Rajotte]

I think Monsieur Crête took some of your time.

We'll go to Mr. Shipley for five minutes, please.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Thank you very much.

An interesting comment was made earlier by Mr. Georgetti that he would have supported universal day care. We put in a universal child care program for everyone. I'm just wondering in your party why it would be so good to have a program proposed that 5% to 10% of people would have used and that would not have addressed weekends, shift work, and holidays. I'm so glad we put a program in that addresses everyone, regardless of when they work and what their schedules are. It sort of shocked me that you would support a program that didn't really fit your type of industry that has shift work.

I also have a quick question on the manufacturing part of it. Mr. Garcia-Orgales talked a lot about the crisis in manufacturing. We've heard a lot on that through our discussions with manufacturing about the dollar, energy, labour...actually they didn't mention much about labour costs. You talked about how competitive you were, and that for $1 there was a $3 return. I can go to some other industries--actually one of the primary industries that feeds this country--where they say $1 invested returns over $7. What is your response on productivity in that respect?

[Jorge Garcia-Orgales]

There are a couple of things. There is this myth that workers and manufacturers in Canada are not productive. Just plain numbers will show that is not true. We've lost 250,000 jobs in the last two years and we didn't lose $1 in shipment in manufacturing. That means this country is producing at the same level as in the past without investment in new equipment, new plants, or skilled training, and with 250,000 fewer workers. That means the workers are producing a lot more with less investment and no increase in wages. So the myth of low or less productivity in the workers in Canada in the manufacturing sector doesn't have any basis in numbers when you look at the statistics.

The second issue is the one you mentioned quickly--labour cost. There was a study by KPMG that said Canada had the lowest business cost environment among the G-7 countries. The study is called “Competitive Alternatives”, 2006 edition.

Productivity has been increasing and wages have been stable. There are no numbers that really show that labour cost is an issue for Canadian manufacturing. Productivity is not an issue, again with a lot fewer workers, no investment in training, and no investment in equipment. Productivity is still at the same level and wages are not increasing. Taxes are the lowest compared to the G-7 countries. When you look at numbers and not the rhetoric, labour cost is not an issue in the manufacturing sector.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

I think one of your comments was that the manufacturing wages are 28% higher than the average wage in--

[Jorge Garcia-Orgales]

For the Canadian worker.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Okay.

Then you say your productivity is $1 invested for $3 returned, where in some cases other ones are quite a bit higher.

You say we've lost 250,000 jobs in manufacturing. We've had the lowest unemployment in many years, and you're saying they are jobs that don't pay very well.

We're losing some jobs in manufacturing. I'm wondering what you are doing by way of concessions to stop that from happening.

[Jorge Garcia-Orgales]

On what we are doing to stop the loss of jobs in manufacturing, we are first doing a presentation to you, and hopefully you will do something.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

I know what we can do. I'm asking what you will do. You have 28% higher wages and a productivity problem.