Industry Committee on Oct. 24th, 2006

[François Vaudreuil]

In fact, I made that remark because we see a strong trend among finance ministers, in Ottawa and Quebec City, toward abolishing the capital tax.

We think that the abolition of that tax should go together with concrete results in the area of corporate investment because we're lagging far behind in that regard.

[The Chair, Conservative, James Rajotte]

As the chair, I want to ask a few wrap-up questions.

I want to thank you all for coming and for your very specific suggestions.

I've made some notes, but I believe the three of you...if you wanted to put something more specific on paper, please free to do so, in terms of recommendations with respect to imports from China, older worker adjustment programs, Canadian procurement policies, investing in technology, and these sorts of issues.

Mr. Georgetti, I have your brief here, which is very detailed. I appreciate your comment about the exchange rate in China, which I think is a very good point and certainly has a lot to do with the trade deficit.

I want a few clarifications. On page 15, you say we should withdraw from the Korean free trade agreement. Are there any conditions under which you would want to see this proceed, or are you recommending very firmly that the government withdraw from it completely?

[Ken Georgetti]

We say withdraw right now, because it's on a track that can't be salvaged. We think you have to withdraw, pull back, retrench, and rethink the strategy with Korea.

I'm sure you can come up with something that we and others would agree with, but right now it's on a real fast track to cripple our auto industry. We're very worried about this, and it's a sincere worry.

[The Chair, Conservative, James Rajotte]

I know you mentioned the temporary investment tax credit in response to Mr. Masse, and you may have mentioned this in response, but I just want to clarify it.

Are you in agreement with the recommendations about the capital cost allowance rates that the Canadian Manufacturers and Exporters put forward? Secondly can you sort of explain very simply how the investment tax credit would work, in terms of investment in new machinery?

[Ken Georgetti]

I don't know the answer to the first part of your question, because unfortunately I don't know what the CME has recommended.

We're saying that the automotive strategy in which they had that temporary investment tax credit, and it's granted for investment in new manufacturing and in machinery and equipment.... We also suggest that a higher tax credit be given for the purchase of Canadian-made equipment to help build Canadian manufacturing.

We use the example here in Ottawa and the contrast with Toronto. Toronto decided to buy Bombardier products made in Thunder Bay, and Ottawa decided to go with Siemens, and those cars will be made in Germany. That doesn't help build our manufacturing base in this country. So I would think there needs to be a procurement policy to go with that.

If there are any specific questions on the mechanics of this, the director of research in our department would be more than happy to supply the committee with that information.

[The Chair, Conservative, James Rajotte]

I appreciate that.

Also on the CCA rates, it's something that's been mentioned numerous times by numerous witnesses, so if you have your research department.... We have some interim recommendations, and it would be helpful if any of the rest of the witnesses want to comment on the CCA rates. It certainly seems to be one of the primary topics, so if we could have your input on that later....

The final thing I wanted to raise was the issue on page 18 with respect to wage earner protection. This was passed in Bill C-55, which was sort of grouped together with the bankruptcy and insolvency legislation. So it's officially been passed, but because of some sort of logistical issues, it's been hard to implement.

Would your recommendation be to section the wage-earner protection part of that bill off from bankruptcy and insolvency? You have wage-earner protection, which I believe all four parties agreed to before the last election, but you also have bankruptcy and insolvency, a very complex set of issues, which seems to be more problematic, in terms of passing the legislation.

[Ken Georgetti]

Our understanding was that any and all of the difficulties with the bankruptcy section had been resolved through the consultations process and the bill was coming back for proclamation. We had this assurance given to us from the minister himself. We were told that would be coming back. So I'm not sure why we would want to consider the bankruptcy section now. I thought it was resolved.

My understanding is that it's days away from proclamation.

[The Chair, Conservative, James Rajotte]

Okay.

Other than that, does anyone else have any final comments?

Mr. Carrie.

[Colin Carrie, Conservative, Oshawa, ON]

I actually did want a clarification.

First I wanted to thank you very much for coming today.

We have spoken to a lot of different manufacturing companies and sectors, and this is really the first good input we've had from labour.

One of the things that's really important for me, coming from Oshawa—

[The Chair, Conservative, James Rajotte]

Mr. Carrie, do you have a question?

[Colin Carrie, Conservative, Oshawa, ON]

Yes.

You mentioned the free trade agreement. You're really not in favour of it. With the Auto Pact, there was a one-for-one exchange. In this country, we seem to be producing about a million more vehicles per year than we buy. It seems we have benefited from the free trade agreement very much, yet you weren't in favour of it. A lot of people have said we need more of these agreements.

[Ken Georgetti]

If you characterize the Auto Pact as a free trade agreement, I'm with you, but I think that was—

[Colin Carrie, Conservative, Oshawa, ON]

I said the Auto Pact was before.

[Ken Georgetti]

That one-for-one is gone now. They've abrogated the Auto Pact. We're still benefiting from it, but it's a legacy. It's not part of the free trade agreement.

We're afraid we're going to see a lot more job loss—not just to the United States but also to Korea. And wait until China starts making cars. We need to make sure we get some benefits out of these trade agreements. As long as the playing field is level on the regulatory side, on the human rights side, and on the monetary side, we can live with the free trade agreement. Problem is, it seems to be only on the monetary side, with the other two forgotten.

[Jorge Garcia-Orgales]

I don't know the number you mention about a million more cars produced in Canada. I'm happy if that is true.

I can see very quickly two reasons that are important for the committee to think about.

One, we have a well-developed and competitive industry in the auto sector that was developed under what you can call a protectionist situation, the Auto Pact. To compete internationally, I think we need to consider this approach in other areas in which we need to develop the industry.

Secondly, General Motors is paying more money in the United States in health care than in steel. We know because we sell steel. A car in the United States costs $1,400 more to make than in Canada, because of the health care costs. Perhaps this also has something to do with why they continue producing cars in Canada and why it is important to protect public health care in Canada as an international competitive tool.

[The Chair, Conservative, James Rajotte]

Thank you all for being with us today. I think it was an excellent session. I hope, Mr. Georgetti, you found it more informative than our question periods usually are. It was a good debate, and I appreciate your taking the time to be with us.

We have some procedural matters, so let's all thank the witnesses and then we'll proceed right away to the procedural issues.

I don't think we need to suspend. I think we can go right to the procedural issues. I am told by the clerk that we have to pass a budget motion, which I want unanimous consent for:

That the proposed budget for the committee's study of challenges facing the Canadian manufacturing sector in the amount of $13,000 for the period of October 24, 2006 to December 31, 2006 be adopted.

This covers expenses for witnesses. It's very inexpensive. Do I have consent? Who's moving this motion? It does not include the travel.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

I so move.

[Jean Lapierre, Liberal, Outremont, QC]

I second the motion.

[The Chair, Conservative, James Rajotte]

It's moved by Mr. Crête and seconded by Mr. Lapierre. All in favour?

(Motion agreed to)

[The Chair, Conservative, James Rajotte]

The second issue I want to raise is travel for the industry committee. We've had proposals from some members, which have been very helpful. I want to encourage members to get their issues in as quickly as possible. We've had responses from Mr. Van Kesteren, Mr. Shipley, Mr. McTeague, and Mr. Carrie. So anyone else, especially in relation to those regions that you best know, please get them in to the clerk as soon as possible. This week would be helpful.

Mr. Masse.

[Brian Masse, NDP, Windsor West, ON]

I will have some in soon. Do we have the actual days yet? People are asking us to give them a day.

[The Chair, Conservative, James Rajotte]

By when you would submit it?

[Brian Masse, NDP, Windsor West, ON]

No, by when—

[The Chair, Conservative, James Rajotte]

The week of November 20th. So if you're looking at Halifax, day one, then Montreal-Granby....

[Brian Masse, NDP, Windsor West, ON]

Do we know the specific days of the week yet, or are we still working on it?