Industry Committee on Nov. 7th, 2006

[Maxime Bernier, Conservative, Beauce, QC]

No, that's false.

[Jean Lapierre, Liberal, Outremont, QC]

Will the program terminate on December 31? You're talking about a few months. You don't have any right to abandon this system, which is the backbone of the Montreal economy.

Next Wednesday, you'll be speaking before the Chamber of Commerce. Are you at least going to announce something, or are you going to stick to verbiage and studies that are so biased that you're bent over?

[Maxime Bernier, Conservative, Beauce, QC]

Mr. Lapierre, we make decisions only once we've analyzed the issues from top to bottom.

For my part, discussions are being held with officials and the industry as a whole. The industry is pleased that we're analyzing the future of this program. You said earlier that the aerospace industry was skeptical about our position. It's entirely the contrary: the industry is very pleased that we've invested $13 billion in defence and aeronautics. That investment will benefit the industry in Montreal and Ottawa, as well as in Manitoba and British Columbia.

Our military procurement policy supports the aerospace industry and will continue to support it.

[Jean Lapierre, Liberal, Outremont, QC]

And I want to go back to this matter of the $13 billion.

What tangible guarantees have you secured? You contend in your speech that you'll have 100 percent benefits.

Let's talk about the real benefits from research and development, technology and so on. Can you provide us with black and white tangible guarantees as regards benefits? I'm not talking about the benefits from grocery shopping done here and there, but about the real research and development benefits.

What percentage is guaranteed for Quebec, which has 60 percent of the industry?

[Maxime Bernier, Conservative, Beauce, QC]

As you know, our department, Industry Canada, manages Canada's Industrial Benefits Policy. That policy, which has been in existence for a number of years, has worked very well for other military contract procurement.

The corporations that get contracts must invest in the Canadian economy, precisely as you said, the same amount that Canada spends to buy equipment. The government uses this policy for the simple purpose of guaranteeing that contractors commit to carrying on high-quality sustainable activities in the high-tech sector for the Canadian economy.

As regards the $13 billion investment in military procurement, there will be a benefit equivalent to $13 billion across Canada. Through that policy, we're ensuring that contractors realize the excellent capability that exists in all the regions of Canada.

To ensure that the aerospace industry takes part in it, the Government of Canada — both Industry Canada and myself — conducted consultations across the country last summer of businesses in the aerospace industry to inform them clearly about military procurement, subsequent military contracts and business opportunities available to them.

So our businesses, which are highly competitive globally, will have to remain competitive and will be in a position to enjoy the economic benefits in that field.

[The Chair, Conservative, James Rajotte]

Okay, we'll go to Mr. Shipley now for five minutes.

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

Thank you, Mr. Chair, and thank you, Mr. Minister, for being with us today.

Over the last number of months we've had a lot of witnesses come before us regarding the manufacturing industry in this great country of Canada. One of the common themes that we hear about is productivity and competitiveness.

From what we heard, manufacturers are relatively productive. They are simply finding it a little difficult at this time to remain competitive. There are a number of factors that come into it: labour costs, energy costs, the Canadian dollar. The other one that comes up, even though there are regulations, is high taxation. The issue of taxation is important, but it is one of those things, I believe, that the government has some control over.

I wonder if I could get your comments regarding taxation and what we can do as a government to help and benefit manufacturers.

[Maxime Bernier, Conservative, Beauce, QC]

Merci beaucoup.

We can continue to do what we did in the last budget. We are very proud of what we did as a new government in our last budget. The fiscal burden on each company has to be as low as possible. In the end, if you tax an enterprise, if you tax the creation of value, you won't create any new jobs here in Canada.

That's why it's very important to reduce corporate income tax, and that's what we did in the last budget. Those cuts will reach more than $20 billion over the next two years, as you know.

As Minister of Industry, I know that Canadians' quality of life depends on the manufacturing sector, which represents more than 17 percent of GDP and employs more than two million people in the country.

I also know that a number of industries, in particular lumber, textiles and clothing are currently facing competition problems. As I said earlier, they're dealing with problems related to a number of factors: energy costs, the higher Canadian dollar, and so on, but we're trying to enhance their competitiveness and make them more competitive.

On this point, I'd like to cite the example of Ireland. As you know, in 1985, Ireland was the European country with the highest unemployment rate: 25 percent. That country's debt relative to GDP was 111 percent. What the Irish exported most was themselves, their labour. In 25 years, that country has become one of the richest countries in Europe. How? By reducing tax rates, by ensuring that the tax rate on corporate income is 12 percent. That has led to a reduction in its debt to GDP ratio, which is now only 30 percent, as opposed to 111 percent. Ireland is considered one of the 13 richest countries in the world, and the Irish are going back to their country.

All that was done through very simple tax policies: lower corporate taxation and ensure that the country is competitive. That attracted a number of Europeans and Irish, so that the Irish population is now one of the most highly educated and productive in Europe.

Why is that the case? Because the Irish government has promoted the free market, economic freedom and individual responsibility. It's a country where government, although it is present and helps the least well-off, leaves the initiative to entrepreneurs and business people.

We in Canada have reduced direct and indirect taxes and are going to continue along the same lines to ensure that the country and its businesses are as productive as possible.

[The Chair, Conservative, James Rajotte]

You have ten seconds.

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

Thank you, Mr. Minister.

[The Chair, Conservative, James Rajotte]

Monsieur Vincent.

[Robert Vincent, Bloc, Shefford, QC]

Thank you, Mr. Chair.

Good afternoon, minister. You remember Mr. Crête's question on orders. You spoke about that at length, but you had reached your conclusion when you were interrupted. I'd therefore like to know whether or not you're going to approve the order. What are you going to do?

[Maxime Bernier, Conservative, Beauce, QC]

As regards the policy direction, which asks the CRTC to rely more on the free market and to regulate only where necessary, I said earlier that you had conducted consultations here and had asked me whether I was going to act on the committee's resolution to postpone implementation of that direction.

I answered that as honestly as possible. I'll read the evidence of the meetings you've held, I'll take note of your proceedings, and I'll ensure I clearly understand the reasons for that resolution before answering you, and I will tell you what action will be taken.

This is an order enacted by the government. So it's not just a decision by the Minister of Industry. We'll therefore have to consult all Cabinet members on the subject. Likewise, I'll carefully read the submissions that have been made to you here so that we don't act in haste on this order.

[Robert Vincent, Bloc, Shefford, QC]

Thank you.

Earlier you referred to Canadian economic growth, fair stability, competition and corporate confidence. Are you aware of the fact that businesses have less confidence in your government? There are a lot more problems than previously. I can give you two concrete examples. The first concerns plastics. Did you know that plastic bags come from China, are sold here and cost less than the raw material that people buy in order to produce them? We talked about the furniture and textile sectors, we talked about lumber, and we're about to talk about plastics. We're also going to talk about the automotive industry. Subcontractors also think there's going to be a shortage, and a business in my riding that manufactures seat belts still has the same problem. If car makers' plants close, where can these people sell their seat belts?

The industry's troubles aren't over. They'll still be around for a few years. I'd like to know your position and what you're going to do for those industries,

[Maxime Bernier, Conservative, Beauce, QC]

Thank you.

As a politician, I always trust individuals and I don't know everything. Your committee is doing a very good job. You've tabled an interim report on the challenges facing the manufacturing industry and on what the government can do to meet those challenges. I anxiously await the end of your work and I'll draw on it in talking to my government colleagues about solutions that we could propose to the manufacturing industry.

[Robert Vincent, Bloc, Shefford, QC]

You knew, minister, that three factors were causing trouble: the rise in gold, the emergence of Asia and energy. You've known that for 10 months. What are we doing about that? What approach are you going to adopt in order to help those industries cope with those three problems? I believe you've had the time to study that and to see what you can do. What are your proposals for helping those industries?

[Maxime Bernier, Conservative, Beauce, QC]

Let's take the textile industry, for example. That industry is under pressure from Chinese imports.

[Robert Vincent, Bloc, Shefford, QC]

What do you propose in concrete terms? I think we know that China is causing it problems. I'd like to have answers to my questions, and not to hear the kind of thing we ourselves say here.

My questions are relevant, and I'd like to have an answer so that industrial leaders can know what the minister intends to do.

[The Chair, Conservative, James Rajotte]

The minister has only thirty seconds. We should give him an opportunity to answer the question.

[Maxime Bernier, Conservative, Beauce, QC]

I was talking about businesses and about the textile industry. Some have recommended that the government raise tariffs to counter textile imports from China. After analyzing that suggestion, we have come to the conclusion that, if we raise tariffs on Chinese imports for the textile industry, other countries, such as Bangladesh or Sri Lanka, will also export their products to Canada. We have to study this issue in an overall context. Does the government want Canadians to pay more for their clothing? Imposing tariffs has an impact on prices. You have to look at the other side of the coin. We're looking out for the interests of the industry and of all Canadians at the same time. We're enabling the textile industry and other industries to have their money, to keep it in their pockets, by reducing their taxes and reinvesting. We want Canadians to have access to the largest possible number of products from around the world, at the best possible price—

[Robert Vincent, Bloc, Shefford, QC]

If they don't have jobs, how will they be able to pay for them?

[The Chair, Conservative, James Rajotte]

Okay, okay—

[Maxime Bernier, Conservative, Beauce, QC]

We believe this country was built on investment and free trade, and we want that to continue in the near future. Thank you.

[The Chair, Conservative, James Rajotte]

We'll go now to Mr. Van Kesteren for five minutes.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

Thank you, Mr. Chair.

Thank you, Mr. Minister, for appearing here.

I was hoping you were going to touch on food and drugs. We spent some time on that too. We've made some amendments to the regulations with food and drugs. Have they restored a balance in the industry, and will they ease the administrative burden? Then I guess the follow-up question to that would be, how will this benefit the public?