Industry Committee on Nov. 7th, 2006

[Maxime Bernier, Conservative, Beauce, QC]

Thank you for your question, Mr. Crête.

Since I was sworn in as minister, I have become acquainted with the program and the criticisms made against it. Some concern accountability, transparency and the repayment of funds that had been granted to certain businesses. We made a number of reports public, including the external audit reports. For the first time, we've posted fund repayments on our Web site. We have ensured that the accountability and transparency that characterize our government also apply to Industry Canada. I'm very proud of that. Furthermore, over the summer, we drafted a new contract that businesses receiving government funding will have to comply with. This is resulting in more transparency and accountability.

The general public will even be able to judge the effectiveness of what the government invests in this program. I've told industry people on a number of occasions at meetings that we were evaluating this program and its relevance. Why? Because the terms developed by the former government terminate on December 31. The industry people asked me the same question as you, whether there would be a new program. This is an important industry. These people were asking and are still asking for a program. They noted the fact that all OECD countries with a developed aeronautics industry subsidize it, whether it's through military procurement policies or industrial policies. They manage to ensure that their programs comply with World Trade Organization rules.

We've announced projects, among others the implementation of an Alcan project last spring. Industry Canada is reviewing other projects. I'm also going to discuss action that should be taken on this program with my colleagues.

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

But you have clients. We're talking about one client whose project was accepted twice and that produced royalties. So we can use this as an example. He's waiting for a decision. Can we be sure that there will be confirmation before the end of the evaluation and the start of the next stage, that is the new program? These are requests that have been on the minister's desk, that is on yours, since last January. Nothing's moved forward for months now.

[Maxime Bernier, Conservative, Beauce, QC]

I don't want to discuss the projects, since they're currently under review at Industry Canada. Once the process is completed and the recommendations for the minister are ready, I'll be able to answer your question.

If you're telling me that these are projects that have often been approved, I'm going to monitor the matter closely. Perhaps we could discuss this matter again over the next few days.

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

Furthermore, you told the CRTC that you expected the committee to conduct a study until March 1. In accordance with your instructions, the committee passed a motion on telecommunications.

I'd like to know whether you intend to comply with the wish expressed by the committee that a study be conducted and reported to you before the directions take final form. I think that has to take the form of a government order.

[Maxime Bernier, Conservative, Beauce, QC]

On that subject, I'd like to point out that the direction that the CRTC rely more on market forces and regulate only where necessary is one of the main recommendations by the expert panel that travelled across Canada for a year. We received the panel's report last March. It contained 127 recommendations. Those people travelled across the country, held public hearings and obtained the comments of international experts. Their report was roundly applauded. It's very well done.

We're trying to take action on that report, and one of the first measures was to issue that direction. It was analyzed by this committee. You even heard witnesses on the subject.

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

We came to the conclusion that it should be studied in greater depth.

[Maxime Bernier, Conservative, Beauce, QC]

You concluded that, in order to be able to continue your work, you would have to hear more witnesses. What I want to tell you is that the CRTC's regulatory framework is what it has been for a number of years, that the time for studies may be over and that we should take action.

Having said that, I haven't yet read your proceedings. I'm going to review them and ensure that I can respond to your concerns in the near future.

[The Chair, Conservative, James Rajotte]

We'll go to Mr. Carrie now for six minutes.

[Colin Carrie, Conservative, Oshawa, ON]

Thank you very much, Mr. Chair.

I'd like to thank the minister for being here today.

As you know, Minister, I come from Oshawa. We've had some talks over the last few months, and you understand my passion for the auto industry. Oshawa, like a lot of communities in Ontario, really depends on the auto industry and the spinoff jobs for their healthy communities. I know you've been meeting with different people involved in the auto industry. I wonder if you could tell the committee what you have found, as far as challenges facing the automotive sector right now, and also elaborate on some of the success stories we've had. I know we've had a great success story in Oshawa. Perhaps you could elaborate on those, please.

[Maxime Bernier, Conservative, Beauce, QC]

Thank you very much.

Indeed, I didn't know much about the automotive industry before I became Industry minister. You are a member who has emerged from that industry. Consequently, you're an expert. I followed your advice and went on site. I met Buzz Hargrove, the people from Linamar Corporation, including Linda Hasenfratz, the people from General Motors, Toyota and Chrysler on a number of occasions. They told me about the automotive industry's concerns and those of the other manufacturing sectors. It's very simple: they want to maintain their competitiveness. Increased energy costs are a major factor for the automotive industry. In Canada, they appreciate the skilled labour, in Ontario in particular, as a result of which they are producing competitive products.

They also told me about their concern about the Canada-U.S. border. You know better than I do that the automotive industry is highly integrated into the U.S. market. More than 85 percent of Canada's automotive industry exports go to the United States. When we build a car, it moves around. It comes and goes from Detroit to Canada and vice versa. For them, mobility of goods is very important.

One initiative, the North American Competitiveness Council, was introduced by the Prime Minister and his counterparts in the United States and Mexico last June. This is a group of Canadian, American and Mexican businessmen. I expect the report soon, but they've told me that one of their recommendations was to ensure that the border between Canada and the United States remains open. Security also has to be ensured, but the emphasis should be placed on the free movement of goods. We're dealing with this at the highest level. In my meetings in Ontario, in Oshawa and all over, the industry people told me about their concerns. My colleague Stockwell Day, the Minister of Public Safety, and I are working to ensure that the borders can always remain as open as they are right now.

They also told me about regulation in the automotive industry. The automotive industry accepts regulations on safety or any other matter, but it would like that regulation and that of the United States to be harmonized or that regulatory differences be recognized and an attempt be made to soften them. Why are they making these requests to us? Because, when regulatory systems are too different, there are compliance costs for the industry. I'm working with them, and we're going to review the regulations that result in additional costs to the Canadian industry. We're working to ensure that Canada and U.S. regulations are harmonized. That's very important for the automotive industry.

The automotive industry representatives also told us about their wish to work, like all other industries, on reducing atmospheric pollution. At those meetings, we discussed the fact that our government had decided to bring in regulations that, for the first time in history, would apply to all industries, including the automotive industry. We're working with the automotive industry to ensure that greenhouse gas emission reduction targets are achieved. The industry must be able to achieve those targets quickly and those regulations must ensure that the targets that we establish for the automotive industry are consistent with what's being done in North America, since the industry is highly integrated.

Following these meetings with the automotive people, I'm much more comfortable than I was when I was appointed Minister of Industry.

I have every hope that this industry will continue to meet the challenges it has always met here in Canada.

[The Chair, Conservative, James Rajotte]

Your time, unfortunately, is pretty much up, Mr. Carrie.

We'll go to Mr. Masse for six minutes.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair.

Thank you, Mr. Minister, for being here.

I will continue with the automotive sector. Did you inherit an auto policy from the previous Minister of Industry, who is now the current Minister of International Affairs?

[Maxime Bernier, Conservative, Beauce, QC]

I don't like to call it a policy, strategy, or action plan. What we want to do as a new government is answer the needs of this industry. As I said, it's very important to have regulation that will be harmonized with the U.S. It's very important to have the flow of goods between the two countries, Canada and the U.S. We're going to work, file by file, with the industry so that we can be sure that we will achieve something in a short time.

[Brian Masse, NDP, Windsor West, ON]

With all due respect, Mr. Minister, I asked whether you inherited an auto policy from the previous Minister of Industry, who said he had one. I'd just like to know, yes or no, whether you inherited a policy. It's a simple question and I think it's a fair one. I'd like to know.

[Maxime Bernier, Conservative, Beauce, QC]

I'll ask Richard to answer that.

[Richard Dicerni]

There are two points. One is due process in terms of policies from one government to another. A number of our briefing books have been accessed and they've been shared quite publicly. The point I'm trying to make is that it's not, I think, appropriate to submit to a minister of a new government or to have officials—

[Brian Masse, NDP, Windsor West, ON]

Fine. I'm not going to waste my time on that. This is just ridiculous. They sit in cabinet together.

I would like to know, Minister, with regard to your CAPC meeting, what particular things you are going to provide. I was disappointed it took nine months.

I know we have success stories in the automotive industry, but at the same time, we actually have some problems. I have here a letter from the Essex County council with regard to the loss of Ford jobs, for example, in Windsor. We have potential issues relating to replacing General Motors product as well. Can you tell me if there are any specific things you've laid out that you're going to do? Do you have a timeline for the auto industry about specific policy announcements that you will have for them?

I met again recently with the auto industry, and they're very concerned about Korea, the border, and a series of other measures. Do you have either something today that you can tell me or will there be a deadline for an announcement for the actual industry itself?

[Maxime Bernier, Conservative, Beauce, QC]

At the last meeting held with the representatives of the CAPC, the Canadian Automotive Partnership Council, my Ontario government colleague was present. We had some very frank talks about the challenges facing that industry. We agreed to meet again as soon as possible, next spring. In the meantime, the Ontario government and the federal government will take note of the challenges facing the industry in an attempt to respond to them in the most appropriate manner.

The automotive industry people also told us about the tax system in Canada. In the last budget, we made 29 tax cuts, and the capital tax has been eliminated two years earlier than expected. These are positions that the automotive industry shares. Its representatives are very pleased, since that will help them preserve capital so that they can reinvest in equipment and become more productive.

That said, the challenges facing the automotive industry are the same for the other industrial sectors in Canada. If we leave money in the pockets of entrepreneurs, they can decide what is best for their businesses. I believe that's what the government has done, and that's its goal. We believe it's better to look at that in a more comprehensive way than to establish programs for each of the industries. However, we'll judge on a case-by-case basis because the door isn't closed. The automotive industry has plans for new automotive businesses in Canada. I'm working in cooperation with my Ontario colleague, and each case will be assessed on its merits.

According to the OECD, there's no correlation between subsidy levels and economic growth in the OECD countries. In some cases, it's good that governments assist certain industries, but since there's no relationship between economic growth and subsidies, each subsidy to an industry must be judged in a very specific manner and special attention must be paid to the impact that that could have on other industrial sectors.

[Brian Masse, NDP, Windsor West, ON]

It's also true that most members of the OECD have an industrial strategy as well. So I hope Canada can bring one forth in the future.

If I can move quickly to the western hemisphere travel initiative and tourism, as you noted, you're cutting the tourism budget back from the consolidated fund, from the extra revenue realized from the move. The WHTI was first introduced back on April 5, 2005, in terms of notification from the United States. Two days later I wrote your colleague, the current Minister of International Trade, about a policy for tourism. Since that time, we haven't seen anything come forward. Is there going to be any support for the tourism industry?

I noted that last week you pulled the half-million-dollar study because previously there had been five study commissions about the negative impact on that. Since that time, we've also had the bioterrorism act, which is actually being introduced, and also the militarization of order. What are you doing on that matter?

Thank you.

[The Chair, Conservative, James Rajotte]

Mr. Minister, please answer briefly.

[Maxime Bernier, Conservative, Beauce, QC]

We halted the half-million-dollar study designed to measure the impact of the U.S. policy. We think that this kind of investment is useless, since we have public information enabling us to assess that impact.

I, my colleagues and Stockwell Day take this matter very seriously. We'll be meeting soon to ensure that the Americans have a very clear understanding of the Canadian problem. Thus far, our policy is effective, because the U.S. ambassador to Canada has said that the U.S. Congress had decided to push back implementation of the U.S. initiative.

We're going to continue our discussions with the Americans, bearing in mind that they are sovereign in their own country. The fact remains, however, that the postponement of this initiative's implementation is positive. We're going to continue talking with the Americans so that they consider this issue a priority.

[The Chair, Conservative, James Rajotte]

Thank you, Minister.

We'll go now to Mr. Lapierre for five minutes.

[Jean Lapierre, Liberal, Outremont, QC]

Thank you, Mr. Chair.

Welcome, minister.

In the past 10 months, you've gone hot and cold on aerospace. You've managed to create total insecurity in the field. An article published in The Gazette this morning was entitled, “Maintain aerospace funding, feds urged: TPC subsidies at risk.” The source of the article was Concordia University.

Sector stakeholders don't know what direction you're taking and wonder whether you know yourself. Ten months later, where does aerospace policy stand, more particularly at Technology Partnership Canada?

Ten months is longer than nine months: you should already have come up with something!

[Maxime Bernier, Conservative, Beauce, QC]

Thank you, Mr. Lapierre.

I'm going to answer your question directly by saying that I'm proud of what we've accomplished. We've inherited a program introduced by the last government.

You cite a newspaper article; I could cite you a number of others criticizing that program's lack of transparency and management. Since Canadians don't know the ins and outs of the program, we've improved its transparency by disclosing the repayments. We've even drafted a new contract.

Businesses are satisfied with these measures. They feel that the program is important for them, but they're aware that they're accountable to the Canadian electorate, since it's taxpayers' money that is invested in their businesses.

A contract that promotes transparency and responsibility is important. We've taken action in that direction, and we still have to take the last step, which is to examine the program together and to decide in the coming months whether or not to keep it.

[Jean Lapierre, Liberal, Outremont, QC]

Obviously the program is transparent. Since you've been here, there's been a void, and a void is transparent. You tell me about a new contract. It's easy to have a new contract when no one signed it.