Industry Committee on March 5th, 2008

[Peggy Nash, NDP, Parkdale—High Park, ON]

If I could just interrupt for a second, something that I had brought to the attention of the committee the other day was a press release from the government when this satellite was launched on December 14. It said that launching the satellite strengthened the government's ability to protect our north, and that it “...sends a clear message to the other nations of the world that, after thirteen years of Liberal neglect, Canada is once again serious about protecting our Arctic sovereignty”. So it does seem ironic now that this technology is being sold.

My question is whether we can we still get this satellite when we need it. Does Bill C-25 protect us in that regard?

[Michael Byers]

Further to the first part of your comment, it strikes me as unlikely to be coincidental that the sale went through immediately after the launch, because obviously the successful launch dramatically increased the value. The Canadian government took the risk, and ATK reaps the benefits.

Your question was what, specifically?

[Peggy Nash, NDP, Parkdale—High Park, ON]

You had made a comment about whether we can get the satellite when we need it. Is this covered under Bill C-25?

[Michael Byers]

It is covered under Bill C-25 as long as we remain the licensee, and this is an absolutely central question: do we remain the licensee once the MDA space program has been sold to an American company, or does the licence transfer to the U.S. government?

Even if we somehow notionally remain the licensee, will there be circumstances in which enormous pressure could be brought to bear on ATK, as a U.S. company very closely linked to the U.S. defence industry, to somehow compromise on the notional control that might be retained by Canada? I don't know the answer to that question. I think this committee needs--

[Peggy Nash, NDP, Parkdale—High Park, ON]

Who would know the answer?

[Michael Byers]

This committee needs to find out. I find it difficult to conceive that Canada would remain the licensee in the long term, but I'm prepared to be proven wrong on that if someone could do so.

[Peggy Nash, NDP, Parkdale—High Park, ON]

Who would know the answer to that?

[Michael Byers]

I think you should ask the Minister of Foreign Affairs and perhaps his lawyers what they think is actually the consequence here. It's of absolutely crucial importance that we discover whether we would retain the licence, because without that licence there's really nothing we can do except be in the queue for the prepaid imagery that we've acquired as a result of the subsidies over time.

[Peggy Nash, NDP, Parkdale—High Park, ON]

Thank you.

Mr. Thompson, thank you for being here.

I've been e-mailed by a number of MDA employees who expressed concern, as you did in your presentation, about working for ATK. Can you describe a little more what your concern is? What is the production of ATK that you find problematic in terms of continuing with MDA?

[Hugh Thompson]

As I said, I think the primary things for me were the professional concerns about jobs being lost and Canadian skills disappearing, but on a personal level there are many things that deeply disturb me about ATK. I don't think it is fair to just say it is the same as another large American weapons manufacturer. They are not all the same.

ATK builds land mines. ATK builds cluster munitions, which presumably will soon be banned or potentially will soon be banned. They build depleted uranium rounds; they're the largest producer in the U.S. of depleted uranium rounds. They are a major contractor involved in missile defence activities. In particular, ATK was a major contractor on the missile that was used to shoot down the satellite a few weeks ago.

The range of activities they're involved in is quite amazing. They've built an airburst assault rifle for shooting around corners. There are a number of things that ethically are extremely questionable.

[Peggy Nash, NDP, Parkdale—High Park, ON]

When you began working for MDA, were you unaware of the potential for the military application of the type of production MDA is involved in?

[Hugh Thompson]

I think I'm quite aware of the military involvements of MDA. MDA certainly is involved in military activities and surveillance, and RADARSAT-2 is involved in military surveillance. There's a line that one somewhere draws; everything is shades of grey, but at some point one's involvement is too far beyond what one is willing to accept, and this certainly would push me beyond my line.

[Peggy Nash, NDP, Parkdale—High Park, ON]

Others have expressed the same sentiment.

Mr. Chair, do I have more time?

[The Chair, Conservative, James Rajotte]

You have 25 seconds.

[Peggy Nash, NDP, Parkdale—High Park, ON]

Very briefly, Mr. Garneau, Canada has made a lot of money from its investment in Canadarm and the space station and other things. It has also in essence given us an entree to get astronauts into space. Do you think that with the sale of MDA, we will continue to be able to have astronauts in the space program?

[Marc Garneau]

It's a difficult question.

I think our ability to have astronauts fly beyond the next two or three will depend on whether we cooperate government to government with countries like the United States. They will accept a partnership providing we put something on the table that comes from Canada. That requires both funding and the ability to provide something of value to the combined program. So it's a complex answer. I'm not sure.

[The Chair, Conservative, James Rajotte]

Thank you, Ms. Nash.

We'll go to Mr. McTeague, please.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

Thank you.

My thanks to the witnesses for being here. I have a bit of déjà vu in reverse, recalling Bill C-25, when I was parliamentary secretary, to see Mr. Byers and Mr. Staples again on this.

I guess I'm scratching my head wondering whether this is the best committee or the best vehicle in which to raise the concerns about this particular sale.

We are looking at it from the narrow perspective of the Canada Investment Act, but I'm concerned more abundantly about Bill C-25, the guarantees that may or may not have been in there. Mr. Byers and I would not have anticipated—though perhaps we should have—the future developments that could take place, the buy-out. But I do recall one thing that has not been raised by any of the witnesses at this point, and I'd like to get your comment on it.

Shutter control remains the authority or the purview of the Governor in Council, the Minister of Defence, the Minister of Foreign Affairs, all of which is in the act and the undertaking. I am wondering if any of you could expand on the undertaking and agreement, or on what might be a question of assignment should this company find itself sold to another company. The Canadian government retains some authority from the limited perspective of shutter control, if I recall the legislation well enough.

It seems to me that the deal cannot be a sale without the covenants that were guaranteed and agreed to by the Canadian government when, in 2005, the satellite was conceived and the legislation passed.

Mr. Byers?

[Michael Byers]

First of all, I want to apologize for having stumbled on Ms. Nash's question. I had to fly overnight from Vancouver and spend six hours in Toronto airport to get here today, so I'm operating on low batteries.

You have put your finger on the question. Who actually controls which pictures are taken from the satellite and when they are taken? Who has priority access? Who can say “We have this single-hull oil tanker coming into the Northwest Passage, and we need images right now, so that we can send a Cormorant helicopter to do an interdiction before the tanker hits a rock and causes an Exxon Valdez type of accident”? That's what we're talking about. How do we have that priority access? How do we have shutter control?

In my reading of the Remote Sensing Space Systems Act, the assumption throughout is that Canada will remain the licensee and as the licensee will retain shutter control.

There is only one section of this act that deals with the transfer of control. It doesn't talk about the transfer of licence, but the transfer of control. That is where you find the test—there needs to be approval for any transfer of control: “In deciding whether to give an approval, the Minister”—i.e., the Minister of Foreign Affairs—“shall have regard to national security, the defence of Canada, the safety of Canadian Forces, Canada's conduct of international relations, Canada's international obligations and any prescribed factors.”

This is the discretion, the override to maintain the licence and therefore the shutter control and everything that you and your colleagues fought so hard to get into this legislation. This is what it's about. Without knowing whether or not we retain the licence, it would in my view be irresponsible to allow the sale to proceed any further.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

Mr. Byers, would you recommend that other committees, including the foreign affairs committee, be charged with reviewing this particular case, because of the ramifications you have cited and because it was the committee tasked with this to begin with? Do you think there should be greater study by that committee at this point?

[Michael Byers]

Absolutely. I can't see that the Standing Committee on Foreign Affairs and International Development can avoid this one. This is too big. It's too important a record.

But I think this committee needs to continue to work on this as well. The net benefit test under the Investment Canada Act would in this context incorporate the national security dimension.

[The Chair, Conservative, James Rajotte]

Mr. Staples.

[Steven Staples]

I have only a little to add to Mr. Byers' testimony.

We have to remind ourselves that around $400 million of the investment was advance purchase of some of that imagery. So we prepaid, like your cellphone, some of the use of this satellite. It envisions a certain ability to jump the queue over other commercial users. So that's important.

Also, the Remote Sensing Space Systems Act, in addition to shutter control, also envisions inspectors being able to go into facilities to ensure that the principles of the act are being adhered to. Now, are we talking about being able to send Canadian inspectors down to Alliant Techsystems' offices to ensure that the data is being used in accordance with the act? I think that's a very good question.

This is a point that's unclear. Even the Library of Parliament, in a study that it did about this sale just a few weeks ago, finally concluded that “...it is possible that the sale of MDA's aerospace division to Alliant Techworks may require some changes to the current licensing arrangements for RADARSAT-2”. That says to me that the laws might have to be changed in order to allow it. So it's not just letting it go. You might actually have to change Canadian legislation to allow this to happen.

[The Chair, Conservative, James Rajotte]

Okay, thank you.

Thank you, Mr. McTeague.

We'll go now to Mr. Stanton, please.

[Bruce Stanton, Conservative, Simcoe North, ON]

Thank you, Mr. Chair.

Thank you and good afternoon to our witnesses. It is certainly an intriguing topic by any measure.

In light of the previous discussion, I'm mindful of the minister. Even though we're dealing with it in the context of and through the lens of the Investment Canada Act, which has the net benefit test but doesn't include national security tests, clearly the RSSSA does.

Citing the same article as Mr. Staples did—which I have also reviewed—I note there are some serious questions about the issues around licensing, and so on. I'm going to direct this to Mr. Garneau if I can, because you're the one witness here who has the ability to look at this from the CSA perspective, as you were there during this period from 2001 to 2004. It would appear from our discussion today that the die is in many respects cast here. Is that what you would say? This was a contractual agreement between the Government of Canada and a privately held company, MDA, with shareholders, and there were certain deliverables agreed to in the course of those agreements.

I've been struggling here to understand how a simple change in the shareholdings of that particular company would change any of those contractual arrangements or obligations that the company, or its parent or successor company, would have.

Mr. Garneau, would you have any comment on how any of this would change those obligations?