Industry Committee on March 5th, 2008

[Hugh Thompson]

Yes. The RADARSAT Constellation mission is the follow-on to RADARSAT-2 and is something for which the government approved funding but hasn't been fully spending that funding. The CSA has not been spending that funding. It is those kinds of projects that would allow MDA to continue doing what it has been doing so well in the past.

I think it is true that MDA will have a hard time if it has no access to U.S. markets and there is no stable and reliable source of space funding in Canada with the space policy.

It is difficult for MDA in the current climate to continue doing what it has been doing, when funding has not been coming in the way it was in the past.

[The Chair, Conservative, James Rajotte]

Mr. Garneau, do you want to just wrap this up then?

[Marc Garneau]

Yes. Thank you, Mr. Chair.

The Constellation program I'm very familiar with, because it was a memorandum to cabinet when I was president, and this was a logical follow-on to RADARSAT-1, then RADARSAT-2, and then to Constellation. The advantage of the Constellation, of course, is that instead of going over the Northwest Passage once every twelve hours, with RADARSAT-3 you go over it once every four hours. Canada is a very, very large country, and the advantage of having a Constellation is largely because of more frequent revisit times.

As to Ms. Nash's comment concerning a policy, we do not have a national space policy here in Canada. We've done some great things over the years. Different governments have done great things, but it would be, I think, appropriate at this time for us to create a national policy that identifies what we expect to get from space and to prioritize our objectives with respect to space.

[The Chair, Conservative, James Rajotte]

Okay. Thank you.

Thank you, Ms. Nash.

We'll go to Mr. Simard, please.

[Raymond Simard, Liberal, Saint Boniface, MB]

Thank you very much, Mr. Chair.

I'd like to thank the witnesses for being here this afternoon.

I guess my first question--and I'm not sure who can answer it--is whether or not there are other companies here in Canada that have technology that is even close to this. We haven't talked about that. I know that Bristol Aerospace produces satellites in Winnipeg. Are they for a completely different purpose? In other words, is this the only company that we can count on to do the things that this satellite is doing?

Mr. Garneau.

[Marc Garneau]

I believe I can answer that. Bristol Aerospace can make small satellites--sometimes called micro-satellites--that are definitely in the small category. Again, there was a deliberate decision to build that capability within Canadian industry. That is nothing compared to a satellite that costs half a billion dollars called RADARSAT-2.

Let me tell you, RADARSAT-2 took a long time to design and build, quite a bit longer than was originally forecast. It was because we were not only having to take the time to build the satellite, but because MDA in a sense had to learn to build the satellite. This was its first satellite, and it was a big one. We took the time, and we put the resources into building what is a fantastic satellite.

There is no other Canadian company that has anything near that.

[Raymond Simard, Liberal, Saint Boniface, MB]

Thank you.

My second question is whether the U.S. government owns its own satellites or it deals strictly with the private sector to get their images.

From what I've heard today, this seems to be quite important for national security for many other reasons. Would this be important enough for the Canadian government to get involved in the purchase of MDA?

[Marc Garneau]

NASA has satellites that it owns. The private sector, largely in the communications satellite business, has satellites that it owns, and the military in the United States of course owns its own military satellites.

The arrangement that we had with MDA was rather unique. I don't think there was anything comparable in the United States.

[Raymond Simard, Liberal, Saint Boniface, MB]

I was a little bit disappointed that there wasn't anyone here who could maybe speak to the other side of this thing and maybe inform us as to what the net benefits to Canada are. This may be a very difficult question, but do you have any idea which arguments they would be bringing forward with regard to the net benefits to Canada of selling this company to an American company?

[The Chair, Conservative, James Rajotte]

Does anyone want to answer that question?

Mr. Byers.

[Michael Byers]

MDA's shareholders will benefit enormously.

[Raymond Simard, Liberal, Saint Boniface, MB]

I know that anyone who has visited the Canadian Wheat Board and has seen the satellite images there and how they use it to Canada's advantage.... I'm not sure if this is a satellite that does this, but it follows crops across the country and the advantages that it has. Is this done through Telesat?

[Marc Garneau]

Telesat is strictly, at the moment, operating communication satellites, so it doesn't get into the earth observation side of things.

[Raymond Simard, Liberal, Saint Boniface, MB]

I guess the challenging thing is going to be how we tell MDA that they can't sell their company. I guess there's a very rugged test, and one of the tests is the effect of the investment on Canada's ability to compete in world markets.

You're telling me that there is nothing even close to this. So this is going to be a very difficult test for the company to meet--the effect of the investment on Canada's ability to compete in world markets. If we sell this, we will no longer be able to compete in world markets, according to you, Mr. Garneau.

[Marc Garneau]

If we were to go ahead with the Constellation, which MDA is completely capable of building--they came up with the concept; and if we were to go ahead with the ExoMars project, for which they persuaded the Europeans to allow us to build the rover that would go on this European mission to Mars; and if we were to build a hyperspectral satellite, which they have been urging us to do for a very long time, and which incidentally is extremely good for crop monitoring and for forestry monitoring and for natural resources monitoring and even discovery; if we were to do these things, which are in the national interest of this country, I am sure MDA would be very happy to continue with Canadian ownership.

[The Chair, Conservative, James Rajotte]

Mr. Byers wanted to comment on this.

[Michael Byers]

I don't want to impute bad faith onto MDA, but I do want to suggest that MDA was certainly aware of these limitations and in fact was very closely involved in the consultation on the draft legislation. So MDA went into this arrangement with its eyes open and certainly would have been aware of the assumption on the part of the very many people, myself included, who commented on this legislation, that this satellite would stay in Canadian hands.

We would not be surprising MDA by blocking this sale for national security or other reasons.

[The Chair, Conservative, James Rajotte]

Okay, thank you.

We'll go to Monsieur Arthur, please.

[André Arthur, Independent, Portneuf—Jacques-Cartier, QC]

Thank you, Mr. Chairman.

I am flabbergasted somewhat by the reaction of the four witnesses to Mr. Simard's question.

All four of you came here as experts, people who know more than we and will teach us things we need to know. He asked you a question that has a direct relation to your good faith: What would the benefits be of this transaction, if people wanted to defend this transaction? And all four of you stayed silent.

I have a hard time with your good faith when I observe the reaction of so-called experts. Anybody want to give it a second try?

[The Chair, Conservative, James Rajotte]

Mr. Garneau would like to.

[Marc Garneau]

Yes, certainly. It's a little hard, when you're remote, to give the right signals, but I believe MDA would bring forward the following arguments.

I believe they would say it was a good business decision for the shareholder, and I agree with that. It was also necessary because it was not able to penetrate the American market, which is the giant. It's the gorilla in the tent. Therefore with the company coming under American ownership, it will have access to contracts in the United States, whilst the company, the plants and the installations, will remain in place in Canada. Therefore this is good, because the Canadian companies will get more contracts and will actually grow.

I believe that is the argument they would bring forward.

[André Arthur, Independent, Portneuf—Jacques-Cartier, QC]

Thank you, Mr. Garneau. You say that the Canadian space industry has a difficult time making inroads into the US market. Didn't the Canadian Space Agency have a clear mandate to represent and promote this industry to US agencies?

[Marc Garneau]

That was part of its mandate, or one of its responsibilities. However, you are talking about challenges confronting the Department of Foreign Affairs and International Trade. Certain obstacles are virtually insurmountable: existing regulations, in particular ITAR regulations, and the fact that there is no free trade in the aerospace industry because this area has considerable strategic importance for that country. And even though the Canadian Space Agency has managed to make inroads into the US market by forging alliances with NASA, that is only a small segment of the US market.

[André Arthur, Independent, Portneuf—Jacques-Cartier, QC]

However, that was the crux of the Canadian Space Agency's mandate at the time. It was supposed to showcase Canadian talent to US users. Or, am I wrong about that? Can we agree that the Agency has failed to fulfill this part of its mandate?

[Marc Garneau]

No, certainly not. Our mandate was to promote the aerospace industry [Editor's note: technical difficulties].