Industry Committee on March 13th, 2008

[Paule Brunelle, Bloc, Trois-Rivières, QC]

Good morning, Minister. Good morning, gentlemen.

I would like to talk to you about the MDA purchase. When Bill C-25 was passed, the Remote Sensing Space Systems Act that was promulgated in 2005, the Bloc Québécois expressed several reservations. In spite of all the money invested by the government in RADARSAT-2, over $500 million, there was nothing in the Act to ensure that if the company was sold to foreign interests, which is what we are talking about today — that control would be returned to the Canadian Space Agency, which created and funded the technology.

Minister, you are responsible for management of the Canadian Space Agency. Given that RADARSAT-2 was designed using Canadian public funds, including the agency in Saint-Hubert, do you think that divesting MDA to an American company is profitable for Canadians? Is it not really profitable only for a handful of shareholders?

[Jim Prentice, Conservative, Calgary Centre-North, AB]

A letter has been prepared by Mr. Boothe, the Director of Investments, in which he says that under section 36 of the Investment Canada Act, it is important to protect the confidentiality of information obtained about this investment. It is therefore difficult to answer that question, because we are bound to honour that obligation.

[Paule Brunelle, Bloc, Trois-Rivières, QC]

I hope, at least, without going into confidential material, that you can reassure Canadians by finding out why a company that has received a lot of public funds is able to sell its business at a large profit without the Canadian Space Agency getting what is coming to it, to my mind. I am not asking you for an opinion; I am expressing my concerns. I am sure you are going to review this closely before authorizing it.

Another difficulty involves the remote sensing satellite, which provides important information about underground water, ore deposits, minerals, gas, oil, cartography, agriculture and forestry. All of these matters are under provincial jurisdiction, under the Constitution.

Minister, given the importance of the information that RADARSAT obtains regarding natural resources, are you going to take the opinion of the government of Quebec into account? Have you requested such an opinion yet?

[Jim Prentice, Conservative, Calgary Centre-North, AB]

We are obligated to discuss it with the other governments, which includes the government of Quebec, and with the other stakeholders in relation this issue.

[Paule Brunelle, Bloc, Trois-Rivières, QC]

Minister, in terms of this issue, we are concerned that the Americans will have access to information to which the provinces will no longer have access and which relates to our territory. People have expressed these concerns to us. I hope that you will be able to enlighten us in this regard.

[Jim Prentice, Conservative, Calgary Centre-North, AB]

First, thank you for providing me with your opinion on this issue and on RADARSAT, MDA and ATK.

[Paule Brunelle, Bloc, Trois-Rivières, QC]

You are responsible for administering the Investment Canada Act. Paragraph 29(e) of that Act states:

(e) the compatibility of the investment with national industrial, economic and cultural policies, taking into consideration industrial, economic and cultural policy objectives enunciated by the government or legislature of any province likely to be significantly affected by the investment;

So these are factors that you have to take into account when you look at the Investment Canada Act to determine whether you can authorize this transaction.

Have you analyzed the effects on the provinces? If so, can you tell us what your conclusions are? If not, are you planning to analyze those effects?

[Jim Prentice, Conservative, Calgary Centre-North, AB]

Yes. The Investment Canada Act refers to the net benefit to Canada, for example the effect of the investment on the level and nature of economic activity in Canada and Quebec. It also refers to the significance of participation by Canadians in the Canadian business, the effect of the investment on productivity, industrial efficiency, technological development and product innovation, the effect of the investment on competition within any industries in Canada and the compatibility of the investment with national industrial, economic and cultural policies.

[Paule Brunelle, Bloc, Trois-Rivières, QC]

You have to analyze the significance of the degree of participation by Canadians in industries. Are there going to continue to be other Canadian businesses in the remote sensing industry, if we divest MDA to the Americans? Is that not going to create a vacuum?

[Jim Prentice, Conservative, Calgary Centre-North, AB]

I am going to answer in English.

In the context of the review, I think I've been very clear that I will discharge the responsibilities I have under the act to the best of my ability. I will ensure that the interests of Canadians, as measured by the net benefit test, are fully considered.

[The Chair, Conservative, James Rajotte]

Thank you.

Merci, Madame.

Mr. Carrie from Oshawa is next.

[Colin Carrie, Conservative, Oshawa, ON]

Thank you very much, Mr. Chair.

Thank you, Mr. Minister, for being here today. As you know, I am from Oshawa, and everybody on this committee realizes that's the centre of the universe as far as automotive manufacturing is concerned. I think you realize the importance of the auto industry to not only our local economy in Oshawa and Ontario, but to the entire country.

I was really pleased to attend your announcement and your speech in Toronto a couple of weeks back. I'm very proud of your leadership and our government's leadership in finally bringing forward an auto action plan. It's really the first time a government has been able to bring this forward. I was wondering if you could explain for the committee how this will enhance Canada's auto industry.

[Jim Prentice, Conservative, Calgary Centre-North, AB]

Thank you for the question. I've been significantly involved in the auto industry since I became the minister. In one of my earliest meetings I spent time with the CAPC executive, and more recently with the whole council. I've read everything I can get my hands on relative to the auto industry. I even checked myself in as an auto part at one point and travelled across the border in a Linamar truck to have a better appreciation of the challenges faced at the Detroit-Windsor crossing, which is an essential element of Canadian competitiveness. Everyone appreciates that the challenge here is that the industry is a North American one, and we need to be competitive and ensure our competitiveness across borders.

We've been very successful as a nation in automobile assembly. One out of every six vehicles in North American is assembled in Canada. It's something we've excelled at. There are those who view this as not being an industry of the future, but I don't agree with that. It is something that we've always distinguished ourselves at; in fact, we are among the best people in the world. It doesn't matter which auto company you look at, their Canadian assembly plants are among the most productive anywhere in the world, and they take great pride in them.

Our action plan is constructed to ensure that Canada's automotive sector remains not only viable but on the competitive edge for future success. There are four elements that have been included in that. First is the creation of a sound fiscal framework within which industry can compete. Second is supporting the integration of the North American industry, because the industry will require fuel standards, safety standards, and so on, that work together in a harmonious way so we can compete with vehicles and producers from elsewhere in the world. Third is investing in research and development. Fourth is the creation of an automotive innovation fund.

Advantage Canada is central to all of that, but you're quite right that recently in a speech in Toronto I outlined in more detail the specific components of our strategy or action plan relative to the automotive sector.

In closing, I will say parenthetically that there will be challenging times from time to time, and the next year may raise some challenges in the automotive sector. But I'm confident that the Canadian industry will rise to the occasion and be able to deal with those issues.

[Colin Carrie, Conservative, Oshawa, ON]

Thank you very much, Mr. Minister.

One of the things that I see as a real challenge is attracting new manufacturing mandates. One of the parts of the auto action plan that I was encouraged to see is the automotive innovation fund that you have. I was wondering if you could explain for the committee and the people of Oshawa, and all the workers on the line in Oshawa, how this automotive innovation fund will have an effect on Canada's ability to innovate and to attract these new investments, which seem to be so important. If you get these big investments here, all the spinoff jobs seem to come with them.

Could you explain a little bit more this automotive innovation fund that you have in the action plan, please?

[Jim Prentice, Conservative, Calgary Centre-North, AB]

I think it's fair to say that the automotive innovation fund and the focus on science and technology work very much together. We know that with the forces of globalization and the challenges with competitiveness, we have to have the right foundations and we need to be on the cutting edge of the development of new technologies and new assembly mechanisms, otherwise we won't have the competitive advantage that we will need.

We've always been at the forefront of innovation in the Canadian automotive sector, and we have to stay there. So the purpose of the $250 million innovation fund is to support what I would describe as strategic, large-scale research and development in assembly facilities in the automotive sector, so that we have a more innovative, greener, and more fuel efficient vehicle platform to compete in the future.

We will also be ensuring that the S and T, science and technology, resources the Government of Canada currently spends are targeted in a meaningful way toward that same objective. There are also additional funds in the budget of 2008 that will deal with exactly those same concerns.

[Colin Carrie, Conservative, Oshawa, ON]

What do you see as the biggest challenge for the auto industry over the next few years? CAPC put out a report a while back that addressed five “asks”, and I'm happy to see that we are taking action on all five—the investment part of it; human resources; regulatory convergence; the infrastructure issues; and innovation and science and technology.

What do you see as the biggest challenge out of those five things for the auto industry over the next few years?

[Jim Prentice, Conservative, Calgary Centre-North, AB]

The biggest challenge for the Canadian automotive industry is to ensure that we are competitive and that we can take on all comers, because there is no doubt that we have been among the best people in the world at automobile assembly. That is because not only of the ingenuity of Canadian business leaders and businesses, but also because of the quality of our workers; we have the best assembly workers in the world, bar none.

We need to ensure that those workers operate in an environment where they can compete with all comers. That is why we're addressing the North American harmonization of regulatory standards; that is why we need to focus on border infrastructure; and that is why we need to ensure that on issues such as fuel efficiency standards we maintain the competitiveness of our industry. That's the challenge.

[The Chair, Conservative, James Rajotte]

Thank you, Minister.

Thank you, Mr. Carrie.

We'll go now to Ms. Nash, please.

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

Good morning, Minister, and good morning to the other witnesses. Thank you for being here today.

Today is, of course, a proud day for Canadians, because the Dextre robot has docked with the space station today. This success is built in the footsteps of the Canadarm, an internationally recognized symbol of Canadian ingenuity and expertise in space technology.

It was also a proud day in December with the launch of the RADARSAT-2, when the government claimed this was key to our Arctic sovereignty--that while the previous government had not ensured Arctic sovereignty, this government would, and that RADARSAT-2 was essential to doing so. RADARSAT-2 has been called the jewel of the Canadian space industry.

Sadly, at this same moment when Canadians are celebrating a new high in our world-class space industry sector, our government is contemplating this sale to an American arms company.

Several weeks ago I tabled a motion to invite you, Mr. Minister, to come to this committee, and I also tabled a motion to have expert witnesses come before our committee and discuss various elements of this sale. The witnesses we've heard from expressed a number of concerns about this sale: ethics, sovereignty, jobs in the sector, and the future of the Canadian space industry. They expressed concern about the lack of the government's leadership in the future of this industry.

With all of these extensive investments Canadians have made--strategic investments in the future of Canada's space sector--how can we just sell this off to the largest U.S. weapons manufacturer? How is this good for Canadian sovereignty or Canadian jobs, and how is this even just good value for the Canadian dollar?

[Jim Prentice, Conservative, Calgary Centre-North, AB]

Let me just say as I begin that in the time since 1962, Canada has been a leader in satellite technology. That is clear. The history is well documented.

To be fair, in your question you suggested that the Government of Canada is contemplating a sale. That is not the case; the proposed transaction in question involves MDA in a transaction involving ATK.

I am required, as the Minister of Industry, to evaluate that proposed transaction under the Investment Canada Act; the Minister of Industry has the responsibility to make a decision on whether any such transaction has net benefits to Canada and to approve or deny the transaction on that basis.

I've indicated simply that this is before me in my responsibility as a minister, and I intend to discharge that responsibility to the best of my ability and to ensure that the interests of Canadians, as measured through the net benefit test, are fully respected.

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

How can we guarantee our sovereignty in the Arctic if we sell off this technology or if you approve the sale of this technology to the U.S.? How can we guarantee our sovereignty in the Arctic when in December this was so key to Arctic sovereignty?

[Jim Prentice, Conservative, Calgary Centre-North, AB]

I emphasize this: I welcome your thoughts as a parliamentarian, and I welcome the thoughts of everyone else in the room about this proposed transaction--that's one of the reasons I'm here today, to hear from you your perspective on this--but I would simply reiterate that I have not yet made a decision. I will make a decision as I'm required to do within the timelines defined in the legislation and to the best of my ability, based on what the law calls upon me to do. You should not presuppose anything.

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

Mr. Minister, the federal government has refused to move forward with funding of the next wave of world-class Canadian space technology, such as the proposed RADARSAT Constellation and the Mars Rover that Europeans had turned to us to build because we were in the best position to do this.

Why has the government not been investing in these future projects that are essential to keeping our space industry at the forefront and building this industry for the future?

[Jim Prentice, Conservative, Calgary Centre-North, AB]

If we can take your question into the financial and policy framework for Canada's role in space and away from the transaction of which you're speaking, I will say this. I've just come back from the Kennedy Space Centre, where Space Shuttle Endeavour was launched. It was a remarkable experience. I was there because this was a mission in which Canada was central. Dextre, which is essentially the operating fingers at the end of the Canadarm, was included in the launch.

The Canadian achievements in space are remarkable. We have achieved incredible success with the Canadarm 1, which was on the space shuttle, the second Canadarm, which is on the space station, and Dextre.

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

Excuse me, Minister, I have so little time. But these are the result of past investments. The RADARSAT Constellation or the Mars Rover, these are the future.

My question is, what about the current investments? These are investments that Canada needs to make, and the government, frankly, has not stepped up.