Industry Committee on Feb. 10th, 2009

[The Chair, Conservative, Michael Chong]

Thank you, Mr. Minister.

Thank you, Mr. Masse.

We'll now go to the second round of questioning. It consists of five minutes per member.

I'll ask Mr. Garneau to commence.

[Marc Garneau, Liberal, Westmount—Ville-Marie, QC]

Thank you, Mr. Chair.

Thank you very much, Minister, for your introductory remarks.

My first question will be about SADI, the strategic aerospace and defence initiative. As you recall, it was a promise that was made in the last election campaign. You have been asked about it on a number of occasions, and you have said that it is a promise you will be keeping.

Given that this is a time when the industry could use that money, can you give us any insight as to when you plan to announce the $200 million, and how it will be rolled out?

[Tony Clement, Conservative, Parry Sound—Muskoka, ON]

Thank you for the question.

You're quite correct that this is a commitment of our government. Some commitments are met in the first budget of Parliament, and others get met further down the line. We intend to keep that commitment in the future, but I cannot give you an exact date.

There are other things we're doing that will be helpful to the aerospace sector. As I've indicated in the past, if you look at the total relationship there's about $900 million in assistance. Certainly on the military side, the acquisitions we're making will be helpful to the industry as well.

I believe Bombardier's C series had $350 million of assistance over time from the Government of Canada. There's an ongoing relationship between the Government of Canada and the sector, and that will continue. We will continue to make announcements when they are ready to be made.

[Marc Garneau, Liberal, Westmount—Ville-Marie, QC]

Thank you.

In your introductory remarks you talked about the fact that you, Ontario, and Canada are committed to maintaining our share of North American production in the auto sector. I wonder if you've had discussions with your counterparts in the United States, and whether they agree in principle with the notion that Canada must have its share, given the fact that it is putting in the same proportion of money.

[Tony Clement, Conservative, Parry Sound—Muskoka, ON]

Thank you for the question.

My previous counterpart, Mr. Gutierrez, and I had a conversation about this very topic. He was certainly aware of Canada's role in the auto sector. That was true in the previous administration, when Minister Bryant and I went to Congress. Our message to Nancy Pelosi and senators and congressmen on both sides of the bipartisan divide over there was the same: “We are integrated, and if you want to help the American industry, you have to understand that it's integrated with the Canadian industry.”

My current counterpart, the commerce secretary, Senator Gregg, has just been nominated. As you know, they had a bit of an issue with Governor Richardson, so he was not nominated. I think just last week President Obama nominated Senator Gregg, who is a Republican senator from New Hampshire, I believe. Upon his confirmation, which I'm hoping will happen tout de suite, I will be engaged in that conversation as well.

[Marc Garneau, Liberal, Westmount—Ville-Marie, QC]

Thank you.

You mentioned funding for the research granting councils in 2006, 2007, and 2008. Similarly, Genome Canada has received funding in previous years. In this particular situation we find ourselves in, I'm wondering why there is no funding in this budget for these government--not in the case of Genome Canada, which is a bit apart--research organizations.

[Tony Clement, Conservative, Parry Sound—Muskoka, ON]

Thank you for the question.

Certainly the augmentation in funding is there. It's part of their ongoing base budget now. There's been no diminution in funds.

For this budget we have focused on other aspects of research and development that, shall we say, have not been as successful in previous budget years. I am thinking of the $2 billion in deferred maintenance for research and development facilities in universities and colleges, which is a huge amount of money. I think it's the biggest amount of money the federal government has spent in this area--ever, perhaps. We have been concentrating on some other aspects, but certainly the funding is still there for those granting agencies as well.

[Marc Garneau, Liberal, Westmount—Ville-Marie, QC]

I certainly welcome the money for the university infrastructures. That's a good thing. At the same time, I think our brain infrastructure is extremely important.

[Tony Clement, Conservative, Parry Sound—Muskoka, ON]

I couldn't agree more.

[Marc Garneau, Liberal, Westmount—Ville-Marie, QC]

Based on the amount of communication I've received from the scientific community about why there isn't an increase this year, I'm wondering whether we're sending the wrong signal. Is that sending a message?

[Tony Clement, Conservative, Parry Sound—Muskoka, ON]

Well, it certainly is not an intentional message. In fact the message should be quite the opposite. When you have a budget that has an extra $3.5 billion in funding for various aspects of science and technology, I think that's the right message to convey.

Certainly your assistance in conveying that would be most appreciated.

[The Chair, Conservative, Michael Chong]

Thank you, Minister. Thank you, Mr. Garneau.

Now we're on to Mr. Brown.

[Gord Brown, Conservative, Leeds—Grenville, ON]

Thank you very much, Mr. Chairman.

Thank you, Minister, for being here today, especially on such short notice.

First of all, Ontario, where I come from, like the rest of Canada, is really suffering some economic challenges.

As you know, Minister, I have long been a champion of this eastern Ontario development program. It was announced in the summer of 2006, when our party first took government. One of the reasons I've been a champion of that type of economic development program is that often the decisions on how that money is spent are made by the local boards of the community development corporations, which clearly reflect community priorities. I want you to expand a bit on how you see that money continuing to flow and how you see this additional money moving through the Southern Ontario Development Agency.

[Tony Clement, Conservative, Parry Sound—Muskoka, ON]

Thank you for the question.

Indeed, I think the eastern Ontario development program model, where it flows through the Community Futures Development Corporation, is a good model. It has worked very well, as you know, and it has provided some excellent programs throughout eastern Ontario for the last three years. As I said to our colleague Mr. Rota, if it ain't broke, don't fix it. This is a clear example of something that is working well.

In terms of the terms and conditions of SODA, those decisions have not been made yet. But I do encourage members who have opinions on it to continue to express those.

[Gord Brown, Conservative, Leeds—Grenville, ON]

Minister, I was very impressed with the recognition by the government that more money is needed throughout the rest of southern Ontario as well as eastern Ontario. We all know the economic challenges that rural eastern Ontario is facing. So thank you for that.

One of the comments you made in your opening statement was that “Our budget decisions flow from Advantage Canada, the long-term plan for the Canadian economy that we introduced in 2006”. You further went on to talk a little about building a more competitive business environment. Can you expand a bit on that for us, please?

[Tony Clement, Conservative, Parry Sound—Muskoka, ON]

Sure.

Advantage Canada has a number of different aspects, obviously including investments in science and technology, which I would reiterate to this committee are an important cornerstone of our innovation agenda. Part of our economy is knowledge-based and should continue to be knowledge-based, and that requires continued investment—not only public investment, might I add, but also private investment. How do we create a culture in which our private enterprises invest more in innovation and knowledge work that will stand us in good stead?

I believe we have some ground to make up there, and certainly part of what Advantage Canada has to do is create the environment in which our private companies will invest in innovation and creativity. That's a continual goal. That's why it's important to express it in our various pieces of legislation.

If I can just take the question down a slightly different path as well, one of the reasons we're moving ahead in the budget implementation bill with the changes to the Competition Act, for instance, is to ensure that we have viable marketplaces in this country, that those who are impeding the marketplace are punished, and that those punishments are 21st century in terms of quantum and our ability to pursue them, for instance—just to give you one example.

I think this is all part of how we create a marketplace for tomorrow and how we remain competitive for the future.

[Gord Brown, Conservative, Leeds—Grenville, ON]

One of the other things you spoke about, Minister, concerned the BDC or Business Development Bank and Export Development Canada.

As a business person, I understand how important access to credit is to build a business and create jobs. Maybe you could tell us a little more about what you were talking about in your opening comments.

[Tony Clement, Conservative, Parry Sound—Muskoka, ON]

Access to financing is a huge challenge right now. We, like most of the rest of the world, were falling into a liquidity trap whereby banks—in other parts of the world this was the case—because of a crash in the credit system, were unable to lend, and therefore business was starting to grind to a halt. That phenomenon affects our banks, because they're part of a world financial system.

In a similar vein, in these kinds of circumstances we look to government agencies to help increase or maintain access to financing. As you know, with the budget, which we hope will, through the implementation bill, be passed by Parliament, we'll be in a position to increase the liquidity of the BDC and the EDC. We'll be reviewing their terms of reference as well, to make sure they continue to be helpful to businesses—but still on commercial terms—and to make sure they can help with liquidity. That will be of benefit to Canadian businesses.

I'm getting the hand signal from the chair.

[The Chair, Conservative, Michael Chong]

Thank you, Minister. Thank you, Mr. Brown.

Monsieur Bouchard.

[Robert Bouchard, Bloc, Chicoutimi—Le Fjord, QC]

Thank you, Mr. Chair.

I would also like to thank the Minister for coming here this afternoon, and to thank the aides who are with you.

Minister, my colleagues and I have tried on several occasions to get clarification regarding the forestry industry. One of your colleagues, the Minister of State for the Economic Development Agency of Canada for the Regions of Quebec, has said several times in the media that the federal government could not give loan guarantees for businesses because it would be contrary to the Canada—United States softwood lumber agreement.

Minister, if you can’t answer my question, your assistants will undoubtedly be able to help. I would like to know what clause loan guarantees to forestry companies would violate.

[Richard Dicerni, Deputy Minister, Department of Industry]

This is not within the purview of the Department of Industry. I can’t give you a precise answer, but on the whole, any government assistance that favours any company would be contrary to the fundamental principles set out in that agreement.

If I may, I can contact one of my colleagues at the Department of Natural Resources and provide you with the information through the committee chair.

[Robert Bouchard, Bloc, Chicoutimi—Le Fjord, QC]

Thank you, I am going to raise another subject. Another of your colleagues who was elected in my region, the member for Jonquière-Alma, has said in the media that Rio Tinto would shortly be undergoing a review by Industry Canada to determine whether it is still in compliance with the conditions imposed by Ottawa.

So can we find out what conditions Industry Canada is imposing on Rio Tinto? If those conditions were beneficial to workers and the public, and respected workers, it seems to me it would be an easy matter to find out what they are. I don’t know what they are, even tough these questions have been asked several times.

[Tony Clement, Conservative, Parry Sound—Muskoka, ON]

Yes. It is not up to me to talk about specific undertakings, that role belongs to the Government of Canada and Rio Tinto. But I can tell you that Tinto is currently in compliance with its undertakings. Certainly our challenge is to continue the discussions with Rio Tinto to make sure that this continues to be the case in the future.

[Robert Bouchard, Bloc, Chicoutimi—Le Fjord, QC]

Is it correct, Minister, that Rio Tinto will be reviewed in 18 months? We are talking about 18 months. I am reporting what I have seen in the papers: 18 months after the acquisition, Industry Canada is going to do a review or ascertain whether the conditions have been met.

But what are those conditions?

[Tony Clement, Conservative, Parry Sound—Muskoka, ON]

I can’t tell you exactly what the conditions or the undertakings are, but it is important to note that this discussion is taking place, this agreement exists with Rio Tinto, and that is certainly my challenge. In my opinion, it is important to have undertakings so that Rio Tinto will abide by them, not just today, but in the future as well.

That's all I can say right now.