Industry Committee on Sept. 10th, 2010

[The Chair, Conservative, Michael Chong]

Just briefly, Mr. Stephenson.

[Don Stephenson]

In fact, the agreement doesn't exactly say that you can't give a subsidy or a benefit. It says you can't give a benefit, direct or indirect, that reduces the burden of the export tax, the export measure, the export charge, because on the U.S. side of the border they wish to see us impose this charge to level the playing field--at least in their minds--with respect to the competition in lumber.

As I said earlier, there are two or three kinds of subsidies that are sheltered under the agreement, subsidies that existed prior to the agreement, that address issues of forestry management or that go to first nations, for example. But otherwise, almost any other kind of subsidy could be challenged by the U.S. under the agreement.

[The Chair, Conservative, Michael Chong]

Thank you.

Monsieur Nadeau.

[Richard Nadeau, Bloc, Gatineau, QC]

Thank you, Mr. Chairman.

Mr. Lachapelle, a little while ago, we were talking about the federal government's $10 billion investment in the auto industry. You were questioned about this. That fact is that it was a very good thing for the auto industry.

I hope we are wrong, but we think that since the Conservatives would really like to get their hands on some NDP ridings in Southern Ontario, they targeted their assistance to that industry. A political decision was made. On the other hand, only crumbs were offered to the forest industry, along with untenable conditions, since it has to do its share, even though it is not in a position to do that now, as you explained earlier. I hope that this can be corrected. When you make the same error twice, that's serious; but if there is a recognition that a mistake has been made and if Quebec is not abandoned by the current government, we can take another look at the situation. The forest industry and paper mills, which are located not only in Quebec, but in Ontario, New Brunswick, British Columbia and several other places as well, are suffering enormously because of this government.

I would like to address another aspect of the situation and talk about the industry as a whole. We spent a lot of time this morning—and rightly so—talking about two plants in particular—the ones in Dolbeau-Mistassini and Gatineau. However, there are others. We could have opened the umbrella a little wider and taken a close look at all the plants. The workers feel cheated and they have every reason to feel that they have been had by AbitibiBowater. And we have also seen how this company deals with people who want the industry to work, even though they may not be directly involved in that industry, but still want to ensure that their residents have jobs in the paper mills and the forest industry. And then there are the small- and medium-sized businesses—the subcontractors—which work with the paper mills, either in terms of transportation or in other areas. They don't work in the plant, but they haul the products, first for processing purposes, and subsequently for sale or reprocessing.

So, a lot of people feel they have been had. How does the industry intend to compensate the people who have been penalized by plant closures?

[Yves Lachapelle]

That is quite a question.

One thing is for certain, and that is that all the parties in our industry are closely connected. You mentioned the small businesses, the suppliers and the customers of our different companies. The future of one depends very much on the future of the other. In that sense, we must try to develop a common future and closer ties between companies.

With respect to your question, the Companies' Creditors Arrangement Act exists. Of course, it does lead to certain consequences that affect everyone. No one is immune to that. Now, what should we do next? Should we be working to fix what was done in the past or should we be looking to the future? In my opinion, we must look to the future because we have a fantastic resource. It is a tremendous asset for Canada and for Quebec, and we have to find a way to once again allow it to serve the people.

[Richard Nadeau, Bloc, Gatineau, QC]

Mr. Lachappelle, I agree with you, we do have to work to develop the future. In any case, we have no choice. Tomorrow is coming, yesterday is behind us, but the fact remains that people are suffering now as a result of decisions that were made yesterday. Do you see what I mean?

As we heard this morning, people are now losing their pension funds or are in danger of losing a significant part of their pension. We're told they will lose only 25% of their pension fund, but in other places, it's 40%. I'm sorry, but that is huge!

Furthermore, some suppliers are losing 100% of their contracts. That means they are losing the money owed to them, and that doesn't include the contracts they will be losing in future. All of that is extremely difficult.

Mr. Boivin, how do you see the current situation? I'm talking about the SMEs and the complex you are proposing. Given how difficult things now are, as you see it, how could this improve their situation?

[The Chair, Conservative, Michael Chong]

Thank you, Mr. Nadeau.

Mr. Boivin, please.

[Jean-Pierre Boivin]

Some people are hurting, including the carriers. They absolutely need help. In order to restructure the industry, support will need to be provided. Let's not forget that, in the resource regions, the industry did get help. It wasn't the companies that grew the forest. They are given that timber, with very little to pay in way of royalties. The forest roads are built for them. Once the trees have been cut down, we do the replanting for them. Again, these people are being subsidized. So, the industry has received benefits. In any case, that is certainly what happened in Quebec.

In terms of a complex like the one we have been discussing, there is no doubt that government assistance will be required. How will these people be able to recover and develop a vision for the future? In my opinion, the government will have to act as facilitator.

This morning we were talking about the workers. In terms of the shares to be received, these same workers will be required to pay the taxes associated with them in advance. The problem is they don't have the money for that, no more than the carriers do. They're making repairs every night using a staple gun, so to speak. They need help, they need guarantees. In that sense, the governments of Quebec and Canada have to help them.

[The Chair, Conservative, Michael Chong]

Thank you, Mr. Boivin.

Mr. Blaney, please.

[Steven Blaney, Conservative, Lévis—Bellechasse, QC]

Thank you very much, Mr. Chairman.

I am happy to be part of a government which, for the past four and a half years, has been there for the workers and the forest industry. Today I heard Mr. Nadeau talking about peanuts. But in the last four and a half years, I've seen some pretty large peanuts being given to the forest industry. Unfortunately, I also saw Bloc colleagues abandon the forest industry on a number of occasions when there was a need to invest. And we saw what the Liberals did.

It's important to remind people that when we took office, we resolved the softwood lumber dispute. It's important to remind people of that today, when we have witnesses here describing how the industry should evolve. It is also important to remind people that, as early as 2007, we invested $1 billion in the Community Development Trust. Our support for the forest industry didn't begin yesterday. We will continue along the same lines with Ministers Lebel and Paradis. We have invested $1 billion in greening the paper mills.

I'm sure Mr. Lachapelle would acknowledge that that is a positive measure. Of course, there are the workers. But we're talking about $1 billion for communities, not including the $235 million provided by the Canada-Quebec Forest Task Team, the $170 million set aside for regional diversification, and the $100 million provided for industry transformation.

Of course, in the last two years, through the Economic Action Plan, at a time when Quebeckers were most in need of help, Bloc members refused to allocate $8.3 billion for additional help for the workers as well as $60 million for older workers, to help them relocate.

The record is there. Can we do more, and continue to do more? I can tell you that we certainly will. Today we saw that the industry needs help. So, yes, we will extend a hand to people in the industry, and work with them.

Today we also talked about financial assistance for industries. Export and Development Canada officials are with us today.

Ms. Hendricks, Export Development Canada allocated $16 billion in 2009 to support Canadian industry. That was alluded to this afternoon. Can you tell us how many forest industry clients benefitted and, of that $16 billion, what amount was specifically allocated to Quebec?

[Justine Hendricks]

The data I mentioned apply to 2009. The $16 billion that benefitted the forest industry was allocated to 538 companies, including $11.9 billion to 223 Quebec companies.

[Steven Blaney, Conservative, Lévis—Bellechasse, QC]

Can you tell us what form of assistance was provided? Was it financial assistance for products sold to the US, for example? You talked about financial facilitation. Is that on a commercial basis? The amount was $16 billion, but what form did it take?

[Justine Hendricks]

Yes, the $16 billion in assistance relates to the products we offer. It includes receivables insurance, bonding and financing. Most of the $16 billion will be allocated in the form of receivables insurance. I don't have the specific details about the markets involved, but in general terms, the most significant one is certainly the US market.

[Steven Blaney, Conservative, Lévis—Bellechasse, QC]

I'd like to talk about your 2010-11 projections. We have been given signals today that the industry is experiencing a major structural crisis. Are you expecting the assistance you provide to increase? How do you see things? Do you have any projections or estimates with respect to market trends?

[Justine Hendricks]

I can tell you that in August, support amounted to approximately $8.6 billion. Thus far, 456 businesses have benefitted from that support. We are a little ahead when compared to last year at the same date, in terms of our results. I can tell you that not only is the trend continuing, it is on the rise, in terms of our support.

[Steven Blaney, Conservative, Lévis—Bellechasse, QC]

There is a slight increase.

Mr. Lachapelle, Mr. Chevrette came to Sainte-Justine. Rotobec is a company that specializes in high tech equipment that is exported around the world. Sainte-Justice is on the US border. Do you not agree that $1 billion for greening is money that helped the paper companies?

[Yves Lachapelle]

There is no doubt that effort was made both at the federal and provincial levels. That cannot be denied. But that is not the issue. The needs and the conditions in many cases, and particularly the magnitude of the problem, are the real issue. I referred to the program you announced not long ago. It represents $100 million over four years. The idea is a good one. It's about supporting innovation. We need demonstration in order to create markets. The fact remains, however, that this is inadequate. Companies must contribute at the level of 50%.

No bank is interested in the forest industry. If you talk about the forest to a banker, he will turn around and look somewhere else. We really are of no interest. Yes, exports are supported, and that's a very good thing. Some $16 billion in export value is supported through your programs. That is not insignificant, but today, companies need oxygen. Many Quebec companies, whether they have multiple plants or are family businesses, have demonstrated extraordinary imagination in seeking new market opportunities and developing new products. But they have reached their limit. That's what we were saying earlier. The consolidation process is not over yet. Unfortunately, we have not yet hit bottom. In that sense, there is still time to act.

[The Chair, Conservative, Michael Chong]

Thank you, Mr. Lachapelle and Mr. Blaney.

I'd like to thank all our witnesses, as well as Committee members.

Thank you for your participation today.

This meeting is adjourned.