Industry Committee on Oct. 3rd, 2024

[The Chair, Liberal, Joël Lightbound]

Thank you, Mr. Généreux.

I'm sorry to interrupt you, but your speaking time is up.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

I just started.

[The Chair, Liberal, Joël Lightbound]

I know, but for everyone else, you started speaking five minutes and 20 seconds ago.

Mr. Turnbull now has the floor for five minutes.

[Ryan Turnbull, Liberal, Whitby, ON]

Thank you.

Thanks for being here.

I know that some Conservative members have said online that they would have rather just given Elon Musk more money. I'm of the opinion that Telesat is a great Canadian company.

Why does the Government of Canada need to lend Telesat money? Why are we stepping in and providing a loan? Is it because the market rates are not competitive, or is it because Telesat can't get access to financing? I think there's a strategic reason the Government of Canada is actually doing the work and enabling the market in certain areas. You've talked about being strategic numerous times. Could you speak to why we need to play a role and why this is in the public interest?

[Francis Bilodeau]

Absolutely.

Part of the dynamic around this one is that low-earth orbit in space is generally a rapidly evolving sector. It's one where a number of global competitors are positioning themselves, and those competitors certainly include Starlink and others. In Telesat, Canada has an opportunity to have a major global player. There's an existing capacity, and reviews of its technologies have been undertaken to make sure we believe it has the potential to be a major player in that industry. The investment around Telesat, while certainly connecting Canadians, is an important component and is seen by the department as a strategic investment in a core Canadian capacity that not only has potential for economic growth but also is strategically important in today's world.

[Ryan Turnbull, Liberal, Whitby, ON]

You say “strategically important”. Are there other strategic reasons that Telesat is a better investment? I think there are. We heard the minister speak of national security, and I think that that's an important consideration here, is it not?

[Francis Bilodeau]

I think that Canadian control and Canadian access to Canadian companies of things like low-earth orbits and our telecommunications are generally strategically important for a number of reasons, whether it's the resilience of the country or whether it's security. That is true for our terrestrial telecommunications systems, and it is true for space and low-earth orbits as well.

[Ryan Turnbull, Liberal, Whitby, ON]

Just to be clear, in the structure of the loan there's a payback period. What is the payback period for the latest loan with Telesat?

[Francis Bilodeau]

It's 15 years.

[Ryan Turnbull, Liberal, Whitby, ON]

Okay.

I'll say at the outset that I'm not an expert in satellite communications technology, but I imagine there's a period of time that's significant—in terms of needing to get the infrastructure built and to get the satellites in the air before you have subscribers—where you're going to be pre-revenue.

Is that the reason that Telesat hasn't had to pay back a portion of the loan thus far? It seems to be logical to me. It would make sense. Is that why their loan is structured that way?

[Francis Bilodeau]

Do you want to jump in on this?

[Mary Gregory, Associate Assistant Deputy Minister, Industry Sector, Department of Industry]

Sure.

I think what the government tries to do is to help a company like this with patient capital, which is the idea you've expressed. We've tried to do that with Telesat, to build a loan program whereby, during the period of the project and the construction, they keep cash on hand; they keep things going, and then they repay once the project is up and running and in selling mode.

[Ryan Turnbull, Liberal, Whitby, ON]

Yes, that makes sense. Being a business person myself for 13 years, and having run a business and supported a lot of other business owners to grow their businesses, that seems to make a lot of sense to me.

Now, the Government of Canada is actually doing this. We're assuming risk by using public incentives and investments strategically. We now have investment tax credits. We have the Canada growth fund. We have the strategic innovation fund and the net-zero accelerator. There's quite a few of these programs, which I think you referred to as a “suite” of programs, wherever we deem there to be a strategic public interest and advantage that Canada can gain in terms of economic growth, opportunity for workers, leading the way and being globally competitive. When it seems to be in the public interest, the Government of Canada is essentially using its balance sheet to assume some of the risk to attract private capital into those strategic areas.

Is that not the philosophy here or the theory of change? Can you provide the rationale for that?

[Francis Bilodeau]

Yes, actually. The Government of Canada, through a current suite of programs, is actually making investments across a range of business types and sizes for a number of different factors.

Number one is to grow our innovative firms, so we have programs like the NRC IRAP. Number two is to grow strategic sectors. Examples of programs that help support that would be the global innovation clusters. Number three is to help build up Canadian companies and Canadian capacities where there is a strategic interest. We've seen a number of those investments or those areas where it's been directed, such as EVs and some critical minerals. Recent investments in AI are intended to build up Canadian capacity in AI and build on past investments like the pan-Canadian AI strategy.

There are also other sectors, such as quantum, where we've had a national quantum strategy. The government has judged this area and sector to be poised for growth and of strategic interest for Canada.

[The Chair, Liberal, Joël Lightbound]

Mr. Garon, you have the floor for two minutes.

[Jean-Denis Garon, Bloc, Mirabel, QC]

Thank you, Mr. Chair.

Mr. Bilodeau, I would like to clarify with you an answer that the minister gave me earlier. We were talking about the softwood lumber dispute, which has been going on for decades. The U.S. updates their tariffs every five years. For its part, Quebec has updated its forestry regime. I will not repeat the whole thing, but we are facing tariffs that people in the industry, the government of Canada and the government of Quebec consider unjustified and unfair.

I asked the minister whether there was the possibility of an emergency assistance program being created for companies in that sector. Fifty per cent of the amounts in play in the U.S. involve dealings with Quebec. Moreover, 20% of the exports are from Quebec.

The minister's reply suggested that, unfortunately, no such program was on the table. The minister said that he was focused on innovation, increasing productivity and so on, without providing any details.

This tariff crisis is another slap in the face for our industry. In light of this, would it be possible for you to tell us the range of very short-term options that the department is considering right now?

[Francis Bilodeau]

As you know, I am in a sense not in a position to speculate or comment on the advice the minister might give in this regard.

In the past, assistance was offered to various companies, and the government did so through direct investments or investments through taxation. I am not really able to speculate on what measures the government might take or the advice the minister might give.

[Jean-Denis Garon, Bloc, Mirabel, QC]

I just have a few seconds left.

I just want to clarify something. I am well aware of the nature of your role and your work, and what it entails.

The tariffs were announced on August 14 and we are now in October. Is a specific policy being developed in this regard?

[Francis Bilodeau]

The work will for the most part be done by our colleagues at Natural Resources. They are certainly aware of the problem, and we are in contact with them. I cannot provide any further details right now.

[Jean-Denis Garon, Bloc, Mirabel, QC]

Thank you.

[The Chair, Liberal, Joël Lightbound]

Thank you very much, Mr. Garon.

Mr. Masse, you have the floor.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair.

To get back to Telesat, are there provisions and expectations that will also include a reduction of prices for consumers? What's the objective of the loan guarantee? Is it just supposed to be financial, and the growth of the industry itself is specific to Telesat, or are there additional strategies to reduce costs for Canadian consumers and include more competition?

[Francis Bilodeau]

On the first point, I noted that I'm happy to provide greater detail on the agreement. I think some of them are actually public at this point, within any bounds of consumer confidentiality.

With regard to the objective of the loan, I'd say it's multifold. Number one, as I've mentioned, is the development of a strategic capability through Telesat around their satellite constellation and the growth of a Canadian company in what is a very globally competitive sector. Number two, through things like commitments around $600 million to pre-commit some of the services of Telesat, we're looking to ensure that some of the regions in Canada that have the least capacity for access to the Internet are able to be connected.

Both of those objectives are true and are being pursued through an investment in a strategic Canadian company.

[Brian Masse, NDP, Windsor West, ON]

To follow up on that, is there a requirement for rural and remote communities to get service first, or will it be left for Telesat? We've seen current carriers often concentrate in hot spots. Since we're actually part of the funding, does Telesat have a requirement to provide a more fair, equitable distribution to connect rural and remote communities?

[Francis Bilodeau]

Certainly, part of the objective of Telesat as an organization is to have a polar orbit. That creates an opportunity for connection in areas that are often not easily connected or where most satellite constellations aren't currently taking place. Part of what I previously mentioned around the $600 million is specifically intended to support access to low-earth orbit in the north.

Also, our investments in this company, which are primarily around building Canadian capability, are supplemented through investments the government is making through the universal broadband fund. Through that fund, active investments are being made to try to get to the connection of 98% of Canadians by 2026 and 100% by 2030.