International Trade Committee on Feb. 26th, 2009

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

Well, you know, actually, usually projected job increases or decreases are the responsibility of private sector commentators or the chief economists of banks and what not. Statistics Canada is there to provide us with, in as real time as possible, what the current industry looks like or what has happened over the last couple of months, that kind of thing.

I can tell you we have 5,000 employees right now, in terms of industry employment. Industry shipments are approximately $525 million, so that's the state of play right now. Obviously we want to grow that. We want to stabilize it and grow it, which is why our policy is what it is.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

That's a little worrisome, then. You haven't done any impact analysis on EFTA.

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

I'm sure somebody has done it.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Well, Trade hasn't either, so I think what you've confirmed is that the government departments that are most concerned with shipbuilding have not done an impact analysis.

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

No, I think you're putting words in my mouth right now, Mr. Julian.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

No, no, I asked you if you had figures and you don't, and I understand that. I'm just remarking that we've heard—

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

Okay, so my answer is no.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

—from Trade as well that they haven't done an impact analysis, so neither ministry has. And that is a matter of some concern, I think, for those who are in the shipbuilding industry and those who want to see a carve-out.

Now, Mr. Minister, you mentioned hearing the concerns of people in the shipbuilding industry. My colleague Mr. Savage mentioned the concerns they have around the lack of an economic stimulus package for shipbuilding. He did mention some of the articles, and it's very clear that no contracts have been awarded and actual work on any project is years away, as the Ottawa Citizen reported. The shipbuilding industry can't rely on a promise that sometime between now and 30 years from now there'll be some investment in shipbuilding. They need action right now.

We've heard some of their voices. So far we've had one witness from the shipbuilding industry come before this committee on Bill C-2 who said, “So this EFTA deal is a bad deal for Canada. ... I know we're going to destroy our shipbuilding industry....” We have two others who have requested to come before this committee. George MacPherson, representing shipyard workers, said, “Under the FTAs...Canadian shipbuilding jobs are in serious jeopardy”. We also have Andrew McArthur, who wants to come before this committee as well and has said, “...our position...has been that shipbuilding should be carved out from the trade agreement”.

The shipbuilding industry's been very clear on their concerns around EFTA, and so my question to you is this. Since they've been very clear, even though this committee hasn't heard from all these individuals yet, wouldn't that or shouldn't that provoke much more action from your minister?

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

I just want to correct the record on one issue. The Halifax class modernization project is ongoing right now, so I didn't want your contention to go unchallenged on that front.

Certainly, we believe we have enough protections in the EFTA agreement to protect the industry. If untoward trade issues come forward that, in our view, violate the spirit and the intent of this agreement, then obviously we can restore the tariffs that are currently in place. We believe that, given our current strategy and current pipeline of work that is projected to be occurring in the future, this industry can not only survive but thrive and, indeed, have access to other markets as a result of a free trade agreement.

The funny thing about the NDP, Mr. Chair, is that they always look at the downside; they never look at the upside. I would encourage you to be more enthusiastic and supportive of our industry and how we can compete with the world.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Well, Mr. Chair, we've been right. We were right on the softwood sellout: tens of thousands of jobs lost. We were right that the iron and steel components of Buy America would go through U.S. Congress. We've been right all along: no action in the automotive sector. So we can have a debate, but I think it's very clear that when we talk about job loss concerns, the NDP has been right on the money. It's the Conservatives who have had the rosy thinking.

The reality is that no contracts have been awarded in the so-called economic stimulus package for the shipbuilding industry. We also have the SFF. Now, within 10 months nearly half that fund, which is supposed to go over a three-year period, has been effectively subscribed. The shipbuilding industry has been calling for an increase in the SFF. They've been calling for ACCA, as Mr. Savage and Mr. Cardin both referenced, the ACCA and SFF being used in tandem. The shipbuilding industry has also been calling for a portfolio management contracting system just to avoid that boom-and-bust syndrome.

My question to you is this. Why aren't these things moving forward, when very clearly the shipbuilding industry is concerned about the impacts of EFTA unless there is a carve-out?

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

I can't let that statement go unchallenged. Twenty years ago, the NDP was spectacularly wrong about NAFTA, which created millions of jobs for Canadians--

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Most Canadians are earning less.

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

--and I've yet to see the apology.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Most Canadian families are actually earning less under NAFTA.

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

So you're against NAFTA. I'm sorry to hear that, because that is a lot of unionized jobs too. Explain that to the CAW.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Most Canadian families are earning less, and you should have those statistics.

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

But in answer to your question, the accelerated capital cost allowance gives the Canadian-built registered ships a thirty-three-and-one-third straight line reduction in the rate, so that might be preferable in certain circumstances to the SFF. If that is not preferable, we want to give some break to shipbuilders, and I think that's the kind of balanced approach the SFF represents. It's an alternative to the accelerated capital cost allowance, if that is not a preferred option by a shipbuilder. In that sense, I think it's a more holistic policy, and that's why we think it's defensible.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Are you excluding, then, the tandem in this recent funding?

[The Chair, Conservative, Lee Richardson]

That's seven and a half minutes.

Mr. Keddy.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

Thank you, Mr. Chair.

Welcome to the minister and the department officials. I appreciate your coming to this committee.

This is an important treaty. It is Canada's first free trade agreement in some time. It is certainly an important one and allows us onto the doorstep of Europe, with bigger things hopefully to come.

I'd like to welcome Mr. Savage to committee. He's another Nova Scotian MP. I appreciate his comments on supporting this piece of legislation, because it's an important piece.

[Michael Savage, Liberal, Dartmouth—Cole Harbour, NS]

You're welcome.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

Well, I appreciate it.

Especially while we're talking about shipbuilding here this morning, I think we would be remiss not to recognize the good work of the sailors and the skipper of the Leonard J. Cowley, who rescued a skipper, 20 seamen, and international fishery observers off the Grand Banks the day before yesterday.

I would like to say for the record, Mr. Chair, that I find reprehensible some of the comments made by some of the NDP members of Parliament on this particular issue. I'll take that up at the fisheries committee after this.

To the minister directly, I think one of the issues that have really been in flux here and that we do need a clear answer on, quite frankly, is the application to the shipbuilding industry of how the structured financing facility and the accelerated capital cost allowance work together. I think that is really the nub of what we've been trying to grapple with here.

The issue that continually is missed by the opposition here is the fact that if we had both vehicles available, some private industry companies actually would be at a disadvantage. They may not be in a position to accept the accelerated capital cost allowance, but they would be in a position to accept the structured financing facility. So what you would do is actually make winners and losers because some companies, some owner-operators, wouldn't be able to access both. Is that correct?

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

I'm going to let Mr. Farina walk us through with more detail on that question.

[Chummer Farina, Director General, Aerospace, Defence and Marine Branch, Department of Industry]

I think the two programs are quite complementary. The structured financing facility is an interest buy-down program for shipowners who purchase vessels in Canada. That works in the international market. Most of the uptake of the SFF has been for boats built for the international market. The accelerated capital cost allowance is solely a domestic program and is designed to help shipowners in Canada buy new boats. They work together. They are complementary. That's how they were designed and put in place.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

To go back to my original question, I understand how both of them work. The question is, if you had both for Canadian shipbuilders, you would have some owner-operators, some private companies, that wouldn't be able to access both, because they would qualify for the structured financing, but if they weren't a profitable company they wouldn't be able to qualify for the accelerated capital cost allowance. So in fact, we would put some owner-operators at a disadvantage.