Debates of Nov. 21st, 1995

Presence In Gallery

[The Speaker]

I wish to draw your attention to the presence in the gallery of the Hon. Louise Dacquay, my sister Speaker of the Manitoba Legislative Assembly.

[Some hon. members]

Hear. Hear.

Points Of Order

[The Speaker]

This morning we had a point of order raised by the member for The Battlefords-Meadow Lake. The hon. parliamentary secretary wants to speak to this point of order.

[Peter Milliken, Liberal, Parliamentary Secretary to Leader of the Government in the House of Commons]

Mr. Speaker, in response to the hon. member for The Battlefords-Meadow Lake and the point of order he raised this morning about the government's lack of response to a report of the Standing Committee on the Environment, I understand that the report of the committee was a very lengthy one and involved 141 recommendations for change to the Environmental Protection Act. That act is currently under review in light of the committee's recommendations.

The government is preparing a response, but because of the length of the report and the very complete report that was tabled by the committee, it was unable to be completed for today. It is anticipated that a response should be forthcoming within the next couple of weeks.

I realize that the standing order requires tabling of a report within a limited time, but rather than table a short or incomplete report, which would not have answered all the committee's concerns, the government chose to take extra time to do this. I regret that this fact was not communicated to the House in advance to warn hon. members so that the hon. member for The Battlefords-Meadow Lake would not be in the position of asking for this today.

I assure the House that the government will proceed with the matter with dispatch. I hope I will be in a position to have the Minister of the Environment here shortly, within a few weeks, to table the government's response to this report.

[Len Taylor, NDP, The Battlefords—Meadow Lake, SK]

Mr. Speaker, I have just a short response. First, I thank the hon. member for his quick return with an answer to this very important question. I appreciate the time he has taken today to bring the government's response timetable to the attention of the House.

I wish to remind you, Mr. Speaker, that the previous Speaker's ruling on a matter like this did indicate that it was disheartening when a government missed a deadline.

The government committee that had studied this issue previously said: "If a document cannot be tabled within the prescribed time, the responsible minister should advise the House accordingly before the deadline. It is not acceptable that a deadline is ignored".

It should be very clear in the House that when the rules of the House are put in place to aid and assist members of Parliament in doing their jobs, the government has a responsibility to uphold those rules. I believe very strongly that something has to be said to the government and the minister responsible in this regard.

The deadline was missed. The government had an obligation to come to the House prior to the deadline being missed. It is unacceptable for them to have missed this deadline.

[The Speaker]

I think the point of order is well taken. I think the hon. parliamentary secretary has given a response and a commitment to the House that the information will be forthcoming within the next few weeks.

I concur that the rules of the House should be adhered to and it is regrettable when they are not. I hope that the explanation that was given by the hon. parliamentary secretary to the member for The Battlefords-Meadow Lake at least in this particular case will satisfy him.

The House has heard the commitment taken by the parliamentary secretary. If that is acceptable to the House, I will not rule on the point of order because it seems to have been resolved at this point.

The House resumed consideration of the motion.

Supply

[Dennis Mills, Liberal, Parliamentary Secretary to Minister of Industry]

Mr. Speaker, I appreciate having the opportunity to share time with my colleague, the member for Vaudreuil, on this Bloc Quebecois opposition day motion.

It is important to go over the words of this motion presented to the House by the Bloc. They are condemning the government for having dropped the Canadian content requirements in the contracts for the purchase of military equipment and refusing to set up a genuine program for the conversion of the military industry, thus endangering the Canadian aerospace industry located in Montreal.

It is important for all Canadians to know, and specifically Canadians from Quebec, people from Quebec who still believe in Canada, and even the separatists for that matter, that it was a Liberal government that basically set up the foundation of the aerospace industry in the province of Quebec.

We only have to go back to when the current Prime Minister was the minister of industry in 1977. As the Minister of Industry, Trade and Commerce, he was the one who bought the rights for the Canadair Challenger jet. That Canadair Challenger jet, which started out as an executive jet, as we all know today is probably one of the best commuter jets manufactured in the world. That industry is alive and well in the province of Quebec, which is part of the Bombardier Corporation.

We just need to go back to 1980-81, when the then Liberal government under the direction and leadership of Pierre Elliott Trudeau made a multi-billion dollar purchase of the F-18A fighter aircraft and 80 per cent of the offsets in that fighter aircraft were basically let out to the aerospace industry in Montreal.

The history of and the commitment of the Liberal government to the aerospace industry in the province of Quebec are well laid out. There is a great commitment and there is great history. For the Bloc Quebecois to suggest that we as a government are not committed to supporting this industry is simply incorrect.

In the motion the Bloc Quebecois is saying that the government dropped the Canadian content requirements. It is forgetting what happened when many members of the government were in opposition.

I would like to return to the free trade agreement. The leader of the Bloc Quebecois supported the free trade agreement. Many of us on this side of the House opposed the free trade agreement. One of the reasons we opposed the free trade agreement was chapter 14, which essentially gave people offshore unfettered access to and unlimited control over the Canadian industry. As part of that agreement, we now are prohibited from dictating Canadian content.

We have to remind the members of the Bloc Quebecois that they cannot suck and blow at the same time. It is not possible. They cannot stand up in the House to support the free trade agreement, which essentially gives up our ability to dictate Canadian content, and then come back three years later and condemn the government for having dropped the Canadian content requirements. That is the motion we have before us today.

The members of the Bloc Quebecois opposed the notion of having control over Canadian content three years ago, and they are regretting it today. It was the Liberal Party that opposed the free trade agreement as it was negotiated by the previous government.

I have always believed that the auto pact was an example of a negotiated trade agreement in which we could enshrine our interests and our ability to ensure Canadian content. That was a unique feature of the auto pact. However, we gave up the opportunity to negotiate a similar agreement for the aerospace industry.

It is very important for us to let Quebecers know that the Liberal government is not opposed to the aerospace industry in Quebec being a vibrant and healthy sector. The Liberal government will not do anything to hurt the industry. If anything, we are going out of our way to help it.

The question that was brought up by some Bloc Quebecois members this morning is what is Quebec's fair share. The Canadian space station is based in the province of Quebec. That is one of the premier institutes of the industry. The commuter jet of Canadair is being manufactured in Quebec. The maintenance of the F-18A, our fighter aircraft, is being done in Quebec today. As a Toronto member, an Ontario member, I have absolutely no difficulty with that. It is a good move. By building a critical mass of expertise in the province of Quebec in the aerospace industry we create a capacity to bid on some available subcontracts, prime military contracts available throughout the world.

In other words, we obviously do not have the capacity to build total military aircraft or total products in an off the shelf sense. However, because of the component specialization that exists within the aerospace industry in the province of Quebec, we can bid on some component parts with any of the prime manufacturers not only in the United States but anywhere in the world.

It is very important to make sure our fellow Canadians realize this avenue of opportunity is available for people in the aerospace industry in the province of Quebec.

It is true that in the past we were much more aggressive in dictating Canadian content. However, because of the ability to make a quality product at a competitive price, there is probably a lot more opportunity in the aerospace industry in the province of Quebec than Bloc members are giving it credit for.

As part of the new defence industry conversion program we are trying to say to those people in the aerospace industry that although we no longer give direct grants we will make sure we give them marketing support. If they have a quality product in that sector at a competitive price-and we certainly have an advantage because of our Canadian dollar-then the secret would be centred in the whole area of marketing. We have to market the aerospace industry in the province of Quebec.

Rather than stand in the House today and cast doubt on the ability of the aerospace industry to compete, we should be boasting about the quality products made in the aerospace industry in the province of Quebec and figuring out ways of doing things together.

[The Speaker]

I regret to inform the member that his time has expired, but we have time for questions and comments if there are any.

[Gilbert Fillion, Bloc, Chicoutimi, QC]

Mr. Speaker, on this opposition day, the debate is on a subject chosen by the Bloc Quebecois, and I must say I have always had a special interest in national defence.

There are a number of reasons why that is so, the main one being that in my riding, we have an important entity that reports to the Department of National Defence and I am, of course, referring to the Bagotville Base.

The base is a major employer in the Saguenay-Lac-Saint-Jean area. Bagotville provides employment for more than 1,250 military personnel and 280 civilians.

That alone makes it a major economic asset to a region that, need I say it again, has the highest unemployment rate in Canada.

I am sure that the same could be said of other regions in Canada, since there are always substantial economic spinoffs for a region where a base is located. Many small industries gravitate around the base itself and have often developed expertise in the defence industry.

Cutting or downsizing at that level does not only affect National Defence as such, it also affects small businesses in the vicinity. There is cause for alarm when the federal government decides to close part or all of its military infrastructures, since residents then have to adjust their lives accordingly.

On February 22, 1994, the Minister of National Defence in this government sent me the following letter, and I will read two extracts: "I regret to announce that the project to develop an air to ground weapons range for CFB Bagotville in your riding has been cancelled".

The most important part of the letter is this: "Although we considered the importance of maintaining the balance of economic and regional benefits, the decisive factor in making these difficult decisions is as follows: they must be based on military and economic considerations".

The letter says: "National Defence will work closely with other departments and regional development agencies that will help communities plan for the future".

You may recall that subsequently, on July 10, 1995, the Minister of National Defence replied as follows: "There are plans to cut 305 military and 15 civilian positions in the 3rd Squadron at CFB Bagotville. However, this information is only an estimate and further changes may be made subsequently". That probably means additional cuts.

What surprises me is that following these cutbacks, the Department of National Defence says it will work in close co-operation with other government agencies to help these communities plan their future. Well, despite the cuts in my area, we have not seen and I have not sensed any willingness on the part of other departments to get involved to deal with certain situations. Certainly not. And of course a number of bills have been tabled in the House, starting with the bill to establish the Department of Human Resources Development, the department that is closing employment centres. Employment centres are being closed while the unemployment rate goes up.

We also have trouble retraining or providing new kinds of training for people who have been laid off, and I am talking about both the military and civilians.

We must face the federal government's new choices. I think that the government has forgotten that the economic development of many communities is based on defence. When the federal government decides to leave a region or change its equipment, it should act a little more responsibly.

In the area of defence, a so-called responsible government should focus on conversion. As my Bloc colleague said earlier, the aerospace industry is one of the areas best suited for conversion. Yet, it seems that this sector remains one of the most fragile in Canada, at a time when several other countries have opted for conversion.

The governments of all countries with significant aerospace industries actively support this sector. One only has to think of companies like General Dynamics in the U.S., which grew because it received defence contracts from the U.S. government. The governments of all these countries put in place major conversion programs.

We, in Quebec, have expertise allowing us to believe in this reality. We have engineering firms, architectural firms, trained technicians who are ready to face these new challenges. In most cases, the federal government's policy on projects requiring new infrastructures is to go ahead without calling for tenders.

I am going to tell you something. Last week, the commander of CFB Bagotville and I inaugurated a $2.8 million arena in my riding. When this project was on the table, architectural and engineering firms from outside Quebec were invited to prepare plans and specifications, when we, in the Saguenay-Lac-Saint-Jean region, have construction firms that can build massive dams like the James Bay project. Yet, they are incapable of building a small arena for some 200 to 300 people, an arena which has, of course, become very important for the military. It is very important.

The question is not whether or not to have an arena, but rather who will be the builders, architects and engineers involved. After running around here, there and everywhere in various departments, I managed to obtain that a firm from our area would at least be allowed to submit a bit. Finally. Many thanks to the government employee who told me: "All right, Mr. Fillion, CEGERGO will be invited to bid for building the arena".

It was not a matter of favouring this particular firm over another, but a matter of placing this firm on an equal footing, to at least give the chance to a firm that is paying taxes to Canada and employing hundreds of people to bid on an arena project.

The defence department, through its construction engineering branch or what not, said the firm would be allowed to bid because it had done some work in James Bay and built a 20-storey building in Montreal. I guess they felt it had some credibility, so they decided to accept it as a contender. Would you believe that the contract, a turnkey contract, was eventually awarded to this very firm, CEGERGO. Turnkey means that everything was run from the office, using expertise from my region.

By going to tender, we give our regions a chance to develop. In contracting however, it is important that everyone be given a chance to compete. I am sure that we end up saving money this way.

In the United States, between $4 billion and $6 billion is allocated to conversion assistance in the Clinton plan. Of course, their population is larger. In Europe also larger sums are invested in this area. When you make an effort to look around and see what is going on outside of Canada, you realize that, more and more, Canada's track record as far as its aerospace industry is concerned is not great.

In Canada, funding for programs designed to help the Canadian defence industry was steadily cut year after year. We are told that a great deal of streamlining is happening in terms of cuts to defence spending, but at the same time people are left jobless. That is not important. It is not important that, at some point, communities find themselves in bad shape. However, they do not realize that, even though cuts are being made in the defence budget, as well as in other departments, Canadians have an increasingly heavier tax burden. Try to make some sense out of that.

In the late 1980's, the budget was somewhere around $300 million. This year, in 1995-96, it is only $102 million and it is constantly diminishing. The government does not care at all about those who relied on the defence industry. As you know, the aerospace industry plays a vital role in Quebec's economy. That is a reality which we repeatedly stressed in this House. That industry is important for many Quebecers, since the salaries paid in that sector are quite good.

In 1993, close to 20,000 Quebecers worked in the aerospace industry. Therefore, the federal government should increase its research assistance in that field. In addition to increasing the budgets allocated for research and development, Canada should change its defence procurement policy regarding goods and services as quickly as possible. This is all the more necessary, given that the new policy no longer includes Canadian content requirements, thereby jeopardizing the development, around each and every base, of companies which have developed such expertise.

Given the federal government's lack of action, these companies are forced to compete with foreign businesses, most of which are heavily subsidized by their respective governments. This creates a double standard. It is very difficult to be competitive when the federal government reduces its subsidies. We are competitive in terms of design and work, but we cannot compete at an economic level since these foreign companies are subsidized by their governments. Yet, we have the expertise. We provide quality products and services.

How, then, can these businesses be competitive when the same types of businesses elsewhere are heavily subsidized?

I can understand the concerns of the people who have built up these businesses with their time and money and the sweat of their brows. We need not be surprised if they also have to relocate outside Canada in order to survive. There is no doubt whatsoever that if Ottawa pulls out of funding research and development a lot of people are going to be worried.

The Government of Quebec will be worried as well. The Quebec minister of industry is committed to looking at ways his government might offset the federal withdrawal. The federal government, via the Department of National Defence, creates a need and then when it finds itself no longer able to foot the bill decides: "Let us shift everything. The provincial government will have to find some solutions".

This is just another way of dumping responsibilities one has assumed off onto the provincial government, withdrawing gradually and leaving them to take up the slack.

In my opinion, this is not a responsible way for the federal government to act. It must change its procurement policy in order to foster the development of leading edge industries. We must take a page from the book of other countries which encourage industrial development.

I trust that this government will, in future, require a minimal Canadian content when purchasing equipment.

[Fred Mifflin, Liberal, Parliamentary Secretary to Minister of National Defence and Minister of Veterans Affairs]

Mr. Speaker, I want to respond by making a comment on the hon. member's presentation.

I congratulate him on coming from a great part of Canada, the Chicoutimi area. I know the area quite well. I used to spend parts of the summer there with my family staying at the Club de chasse in Tadoussac. I fished on Lake Tadoussac at the mouth of the Saguenay. It is a very beautiful part of the world.

With respect to the tenor of his comments, some of the things the member said may sound sensible and logical. Perhaps in different times we nurtured the idea of Canadian content when we could afford it. It was a luxury. I point to the St. Laurent class destroyer, to the DDH280 and to other acquisitions that had total Canadian content, with some exceptions of boiler equipment and other auxiliary machinery.

All countries are cutting back. In the course of my duties as parliamentary secretary over the last two years I have had the occasion to meet with the secretary of defense if the United States, the minister of defence of the Federal Republic of Germany, the minister of defence of Holland and other defence ministers. If there is one thing we have in common it is that we are cutting back. There is a peace dividend. The cold war is over. While we are peacekeeping and fighting brush fires which are real wars in that sense, the scale is different.

In the last decade the Department of National Defence has given up $21 billion and 21,000 men and women in uniform, 45 per cent of its civilian workforce. It has reduced the reserves from 29,000 to 23,000 in two years. We can no longer do what we used to do and I did not find that factored into the equation presented by the hon. member.

I know he did not intend to mislead. To talk about principles, theories and things that would be nice if there were no limitation on funding is one thing. However, if he would look at the reality of the situation, at the issues that dictate procurement policy in national defence, he might come up with a slightly different approach. I want to ensure the hon. member has factored that into his equation.

It is the same with conversion. The answer to conversion is not a massive infusion of money. Canada cannot afford that. Let us try to do like other countries have done with initiatives and other ways of doing it, as I suggested earlier in my presentation were presented by the Minister of Industry and the minister of public works.

[Gilbert Fillion, Bloc, Chicoutimi, QC]

Mr. Speaker, first I think the hon. member should come and visit the region before it closes down. As I said earlier, we have a very high unemployment rate, and when you add all the people who are on welfare, I think the government should go down there and reassure these people. I would appreciate it if he came down for a visit. I would be delighted to have him as a guest.

As for his comments, I must say that when they talk about Canadian content and they tell us that when we had a lot of money, we could afford Canadian content, we could give the people in our regions something to hope for and tell them: "Get into those fields, start factories and small businesses and adjust to what is out

there". Today, now there is nothing left, the government has dropped the whole thing and we let others do the job.

If you consider all the government programs we have in this country, I am sure we would be able to find the money to fund defence conversion. There are so many programs.

In fact, the auditor general himself said today in one of his reports that the Federal Office of Regional Development for Quebec had spent $4.5 billion without knowing where it all went and what it accomplished. In fact, this kind of money could be used for programs to help develop this defence industry.

My point is, we should look at the various programs that exist today, that are poorly managed and that cost us an awful lot in terms of time, money, energy and interest, especially, and accomplish absolutely nothing. We could give these industries a special boost.

In any case, if these industries are not given financial support, they still remain competitive in terms of the products they manufacture or the services they offer. And that is where the answer lies. Because these businesses are competitive, we can develop expertise, using programs that today are not accomplishing a thing but could be reviewed and redirected to National Defence.

[John Richardson, Liberal, Perth—Wellington—Waterloo, ON]

Mr. Speaker, it is my pleasure to join in the debate on the Department of National Defence and the Canadian industrial base as proposed by the official opposition.

This is the age of information, the age of rapid change. We are not just talking about technological change, which most of us have managed to keep up with over the course of the past ten years, but about change in the very nature of the way people relate to each other and the way things are done. With the fall of the Berlin wall, we began a period of change more radical and intense than anything we have known since the invention of the cold war.

I am here today to speak about those changes which affect the relationship between DND and the defence industry and suggest a view of what that new relationship may look like.

Actions in the world have caused a reaction in DND. Let me trace the main actions and then the DND reaction. The first action was the fall of the Berlin wall, which led to a reassessment of Canadian defence concerns.

The second action is the fiscal situation in the country. We have a deficit and a significant debt. The negative effects of the situation have been made clear to all of us over the past year. There is now widespread agreement that this situation must be revised through budget cuts.

The third action results from the need to reduce the number of employees in the federal public service, including DND. This results in a significant reduction in the workforce. All of these actions affect DND, resulting in changed roles, reduced budgets and reduced personnel.

Now let us have a look at the industry side. We can see that these same events-the fall of the Berlin Wall, the reduction in military personnel and budget cuts-have put considerable pressure on Canadian industry and their export markets. This is the case, specifically, for many of the companies involved in Canada's defence industrial base, which we want to be able to count on in the event of an emergency.

As for DND's reaction, it does not require a whole lot of intelligence to realize that the department is no longer merely a spectator in this age of change. It is a participant and must make its own changes. DND must look after its affairs differently and change its structure if it is to succeed in this new context.

This need for change led to the defence white paper of December 1994. In general this document reconfirmed the need for multi-purpose, combat capable sea, air and land forces to perform a wide variety of tasks at home and abroad: the protection of sovereignty and security; co-operation with the United States in the defence of North America and contributions to peace and security abroad.

In addition, the white paper indicated that to accomplish these ends, DND would have to operate more efficiently and make optimum use of equipment, infrastructure and human resources specifically to focus on maintaining core capabilities, reduce and refocus regular and reserve forces and the civilian workforce, to reorganize the command and control systems and to purchase affordable equipment.

The white paper also recognized the need for the department to exchange or enhance its partnership with the private sector, work toward harmonizing industrial and defence policies to maintain essential industrial capabilities, transfer activities currently conducted in-house to Canadian industry or to share them with industry under various partnerships arrangements when a business case of the same could be made, modernize and streamline procurement process and in general to seek innovative ways to support operational forces.

It must not only be said of the Canadian defence industrial base that DND must adapt to the new circumstances but that our industries must also do things in a different way with a different structure if they hope to fulfil their corporate visions in the new age.

It would be worthwhile to provide an overall context for the Canadian defence industry through some relevant defence statistics. Canadian defence spending is quite small compared with that of other western nations. It is about 1.5 per cent of GDP. Canadian defence and defence related industry accounts for little more than 1 per cent of the gross domestic product and somewhat less than 1 per cent of the Canadian labour force which equates to between approximately 60,000 and 80,000 direct and indirect jobs.

With few exceptions like Bell Helicopter, CAE, the diesel division of General Motors, Diemaco and Saint John Shipyard Ltd., our industry produces subsystems, components for niche markets rather than complete systems. A Canadian defence industry is highly specialized with particular strength in the areas of aerospace, electronics and communications. This enables our industries to be well positioned in the competitive process.

Canada's defence industry has the ability to diversify its activities and to come to terms with niche markets, which augers well for its future. As you can readily understand, Canada's defence expenditures alone will not support Canada's current defence industrial base. Our defence industry's survival and prosperity depends on its selling or exporting dual purpose commercial products.

I would now like to talk about the factors and new realities governing relations between DND and the defence industry in Canada. It is clear, on the one hand, that our present budget precludes our supporting an industry base of the size we might have had a few years ago. Funding additional resources is totally beyond our present means.

Our desire today is for a sound Canadian defence industrial base which optimizes the number of national sources of goods and services available to support the Canadian forces during operations.

In addition, the scenario for operations today for us and our major allies is pretty much accepted to be "come as you are". Under these conditions, our interests are best served by supporting the overall health of a Canadian industrial base which includes a broad range of technologies and support capabilities that we need.

From another aspect, DND has the responsibility to recognize the considerable impact which expenditures from the defence budget have on the Canadian economy and the Canadian industrial base.

DND must smoothly integrate other factors and government program initiatives such as the development of dual use technologies, demonstration of a peace dividend, defence industry conversion, development of export markets and the like into its procurement process.

Let me give some specific examples of our changing relations with industry. Although DND's budget has been reduced, the department remains committed to the goal of devoting a greater share of defence expenditures to capital acquisition.

To maximize the return from these expenditures, the department will be approaching its future capital procurement based on principles such as the following. First, it will accelerate the shift to off the shelf technology and commercial specs and standards. Second, it will augment our reliance on the private sector in the day to day support of commercial items. Third, it will seek to avoid unique Canadian solutions that require expensive and risky research development or modifications. Fourth, whenever possible it will purchase equipment with performance which has been demonstrated in the field.

As a result of the budget cuts and changes in thinking mentioned earlier, it is only logical that the department will have to rely to a much greater extent on the private sector to meet equipment support needs of the Canadian forces in the future.

The trend will be government partnering with industry, that is government seeking solutions from industry rather than dictating solutions to industry. In addition, in order to allow Canadian firms to increase their productivity and competitiveness, DND is looking at how it can make doing business with government easier.

While both DND and the industry try to maintain a sufficient industrial base, they are under considerable pressure and must adapt to a completely different defence framework in industrial terms. Exporting, which in the past was a way to compensate for a low demand from Canadian forces, has become a double-edged sword.

World over-supply and competition from the former eastern block and Asian countries will create an increasingly competitive market.

As defence budgets around the world began to shrink significantly, there was much talk about the need to convert military production to civilian or commercial production. However, defence firms used to selling to one customer, the government, find themselves ill-equipped for the commercial market where tastes change rapidly.

The same problem of the conversion to the private sector market was faced in the United States. The problem in defence downsizing and conversion for the Canadian industry is much less significant than that in other western industrialized nations.

As I stated previously, the Canadian defence industrial base is a highly diversified one. In fact, only a handful of companies make complete defence systems such as Oerlikon Aerospace and Diemaco.

Also included in Canada's defence industry are several companies that make complete dual use or commercial systems for the global market, such as Canadair, CAE Electronics, and Bell Helicopter; manufacturers that are primarily oriented toward niche marketing and the exports of parts components and sub-components, such as Pratt & Whitney Canada, Canadian Marconi, and Allied Signal; and several repair and overhaul contractors, such as IMP and CAE Aviation. As such, the Canadian industry is well placed to respond to and weather the challenges posed by defence downsizing.

Spar Aerospace, for example, has reduced its defence operation and has increased its market diversity. At the same time, it has vertically and horizontally integrated its operations by acquiring an interest in Telesat Canada. Furthermore, it has acquired Comstream and prior data giving an additional technology in the area of satellite broadcasting and data compression as well as access to additional markets.

Other companies, such as Computing Devices of Canada, have chosen to remain in the defence market, realizing that there are still many opportunities in the global defence market for competitive high tech companies.

At this juncture I think it would be valuable to give an insight into our assessment of what the major features of the defence environment are likely to be. Broadly speaking, the following characteristics will likely dominate. First, domestic procurement expenditure by the Department of National Defence will not see any appreciable increase and will decline across the board. Second, the nature of what is bought and the size of the buys may change. This could mean a move toward non-leading edge technology in weapon systems and an increase in demand for repair and overhaul items, thereby placing greater emphasis on services. Third, there will be an excess capacity in the worldwide defence sector. Finally, competition will grow, and worldwide protectionist tendencies will be more difficult to maintain under the world trade agreement.

The preceding features will affect government and industry equally. However, the appropriate response to the new defence environment will need to take into account the complementary but unique role each plays.

Let me deal with industry first. The rationalization of a North American defence industrial base will likely conform to the following scenario.

First, there will be a gradual movement out of the defence sector, particularly on part of those marginal firms that only entered the defence business to take advantage of the increased DND procurement activity and for which defence sales have always been a marginal aspect of their sales. The pressure to exit may be offset to some extent by the growth in the use of dual-use technologies, giving rise to new marketing opportunities for the businesses.

Second, while still searching out export markets firms that remain in defence sales will probably reduce still further the portion of their business activity devoted to defence.

Third, there will be an increase in strategic downsizing, merger, and joint venture activities. We must try to reduce risks and offset unit cost increases. We have seen a great deal of evidence of this with major U.S. contractors already. Firms are selling off unprofitable divisions to concentrate on core expertise in particular systems or acquiring competitors' divisions to remove former competitors and emerge as centres of expertise.

Fourth, product lines will be re-evaluated in terms of the civilian and military mix. Extra efforts will be made to respond where possible to the new demands for innovative products.

Finally, there will be a renewed emphasis on technology based R and D.

In spite of the difficult international environment that lies in wait, the bottom line is that the Canadian defence industry has been successful to a significant degree because of its outward business approach.

On the government reactions, the Canadian defence industrial base plays an important role in meeting the peacetime and wartime requirements of the Canadian forces. As such, we ignore the health of Canadian industry at our peril. The role of the government in management of change in the industrial base falls into three categories. First is the maintenance of a suitable trade environment for Canadian industry. Second is to select support through established programs or specialized assistance where warranted for critical operational requirements. Third is enhancing the Canada-U.S. material co-operation.

In giving the House a brief overview of how the department is responding to current challenges, I need to stress two factors. First, DND's resources are finite. It cannot simply throw money at the problems faced by industry, as the essence of its corporate problem is a significantly reduced fiscal framework in which to operate. Second, the fact that much of Canadian industry is focused on sales abroad, to the U.S. in particular, presents DND and the government with a unique policy challenge. A substantial degree of vitality of Canadian industry and its ability to support our operational needs is strongly influenced by developments in the U.S. Our industrial base planning must take this unusual situation into account.

DND must smoothly integrate factors and government program initiatives such as development of dual-use technologies and demonstration of a peace dividend, defence industry conversion, and development of export markets and the like into its procurement processes.

[Claude Bachand, Bloc, Saint-Jean, QC]

Mr. Speaker, I would like to let you know that I will share my time with my colleague from Terrebonne, who will join the debate in a moment. I understand that I will have ten minutes to make my point.

To start with, I will say that this morning, when I came back from Montreal, I turned on the parliamentary channel and watched the debate on the motion before us now. I was surprised to see that my Reform and Liberal friends were questioning the legitimacy of the motion we moved in this House today.

Some were claiming that the leader of the Bloc Quebecois was going to be the premier of Quebec, others that my colleague from Charlesbourg was basically guilty of insurgency. I could not help but remember why I was elected to Ottawa. It should not be forgotten that Quebecers pay $29 billion a year to Ottawa, and that in return they are entitled to services at an equivalent level.

With regard to today's debate, which in a sense is the history of the Canadian content requirement in defence spending, it should be noted that for decades Quebec has not been given its fair share by the defence department. For the past ten years, the shortfall has been $600 million a year.

I believe that as elected members from Quebec we have every right to move such a motion, which is perfectly legitimate, to boot. I had a look at statistics. We know that for a long time now the Saint-Jean area-and the Montreal area for that matter since Saint-Jean is part of the Montreal region-has been the victim of this kind of shortfall, which translates in terms of job loss.

I have the statistics right here. From 1990 to 1994, we lost 7,800 jobs out of a total of 13,900. I believe that in the current difficult context, these jobs would be very valuable.

In my own riding, we too are victims. I do not wish to belabour the point, but I will remind the Liberal Party of the terrible blow it dealt Saint-Jean when it closed the royal military college. This

represents a $32 million loss for our economy every year. Believe it or not, this college was the most efficient, which means that it was less expensive to train officer cadets in Saint-Jean than in Kingston or Royal Roads.

In spite of that, the Liberal government decided to close the Collège militaire royal de Saint-Jean. Thirty-two million dollars; it was the most efficient and the most bilingual military college.

We all know that the Canadian Parliament often boasts of its ideology and its policy on bilingualism. Pierre Elliott Trudeau himself, not the greatest advocate of Quebec I must admit, came in person to Saint-Jean and said that the college was the greatest proof that bilingualism could succeed. Nonetheless, in its last budget, the liberal party closed the Collège militaire royal de Saint-Jean.

Another inequity I would like to point out today is directly related to the debate and the issue at hand; I am talking about Oerlikon.

The Oerlikon case is another example of inequity towards Quebec and Saint-Jean. We all remember that the minister announced, August 16, that he was planning to award a two billion dollar contract to General Motors for the manufacture of armoured personnel carriers. At the time-I remember it well-the minister explained that the situation in London, Ontario was urgent. He said that they were almost out of contracts in London and that, since it was the centre of expertise for armoured vehicles, he had to award the contract to GM without any call for tenders. Why did the minister say that? Because it was also a centre of expertise. He said that no other plant in Canada could build better armoured vehicles than GM in Ontario.

Once again, the minister and the Liberal Party were forgetting Quebec.

The hon. member just mentioned the case of Oerlikon and I hope he is listening to me in the lobby. The Oerlikon situation is clearly unfair in this regard since out of the $2 billion contract for armoured personnel carriers about $500 to $600 million will be used for the gun turret. It happens that Oerlikon Canada is the centre of expertise for turrets in Canada.

Of course, General Motors said: "Listen, you are giving us a whole contract and you must understand that we have affiliates". Among others, there is one in Santa Barbara, called Delco, which is specialized in gun turrets. Therefore, GM seems to be saying: "You give us the $2 billion contract and we will subcontract to whoever we want". And as good capitalists and good business people, they give the subcontract to Delco of Santa Barbara, California. So you can see the impact of the department's decision on the Canadian content and on Quebec which, once again, is being excluded.

Canadian taxpayers are going to pay a $2 billion bill and almost half the money will be used to create jobs in the U.S., in Santa Barbara, California. I think this goes against the Liberal program which we all read so carefully during the election campaign and which said in English: "Jobs, jobs, jobs" and in French: "Emplois, emplois, emplois".

At the first opportunity it had, the government cut the jobs and sent them to California, saying to Canadian workers: "You pay your taxes to Ottawa and as for you, Quebecers, send $29 billion to Ottawa and you will get $600 million less".

We have here an opportunity to compensate for this shortfall for one year, since the contract is worth some $500 million to $600 million, but the Liberal Party is missing this opportunity. I find this totally deplorable because it shows a double standard.

If we recognize GM in London, Ontario as a centre of expertise for armoured vehicles, why do we not also recognize Oerlikon as the Canadian centre of expertise on turrets? We find this hard to explain. As a buyer, the government should use all the means at its disposal and ask General Motors in Ontario to have the turrets made by Oerlikon in Saint-Jean, the Canadian centre of expertise on turrets.

Lobby groups are at work. A number of people are trying to convince the federal government that my arguments are valid, but the government is not budging. Even the Bloc Quebecois has raised several questions on this issue, but all the minister can say is, "Submit your bids to GM and I might be able to talk to them, perhaps we will see if your bid is the best".

The federal government could even use this as an excuse to back out, because Oerlikon executives claim that they have sufficient expertise to carry out the contract for less than Delco in Santa Barbara. Although this would save Canadian taxpayers money, the minister continues to turn a deaf ear. I find this totally unacceptable.

If at least the minister said, "Look, Canadian content requirements have been reduced; they are no longer mandatory. So let us award the armoured personnel carrier contract to General Motors in London and call for bids on the turret contract in a way that is open and fair to everyone".

Even then, Oerlikon claims that it could do better than Delco any day. I visited the plant, and it is true that asking them to make turrets for armoured vehicles is like asking a Ferrari plant to build Volkswagens. They are perfectly capable of performing the task.

They are already producing Ferraris. The Ferrari of turrets are produced in Saint-Jean.

Now they want the Volkswagen turret to equip the new armoured vehicles to be sent elsewhere, claiming that General Motors was awarded the whole contract and that nothing more can be done because they do not want to interfere too much. They say: "Delco also makes them. Why meddle in this business. We just want to give the contract to GM and have nothing else to do with it". It think that this is utterly unfair to the Saint-Jean area and for Quebec as a whole.

Oerlikon has been lobbying extensively in the past little while. In fact, I think that the company's president is here, in Ottawa, today in a further attempt to make the government see reason. I also think that those involved were quite forceful, because perseverance did not get us anywhere so far. There are people who try, day in and day out, to get across to the department that the arguments I just mentioned are valid. Unfortunately, the federal government is apparently doomed because, any time it contemplates giving something to Quebec, it takes longer to make a decision than it normally does for any other part of Canada.

It certainly did not take the minister very long to decide to award the contract to GM. In no time flat, he decided: "I must help GM. It is a centre of excellence and short of contracts." As far as Saint-Jean and Quebec are concerned, that is another story.

That is why I take this opportunity today to try to show, once again, that this is unfair and that it is no too late to make it right. I ask the Liberal government and all my government colleagues to impress on the minister responsible that Canadian taxpayers, and indirectly, Quebec taxpayers, stand to save money. The minister should take his responsibilities and give Oerlikon the same consideration he gave GM when awarding GM the contract. We are dealing with two centers of expertise and potential savings to the taxpayers.

[John Bryden, Liberal, Hamilton—Wentworth, ON]

Mr. Speaker, I congratulate my colleague on his remarks which I listened to with great interest.

I want him to know I have quite a bit of sympathy for his comments on the closing of Collège Saint-Jean. It is indeed a beautiful military college with a great history and tradition. I want to remind him that the government in closing Saint-Jean also closed Royal Roads in British Columbia. A lot of my family live in Victoria and I know Royal Roads very well. It was a very fine military college with a great tradition.

All Canadians feel pain when cost cutting affects jobs and the people of our regions. I sympathize with the Bloc member and all Bloc members when they bring that kind of position forward in the House. However I would submit to my hon. colleague that the government did approach this matter, certainly in the closing of the colleges over which it did have control with great equality of spirit.

Is the hon. member familiar with Royal Roads? Can he speak with the same passion about this college near Victoria as he does with Collège Saint-Jean? Does he not agree that however unfortunate it was to close Collège Saint-Jean and Royal Roads given that we had more college space than we needed in these cost cutting times, the government really acted very responsibly and with a sense of fairness?

[Claude Bachand, Bloc, Saint-Jean, QC]

Mr. Speaker, I thank the hon. member for giving me an opportunity to elaborate, particularly on the issue of unfairness. There is unfairness at two levels. The first level is rather ideological in nature and has to do with culture and language. Saint-Jean was the main route for young francophones interested in becoming officers in the Canadian forces.

Closing the military college in Saint-Jean-and we have news from Kingston today-will have an impact on the number of young francophones in the Canadian forces. If I had more time, I would give you figures which show that, already, this decision has had such an impact.

But I want to go back to the financial issue raised by the hon. member. It is true that Royal Roads was also closed. But, again, there is an injustice related to the compensation given to the two military colleges. Saint-Jean, which had an annual budget of $39 million, was given $5 million for each of the next five years. Royal Roads, which had an annual budget of $19 million, was given the same compensation.

So, Royal Roads, a college half the size, with half the budget and half the number of officer cadets, gets the same compensation as Saint-Jean. Not only is it unfair to close the military college in Saint-Jean because it is the main route for francophones interested in becoming officers in the Canadian forces, but there is also an economic injustice in that the compensation of $5 million per year given by the federal government is the same for both institutions, even though one had an operating budget twice the size of the other. Saint-Jean should have received $10 million per year, considering the size of the two institutions.

[The Acting Speaker (Mr. Kilger)]

Resuming debate, with the second half of the twenty minutes allocated now being shared with the hon. member for Terrebonne.

[Benoît Sauvageau, Bloc, Terrebonne, QC]

Mr. Speaker, I wish to make the House aware of the importance the Bloc Quebecois

attaches to defence conversion. This is the main reason why we selected it for our opposition day. It is important in Quebec and it is important in my region. I should point out that I have SNC Technologies in my riding, a munitions plant, and its employees are extremely worried about federal government inaction on defence conversion.

Before addressing the matter we are looking at today directly, I would like to take this opportunity to denounce the Canadian Armed Forces' lack of respect for francophones in its ranks. Last February 22, the Office of the Commissioner for Official Languages followed up on numerous complaints about the lack of compliance with the Official Languages Act in the Canadian Armed Forces. Its letter stated that there would be an investigation to compare the situation of francophones in Moosejaw and that of anglophones at Bagotville. The report was to be submitted within a few weeks of the February letter. Nearly a year later, the report is still secret, despite the Access to Information Act, probably because the conclusions do not put the government in a very good light.

All we are asking is for the investigation to be made public, first of all, and then for them to comply with their own legislation. Now, back to the key point of this debate, defence conversion; this must be looked at on the world scale, but also in Quebec, primarily the Montreal area, and in Canada. The situation is not a very comfortable one. With the end of the cold war, defence industries everywhere in the world are in a crisis situation. The market, estimated to be in excess of $450 billion, dropped 10 per cent between 1987 and 1994. This slump is far from over; according to the international experts, there might be another drop of some 25 per cent within the next few years, which is why it is important to have an eye to the future in this sector.

The result of this crisis in the industry has been major job losses world wide. For example, 700,000 jobs have been lost in the USA, and 600,000 in Europe. In Quebec and in Canada we are far from being protected from the inroads being made upon the defence industry world wide. In Quebec alone, sales figures in the defence sector dropped 48 per cent between 1987 and 1992. During that same period, lower defence sales resulted in the disappearance of 11,000 of the 57,000 jobs directly linked to defence.

As I have already stated, there is a company in my riding whose 500 employees are worried at the lack of action. Considering the situation in the defence industry, there are two other points that must be taken into consideration.

First, we must remember that jobs lost in the defence industry are jobs in a sector with a very high concentration of advanced technology. The jobs that disappear are high calibre, lucrative positions. In fact, salaries paid in the aerospace industry, which plays a major role in the defence industry, tend to be 24 per cent higher than the average salary in Canadian industry. Twenty-four per cent is a lot.

Second, we must consider the fact that these changes in the defence sector are particularly hard on Quebec, where a major part of Canada's defence industry is located. This is not partisan politics. This is the truth. Because of the way the industry is distributed within the province, these changes come down hard on the Montreal region which is the driving force of Quebec's economy.

In other words, a lack of federal programs to help the defence industry whether this crisis will be particularly damaging for Quebec and weaken the ability of Quebecers to make advanced technology one of the strengths of their economy.

I am referring here to sectors like telecommunications and the aerospace industry, where we have to do everything we can to promote development and provide a solid basis for competitive growth in the long term. If we want to build this solid basis for the future, it is important to help the defence industry negotiate the rough spots it is experiencing today. This can be done partly by helping the industry adjust to changing conditions, something the government has failed to do.

For instance, we could provide incentives for defence producers to develop civilian applications of their products.

Since the defence industry uses advanced technology which benefits the economy as a whole, it would make sense for the government to have programs that provide incentives for defence conversion, which is already the case in other countries.

In the United States, the Clinton plan provides between 4 and 6 billion dollars worth of funding for defence conversion. In Europe, largely thanks to the KONVER program, hundreds of millions of dollars are invested for this purpose.

And then Canada. Does this country have a program similar to the European and American programs that focus on defence conversion? Unfortunately, it does not.

The only program that comes close is DIPP, which has been around for several years, and it certainly does not focus exclusively on defence conversion.

Its purpose is also to support companies that work in the defence industry, especially in aerospace and avionics, and to facilitate and consolidate R&D activities in these companies. It also focuses on setting up networks of suppliers of derivatives and components for these sectors and promoting investment and exports in manufacturing sectors with a high added value.

The purpose of the program is to help defence industries remain competitive on world and Canadian markets. It provides companies in the defence sector with incentives to continue their activities. It is only in recent years that part-and it must be remembered that it is only a small part-of the budget for this program has been allocated to promoting defence conversion.

Here, we could perhaps point out that expenditures under the DIPP program have a major economic impact. Every dollar spent under the program is estimated to produce more than $40 worth of economic benefits. We must not forget that, through its strong participation and dynamic role in the defence industry, Quebec enjoys a significant amount of these benefits.

This therefore is the only federal program with a goal of defence conversion, even though it may be both limited and inadequate. While the program does not entirely serve the needs of conversion, it could at least serve as a basis for the work needed in this area. It is simply a basis requiring constant work, but at least it is something. Even the Liberals promised to face the challenge of defence conversion in their famous red book. They have forgotten in the meantime, as everyone will agree.

They acknowledged, and I quote: "The defence industries today employ directly and indirectly over 100,000 Canadians. The end of the Cold War puts at risk tens of thousands of high-tech jobs". They promised in the red book, and I quote once again: "A Liberal government will introduce a defence conversion program to help industries in transition from high-tech military production to high-tech civilian production".

This then was a promise to build on the existing program to help the sector through its difficult times. Where is it at today? Forgotten, gone, like most of the other promises the other party made.

Looking at the record to date, we see that the benefits derived from the defence industry are substantial for Quebecers and Canadians, but that the industry is facing a serious crisis. Some adjustments must be made. Conversion of a significant portion of the defence industry to civilian production would help us keep and develop high calibre jobs. Other countries have taken on this challenge, as I mentioned earlier.

In Canada however the federal government has not, truth be known, managed to respond coherently to the problem, despite empty promises-something that does not surprise us. The only reaction to the crisis in the defence industry up to now has been a few adjustments to an existing program and cuts to it, on top of everything else. And yet, the Liberals had promised much more to help the industry survive this crisis.

Despite the logic of providing more active support for defence conversion, the Liberal government has not kept its promises. The DIPP budget is in free fall. It reached its peak in 1989-90 at over $300 million. In 1994-95, the figure was less than $144 million. New cuts are expected for 1995-96. The DIPP will then amount to only $102 million, a 66 per cent reduction over six years, at a time when business is facing a serious crisis.

These cuts will only continue, and the 1997-98 budget should drop to only $24 million. In fact, the program no longer accepts any new projects, and the government is honouring only the commitments it has already undertaken. This is a funny way for the government to keep its promise to facilitate defence conversion, do you not agree?

At a time when the industry needs it more than ever, the government is drastically reducing its participation. Its budget cuts are placing an enormous burden on Quebec. While Quebec businesses received $168 million in 1989-90, this amount dropped to $80 million in 1992-93. This is quite disturbing for the people who work in this sector in Quebec and in the Montreal region.

In conclusion, I think that so far the federal Liberal government has behaved inappropriately and irresponsibly by promising assistance while at the same time cutting back on the defence conversion program. This is a Machiavellian way of looking at things and avoiding the problems by shoving them aside to make them disappear. The time has come to initiate an honest program to face the real, global crisis everyone recognizes. The government must act now.

[Marlene Catterall, Liberal, Ottawa West, ON]

Mr. Speaker, I have a question for the hon. member who just spoke. He talked about the cold war and the many jobs available during the cold war. He seemed saddened by the fact that those jobs have disappeared now that the cold war has come to an end. I would like to ask him if the economic solution, according to the Bloc, is to go on with cold, hot and lukewarm wars and to have jobs that support wars and conflicts around the world.

Does he really believe that the key to a prosperous economy is to perpetuate conflicts throughout the world and base our economic future on arms sales?

[Benoît Sauvageau, Bloc, Terrebonne, QC]

Mr. Speaker, I feel like laughing. Where I come from, we say of a nice action or activity that it is a good show. I would say to the hon. member across the way that she is missing a good show. She has missed good, coherent speeches.

Most of all, I would like to remind her of her party's promises. You said, my dear colleague, "The defence industries today employ directly and indirectly over 100,000 Canadians". You wrote, "The end of the Cold War-

[The Acting Speaker (Mr. Kilger)]

Order. I simply wish to remind members that they should address their comments to the Chair.

[Benoît Sauvageau, Bloc, Terrebonne, QC]

I apologize, Mr. Speaker.

The Liberal Party wrote, "The end of the Cold War puts at risk tens of thousands of high-tech jobs". This does not come from us but from the red book. I say through you that I hope the hon.

member agrees. The Liberal Party also wrote that it would "introduce a defence conversion program to help industries in transition from high-tech military production to high-tech civilian production".

The purpose of the Bloc Quebecois's opposition motion is simply to remind the Liberal Party of its red book promises. We have never, ever said that we wanted other conflicts. This is totally unrealistic and does not make any sense.

[Maurice Bernier, Bloc, Mégantic—Compton—Stanstead, QC]

Ridiculous.

[Benoît Sauvageau, Bloc, Terrebonne, QC]

We heard the word "ridiculous".

But it is important to recognize that other countries are putting in place defence conversion policies while Canada is cutting conversion budgets.

I think this is a serious problem. We must stop treating this matter lightly and start asking serious questions.

[Marlene Catterall, Liberal, Ottawa West, ON]

Mr. Speaker, it is with great pleasure that I enlighten the colleague who has just spoken on this issue to what has been occurring in the industry of which the motion speaks. He and his colleagues certainly seem not to be as familiar with the industry as I would have expected them to be.

It is somewhat suitable that we are having this debate the day after Canadian astronaut Chris Hadfield returned from a very successful aerospace mission. It is also interesting to note that RADARSAT was launched very recently. I seem to recall that the city of Montreal was somehow involved in the launching of RADARSAT into space. One of the things members opposite might do is to watch events in Montreal and to be a little more familiar with the ways in which Montreal companies and other companies in Quebec are participating in this very prosperous industry.

Quite simply, the Bloc Quebecois has it wrong. The hon. member for Charlesbourg who proposed this motion would have this House believe there is no conversion of the military industry to civilian production and that the Montreal companies in the aerospace industry are facing hard times as a result. Perhaps he and his colleagues were not listening when this House debated defence conversion on May 5, 1994. Perhaps they did not participate in the debate or perhaps the Bloc Quebecois simply wants to stir up the pot, any pot. Let me give the member some of the facts.

First, the Canadian aerospace industry is already well on the road to converting from military to civilian applications.

Montreal companies have been in the forefront of this trend and provide excellent examples of firms that have managed to win a niche in the international aerospace industry while at the same time remaining competitive.

Here are statistics that are well known in the Montreal aerospace sector.

In the 1980s, 70 per cent of the sales of the aerospace and defence industry were for military use, and 30 per cent for commercial use.

Today, the mix is reversed, with sales of military equipment down to 30 per cent while sales of commercial products have gone up to 70 per cent. And the commercial component keeps growing. Soon the civilian, commercial component will account for 80 per cent of Canada's defence and aerospace sales.

If the hon. member took a closer look at the Montreal industry, he would realize that these statistics reflect the reality and see how Montreal aerospace firms run the entire range of commercial aerospace design and manufacture.

Is the hon. member interested in final assembly of aircraft? He should look at Bombardier and Canadair. They specialize in commuter aircraft. Perhaps the hon. members across the way should think about that before they raise the issue of defence industry orientation.

Does the hon. member want examples of Montreal firms that design and manufacture helicopters? There is Bell Helicopter Textron.

Landing gears? Héroux Inc. Does he want to know more about world class aircraft engine designers and manufacturers? He need only remember that Canada is a world leader in the manufacturing of small commercial turbo fan engines. One of the leading manufacturers is, of course, Pratt and Whitney. Most of the company's R&D is on advanced materials, which can be used for any number of commercial purposes.

For avionics systems, the hon. member need only think of Canadian Marcony.

Finally, if the hon. member for Charlesbourg and the other hon. members who have taken part in the debate today want information about flight simulators, they should talk to CAE Electronics Ltd. They will learn that not only are this company's simulators used for commercial as well as military aviation, but CAE has begun drawing on its flight simulator technology to enter into the health field.

These Montreal-area companies are world renowned for the quality of their design. They have built a solid reputation in serving particular niches in commercial aerospace.

I certainly hope members opposite are listening. The Montreal industry has prospered because it is part of a broader Canadian aerospace sector.

Once again, let the hon. member look at the facts about the aerospace industry in Canada. We have the sixth largest aerospace industry in the world. In 1994 aerospace sales were $9.6 billion and the industry employed 53,000 people. The Aerospace Industry Association of Canada estimates that the sector will add more than $8 billion to Canada's GDP from exports in the coming year. The aerospace sector continues to be the one high tech industry where Canada maintains a consistent trade surplus, which was $2.5 billion last year. Let us go back one more year where more detailed statistics are available.

In 1993 total Canadian sales of aircraft components and related products and services were $7 billion, of which almost $5 billion were exports. Quebec firms accounted for over $4 billion of the $7 billion worth of sales, representing 60 per cent of the total sales of the Canadian aerospace industry.

Almost 200 aeronautics firms with approximately 25,000 people are located in Quebec. The companies and the employees clearly have a major interest in the continuing success of the aerospace industry.

What are the keys to success? How did we reach the position where Canada is a world leader in aerospace? There are many reasons. I am sure hon. members across the floor would be happy to list some of them. The skills of our workforce across the country including Montreal, the quality of our educational institutions and the high standard of living that attracts people from around the world are characteristics of the industry and of the country.

But one of the most important reason for the success of the aerospace industry in Montreal is one that Bloc members will never mention or recognize, even though they must realize that it is the truth. They will have to agree that one of the major reasons why the Montreal aerospace industry has become a world leader in the commercial aerospace sector is the benefits of a strong and united Canada.