Debates of Nov. 21st, 1995

Supply

[Fred Mifflin, Liberal, Bonavista—Trinity—Conception, NL]

Mr. Speaker, I am very pleased to speak on the subject before us this morning.

The political rhetoric I have heard from the two speakers in the main opposition and the third parties somewhat disappointed me. The tenor of the debate this morning was not the tenor present in the standing special committee of the Senate and the House of Commons in which there was a modicum of consensus. This did not seem to come out on the floor of the House of Commons today. Notwithstanding I should like to get rid of the political rhetoric and talk about some of the reasons my party and I will not be in support of the motion.

Essentially the procurement policies of national defence have been developed over a period of time which has seen a lot of grief with respect to procurement policies. Perhaps at the time they were appropriate to the occasion but now, because of the paring down, the lack of resources, the difficulties with funding, the end of the cold war and the difficulties in planning defence procurement, we have to do it differently.

I believe I can quote the auditor general in his 1993 report as being objective in his major study of defence procurement policies.

[The Deputy Speaker]

I apologize to the hon. parliamentary secretary. It is an opposition day and a Bloc motion. The Chair is in the habit of going back and forth and made a mistake. It is not in fact the turn of the parliamentary secretary.

The hon. member has returned to his chair and with permission I ask that the hon. member for Shefford speak in proper order.

[Fred Mifflin, Liberal, Bonavista—Trinity—Conception, NL]

Mr. Speaker, I rise on a point of order. Certainly, as we say south of the border, I will concede but I was hoping to ask some questions to the hon. member for Okanagan-Similkameen-Merritt.

[The Deputy Speaker]

Is there unanimous consent to reverse the speaking order so that the hon. member can put his question?

[Some hon. members]

Agreed.

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

Mr. Speaker, I rose to ask the member a question, but since Your Honour recognized me on debate I thought I would commence my debate.

The hon. member mentioned a couple of things I want to clarify, but first I want to make a comment. I was a bit concerned about some of the statements made by the hon. member for Charlesbourg, some of which were raised by the Minister of National Defence, when he suggested the only province that suffered defence cutbacks was the province of Quebec.

I will say in a different manner and perhaps with a different emphasis that I belong to the maritime provinces where the economy is in very rough shape, particularly in Newfoundland. It hurt me as parliamentary secretary to see my colleagues who occupy 31 of the 32 seats in those four provinces being hit with a tremendous blow because the necessary reductions in defence were done objectively.

I refer to the closing of Canadian forces bases Chatham, Cornwallis, Shelburne and the reduction in CFB Shearwater. These were major economic blows to the Atlantic region. I do not think we have heard any of those four members cry wolf. Despite the hardship it has caused politically and otherwise, they have accepted that it is part of government reduction. It would have been graceful if other members had done the same thing.

With respect to my question to my hon. colleague in the third party, he talked about the procurement policies and how they have developed. He used a bit of politics, which I suppose is his duty as the defence critic and which I accept in good spirit. I wonder if he has read the 1993 report of the auditor general. Does he recall some of the discussions we had in the special committee on national defence with respect to some of the difficulties that the old procurement policies had? The policies took a long time and emphasized the wrong things. By the time the equipment was developed, it was out of sync.

I also want to make another comment and ask him to respond to it. He said that the EH-101 was not an over designed helicopter. I wonder if he realizes that the EH-101 specifications and capability efficiencies were developed at the height of the cold war. By the time the hardware was developed, it responded to a threat that no longer existed.

I wonder if he has taken that into consideration when he says the EH-101 was the best helicopter for the day.

[Jim Hart, Reform, Okanagan—Similkameen—Merritt, BC]

Mr. Speaker, we are saying that the procurement policies of governments in the past were not adequate. They were not fair to Canadian taxpayers. They were not fair to the people who pay the bills.

Under the old system, it could be 15 or 16 years from the time a decision was made to purchase a piece of equipment until it is actually delivered. The frigate program is a good example of that.

I was in the navy in 1973. It was about 1975 that the planners of the frigate program started to come around to the ships to talk to the sailors and to the people in the military about the purchase of new frigates. As members know, we have just recently taken delivery of the very frigates that were in the planning stages in the mid-1970s.

Our procurement process over the years has not been a good one. It has not been value added for the Canadian taxpayer. It has left the military personnel who are challenged with these very heavy commitments that the government places on them with aging equipment, as we see with the Labrador and Sea King helicopters. They are literally falling out of the sky while we wait for an announcement on helicopters.

The helicopters were a big campaign promise. Many would argue that the cancellation of the EH-101 helicopter was probably what won the Liberal government victory in the last election campaign.

What is happening now? The Canadian taxpayers are paying the cost for cancelling the EH-101. I am not overwhelmingly endorsing the EH-101 project but I am not going to say that we should have ruled it out and used it as a political football, which is what the Liberal Party did during the election campaign.

It did not come down to whether the specifications were right. We did not talk about that in the election campaign. We did not talk about whether it was value for the Canadian taxpayers. The Liberals did not talk about that. They just said that they were going to cancel it regardless of the requirement for it, the specifications for it, the terrain that we have to live with in Canada, one of the largest countries in the world. It has excessive weather.

They did not talk about that. They made it a campaign promise to cancel the contract. The figures run about $600 million right now for the cancellation of the EH-101 helicopters. Now the taxpayers know that those figures could reach $1 billion.

The member shakes his head and says no, it will not reach $1 billion. Why, since I have had access to information on this very subject since the summer, has this government that claims to be open, responsive and interested in letting Canadians know all the

information not been forthright about the actual costs of cancellation? It has not done that.

These members have not been forthright. If I can use the members own words, the government is being opaque on this issue, very much so.

This issue with the helicopters is so much like this Liberal government. After spending $600 million in cancellation fees so far, after the minister announces that the government is going to spend $600 million on a new search and rescue helicopter with a decreased capability of 15 per cent, we still do not have helicopters today. That is $1.2 billion right there. The costs are not in yet and Canadians do not have one helicopter to show for it.

This is hypocrisy. The government is going to have to get down to real terms. It is going to have to go to the Canadian people and tell them exactly what the requirements are for the search and rescue helicopter. You cannot even get that information from the minister and the department.

The government is supposed to be open, consulting with the people. Why does it keep secret the information on this procurement? It is not right. I will do everything in my power to fight this and make sure that the government is held to the fire on this one until a purchase is made.

[Fred Mifflin, Liberal, Bonavista—Trinity—Conception, NL]

Mr. Speaker, in response to that I would have to tell the hon. member I do not know from where he is getting his figures. I am disappointed he would use this kind of rhetoric to suggest that these things are happening when in fact they are not.

I have another point I wish to make which I believe he understands but may have miscued. He says the helicopters are falling out of the sky. That is not true. Those helicopters are safe to fly until the year 2000. He knows as well as I that the Canadian forces will not permit their pilots to fly helicopters that are unsafe. I want to clarify the record on that. He is looking over at me and nodding, with a smile on his face. I know he is playing politics again.

[Jim Hart, Reform, Okanagan—Similkameen—Merritt, BC]

Mr. Speaker, in response to the hon. member's question, on my recent visit to Shearwater, while I was being told that the Sea King helicopters were in the best condition they have ever been in 30 years, cranes were lifting them off the flight decks of the frigates.

Canadians might recall the words of a Canadian pilot who was a trainer in Sea King helicopters. He was quoted in the Globe and Mail : ``You only fly a Sea King as far as you want to fall''.

[The Deputy Speaker]

Resuming the debate, with my apologies to the member for Shefford.

[Jean H. Leroux, Bloc, Shefford, QC]

Mr. Speaker, I wish to speak about the equity, or inequity if you prefer, of which Quebec is a victim with respect to military procurement.

The recent government decisions to purchase new armoured personnel carriers and 15 search and rescue helicopters are far from reassuring to Quebec. It is now a well known fact that Quebec is far from receiving its fair share of federal defence spending, and this has been the case for some years.

All indications are that this inequality will increase rather than decrease. In fact, the new National Defence procurement policy is likely to affect Quebec even more than before.

My colleague, the member for Charlesbourg, clearly demonstrated this morning just how much Quebec is a victim of the federal government's double standard.

I would like to add my voice to his in severely criticizing the government for dropping any requirement for Canadian content from its most recent military procurement policy. What is even worse is that it refuses to put into place any true program for defence conversion. It is very easy to imagine what the consequences will be.

The consequences are that this new government policy will directly endanger the entire aerospace industry. We all know that this industry is mostly concentrated in Montreal, Quebec.

My Bloc colleagues will have the opportunity later today to address more specifically the important issue of defence conversion.

I, for one, want to underline the negative impact the federal government's new policy will have on Quebec. I should, however, start by reminding you that Quebec has been cheated out of a minimum $650 million a year on average in the distribution of federal defence spending in the last 15 years at least, and I will not go any further because it could be worse.

This does not come from me but from the defence department's own statements and figures. In concrete terms, it means that, in the last 15 years, Quebec has received only 17.9 per cent of all defence spending, including 13 per cent of infrastructure costs and 15 per cent of personnel expenditures.

I should also remind you of the conclusion reached by a defence department official, Charles Trottier, in a study he released last February. In the last 15 years, Quebec has received 27 per cent less than its fair share of defence spending. Mr. Trottier compared this loss to the James Bay project or $10 billion over 15 years. This represents a $10 billion shortfall for Quebec. In terms of jobs, this represents a loss to Quebec of 15,000 direct jobs and 25,000

indirect jobs per year on average: nothing less than 40,000 direct and indirect jobs.

In fact, if distribution had been fair, Quebec should have twice as many defence facilities as it now has. Twice as many. Such injustices to Quebec are systemic within the armed forces. This demonstration clearly shows that the federal system is fundamentally flawed, as I will try to explain to you.

Even the minister of defence confirmed that Quebec has been treated unfairly. When he appeared on Radio-Canada's Enjeux last April, the minister said about Quebec that they could not afford the luxury of being totally fair.

I myself asked the minister how he could have the gall to consider fairness a luxury. "Fair"-that is all we ask-to Quebec. Guess what he replied to me? In complete contradiction with his own remarks and suggesting that Quebec was favoured by capital expenditures, which is not true, he said, and I quote: "The province of Quebec generally leads the country in its share of defence capital acquisition expenditures and probably will continue to do so in the future when the new defence acquisitions are announced."

Let us talk about these new defence acquisitions that Quebec is allegedly getting its fair share of. Let us look at this. What are the facts? We know that the government has taken a piecemeal approach to announcing such acquisitions so that the pill will not be too bitter for the taxpayers.

Let us start with the new armoured vehicles. What is Quebec's share of this huge contract worth more than $2 billion? Try as we may to find it, Quebec's fair share is nowhere to be found. Why? Because it just does not exist.

The fact of the matter is that the federal government awarded this contract, directly and without a tender call, to the GM plant in London, Ontario. Quebec companies were not even invited to tender for this contract.

Worse yet, they are not even guaranteed a chance of putting a bid with GM Ontario for subcontracts. But everyone is well aware of the fact that Oerlikon of Saint-Jean, in the riding next to mine, in Quebec, has all the expertise required to carry out at the very least the turret part of the contract.

My colleague, the hon. member for Saint-Jean, will certainly have an opportunity sometime today to get into this issue of Oerlikon. In spite of the official opposition's pressing plea, this government, the Liberal government absolutely refused to require GM Ontario to go to tender for its subcontracts.

As a result, Ontario is the only province benefiting from this great $2 billion contract. Two billion dollars is a lot of money. All that for Ontario, a province which has a very strong majority in the Liberal caucus. So, when the minister says that Quebec will benefit from the new defence procurement, we can only conclude that it will certainly not be through the armoured vehicles contract.

But let us give the minister another chance. Let us take a look at the procurement contract for the 15 new search and rescue helicopters. Perhaps we will find that Quebec gets its fair share in that deal. After all, it would only make sense, since Quebec was the big loser following the cancellation of the previous contract to buy the EH-101 helicopters. We are not talking about a $2 billion contract like the one awarded to Ontario for the armoured vehicles, without any call for tenders, but it is nevertheless a deal worth $600 million. And $600 million is not peanuts.

Let us ask ourselves this question: Will Quebec, as the defence minister claims, get its fair share of that second military procurement contract? Again, anyone could foresee the answer to that. Quebec has no guarantee whatsoever that this will be the case. Why? Because the government suddenly changed its military procurement policy.

This is a strange coincidence, is it not? While the aerospace industry is primarily located in Quebec, the government suddenly decides to call for tenders, contrary to what it did in the case of the armoured vehicles contract, which was awarded to Ontario without any call for tenders.

This is ironic, especially considering that Quebec was the province most affected by the cancellation of the EH-101 helicopter contract. By the way, that was a $4.8 billion contract.

If I raised that issue, I would probably be told that we should not oppose the government's decision to call for tenders, since it is in the best interests of taxpayers, whose fiscal burden is already heavy enough, and we certainly agree with that. Our public finances are indeed in bad shape. The state itself is in bad shape. And that is not our fault.

The Liberals were going to do marvellous things. What marvellous things? I can use either an exclamation mark or a question mark. In all sincerity, I will tell you that it is surely the case. But then why did the government use a different approach in the case of the armoured vehicles contract? Why did the Liberal government not apply the same policy in the two cases? We are still waiting for an answer.

And why does the government refuse to require that GM Ontario allow Quebec businesses to bid on those subcontracts? Again, we are still waiting for answers that are not coming.

Wise observers might point out ironically that what it good for Ontario is bad for Quebec or for the rest of Canada. The problem is that the minister lacks the courage to say so publicly. We realize that he comes from Ontario; that is obvious. In any case, if we take for granted that calling for tenders is okay where Quebec is concerned but that the same rule does not seem to apply to Ontario, one question remains relevant. This question is why, in the case of the search and rescue helicopter contract, the government has

suddenly dropped all Canadian content requirements. This is rather peculiar, especially since it could have disastrous consequences not only for Quebec businesses but also for Canadian businesses.

Professor Yves Bélanger, who is also director of the University of Quebec in Montreal's research group on the defence industry, was quoted in yesterday's Le Devoir as saying that, by dropping the Canadian content requirement, the Liberals have taken away from Canadian businesses the best argument they had to force multinationals to negotiate partnerships with them. We are now familiar with the word ``partnership'', which came up repeatedly during the referendum campaign. Partnerships are the future.

The spokesperson for the Aerospace Industries Association of Canada also agrees. Let me read you what he said in relation to the government's new procurement policy. He is what he said about it: "If you push it to the extreme, all Canadian development programs would disappear, making it extremely difficult to maintain our defence industry." Thanks to whom? To the Liberal government.

These concerns are especially justified, since, according to analysts, none of the manufacturers competing for this contract are from Quebec or Canada. Apparently, there are two American companies: Boeing and Sikorsky, and three European companies: Eurocopter, Agusta-Westland and the Russian manufacturer Kamov.

In the case of Agusta, there is cause for concern because serious accusations of corruption have been made against this company in Europe. But not only does the government refuse to investigate the circumstances of the EH-101 contract award, as requested by the now Minister of Human Resources Development when he was in opposition-

[An hon. member]

That is different.

[Jean H. Leroux, Bloc, Shefford, QC]

It would indeed seem that, here, in Canada, it is quite a different story, depending on which side of the House you are sitting.

Also, one can wonder whether or not the government is getting ready to offer a "sweet deal" to this company.

At any rate, let us come back to the remarks made by the defence minister on Radio-Canada's program Enjeux in April. As I said earlier, the minister had stated on that occasion that Quebec was receiving its fair share of defence procurement. He said so. Now, if Quebec, and Oerlikon of Saint-Jean in particular, is literally excluded from the $2 billion APC acquisition contract, which was awarded to Ontario, and if Quebec is not guaranteed any benefits arising from the $600 million search and rescue helicopter contract, what does this leave as Quebec's fair share?

That is hard to predict, since the federal government is announcing its defence acquisitions in a piecemeal fashion, one slice of baloney at a time, in the hope, of course, that taxpayers will find the pill easier to swallow.

That way the bill does not seem as steep, but if you add everything the result is the same. However, according to the most recent statements made by the defence minister regarding that issue, we can presume that the government is about to buy, at a cost of more than half a billion dollars plus several other considerations, four used submarines that England is no longer interested in. That country wants to get rid of these submarines and we are going to buy them.

We will buy four old submarines which are no longer in use. This is what we will get. We will then be better protected. What do you think Quebec could get out of such a deal? As I just said, there is every indication that these are British submarines. Quebec will obviously not get anything out of that deal. But it will have to pay its share, its 25 per cent. Quebec always gets 13, 14 or 15 per cent of everything, but it pays 25 per cent. This is unacceptable.

The government's new policy no longer requires any Canadian content, unless of course it applies to a procurement contract which can help Ontario increase its large share of federal defence spending. This creates a double standard. There is one policy for Ontario and one for the rest of Canada. I can only conclude that Quebec which, as we all know, is far from receiving its fair share of federal military spending, will continue to be greatly and unfairly penalized by this government.

It is no wonder that more and more Quebecers feel that the only alternative is, to be sure, a sovereign Quebec. Quebec's sovereignty will soon become a reality and, when that happens, Quebecers will turn their backs on these injustices, which cost them dearly.

In conclusion, I have no choice but to blame the federal government strongly for giving up the Canadian content requirements in military procurement contracts. These requirements were among the last guarantees that, some day, Quebec might get its fair share-no more and no less-like the others in Canada, that it might be recognized as a province, and that it might get what it is entitled to.

Therefore, I join with our defence critic, the hon. member for Charlesbourg, in blaming the government for its current action.

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

Mr. Speaker, I listened attentively to the member's remarks today. He has been very selective in his speech and has forgotten some very important historical realities.

I would like to go back to the period of 1979 to 1981, when the Government of Canada, under the leadership of the Right Hon. Pierre Elliott Trudeau, basically put the foundation in place for the Quebec aerospace industry. The member conveniently did not touch on that period of time; he conveniently overlooked it. This tends to be the basic strategy of the Bloc Quebecois members. They forget the foundation upon which an important industry like the aerospace industry was brought to Quebec.

I remind the member of the government's decision in 1980 when the Government of Canada purchased the F-18A. Almost 80 per cent of the offsets that were part of that contract went to the province of Quebec. In no way, shape or form do I begrudge that because I am a Toronto member, an Ontario member. We celebrated that great purchase under the leadership of Pierre Trudeau.

I also remind the member that it was under the leadership of the present Prime Minister that the decision was taken to get involved with the Canadair Challenger jet. Canadian taxpayers, not Quebec taxpayers, invested almost $1 billion into research and development to lay the foundation that led not only to the Canadair executive jet but also to the Canadair commuter jet, which is now being manufactured in the province of Quebec not just through Canadair-Bombardier but also through various aerospace manufacturers.

I will give a third example. There was a contract given to maintain the F-18As, I believe about four years ago. The actual price submitted by Bristol Aerospace in the province of Manitoba was cheaper than the contract price in Quebec. The government of the Right Hon. Brian Mulroney made sure under his leadership that the maintenance contract for the F-18As, our fighter jet, went to the province of Quebec.

I do not want to suggest that as a Toronto member I resent any of those contracts going to those manufacturers in the aerospace industry in Quebec.

When we talk about what is Quebec's fair share, I can point to a specific example where a Liberal government under the leadership of Pierre Trudeau laid the basic foundation for the aerospace industry, which I recognize is an industry leader in the world.

We have to deal with something that happened during the regime of the last government: the free trade agreement. I campaigned vigorously against the free trade agreement. I campaigned against it for many reasons. One reason was chapter 14 of the free trade agreement, where essentially there was unfettered foreign access to our markets, whether it was for procurement, manufacturing, or investment opportunities. We essentially gave up a big part of our sovereignty under that chapter.

Members of the Bloc voted for, supported and campaigned for the free trade agreement. We must remember that one article in the free trade agreement prohibits us as a nation from dictating Canadian content. So when the member from the Bloc in his speech today talked about the government not dictating Canadian content, the member must realize that his leader campaigned against dictating Canadian content when he supported the free trade agreement. You cannot suck and blow at the same time. The member from the Bloc Quebecois I know is fighting for his people, and I respect that. But we must deal with the truth. The truth of the matter is that we cannot dictate Canadian content.

I believe in the Quebec aerospace industry. When Pierre Trudeau, a great Liberal Prime Minister, laid the foundation to put that industry primarily in the province of Quebec, I believe he made the right decision, not just on behalf of Quebecers but on behalf of all of Canada. The member from the Bloc Quebecois is forgetting a very important factor in any business equation. I want to get to the point about procurement. I have confidence in the Quebec aerospace industry in the sense that it does have the capacity to produce a quality product at a better price.

If we were to promote and support the quality product and competitive price that Quebec aerospace industry operators provide, we could overcome this insecurity the Bloc Quebecois member has about his own industry. Any businessman, if the product is quality and the price is right, will always get the business. Therefore we should not give up on the aerospace industry not having the ability to produce a quality product or service at a quality price. Rather than throw in the towel and give up on the industry, let us rally around it.

I do not believe the member from the Bloc Quebecois has that confidence. Essentially what he is saying today is that we should be dictating that automatically these firms should get the business.

Before the free trade agreement I liked the situation in which we tended to be a little more protectionist. I fought for a more protectionist role. The member's current leader said we do not need that kind of protection. We should be consistent when we are having this debate. If the member would not be so selective and instead would look at all the things in a total equation, I believe he would see that the people of Canada and the Government of Canada have done their absolute best to be fair to Quebec.

[Jean H. Leroux, Bloc, Shefford, QC]

Madam Speaker, it seems fairly obvious that the hon. member considers former Prime Minister Pierre Trudeau his guru, since he has referred to him four times within one short presentation.

What we in Quebec are demanding, and I use the word "demand" advisedly, is to have equity, to see Quebec treated equitably, to see Quebec receive what it is entitled to. It is true that by around the end of the Seventies, an aerospace system was in place in Quebec, and now the government across the way cannot be allowed to make use of legislation to kill it off bit by bit. This government must not be allowed to use dubious laws, unwanted laws, to cause Quebec's aerospace industry to disappear. I feel that this is important, and those in the industry say the same. It is one thing to establish an aerospace industry, but quite another thing to destroy one, and that is what is being done now with the legislation being passed and the way Canadian and Quebec companies are being treated.

Personally, I have no problem at all with insecurity, despite what the hon. member said about my seeming to be insecure. What I want is to see Quebec treated equitably, fairly, more fairly than at present. I think it is important-and there is no question of insecurity in working on behalf of one's constituents, the people of Quebec who elected us to this House-and I think it is important to say so.

Madam Speaker, the hon. member took seven minutes to ask his question, and it seems to me I ought to be able to respond to it.

[The Acting Speaker (Mrs. Maheu)]

You may respond within the allocated ten minutes.

[Jean H. Leroux, Bloc, Shefford, QC]

Madam Speaker, perhaps then he ought to have taken a little less time, so that I could have as long as he. But I respect your decision.

I merely wanted to say, in closing, that without the members present here in the House when the Conservatives passed the Free Trade Agreement-we know that the Liberals were opposed, Ontario was opposed. Why? Because Ontario has always been Number One. So, without the Quebec members-this is proof that Quebecers have a world view. We are open to the rest of the world, and we want to be able to negotiate, to trade with everyone.

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

Madam Speaker, before I begin this debate I want to thank my hon. colleague from Broadview-Greenwood for his usual intelligent, logical, non-political intervention in this debate, which I think is slowly starting to rise in its level of intelligence. He has introduced some sense and some logic and some good debatable points into this debate. Because I have such respect for the points he has made, I am not going to reinforce them in my presentation.

I want to start with the motion to provide a backdrop for my debate this morning:

That the House condemn 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.

Coming from Her Majesty's Loyal Opposition, I would expect that it would take into consideration not just the aerospace industry in Montreal but the aerospace industry in Canada, and indeed all the military industry in Canada. You cannot talk about the military industry and relate it to one province. We just do not do business that way in our country. The hon. members know that as well.

I will give a personal experience, which will provide the thread for my thesis. My thesis essentially is that we can no longer continue to do business the way we have been doing it. The climate is not the same. The military climate is not the same and the fiscal climate is not the same. We have changed, and we have changed for a reason. If the hon. members opposite would follow the logic of my presentation, I give them forewarning that this is the general pattern.

In my previous incarnation I had the fortune, or some would say misfortune, to serve at Department of National Defence headquarters. For an operational officer in any branch of the armed forces, this is not considered the highlight of one's career. One likes to be out in the field driving ships, tanks, airplanes, or whatever the case may be.

My first tour, which was rather traumatic, came in 1967, my first time in Department of National Defence headquarters, or Canadian forces headquarters, as it was then called. One of the first projects I became involved in was a replacement ship for the 20 St. Laurent class destroyers that were built in the post-war period.

I have to say in deference to the issue, and I would be less than honest if I did not, that they did have Canadian content and were considered to be among the best in the world. It was a different time, a different environment, different circumstances-post-war. In 1967 the debate for the replacement of those destroyers had begun. Not only had it begun but it had been going on for some time, maybe a couple of years.

If you can take a snippet of this point in history, the genesis had been set for the four gas turbine general purpose frigates, or DDH-280s, as they became known. There were four special ships in the making, but they had a long time to go as well.

In 1967 the debate had already begun on a replacement for the 20 post-war destroyers. On December 22, 1977, ten years later, a

cabinet document approved the construction of the Canadian patrol frigates. That was in December 1977.

I will now report that the last of that class of frigate will be commissioned next year. Actually HMCS St. John's will be commissioned in St. John's, Newfoundland on June 24, 1996, and the last of that class will be commissioned in Cornwall, HMCS Ottawa , in September 1996. After approval in 1977, the last to roll off and be commissioned will be practically 20 years later. That is a long time. That is 30 years from the conception to the last of the class delivery. I do not care what anyone says. I do not care what province they are from. I do not care what they represent or what discipline they belong to. That is too long.

During the cold war we produced equipment for something that might happen. It is happening today. There are 50 wars going on and we are involved in some of them. We cannot have equipment for tomorrow; we have to have it for today. We cannot go on planning for 30 years, expecting and not delivering.

If they do not want to heed what the Parliamentary Secretary to the Minister of National Defence and Veterans Affairs has to say, I refer them to none other than the auditor general. In his 1993 report he essentially reinforced more eloquently and more specifically the points which I have made. He found three major difficulties with the present procurement system in national defence.

There were 550 major capital projects under way at one point in time. A capital project was in the vicinity of $100 million. That in itself is a challenge.

I am going to repeat this because if I heard somebody say this in the House I would say that they were wrong by a multiplier of 10. The first difficulty which the auditor general found was that it took 5,550 days from the time a capability deficiency was discovered in the inventory of capital equipment in national defence until Treasury Board approval. Not delivery, approval. It took 5,550 days which is 15 years. The system is cumbersome. The number of man hours used in that process would indicate why national defence headquarters was so large and why there was so much difficulty in reaching agreement on the kind of equipment we needed.

The second difficulty was that one of the major pieces of baggage the defence program management system had was the business of content and industrial regional benefits which were always built into the program. As my hon. colleague for Broadview-Greenwood has pointed out, that is no longer permissible under the free trade agreement.

The difficulty was that in trying to build in regional industrial benefits and offsets, quite often the major contract was averted. The major project which was proceeding apace, logically and reasonably, despite the time frame involved, got thrown off course because of an interjection which was too far downstream to be brought into the original concept of the contract. That threw the system off. The end result was that we did not get the best equipment for the money spent. Yes, it was rationalized, but the auditor general did not believe the rationalization was reasonable.

The third major difficulty which the auditor general found in 1993 was that because of the length of time it took to produce Treasury Board approval for the equipment and because of the dynamic instability inherent in the system, by the time the product was produced it did not necessarily relate to the threat or the deficiency which existed 15, 20 or 30 years before.

[Dennis Mills, Liberal, Broadview—Greenwood, ON]

The original requirement.

[Fred Mifflin, Liberal, Bonavista—Trinity—Conception, NL]

The original requirement.

I do not want to belabour this, but the case in point was the EH-101. It was a good helicopter, but it was too good for what was needed at the time. It was designed for the cold war. By the time the selection process had come to an end, the cold war was over and the requirements had changed.

Where did we go from there? We had many discussions in the special joint committee on national defence, in which I was honoured to play a role, along with other colleagues of the House. There was some disagreement, but I thought the work of that committee was conducted very co-operatively. The report was hailed as a good report from the bottom up. In 10 months of study the committee consulted over 1,200 Canadians and every kind of group which was involved and interested in national defence, from the positive to the medium to the negative. We took into consideration all of their concerns.

One of the major areas we spent time on was the procurement of equipment. Major equipment groups, defence preparedness groups, Canadian defence associations and the military equipment requirement industry came and spoke with us. Our conclusion was not in support of the motion the opposition has put forth.

In the major discussion one of the things we focused on was that the procurement function was central to the operation of any military service. If we do not have equipment we cannot really have a decent force. This is especially so in the modern era where weapons systems are becoming more complex, more sophisticated and more expensive, not just because of the escalation in money but also because of the escalation in complexity and sophistication.

The design and the delivery schedules extend over 10 to 15 years. I used the example of the Canadian patrol frigate. I think the

first one was delivered in 1988 and we will be delivering those ships until 1996. That is an eight to ten year delivery schedule.

The factor that was considered in the special joint committee was the regrettable tendency for the Canadian forces to overspecify the requirements and generally to use every procurement opportunity as a chance to design and build the very best weapons system possible. Best was the enemy of good enough.

The second point we focused on was that there was a stringent set of oversight and accountability requirements imposed over the years and probably for good reason by the Treasury Board.

Together these factors produced a bureaucracy and a system for the management and control of federal procurement that has grown out of all proportion to the real needs of the Canadian forces, out of proportion to the size of the Canadian forces which over the last 10 years has been reduced both in size and in budget. I will mention some figures on that in a few moments.

Our recommendations were threefold. We believed that a significant reduction in the unnecessary superstructure was long overdue. The recommendation was made that first of all the government make a public commitment to purchasing military equipment off the shelf and that it avoid the complex, slow moving custom designed procurement and production processes that characterized too many capital projects in recent years, some examples of which I have given.

In this spirit the procurement policies of the department and the Canadian forces should show a bias toward the purchase of commercially available products whenever possible, be it Canadian or offshore.

The final recommendation, and we felt strongly about this, was that the deputy minister and chief of the defence staff working with the officials of other concerned departments should take immediate steps to modernize and streamline the procurement process. The parliamentary secretary for industry and the parliamentary secretary for public works will be commenting on that this afternoon.

The white paper stemmed from our special joint committee. In the white paper a considerable effort was devoted to looking at capital equipment. The opening thoughts were that we had to change security environment and we had to change fiscal circumstance. This demanded that national defence radically restructure its plans to purchase capital equipment.

To put it more succinctly, if we add up all the reductions, in the last decade national defence has had funding reduced by $21 billion which is a lot of money over a decade and 21,000 people in the regular force which is a lot of people. I have not counted civilians and I have not counted the reserve force.

We cannot give up that amount of funding for whatever reason and expect to do business as usual.

[An hon. member]

Over how many years?

[Fred Mifflin, Liberal, Bonavista—Trinity—Conception, NL]

Over a decade. That is a lot. In the last two years since 1993 there has been a reduction of $7 billion from the department. That is from 1993 to 1999 and is in the 1993 budget. In last year's budget there is another $2.8 billion. I am talking about a lot of bucks here and a lot of jobs. I am talking about a lot of corner cutting which has to be done to make do with the money we have to buy the equipment we need. We cannot do business as usual which is the point I am making here.

First of all, we have put emphasis on extending the life of equipment whenever cost effective and prudent. With respect to new equipment, the acquisition will be only for purposes considered essential to maintaining the capability of the Canadian forces and for the widest range of defence roles. We want the equipment to do as much as possible without compromising the role and the major purpose of the equipment. We want to get fewer types of equipment, which is now the case, and to purchase equipment that is easier to maintain.

With respect to planned acquisitions, in 15 years capital equipment alone was cut by $15 billion. I talked about $21 billion but that involved other reductions in base closures and that kind of thing. That is a lot of money.

The Department of National Defence had to adopt a better business practice where greater reliance was placed on the just in time delivery of common usage items to reduce inventory costs. Also, in direct response to the recommendation made by the joint committee, the department increased off the shelf procurement of commercial technology which meets the essential military specifications.

The Department of National Defence has embarked on a program to enhance its partnership with the private sector. The most recent and best example of this is the way we are going about the acquisition of our 15 search and rescue helicopters, which does indicate a tremendous partnership and co-operation with the private sector. We have built in a lot of flexibility to the private sector.

Where business case evaluations demonstrate potential for increased cost effectiveness, support activities currently conducted in house will be transferred completely to Canadian industry, or shared with private industry under various partnership arrangements. This again speaks of more flexibility, cost effectiveness and efficiency.

We are also continuing to seek new ways to support our operational forces. If we can contract out to maintain the equipment, that is quite satisfactory to the department. I could quote

examples but because of the time I will finish the main thread of my presentation.

In Canada today, 60,000 people are employed in high technology industries, such as aerospace and electronics, which are directly linked to defence procurement. These linkages extend beyond the production of defence equipment to include technological spinoffs into commercial products and access to international markets.

The challenge of lower R and D and capital spending, as I alluded to earlier, and more off the shelf purchasing will be to maintain and improve the industrial impact of those expenditures which remain. To this end, it is the intention of the Department of National Defence to work with Industry Canada and Public Works and Government Services Canada toward harmonizing industrial and defence policies to maintain essential defence and industrial capability.

In general, the government will seek to foster defence conversion despite what the motion suggests. We are going to foster conversion not by a vast infusion of money, but through other initiatives which the Minister of Industry has espoused in very clear terms in this House during question period and in major speeches he has made. I am surprised there is so much doubt on the other side.

We are looking at overall industrial growth and the international competitiveness of Canadian firms consistent with our international trade agreements.

To summarize, what we did before may have been all right when we had the budget to do it, when there was the threat climate to do it and when circumstances permitted. All of the circumstances have changed. We can no longer do business as usual. We have had a major overhaul in the way we do business: in procurement, in life cycle management, in life cycle maintenance.

I look forward to the rest of the debate today to see if we can pick up some more ideas to further enhance what I believe is already tremendous progress in this area.

[Jean-Marc Jacob, Bloc, Charlesbourg, QC]

Madam Speaker, I have two comments and a question for the parliamentary secretary.

I do not know whether this is a military tactic, but he digressed somewhat from the topic at hand-I am actually very glad he did so-to discuss timeframes and the whole structure at headquarters for supervision, programming auditing, and so forth, all of which takes forever. He said as long as 15 years, in some cases.

This is indeed one of the problems of defence procurement. The Auditor General mentioned this in his 1993 report, and he made his case very eloquently. We also discussed this on the special joint committee, but I would like to ask the parliamentary secretary what exactly has been done within this whole review process.

There was, for instance, the software for maintenance of the frigates, for which the military had set certain criteria. After a lot of negotiations and unavoidable delay, we finally obtained a small percentage what the military had asked for. After spending about $30 million on this software, we have yet to obtain what we want.

I wonder how the parliamentary secretary can say that things have changed within the Department of National Defence. If we are going to buy equipment directly on site, will defence testing requirements become stricter or will they remain the same after acquisition of this equipment?

We have now reduced the EH-101 capability to 15 per cent. Are we going to upgrade it again afterwards? Because nothing has happened to change the whole situation he referred to in the department and at headquarters in the past two years. That is my first comment. I would like to know whether the parliamentary secretary has any specifics.

Second, in his speech he said that we could no longer afford to use defence procurement as a tool for regional development, as the federal government often did in the past. As I said earlier-and I appreciate the fact that the parliamentary secretary talked about being logical-when there is no infrastructure, I agree we should not create a new infrastructure, but when it exists, when a company has the infrastructure, then we can use and adapt it to defence criteria.

When we talk about armoured personnel carriers, I am always reminded of the fact that the last deliveries of Bisons, which are now judged to be obsolete or old, were made in 1994. If defence equipment is old after only one year, I really wonder about the future of the Canadian army's equipment.

[Fred Mifflin, Liberal, Bonavista—Trinity—Conception, NL]

Madam Speaker, I thank the hon. member for his question. I recognize that he has agreed with some of the things we have said, as he did in the special joint committee.

I emphasize that the changes I have just related to him and to the House are not yet a year old. I assure him from the bottom of my heart that the name of the game is what is the most cost effective way of doing business. He is right in pointing out that we have done things differently depending on the kind of contract we have. However, that points out the flexibility in the system.

We no longer have to go through a system of hoops, milestones and baggage difficulties because it says so in the manual. It is done differently depending on which is the best way to do it and what is the most cost effective way of doing it.

The best example I could give the hon. member for Charlesbourg is to tell him about one area of technology, which I know he understands, so I will relate it to him very briefly.

In 1985 the Canadian navy had less than 350,000 lines of code. I am talking about software now. A decade later the number of lines of code in software in the computer and command control systems and technology transfer systems has increased by a factor of 30. It has just under 10 million lines of code now.

The member knows what that means with respect to software managers, the number of people who work in the software production areas and who are involved in maintenance and producing programs.

Different ways have to be found to do this. Some work may have to be contracted out as was done in one case. The member alluded to the case of Paramax. I think he was satisfied with the number of witnesses that were heard who indicated the difficulties we had with that and in other areas. That is one area to which I would like to respond.

However, this system is still evolving. The examples that he used indicate that we are prepared to do things differently and hopefully in the right manner. We may not get it right 100 per cent of the time, which is always the case when we are making a change. But we know that we have the major thrust right.

I want to respond to comments the hon. member made earlier and to clarify, in case there is any doubt in his mind, with respect to the submarines. He sat on the special joint committee. I am not going to read the recommendation because it is very clear. I can almost do it verbatim. The special joint committee said that, reluctantly, as much as it believes Canada needs a third dimension in surveillance of the oceans, which are the same size as the country, a submarine capability is needed to replace the aging submarines now. They are at the end of the line.

Pretty soon the capability to have people serve in submarines will be lost because the submarines will be gone. Therefore the capability will go with it. The report said, reluctantly, that Canada could not afford to spend the $5 billion needed to get four new submarines. However it did say that because Canada is a maritime country and because it really needs this third dimension to see beneath the surface as well as on and above the water, that if there was an opportunity to buy four submarines that were fairly modern, advantage should be taken of that.

As it turned out the British navy had retired its new submarines, the Upholder class. They are not old submarines. One of them has never been used. How can Canadian content be put into an opportunity buy? The committee agreed and said that its members did not specify a particular country. As it turns out it was the Upholder class in Britain, but it could have been other classes. It was not specified. The committee members did not restrict themselves. They said: "If we can get something at a bargain price that somebody else does not need any more, then buy it". It is like a major capital equipment garage sale. I wanted to clarify that.

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

Madam Speaker, I have a question for my colleague, the Parliamentary Secretary to the Minister of National Defence. The thrust of his speech dealt with the whole issue of off the shelf. We must be more sensitive to off the shelf purchases.

I realize that some of the prime military manufacturers are not Canadian yet Canada has some of the best component part manufacturers in the aerospace industry. What is the government or the Department of National Defence doing to marry our aerospace component manufacturers with those prime military manufacturers? Is there something that could evolve like the auto pact which we have for the automotive sector?