Debates of Nov. 23rd, 1999

Shipbuilding Act, 1999

[Antoine Dubé, Bloc, Lévis, QC]

moved that Bill C-213, an act to promote shipbuilding, 1999, be read the second time and referred to a committee.

—He said: Mr. Speaker, it is with a great deal of emotion that I rise today in the House to give the most important speech I have ever given since I was elected in 1993 as the member for Lévis-et-Chutes-de-la-Chaudière. I will be dealing with the private member's bill that I have brought forward to promote shipbuilding.

In my riding, shipbuilding is the most important issue falling under federal jurisdiction, since the Lévis shipyard once had over 3,000 employees and provided jobs to close to 1,200 workers during the last two years to rebuild the oil platform Spirit of Columbus . At some point, the overall wages reached $150 million a year and the economic benefits often exceeded $300 million in the regions of Quebec and Chaudières-Appalaches.

This bill is the result of a process I started more than two years ago with Richard Gauvin, the president of the Davie workers union, in order to bring together all the stakeholders in the Canadian shipbuilding industry. Why? Because we both realized that we would never get the attention of the federal government that the Davie shipyards needed if we did not get the other Canadian shipyards on board.

Sometimes together, sometimes individually, we approached all of the stakeholders that could be of some help to us. I want to thank Richard Gauvin for his valuable contribution and I want to say hello. I know he is sitting in the gallery, along with two members of its union executive, Bernard Demers and Nelson Roy. I can assure the House that the Davie workers and their families were always at the centre of my main concerns when I was drafting this bill.

I also want to thank the management of all the shipyards I visited in Canada during the last two years for their co-operation. They helped me see that they were not competitors of Davie but partners fighting the same battle—to get the federal government to put together a real shipbuilding policy, a policy that would allow them to compete effectively with other shipbuilding yards in the world.

I also wish to thank all MPs in the ridings concerned who paved the way for me to meet with the directors of these shipyards, as well as the 100 MPs who have supported my bill this far.

People have talked about a merchant marine policy for Canada for more than 50 years, and nothing has really been done to promote shipbuilding per se.

Since the government did not address this in the last throne speech, today I will present three of the seven measures being called for jointly by the Shipbuilders' Association of Canada, which represents the owners of all the major shipyards in Canada; the Fédération de la métallurgie CSN; the Marine Workers Federation (CAW Canada), representing maritime workers primarily; and the Shipyard General Workers' Federation of British Columbia.

These demands are being supported by 160,000 people who have sent postcards to the Prime Minister of Canada, and to all provincial premiers who met in Quebec City on August 9.

The purpose of Bill C-213 is to promote shipbuilding in Canada and make Canadian shipyards more competitive.

First measure: A loan and guarantee program: a ) through the establishment of a program whereby a maximum of 87.5% of the money borrowed by a company from financial institutions to purchase a commercial ship that will be built in a shipyard located in Canada

(i) is guaranteed by the federal government in the event of default in the repayment of the loan,

(ii) bears a rate of interest comparable to that available for loans from financial institutions to large and financially strong corporations, and

(iii) is repayable on terms comparable to those usually granted by financial institutions to large and financially strong corporations for the repayment of their loans;

This measure already exists in the United States, and is part of a specific program to promote shipbuilding, known as Title XI. Since 1993, the American government has approved financial guarantees totalling $2.9 billion U.S. under this program.

My goal in this bill is to improve the loan guarantee program of the Export Development Corporation. Right now, this program is restricted to exportats only, and the maximum is 80%.

But a loan guarantee program is needed because of the very high cost of ships and oil rigs and the long period of time required to build them.

In the United States, the title XI program makes it possible for American shipyards to price their ships competitively on the international markets. It provides federal government guarantees for financing or refinancing requirements in the private sector for long term construction or reconstruction projects of ships under the American flag in American shipyards.

The Canadian program should extend to Canadian and foreign owned ships built in Canada, and it should include a Canadian government guarantee for private loans and set interest rates similar to those granted to big healthy corporations.

Ships eligible under the program could include commercial ships like passenger ships, bulk carriers, self unloaders, cargos, tankers, tugs, push tugs, barges, dredges, research ships, pollution abatement ships, oil and gas drilling rigs, and floating drydocks.

A similar loan guarantee program was recently launched in Nova Scotia, but it is limited to $85 million and is obviously restricted to the Halifax shipyard.

A second measure provides for changes to tax rules relating to lease financing. Another provision in clause 3 provides: b ) by amending the provisions of the Income Tax Act and the Income Tax regulations to improve the tax treatment of lease financing for the purchase of a ship built in a Canadian shipyard.

Essentially, this is aimed at exempting new ships built in a Canadian shipyard from the application of Revenue Canada regulations with regard to lease financing. Lease financing has become the preferred financing option for the purchase of capital equipment. In their current form, these regulations make ownership and lease financing not very attractive, even unprofitable.

The annual depreciation that Revenue Canada would normally allow as a deduction from taxable income in other circumstances is substantially reduced in the case of lease financing. Not only does this transfer the depreciation from the first to the last years of the useful life of the ship, but it also results in a decrease of real savings from the ownership and operation of a ship, which means an increase in the operating costs of Canadian ships.

By exempting ships built in Canadian shipyards from the application of regulations relating to lease financing, the existing depreciation rates for ships would apply without any restrictions, and the tax disadvantage which prevents ownership or lease financing of ships would be eliminated. This exemption would not eliminate any of the taxes applicable to ships and their owners.

This is not an unprecedented initiative, because many assets are already exempt from regulations governing lease financing, such as furniture, office equipment, computers, electric appliances, televisions, radios, furnaces, air conditioners, railway cars, cars, vans, trucks and trailers. But not ships.

The third measure concerns refundable tax credits: c )—by amending the provisions of the Income tax Act and the Income Tax Regulations to allow a refundable tax credit for a portion of the costs relating to the construction or refit of a commercial ship in a shipyard located in Canada or the conversion of a ship in such a shipyard

(i) to the shipowner for the construction of a Canadian ship, or

(ii) to the shipyard owner for the construction of a foreign ship.

This tax credit is drawn from a Quebec government initiative implemented in the context of 1996-97 budget measures to support Quebec's shipbuilding and marine industry.

The program could apply, without being limited thereto, to commercial ships, such as passenger ships, bulk containers, self unloaders and all those I named earlier. It would not apply to fishing boats eligible for financial assistance under other federal or provincial ocean fishing development programs.

The costs that could be taken into consideration in calculating the tax credit would include the cost of plans and specifications and the salaries of employees involved in the construction of a ship. Total construction costs ought to be in keeping with market standards in relation to the planned ship. A tax credit could be given that would be the equivalent of a maximum of 20% of construction costs of the first of a series, 15% of the second and third, and 10% for the fourth.

This credit might be considered an extension of the R and D credits in effect in Canada, so as to reflect the unique nature of shipbuilding, where the very first units in a new construction or retrofit program involve very steep development costs.

By contributing to these initial expenditures, the reimbursable credit could facilitate subsequent production, thus generating the economies of scale so essential to the prosperity of the industry.

The tax credit would be kept within the economic entity of the shipyard. It could not be transferred to other divisions of the business owned by the shipyard owner, and would be paid only once construction of the ship or oil platform was finished.

I would like to make it clear that it is not just by chance that the other four initiatives called for by the key stakeholders in Canadian shipbuilding are not part of my bill.

First of all, “elimination of the unilateral aspects of NAFTA which, while allowing the United States to sell new or used ships to Canada free of the 25% duty imposed on all other countries, totally blocks Canada's access to the American market” cannot be part of a bill. It must be part of some bilateral negotiation opened up again with the United States.

It is my personal opinion that the federal government ought never to have accepted the 1989 exclusion of shipbuilding and shipping from NAFTA. If these two areas were included from NAFTA, with the present exchange rate of our Canadian dollar, our shipyards would be overloaded with work.

The shipyard owners and the shipyard unions are also calling for “an international social clause governing working conditions for shipbuilding”. This ought to be included among the concerns of the Minister of International Trade at the World Trade Organization negotiations. Hon. members must understand that I could not include this in my bill, because it involves the WTO and must be the object of multilateral negotiations first.

The joint publication by shipyard owners and unions also asked for the “promotion of Canadian resources” and “for investments in coastal infrastructures”. These views are simply meant to remind the Liberal government that Canada has the world's longest coastline and the largest inland waterway.

Under the circumstances, it would be important to preserve the existing Canadian shipyard infrastructure. Let me digress for a moment to point out Davie's useful role following the grounding of the Norwegian cruiser Norwegian Sky . That shipyard may also be called upon soon to repair the Maltese freighter Alcor , which is grounded not far from Île d'Orléans.

Finally, shipyard managers and unions asked the federal government to hold a summit for industry stakeholders, to further discuss the issues affecting the Canadian shipbuilding industry and to develop a strategy covering all aspects of shipbuilding, so as to make that industry prosper again. I fully support that request for a summit which, incidentally, was a promise made by the Liberals in 1993.

There are also biases and myths that should be dispelled regarding the shipbuilding industry. The first myth is the high cost of manpower. Salaries paid by Canadian shipyards are lower than those paid anywhere in Europe. The hourly rate for manpower in the Canadian shipbuilding industry is 20% lower than in the United States, 50% lower than in Germany, and 40% lower than in Japan.

Only Korea and communist China pay salaries that are lower than those in Canada, but our manpower is far more qualified. The effectiveness of our manpower has increased by 25% since 1986. Not many countries can boast such an improvement. Collective agreements are more flexible than ever. This is not necessarily the way to look for improvement.

It is true that workers in the shipbuilding industry are well paid, but they also pay a lot of taxes. With the loss of 7,000 jobs in this sector, the federal and provincial governments in Canada have lost $70 million annually. If nothing is done, these losses could soon reach $100 million.

Since each shipbuilding job lost eliminates at least two other jobs elsewhere, tax losses can be estimated at close to $200 million annually.

How much have these job losses cost the EI and social assistance programs? I have not been able to obtain official figures, but I can say that costs were at least $200 million a year.

Another myth is that demand is low. Many of the shipbuilding industry's detractors claim that the industry is in decline and that demand has dried up. In fact, the opposite is true. In the spring of 1999, there were 2,542 ships on order throughout the world.

The majority of the ships in circulation in the world are over 20 years old. Some of them are in very poor condition. We saw this recently off the Île d'Orléans. Others must be refurbished very soon. As ecological concerns increase worldwide, more and more countries are requiring double hulls.

The recent increase in oil prices will further favour shipping as a means of transportation and again point up the need for new oil drilling rigs.

With globalization of markets leading to increased exports, shipping can only benefit, because trains and trucks cannot cross oceans, and transportation of weight cargo by air is too expensive.

We hear that a traditional industry is in decline. Another concept that must be challenged is the view of shipbuilding as traditional. All eyes are on the new technologies.

A recent visit to several American and other shipyards, including the largest shipyard in Taiwan, which is the fourth largest in the world, showed me that the largest Canadian shipyards have nothing to fear from any of them. Our technology is equal to, if not better than, that of our competitors.

Some of our shipyards, such as Davie, are known worldwide for the quality of their engineering services; they produce three-dimensional plans. Computer-aided manufacturing is present nearly everywhere.

Frigates manufactured in Canada are the best in the world. They are loaded with more computers than any airplane. So where is the problem? The problem is financial.

You are indicating to me that I have only two minutes left, Mr. Speaker, so I will have to go faster and improvise my conclusion. I could easily speak for two hours, but I have only 20 minutes. The problem is financial, there is a lack of financial guarantees.

The problem is also that many countries are still subsidizing shipyards to the tune of 9% in Europe, and 30% in Asia. In the meantime, the United States are hanging on to their protectionist measures.

And what is the good Liberal government doing meanwhile? It is watching the ships go by and is doing nothing. It is counting on the nature of things, on external pressures to make things happen in the area of shipbuilding. However, it is not with such a laissez-faire attitude that the situation will improve. While it has been ignoring the problem, the number of jobs has dropped from 12,000 when it came to power to 7,000, and it is still dropping.

In St. John's, Lévis, Vancouver, everywhere, the situation is increasingly precarious. I urge the Liberal government, which, I know, will not dare support a bill introduced by a mere opposition member, to vote the way its party faithful asked it to do at the last national convention through a resolution asking for substantial action: a review of the situation and concrete measures. I urge the government to wake up.

[John Cannis, Liberal, Scarborough Centre, ON]

Mr. Speaker, I am pleased to be able to address private member's Bill C-213, an act to promote shipbuilding, brought forward by the hon. member for Lévis-et-Chutes-de-la-Chaudière, and to hopefully shed some light on some of the innuendoes and the doom and gloom we have been hearing.

The desire to see shipbuilding in Canada contribute to the national well-being is one that the government wholeheartedly shares. This is why the government has designed a federal shipbuilding policy tailored to the industry as it exists in Canada today and is consistent with our approach to other industry sectors.

There is no doubt in my mind why the member has put forth his bill. He is hoping to assist an industry located in his riding. I refer to MIL Davie. As all members of the House, the hon. member has come to this place to defend the interest of his constituents and I commend him for that. As elected representatives we all share this sense of obligation and must meet it with vigour by telling the full story.

Accordingly, the member may wish to ask his constituents if they are aware of the federal government's contribution to MIL Davie. I suspect the member's party line dictates that he cannot discuss positive contributions offered by the Canadian government. This would be a truth that his party would rather leave to others to raise.

Let me do so with pride. Has the member informed his constituents that the Government of Canada already invested almost $1.6 billion in Davie industries between 1983 and 1996 in the form of contracts, contributions and loan guarantees? Probably not. Has the member asked his constituents if they prefer more money thrown at the problem as he is proposing in his bill? Probably not.

I would even venture to say that the hon. member's own constituents would take a common sense approach and affirm that his bill is not the magic bullet for this specific industry. Rather, his constituents would likely prefer a tax cut or increased spending on various social programs. In the wonderful world of the Bloc Quebecois everything is possible. After all, it chooses not to govern, only to oppose.

Let me now take a moment to reiterate the Government of Canada's policy. My colleague, after asking the industry committee to meet on the subject of productivity and shipbuilding, essentially ignored the evidence presented by the witnesses and concluded that there is no government support for the shipbuilding and repair industry.

I take it that this must have been nothing more than a partisan slip from my colleague who I am sure will eventually admit to his constituents that there is a federal shipbuilding policy made in Canada.

There are essentially four elements to our government's shipbuilding policy carried out by the various government departments.

First, thanks to Public Works and Government Services Canada, the acquisition of ships in Canada by the federal government is done on a competitive basis but is restricted to Canadian sources. Let me point out that at present shipyards in Atlantic Canada employ almost 2,000 Canadians and, thanks to the federal government's made in Canada shipbuilding policy, these workers are now benefiting from over $8 billion to $9 billion in federal shipbuilding and repair national contracts tendered through the competitive bidding process in the past 10 years.

Second, the finance policy allows for an accelerated capital cost allowance on new ships built in Canada. It also allows purchasers to write off 100% of the entire cost of a ship over a mere four years. If we bear in mind the fact that the average life of a ship is approximately 40 years, this is a very accelerated rate of depreciation. It gives rise to a deferred tax item on the balance sheets of companies that exceeds the 15% declining balance rate afforded to foreign built vessels.

Third, thanks to DFAIT, we have put in place a 25% tariff on all non-NAFTA foreign built ships of more than 100 tonnes that enter Canadian waters, with the exception of course of fishing vessels over 100 feet in length.

Fourth, in response to the shipbuilding and repair industry's conditions, the government has spent $198 million on an industry-led rationalization process between 1986 and 1993. This money was given directly to the industry for upgrading facilities and displaced workers adjustment programs because the industry itself, I point out, decided it was necessary to reduce its capacity so that the remaining shipyards could survive and continue to be competitive.

The Government of Canada is also supporting the shipbuilding and repair sector through a number of other key initiatives as well. For example, we have an attractive R and D environment driven in part by the scientific research and experimental development tax credit.

We have financial assistance through risk sharing repayable funds through the enabling technologies element found in Technology Partnerships Canada. This could likely be of help in fostering the development, application and diffusion of critical technologies with major impacts and benefits within and across industry sectors.

The federal government helps the shipbuilding and repair industry to compete internationally through the Canadian Commercial Corporation assistance and the Export Development Corporation export financing, which can support up to 80% of a purchase over a 12-year term at commercial market, and let me highlight its support, which has grown from $3.5 million in 1996 to more than $130 million in 1999. This is a perfect example of how the government is modernizing its policy to reflect changing needs. Financing terms were expanded from eight to twelve years, and interest rates now match commercial rates.

Peter Cairns, president of the Shipbuilding Association of Canada, called this “a very good initiative, beneficial to the whole industry nationwide”. He called it a “significant step in the right direction in an area where Canada has a lot of expertise”.

Now the hon. member opposite would ask the government to pile on top of these measures special treatment for the shipbuilding and repair industry in the form of more favourable loan guarantees and exemption from lease financing, measures that do not exist for any other industry in Canada and that are contrary to Canadian tax policy and our international trade obligations.

Furthermore, the kind of tax credits the hon. member is asking for amount to what is in essence a subsidy. Canada will not get into a subsidy war with its international competitors which, let me point out, it cannot possibly win.

Permit me to take a step back and provide the member with a worldwide view of this entire issue.

At present, when measured internationally, shipbuilding in Canada amounts to about four-tenths of one percent of global production. This market is dominated by Japan and Korea which account for about 35% to 33%, respectively, of the world commercial shipbuilding. When we add China to the mix, three top countries now control more than 75% of the world's production.

Moreover, the Asian and Europeans are not standing still waiting for the rest of the world to catch up. Consolidation, mergers and specialization continue with giants like HHI and Daewoo in Korea, and a Chinese industry that is rationalizing from 26 companies down to two. In the face of such extreme and unremitting pressure, brought about by predatory pricing, substantial global overcapacity and subsidies, many traditional firms, such as Norway's Kvaener, have elected to get out of the business of new construction altogether.

In the face of such evidence, one may be inclined to walk away from the table and ignore the difficulties being encountered by the men and women of the shipbuilding and repair industry. However, that would be too easy and, simply put, not the right thing to do. The Bloc, the NDP and the Tories may disagree that the answer does not lie in topping up the subsidies that other countries are providing or in simply throwing in the towel, as the Reformers would like us to do.

The government will do the right thing and continue our efforts in multilateral discussions to negotiate subsidies down. As the Minister for International Trade has stated, we are committed to doing so and we are putting shipbuilding subsidies on the priority list of the upcoming negotiations in Seattle, Washington.

Yes, we should be doing all we can, in an intelligent way, to foster shipbuilding and repair in Canada. But, surely, this is a shared responsibility not to be undertaken solely by the federal government. The provinces as well as the owners have a duty to respond to their workers. Most of the provinces with shipbuilding and repair interests have provided support.

[Gurmant Grewal, Reform, Surrey Central, BC]

Mr. Speaker, I rise today to respond to Bill C-213, an act to promote shipbuilding in Canada. The purpose of the bill is to make Canadian shipyards more competitive.

The member for Lévis-et-Chutes-de-la-Chaudière in Quebec wants to establish a federal loan granting program that will cover up to 87.5% of money borrowed to purchase a commercial ship built in Canadian shipyards.

The bill would also provide a favourable and generous tax treatment of lease financing for the purchase of Canadian built ships.

Finally, the bill proposes a refundable tax credit for refitting commercial ships in Canada.

As a Canadian, I can commend the hon. member for the intent of the bill and what he is trying to accomplish.

Surrounded on three sides by water, one would think that Canada could have a viable, thriving and prosperous shipbuilding industry. However, that is not the case. There are so many who remember the great ships built on our east coast in particular, and the shipbuilding industry in Canada takes on a romantic notion.

The Tories make a great deal of noise lamenting the sad state of our shipbuilding industry. In fact, they are to blame as much as the Liberal Party of Canada for the loss of this industry in Canada.

As all Canadians know, the current Liberal government is maintaining a high and artificial level of taxation. They are hurting our economy, our productivity and our growth with their high taxes. They are hurting our consumers, and they are discouraging foreign investors from coming to Canada. They have caused a brain drain that threatens the future of our country.

Just this past weekend, the International Monetary Fund recommended that the Liberals abandon their policy of delegating 50% of the budgetary surplus to new spending because something has to be done about the high level of taxes that are killing jobs, our economy and our industry in the country.

Our employment levels are too low. With our vast resources and our ability to create wealth with other nations in the global economy, we should be doing a lot better.

On this side of the House, we appreciate the initiative shown by the member in bringing forward Bill C-213. He is trying to find solutions to the government's mismanagement and its effect on our shipbuilding industry. Regrettably, he is using the wrong approach.

Loans, grants and incentives will not accomplish what low taxes across the board would accomplish. Would the member go sector by sector, industry by industry, company by company offering tax breaks, granting loans and other things? That is what the Liberals do. They give away government contracts and opportunities to those who contribute to the Liberal Party. A hotel can be saved from bankruptcy if enough money has been given, and CIDA contracts will be awarded. We know this is a long story.

Lower taxes would help all sectors of our economy. If the government lowered taxes, that would help our industries. Lower taxes would help all companies across the country. High taxes caused the problems. Lower taxes would solve much of the damage that has been done.

The official opposition policy calls for private sector self-reliance without the federal government providing tax dollars to support any specific sector. Why would the hon. member single out shipbuilding? There are so many other sectors to be propped up with tax dollars.

Let us look at the shipbuilding industry in Canada. With only .04%, that is 1/25th of a percentage point, of the world's shipbuilding production, it is time to admit that Canada does not currently have the right environment to sustain a shipbuilding industry. Rather than try to match the subsidies and other incentives offered by other countries, we should concentrate our efforts on negotiating down unfair export subsidies. Far from guaranteeing loans to Canadians who purchase Canadian built ships, we should drop the 25% tariff we have on non-NAFTA ship imports so that all Canadian shipowners are not penalized.

Industry Canada can tell us about the problems in the shipbuilding industry. It is a declining industry, a dead in the water industry. There is an overcapacity in the world of over 40%. Canada is not even in the ballpark. We have 25% duties against imports of ships.

What the Liberals and Tories have done to the shipbuilding industry in Canada is a study on what not to do in terms of productivity. Yet the industry department continues to have a shipbuilding policy which has technology partnership grants, research and development grants, and the Export Development Corporation supporting it. Why?

The technology partnerships Canada program is available to a number of firms to do research and development if they so wish. It is repayable based on success. It is a risk sharing, reward sharing program. No one should use this program for shipbuilding. There would be no way to pay back the loan.

Let us look at the world shipbuilding industry. The industry has moved away from North American markets and European markets to southeast Asian markets. Japan and South Korea continue to control over two-thirds of the total international market for shipbuilding and ship repair. China is emerging as a rival. Combined, these three countries control over 75% of the world market. Due to extreme pressure from Asian shipbuilders, many traditional shipbuilders, including the Norwegian company Kvaerner, have chosen to get out of the industry altogether.

Canada cannot build major ships, only minor and smaller vessels. Both of these markets are already operating at over 40% of their capacity. Demand and prices are already weak and are forecast to continue to decline. Prices for 1999 are down by 6% to 24% from last year.

The international market is experiencing a significant downsizing. Since 1976 the number of shipyards in the world has dropped by half and direct employment has significantly declined to about one-third of what it was.

Let us do those things that we can do well. We can reduce duties in a multilateral forae, and we will be going into the WTO round in Seattle. If we will be dealing with duties, then I hope we will deal with this one.

All tariffs will probably be on the table for discussion and I would expect, depending on what we can get in return, that we may be able to drop the 25% duty.

Market conditions for shipbuilders are not about to change. Maybe we would be better off in Canada helping our ship buyers by reducing the 25% duty. Maybe the ship purchasers in Canada could help generate employment, creating jobs and developing the business. Protecting shipbuilders did not help in the past.

The total employment in Canada's shipbuilding and ship repair industry as of May 1999 was about 4,950. The rationalization of this sector of our economy took place between 1986 and 1994 and resulted in a loss of over 7,000 jobs. The loss of those jobs cost the federal government $198 million. That is a lot of money.

The federal government has already assisted in helping the industry phase down through $200 million in adjustment payments. That experiment, as usual, has proven to be a dismal failure.

We should not turn to taxpayers and make them pay for a shipbuilding industry in Canada that will never be viable. Let us not hinder the choices of the firms in Canada that want to buy ships or force a duty on them if they do not buy a Canadian ship because we wish to have a shipbuilding industry. It is the government's fault that this industry and others are not thriving in Canada. In fact, it is hindering us with high taxes, preventing prosperity. We support de-politicizing economic decision making by eliminating grants, guarantees and subsidies.

[Wendy Lill, NDP, Dartmouth, NS]

Mr. Speaker, I am very pleased to speak today to Bill C-213, a bill which I support because of my party's longstanding support for the creation of a national shipbuilding policy for Canada.

I thank members of the Marine Workers Federation who came here en masse last spring, from coast to coast to coast, to present 100,000 cards demanding that the government implement a national shipbuilding policy. I am glad to see many of them here tonight for this important debate.

Why do we need a shipbuilding policy? It seems so obvious to many of us, but it cannot be reiterated enough.

I come to this place from Dartmouth, Nova Scotia, a community which sits on the shores of one of the finest working harbours in the world. Shipping is part of the economic lifeblood of my community. It is part of our history, culture and who we are.

From my home I can see crews working on ships on the shores of Dartmouth Cove. They are blasting the hulls or repairing and refitting the superstructures. Across the harbour I can see the naval dry docks where our navy is being fit with the latest technology, and as I cross the bridges I see the huge Halifax shipyards, major employers in my community.

These are jobs in a vibrant and necessary industry. I see this from my home, I hear it from constituents, and I know it from the things I am told by the workers in the industry. However, I am troubled by the fact that the government has a different view of the industry. It sees the industry as one which is on the way out, a sunset industry. That is why it is letting the industry die. It sees this industry and the workers involved, and the communities which rely on shipbuilding, as being expendable.

That approach is reflected in the government's indifference to a shipbuilding policy. It is astounding to me that the indifference exists, given the fact that such voices as Buzz Hargrove, J.D. Irving and the Canadian Chamber of Commerce are now all singing from the same song book about the need for a shipbuilding policy. But indifference is what we have seen from the government, or at best mixed messages.

The Liberal Party has a long but not very proud tradition of saying one thing in opposition and doing another when in government. The Prime Minister was firmly in favour of a national shipbuilding policy when in opposition. At that time it was the Conservatives in government who were dragging their heels.

During the election of 1997 the Liberals trotted out kind words about shipbuilding, but when my colleague for Halifax West raised issues surrounding shipbuilding with the Minister of Industry after the election, his position was against the shipbuilding policy. He admitted that his biggest worry was spending any money to support the industry. Why? Because this could see Canada participating in a subsidy war. Once again we saw our government abandoning our industry to avoid potential trade irritants with our powerful neighbours.

We clearly heard that the government's policy was to allow our shipbuilders to disappear, while other countries like the United States were prepared to protect theirs. The difference seems to be that other countries understand the importance of having a cutting edge shipbuilding industry. Contrary to our government's view that shipbuilding is a sunset industry, other countries understand that shipbuilding is using the most up to date technologies in the world.

Other jurisdictions are not content to rely on the third world for their transport needs as a matter of policy either. Unfortunately, that is the case in Canada. Halifax harbour rarely sees a Canadian built ship with a Canadian crew. We instead see ships like the Maersk Dubai. These are common vessels in our waters, ships with no labour standards and questionable safety and environmental practices. It is shameful that this is the policy of Canada.

Very recently we have seen new developments in the Liberal government's waffling on its shipbuilding policy. We have heard the government leader in the Senate, a newcomer in cabinet but a Liberal hack of the oldest order, say that he wants a shipbuilding policy that not only supports the current shipyards, but which can compete for foreign and domestic business. However, across the cabinet table the Minister of Transport is delivering yet another slap to the face of Canadian shipbuilders. He has chosen to abandon any pretence of having a Canadian first procurement policy. An example is that the Minister of Transport has gone offshore to buy the much needed ferry for Newfoundland to Labrador, while the St. John's shipyard is currently idle. Why is that?

It seems to me that the solution to the problem is obvious. Build the ships here. Create the jobs here. Keep the skills here. Support the communities here. Develop the economy here. Instead, we see the Minister of Transport going offshore to get the ferry. How can we trust anything the government is saying when it behaves like this?

I support this bill, not because it is perfect, but because it moves in the right direction. It recognizes that we need public investment, using all public policy tools, such as government loan guarantees and tax credits to support a national shipbuilding policy. That is why I support the bill.

However, as a country we need to go further than this bill. We need to look at shipbuilding as part of a larger shipping policy. Our policy toward shipbuilding should not just create employment, it should set some terms on that employment. We have to establish some environmental terms for that employment. Shipbuilding and refitting can be a dirty job. It involves a lot of heavy industrial activity. Many of my constituents have expressed concerns about the environmental problems related to activities such as blasting hulls and the use of chemical solvents in refitting ships.

For the sake of our workers and the sake of residents who live near shipyards, we need to have more comprehensive environmental controls and protections for these worksites. They should be regulated and the regulations should be enforced. We need to have fair labour standards in the shipbuilding sector which encourage the democratization of the workplace and better treatment for labour organizations. We need basic social rights to be protected by shipbuilders.

We should be looking beyond this bill to having a national policy that requires international shipbuilders to live with acceptable social, environmental and labour standards if they want to use their products in Canada.

We also need to change our overall shipping policies to allow the enforcement of health, safety and environmental standards on all ships which ply Canadian waters.

We need to use a national shipbuilding policy to encourage other industries to add value to our raw resources and not just ship out the raw goods. I believe we must re-approach our dealings with out trading partners and reject subservient relations with other countries, such as we get from NAFTA and the WTO.

While I support the bill, I will remind the House that the root of our problems in many sectors, such as shipbuilding, comes from our decreased ability to use subsidies and tax incentives to promote domestic economic development. These restrictions are a result of trade agreements put in place by both Tory and Liberal governments which restrict our ability to have a national policy in areas like shipbuilding.

We need a national shipbuilding policy: Dartmouth and Halifax, Nova Scotia; Marystown, Newfoundland; Saint John, New Brunswick; and Lévis, Quebec need it. Canada needs the thousands of family-supporting jobs that a vital shipbuilding industry will create. I hope the government will finally commit to action on a national shipbuilding policy for the sake of all of those communities.

[Elsie Wayne, Progressive Conservative, Saint John, NB]

Mr. Speaker, I thank my hon. colleague from Lévis for his bill. I am so pleased to be able to get up and support his bill and his comments.

I heard some comments about how the Conservative Party, when it was in power, did not do things for the shipbuilding industry. Let me tell the members that the Conservative Party gave the single largest contract in the history of Canada to Quebec and, yes, indeed, to Saint John, New Brunswick, my shipyard. It injected billions and billions of dollars into the economy.

I sit in the House of Commons week after week. I got up in the last session 27 times to ask the Minister of Industry to bring in a national shipbuilding policy to make us equals and competitive. All we ever heard was “We have a national shipbuilding policy right now”. Well, we cannot compete with the national shipbuilding policy that the the Minister of Industry says we have. He should take a look around the world.

I am in favour of the International Monetary Fund helping those countries that are poor and having a difficult time. However, right now money from the International Monetary Fund is going into Korea and Japan to help subsidize shipbuilding. Here we are and we cannot subsidize our shipyards. “No, no, we cannot do that”, says the Minister of Industry.

Back on October 29, 1990, Mr. Holloway, the secretary treasurer of the Marine Workers' Federation, wrote to the now Prime Minister of Canada, when he was seated on the other side in the opposition, asking about the state of shipbuilding in Canada. The the present Prime Minister replied by saying that while the Conservative government may indeed have recognized that there was a problem, because things were winding down in the shipbuilding industry, that it had done absolutely nothing to foster the development of a Canadian merchant marine. He said that it was safe to say that most people recognized that something needed to be done to create a much more competitive shipbuilding industry, and that the government should have, as it should have done long ago and as it had promised to do, taken steps to alleviate this problem.

That was what the Prime Minister said when he was in opposition. Well, he is in government now and he says that there is no problem whatsoever to bring it in. The government has the power to bring it in, but where is it? It has not done anything. The silence from Ottawa is deafening as other jurisdictions continue to announce further support for shipbuilding in their countries. Why are we not seeing the same level of competence and responsiveness from our government?

The Minister of Industry talks about high technology. Shipbuilding is high technology, very high technology. We used to have thousands and thousands of people working in the shipbuilding industry. For every job that was created in the shipbuilding industry, there were two or three other jobs in the community that were created as well. When I am talking about shipbuilding I am talking about a national policy that goes right from Newfoundland to British Columbia. It is not just two shipyards.

Let us look at what happened recently. The United States came in and wanted to buy MIL Davie because it wanted to take over. There is no question United States has invested. We know that and we are worried about it because the United States has the Jones Act and the Jones Act protects the United States.

The United States can do all kinds of things, but we cannot go into the United States and bid on its tenders. We cannot go in and do what Americans can do in Canada. They can come here and bid on our shipyards. They can bid on our contracts. They can do everything because they have protection. We cannot because we do not have that protection in Canada.

Why are we not seeing the same level of confidence and responsiveness from our own government? We want to know why we are not. Highlights of the shipbuilding industry supported by other jurisdictions in the last two to three weeks include the week of November 10 when the United Kingdom announced new support for ship repair whereby two and a quarter of the value of the repair is given as a subsidy.

Norway has increased its subsidy from 7% to 9%. Norway has also stated its intention to provide a special new subsidy to support the building of fishing vessels. Germany has reintroduced subsidies to the level of 9%. Of the 68 shipbuilding nations on the planet today, 67 of them have national shipbuilding policies.

[An hon. member]

Except us.

[Elsie Wayne, Progressive Conservative, Saint John, NB]

Yes, except us. The old OECD agreement was entered into by this country. All countries that built ships entered into it many years ago. The only country adhering to it is which one? Canada. We are the only country adhering to it. That is why we cannot compete. None of the others are adhering to it.

Yes, we hear that the Liberals will be going to the WTO meetings down in Seattle and that this will be a priority. We have heard all that rhetoric before. They do not have to go to the WTO. They can come in here this week and bring in a national shipbuilding policy. There is absolutely no reason in the world for our men and our women who built frigates, which are the best ships to be found anywhere in the world, to have to wait until they go to the WTO.

European countries are so concerned right now with what has been happening with the dollars from the IMF supporting Asian shipyards that they have initiated a court action against the Daewoo shipyard. This Korean shipyard is over $350 million in the red, continues to take orders and build ships below cost and, we have been told, allegedly uses some IMF money which includes Canadian tax dollars.

We need a shipbuilding policy with provisions for an improved export financing and loan guarantee program similar to the title 11 program in the United States. Yes, it took over our sugar refinery. It is taking over our shipbuilding. It is taking over everything, and we are sitting back and letting it happen here in Canada.

There should be an exclusion of the newly constructed ships built in Canadian shipyards from the present Revenue Canada leasing regulations, provisions for a refundable tax credit to Canadian shipowners or shipbuilders that contract to build a ship or contract for conversions with change of mission, mid-life refit or major refit in Canadian shipyards.

We have to say that there should be an elimination of the one sided aspect of NAFTA which allows the U.S. to sell new or used ships duty free in Canada yet absolutely prohibits Canadian access to the U.S. market.

Our newly appointed industry minister in 1993 was given a gloomy report from Ernst & Young on the future of shipbuilding in Canada. The report entitled “International Competitiveness of the Canadian Shipbuilding Industry” was commissioned by the previous Tory government and concluded that the industry was in very serious trouble. That was 1993, and this minister and this Liberal government have done nothing to make Canadian shipbuilding competitive with the international shipbuilding sector in countries that subsidize their shipbuilding.

That 119 page report stated that if the government did nothing to help the industry become more competitive, an estimated 15,000 jobs would be lost by the turn of the century. We only have a month to go. I beg my colleagues over there to take a serious look at what is happening. There are about 25,000 people, some of whom are on welfare and some of whom had to go to the United States to find work.

People have come up from Louisiana to Saint John, New Brunswick, to interview our shipyard workers and said they were the best trained people they have ever interviewed. They offered them jobs down in the United States. We have the most modern shipyards in Quebec, back home in Saint John, New Brunswick, in Newfoundland and right through to Vancouver, and what happens? We have a government that does not care.

I plead tonight like never before for the government to put our people back to work. Let them have their dignity. Let them feed their families. They do not want to be on welfare. They do not want to be on unemployment. We can do that by working together and getting a national shipbuilding policy which makes us competitive.

[The Acting Speaker (Mr. McClelland)]

The time provided for the consideration of Private Members' Business has now expired and the order is dropped to the bottom of the order of precedence on the order paper.

It being 7.36 p.m. the House stands adjourned until tomorrow at 2 p.m. pursuant to Standing Order 24(1).

(The House adjourned at 7.36 p.m.)