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.