Debates of May 3rd, 1999

Supply

[Michel Guimond, Bloc, Beauport—Montmorency—Orléans, QC]

Mr. Speaker, if foreign companies used to come and still come now to MIL Davie to have their ships built or repaired, it is not just to please us. They are not charitable organizations. They do business with our shipyards because of the quality of their work, their efficiency and their productivity.

The CSN workers at MIL Davie have shown some backbone. They put their collective agreement in order. They want to survive and prosper, which is quite legitimate. The hon. member is right to say that in Lauzon and elsewhere in Quebec—let us not forget the shipyard in Les Méchins—we have experienced, competent and motivated shipbuilding workers.

[Bryon Wilfert, Liberal, Oak Ridges, ON]

Mr. Speaker, I would like to begin by indicating again that the government has a shipbuilding policy. In fact the policy being pursued by the government traces its origins to the days when the Progressive Conservative Party formed the Government of Canada. I remind my colleagues across the way of that.

Since then we have done a lot of good for the shipbuilding industry in this country. Some of the good work lies in the support provided by the Export Development Corporation. It is in that area that I would like to address my remarks.

Let me begin by stating that the Export Development Corporation, Canada's official export credit agency, provides Canadian exporters in all sectors a wide range of innovative trade finance services. Canadian exporters and investors look to the EDC to provide creative and responsive financial solutions as they do business in over 200 countries, including high risk and emerging markets.

Founded in 1944 as a crown corporation, the EDC operates as a commercial financial institution on a self-sustaining basis. As the EDC carries out its mandate to be self-sustaining it applies sound commercial principles to all of its transactions. Premiums and fees are charged for insurance and all loans are fully repayable with interest. The EDC reinvests to support future growth in Canadian exports. As the EDC operates along commercial lines, it does not provide subsidies.

As Canada's official export credit agency, with the government of Canada as its stakeholder, the EDC is bound by certain international trade obligations. This includes the OECD's arrangement on guidelines for officially supported export credits. This arrangement, also know as the consensus, has provided disciplines for the orderly use of officially supported export credits since 1979. The arrangement provides participants clear limitations on key terms and conditions when official support is provided, such as maximum repayment terms, minimum interest rates and disciplines on trade related aid.

In certain key areas, such as aircraft and shipbuilding, the consensus agreement has sector understandings in place to provide disciplines that satisfy the special demands of these important industrial sectors.

At present there is a sector understanding on shipbuilding which dates from 1981. The OECD, recognizing the strategic importance of the shipbuilding sector, concluded negotiations in 1994 on a new agreement respecting normal competitive conditions in the commercial shipbuilding and repair industry. As part of this new agreement the sector understanding on export credits for ships was revised to bring it more in line with current market realities.

The revised 1994 sector understanding calls for maximum repayment terms of 12 years for loans and interest rates which reflect market conditions, the commercial interest reference rate of the OECD, and a 20% down payment.

Canada has stated that it will not sign the shipbuilding agreement until such time as it is ratified by all signatories. It will then be clear what final exemptions the U.S. and other signatories will build into the agreement to protect their individual national shipbuilding industries.

The existing OECD guidelines allow us to match foreign financing terms when these are extended to more favourable terms and conditions.

The Government of Canada fully supports efforts by the OECD to move closer to an internationally accepted set of rules that will eliminate unfair financing practices. The EDC will continue to be guided by revised 1994 sector understandings when offering support to Canadian yards for their foreign business transactions.

Moving on to the specifics of EDC support in the shipbuilding sector, I am very pleased to state that the EDC has been providing a tremendous amount of support to the Canadian shipbuilding industry. The EDC tells me that since 1996 it has supported more than $110 million in Canadian trade vessels and in ship repair services provided by Canadian yards. At this time the EDC is developing another $733 million in potential international business on behalf of Canadian yards.

The House should not take my word for it. In the April 26, 1999 edition of the Canadian Sailings magazine the president of the Shipbuilding Association of Canada, Peter Cairns, said in reference to the EDC that it was “a significant step in the right direction in an area where Canada has a lot of expertise”.

There are other enthusiastic supporters of the initiative of the EDC who have raised their comments in support, including Alan Thoms, president of Canadian Shipbuilding & Engineering Ltd. and John T. B. Chard, executive vice-president and chief operating officer of Shipyards in North Vancouver for the Washington Marine Group. These are people in the industry who support the very important role which the EDC plays.

The EDC is organized along sectoral lines so that business teams can provide Canadian exporters with financial services to meet their specific and unique needs. Shipbuilding and repair transactions are handled by the ground transportation and shipping team. This team contains financial service professionals who can structure financial support to meet the complex demands of today's shipbuilding industry.

The EDC can support Canadian shipbuilders with a wide range of financing, guarantees, insurance and bonding products. The EDC actively considers support for Canadian shipbuilding using direct loans, guarantees for debt participants in shipbuilding transactions who are taking a risk with the EDC, bid and performance bonding, specific transaction insurance and leading and participating in structured financial transactions.

There is a market in financing where the EDC has not been able to help Canadian yards. This is the case of a Canadian buyer receiving offers from foreign yards to buy their vessels on terms supported by their national export credit agencies. This has happened on occasion in the past. Unfortunately, since these would be domestic transactions, Canadian yards have not been able to go to the EDC for competitive financing.

An outstanding example of the EDC sectoral approach to supporting Canadian business is its ship repair financing framework. The framework is ideally designed for ship repair transactions which require swift credit decisions for amounts up to $1.5 million U.S. and credit terms of up to 120 days. The EDC purchases the promissory notes issued for the cost of the ship repairs, allowing shipowners to receive financing for up to 80% of the cost of ship repairs, with a fixed interest rate for up to four months, with a straightforward documentation and administration process.

The benefit to the Canadian shipyard is a cash sale upon receipt of the promissory notes by the EDC.

In order to be eligible for this financing, the proposed transactions must involve a shipyard or shipyards operating in Canada, benefits to Canada and the vessels involved must operate on international routes. EDC is also very willing to discuss financial solutions for complete ship overhauls and new construction in Canada.

Before I conclude I would like to make a few comments on U.S. programs that are of great interest to Canadian shipyards. The new OECD shipbuilding agreement which was discussed earlier has still not been ratified by the United States, which continues to offer special longer repayment terms to buyers of U.S. vessels. As an example, under the U.S. MarAd program title XI financing of the U.S. sourced equipment and products, buyers can receive financing support of up to 87.5% of the contract value and repayment terms up to 25 years.

Furthermore, we have discussed in the House today a number of maritime laws known collectively as the Jones act which also impose a variety of limits on foreign participation in the U.S. domestic maritime industry.

Under these laws the carriage of cargo or passengers between points in the United States is restricted to U.S built and U.S. documented vessels owned and operated by U.S. citizens. Similar restrictions apply to dredging, salvage and other commercial marine activities in U.S. waters.

In international shipping there are limitations on foreign ownership of vessels eligible for documentation in the U.S. In addition several subsidies and other support measures are available to operators of U.S. vessels. Cargo preference laws restrict the carriage of military cargo and limit the carriage of government non-military cargo, aid cargo and certain agricultural commodities to U.S. vessels. These and other restrictions coupled with defence related prohibitions of the Byrnes-Tollefson amendment limit Canadian participation in U.S. shipping activities.

The Jones act does not entirely bar foreign shipyards from participating in the U.S. shipbuilding market. For instance, certain types of ships such as research vessels and other offshore platforms may be procured from non-U.S. yards. Foreign yards are allowed to do some repair and overhaul work.

As a result of a commitment made in NAFTA negotiations, virtually its only undertaking in the maritime sector, the U.S. has clarified that work involving the replacement of less than 7.5% of the hull and superstructure of a vessel can be done without forfeiting its Jones act status. Work involved in the replacement of more than 7.5% but less than 10% of the structure of a vessel can be done without forfeiting the U.S. Jones act status, but approval for such work must be obtained in advance. Having fulfilled its NAFTA commitment to clarify the rebuilding determination, there is no expectation at this time that this allowance for repair and overhaul work will be liberalized.

Although Canada and other trading partners have sought to enhance access to the American market in this sector through trade negotiations, the United States has refused to negotiate improvements. At this time there is no viable recourse available to Canada against the Jones act. Legally the United States has safeguarded the Jones act both in NAFTA and the WTO under the present terms and conditions of these agreements. Therefore future trade negotiations may provide an opportunity for change, but even this will be difficult in light of the strong support the Jones act continues to enjoy in the United States.

In the NAFTA and the WTO Canada protected its ability to utilize similar measures with respect to imports from the United States. An initial assessment of the imports of a Jones act type restriction in Canada indicates that such action is likely to impose significant costs on the Canadian economy while at the same time being unlikely to achieve any success in reducing the Jones act restrictions.

Overall I am convinced that EDC financing support has been competitive.

We have studied the issue and where international transactions have been lost other issues have been found to be at play. I am very impressed with the progress that has been made in productivity and modernization improvements in Canada's yards.

However, when other countries choose to subsidize their cost of production, we cannot fault our suppliers for failing to submit a competitive bid. We cannot expect EDC financing to compensate in these situations since we do not have deep enough pockets to fight on those terms.

I conclude my remarks by once again noting the high level of EDC support to the shipbuilding industry. The good news is that the EDC is currently developing $733 million in potential international business on behalf of Canadian shipyards. Members will understand that I cannot go into specifics because of the commercially confidential nature. However, since our industry has made enormous strides in recent years and is competitive internationally, I expect that much of this business pipeline will become firm contracts.

While the EDC is committed to abiding by our international trade obligations, it will continue to aggressively monitor and pursue deviations by other export credit agencies under OECD guidelines. EDC will continue to be an important partner for the Canadian shipbuilding industry in a highly competitive international market.

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

Mr. Speaker, I have a couple of questions on the OECD and the agreement in 1981. I have been led to understand that the only country abiding by the OECD agreement of 1981 is Canada. None of the other countries are abiding by those rules and regulations.

The member said that there was a new agreement in 1994, but it has not been signed by the U.S. We have not signed it either because the U.S. has not signed it. The 1981 agreement still applies. I wonder why the WTO is not dealing with this issue. All the other countries have opted away from that agreement and are doing their own thing. I ask my hon. colleague to address that point.

[Bryon Wilfert, Liberal, Oak Ridges, ON]

Mr. Speaker, I certainly respect my colleague's comments. It is my understanding that in the next round this issue will be dealt with. It is obviously of concern to us and is something that will be dealt with in the next round.

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

When? Do you have a time?

[Bryon Wilfert, Liberal, Oak Ridges, ON]

Mr. Speaker, I am afraid I do not have a time at this point.

[Antoine Dubé, Bloc, Lévis, QC]

Mr. Speaker, I got to know my colleague across the way better during a trip to Taiwan, where our group visited the giant Kao-hsiung shipyards. We could see that they too were experiencing certain difficulties, which leads me to make a point.

We often compare our shipbuilding facilities to those in Asia, but the ones in Canada, in Saint John, Lévis or elsewhere, have developed different areas of expertise than those of Asia, which were designed mainly for building ships in excess of 300,000 tonnes.

We have to take away some of the mystery. Most ships built in Canada have to use the Panama canal, so our dry docks are made for tonnages of 90,000 or less.

Each of Canada's shipyards has an area of specialization, for instance, aluminum ferries in B.C., military vessels in Halifax. Each, therefore, including St. Catharines and Port Weller, has highly specialized and highly advanced equipment. This is not, therefore, where the problem lies.

The problem is raised by the hon. member for Saint John. In my opinion, Canada's attitude can be considered naïve.

On the one hand, we depend on the OECD treaties, while the European countries, seeing that the Americans are not signing them, are adopting interim measures. These include subsidies.

The hon. member also refers to the EDC. That is all very well, but allow me to cite an example. Just recently, a few weeks ago, two years after the arrival of the Spirit of Columbus platform and after Davie Shipbuilding was at risk of closure because of the lack of funding guarantees, the EDC finally came through. The funding guarantees should have been available right from the start.

There are, therefore, certain possibilities, but the mechanisms for evaluation operate far too slowly.

I would like to have the hon. member's reaction to this.

[Bryon Wilfert, Liberal, Oak Ridges, ON]

Mr. Speaker, one of the difficulties is that unfortunately, and I pointed it out in my comments, it is not a level playing field. We know subsidies are being provided by other countries. That explains in part to my colleague across the way why some of the things he pointed out exist. I concur with him.

We saw that, as he mentioned, in Kao-hsiung, Taiwan, where China shipyards clearly have that advantage from the government. We are working as a government with our partners around the world, particularly in the next round, to push for liberalization in the market and to make sure about these types of subsidies.

In December 1997 the OECD reported internationally that there was a substantial overcapacity in terms of shipbuilding, which is estimated will be about 40% by the year 2005. We have to work together. We have to stop the kind of things that put us at a disadvantage.

In this country the EDC is working very hard with our shipbuilding industry to make sure we are very competitive where we can be for contracts in the international field.

[John Herron, Progressive Conservative, Fundy Royal, NB]

Mr. Speaker, I have a couple of comments and questions for my hon. colleague. I am left somewhat confused by his position with respect to shipbuilding. Maybe he can help me work it out.

He is saying that the EDC is actually supplying sufficient support to the shipbuilding industry and that the federal government is essentially doing the best it possibly can with respect to the industry.

Why would a candidate who actually ran in the riding of Lévis in the last election in 1997—I was a candidate and I know, Mr. Speaker, you were a candidate in that same election—make as one of his fundamental planks that we needed to have a new revitalized shipbuilding policy if everything was fine the way it was?

I am even more confused about a particular initiative. I know most Liberals sometimes get things a little mixed up or confused. The enter convention hall of the Liberal Party of Canada indicated as one of its policy initiatives that it was imperative the federal government take progressive steps to establish a new, revitalized shipbuilding policy for the country. They voted on that. The actual wording of the amendment we put forward today is very constructive. The entire Liberal Party of Canada actually voted at its congress to go ahead and do this.

If the candidate, the Liberal Party of Canada membership, the premiers, the shipbuilders association and the shipowners association all say that something has to be done, and labour is on side as well, I would say the member might want to take a look at it again and say that not everybody is happy with the so-called shipbuilding policy he put forward.

[Bryon Wilfert, Liberal, Oak Ridges, ON]

Mr. Speaker, I would point out to the member that we have a motion before us which the Liberal Party of Canada voted on at its convention. I am sure motions often get put forward at Conservative Party conventions.

The purpose of this debate is to inform both the opposition and the country as a whole what the government has been doing. I have been pointing out a number of things which the government has been doing in response to that resolution, whether it is the accelerated capital cost allowance of 33.3% on Canadian built ships or the 25% tariff on most non-NAFTA ship imports. The Export Development Corporation plays a major role. I am sure my hon. colleague was listening when I said that it cannot help a Canadian buyer receiving offers from foreign yards to buy their vessels on terms supported by their national export credit agency.

Let us look at the record. We have a very favourable research and development tax credit system and domestic procurement by the federal government for all government shipbuilding and ship repair needs. The EDC is currently assessing an unprecedented number of shipbuilding proposals which I mentioned in my comments earlier. Obviously, if provinces in this country want to pursue these initiatives they are free to do so.

I pointed out to my colleague earlier the fact that we are building on a policy which has been working well. We did not say it was perfect, but we did say that we are doing something. I want you to keep that in mind.

[The Deputy Speaker]

I am sure the hon. member was addressing his remarks to the Chair.

[Nelson Riis, NDP, Kamloops, BC]

Mr. Speaker, some days this place reminds me of Yuk Yuk's, the stand-up comedy headquarters. We listen to speaker after speaker and sometimes we just have to shake our heads.

When the Liberal Party of Canada votes at its national convention that we have a serious problem with our shipbuilding policy; when we have workers from coast to coast to coast, who know the industry, saying that we have a serious problem with our shipbuilding industry; when the owners and the administrators of the various shipyards are saying that we have a problem and when every expert in the country on shipbuilding is saying we have a problem, we probably have a problem.

People have been standing in the House saying that we do not have a problem because a policy is in place. I would like to issue a challenge to all my friends sitting across the way on the Liberal benches. I would like them to jot down on a piece of paper what they think Canada's shipbuilding policy is. Can anyone imagine the kind of hodgepodge we would come up with?

We would have a few people saying that our R and D credit is one of the best in the world. That is fair enough. Some people would say that some EDC programs are concerned about funding some of our exports. Yes, that is good. Some members would mention the people who are doing very well in a particular yard or agency. However, what is our strategy? What is our policy? What is it that we are trying to accomplish as a country?

Let is look at the records of the other countries that are involved. Let us look at the United States of America which has a policy and articulates clearly what that policy is. All members of the congress, if asked, would indicate what they understand their national shipbuilding policy to be. They would not be 100% correct, but they would at least be in the ballpark.

I again challenge my friends opposite to articulate today what our shipbuilding policy is? The answer would be an embarrassing no. That is nothing new.

We are the second largest country in the world but do we have a transportation policy? No. We are the second largest country in the world with water from coast to coast to coast. We have one of the major reservoirs of freshwater in the world but do we have a water policy? No. We are one of the major trading nations in the world and, historically, always have been. One would think that if there was a single country that had a shipbuilding strategy it would be Canada. Do we have a shipbuilding strategy? No. The answer is no, no, no. We do not have strategies. We do not have policies. We do not have programs and plans because we believe in the liberalization of the marketplace. That is our plan. It is called free trade. We are the free traders of the world. We do not like government encumbrances. We do not like tariffs. We do not like things that are limiting. We do not like the Jones Act in Canada. We are a free trader. We are the global marketplace. We are the free marketplace and that is our mantra. If we do not believe in the free market then we cannot believe in plans. We cannot have strategies. The market is the strategy.

No one else believes that stuff. If there has ever been a collection of boy scouts, we have to be it. Probably, if we looked back at the backgrounds of all of the men and women of the House of Commons, we must have been girl guides and boy scouts at one time because that is how we act. We are really nice people who like to help people around the world. We will just abandon all of our tariffs and everything, but nobody else will. We will just abandon any strategy we have or any support program from the government, but nobody else will.

I give my Liberal friend who just spoke a great deal of credit. He talked about Taiwan. If there is supposed to be a free trading nation it is Taiwan, but it is not a free trading nation. It has huge subsidies in its shipbuilding sector. It has huge infrastructure subsidies. It probably has subsidies in every single sector there is.

The banks and the governments are all involved. One of the reasons Taiwan has done so well compared to other countries is that it actually has a strategy. The banks know what the strategy is, the investors know what the strategy is, the unions know what the strategy is and the managers know what the strategy is. Everybody knows what the strategy is, but not so in Canada.

Canadians were quite hopeful a few years ago, particularly those who were knowledgeable of the shipbuilding sector, because they received a letter from the Prime Minister. It said, “It is safe to say that most people recognize that something has to be done to create a much more competitive shipbuilding industry”. The government should now, as it should have long ago, and indeed as it promised to do, take steps to alleviate the problem.

The people working in a shipyard and receiving a letter like that from the Prime Minister would probably think that once the Prime Minister got into office and got a nice majority government behind him, they would actually see some significant changes such as employment in the shipbuilding sector going up and some long term strategies coming into place. This would be a natural assumption for a voter to assume.

Here we are now, some eight years later, is there a strategy? No.

I always listen to what my Liberal colleague has to say because he actually has some very useful observations. He said there is no level playing field when it comes to the shipbuilding industry. So here we are, the level playing field enthusiasts, playing the game with no other level playing field enthusiast to play with, but we went out there and levelled it all off to the point where we now do not have much of a shipbuilding industry.

This is a very frustrating debate. I want to congratulate my hon. friend from the Progressive Conservative Party for at least bringing the issue forward. I know we have all been listening to the various groups that have come from the various shipbuilding sectors explaining what they felt ought to be done, that we ought to have a clear strategy in place. They do not necessarily want subsidies, but they do want a plan.

What would that plan look like? Most of the shipbuilding initiatives we take, we take either because we are embarrassed into something or it becomes so acute we have to sort of say that we will need to have a fleet of ferries, or we will need to build a whole number of frigates, or we will need to do this or that. It is sort of a last gasp decision.

It would be nice to have a plan in place where we could say to the various shipyards on the coast that we will start building this number of ships over the next 10 years, these kinds of ships over the next 15 years and these kinds of ships over the next 5 years. Every shipyard could then plan and know that some of the government programs would be coming.

[Peter Adams, Liberal, Peterborough, ON]

Is that a five year plan?

[Nelson Riis, NDP, Kamloops, BC]

I am not talking about a five year plan, I am talking about any kind of plan. I would be happy to have some kind of commitment, some kind of plan so that those shipyards would know they are guaranteed this, this and this order in perpetuity and we could then build on top of that with some other supports in place.

If we look at what other countries do, they offer loan guarantees, long term amortization and so on. In other words, there are actual things that we could do to make these shipyards economically and financially viable into the future. That is what we are calling on the government to do, or at least to consider and be open to this.

We have the Jones Act in the United States. I suspect the Jones Act contravenes every free trade concept that exists. If one wants to move material from port to port in the United States, one has to have a ship that is built in the United States with employees from the United States. We understand why it does that. It is good economic policy from the American's point of view. It is certainly not part of any free trade, free market mentality. It is good regional politics and good national economic development. We do not do that. Again, we are the boy scouts of the world. We let the Americans get away with it.

I suspect that most of us have at one time or another toured a shipyard on the coast or in other areas, large and small. I think it is fair to say that Canadian shipbuilders are probably the most creative, productive and efficient in the world. We do not take a second place to anyone. We can compete with anyone as long as we have a level playing field in which to compete. I think the point being made today is that we do not have that. If we had that, we would do exceptionally well. We need a level playing field for our shipbuilding sector.

Recognizing that employment in this industry has plummeted from 12,000 employees in 1990 to less than 5,000 last year represents where the issue is. It is very clearly a declining industry at a time when international trade is expanding, where the need for ships is increasing and where a whole variety of new technology in shipping is becoming more relevant by the day.

Canada and Canadians should be playing a role in the development of this technology and playing a significant leadership role in the development of these new shipping opportunities, but we do not. One of the reasons we do not is because the government of the day, for some mysterious reason that escapes me, is simply unprepared to sit down and draft a long term strategy, a long term plan for this sector.

I know this may sound boring. I have said long term plan about 20 times in my short speech. However, can we have a successful life if we do not plan it? Can we run a successful organization if we do not have any plan? Can we run a successful business if we do not have a business plan? The answer is always no. However, for some reason we believe that we can have a shipbuilding industry without any national plan to it. It is some sort of magic that we just play by ear day each day. Obviously that will not work.

I could say a great deal more about this, but I will simply compliment a number of the comments made by others earlier. People have laid out the case that we need to have a strategy. It makes sense for a trading nation like Canada to have one.

I say, with some regret, that when we look for leadership on the government benches and to the Minister of Finance, who is certainly well known in the shipping business where he does his shipbuilding and where he gets crews for his ships and so on, they do not really provide the kind of leadership that is encouraging to the Canadian shipbuilding industry.

I will conclude my remarks by simply saying that I hope today's debate at least advances the issue and takes it forward another step. Maybe one day soon we will hear an announcement by the Minister of Industry saying that the government plans to bring the stakeholders together to develop, once and for all, a comprehensive, dynamic, national strategy for Canada's shipbuilding sector.

[Antoine Dubé, Bloc, Lévis, QC]

Mr. Speaker, the remarks by my NDP colleague lead me to say the following. He is supporting a motion by the member for Saint John, who is a Progressive Conservative and does not usually think like a member of the NDP and vice versa. On this subject, however, be they from the west, British Columbia, the maritimes or Quebec, the members of the opposition parties are in agreement.

It is a rare thing to have a consensus among all the unions of the various regions of Canada and the members of the Canadian shipbuilders association, which represents the nine biggest shipyards in Canada.

As the NDP often takes stands on the number of jobs or employee rights, I have a question for my colleague. Did he notice, as I did, in thoroughly examining the shipyards issue, that none of the unions involved in shipbuilding, for the past four or five years, can be claimed to be protecting its collective agreements at all cost? Did he see the same thing?

The collective agreements are now very flexible. Workers have agreed to make considerable sacrifices, for example the ones in Lévis and the other shipyards I have visited. Studies show that members of the United Auto Workers, who are in the eastern shipyards especially, have pointed out—and the member for Trois-Rivières did too—that salaries and collective agreements are not the issue. In this case, the workers cannot be blamed for the situation.

I want to know whether the member shares this position, whether he has seen what I have in terms of the effort put out by the workers in Canada's shipyards.

[Nelson Riis, NDP, Kamloops, BC]

Mr. Speaker, first, my hon. friend notes that the New Democrats are agreeing with the Progressive Conservatives on this motion. I suspect that probably everybody in the House basically agrees with the motion. However, because of the nature of our parliamentary system, the government has to be somewhat more hesitant to agree and opposition parties more enthusiastic, but that does not occur on all motions.

I also think it is fair to say that as a classic Progressive Conservative and as a classic social democratic we probably find more in common than we find in difference, unlike our Liberal friends across the way. Quite frankly, I do not know what a Liberal is, but I will simply say that it is not a Conservative or a social democratic and whatever is left over can be Liberal, depending on the nature of the times.

Yes, I agree with my friends. I would challenge my Liberal colleagues opposite to identify anybody who would suggest we should not have a shipbuilding strategy for our country.

[Stan Keyes, Liberal, Hamilton West, ON]

We have one, but not to your liking.

[Nelson Riis, NDP, Kamloops, BC]

My friend says that we have one. We have strategies on everything. However, I do not think anybody knows what this one is. That is the problem. I do not think we could articulate it. I do not think we could sit down and say “This is what our strategy is”.

Let me rephrase that. I do not think we would find a single Canadian who is concerned about the Canadian shipbuilding industry, or certainly knowledgeable about that sector, who would say that we should not at this point bring together the appropriate stakeholders to develop a national strategy which is flexible and includes all of the players, including, as my friend suggested, the various unions. They have indicated a willingness to be flexible even beyond where they have already gone and to do it just seems natural.

I would ask my Liberal friends opposite: Would anybody suggest that we should not do that? I do not think anybody at this time would say that everything is okay. In fact I have not heard people identify many groups in the country which would suggest that we have a shipbuilding policy in place, and certainly one that makes sense.

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

Mr. Speaker, I want to thank my colleague from the NDP for his presentation and his full support.

What is most disturbing to me, and I am probably the most non-political person who sits in the House of Commons, are the letters which the Minister of Industry wrote when he was the industry critic, replying to people who were working in the shipyards. They got in touch with him when he was in opposition and his reply was “Please be assured that the shipbuilding industry is a priority for me as it is for my caucus colleagues”, and he said that they would be doing something about the situation.

A lot of families are breaking up. There were 200 people in my riding who were asked to go to Louisiana, U.S.A., to work. They were told they were the best shipbuilders who had been interviewed from around the world. I am really concerned about what is happening.

I know that our boys back home have sat down with the owners of our shipyard. They have made concessions. They will do whatever is necessary to bring work into the shipyard.

Does my colleague think that we could honestly, all of us collectively, convince our colleagues on the government side that they should agree with and adopt the motion? Then they could come to us and say that they agree there has to be a new shipbuilding policy. They could say that they will take steps to bring intergovernmental affairs, finance and industry together to see what could be worked out. They could take the credit for that. All we want to do is put our people back to work and give them their dignity.

Does my hon. colleague think we could convince them today to do this?

[Nelson Riis, NDP, Kamloops, BC]

Mr. Speaker, I think we could convince our colleagues across the way to do this today. It seems to me to be a very thoughtful proposal.

Perhaps another avenue would be to strike a special task force of members of parliament from the various political parties and bring in the various standing committees on industry, finance and others, as she suggested, to work among ourselves toward the development of a program.

Yes, I think that is possible. I hope as this debate concludes that we all agree to make this a votable motion so that we can support it 100%.

My hon. friend mentioned the letters the Minister of Industry wrote to various people in the shipbuilding industry, saying that if he became minister or the Liberals formed the government they would do something about the shipbuilding industry. People misunderstood that to mean that something would be done to improve it, as opposed to something which would make it more difficult to survive. Perhaps we need to read those letters a bit more carefully and recognize that the minister was saying they did not plan to do much.

The time is right. We all agree that it is time to move forward. I suspect that my hon. friends opposite will be anxious to make this motion votable so that we can do something positive for the country.

[Lynn Myers, Liberal, Waterloo—Wellington, ON]

Mr. Speaker, I first want to say that this is a very important debate. I have listened very closely to all hon. members today talk about this very important industry. It is important that Canadians have the opportunity to hear the points of view of members of the House because, indeed, this is important and something which all Canadians should, and in fact do, take very seriously.

In her motion the hon. member for Saint John refers to Canada's coastline as being the longest in the world, and I think she is correct. I would also add that we have the largest bodies of inland water in the world and, by these measures, we are certainly a maritime nation. I do not think anyone disputes that.

However, it is fair to point out that the hon. member should not equate this geography with a high domestic demand for shipbuilding. It is simply not there. This is a reality for Canada and it is something that we must face. Therefore, for Canada to remain in the shipbuilding industry, we must export. That is the reality of the world in which we live today.

This is an industry for Canadians in which we must succeed in global markets because our domestic market is simply not big enough. International competitiveness is the key to all of this; competitiveness, moreover, that must come at a time when there is substantial overcapacity in shipbuilding around the world. The OECD, for example, predicts that by the year 2005 the overcapacity will reach 40%.

To respond to overcapacity in this country the Canadian shipbuilding sector has already gone through a voluntary industry-led rationalization process. That is important to note because it underscores its commitment to this very important rationalization.

The Government of Canada has contributed $198 million to this process. Through the reorganization and streamlining of its operations over the past decade the Canadian industry has been able to improve its productivity levels. That is something we can all be very proud of.

However, it still faces very tough competition from international markets. That is the kind of world in which we live in the late 1990s, into the year 2000 and beyond. The way to meet that competition is not to go to the government to ask for money from the taxpayers. I think those days are over, as the opposition parties are proposing. Rather, the solution lies in building competitiveness through innovation by offering generous research and development tax credits, for example, and by promoting enabling industries which give Canada-built ships the technological edge. That is where the world of tomorrow is at.

The solution, I would also submit, lies in providing support for export financing through the Export Development Corporation. As we know, the EDC has improved the financing packages available to shipbuilders. The terms of repayment, as has been noted in the House, have been increased from eight to twelve years and interest rates now match the commercial rates that we know.

Finally, I think the solution lies in convincing other countries to stop their wasteful and burdensome subsidies so that all nations can compete on a level playing field. I think that is important too as we move into the 21st century.

We should then negotiate down rather than subsidize up. That is where the world lies.

The Government of Canada is doing this. We should be continuing to do so through the OECD and the World Trade Organization negotiations on shipbuilding. That we will and must continue to do.

I also want to point out that some provincial governments in Canada have taken a different approach. For example, the province of Quebec announced four incentives for shipbuilding in its 1996-97 budget. I will elaborate on those four points. The first is the marine construction loan guarantee program which was included in that budget. The second is an income tax holiday for Quebec sailors assigned to international freighters. The third is a refundable tax credit for shipbuilders. The final incentive is a capital tax reduction for taxpayers who acquire Quebec built ships. Those are significant changes and certainly we note them in parliament.

Some members of the Bloc have argued that the federal tax system undermines some of these measures. That is simply not the case. The record needs to be set straight. The operation of the federal tax system does not cancel or eliminate the benefits of provincial programs which are designed to support particular industries. In general, the federal tax system provides for tax deductions and credits based on the actual amount of costs incurred, net of any provincial assistance. To do otherwise would provide tax deductions or tax credits for costs that a taxpayer has not incurred. We need to note that and we need to understand it fully so that all Canadians know exactly what the case is in this matter.

I would emphasize that the federal government has also supported the shipbuilding industry in Quebec. Between 1986 and 1993, for example, the federal government invested almost $1.6 billion in Davie Industries in the form of contracts, contributions and loan guarantees. As hon. members are aware, Davie Industries is now under the protection of the Bankruptcy Act following the bankruptcy of its owner, Dominion Bridge Corporation. Davie Industries will receive all of the benefits to which it is entitled under the act. Meanwhile, Davie Industries has a contract to modify the Spirit of Columbus oil platform for Brazil. The Export Development Corporation is studying a proposal to supply export financing to support this project.

The Government of Canada has a generous package of measures which, in conjunction with provincial policies and sound industrial practice, benefits shipbuilders. In addition to EDC financing, for example, this package includes an accelerated capital cost allowance and very generous R and D tax credits. It includes a duty on ship imports and domestic procurement for all government shipbuilding and ship repair needs.

I want to emphasize once again, and I know we have heard it throughout the course of this debate, that the government is now and always has been supportive of the shipbuilding industry and will continue to encourage its development. That is, after all, what Canadians want.

The federal government already provides strong support in this area to the industry. It is important to note these points. There is in the form of support an accelerated capital cost allowance of 33.3% for Canadian built ships. There is a 25% tariff on most non-NAFTA ship imports. There is domestic procurement by the federal government for all government shipbuilding and ship repair needs. There is the Export Development Corporation financing for commercially viable transactions. There is a very favourable research and development tax credit system. All of these things underscore our commitment in this very important area.

The shipbuilding industry also has access to the enabling element of technology partnerships Canada. That program supports the private sector through investments sharing both risk and reward.

Our objective as a government in this very important sector is to make sure it is competitive and therefore able to win in international markets without subsidies. That is what all Canadians want. As a result, our policies and programs are working. The Canadian shipbuilding sector is now more streamlined and viable as a result, which is something we can all be proud of.

The global shipbuilding marketplace is restructured. We see that and we know that is happening throughout the world. Labour costs, aggressive pricing practices and shipowner national loyalty are having an impact in this important area, as is the growth of large integrated companies which build ships for their own use.

Government subsidies could be one way to respond to these changes but it would not be a good way. Instead, Canada should be enabling its shipbuilding industry to focus on high productivity, research and development that provides value added components, modernization and innovative marketing. These are important things that we as a government are aggressively pursuing, and rightfully so, on behalf of this important sector.

That is the route we as the government are taking. I hope other members in the House will support that approach by voting down the hon. member's motion. This is the way we need to proceed, the way we need to move into the 21st century. This is the approach that will be in the best interests of Canada and all Canadians wherever they may live in this great country of ours.

[Antoine Dubé, Bloc, Lévis, QC]

Mr. Speaker, before I ask the member for Waterloo—Wellington my question, I would like to make the following comment.

I have been here since the beginning of this debate on the motion by the member for Saint John. The motion repeats word for word a resolution adopted at the federal Liberal Party convention in 1998. I am astonished that, so far, Ontario MPs are the ones speaking on behalf of the Liberal government. There have been no representatives of the maritimes, Quebec or the west coast. Yet they are the ones with shipyards in their ridings.

Another thing perhaps worth pointing out is that all the members with shipyards in their ridings are opposition members. In my riding, I defended the Lévis shipyard with everything I had.

I looked at the electoral map and saw that it was not very hard to find a Liberal in Ontario. With one exception, all the members from Ontario are Liberal. Contrary to the promise it made in 1993, this government did not hold a summit on the future of Canada's shipyards in the year following its election to office. After failing to keep their promise, some well meaning members probably want to do well by the Prime Minister and they are all singing from the same song sheet.

I ask the member for Waterloo—Wellington whether he attended the last convention of the federal Liberal Party, whether he recalls the resolution put forward by the New Brunswick Liberal Association, and whether he voted for or against it. And if he voted in favour, will he show some consistency and vote in favour of the motion by the member for Saint John when it is put to a vote?

[Lynn Myers, Liberal, Waterloo—Wellington, ON]

Mr. Speaker, it is very interesting that the member would want on the record my comments about attending Liberal Party conventions. Let me say categorically through you, Mr. Speaker, that I am very proud to have attended all of them that I can remember since 1965.

Unlike the approach of the Bloc members opposite, we on this side of the House no matter where we live or which ridings we represent in Canada, speak as a government on behalf of all Canadians. While the Bloc members have a parochial view of the country and while they want to divide as opposed to unite, we on this side of the House pull together in a way that is meaningful for Canadians no matter where they live in this great country.

I can tell the Bloc that we over time, not only in the past, will continue to support this very important sector of the economy. Shipbuilding is absolutely crucial to Canada. It is fundamental to out very values not only going back through history but also projecting into the future.

We as a government will continue to maintain that kind of approach in the best interests of this very important sector and in the best interests of Canadians wherever they may live.

[John Herron, Progressive Conservative, Fundy Royal, NB]

Mr. Speaker, I would like to pick up on some of the comments made by my hon. friend and colleague from Lévis.

This is a very serious issue. We need to ensure that we are debating the merits of the initiatives which were put forth by the member for Saint John and seconded by the member for Burin—St. George's. All members from all parties spoke about this issue. I do not think we need to overly attack the intentions of different members. The member from Lévis has worked very hard on advancing this particular file.

The member's comments during his speech were dead on in one regard. The future success of the shipbuilding industry in Canada is through the export sector in addition to domestic repair and new ships which will be built to replace the aging fleets in the Great Lakes. In order to do that, an export financing regime is needed to be competitive.

The Americans have had a regime entitled title IX which they extended in 1985. Previous to 1985 they were not a player in exporting ships internationally. Almost overnight they started to show up on the order book in the United States.

This is something we should be very embarrassed about, but a company in Canada, Secunda Marine, had to make a financial decision on where it could get the best ship at the best price. All it came down to was the financing. The price was competitive but in terms of having access to capital and lease financing that was cost competitive, it made a choice to have a ship built in the United States. Courtesy of what? Courtesy of title IX, the same financial vehicle which we are asking the government to address. That is my first issue. Why do we not actually look at something that works and adopt it?

I have a second question for the hon. member. The membership of the Liberal Party of Canada voted overwhelmingly to adopt the very wording of today's motion. The previous Liberal member who spoke said that there are lots of motions and things that they vote on at conventions, inferring that it does not necessarily mean something is going to happen to them.

I know the membership and the policy initiatives of the Progressive Conservative Party of Canada. I believe Reform speaks to this as well. The membership of the Progressive Conservative Party of Canada owns the principles and policies of our party. It is incumbent on us to follow through with them, to visit them and to bring them to the House of Commons. They are not something out of a feel good group therapy session for our party members. That is what the Liberal Party of Canada obviously feels this to be if the Liberals are going to vote it down.

If I were a member of the Liberal Party of Canada, and thank goodness I am not, I would have voted on issues and policy directives and then have come to Ottawa and voted on a particular initiative actually to find out that they cared less if it passed or not. Are you going to actually respect the membership of your own party?

And what is wrong with adopting a title XI regime?

[The Acting Speaker (Mr. McClelland)]

I remind hon. members to address each other through the Speaker.