Mr. Speaker, the hon. member for Saint John is right to point out that shipbuilding is a long and honourable tradition in Canada. It is an important part of Canada's marine industry.
In 1997 the shipbuilding industry employed 5,400 Canadians and had total revenues of around $625 million. Canada's current strength is in building high quality, relatively small vessels, such as ferries, icebreakers, tug boats, fishing vessels, excursion craft and so on. We are also internationally competitive in commercial ship overhauls and mining platforms.
Many regions of Canada have shipbuilding companies. Activity on the east coast has recently centred on the construction of two container ships, two offshore vessels and tugs, the refit of one oil rig, the manufacture of oil rig components and various commercial repair work. The industry in Quebec has been involved in upgrading one oil rig, constructing tugs and doing ship overhauls and commercial repairs. The Ontario industry is currently active in the reconstruction of three bulk carriers, the conversion of two ships into one self-unloading ship and commercial repairs. The primary construction activity in B.C. has been the three high speed ferries, but the industry is also active in the construction of smaller ferries and in commercial and government ship repairs.
The health of the shipbuilding industry concerns four regions and seven of Canada's ten provinces. The Government of Canada recognizes the importance of the industry. It has a shipbuilding policy that benefits the industry and acknowledges that taxpayers want to stop business subsidies. This policy includes an accelerated capital cost allowance of 33.3% for Canadian shipbuilding. Many other industries would not mind having that type of capital cost allowance write-off. The policy includes a 25% duty on most non-NAFTA ship imports, domestic procurement on a competitive basis for all government shipbuilding and ship repairs, a favourable research and development tax credit system, including the technology partnerships Canada program, as well as Export Development Corporation financing for commercially viable transactions.
Last year, after consulting with the industry, we extended the pay back period for this financing from eight years to twelve years. In fact discussions with the Export Development Corporation continue in that area.
I would also add that one of the major contributions the government makes to the competitiveness of our shipbuilding industry is through the facilities of the National Research Council. In Saint John, NRC's Institute for Marine Dynamics offers R and D programs in ship design and advanced navigation systems, ice structure and wave structure interaction, and innovative concepts in such areas as underwater vehicles and recreational craft.
The federal government is not alone in supporting the shipbuilding industry in this country. Two provinces have come forward with programs to foster shipbuilding in their jurisdictions. Nova Scotia has a shipbuilding loan guarantee program similar to Title XI in the United States. The program consists of loan guarantees up to 87.5% of the buyer loan, with a maximum $80 million to be guaranteed at any time.
Last March Nova Scotia announced that it will provide $47.5 million in loan guarantees to Secunda Marine of Dartmouth for the construction of two supply vessels for the Terra Nova offshore oil project.
The Government of Quebec has also stepped forward with a program for the shipbuilding industry. Quebec will provide a 50% subsidy on the direct labour costs of the first ship built in a series or converted into series. The subsidy may be as high as 20% of the ship costs, with the subsidy decreasing to zero over the first four ships. Quebec has also provided income tax exemptions on the foreign income of Quebec mariners and has reduced the capital tax for owners of new ships operating internationally.
Hon. members opposite have been calling for similar subsidies to be provided by the federal government. I would ask them if they would be prepared to offer similar subsidies to every other industry in Canada that must meet the test of tough international competition. Some say that shipbuilding is an exceptional case because other countries subsidize their industry so heavily. The Bloc in particular wants Canada to match the kind of subsidies provided by European countries and the United States. What it neglects to say is that even if we tried to match these subsidies dollar for dollar there is no guarantee nor even a likelihood that foreign buyers would turn to Canadian ships instead of ships from their own country or region.
The international market for ships is much more complicated than that. It is not just a case of who offers the best price or who puts more of a burden on their taxpayers so they can offer a good price. In the case of the United States, for example, the Jones Act of 1920 prohibits non-U.S. boats from taking part in domestic U.S. commerce.
The Canadian government is participating in the OECD and WTO negotiations to eliminate subsidies and remove the barriers that impede the ability of our shipbuilding companies to compete internationally. We offer generous tax and export support. We are continuing to meet with industry representatives to fine tune the programs now in place and ensure that the industry takes advantage of them. That is a more realistic response to the challenges faced by the Canadian shipbuilding industry than the spend thrift proposals we have heard from the opposition parties to date.