Debates of March 1st, 2007

Opposition Motion—Aerospace Industry

[Dawn Black, NDP, New Westminster—Coquitlam, BC]

Mr. Speaker, I want to ask my colleague, who also sits with me on the defence committee, a question about the issue of the national security exemption, which the government implemented on this contract. It negates the agreement on internal trade that was brought in after the CF-18 contracts left Winnipeg and went to Quebec, and that caused a political firestorm across the country.

Could the member respond to the—

[The Deputy Speaker, Bill Blaikie]

Order, please. I did say resuming debate and then I called the hon. member's name. The time for questions and comments is over. The hon. member has the floor in which she is able to ask rhetorical questions of the hon. member for Bourassa, but he will be unable to answer.

[Dawn Black, NDP, New Westminster—Coquitlam, BC]

I apologize, Mr. Speaker. I thought we were still on questions and comments.

Just a few minutes ago, we were at the Standing Committee on National Defence. We heard testimony from Alan Williams, who was the former assistant deputy minister of National Defence responsible for procurement. We also heard from Douglas Bland, from Queen's University.

At that meeting we were able to adopt, unanimously, a motion to ask the Auditor General to look into some of the issues around the recent procurement. I think most Canadians would appreciate that there is civilian oversight to all of this, but a lot of it is in retrospect and not happening in the way perhaps it should, through a very strong and active defence committee having the opportunity to do that.

It was been clear from the beginning of this procurement process that the government really did know what it wanted to buy before it started the process. For strategic lift, the government wanted the C-17. For tactical lift, it wanted the C-130J. For helicopters, it wanted the Chinook. It was not ready to allow the process to happen as an open and public tender. It used the ACANs, the advance contract award notices, and it used the national security exemption to get out of the agreement on internal trade. That is what I was referring to a few minutes ago.

The agreement on internal trade was meant to take out of the process the politics and the opportunity for political decisions being made about where these contracts would go and have a process that was based more on the industrial benefits for the country as a whole, without the suspicion of political interference taking place.

Canada has good laws available for tendering defence contracts. We are one of the only countries that has a mandatory system for the tendering of defence contracts. However, it is clear that the Conservatives took on this massive spending without thinking clearly about the implications on industry, and they brought in a very rushed process.

There are some key needs for the Canadian Forces now, and I think everybody in this House recognizes that. One of the needs is the fixed-wing search and rescue. Right now Buffalo aircraft, which are 40 years old, are doing search and rescue. When I raised this issue with the Minister of National Defence at our defence committee, he said the process was stalled.

The Government of Canada has been proposing new fixed-wing search and rescue planes for at least 25 years, but both the previous Liberal government and the Conservative government have failed to deliver.

All parties in the House should support new search and rescue. This is a huge issue for Canadians at home. It is a big issue in my province of British Columbia. It is one that neither government, the previous Liberal government nor the Conservative government, has addressed sufficiently.

I have proposed a motion in the House, Motion No. 283, which will allow the House to express its support for new search and rescue planes. Sadly, the Conservatives have not made this part of what they are presenting to the House. Nor have they made Arctic sovereignty a goal of their procurement strategy. That is contrary to all of their election promises in the last election campaign.

The Conservatives had promised that Arctic and Canadian sovereignty would be an important component of everything they did, in terms of defence. Instead the Conservatives have focused on the C-17s, which, as members said earlier today, are American built. Therefore, a big portion of the contract for service and maintenance will go to the U.S.

I have asked this question at committee, but I have never received a satisfactory answer from the government. What will happen when a number of American planes, U.S. air force planes, are lined up for important maintenance and servicing in the U.S., which is where our planes will need to be maintained and serviced? What will happen if six American planes and two Canadian planes are in a lineup for maintenance? Logically thinking, which planes would be serviced first?

I will also talk about the manufacturing situation in the country, despite the kind of rosy picture that has been presented by the Conservative government and even the Liberals. There are some very disturbing trends in today's economy. We are losing a lot of good jobs in key sectors. Through the softwood lumber agreement, another mill went down in my community just within the last month. The loss of these good, family supporting jobs really hurts middle class Canadians.

A report came out today from the Canadian Centre for Policy Alternatives, which shows the prosperity gap is increasing in Canada. Canadian families are working harder and yet the income gap is getting larger. We are told that the rewards of a booming economy are going disproportionately to a select few in Canadian society. This is a very troubling trend. The majority of Canadian families are actually falling behind or simply treading water.

Across Canada, one-quarter of a million manufacturing jobs have been lost since 2002. More than one in ten jobs in the manufacturing sector has been lost due to layoffs, plant closures or the non-replacement of retiring workers. One in three of those jobs was held by a woman. Among the hardest hit was Ontario and Quebec. This is unsettling news for working Canadians because manufacturing jobs pay almost 30% more than the national average.

Despite occasional promises by both Liberal and Conservative governments, Canada has no concrete plans for the auto sector , the aerospace sector or the manufacturing sector. There is no long term R and D or skills training strategy and no blueprint to seize the massive opportunities that are available for the 21st century green economy. This is why the World Economic Forum has Canada falling from 11th place to 16th in global competitiveness.

The World Economic Forum and others have warned us that there is a need for Canadian innovation and more original products and processes. Adding value to existing products and services is something that those of us from British Columbia have talked about and pushed for in terms of our lumber industry and adding value to our logs.

The NDP supports ensuring that procurement stays in Canada where it can create jobs and build up our industries. What we need for the aerospace industry is the same thing we need for large industrial sectors like the auto sector. We need a comprehensive policy that looks ahead to where the industry can grow, one that addresses skills and financial challenges. Canada's aerospace industry did not fall into place without a plan. On the contrary, Canadian aerospace was actively developed through a strategy that included public and private investment and innovation.

There are opportunities in British Columbia for the aerospace industry as well. B.C. has about 10,000 jobs in the aerospace industry, and these are good jobs. These kinds of jobs are family supporting jobs. They allow families to purchase homes and to have a quality standard of life. My colleague from Abbotsford will be familiar with one of these businesses, Cascade Aerospace.

One thing to note is the average industrial wage in British Columbia is $35,000, but in B.C.'s aerospace industry the average industrial wage is $50,000 a year. There are other companies in British Columbia that may be able to supply some of the military aircraft contracts as well, such as ACROHELIPRO Global Services Inc. at Vancouver International Airport and Delta's AVCORP Industries Ltd. and ASCO Aerospace Canada Ltd.

When decisions are made about how these contracts are awarded, I hope the people in charge will look at the country as a whole and that all regions of the country will have an opportunity compete for and perhaps win some of these contracts.

With the skills shortages that are upon us and with Canada slipping in global competitiveness under both the Liberal and the Conservative governments, the time for a comprehensive aeronautic strategy is here. In the past, many Canadian industries were not left to market forces, and there were strategic investments so we could prosper in key sectors.

That is what helped to build the middle class in Canada and to build Canadian prosperity. This is what provided families with jobs so they could support their families and so working Canadians could have some economic security to purchase a home, look after their children and look forward to a retirement with some dignity. The C-17 contract does not give us those benefits. It is effectively a sole source procurement to Boeing and to the U.S. Air Force.

However, we must look at the position of the Bloc Québécois. The Bloc members have been saying for years that they are pushing for a comprehensive aeronautics policy with predictable long term funding covering aspects of the industry. The members of the Bloc have to ask themselves how they are doing that with this motion.

The Bloc has been here since 1990. At times, the Bloc has had nearly 70% of Quebec's seats in the House. It was the official opposition in the House after 1993. The Bloc now has enough seats to keep a minority government in power. It used that power last spring to support the Conservatives' budget, a budget that gave nothing for employment insurance, nothing for Kyoto, only a pamphlet on equalization, and nothing for aerospace.

If the Bloc members were sincere in wanting a comprehensive aeronautics policy, why did they not use their power in this minority government to fight to get one in that last budget? The Bloc could have done what the NDP did in the Liberal minority government to secure overdue funds for cities, international development and the environment, but it did not, and the Bloc members will have to explain that to their voters the next time around.

In 2006, the NDP campaigned on developing industrial sector strategies in sectors such as auto, aerospace, steel, tourism, forestry and shipbuilding. We will continue with this economic vision. We hope other members of the House share our concerns.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Mr. Speaker, I listened with interest to the hon. member's speech. I think that she is disputing the value of the action of the Bloc Québécois because we did vote in favour of last year's budget.

Let us remember that the main issue for Quebec in the last election was the fiscal imbalance. The Conservative government promised to remedy the situation with its budget and it did make some announcements going in the right direction. We will see this year if it delivers on its promise.

As for the protection of the aerospace industry, I was glad to see that the hon. member recognized the efforts made by the Bloc. We did propose policies and asked for intervention. Quebec has been developing its aerospace industry to the point where it has become the leader in that industry in Canada, as Ontario is more of a leader in the auto industry.

Does the hon. member not think that the motion we moved today is very reasonable since it says that the Conservative government should not have given $3.4 billion in contracts for the C-17 and more than $9 billion for the purchase of military equipment without getting any guarantee of spinoffs that would respect the structure of the Canadian aerospace industry?

The government, without assuming any responsibility, will let a private company change that structure on its own. That, in spite of the fact that $9 billion of the taxes paid by Quebeckers and Canadians will be invested in these plans.

Does the hon. member not think that the proposition we made today is very reasonable and that, in the end, if it were adopted, it would allow investments to follow the distribution of the industry in Canada and would do justice to the particular efforts Quebec made in that sector, as that has been done for the auto industry?

[Dawn Black, NDP, New Westminster—Coquitlam, BC]

Mr. Speaker, the New Democratic Party has been on the record for countless years in the House of Commons about an industrial strategy for Canada, a strategy that looks at all regions of Canada, promotes and helps industries in every region of the country to fulfill their potential, and meets the needs of Canadians from coast to coast to coast.

When I referred to the Bloc Québécois supporting the Conservative government in the last budget, my concern was about seeing an opposition party support a government that made no movement on and no commitments in this area of an industrial strategy for Canada. There also was no movement on the environment, nothing, and not even a mention of the word Kyoto in that budget. There was nothing about a comprehensive aerospace industrial program. In fact, there was nothing in that budget about an economic plan for Canada. That is why I was so shocked to see the Bloc Québécois supporting the Conservative government on the last budget.

[John Cannis, Liberal, Scarborough Centre, ON]

Mr. Speaker, I have two questions for the hon. member, who sits with me on the defence committee. I want to put forward the setting before I ask the two questions, one on the C-17 and one on the procurement process.

Mr. Speaker, you will recall, as I know you were in the House, that about three or so years ago Canada's first central command was introduced by the military. At that time, the then Liberal government appropriated about $13.5 billion for the acquisition of new equipment. The policy was put forward by the military. The government then put in its budget the money to acquire this equipment.

The hon. member has served on the committee, which I chaired, and at that time we commenced a process to evaluate our procurement system. We visited and wanted to hear from other countries. It was not that our procurement process was not good. It just needed improvement. Does she not agree that we should have completed this evaluation of procurement processes before the new government commenced procuring?

I will close with my second question, which is on the C-17. I think the hon. member is well aware that there are two proposals, one for leasing, which will eliminate some of the problems mentioned earlier, as opposed to buying. If I understood it correctly, there would be savings of almost half a billion dollars for Canadians. Maybe she can confirm that.

Could the member please comment on those two questions?

[Dawn Black, NDP, New Westminster—Coquitlam, BC]

Mr. Speaker, I want to thank my colleague, who also sits on the defence committee. I know that all of the opposition members on the defence committee share a real frustration that we do not have a defence capabilities plan. It has been talked about by the defence minister and others who speak for the government, but it just has not come forward. We cannot figure out what the delay is and why it is not coming forward. There must be something going on within cabinet where there is a competition around what eventually will be in that document.

One of my biggest concerns, which I have mentioned at defence committee, is the whole issue of the national security exemption being invoked on this contract, because it then leaves open the opportunity for, if not the reality of politics entering into the equation of how the contracts are awarded, certainly the appearance that it could be possible. We have in Canada an agreement on internal trade that was developed after a past fiasco when Canadians, or certainly western Canadians, became outraged when the CF-18 contract was not awarded to Winnipeg, which put in the lowest bid.

I share the member's concerns around that. I cannot speak specifically to what happened on the committee before I was a member. I do not have access to the memory that the member has, who has served on the committee much longer than I have.

I certainly hope that when we finish our study on procurement we will come to an agreement in committee, with some very hard and clear recommendations to government on defence procurement.

[Robert Vincent, Bloc, Shefford, QC]

Mr. Speaker, I would like to share my time with the member for Saint-Bruno—Saint-Hubert.

First, Quebec is not asking for a handout. The only thing it wants is its fair share. Quebec's aerospace industry represents, depending on the year, between 55% and 60% of Canadian aerospace industry. It would be only natural for it to receive its fair share of aerospace spinoffs from federal contracts. Its fair share is between 55% and 60% of total spinoffs. The Minister of Industry speaks nonsense. He says that government contracts are not like private ones. Does he not know that a government contract is not a private contract? The minister goes so far as to say that requiring spinoffs for Quebec would be like patronage. We must believe it, we must also see it, and we saw it. We are only asking him one thing: to ensure that Quebec's industry gets its fair share. This is his job as the Minister of Industry.

Quebec's aerospace industry is asking him the same thing, as well as Quebec's chamber of commerce and large labour unions, that is everyone, except perhaps Mr. Charest, who is willing to bend over and to get on his knees in front of the Conservative government. For our part, we will stand up.

The government could have imposed all the conditions it wanted. Since defence procurement is excluded from trade agreements, it can do what it wants. However, it did not specify that there be spinoffs for Quebec. Ottawa is weakening the only real Canadian aerospace centre in Canada. This decision means putting at a disadvantage Quebec industries that, instead of all being integrated into the American industry, are excellent, I repeat, excellent enough to measure up to competitors all over the world and to create centres of aerospace development at home. For a Minister of Industry from Quebec to approve such a bad decision for Quebec is shameful and unacceptable.

There will be 18,500 fewer job-years in Quebec because of the Conservatives. The purchase of the C-17 planes from Boeing, Chinook helicopters from Boeing, Hercules planes and C130Js from the American company Lockheed Martin totals $13 billion, including the maintenance contracts. The spinoffs in Canada should come to at least $9.2 billion. The Conservative government will therefore be directly responsible for the loss of 18,500 job-years in Quebec, the equivalent of 1,850 jobs over 10 years.

At the same time, I believe the Conservative government is turning its back on industry in every shape and form. We need only think of the textile industry, softwood lumber, furniture, and now it will be aerospace. By countenancing this kind of horror, to please their bosses in English Canada, the Conservative members from Quebec have fallen to a new low. By weakening the Quebec aerospace industry, the government is striking at the jewel in the crown of our economy. Aerospace in Quebec means 250 companies, 240 of which are SMEs, whose production is over $11 billion, 89% of which is for export.

Where I come from, in my riding, there are aerospace companies. In my riding, I have Air-Terre Équipement, Automatech Industrielle, Machine-Outils Henri Liné, Placage Granby, Produits intégrés Avior Inc., in Granby, and SIDO. Those companies should be getting economic spinoffs from these contracts, but they are really not sure this is going to happen.

Not only are they not supporting our industry today, the Conservatives are hurting its future too. The Bloc Québécois has long been calling for a real federal aerospace policy. In addition to the usual tax incentives, that policy must have the following objectives: a clear and predictable program to support research and development, a firm and predictable commitment to financing sales, particularly export sales; a policy to support aerospace SMEs; and a military procurement policy that encourages industry expansion.

The Conservative government can keep telling us that the Bloc Québécois can do nothing, but I can say one thing: when the time comes to put forward suggestions and plans, we are right there doing it.

That is when the Conservatives take our plans and ideas and put them to work. Then they realize that the Bloc Québécois does have some influence here, with the government, because it has the right ideas.

Let us talk about the Conservatives' military procurement. In June 2006, the Minister of National Defence, a former lobbyist for military manufacturers, announced the federal government's intention to increase defence equipment procurement by $17.1 billion in order to implement his "Canada First" defence plan.

The aerospace component of the "Canada First" project announced came to $13 billion: $7 billion to procure new aircraft, planes and helicopters, and $6 billion for in-service support and maintenance over 20 years.

The three aerospace procurement programs are: $1.2 billion to purchase four new Boeing C-17 heavy tactical transport planes, plus $2.2 billion for service and maintenance over 20 years. The total comes to $3.4 billion. There is also $3.2 billion to purchase new tactical airlift aircraft, of which the government might buy 17, plus $1.7 billion for in-service support and maintenance over 20 years. The plane that is preferred for this contract is the Hercules C-130J made by the American company Lockheed Martin, for a total of $4.9 billion. There is $2 billion to purchase 15 new Boeing Chinook medium to heavy lift transport helicopters, plus $2.7 billion for support over 20 years. All of that comes to a total of $13 billion.

None of these aircraft has been or will be built in Canada. The search and rescue helicopters were, at least in part, developed in Canada, but no purchase has been announced.

The expression "maximum economic spinoffs" means that the prime contractor must spend an equivalent amount in the Canadian economy, either in purchases or in investments, for each dollar received from the government, but not necessarily in the aerospace industry.

According to the contract, Boeing was to purchase or invest for a total of $3.4 billion, or the equivalent of the value of the contract, while complying with the following conditions: half of the spinoffs to be in aerospace and defence; 30% in technology-related areas, and 15% of spin-off generating contracts to small and medium sized businesses.

There is no specification whatsoever in the contract about the geographical distribution of these spinoffs. Boeing will purchase or invest where it pleases. The aircraft will be built and repaired in the U.S. Direct spinoffs from the contract will, therefore, be more or less non-existent. So will indirect spinoffs.

If, as one might well expect, Boeing depends on its existing supply chain, Quebec should get between 25% and 30% of the spinoff. Boeing has two western affiliates, in Manitoba and British Columbia, and its main suppliers are in Ontario, first and foremost a Mississauga company by the name of Magellan. And this when the aerospace industry in Quebec accounts for between 55% and 60% of the aerospace industry in Canada.

As for the loss of 18,500 jobs, had Quebec got 60% of the spinoffs, the contracts would have generated 37,000 jobs in Quebec. Since Quebec will instead likely see a mere 30%, the contracts will generate only 18,500 jobs annually.

I would like to give an overview of the aerospace industry, but since you are signaling that I have just one minute left, I will try to pick out the salient points I wanted to mention.

In connection with the military equipment procurement policy, the Bloc Québécois is calling for a new policy to be adopted which would comprise the following: give priority to Canadian suppliers; when a Canadian supplier is not in a position to provide the item in question, ensure that foreign contracts awarded generate worthwhile, positive spinoffs in Canada; ensure a fair distribution of spinoffs, i.e. in such a way as to respect the geographical distribution of the industry.

In closing, I would like to thank the hon. member for Montmagny—L'Islet—Kamouraska—Rivière-du-Loup and read the motion he has presented to us:

That the House denounce the laisser-faire attitude of the government that prevailed in its negotiations with Boeing, regret the fact that Quebec did not get its fair share of the economic spin-offs of this contract given the significance of its aeronautics industry, nearly 60%, and call on the government to provide fair regional distribution of economic spin-offs for all future contracts.

[Laurie Hawn, Conservative, Edmonton Centre, AB]

Mr. Speaker, I thank my colleague for his speech.

First of all, I must say that C-130s and C-17s are like apples and oranges. In my experience, the aerospace industry in Quebec is strong and capable. I have often used its products in the past.

Does my colleague from the Bloc think that Quebec companies are not able to hold their own in the marketplace? Do we have to stop competition between companies in all regions of Canada, including Quebec? I think that Quebec workers would be insulted if that was the opinion of my colleague and of the Bloc.

[Robert Vincent, Bloc, Shefford, QC]

Mr. Speaker, I believe that Quebec's aerospace and aircraft industry can hold its own. Quebec ranks fifth in the world and is second to none. Let us not grant contracts to foreign companies when we, in Quebec, can do the job.

It the member across the way wants to ask more questions, I think we can give him the answers he seeks, that is not a problem.

[Alan Tonks, Liberal, York South—Weston, ON]

Mr. Speaker, I am sure the House is very aware how important it is for there to be economic value added that is equitably distributed, especially when there are procurement contracts in the magnitude of the contract with Boeing that has been alluded to in the House today.

The member talked about the maximum economic benefits and the difficulty in applying an equitable formula across the country. He cited Ontario where one firm, Magellan in Mississauga, is a prime beneficiary of this contract.

The legislative amendment the member has proposed does not really come to grips with the very difficult issue of what constitutes equity, what is the formula with respect to equity. I am sure that the people who work at the plant in Mississauga would feel that the small portion that the plant is getting is part of that equitable return that they have a right to expect.

I would ask the member how the legislation could be amended further to be more specific with respect to how to apply this concept of equity with respect to maximum economic benefits such that all taxpayers get a fair shake on these kinds of government contracts?

[Robert Vincent, Bloc, Shefford, QC]

Mr. Speaker, it is simple. In the motion, we are already asking for 60% in Quebec. We can use the percentage of the production for each province or territory. If Quebec has 60% of the production, it should get 60% of the benefits. This is not just an approximate figure. There are 250 aerospace companies in Quebec. That is not one or two, but 250 businesses, of which 240 are small and medium-sized businesses with over $11 billion in sales. This is big money.

Consequently, to be equitable, it must be according to the percentage of production in each province and territory. For Quebec that percentage is between 55% and 60%. I hope that answers the member's question.

[Laurie Hawn, Conservative, Edmonton Centre, AB]

Mr. Speaker, my friend keeps saying that 60% of the benefits come from Quebec and therefore, 60% of the benefits should be in Quebec. If 30% of the business was in Quebec right now and 60% was in British Columbia and there was a very strong start-up capable company in the province of Quebec, should that company be excluded from participating in contracts like this just because he thinks there is some artificial magic to the figure of 60% that may or may not in fact be true?

[Robert Vincent, Bloc, Shefford, QC]

Mr. Speaker, I would ask the member to check his allegations before saying such things. We know that it is 60%. We are therefore not budging and we will not bow down before the Conservative government, as other governments in Quebec are doing. We will stand up for ourselves. We are asking for 60%, we are sticking to it, and we will not move an inch on this issue.

Now, he asked another question: how will we ensure that this is distributed equitably? The other provinces may have something different to say. We cannot stick our heads in the sand. The automobile industry is in Ontario, and you do not hear us complaining like this. The automobile industry is there, and all the money from Ottawa goes to Ontario.

For years, we have been saying that the bulk of the aerospace industry is in Quebec. So, we would like our fair share in Quebec.

Another thing. Let it not be forgotten that we represent 25% of the population. So who is paying for one quarter of this $13 billion contract?

[Carole Lavallée, Bloc, Saint-Bruno—Saint-Hubert, QC]

Mr. Speaker, my colleagues provided a brilliant account this morning of the importance of the aerospace industry to Quebec and the spinoffs we should be getting. They mentioned 55% to 60%. I am going to show the hon. member who just asked the question that it really is between 55% and 60%.

We said that the aerospace industry plays a major role in Quebec’s economy. That is true as well of the South Shore, where my riding of Saint-Bruno—Saint-Hubert is located. I would even say that the aerospace industry is without a doubt one of the strongest sectors in the South Shore’s economy. Longueuil Economic Development has done an excellent study of this, and I would like to share a bit of it with the House.

The pre-existing infrastructure in the South Shore, the concentration of world class companies and the tax incentives for research and development help attract new investors to the South Shore every year. Montreal’s South Shore is also an export powerhouse.

Among the lead aerospace companies, we have Pratt & Whitney Canada, Héroux-Devtech and the Canadian Space Agency in Saint-Hubert. Unfortunately, this federal government has been reducing its contribution to the space agency’s research year after year, in contrast to the other G-8 countries. There is also the Lemex Group. These companies all help to make the aerospace industry a pacesetter in greater Montreal.

The Montreal area is the only place in the world where, within a radius of 30 km or 19 miles, the main components of an airplane are all available. The Montreal area is the second largest aerospace centre in the world, after Seattle but ahead of Toulouse. It has a matchless concentration of companies that are leaders in their field—I already mentioned Pratt & Whitney Canada, Bombardier Aeronautics, the Space Agency, Bell Helicopter—and are supported by 10 research centres. The aerospace industry in greater Montreal employs 37,000 people, numbers more than 240 companies, generates more than $10 billion in annual revenues, and accounts for between 55% and 60% of the Canadian market. One job in six in the Montreal area is connected to the aerospace industry.

In six years, this sector’s sales have increased by more than 80%. More than 80% of its production is exported and it invests more than $700 million annually in research and development in Quebec.

In my riding of Saint-Bruno—Saint-Hubert, which is almost in the middle of the South Shore, many aerospace companies are to be found. There are about ten subcontractors as well as major companies. My riding even includes the Saint-Hubert airport, which I will talk about later, the Canadian Space Agency, which I mentioned, as well as the École nationale d'aérotechnique, a very important college in the aerospace industry.

The following businesses are in my riding: Aéro Teknik, Amphenol Air LB North America, Avtech, Beel Technologies, Brechbuhl, Lemex, Marinvent Corporation, Netur Usinage and Tecnar Automation. These are extremely important businesses and subcontractors with a few hundred employees. Officially, these nine businesses have 175 employees in all, but we also know that many men and women in the South Shore work for large companies. Thousands work for Pratt & Whitney, for Héroux-Devtech and also at the Canadian Space Agency. They have quality jobs—the average salary being $60,000—and they expect to keep these jobs in the years to come. Just talk to Camille Larochelle, for example, from the aerospace workers union. He has a lot to say about this.

Not only are the South Shore, the greater Montreal area and the province of Quebec in need of spinoffs from the purchases this government is making and from the purchases of the C-17 from Boeing, they also have other needs regarding the airport. Not only is the government unable to manage the conditions of a $3.4 billion contract, it cannot meet quickly and easily a very simple request from the people in charge of development at the Saint-Hubert—Longueuil airport, the DASH-L group, who need additional money and important subsidies to repair and lengthen the airstrip. We know that this work, which would cost $70 million, would enable a large aerospace industry, Pratt & Whitney, to continue testing its engines in Saint-Hubert, just as it has done for the past 75 years.

Pratt & Whitney has delivered 55,000 engines to its clients in some 190 countries over the past 75 years.

We know that the competition from other countries is very strong and very keen. The large foreign companies are supported by their governments. It is not just a financial matter. This is the future of our industry, and especially the future of our workers.

The Bloc Québécois wants a real aerospace policy. Let us stop this piecemeal management, with a bit here and bit there, a little contract with Boeing for a few billion dollars with no conditions negotiated. It does not make any sense. No one here would pay billions of dollars for something without setting any conditions.

In the fall of 2004, Bombardier, Pratt & Whitney and Bell Helicopter expressed their intention to invest large amounts in research and development to launch some large-scale projects. In all three cases, the lack of a clear federal policy resulted in long and painful negotiations.

Since 2002, the Bloc has been asking the government to establish an aerospace policy that would provide the companies with reliable and predictable support thus enabling them to plan their development projects ahead. Faced with the federal lack of interest, the Bloc even submitted its own policy, which was very well received by the industry.

In the fall of 2005, exasperated by repeated pressure from the Bloc Québécois, the Liberal government presented a list of standards that it would take into account in the development of an eventual aerospace policy. It must also be said that we were on the eve of an election campaign. The policy never materialized and the Liberal government was not re-elected. Through sheer tenacity, the Bloc finally convinced the Liberals that such a policy was necessary after they denied it for years.

The Bloc will continue to push this file in order to get the Conservatives to bend. The Conservatives are doing Quebec a lot of damage with their denial of the reality of this vital sector for Quebec.

A real aerospace support policy would include the following: support for research and development, the restoration of a real technological partnership plan, financing of sales contracts, support and, finally, a policy on the procurement of military equipment.

With regard to support for research and development, the Government of Quebec has succeeded in creating an environment favourable to the development of the aerospace industry. In Quebec there are close to 40 training programs aimed at the aerospace industry—graduate degree programs—that provide the industry with quality employees.

Moreover, the government offers investment support and generous tax credits which reduce the cost of doing research and make Quebec attractive for high technology companies.

The federal government also offers tax incentives for research and development. Nonetheless, federal funding for research is clearly insufficient.

Federal support for research and development in the aerospace industry is vital because the industry in Quebec and Canada is competing with Boeing, Airbus and Embraer, which can all count on their respective governments for support.

In OECD countries, spending on research and development averages 2.3% of GDP. Among G-7 countries, the average is about 2.5% of GDP. In Canada, spending on research and development is stagnating at 2% of GDP. Canada is falling behind.

Quebec is doing well, spending considerably more on research and development than the average of industrialized countries, in spite of the paltry support it gets from Ottawa. Indeed, federal dollars account for only 15% of the funding for research done in Quebec, which is less than anywhere else in Canada. Quebec's successes are attributable to Quebec's efforts, despite the obstacles Ottawa is putting in its way.

In concluding, I will summarize in one sentence the policy proposed by the Bloc for the aerospace industry: the aerospace industry has to be for Quebec what the auto industry is for Ontario.

[Laurie Hawn, Conservative, Edmonton Centre, AB]

Mr. Speaker, my colleague had some good points about R and D in her speech. I hope the people at CAE will not feel left out, though, because she did not mention them, since they are the largest simulator company in the world.

I would like to ask a question about fairness. The Bloc members are hung up on the 60% number and that is their prerogative. I suppose that would mean they would also be hung up on 40% of the rest of the aerospace being outside Quebec.

If a company started up in Quebec to make a better whatever for the aerospace industry but it meant it would potentially win a contract from a company in Ontario and Quebec would get 65% instead of 60%, would the hon. member consider that fair or would she think that the people in Ontario would have an equal right to cry foul in that case?

Should business not be given to companies that are the most capable, in the best position to earn the business regardless of where they are located in Canada?

[Carole Lavallée, Bloc, Saint-Bruno—Saint-Hubert, QC]

Mr. Speaker, we know that the Conservative government has a laissez-faire, "survival of the fittest" attitude, and as such it is not fulfilling its responsibilities. A responsible government must see to the economic development of each of the parties.

You of course know the intentions of the Bloc Québécois regarding the federal government. If we had purchased those C-17s, we would have purchased them as we saw fit, and would have made sure that all Quebeckers profited.

However, let us go back to this 60% that seems to be getting my Conservative colleague rather excited. All I can do is repeat the figures and ask him to give me his figures to explain why it is not 60%.

In my view, the greater Montreal aerospace industry employs 37,000 people, in more than 240 companies, generates annual revenues of more than $10 billion, and represents 55% to 60% of the Canadian market. One out of every six jobs in the Montreal area is connected with the aerospace industry.

I would ask my colleague to give me the figures that support his 40%.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

First, Mr. Speaker, I would like to congratulate my colleague for the excellent speech she delivered earlier on the Bloc's motion regarding the future of the aerospace industry in Quebec and the lack of will of the Conservative government in the attribution of contracts.

I would remind her that in my riding of Saint-Maurice—Champlain, the current economic situation is extremely weakened by all the forest industry problems, of which we have not seen the end yet. For several years now, there has been a diversification of the regional economy in the form of subcontracting businesses in the aerospace sector.

Citizens have been asking me for a while now how it is that the current government does not intend to support Quebec's aerospace industry, knowing that there could be economic spinoffs, the same way it has supported and is still supporting the automobile industry in Ontario. Why is it that we are not able to benefit from the support that other regions of Canada have benefited from? Now should be the time for us to benefit from some sort of support, because this lack of will from the Conservative government could jeopardize the survival of those businesses.

Could my colleague tell me what answer I can give to my constituents about the economic future of my region?

[Carole Lavallée, Bloc, Saint-Bruno—Saint-Hubert, QC]

Mr. Speaker, it is quite clear the Conservative government wants to keep or share outside Quebec the spinoffs from its $3.4 billion purchase from Boeing.

In view of what is there to see and everything the government does, we have to realize that even if it is trying to woo Quebeckers into voting for the Conservatives, when real things happen, in crucial moments when it should contribute to the economic development of Quebec, it is not by the side of Quebeckers. Instead, it tries to share the spinoffs with the rest of Canada.

To conclude, I sympathize a great deal with the forest industry workers and people in the Saint-Maurice—Champlain area who do not have their share of spinoffs from government contracts. Even in the forest industry, the government does not grant them their fair share.

Nonetheless, I think this government—

[The Acting Speaker, Andrew Scheer]

The hon. Secretary of State for Agriculture has the floor.

[Christian Paradis, Conservative, Secretary of State (Agriculture)]

Mr. Speaker, I am pleased to have this opportunity to speak about the many stringent conditions this government set with Boeing for the purchase of strategic airlift planes.

The motion suggests the government was soft on Boeing during the negotiations. Nothing could be farther from the truth. Economic spinoffs must be high quality and involve high technology. Here are a few examples of acceptable projects: the production of mission avionics for helicopters; the installation of radars and other electronic material in fighter planes; the production of composite high-tech parts for large commercial planes; the establishment of a research and development centre; or investments in Canadian universities for research in aerospace engineering.

But if a company wants to buy raw materials like steel or iron ore, trade wheat, foodstuff or farm products, or goods and services with a low technological content, these proposals would be refused.

Once a company has prepared a proposal for high quality and high technology industrial benefits, that proposal is evaluated according to three strict criteria. First, the work must be generated by the procurement program. Second, the work must be carried out during the period defined in the contract. Third, the work must comply with the growth principle, which is that existing business relationships may be used, but only the new work will count toward meeting the obligation.

Industry Canada then insists that the spinoffs be truly Canadian. To determine this, the department examines the precise value of the Canadian content of the transactions between the principal suppliers and the Canadian suppliers. In other words, officials examine the precise quantity of materials or work from Canadian sources that a transaction involves and award it points.

Consequently, if a contractor buys a product from a Canadian company and the product is entirely manufactured in Canada, it receives full points for that factor. However, if 60% of the product is manufactured in Canada, it will be awarded only 60% of the points assigned for that factor. That also means that the total value of contracts with Canadian companies often exceeds the amount that the government pays the principal supplier. Canadian companies receive that income, and the Canadian economy automatically benefits.

As well, half of Boeing's transactions in relation to industrial spinoffs must be in the aerospace and defence sector. Boeing operates primarily in the aerospace and defence industry, and so a majority of its activities in Canada should be in that industry. However, by imposing that minimum, the government has left the door open for other high technology industries. Boeing must also allocate 30% of its industrial benefits contracts to key technologies, as set out in the list drawn up for that purpose.

The list of key technologies was developed in collaboration with the industry. It sets out the nine main priorities for technologies that will help to preserve and expand the aerospace and defence industry, while ensuring its long-term sustainability. The list includes the following technologies: advanced manufacturing and emerging materials; avionics and missions systems; communications and control; propulsion and power management; security and protection; sensors; simulation, training and synthetic environment; space; and unmanned vehicle systems. Boeing has already identified a number of transactions that meet the requirements of the key technologies list. The company will be undertaking major projects that use technologies relating to composite materials, simulation and training, communications and control, and space.

Finally, 15% of Boeing's industrial benefits contracts must be awarded to small and medium sized businesses. These are vital to ensuring the growth and viability of the aerospace and defence sector and of the economy as a whole. These have proven their lead role in economic growth models. Boeing is a huge company with multiple divisions and it is often hard for small businesses to make a place for themselves in Boeing's supply chain. This is why it is important to ensure that these businesses will also be able to take advantage of this opportunity.

To date, the industrial benefits relating to the strategic airlift project have been solid in all these sectors and show promise as far as potential long term impact on the Canadian economy is concerned. Through Industry Canada, the new government of Canada places strong emphasis on the importance of Canada-wide participation and showcasing the skills of Canadian companies. Our government is making every effort to ensure that international corporations are aware of the scope of Canadian industry and of its many and varied assets.

Industry Canada officials will be working closely with the regional development agencies, that is the Atlantic Canada Opportunities Agency, Western Economic Diversification and the Economic Development Agency of Canada for the Regions of Quebec. Together they will seek out Canadian businesses with a potential interest in the opportunities available.

In addition, departmental officials will work directly with Canadian businesses throughout Canada in order to draw attention to existing opportunities and to help companies interested in obtaining contracts, in order to underscore the importance of Canada-wide participation and to showcase these companies' abilities.

We also make it very clear to potential bidders that they are expected to work with companies throughout Canada. Boeing, for example, held four sessions with regional industries, one in each region of Canada. The one in the Atlantic region was held on September 7 and 8, 2006 in conjunction with the Halifax air show. They were in Calgary for the western region on October 3 and 4, 2006, in Montreal for the Quebec region on October 24 and 25, 2006, and in Toronto for the Ontario region on November 7 and 8, 2006. Boeing was thus able to meet hundreds of Canadian businesses and to gauge the strengths and abilities of companies all over the country. Boeing has undertaken to work with Canadian businesses in order to achieve 100% industrial benefits. This will be achieved through logical business relations leading to real markets and the forging of lasting and viable partnerships.

The spinoffs in Canada are serious contract obligations. Industry Canada requires annual reports, audits and performance guarantees. Each year, contractors must report on what they have accomplished in that respect. Financial penalties can even be applied in case of a failure to comply, but until now, it has never been necessary to impose such penalties.

I would like to sum up the strict requirements which I just described. Boeing must ensure that there are high quality spinoffs worth 100% of the eventual contract value. The company musk work with businesses throughout Canada, including Quebec. At least 50% of the spinoffs must be for the aerospace and defence industry, at least 30% for the nine key technologies identified by the aerospace and defence industry and at least 15% for small and medium sized businesses. The value of the spinoffs in Canada must equal 100% of the contract value.

The work must come from the acquisition program. It must be performed during the period defined in the contract. It must be in agreement with the principle of growth. Existing business relationships may be used, but only new work counts in assessing compliance with the obligation. These are rigorous conditions which define a serious contract obligation.

The government is very serious about its responsibility to negotiate firmly with potential suppliers and to obtain optimal spinoffs for all of Canada. The government has respected its obligations.

I will stop here in order to be able the share my time with the member for Beauport—Limoilou.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Mr. Speaker, I listened to my colleague outline the conditions imposed on Boeing, the 30% of spinoffs, etc. I am very shocked that, as a member from Quebec, he was not upset by the fact that there was no obligation to respect the distribution throughout Canada. Currently, more than 60% of aerospace benefits are in Quebec, and Boeing's main subcontractors, and the main people with whom it has contracts are outside of Quebec. Does the member not know that the federal government, which is giving out $9 billion in contracts, could have set a condition that the current distribution be respected for Quebec? As a member from Quebec, will he stand in this House and vote in favour of the Bloc Québécois motion when the time comes?

[Christian Paradis, Conservative, Mégantic—L'Érable, QC]

Mr. Speaker, we have here some good news, on which the Bloc Québécois is trying once again to put a negative spin. We have to understand that there have been 13 years of Liberal negligence with the complicity of the Bloc Québécois. To illustrate this, I would say that the Liberals and the Bloc were satisfied our troops were going off to fight with slingshots. Now, we are allowing them to have access to adequate weaponry and technology. Today, we have 100% Canadian spinoffs, which was not the case before.

Then, the Bloc Québécois was against the softwood lumber agreement. Unions and the Quebec government said that it had to be passed, so the Bloc Québécois flip-flopped. Better still, let us talk about supply management. I read this morning a press release from the member for Richmond—Arthabaska saying that the Minister of International Trade was not clear on this issue. According to Laurent Pellerin, the president of the UPA, this is the most meaningful action that the federal government has taken for supply management in 15 years. When will the Bloc Québécois face reality and finally admit that there is a government that is working at the federal level in Quebec's interests?

[Alan Tonks, Liberal, York South—Weston, ON]

Mr. Speaker, my question for the minister is similar to the one I asked the Bloc.

The intent of the motion is to make sure there is an equitable distribution of value added coming out of the contract. I think we all agree that right across the country there can be a tremendous impact on small and medium size businesses, on their operations and creating jobs and employment activity. It is really important that those percentages to which the member alluded are implemented through the contract.

What checks and balances are there to follow up in an auditing fashion to make sure that the government's intent for procurement is equally distributed according to those percentages that the government intends to see implemented? Could the minister give us a sense of what the follow-up will be to make sure there is value added equitably right across the country, especially to small and medium business?

[Christian Paradis, Conservative, Mégantic—L'Érable, QC]

Mr. Speaker, I thank my colleague for his question.

Indeed, this is a point that was picked up by the government, that is that small and medium businesses would be targeted by this project. As a matter of fact, Boeing was asked to provide economic spinoffs of 15% specifically for that sector.

What must be understood is that we never had to use this clause, never had to do a follow-up. This requirement has always been met in the past. However, and despite all this, the Department of Industry is quite aware of this risk. This is why, in my speech, I reiterated, on behalf of the Minister of Industry, that a large group of officials would be deployed to ensure a follow-up. This is a legal framework and we want it to be respected. It is strict and a team of officials will do this follow-up. That is why clear benchmarks have been established to ensure there is an adequate follow-up that would respect the very essence of the agreement reached by this government and Boeing.