Madam Speaker, I am disappointed by Caterpillar's decision to close the Electro-Motive Diesel facility in London. This facility has had a long history in London and our government sympathizes with the workers there. We will continue to monitor the situation closely.
That being said, in essence this is a labour dispute between a company and a union in a provincially regulated jurisdiction. The federal government does not have the power to interfere.
In addition, I would like to say that I especially empathize with the workers at White Birch Paper in Quebec City. This company was under the protection of the Bankruptcy and Insolvency Act for two years, and it is very difficult to see working men and women find themselves in this situation. It will come as no surprise to anyone that I disagree with what the NDP has said in this regard, both today and in the last month.
I would like to take the time today to address certain statements that have been made. First, I would like to quickly explain the situation of White Birch Paper to the members of this House. This company owned three paper mills in Quebec between 2004 and 2008, including the Quebec City paper mill, which was purchased in 2004, and the Soucy and Masson mills, which were purchased subsequently. These mills were profitable for a while. However, the company ran into financial difficulty and filed for bankruptcy protection in February 2010.
In September 2010, the court approved the purchase of the three paper mills by a new owner, but the purchase was conditional on a new agreement between—a new agreement with the employees. As we all know, the new agreement was never signed, so the paper mills have not yet been sold to the court-approved buyers. In the meantime, the current owners decided to close the Quebec City mill.
I think it is important to clarify that the Quebec City paper mill had already been sold once in a transaction that required the Minister of Industry's approval. I am referring to the 2004 sale. White Birch bought the mill in a transaction approved by the former Liberal government.
We sincerely hope that there will be a future transaction representing a net benefit to Canada. However, the current situation is not covered by the Investment Canada Act. This situation is about solvency and labour relations, which are governed by provincial legislation.
The opposition has not done its homework. Once again, it has proven that it is incapable of governing. The opposition is way out in left field on this issue.
Next, I will discuss the history of the Electro-Motive Diesel facility. As the facility is in the constituency of the member for London—Fanshawe, I am somewhat concerned that I need to inform her that this plant has never been Canadian-owned. It has been American-owned from the very beginning, back in the 1930s.
Electro-Motive Diesel was initially owned by an Ohio-based company. It was then purchased by General Motors who in turn sold it to American private equity firms back in 2005. Then Electro-Motive Diesel, including facilities in Canada, the United States and Mexico, was purchased outright by Caterpillar, another American company.
The history is important within the context of my second point that this transaction was not reviewable. The reason it was not reviewable is that the plant changed owners when Caterpillar, a company based in a WTO country, bought Electro-Motive outright, another company based in that WTO country. Electro-Motive also had assets in Canada.
According to the Investment Canada Act, indirect acquisitions are not subject to review under our World Trade Organization obligations. That is the law. Those are our trade obligations at the international level. This is based on the belief that free and transparent trade creates more jobs and opportunities in the long term than the protectionist barriers on the NDP's wish list ever could.
With respect to those who have said that the government approved this transaction, they are mistaken. No such approval was required.
With respect to those who have said that we should retroactively review the transaction now, the law neither required nor allowed for a review to take place in the first instance, so a second review would be equally out of the question.
Finally, with respect to the leader of the third party who on Monday asked in the House “...how it could be that the government could have allowed such an investment without receiving guarantees from the company with respect to its future intentions...”, I would point out that this is the same law his current party oversaw for 30 years and in such time did not see fit to block a single transaction.
There is also another misconception that I need to correct. The member for London—Fanshawe has referred in her public communications to a $5 million tax break, and she appears to be of the belief that Electro-Motive Diesel received a $5 million subsidy. She is wrong on that point. In fact, with the greatest respect for my colleague across the way, the member is so wrong that she is either deliberately misleading Canadians or does not understand how the tax system works.
For the sake of clarity, let me read the section of budget 2008 that addresses support for the purchase of new locomotives:
Both the Standing Committee on Industry, Science and Technology and the Standing Committee on Finance have recommended an increase to the CCA rate on rail equipment. Budget 2008 proposes to increase the CCA rate for railway locomotives to 30 per cent from 15 per cent. This change will ensure that the CCA rate for railway locomotives better reflects the useful life of these assets. It will also encourage rail operators to acquire a newer, more fuel-efficient fleet of locomotives (e.g. hybrid locomotives), which provide a more environmentally-friendly mode of transportation.
This change is effective for new locomotives acquired on or after February 26, 2008, as well as for reconditioning and refurbishing costs incurred on or after February 26, 2008. It is expected to reduce federal revenues by a small amount in 2008-09 and by $5 million in 2009-10.
How this works is simple. Companies that buy locomotives benefit from a 30% capital cost allowance rate, whereas they used to benefit from a 15% capital cost allowance rate. The manufacturers of locomotives get no special tax break.
This measure was brought in to promote the purchase of more fuel-efficient locomotives. It was brought in with the enthusiastic cheerleading of the NDP. While that party did not see fit to actually vote for it in budget 2008, the NDP members did support the measure when it was recommended by the industry committee back in 2007.
I know that the NDP understands how capital cost allowances work. The question is, why are those members now deliberately misleading Canadians in order to score cheap political points?
The only logical conclusion I can draw is that the NDP is using struggling workers as an excuse. Now Quebeckers are learning more and more about the NDP's hidden agenda, which is based on a radical ideology that will directly destroy thousands of jobs. The NDP does not want Canadian companies to be involved in international trade. Its members are hostile to foreign investment and do not want Canada to be an economically productive country.
NDP members have voted against every single measure that we have taken to support manufacturing in this country, for example, providing tax relief to individuals, families and employers. They voted against enacting a 50% capital cost allowance rate for machinery and equipment. They voted against eliminating tariffs on machinery and equipment and industrial inputs. They voted against investing in skills training and infrastructure. They voted against supporting research and efforts to commercialize innovation. They voted against extended work sharing agreements to assist workers. I could also speak about forestry measures, where the NDP voted against the softwood lumber agreement and the black liquor $1 billion subsidy. Those members also voted against the $1 billion for the community adjustment fund. They voted against the $1 billion community trust fund.
That is all we need to know. In the middle of the worst economic downturn of our lives, the NDP wants to create obstacles for businesses that want to create jobs. It wants to make Canada less attractive to investors. In practical terms, during the first six years of our government, foreign companies invested nearly $270 million in Canada through transactions requiring review and another $150 million through transactions that did not require review.
On the other hand, the NDP plan for high taxes, carbon taxes, trade barriers, a hike in gas prices by 10¢ a litre and opposition to our natural resources sector is a plan that would erase all of that investment in the blink of an eye.
Third parties have confirmed that if we were to apply the plans currently proposed by the opposition, Canada would lose over 400,000 jobs. In the middle of our fragile recovery, that is simply terrifying. Those jobs would disappear because the NDP's mediocre economic plan includes massive tax hikes.
It is clear that the NDP economic thinking leads to false promises, dead ends and economic ruin.
Our government has an economic recovery plan that is working and, unlike the opposition, our government understands the importance of attracting foreign investment to Canada. We welcome foreign investment, innovation, international expertise and, more importantly, we welcome job creation.
Our government has a long-standing good reputation for welcoming foreign investment because it is an important driver of Canada's economic success.
Our government is determined to send the most favourable message possible to investors around the world to promote Canada as a secure and stable country and a great place to do business and invest.
Major investments will continue to be subject to review under the Investment Canada Act.
However, it is important to point out that the purpose of the Investment Canada Act is to provide a review of major investments in Canada in a way that encourages investment, economic growth and job opportunities in Canada.
In 2009, our government amended the act to strengthen it and especially to encourage foreign investment.
On the strength of recommendations from the Competition Policy Review Panel, the act was amended to liberalize the foreign investment review process. Once in force, these amendments will raise the investment review threshold to focus our reviews on those investments that are most significant to the economy and to better reflect the increasing importance to our modern economy of service and knowledge-based industries.
What is more, in 2009, we eliminated the barriers in the Investment Canada Act that targeted certain sectors, in order to ensure that investment in those sectors is subject to the same rules as in other economic sectors; this improved certainty.
Those barriers were an additional unnecessary burden for industries subject to efficient government regulation.
In addition to these amendments, we also introduced a review mechanism with regard to national security into the Investment Canada Act in order to ensure that, with increased foreign investment, Canada's national security interests are protected.
Other changes were made in 2009 in order to improve transparency in the review process and we acknowledged that there could be room for more improvement when it comes to transparency in the legislation.
I would add that the previous Liberal government never felt that such an acknowledgement was necessary. It is funny to see the Liberals here today take a totally different position.
I can assure the House that we are looking at the best ways to provide more information to Canadians about the review process, while ensuring that confidential commercial information remains protected. It is a question of balance.
Once again, this government's objective is to promote foreign investment. It is vital that our system guarantee investors that their confidential information will have the same protection in Canada as is afforded elsewhere in the world.
This cannot be a one-way street. By encouraging greater foreign investment in Canada, we are leading by example. If Canadian businesses hope to expand to new markets and compete successfully with the best in the world, we must walk the talk here at home and demonstrate to the world that protectionism is not the path to economic growth.
Make no mistake, when a foreign investor breaches undertakings that it has made to our government, we will not hesitate to take it to court to ensure it lives up to its commitments. That is exactly what we did in the case of U.S. Steel. We took U.S. Steel to court when we felt it did meet its commitments. That action resulted in a new agreement between U.S. Steel and the Government of Canada.
Under the agreement, U.S. Steel agreed to important commitments. As well, U.S. Steel will continue to guarantee pension funding obligations for over 15,000 current and retired employees. This means jobs and continued economic activity in both Hamilton and Lake Erie. Therefore, Canadians can rest assured that when the government believes that undertakings are not being respect, we will act.
As an aside, I would like to point out that it is not just foreign investment that we want to attract. We want Canadians to continue investing in our country. That is why we have a low tax plan for jobs and growth, which is working.
Canadians gave us a strong mandate to protect and complete Canada's economic recovery. We cannot say it enough: the top priorities for our government are job creation and the economic recovery. We are working hard and tirelessly to support Canadian workers during the recovery with our economic action plan, which has a track record of 6,000 net new jobs since July 2009.
We have also acted in the interests of Quebeckers by settling the sales tax harmonization issue. All Canadians must realize that this is a government that takes concrete action. We will not be shifted off course by the opposition's smoke and mirrors, such as this motion.
The NDP would undo all of that good work. The motion before us demonstrates that the NDP wants to shut down foreign investment in our country, and at the root it exposes a reckless high tax, dangerous plan for our economy.
Canadians have sacrificed too much in the interest of keeping our country strong during the global recession to accept a plan as destructive as that of the NDP. Therefore, I urge all members of this House to vote against this motion.