Transport committee  I would agree. We certainly see a continued and important role for Transport Canada as we move forward with SMS. Those roles will continue to evolve over time, but the engagement between industry and Transport Canada officials will and must continue as we move forward in a shared way to continue to advance aviation safety.

Transport committee  I would wholeheartedly agree with that. I think the key word is “empowerment”. This is an area of aviation safety where a partnership can be far more effective than an us-versus-them situation. Bill C-6, the designated organizations, the delegation authorities, and SMS are all part of creating a much stronger partnership between elements of industry and Transport Canada and are not displacing Transport Canada.

Transport committee  I will certainly be pleased to answer that question. Yes, it did, because certainly from our perspective, safety is safety. Our industry is a highly competitive industry, and a key component of that competitiveness is safety and reliability of aviation products. It's not in the industry's interest whatsoever to go on the cheap and put out products that are less safe, because ultimately, that's just not in their business interests.

Transport committee  I can't tell you, because I don't know who, specifically, said that, but it's in the context of broad general discussions we've been having with Transport Canada through our committee system, which engages our member companies. There were discussions on the implementation of SMS and concerns were raised by the smaller companies that the infrastructure that is required to put up an SMS system may be too significant and too difficult for a smaller company.

Transport committee  Bob, can you maybe address this? You participated more directly in some of these discussions.

Transport committee  Thank you, Mr. Chairman. Mr. Chairman, honourable members, ladies and gentlemen, good afternoon. It's a pleasure to be here. With me today I have Robert Mather, our vice-president of civil aviation of the association. I think Robert brings a unique perspective to this issue, having served for twenty years within Transport Canada in the aircraft certification branch, and more recently having spent almost ten years at one of our member companies, Pratt & Whitney Canada, as the chief airworthiness engineer.

Industry committee  Thank you very much, Mr. Chairman.

Industry committee  On the issue of investment, I think those higher investment levels we saw through the late 1990s was not just R and D investment; it was also capital investment. For a period of several years, a number of our companies were rapidly expanding their facilities, so there was a significant degree of capital investment in buildings and equipment, not just R and D.

Industry committee  The argument is the lever that the government investment is and how then that levers significant private sector investment. I'll put it in very simple terms. We'll have a company that's looking to continue to develop an existing world product mandate it has here in Canada. Let's use the example of an American-owned subsidiary that's been established here in Canada to develop a certain product or system and has the world product mandate for that, so it's not serving the Canadian market, but the global market.

Industry committee  Well, they're not going to decide to do it overseas anyway if there's a solid business case and a strong partnership. They don't expect to get free money; they're looking at, ultimately, the instrument of TPC, a risk-sharing investment model. They're looking for someone to share the risk so they can help to build the business case; there are other positive elements of serving global markets from Canada, but that's one element they clearly do look at as important.

Industry committee  It goes back to how we strengthen or reinvent programs like TPC. How do we look at improving the investment climate through tax structures and making our SR and ED program more effective? Are there issues around regulatory barriers? The investment climate is ultimately made up of many different factors.

Industry committee  I would agree on that issue of skills. One of the biggest attractants for skills and for growing those highly qualified people is R and D--research and development opportunities.

Industry committee  I'll try to take those in order. Yes, the investment in R and D is an issue of concern for us. This industry is investing a little over $1 billion a year in R and D on an annual basis, and it's been investing that amount for about 10 years; it hasn't changed. At a time when the industry has grown more than twice as large, our R and D intensity, as we would describe it, has gone from about roughly 10% a little over a decade ago to about 5% today.

Industry committee  On the first issue of tax, the one I would concentrate on is the SR and ED income tax credit program. Clearly, there are opportunities to approve that to facilitate and stimulate Canadian investment in innovation, which impacts our competitiveness. Right now, refundable credits are exclusive to Canadian-controlled private corporations, CCPCs; it's non-refundable to companies over a certain threshold and those that are not Canadian controlled.

Industry committee  Certainly I would support exactly what Mr. Bain has said, that the one-size-fits-all approach doesn't work. You really need to look at the differing needs among differing elements of the spectrum, from the capital R all the way through to the capital D. You can't use the one-size-fits-all approach.