Mr. Speaker, I am pleased to speak to Bill C-4. I will take a moment to read the title of the bill, which reads as follows:
An Act to implement the Convention on International Interests in Mobile Equipment and the Protocol to the Convention on International Interests in Mobile Equipment on Matters Specific to Aircraft Equipment
It is a scholarly and complicated enactment. The International Civil Aviation Organization, or ICAO, adopted these protocols in the fall of 2001. We recall, of course, September 2001, and the grave crisis the whole airline and aerospace industry faced at the time. The ICAO met and decided to negotiate protocols to facilitate the taking of aircraft as collateral by the banks, starting in the fall of 2001. Since then, 32 countries have signed this protocol. Canada, however, did not sign it until March 2004, in spite of the industry's pressing need. If the International Civil Aviation Organization met in the fall of 2001, it was because there was danger in waiting. It wanted to standardize the taking of guarantees around the planet. That was the intention, so that, in the event aircraft had to be repossessed, bankers would have the ability to exercise their guarantees and repossess as required.
Bankers were nervous and did not want to finance new equipment. Even though it was requested by the industry and discussion was urgently required in the fall of 2001, this convention was not signed by Canada until March 2004. Today, in November 2004, we are still debating a bill that was introduced following the election. We are understandably skeptical when we hear about an emergency and a request from the industry. I think the industry has moved on. The aerospace industry is going through a grave crisis. The expectation in the industry would have been that the government provide a real aid package for the aerospace industry, not introduce a bill that should have been introduced back in 2001, or in 2002 at the very latest.
Once again, the Liberal government has decided that to help the aerospace industry, it would present a bill to make it easier for bankers to secure their interests. The problem is that bankers are not jumping at the opportunity to finance planes these days. Such is the reality. The industry will work, appear before the committee, propose changes and try to have a decent bill so that one day when bankers become interested in the aviation industry again, there will be laws to protect them. We are talking about creditor protection because this bill will amend the Bankruptcy and Insolvency Act, the Companies' Creditors Arrangement Act, the Winding-Up and Restructuring Act and the Bank Act. Once the bankers secure their interests throughout the world we want them to be able to require compliance with conventions and the application of a uniform law.
The Bloc Québécois agrees with this bill. We would have agreed to its being tabled in 2001 and passed in 2002, but the Liberals have been too slow to take action. Today, in 2004, after the election, we have a protocol that was signed in March when we should have had legislation just before the election, but no, it was not considered urgent enough. Today they are trying to tell us this bill urgently needs to be passed when what is truly urgent is what I will explain in the second part of my speech, that we need a real plan to help the aerospace industry. We need a true national aerospace policy.
It is unthinkable that Bombardier and other companies are still, month after month, year after year, having to go to the federal government cap in hand. I had the opportunity to attend an international aerospace exhibit at Bourget a few years ago. You were there as well, Mr. Speaker. It was amazing to see how many countries were courting our national flagships, Bombardier and the others, to get them to relocate to their part of the world. Aerospace is seen as a glamour industry. There are a number of countries that are prepared to take our best companies, but Canada appears not to understand. Yet Canada has no trouble understanding the Ontario auto industry's need for money.
That they can understand. I repeat the words of the Minister of Transport which—surprisingly, since he is a staunch supporter of the Prime Minister—echo what Jean Chrétien said when he was Prime Minister: “The automotive industry is to Ontario what the aerospace industry is to Quebec”. The reverse is equally true: The aerospace industry is to Quebec what the automotive industry is to Ontario. It makes little difference. He may have reversed what Jean Chrétien said.
Nevertheless, what hit us hardest was the bit about the automotive industry and Ontario, because GM was closed down in Sainte-Thérèse-Boisbriand and everything was concentrated in Ontario. There was a plan, prior to the election, to help out aerospace with $500 million. In the meantime, the likes of Bombardier and Pratt & Whitney—not to mention Bell Helicopter—are asking for a little help from the government. Nothing huge.
I have heard comments from members of other parties in this House that this makes no sense, and I have read newspaper articles asking what can be given to Bombardier. It is not a matter of what we can give Bombardier. It is a matter of matching what other countries are prepared to offer in order to attract a leading edge industry, a glamour industry.
If we are not willing to do anything, and if Canada wants to drop to second, third or tenth place, it should say it. But other countries are interested in having the flagships of our industry and building their own aircraft. A single American state is ready to offer what the Canadian government is now refusing. I am not talking about the United States but about a single state. Three states are offering what Bombardier is asking from Canada.
I find that the Bombardier people are quite polite. I was present at one meeting, and they said, “We do not want to leave Canada”. We are fortunate that this is a home grown industry. Otherwise, it would have left a long time ago. It is trying hard to be heard. Ministers tell us that it is not easy. I heard Bombardier's president say, “Canada is too small for us”. A G-7 country is being told that, and nobody says anything. The industry minister was there, and the foreign affairs minister also, and he said, “We have to make do with limited means.”
Limited means are passé. There was no new money for the aerospace industry, but the government found some for the Ontario auto industry. Existing programs are being used. This is difficult for Quebeckers, because the aerospace industry is second in North America to the Silicon Valley in importance. We are proud of this flagship aerospace and high tech industry, because it is a high tech industry. This is what the aerospace industry is today.
This is why countries or states want to have this type of industry. Because it is glamourous and because it is leading edge technology. We are lucky enough to have it here. Quebeckers want to keep it, and it is normal for them to.
We want the government, which has always helped them, to keep on helping them. Exports are under its jurisdiction and responsibility. It is not that Quebec would not like to be a country and is not working toward this goal. However, we are still a part of Canada, and the federal government is in charge of exports and has to help in this regard. We are thus asking the government to assume its responsibilities in areas under its jurisdiction.
Let us have a look at all the investments that the federal government is trying to do in all sorts of areas that have nothing to do with its own jurisdictions: the health care system, the child care system, the municipalities, all areas that are not under its jurisdiction. However, the export programs do fall under its jurisdiction, and the government is not doing anything. It does not want to do anything. It has no money. It is not increasing the budgets in this area. This is the harsh reality.
Once again, it is not rocket science. The federal government is responsible. It has export programs. We can give them all sorts of ideas. However, the industry is well aware of those ideas. There are programs and I will give you a short list. The problem is there is no new money. This is the harsh reality. So the government must increase the amounts in the existing programs.
Bombardier wants to finance new aircraft. There are finance programs for that purpose. It is the same with Bell helicopters. Just last week, the company announced in Les Affaires that, with no help from the federal government, it would also leave.
I met with Bell Helicopter officials. I did not do like the parliamentary secretary to the Minister of Transport. I did not talk about it: I went to see these people. The problem that they have is simple: they have offers in other countries. If we say no, they too will take their business elsewhere. Of course, Bombardier is the number one issue. We cannot let it go. Bombardier keeps asking the federal government to help it upgrade its operations; it is not asking for an extraordinary amount of money.
Bombardier is asking for is what other countries are offering it. Some members in this House have a problem with that and they wonder why Bombardier should once again get help. We will support a high technology industry that other countries want to take away from us. This is what we will do. It is as simple as that. We are not going to do so by giving them too much money, but by giving them what the others are prepared to give them, and no more than that.
As I said earlier, Bombardier has been very respectful. It is only asking for what the others are prepared to give to it and what it needs to be able to develop new equipment. Of course, you have it there. We are asking for an increase in support for industrial research.
This is not difficult, for the simple reason that the only money available comes from Technology Partnerships Canada. TPC has no new money. How does it operate? When companies develop a new product, they get funding from Technology Partnerships Canada. TPC lends them money, and when the product is sold, it collects royalties. Currently, royalties paid annually by companies are estimated at $50 million. This is the money that is available. There is no new money. The money collected is reinvested; there has hardly been any budget increase.
I have to be honest here. The contribution did increase by 8% annually, but it is practically 30% in other countries. This is the reality. Canada increased the budget of Technology Partnerships Canada by 8%. This is in addition to the royalties paid by companies that sell equipment for which they got funding from TPC during the developmental stage, several years earlier.
As regards the jets that Bombardier is building across Canada, when the company sells one, it pays royalties to the government. This is what brings money to Technology Partnerships Canada. The problem is that this fund does not increase quickly enough to meet the needs of the industry, and these needs are similar to those in other countries of the world. It is no more complicated than that.
That is an area of federal responsibility. Yet, the federal government makes a conscious decision not to invest in its own jurisdiction, exports. Again, this is difficult to understand.
I can understand Bombardier, Bell Helicopter, Pratt & Whitney and the 240 aerospace subcontractors in Quebec alone. They are wondering why there is no increase. If funding for research were increased, Bombardier could finance its new equipment, and Bell Helicopter could get financing for its new aircraft.
We are talking about design. This is an industrial research program to design this new equipment. That is what the $700 million requested by Bombardier, among others, was for: to develop its program. Bell Helicopter is asking for approximately $250 million to develop its series of aircraft in order to be competitive.
Why are they doing that? Not for the sake of having new aircraft, but rather because the competition is playing hardball . That is how it is. They have to watch out and always be up to date, or else they are overtaken by the competition.
Let us take a look at some competitors. There is Embraer in Brazil, for example. In this case, I would say that, on top of the government assistance available to the company, Brazil is financing exports. This means that, when an aircraft is sold, the Brazilian government actually finances the buyer. Last year, it financed 80% of Embraer's deliveries. That is not easy. Not to be chauvinistic, but Bombardier and Embraer are about the same size.
Here in Canada, only 41% of exports were financed this past year. In 2003, it was 37%. The percentage actually dropped in previous years. In recent months, the government made a little effort in an attempt to help. But it really does not measure up to what is done in other countries. There is no comparison, as my hon. colleague from Terrebonne—Blainville would say. That is the harsh reality.
I understand why the presidents of Bombardier, Bell Helicopter, Pratt & Whitney and all the other companies are telling the federal government that a real development policy for the aerospace industry in Canada is needed. Such policy is indeed required, along with the necessary funding based on what is spent elsewhere.
Of course, once again, when we think that, in research and development alone in the United States, the Pentagon spent US $45 billion for the aerospace industry last year. For Boeing alone, it spent $6.5 billion. How can a Canadian company like Bombardier hope to compete with that? For the multinational Bombardier to compete with the multinational Boeing in terms of equipment, it would take phenomenal assistance. Of course, we are not equal to the task.
In Europe, Airbus received US $3 billion. This is an industry where research and development must be funded. These funds must be provided through royalties when aircraft are sold. We are therefore asking for an upgrading of the Technology Partnerships Canada program.
Concerning exports, Export Development Canada guarantees equipment deliveries. We would like to see them at the same level as the Bombardier competitor, among others. When Brazil guarantees 80% of client purchases, we would like Canada to be able to be competitive, at 41%. I am not saying that we must reach 80% in the same year. We would not want to shock the Liberals. We will give them a chance. We will have a program that will be adjusted and that will grow, so that Bombardier can predict the demand and be able to make its deliveries and harmonize its order book with the guarantees that might be provided by the Government of Canada.
This is very important at present because of the events of September 11, 2001. The aviation and aerospace industry is in crisis throughout the world. Solutions need to be found. One day, when things are going well, the bankers in this world, GE Capital and the like who financed a big part of airlines' fleets, will see the light and recognize the potential for profit and will decide to guarantee loans in the place of governments by means of the legislation we are passing today. However, that is yet to come.
It is as if the government were saying that with Bill C-4 we are telling bankers that they can now secure interests since all laws are standardized and that it will be no problem for them to lend money because they will be able to recover the equipment. The problem is that no bankers are interested these days. If we took a survey of those bankers interested in buying a plane, very few would say they are prepared to provide a guarantee. This is because some companies are still under bankruptcy protection in the United States. Air Canada just came out of bankruptcy protection. It is not easy.
Things might change, but in the meantime the federal government has to use its means under its area of jurisdiction. I cannot emphasize enough that exports come under federal jurisdiction. The government prefers to take away responsibilities from the provinces and interfere in their jurisdictions. It probably finds this more glamourous. However, if it lost the aerospace industry, if it ever let aviation and aerospace companies go because of a lack of funding, I am not sure the world would view Canada the same way.
I am not sure Canada would still be a leader in the G-7, as it often likes to point out. The government says we are number one and the best country in the world, as Jean Chrétien said. However, the best country in the world is in the process of losing its aviation and aerospace industry to competitors who want these companies and think it is the perfect time to finance the industry, which is at the cutting edge of technology. Such is the reality. There are countries ready to do this.
What will we do when those industries are shut down? We will lament the fate of the workers of Bombardier. Already, 2,000 workers in the Montreal region have lost their jobs. This is not good news for us, in the House. We would like not only to see these people keep their jobs, but 2,000 more hired. That is what we would like.
If the Liberal government really wanted to do its job in the export industry, that is what it would do. It would ensure that sufficient funds were made available to businesses to help them not only maintain existing jobs, but create new ones. However, that is not what it is doing. With Bill C-4, it is focusing on damage control.
The reason for our cri de coeur is that the aerospace industry is not made up only of Bombardier, Bell Helicopter and Pratt & Whitney, but also comprises 250 small and medium-sized businesses which live on royalties. This is how a cluster works. A big corporation is at the top, and many small supplier businesses cluster around it. This is why Quebec is the second most important hub in North America, after Silicon Valley.
We hope to keep that leadership. We hope that the Liberal government will not risk losing it to other American states or other countries, just to punish Quebec.
Madam Speaker, I am pleased to rise in the House today to offer my support during third reading of this important legislation. I wish in particular to briefly highlight the anticipated benefits of adopting the proposed international interests in mobile equipment act.
It is clear that we all agree that a strong competitive aviation industry is an important component of Canada's economy in the upcoming century. Adopting the bill will help the Canadian airline and aerospace industries compete more effectively in the global economy by facilitating their access to capital markets. It is for this reason that both the industry and leaders support the bill and it is apparent that most members of the House do as well.
On March 31, 2004, Canada signed the Convention on International Interests in Mobile Equipment and the protocol to the Convention on International Interests in Mobile Equipment on Matters Specific to Aircraft Equipment.
Extensive consultations with interested parties were held throughout the process. Representatives of the Canadian industry were present and participated in many of the meetings leading up to the diplomatic conference in Cape Town as well as the meeting that formally adopted the instruments.
The convention and protocol will establish an international framework for the financing of aircraft equipment. Within this framework, the value of the aircraft would be used as security for payment, much like a mortgage or a lease. Adopting legislation to implement the convention and protocol will reduce the financial risk to creditors, allowing them to make greater levels of financing available for the purchase of aircraft. This could translate into lower costs for airlines purchasing or leasing aircraft, which would enhance their competitiveness and strengthen the airline and aerospace sectors. The expected result is a direct positive impact on airline earnings, investment and overall profitability.
Among the benefits of implementation is greater security for creditors, an increase in the global competitiveness of the Canadian aerospace and airline industries, and very important, maintaining jobs in Canada and spinoff effects for various regions within Canada.
If Canada were to ratify the convention and protocol and adopt implementing legislation in a timely manner, Canadian purchasers would be able to benefit from reduced exposure fees. For example, the U.S. export-import bank is offering a one-third reduction in its exposure fee to companies whose home states have signed, ratified and implemented the convention and protocol before September 30, 2005. This offer recognizes that reducing uncertainty translates into lower costs. This kind of advantage would contribute to the industry's competitiveness.
As the Canadian aviation industry becomes more cost competitive, the benefits could be passed on to consumers through increased airline services and lower fares. A healthy aviation industry will of course translate into more jobs for Canadians. As airlines become more competitive and grow, they will expand their workforce. This has spinoff benefits for the aircraft manufacturing sector. The airline and aerospace manufacturing industries generate many high paid specialized jobs. The importance of such jobs and their spinoff effects in the economy cannot and should not be ignored.
In the west, Alberta and western Canada will benefit from WestJet's increased competitiveness. As the home of Air Canada, Jetsgo, Pratt and Whitney Canada and Bombardier, Quebec will no doubt enjoy a boost in its economy.
The reason that I am pleased to stand today is that CanJet and Pratt and Whitney Canada in eastern Canada will provide a positive economic impact for eastern provinces. Nova Scotia is one of the provinces that fully supports the bill and is ready to adopt the protocol and convention. It will assist our growing aerospace industry.
Nova Scotia is more known for shipbuilding, another industry that we must keep our eye on and for which we must ensure support. However, the aerospace industry has grown in Nova Scotia and it sees great potential for further growth.
Smaller airlines across the country will also enjoy the benefits created by the convention and protocol. In addition, aircraft manufacturers and their numerous subcontractors throughout Canada will be positively affected by the increased certainty that this will provide.
Bill C-4 is an important step toward strengthening Canada's aviation industry which will generate competitive and other spinoff benefits right across the country.
Madam Speaker, it is a great pleasure to rise today for this third reading debate on Bill C-4, an act to implement the convention on international interests in mobile equipment and the protocol to the convention on international interests in mobile equipment on matters specific to aircraft equipment. I would like to take this opportunity to discuss the legislative amendments that will come into force once this convention is ratified.
Canada is a leader in electronic registries and has one of the most modern asset based financing systems in the world. Canada already has a sophisticated financial regime that uses assets as collateral. However, implementation of the convention and protocol would benefit the aviation sector by amending insolvency legislation and establishing an international registry specifically for aircraft equipment.
The convention and protocol would establish an international registry in which interests in aircraft equipment would be registered. This registry would replace individual national registries. It would record the existence and prospective rights and determine their priority for the use of purchasing and financing of aircraft.
Currently, in Canada each province and territory maintains their own aircraft registry and the federal government maintains a registry as mandated by the Bank Act. The establishment of a single worldwide international registry would replace both federal and provincial registries for aircraft and aircraft parts in Canada, greatly simplifying aircraft registration.
On March 31 Canada signed the convention on international interests in mobile equipment and the protocol to the convention on international interests in mobile equipment on matters specific to aircraft Equipment. Justice Canada officials regularly consulted with the provinces and territories throughout the negotiations leading to the adoption of the convention and the protocol. This will create a uniform, secure and predictable environment at the international level for Canadian business. This is in line with Canada's goal of achieving enhanced transparency, security and predictability in international business.
The Bank Act special security regime allows banks in Canada to register security interests on a national basis for certain types of defined products listed in the act. The types of products that can be registered under the Bank Act are technically broad enough to include aircraft equipment covered by the new protocol.
Since the goal of the protocol is to create a single international registry, amendments to the Bank Act would be required to avoid overlap. The most effective means of doing this would be to remove aircraft equipment from the application of the Bank Act.
The international registry would allow aircraft owners, lessors and financial institutions to record their rights, including security interests in aircraft and aircraft engines. Registration would establish the purchaser's or creditor's priority over the unregistered or subsequently registered interests of other parties.
Information on the Internet based registry will be available to and accessible by any individual or company directly. This will provide a considerable advantage in terms of time, cost savings and improved certainty in resolving questions of priority of interests.
Aviareto, an Ireland based company, was selected as registrar through a tendering process supervised by the International Civil Aviation Organization. The establishment of the international registry has begun, and Aviareto will operate the registry once the convention and protocol come into force.
Before Canada ratifies the convention and protocol, a careful examination will be done of the final acceptability of the terms of operation of the new international registry. Canada will withhold ratification until it is satisfied that the registry is fully operational and secure.
Amendments to the Bankruptcy and Insolvency Act, the Companies' Creditors Arrangement Act and the Winding-Up and Restructuring Act would also be required in order to implement the convention and protocol. The bill would provide for a special remedy in the case of insolvency that would impose a fixed stay period of 60 days. After this period, creditors could reclaim an aircraft or aircraft equipment on which they had a security.
Under current legislation, there are various periods within which creditors are subject to a stay on their ability to enforce security interests. These stays can sometimes extend to more than a year. The adoption of a fixed 60-day period would increase certainty in the system and level the playing field between Canada and the United States. The U.S. industry already benefits from a similar provision under the U.S. bankruptcy code.
The adoption of consequential amendments to Canada's insolvency laws would benefit Canadian aircraft manufacturers, financiers and airlines on the international level. Although these changes would provide better protection for creditors, they would not materially impact debtors' ability to pursue reorganizations in case of insolvency.
The federal legislation required to implement the convention and protocol would make the necessary amendments to the relevant acts. Legislative amendments may be proclaimed into force at different times, but no later than a date on which a convention and protocol enter into force in Canada.
It is clear that the adoption of the bill will be an important step in the creation of an international regime that the aviation industry worldwide sees as beneficial. I applaud the quick and thorough work done by the Standing Committee on Transport, and I encourage all members to support third reading of Bill C-4.