Thank you, Mr. Chair and members of the committee, for the invitation to appear today. Mr. Justice Gomery has done his work. I'm pleased to add 15 minutes. That's not a difficulty.
I must say I look forward to the discussion today. I have enormous respect for the work of this committee, for what's been achieved over a number of years by the committee. I look forward to a strong, positive working relationship.
As I begin, I should just say I do have three officials with me. There are many fine people who work for the Government of Canada, but I can say categorically that I have here with me amongst three of the finest I've experienced in my time in government: Mr. Dicerni, who is one of the most experienced deputies in the government; Paul Boothe, an associate deputy who we have recruited as a bright light from western Canada to the Government of Canada; and Mr. Legault, who is my legal counsel, who is a fine lawyer whose counsel I rely heavily upon. So I'm pleased they're here with me.
Today I'm going to take the opportunity to discuss several items: firstly, the proposed sale of part of MacDonald Dettwiler and Associates, MDA, to Alliant Techsystems Inc., ATK; secondly, counterfeit and intellectual property; thirdly, the service sector; and fourthly, the challenges facing the manufacturing and forestry sectors.
With such a broad range of issues on the table, I will try to keep my opening remarks reasonably brief to allow ample time for questioning. We will stay a little longer, as required.
Firstly, I would like to speak to the proposed acquisition of MDA by Alliant Techsystems. As you may know, the strict confidentiality provisions of the Investment Canada Act apply and do not allow me to make specific comments on specific cases.
Now, with the agreement of Alliant Techsystems, I can confirm that I have received an application for review under the Investment Canada Act. I can assure you that any investment review conducted under the act is performed rigorously, and it includes consultations with affected provinces and other federal government departments and agencies. Members can rest assured that I will not approve this investment unless it demonstrates a net benefit to Canada.
I have with me a two-page letter that I would like to table with the committee, Mr. Chair, and perhaps it can be circulated. I understand there are copies in both official languages. It deals with the issue of confidentiality and the restrictions I face as the minister. This specifically arises from subsection 36(1) of the statute--the Investment Canada Act--which basically says that all information obtained, essentially in the administration of the act, is subject to a confidentiality restriction that actually contains criminal sanction if it is knowingly violated. I think this will be familiar to some of the people at the table. It places some challenges for us as parliamentarians in terms of responding to some specific questions. I would be pleased to discuss the letter, Mr. Chair, after everyone has had a chance to read it.
I can assure you that the government--myself as minister--will take all the steps necessary to ensure that the company's contractual and other obligations are respected and that the interests of the Canadian taxpayers are protected, regardless of the ownership of MDA. I know we'll discuss this in more particularity.
I'd like to also address, in passing, the issue of copyright. I think it's fair to say, Mr. Chair, we live in a world that is getting faster. Intense global competition, information technology, and the Internet are reshaping how businesses compete and how commerce functions. The prerequisites for economic success today are quite different from what they were only a few years ago.
Sometimes when I speak publicly I like to point out to people that when you throw away one of those greeting cards that sings a tune as you open it--to your mother or daughter, as the case may be--you're actually discarding the same amount of computing power the world had at the end of the Second World War. That puts in context just how quickly the world moves today and how fast commerce unfolds.
The real engine of growth on the way forward is the human mind, designing innovative projects, transforming services, and creating whole industries on the strength of an idea or a Canadian innovation. This is a world in which applying ingenuity and bringing new products and services to market is what will distinguish leading-edge economies from economies that don't succeed. We need to be in the successful group.
Members of the committee, a strong and effective copyright framework is essential to all of that. It's essential to a faster-growing, competitive, knowledge-based economy, and it's vital for promoting the creativity required to maintain Canadian status as a cutting-edge competitive economy. Updating and improving the Copyright Act will serve to strengthen this innovation and creativity, and it will have a positive effect across the entire Canadian economy.
The government is aware, and I'm well aware as minister, that there are many differences of opinion on how best to update the statute. While some advocate stronger protections, these protections must be crafted in a manner that protects the broader Canadian public and society. Recognizing these differences, the government will be looking into moving ahead with updating and improving the act.
You also expressed an interest in your motion in discussing Canada's service sector. I would say to you that this is a good news story. Our service sector has shown a remarkable record of achievement. It's the single largest sector of the Canadian economy, and it's been responsible for most of the recent employment growth in our country. Average wages in some service sectors are well above the national average, and the sector has also recorded remarkable productivity enhancements in recent years.
I'll turn briefly to the manufacturing and forestry sectors.
Manufacturers and processors are major contributors to Canada's economy and employ Canadians in many communities across our nation. I am well aware that many manufacturers face challenges. There are no simple answers for this. Manufacturers will have to adjust to remain competitive; our policies are helping manufacturers do exactly that, by creating the right business climate to succeed and to compete.
The government's actions to implement the Advantage Canada framework have delivered important benefits for manufacturers and processors by helping them to invest and compete.
The government's actions to implement the Advantage Canada framework have delivered important benefits for manufacturers and processors by helping them to invest and compete. We've improved the overall business climate by providing tax relief: we've lowered corporate tax rates and we've eliminated the federal capital tax, all to help improve liquidity.
Budget 2008 builds on strengthening Canada's tax advantage by providing an additional $1 billion in support of Canada's manufacturing sector, with an additional three years of accelerated capital cost allowance treatment for new investment in machinery and equipment. This will continue to help the manufacturing industry to invest and to improve productivity.
We introduced an S and T strategy in 2007, and it has received wide acclaim. Budget 2008 provides an additional $654 million over the next three years to secure our leadership in the global marketplace through research and innovation.
The auto sector, which we will speak of today, is a major driver of the Canadian economy. The sector has to be at the forefront of innovation in order to remain competitive. Budget 2008 provides $250 million over five years for an automotive innovation fund and will support the development of greener and more efficient vehicles. This will be good for the environment and will also help preserve high-quality, high-paying jobs in Canada.
The government continues to work on reducing as well the administrative and paper burden on Canadian businesses. This will help business be more competitive, but that is not all, ladies and gentlemen. With the $33 billion Building Canada plan, we are modernizing Canada's infrastructure, with a focus on transportation corridors, on gateways, and on infrastructure that will benefit business, including manufacturers.
The government is also investing in people, in skills, and in training so that manufacturers will continue to have access to the best educated, most skilled, and most flexible workforce in the world.
In short, we are working to create an environment in which manufacturers and other businesses can be more productive and innovative. We are therefore also working to create well-paid jobs for Canadians.
We will continue to work with Canadian manufacturers and other stakeholders to further improve the business environment, and we have urged the provinces to take complementary action.
Mr. Chair, as I draw to a close, I would mention that we are committed to ensuring that the forest product sector is strong and successful as well. We are working hard to lay the groundwork for an environment where this industry can succeed and prosper. Budget 2006 provided $400 million to encourage long-term competitiveness, to assist worker adjustment, and, in the context of western Canada, to address pine beetle infestation.
The new $1 billion Community Development Trust, announced in January 2008, is also in place to assist vulnerable regions and laid-off workers.
In closing, through Advantage Canada, we have attempted to introduce measures to stimulate business by lowering taxes, by reducing unnecessary regulations and red tape, by building new border capacity, and by creating a skilled workforce.
We are determined to ensure that favourable conditions are in place to support Canadian business.
Going forward, we will continue to enhance our competitiveness and our capacity for productivity, innovation, and investment.
I'm pleased to respond to your questions, Mr. Chairman.
Good morning, Minister, and good morning to the other witnesses. Thank you for being here today.
Today is, of course, a proud day for Canadians, because the Dextre robot has docked with the space station today. This success is built in the footsteps of the Canadarm, an internationally recognized symbol of Canadian ingenuity and expertise in space technology.
It was also a proud day in December with the launch of the RADARSAT-2, when the government claimed this was key to our Arctic sovereignty--that while the previous government had not ensured Arctic sovereignty, this government would, and that RADARSAT-2 was essential to doing so. RADARSAT-2 has been called the jewel of the Canadian space industry.
Sadly, at this same moment when Canadians are celebrating a new high in our world-class space industry sector, our government is contemplating this sale to an American arms company.
Several weeks ago I tabled a motion to invite you, Mr. Minister, to come to this committee, and I also tabled a motion to have expert witnesses come before our committee and discuss various elements of this sale. The witnesses we've heard from expressed a number of concerns about this sale: ethics, sovereignty, jobs in the sector, and the future of the Canadian space industry. They expressed concern about the lack of the government's leadership in the future of this industry.
With all of these extensive investments Canadians have made--strategic investments in the future of Canada's space sector--how can we just sell this off to the largest U.S. weapons manufacturer? How is this good for Canadian sovereignty or Canadian jobs, and how is this even just good value for the Canadian dollar?
I am very excited about science and technology in Canada's policies and where we're headed. I begin that journey as someone who is not a scientist. I freely confess that. We have the capacity as a country to do some very remarkable things.
The Canada science and technology policy has been an issue for many years. Last May 2007, as I recall, we put in place a science and technology policy, which is known as “Mobilizing Science and Technology to Canada's Advantage”. This was done by the Prime Minister and my predecessor, and I have found in inheriting that policy and moving forward on it, it being my responsibility to implement policy, that it is a policy that has received wide acclaim. I have heard virtually no substantive criticism of the policy as a visionary way forward for the Government of Canada. I know Dr. Carty apparently was quite supportive of the policy, and I know he's been previously supportive of the fact that he was included in the development of the policy.
The essence of the policy is to ensure that we define federal research priorities and promote world-class research in Canada; that we achieve global excellence; that we be focused; and that we endeavour to ensure practical applications of Canadian technology, Canadian know-how.
I like to describe the policy in these terms. It consists really of three steps. The first step is to find the brightest minds in the world and get them into Canadian universities and colleges. The brightest minds in Canada is a minimum threshold, but it's not a sufficient condition. We need to go beyond that. We need not only the brightest kids in our own country, we need the brightest young minds we can find worldwide and get them to our country. We have a wonderful standard of living that will keep them here. That's step one.
Step two is to make sure that while they are at our universities or colleges we adhere to global excellence in research; that it is adequately funded; that we are doing things at Canadian colleges and universities that are truly cutting-edge global quality; and that we not simply talk about that, but that that's actually the test.
The third step is that we ensure that we can commercialize the product of those bright minds in our universities and colleges and translate it from the idea stage--from the bench, if you will--right through into business.
I think it would be fair to say that if one examines much of what has been written, it is that third step where we need to focus activity. That certainly has been a priority. It's something we are discussing in terms of venture capitalization and other mechanisms to translate intellectual property from the university or college environment into our standard of living.
Minister, under the Investment Canada Act, which determines whether the investment is of net benefit to Canada, which is what we have been talking about for some time now, you have to consider section 20, that is, paragraphs 20(a) to 20(f). I am going to focus on paragraphs 20(a), 20(b) and 20(e), which have to be taken into account for this sale. We will take the time we need so we can see what I'm talking about.
Paragraph 20(a) reads as follows:
||20(a) the effect of the investment on the level and nature of economic activity in Canada, ...
The primary reason I see for the government not approving the MDA sale is the loss of jobs. Paragraph 20(a) talks about job losses. This is therefore not of benefit to Canada.
Now we have paragraph 20(b):
||20(b) the degree and significance of participation by Canadians in the Canadian business ...
The second reason why the government should not approve this sale is that there will be no participation by Canadians, because there will be no other business in the remote sensing industry.
The third reason why this sale should not be approved is in paragraph 20(e):
||20(e) the compatibility of the investment with national industrial, economic and cultural policies, taking into consideration industrial, economic and cultural policy objectives ...
We are thinking that you have not consulted Quebec and the other provinces on this subject.
Those are my questions. These three reasons mean that it is not of benefit to Canada to sell MDA. Have your senior officials brought paragraphs 20(a), 20(b) and 20(c) to your attention? Is there a report or a study by senior officials in your department that demonstrates that the investment is of benefit to Canada? If a report like that exists, is it available?
I'll be pleased to do that.
Before I do, I might point out for the benefit of Mr. Brison that in response to his question earlier about Mr. Phil Murphy and whether there had been any meetings or discussions between me or any of Mr. Boothe, Mr. Legault, or Mr. Dicerni with Mr. Murphy—and I said no, absolutely not, and that is the case—I have asked my staff in the meantime to confirm whether there had been any other discussions.
I would advise you that one of the staff in my office, Leanne McIntyre, had a meeting with Mr. Phil Murphy on October 4, 2007. This, of course, is some time ago, and I'm advised that it was part of a general introductory briefing.
I just wanted to be fair in responding to your question. That's the best information I have of the only meeting that transpired.
Going back, if I may, Mr. Chair, to AWS, on November 28, 2007, we released the policy framework for an auction for advanced wireless services. Of course, we've been looking for greater competition and innovation in the industry. As I said at that time, and still feel quite strongly today, the objective is lower prices, better service, and more choice for consumers and businesses.
I should say parenthetically that we started from the premise that radio spectrum is a finite resource, a defined resource that is valuable and is used by all Canadians. It is in a sense a public good that is owned by Canadians. The decisions with respect to the deployment of it need to be made in the best interests of all Canadians.
We made those decisions when we announced the framework for the spectrum auction in November. In the time since then, we have been proceeding with the consultative process that is required. We've received over 60 written submissions and have also considered the advice of the telecommunications policy review panel.
So we are moving forward and will be dealing with the actual auction on the timeline that was previously indicated. We are very much looking forward to achieving those objectives of lower prices, more choice, and better service for Canadians.
Certainly. I am going to ask you to be patient and answer in English, given that this is a very technical subject.
The important decision of how to allocate AWS spectrum was made by me, with the advice of the department, following an extensive process of deliberation and consultation.
I received legal advice shortly after I became the minister that it would be prudent to consult extensively with the players in the industry. Further to that advice, I met with the individual CEOs of six or seven, as I recall, different players in the telecommunications industry. I afforded each of them an equal amount of time to explain their perspective. I was a new minister and I wanted to make sure I understood where they were coming from. I also read everything I could about the industry, and I spent an enormous amount of time with the department getting further details.
I came to the conclusion, not at any single point in time but gradually, that we needed to ensure through the AWS auction that Canadians received the benefit of their AWS spectrum, because it is a public good that is owned by the citizens of Canada, and that what was in their interest was lower prices, more choice, and better service. I strongly formed the view that the way to achieve that was with a set-aside that is reasonably modest in terms of the overall amount of spectrum that is publicly deployed on a commercial basis but that nonetheless would achieve the objective of more competition and thereby lower prices, more choice, and better service.
I note that virtually all the auctions, whether you speak of Canada or our industrial competitors, the United States, England, and so on, have had some mechanism to achieve new entry. A set-aside is one such mechanism. It's not the only mechanism. There are other public policy steps that different governments have taken. I won't bore you with the details, but they have all been targeted to achieve the same thing, which is new entry.
I would say in closing that the very first auctions in Canada were actually targeted to do exactly that, and in fact all the incumbents in the telecommunications industry in Canada currently hold spectrum that they acquired by way of set-aside.
Thank you very much, Mr. Chair.
Thank you very much for being here, Minister.
I'm sorry I missed the first part. I had to speak in the House, and we don't necessarily control the timing of that. I did hear you say, Minister, that you're very proud of the work of this committee. It is a very thoughtful committee, by the way. It's a committee that works very, very well.
We're hoping you use it as a sounding board for some of your decision-making. I really feel, Minister, that it would be tragic if a decision were made over the Easter break to allow the sale of this company. I do think that when we had our witnesses here—the last time we only had one meeting with them—all members, and I'm not going to speak for the other members, but I think all members had some concern in terms of selling this company.
I do feel, as Mr. Brison indicated before, that it has the potential of being an Avro Arrow. It will be a benchmark decision. And 10 years down the road, we'll be looking back and saying, “My God, we made a bad decision.”
I would hope that you would commit now to at least extending for 30 days and allowing us to have a few meetings with the key players here, experts, so that we can express our concerns to you.