Mr. Speaker, first, I would like to mention that I will share my time with my hon. colleague from . He will have an opportunity to speak to this very important bill, which will have a real impact on people's lives.
Most days, I am pleased to rise in the House and participate in debates with my parliamentary colleagues. Today is a bit different. Today, I feel bitter and disappointed about a major decision made by the Liberal government that is the culmination of betrayal, deceit, and a lack of trust. This Liberal government is letting down 2,600 families across Canada, including 1,700 in the Montreal area. These families are being completely rejected by this Liberal government and Bill . They are being left high and dry.
I will try to give a little bit of background. The Air Canada Public Participation Act took effect in 1988 and set out the conditions for the privatization of Air Canada, which took place the following year in 1989. Section 6 of the act specifically states that maintenance on Air Canada aircraft must be carried out in three specific cities in Canada: Winnipeg, Mississauga, and Montreal. That worked for years. Air Canada complied with the act, awarding a contract to a subcontractor in the Montreal region named Aveos, which went bankrupt in 2012. That is where things start to get complicated. Aveos went bankrupt and disappeared, but Air Canada did not find a replacement. On the contrary, Air Canada took advantage of the situation and relocated those jobs to various countries around the world, such as the United States and countries in Europe and Asia. These 2,600 workers lost their jobs, even though they were guaranteed by a federal law duly passed by the House of Commons and applied for years.
The Conservative government of the day stood by and did nothing to enforce the law, but the Liberals wanted to demonstrate their support for the workers as well as their camaraderie and solidarity. We even saw the current , the member for , demonstrate with unionized workers on Parliament Hill chanting “So-so-so-solidarity” and demanding that the Conservative government of the day enforce the law. His argument, a good one, was that the least a law-and-order government could do was enforce the law, particularly when doing so would save good, well-paid jobs in a high-tech sector.
As soon as the Liberals took over, they changed their tune. So long “So-so-so-solidarity”, hello “Relocate; forget about our good jobs; who cares about the aerospace sector?” The government is basically telling these people that their jobs are gone for good.
When they came to power, the Liberals realized they did not have to enforce the law because they could just change it. That makes things much easier, for sure. There is no need to enforce the law when it can be changed so that Air Canada is no longer required to carry out aircraft maintenance in Canada.
We have to wonder whether that is the Liberal plan for job creation, namely eliminating the good jobs we have here in Quebec, in Mississauga, and in Winnipeg and shipping them off to the United States and Europe, because that is what will happen under Bill . This bill means abandoning the workers represented by the International Association of Machinists and Aerospace Workers, supported by the FTQ. They took their case to the Quebec Superior Court, which ruled in their favour in 2013. Air Canada appealed that decision, and the case went to the Quebec Court of Appeal. In 2015 the Quebec Court of Appeal also ruled in favour of the workers.
I would like to quote Justice Marie-France Bich, of the Quebec Court of Appeal:
From the moment that Air Canada decided to close this centre [the Aveos centre in Montreal] or reduce its activities in such a way that they were no longer at the same level as they had been in 1988, it broke the law.
This could not be any clearer. Bill threatens to pull the rug out from under the workers by making it that much harder to take this kind of legal action. When they are arguing their case before the Supreme Court, if section 6 of the act is amended, there will be a whole new legal framework. The changes to the Air Canada Public Participation Act set out in Bill are extremely weak, or virtually non-existent, in terms of Air Canada's obligations.
There is no longer any requirement to keep jobs in this country, let alone a minimum of jobs, a certain volume of work, or a percentage of tasks that must be carried out in Canada.
In short, they are giving Air Canada a blank cheque. The government wants to provide flexibility, but before long Air Canada will be doing contortions to outsource the good jobs that we have in Canada. I am saddened to know that our government is not giving a second thought to the lives of 2,600 families and is prepared to cynically abandon them after publicly supporting them. That is sad.
I am rising in the House of Commons today with a sad story of employees at Air Canada who lost their jobs in 2012. We are talking about 2,600 families around the country. Air Canada had the legal obligation to do the maintenance of its planes in Canada, especially in Winnipeg, Mississauga, and Montreal. Now it can do whatever it wants.
When the Liberals were in the opposition, they stood outside this building with the workers, with the union, singing “solidarity, brothers and sisters”, saying that they would support the union's jobs because they were good jobs. They were asking the Conservative government to apply the 1988 law about Air Canada.
When they gained power, it was like some magic appeared, and the Liberals changed their mind completely. Now they are singing another song. It is no longer “solidarity forever”, but “job creation for United States, Europe, or Asia.” With Bill , there would be no more legal obligation for Air Canada to keep those good jobs in Canada. Air Canada would have a blank cheque; it could do whatever it wants.
It is sad because the workers and their union, the machinists and in Quebec the QFL, went to court and won twice. They won in the Superior Court and in the Court of Appeal of Quebec. The decision of the judges was crystal clear that Air Canada was not respecting its legal obligation about the maintenance of its planes. Now the Liberals want to change the law and that might have a profound and brutal impact on the legal pursuits in the Supreme Court of Canada of those hundreds of workers.
Now the Liberals are saying they do not want to help them anymore, that Air Canada can do whatever it wants, and workers can find another job. However, aerospace is a very important sector in our economy, especially in the Montreal area.
We do not agree with the 's argument that Air Canada will create jobs by buying Bombardier's C Series aircraft. That is comparing apples and oranges. If Air Canada buys the C Series, it will be because it is a good aircraft and they need it.
We refuse to pit the aircraft manufacturing sector against the aircraft maintenance sector. We can and should support both. The Liberals should understand this. They should be ashamed that they are giving up hundreds of good jobs and sending them abroad. We are asking them to finally listen to reason and to withdraw Bill .
Mr. Speaker, I will start by saying how disappointed I am at having to rise to speak to this bill. This is not the kind of bill that I expected to have to deal with. If I had been told a year ago that the Liberals would be in government and then base a projection about this kind of bill on what they were saying at the time, I never would have thought that I would be speaking to such a bill.
In the last Parliament the now was standing on picket lines with Air Canada workers, shouting about solidarity, and probably taking a few selfies, too. That was great, because he was out shopping for votes. Many workers who felt that the Prime Minister was serious in his expression of solidarity may well have gone out and voted for the Liberals because they never would have suspected a Liberal government to bring forward a bill like this.
Some of the prime minister's members, some of whom have returned, like the member for , were saying, “The law is clear. The corporation is to maintain operational and overhaul centres in the city of Winnipeg, the Montreal urban community, and the city of Mississauga. That is the law. The Conservative government says it is tough on crime. It is time to get tough on Air Canada”. Those are the kinds of remarks we were hearing at the time from Liberal MPs like the member for Winnipeg North.
Fast forward to today. As I mentioned in debate on a motion earlier, we are six months into the new government. Most of the legislation that has been brought forward is either routine business with respect to the finances of government, bills responding to Supreme Court decisions, usually with a court-imposed timeline, or they are straight up and down repeal of certain measures brought in by the previous Conservative government that were explicit election commitments by the Liberals.
If we want to look for a bill that does not involve any of that, that goes beyond those things, then really the only indication of what the government is going to be like for the next four years on issues that were not foreseen in the election is this bill. I have to say that this bill is a complete betrayal of the workers that the Liberals pretended to be the champions of when they stood beside them on the picket line. It is absolutely shameful. It is a sign of the kind of cynicism and condescension the must feel toward Canadian workers. How could he stand on a picket line with them and say that he is going to protect their jobs, to shame the government of the day for not enforcing an act that in the end it was his intention to change when he came into government? That is a rhetorical sleight of hand the likes of which even the previous government was not capable of doing. During the campaign the Liberals were righteous in saying “Oh, the government should enforce the act. We will enforce the act.” Yes, they will, right after they change it to get rid of the very provisions that would protect the jobs and the very reason for which the workers would like to see it enforced.
I am appalled, frankly, but maybe having spent as much time around politics as I have I should not be surprised, particularly not by Liberals. We are six months in and they have already managed to teach me a new depth of cynicism when it comes to politics.
If it is a contest of narratives as politics so often is, the Liberals would have us believe there is a happy coincidence of factors, that it just so happened that without any prodding or conversation between the government and Air Canada, Air Canada decided to buy some Bombardier C Series jets, and it just so happened to be at a time when Bombardier was in trouble. Some other hon. members have done a good job of poking and prodding at this issue to get the government to affirm that there is a connection between those things, but if we listen to the government members' answers, they say, “No, no, no. There is no connection. It is just a happy coincidence. Bombardier was in trouble and Air Canada came forward.” It just so happened that when Air Canada came forward and there were some rumblings about the federal government selling out Canadian workers that the provinces just happily decided to drop their lawsuits.
As a result of all of these things magically coming together by some unseen force, the government feels this is a great time to change the act because we need to be fair to Air Canada, the very same Air Canada that the Liberals not that long ago when they were in opposition thought it was time to get tough on.
That is the story.
The Liberals have said that a whole bunch of benefits are going to accrue from this bill. It just so happens that none of them are in the bill. The centres of excellence are not in the bill.
There are no legal guarantees for those jobs. There are for the ones that are getting gutted. However, for the new jobs that we are supposed to get in this great trade, there are no legal protections for those jobs and there is no guarantee that Air Canada would not turn around, walk away, and put those jobs somewhere else.
Under the terms of this bill, by far the most contentious clause is not the clause that says instead of having the jobs in Winnipeg, Mississauga, and Montreal we would have them in Manitoba, Ontario, and Quebec. It is the one right under it that says Air Canada would define for itself the type of work that would be done and the type of work that would satisfy the requirements of the act. It is the clause that says it would determine the volume of work and the level of employment. Air Canada could rent a closet in Winnipeg, put some engine parts in it, and pay a guy to come around once a year to check up on them, make sure they are still there, maybe dust them, and that would be sufficient to meet the requirements of the bill.
The Liberals cannot tell me that we are supposed to be happy with that situation and accept a bunch of jobs that have no guarantees at all, particularly with the language of the company, and the government, incidentally. Next time there is a spot for a Liberal speaker on this bill, I wonder if they should not just invite the Air Canada corporate executives in and hear from them directly and cut out the middle man. They are expensive middle men for Air Canada in this debate. We do not need them.
We have heard these kinds of arguments before when we have heard about flexibility and the need to compete. I am sensitive to some of that, but one wonders, there is a tension here. That is, are we saying that we have come to the point where we cannot do maintenance on planes in Canada and have a competitive company? Is that what we are prepared to say? Is the Liberal government encouraging Canadians to believe that the global economy has come to a point that we cannot do maintenance on planes in Canada, that they have to be shipped somewhere else in order for companies to be competitive?
One wonders why one should be so concerned about the viability of a company once it does not mean any direct employment in Canada anymore. We are giving up guarantees for these jobs because we need to be flexible and competitive. That language means moving the jobs out of Canada. The government cannot have its cake and eat it too. It cannot say this is all about creating jobs when all of the jobs it is talking about, frankly, are completely consistent with the act as it is. There is zero reason in order to establish those centres of excellence to change the act. If this is not about exporting jobs, if this is not about sending jobs to Mexico or elsewhere, then why the changes to the act? It does not make sense.
On the face of it, this is about taking good-paying Canadian jobs and moving them out of Canada. The rest of it, the window dressing, none of which is in the act, and none of which is legally enforceable, is all about giving a fig leaf to cover the government in this, and it needs a big one because there is a lot that is ugly to cover.
There is nothing to say that a month later Air Canada would not take those jobs away. I am not saying it will. Maybe it will be three, four, or five years, but there is nothing to prevent those jobs from being taken away. The Liberals knew that well when they were opposition. That is why the Liberals said that the Conservative government should enforce the act. The Liberals must realize that now there will not even be an act to enforce, not in any meaningful sense, because under the bill Air Canada will be given every right to define the scope of this work right out of Canada.
The Liberal narrative on this is so contorted it is just shocking. I hope Canadians will listen to this debate. They do not have to listen to a lot of it to understand what is really going on. I hope they are paying attention, because what is going on here is completely unacceptable.
Mr. Speaker, it is my privilege to rise to speak to Bill and to join in the debate today. This is one of those unique circumstances where the opposition, in many ways, is united in part and is in some ways speaking with a unified voice, but for different reasons, perhaps. In many ways, this debate is an interesting one for me, given my background in the Air Force and my background as a lawyer. In my early days, articling as a first-year lawyer, I was involved in the CCAA restructuring of Air Canada. That was a time when Canadians worried about losing our flagship carrier. The company successfully restructured under CCAA, which protected a lot of jobs, a lot of commercial relationships across the country, and the airline.
We all remember years when there were many more serving the country, companies like Canadian and Wardair. It shows how globally competitive this industry is.
I was very proud, as a young lawyer, to be involved with the firm that represented Air Canada in that restructuring many years ago.
Its heritage as a former crown corporation is really why we are here with Bill , an act to amend the Air Canada Public Participation Act, which was a creature of the privatization. Most of the comments from my NDP friends along the way relate to the commitments made back in 1987 and 1988 when this crown corporation was privatized.
I do not think even my Liberal friends would suggest that the industry is the same today as it was in 1988. To suggest even the members of the unions they are talking about are performing the same tasks on the same type of aircraft would be false, because certainly the industry has changed in terms of technology, in terms of the needs of the workforce, and in terms of the globalization of the supply chain. Therefore, we have to have these debates in the House of Commons.
Where I am united with my NDP friends in my concern is really how this debate is coming to the floor. In many ways, the new Liberal government is showing that the old ways—and in fact the ways a lot of Canadians disliked about the Liberal governments in the past—appear to be back, when deals are made to benefit special interests or certain groups and the public policy ramifications of an issue are not actually spoken about.
I am going to raise a few of these points, in relation to the debate of Bill because I think they are important.
In many ways, the Liberals prove that old adage: why take one position on an issue when one can take two positions on an issue politically and advance both?
Here is one. Most of the Liberal Party at the time, in the 1980s, opposed privatization of Air Canada at the time when the Mulroney government proceeded with that privatization. Yet, here it is sneaking in an amendment to the participation aspects and sort of the job guarantees provided in the 1980s, with limited discussion and no real mention in its election document, which it holds sacrosanct in all other aspects of what it is doing in its early days, and we are here as a result of it.
It is also the result of its bad policy decision with respect to the Toronto island airport and the fact that a private sector operator was looking at buying a Bombardier aircraft at a time that Bombardier was seeking government assistance. However, because of a small lobby group in downtown Toronto, very influential within its caucus, it circumvented the regulatory process looking at the expansion of a regional airport.
That is not just a decision made in isolation, because our transportation networks are integrated. What happens about Billy Bishop airport will impact Hamilton, the airport in Kitchener-Waterloo, Pearson airport, and the Pickering airport and what size that takes in the future.
These decisions cannot be taken in isolation, but they stopped expansion applications and review for the Toronto Island, thereby eliminating a private sector sale for Bombardier at a time when it is teetering. Yet, behind Bill , is really a deal, I believe, that was crafted by the federal government in relation to another purchaser acquiring said aircraft and coming to the rescue, so to speak. I would like the minister to bring to the House whether Bill C-10 was discussed as an element of the private sector sale to Bombardier that we see Air Canada announcing? The announcement came mere days after that company met with the minister, so what someone needs to do is connect the dots on all this and see what led up to Bill C-10. The reason it was not in the Liberals' election platform was that it has come about as a result of the challenges Bombardier is facing. That is my concern.
We need to have a full debate, with discussion of the impact of Bombardier's financial difficulties alongside sales of aircraft and alongside litigation that several other provinces were party to, in relation to the Air Canada Public Participation Act.
Bill is a small bill in terms of the number of words, but when the onion is peeled on the issues underlying this, as all members of the opposition have been doing today, we see there is a lot more to the bill than the couple of pages that it appears to represent, and the government has not been transparent on that at all. For a government whose hallmark is transparency and sunny ways, we have seen that jettisoned on most issues within weeks.
In my remarks I am going to explore why I think these underlying public policy decisions relate to what is before us in Bill , and that is why I have serious concerns with the bill. The government has not been transparent on the road that has us here considering this amendment to a long-standing act and a long-standing practice.
I am also very proud, as a former officer of the RCAF, of our aerospace industry, very proud of Bombardier, proud of Air Canada, our carriers, and proud of the suppliers, which are world-class. That is why, when the government made a quick move to scuttle the expansion of the Toronto island airport without proper consultation, that impacts our industry, which is world-class. Many Canadians do not realize that Canada was the third nation in space, with Alouette I. Canada basically trained most of the pilots in the free world that won World War II with the British Commonwealth air training plan.
On the weekend, I played the Hon. George Hees, John Diefenbaker's transport minister, at a dinner that recreated the Avro Arrow dream. We celebrated aerospace and our achievements. Diefenbaker himself was not celebrated at this dinner, because he did cancel the Arrow, but we have a tremendous heritage, and the opportunities in this industry are really not well known by Canadians. We remain the number one producer, from an R and D and a production standpoint, of flight simulators around the world.
When I was in Seoul as the parliamentary secretary for international trade in the previous government, I toured CAE's simulator just outside Seoul, which provides flight training and aircrew training for Asian airlines. We were there as part of the South Korea trade agreement. That is a company with a global reputation as the best in the business, and we should celebrate that.
Canada remains the number three producer in terms of aircraft production, small and medium-size aircraft with a new larger one on the horizon from Bombardier, which will again be best in class. We are third in engine production for civil air purposes. These are incredible numbers. They are all well-paying, all highly skilled and high trade jobs, and they are all trade focused.
At a time when our dollar is lower and we have the ability to trade very competitively, we should be taking advantage of leveraging this industry, not secret deals that hold it back. There are $28 billion in revenue across the companies within this sector, both in the supply chain and in production and manufacturing; and 76,000 jobs across the country, in all provinces, with particularly well-regarded and highly concentrated industries in the Montreal area, Winnipeg, Toronto, and also in Mainland B.C. We should foster these jobs and work with them.
Our previous government did in terms of reforming research and development. In fact, the previous government outlined the Red Wilson report to ensure we constantly looked at our competitiveness. Red Wilson had been a corporate leader at CAE.
It is worth noting some of these companies, and I have a particular passion for them, not just because I am ex-air force, but because I am ex-minister of veterans affairs. A lot of these companies are veteran employers. In some cases, their senior leadership are veterans. They include MacDonald, Dettwiler and Associates, the famed Canadarm, probably our biggest iconic R and D development; Viking Air, which has recreated some of the old classic de Havilland aircraft that have been flying for generations; Cascade; Avcorp; Bombardier; CAE; and COM DEV. We also have global companies producing in Canada, including Boeing, General Dynamics, and Lockheed Martin, through our industrial regional benefits programs that provide supply sector jobs as a result of our defence purchases, which at times the government seemed somewhat uncertain. However, if something is acquired, there is money put in to research and development into jobs on the ground here.
That supply chain is critical and is why our industry has to modernize. We need to have a debate on the ground about public participation and about the industry so our manufacturers, including some of the businesses I named, do not take advantage of servicing for Air Canada, or WestJet or Porter. They really need to be involved in the global supply chain for both maintenance and production.
What are we here for on Bill ? We have heard a lot of passion on the side of members of the New Democratic Party, but it boils down to three subtle changes to the act, which came in as a result of the privatization of Air Canada in 1988.
The bill would amend section 6(1)(d) of that act, changing the maintain operations and overhaul description of securing jobs as they stood in the 1980s into “...carry out or cause to be carried out...”, which recognizes that a lot of specialized manufacturers, whether landing gear or components, can provide that specialized life cycle maintenance that is important in the airline industry, and that specialization can happen through the carrying out. That makes sense in this environment, but we have not heard that because of the secret deals that have brought us to Bill C-10.
The operation and overhaul would be expanded to show that it would include any type of work related to airframes, engines, and components mainly because we have some expertise on a sub-component basis in Canada in terms of some of the leading producers.
The geographic areas protected back in 1988 with the privatization at that time were described as the city of Winnipeg, the city of Mississauga and the Montreal urban area, because I think they needed to describe that in a wider sense. The new amendments proposed in Bill will refine that to the provinces, as opposed to those cities proper.
The substance of Bill in some ways recognizes the fact that the industry is not the same industry it was in 1988. I can certainly understand why Air Canada probably wants to be unshackled from the requirements put on it in 1988 to ensure that the privatization was not too disruptive.
If we look at the airline as it stands today, it is strong and a global leader in many ways, but it is also subject to global competition. It has to be able to take advantage of the same expertise and opportunity. Therefore, if we are carry out, or cause to be carried out in a certain part of Canada, as long as we are getting that best-in-class ability to maintain and modernize fleets, then that is what we want to see.
The other thing I said at the outset, which has us here in this debate today and that the government has not been transparent on, is the fact that Bill is really the result of litigation in relation to adherence to this act. As I said, Air Canada probably, understandably, feels unfairly shackled by something that was done, not just by the last government or the previous government, but three governments ago, in the 1980s at a time when privatizations were a little newer. However, I think today most Canadians would certainly not expect the federal government to operate its airline in a competitive environment where there is a lot of choice.
Quebec and Manitoba joined the International Association of Machinists and Aerospace Workers in litigation related to business changes in those jurisdictions. Certainly, with that union involved, it is why my friends in the NDP are as passionate, and I respect their standing up for workers and items they believe. However, I would suggest that their workers would tell them that this is not the same industry that it was in 1988.
What we saw was the government of Quebec drop its participation in this litigation as a result of an Air Canada decision to purchase aircraft. Obviously, there was some political horse-trading that went on, and the Quebec government removed itself from the litigation in return for Air Canada supporting the industry through the acquisition of Bombardier aircraft.
Manitoba also removed itself from this litigation by carving out a deal whereby Air Canada supported three world-class aerospace services suppliers in Manitoba and leased one of the Air Canada maintenance hangars to an operator in Manitoba on favourable terms. In that case, there was another provincial government coming up with a deal it thought was sound enough to remove itself from a civil action in relation to an act from 1980s.
As I said at the outset of my remarks, I would have much preferred it if the had come to the House and told us that Bill was the result of yet another pragmatic deal that was made. However, to do that, he would have had to outline all aspects of that deal, what exactly happened, and if the government approached a private sector player to help it with respect to requests from Bombardier for assistance.
This is where we get into some difficult territory. Should the government be convening these meetings behind closed doors to cobble out a position, particularly when the minister was getting heat for ending the exploration of the expansion of the Toronto Island Billy Bishop Airport, and cancelled that with a tweak after demands from people within his caucus and within a group in Toronto advocated against an expansion? What that cancellation led to was a private sector company that was planning an acquisition of Bombardier aircraft could no longer proceed. All of these events gather, and that is the run-up to why we have Bill .
We can actually have a rational discussion on whether it would be helpful to unshackle a company from requirements that limit its competitiveness from 1988 legislation. We can have that discussion, and I would like to, because the minister and the Liberal government have not come to the House in an open and transparent way, much like the parliamentary budget officer said they approached their recent budget, the least transparent in over 15 years.
I would like the government to outline all aspects that went into Bill : the related litigation, the pressures in relation to the financial stability of Bombardier, and Air Canada's need to be competitive in a global age. I think we could have a proper debate if that was before the House. I am disappointed the information is not here for this debate.
Mr. Speaker, I am pleased to rise in the House to speak to Bill , an act to amend the Air Canada Public Participation Act and to provide for certain other measures.
Speaking in technical terms, this legislation will remove the articles of the act that stipulate that Air Canada undertakes operational and overhaul maintenance in Mississauga, Montreal, and Winnipeg.
In plain English, the proposed amendments to the 1988 Air Canada Public Participation Act mean that the jobs of 3,000 Canadians who provide aircraft maintenance will be affected. Under the amendment, Air Canada would still be required to do some maintenance work in each of these provinces, but would be allowed to change the type, volume, or scope of any or all of those activities in each of those provinces. As well, the level of employment in any or all these areas could be changed, depending on the scope. Air Canada would be free to dictate how many people would be employed by these centres and what work they will do.
Let me be clear with regard to one particular aspect of this. The Conservative Party believes it is time that Air Canada becomes a private sector company that is not supported by taxpayers. We agree that Air Canada, and all of our carriers, should have the ability to be more competitive, a level playing field, and this does not have to be at the expense of high-quality, well-paying jobs of Canadians. Having spent almost 20 years in aviation, I am aware first-hand of the challenges that Canadian aviation industries face in remaining competitive in an ever-changing global industry.
However, before getting into the weeds of the bill, let me speak about the history of Air Canada in this country for a moment.
Air Canada inherited a fleet of 109 aircraft upon being privatized in 1988. All of Canada's major airports where Air Canada first flew were built with the financial support of the Government of Canada at the time. Air Canada is the largest airline in this country, and an important international player in the aviation sector. However, that is because of, not despite, the support from the Government of Canada and Canadian taxpayers over the years.
Today Air Canada is the largest tenant in nearly every major airport in this country, with the exception of Calgary and the Billy Bishop Toronto City Airport. This gives Air Canada significant influence over each airport's operations, and access to the best landing slots in all of our major airports. One might be tempted to say it is a bit of a competitive advantage over other carriers, including our other national carriers.
As I said before, we welcomed the original intent of the Air Canada Public Participation Act when it was introduced in 1988. The act put in place clear conditions to ensure that all of the support that Air Canada had received from the government to turn it into a profitable crown corporation was not lost. The government could be seen as perhaps protecting its investment.
The conditions were that Air Canada would be subjected to the Official Languages Act, would maintain its headquarters in Montreal, that 75% of its voting shares had to be held by Canadians and, finally, it had to “maintain operational and overhaul centres in the city of Winnipeg, Montreal urban community, and the city of Mississauga”. Given all this, it is surprising that the government would only make such a narrow change to the act. While it is unclear what level of benefits this legislative change will give Air Canada, it is clear that the intended change will make it possible for the carrier to move thousands of jobs from Canada to other jurisdictions.
If we are talking about giving further competitive advantage to one of our national carriers, perhaps it would be appropriate to look at the industry as a whole. If afforded all of the advantages previously and Air Canada is still having difficulties remaining competitive, it might be a sign that our national aviation industry might need some retooling.
Let me talk about some of the challenges facing the aviation industry as a whole, because to understand the issues, one must first understand the product. Air transport is a critical, economic, and social infrastructure. It provides access to trade and investment; connects people to jobs, friends, and family; and delivers vital goods and services in remote areas, such as air medevac.
Geography, population size, and environmental conditions increase the operating costs of air transport in Canada compared to other jurisdictions. The Canadian passenger travel market is relatively mature, and it has enjoyed small to medium growth over the years. The total Canadian passenger market is estimated at between 122 to 125 million enplaned and deplaned passengers. However, this pales in comparison to the emerging and developing markets around the world.
In some measure, this is due to some of the very same policies developed for the industrial and economic environment in the 1990s. Simply put, the very same policies that were designed to protect our industry are now the ones hindering it.
Most of Canada's domestic air services are provided by Air Canada and WestJet. A small number of regional and local air carriers across the country service some small communities from coast to coast. This allows for better customer service and connectivity.
In the 1990s, Canada saw the Southwest Airline low-cost airline model introduced by WestJet. This came at a time when consumers and communities were held hostage by predatory pricing by Canada's two major airlines of the time, Canadian and Air Canada.
Canada's main charter carriers are Transat and Sunwing. They are focused primarily on seasonal vacation destinations. WestJet's entrance into the Canadian market created excitement by offering low-cost travel. It allowed many Canadians to experience air travel for the very first time. It was an exciting time and it was an exciting project of which to be part.
There was a time that air travel was only for the elite and was considered glamourous and accessible to only those who could afford it. With the entrance of low-cost carriers and competition, air travel is now easily afforded and this has stimulated market growth.
Both Air Canada and WestJet have now introduced lower cost, lower fare vacation or charter subsidiaries, Rouge and Encore. Respectively, this has stimulated some vacation or destination growth in a number of markets and, as we speak, there are a number of start-up low-cost carriers at various stages of financing that are expected to enter the market in the short term.
Ultimately, this will lead to a price competition with existing carriers. For a time, our national carriers will react with even greater seat sales and maybe even new routes, but as past experience suggests, only the new entrants with deep pockets will be able to survive.
Unable to compete or go head to head with the big boys because the deck is stacked against them, airline start-ups and failures are frequent. The ones that suffer the most are the communities and, ultimately, the consumer.
All of this is to say that maybe it is time to reconsider policies that may have served us well when the Canadian aviation industry needed protection to flourish, but now impairs our competitiveness. Of course, such protectionism comes at a cost that is largely borne by consumers, who pay relatively high airfares, and the Canadian travel and tourism sector that also, due to higher costs, has been losing market share for over a decade. Simply put, Canada is sliding backward in its competitiveness.
The Conference Board of Canada estimates that Canadian airports in 2012 accounted for $4.3 billion in real GDP, but had a total economic footprint of $12 billion, generating almost 63,000 jobs, and contributing over $3 billion in federal and regional taxes. Canadian airports are vital to the success of the Canadian economy, key gateways for inbound and outbound tourism, business, and personal travel. Domestic commerce and international trade are dependent on our key gateways, our airports.
Canada is blessed with strategic geographical location. We are at the crossroads of the great circle routes among Asia, Europe, and the Americas, and we have this competitive advantage, but yet our nation has never taken full advantage of it. Competition has successfully negated this competitive advantage with integrated policies and programs aimed at stimulating inbound tourism and facilitating connecting traffic through their global hubs, essentially overstepping or, to use an aviation term, doing a flyby of Canada.
Canada's airports face increasingly aggressive competition from countries that have recognized the importance of air transportation as a driver of economic growth. Our neighbouring U.S. counterpart markets directly to and easily accesses a large portion of Canada's U.S. transborder and international travel market. Finally, Canadian airports also compete with each other for the allocation of limited carrier capacity.
Our regional airports and communities are oftentimes pitted against one another in competition for airline service. As mentioned during the Billy Bishop debate, Canadian airports also face challenging times with changing aircraft capacity and the continued focus on environmental issues such as noise due to residential encroachment.
In the 1990s, with the introduction of the national airports policy, a new framework was defined with relation to the federal government's role in aviation. NAS airports, comprised of the 26 airports across Canada that were deemed as critical links for our country, were deemed essential to Canada's air transport system. They served 94% of the air traffic in Canada. These airports were transferred under lease to airport authorities, and in some cases, municipalities.
The infrastructure in many of these airports was antiquated. Some, if not all, of them were in need of attention. Through the transfer negotiations, reinvestment monies were given, but the expectation for these airports was that they were to do everything in their power to be self-sufficient.
Airports have very few revenue generation streams. With the transfer of airports and the newfound independence also came the realization that user-pay systems were needed. Airport improvement fees have now become the norm, and today we have airports that are incredible examples of the NAS airport of the 1990s. We have also seen airports that continue to struggle to be competitive and to be innovative.
The user-pay approach to financing air infrastructure and services is effective and sustainable, but it further increases costs for the sector and for users. It costs more for airlines to fly into our airports because it costs more for our airports to operate.
Canada is unique among its competitors in charging onerous rents and taxes that undermine competitiveness. Airport rents, for example, can represent up to 30% of airport operating budgets, far more than what would be expected in dividends and income tax from a private for-profit airport, such as what we see in Europe.
The federal government takes in about $300 million annually in rent, but it only invests $50 million back into our airports. Canada cannot become a world leader in terms of cost competitiveness of air transport without heavy public subsidization of the sector, not only to match the subsidies offered by some of our competitors, but also to overcome the naturally high-cost operating conditions and lack of economies of scale.
If Canada wants to remain competitive, we need to fully integrate parts of our local transportation system and recognize essential partners, such as the government, airlines, tourism and business interests, using an overall team Canada approach to align policy and promotion. We need to stimulate air travel to, from, and within Canada. This alone would have a broader, far reaching, positive industry impact than continually giving a single private sector company competitive advantages over others.
Arguably the most important challenge facing Canadian industry today is our air policy. The key to enhancing Canadian connectivity, global competitiveness, and economic prosperity is to realign Canada's air policy. The government can improve Canada's competitiveness and help create opportunity in trade and tourism, which in turn would create more demand for air services, strengthening our national carriers, all of our carriers and not just one, by using their time not to pick off the low-hanging fruit, the easy wins, and looking after friends.
Let us look at our air policy. Let us apply our blue sky policy more progressively and in a manner that is strategically aligned with Canada's international trade and tourism objectives. Let us pursue more aggressive open skies agreements with Canada's free trade partners. Let us pursue progressive and more open agreements with Canada's tourism markets. Open up more markets for tourism and trade: wow, what a novel idea.
Tourism is a large and high growth industry. It has a significant impact on the global economy. In 2013 alone, the tourism industry saw more than one billion international tourists worldwide, generating more than $1.3 trillion in receipts. Canada's tourism industry contributes $84 billion to the economy and employs more than 600,000 people.
Competition for tourism is heating up more and more as more countries are investing in tourism marketing, aligning their aviation and visa policies to attract a greater share of this market. Canada is lagging further and further behind. Aligning our tourism objectives with our aviation policy would only serve to build a stronger Canadian aviation industry and stronger carriers.
I have a quote from Air Canada's president and CEO, Calin Rovinescu:
It is indeed time that the Air Canada Public Participation Act, dating from the company's privatization nearly 30 years ago, be modernized to recognize the reality that Air Canada is a private sector company, owned by private sector interests, which operates in a highly competitive global industry that has undergone dramatic transformation over the past three decades.
I agree, but there needs to be a level playing field, and protecting Canadian jobs should be the number one priority.
The announcement made by Air Canada to undertake and overhaul maintenance comes only after the airline announced that it would be purchasing Bombardier's C Series jets.
Air Canada until very recently had been subject to lawsuits from Quebec and Manitoba as a result of the service centre closures in those provinces.
In the Quebec case, it failed to reopen a factory that went bankrupt in 2012, putting 2,000 skilled workers out of work. The Quebec government filed a lawsuit that accused Air Canada of breaching its legal obligations when it transferred some heavy maintenance work outside the country. The Quebec Court of Appeal sided in a ruling last November. However, Quebec dropped the case when Air Canada agreed to purchase 75 Bombardier C Series jets and service them in the province. Was that convenient timing? I think not.
The Manitoba government also ended legal proceedings after the airline signed a new maintenance agreement that is expected to create at least 150 jobs in the province.
Air Canada already outsources its maintenance work to two suppliers in Quebec, in addition to providers in the U.S., Singapore, Ireland, and Israel.
While the proposed legislation should have nothing to do with Bombardier, this bill unfortunately has everything to do with Bombardier. While the government has yet to announce whether it will provide Bombardier with yet another billion-dollar bailout as requested on December 11, 2015, it seems it is finding ways to skirt the public with backroom deals.
In his short justification for introducing Bill , the minister hailed Air Canada's decision to purchase the C Series aircraft combined with the Government of Quebec's and the Government of Manitoba's intention to discontinue litigation against the carrier as the main cause. That is so nice of them. The minister also noted that this would allow Air Canada to be more competitive in an evolving and ever-increasing globalized industry. I think that line alone speaks for itself.
The taxpayers of Canada have done a lot for Air Canada and the company is rewarding them by taking away high-quality, well-paying jobs. The Conservative Party does not support any bill that seeks to eliminate jobs, especially when there are viable alternatives to do so that will not affect the company's bottom line.
The government has an opportunity to look at all of our industry and make some real change. If the government really wanted to take a measure that would stimulate the entire Canadian aerospace sector, and as I said, create real change, including Air Canada, it could choose to tackle any of the issues I have mentioned previously. I would note that all of these measures have near universal support in the aviation sector and would not lead to a single loss of jobs in Canada.
Madam Speaker, I appreciate the opportunity to now give a speech on this debate, having participated throughout the day in questions and comments.
I want to share that the reason I have been involved in the debate, the reason I am giving this speech, is that this was actually an issue that a constituent brought to me in my office a number of months ago. This gentleman had been an Aveos employee and had lost his job as a result of, in my view, Air Canada's ongoing efforts to shirk its clear obligations under the Air Canada Public Participation Act.
It was a pleasure for me to chat with this gentleman. I always appreciate it when constituents come to my office to educate me about issues I may not know about, and, when I have the opportunity, I can then reflect their concerns in the House. In this case, these are certainly concerns that I share. This is the context I bring to this debate.
It is certainly telling that my constituent wanted us to be talking about this issue, yet it is very clear from the way this debate has progressed back and forth that it is not an issue that the government wants to talk about. The Liberals wanted to bring this legislation forward, and to be sure, they want it to pass. However, while other parties are participating actively in this debate, it is clearly not something that the government is keen to talk about, and it is not surprising why.
Here is the deal.
The government came up with an arrangement that I think it feels satisfies everyone of importance. However, the legislation ignores the one too often overlooked stakeholder group: the people, the ordinary working women and men in this country, taxpayers, people who cannot afford to hire lobbyists, people who cannot afford to go to $500-a-plate fundraisers with ministers, people who go about their ordinary business and just hope and expect, perhaps against the odds, that the government will treat them fairly and honestly.
The government has come up with a solution in this context. The Liberals believe, it seems—which reminds of the title of a recent book I read—that the bill satisfies everyone but the people. As obscure as the Air Canada Public Participation Act may be to some Canadians who have not interacted with it directly, I think the legislation before us is something that everyone should pay some degree of attention to, because it tells us a great deal about the way the government does business. To paraphrase Michael Corleone, if you want to do business with this government, then it will do business with you.
I would like to start the substance of my remarks by reviewing the story of how we got to this sordid piece of legislation, and of who has already paid the price for the policy of the government and will continue to pay the price as we go forward.
In 1988-1989, through two separate offerings, Air Canada was privatized under, notably, a previous Conservative government, which I think had the wisdom and foresight to see the value of proceeding in that direction. I think most of us will accept now, in principle, the value of government stepping out of being directly involved in that kind of business activity, but certainly in the lead-up to that privatization, the people of Canada had already been very involved in terms of putting money into the development and ongoing maintenance of what had then been a crown corporation.
The mechanism of privatization is important here. The privatization of Air Canada was achieved through a share issue privatization, or SIP for short, and this is exactly what it sounds like. The government issued and sold shares in what had previously been a publicly owned company. Particularly in this case, and in some other cases in those years when the government initiated SIPs, certain provisos or restrictions were placed on the company being privatized. In this case, Air Canada was subject to four conditions: it would be subject to the Official Languages Act; it would maintain its corporate headquarters in Montreal; 75% of its voting shares had to be held by Canadians; and it had to maintain operational and overhaul centres in Winnipeg, Montreal, and Mississauga. This was the law, and they were also the conditions of the privatization.
The latter point of maintaining operational and overhaul centres in those three Canadian cities is what the legislation before us seeks to remove. It would no longer require that these jobs be kept in Canada.
Therefore, we can be very clear that the proposed legislation is not about creating jobs in Canada but about sending jobs out of Canada. There is no denying that. Certainly the government may point to other jobs being created in the aerospace sector, but it is very clear that the effect of the legislation before us is to allow, to facilitate, this company in sending jobs out of Canada.
As everyone knows, when conditions are put on a sale of anything, whatever that thing is, that is likely to have some impact on the price. A 2012 University of Calgary paper from the School of Public Policy stated this on privatization: “Whether [these] provisions were in the interests of Canadians or not, they probably reduced the initial share offering prices and governments’ sale proceeds.”
Because of these conditions, shareholders got the shares for less than they would have otherwise, and taxpayers got less money. To summarize, the Government of Canada sold Air Canada shares subject to certain conditions, which reduced the value of those shares but which the government felt at the time were worth the cost.
Recognizing that was how the privatization happened in 1988-89, it would seem obvious that as a matter of basic fairness to the Canadian taxpayers, we would expect that any subsequent removal of those conditions should not come for free, the removal in particular of the conditions around the requirement that Air Canada keep certain jobs in Canada. The removal of these conditions has, on the one hand, an economic cost for workers and taxpayers but, on the other hand, has an economic benefit for Air Canada. Effectively, the government will legislate windfall gains for Air Canada at the expense of workers and taxpayers, at the expense of ordinary people.
Why is the government doing this? Why would it pass a law that would absolve Air Canada of clearly stated commercial obligations that are long-standing and allowed shareholders to acquire Air Canada at lower prices? Why would it do such a thing? It does not make sense, until we realize the other interests that are in place, in fact other interests that have been alluded to directly by government members. Again, these are not the interests of workers and taxpayers but the interests of another private company.
Air Canada has been sued by the governments of Quebec and Manitoba for its failure to live up to its obligations under the Air Canada Public Participation Act, which is the act that lays out the requirements that operational and overhaul centres be maintained in Winnipeg, Montreal, and Mississauga, as we have discussed. However, these governments have now both suspended their litigation because of some notionally unrelated but in fact very much related events. This appears to be an elaborate scheme aimed at bailing out a different group of shareholders, that is, Bombardier shareholders.
Bombardier is a company that all of us want to see survive and do well. However, certainly on this side of the House, we are more interested in protecting workers and taxpayers and not providing further windfall gains to company owners. The connection between windfall gains for Air Canada and windfall gains for Bombardier has already been well laid out by my colleague from . It has been alluded to, but not clarified, by members of the government. In any event, it is worth going over one more time.
On February 17 of this year, Air Canada announced that it had started negotiations with Bombardier to purchase C Series aircraft, which are aircraft that Air Canada had not previously expressed an interest in. Then, on March 8, the minister put this bill on notice. The governments of Quebec and Manitoba suspended their litigation. It is hard to imagine them successfully resuming it if this legislation passes, the law under which they were suing having at that point been significantly altered.
Air Canada would receive the free removal of conditions of its privatization at the same time as it is exploring previously unplanned purchases from Bombardier. The government knows that a direct bailout of Bombardier is unlikely to be acceptable to the public at a time when Bombardier, like Air Canada, is out-sourcing jobs. Therefore, there may exist what we might call some form of an indirect bailout. The benefit of the removal of conditions flows from the government to Air Canada, and the benefit of a previously unplanned large purchase flows from Air Canada to Bombardier.
This seems to be the crux of the matter. We are not clear as to why or how, but we know that the benefit of the removal of conditions flows from the government to Air Canada, and the benefit of a previously unplanned large purchase flows from Air Canada to Bombardier.
Something in this connection was made explicit by the Quebec government when it discontinued its litigation against Air Canada. Here is what it said in a press release:
Subject to concluding final arrangements, the Government of Quebec has agreed to discontinue the litigation related to Air Canada's obligations regarding the maintenance of an overhaul and operational centre following Air Canada's agreement to collaborate with the Province to establish a Centre of Excellence for C Series....
Note the careful language here: “collaborate...to establish a Centre of Excellence for C Series”.
The government, again, will not acknowledge this connection. I asked one of the members, explicitly, what the connection is and why it is talking about these new investments in C Series in a debate about the Air Canada Public Participation Act. There was a bit of wink-wink, nudge-nudge as they talked about these things together, but they will not acknowledge the connection.
Well, what is going on seems fairly clear, given the timeline, given the benefits that are flowing to Air Canada from the government and then on from Air Canada to Bombardier.
It seems, therefore, that Bombardier is getting help from the government after all. Now, all of a sudden, it is claiming it does not need the help anymore. Here is a Financial Post story from March 23. It quoted a representative of Bombardier. This story came out, by the way, the day before this act was proposed, but certainly after it had been put on notice. Here is what a representative of Bombardier said:
Really, the federal funding would just be an extra endorsement for the program.… That’s really just an extra bonus that would be helpful but is very clearly not required.
Now, we are talking about a $1 billion bailout. That is an extra bonus that I am sure many of us could use, as well. However, this is quite a different tone from what we heard from the same company a few months ago.
I wonder if it is really that Bombardier did not need the money all along, or is it simply that by March 23 it was clear that the same benefit would be received, just perhaps by a different means, notably without the pesky conditions that might require real and substantial reform, without those trappings that might be associated with a more direct package of financial support?
I actually worked for the Department of Industry during the tenure of the last government. At the time, we were involved in bailing out a number of major auto companies. I got to know some of the members who are still in this place during those years. I know that, for those of us who are Conservative-minded, who believe in free markets, it was a very difficult decision for the government to be involved in bailing out car companies. Many Conservative-minded people may still not agree with that decision, but it is clear that there were some very particular conditions and circumstances operating at the time.
At the time, in 2009, the government undertook a very carefully constructed bailout approach. It did a few important things, though. It required reforms that ensured viability. It involved the best possible effort of the government to ensure that there would be some kind of meaningful return on the investments that were made. Part of the deal was a loan; part of the deal involved the acquisition of shares.
For those who believed that the bailout was necessary at that time, it was at least transparent. It was done in the least bad way, because it involved reform and it was set up in a way to try to ensure that there would not be a need for bailout in the future, that these companies would go on to be successful and continue to create jobs in Canada. Not to undermine the challenge of the decision at the time, but it is clear that to some extent it worked and those companies have continued to exist.
However, the novel approach we see here is what appears to be some form of an indirect bailout, benefits flowing to Bombardier via Air Canada, in a way that is not transparent, not accountable, and involves no reform, to a company that I should underline has received something approaching $4 billion, by some estimates, in various forms of government assistance since 1961.
I would just say that, if the government wants to be involved in supporting a private company, it should, at minimum, try to ensure that it is the last time it has to do it, and that there are reforms in place that ensure it is not going to be providing bailouts on and on.
The problem here is that there is this murkiness, this allusion to things that may be happening, but we do not know how they happen or why they happen.
I want to comment directly on some of the comments made by other members and offer some refutation.
We have heard a lot of interesting language by the other members who spoke, although not many members of the government have spoken to this issue.
They talk about modernizing the act. I believe one member told us that it is 2016, as if stating the current date is an argument for so many different things, not just the policy of gender parity in cabinet but also for this, and that all we have to do is state the current year to say that we are modernizing and moving forward. I do not think that selling out Canadian workers and taxpayers is modernization at all; rather, it takes us backward.
They have said that they are updating the act. Updating is not what this is. This is a substantive policy choice the government has made that betrays taxpayers and betrays workers.
In certain speeches, the government has made the point that there are costs associated with these conditions that Air Canada has to bear but that other private companies do not. The reality is that those conditions were associated with those shares being sold at a lower price, as I have already mentioned, but let us not forget that Air Canada has benefits as well that other companies do not have. Canada regulates its airline industry significantly, in a way that I think has very clearly been designed to protect the economic interests of Canadian carriers. We can debate the value of those various individual policies back and forth, but there is no doubt that those policies exist and that Air Canada has received certain advantages from government regulation as well. That is something we need to recognize and take into consideration.
In any event, this is simply a matter of fairness. Those were conditions that were imposed on Air Canada as a condition of its sale, and those who bought those shares knew exactly what was happening.
We have heard this argument of the importance of Air Canada's viability. There is no disputing that all of us want to see Air Canada, as well as Bombardier, be strong, create jobs in Canada, provide good service to Canadians, and provide choice in the marketplace as well, but there are many different things that could be done to improve Air Canada's viability. Some of my colleagues have mentioned examples of these already. Increasing the foreign ownership limit of Canadian-based airlines to 49% would be one option. Allowing more money to come into Canada instead of jobs going out of Canada would be a better way to improve competitiveness. Continuing to streamline immigration and customs processes and establishing a set of principles to guide airports when determining fees are another. Those are the kinds of reforms that would help Air Canada's competitiveness, and they would help the competitiveness of Canadian airlines in general.
I did not want to say just this on the point about these being costs that other airlines do not have. That is true of the Official Languages Act as well, yet we do not see any movement by the current government to remove the application of that act, so there will still be conditions on Air Canada that do not exist on other airlines, and I think they would understand why.
To summarize, conditions are being lifted, at a cost to and with no benefit to the taxpayer. Bombardier is getting business from Air Canada, and because there are no conditions, both companies are able to continue sending jobs out of this country. Air Canada gets something for nothing, Bombardier gets something for nothing, and the government thinks it is filing away a potential political headache.
However, the real question is this: who gets left behind?
It is the workers and the taxpayers. It is the ordinary folks. Those are the people who are getting left behind because the Liberals are sacrificing the principles of real economics and real free market economics for their own particular brand of crony capitalism.
Those of us on this side of the House believe deeply in the market mechanism, but the necessary condition is fairness, and this bill is not fair. It is not fair to workers who will lose their jobs. It is not fair to the taxpayers who could have received more for Air Canada's privatization. It is good for the elite, but it is not fair for the people, and that is why we are opposed to it.