In Debate: Amending Investment Canada Act to Protect Jobs, Part 1
February 9th, 2012 - 7:02pm
Opposition Motion—Investment Canada Act
Ms. Irene Mathyssen (London—Fanshawe, NDP) moved:
Madam Speaker, it is truly my privilege to rise today in the House and introduce this motion on behalf of Electro-Motive Diesel workers of London, Ontario. This motion seeks to highlight the recent plant closings in my community of London and in a second community, that of my colleague, the MP for Beauport—Limoilou, with whom I am sharing this speaking spot.
This motion also seeks to offer some remedy to workers across the country by calling on the House to draft amendments to the Investment Canada Act, amendments we most desperately need to ensure there are good-paying jobs in Canada so that our families, communities and country can thrive. We need to protect Canadian jobs now. We can no longer allow this government to simply watch while good jobs disappear across our borders.
Many of the members across aisle in the government benches have shrugged off any suggestion that we are in the midst of a manufacturing sector crisis in this country, but the figures from Statistics Canada do not lie. Canada has lost nearly 400,000 manufacturing jobs since the government took office in 2006. We have lost 40,000 manufacturing jobs in the last year alone. We are currently at an historic low in terms of manufacturing jobs going back to when these statistics were first gathered in 1976. I would like to note that this low is quite significant because both our labour force and population has grown significantly over the same period. In other words, there are fewer manufacturing jobs in Canada now than there were in 1976.
Of particular note, the textiles and clothing sectors, which, according to Statistics Canada, has long been one of the largest manufacturing employers in the country, was the hardest hit among the manufacturing industries. From 2004 to 2008, clothing manufacturers and textile and textile product mills saw almost half of their jobs disappear. Manufacturing jobs are declining at a rapid rate in this country and most of these jobs are landing in China.
A Statistics Canada report found that China has become the world centre of manufacturing employment. In fact, the number of workers in manufacturing in China was estimated at 109 million in 2002, which represents more than double the combined total of 53 million in all the G8 member countries. The same report paints a dismal picture for the Canadian automotive industry, which is concentrated mainly in Ontario. In fact, my communities are still reeling from the effects of the closure of the Ford plant in Talbotville.
I would like to quote from the Statistics Canada report, which states:
Automotive parts manufacturing lost more than one-quarter of its employees from 2004 to 2008, while motor vehicle manufacturing lost one-fifth. Parts manufacturers saw their jobs go from 139,300 to 98,700, which completely cancelled the strong growth from 1998 to 2004. For their part, motor vehicle manufacturers lost 15,900 jobs between 2004 and 2008, following a rather modest job growth of 5.0% from 1998 to 2004.
Just a quick reminder that most of these job losses have come under the watch of a Conservative government led by the Prime Minister. It is very clear that tax breaks to big businesses do not keep or create manufacturing jobs in Canada. We need a new strategy. We need an intelligent strategy.
The first step of New Democrats' strategy would be to make changes to the Canada Investment Act. We want to reduce the threshold for investments subject to a review to $100 million. We want to provide explicit and transparent criteria for the net benefit to Canada test. We want an emphasis on the impact of foreign investment on communities, jobs, pensions and new capital investment. We want there to be a required public hearing that allows for communities to have input into decisions on both the assessment of net benefit and conditions to apply to the investment. Lastly, we want to ensure public disclosure and enforcement of all commitments undertaken by potential investors. We also need to investigate and close the loophole in the Investment Canada process, whereby a takeover of a foreign company operating in Canada may not be subject to the act.
These changes would be the first step in the right direction for our manufacturing sector. A plant such as White Birch in Quebec City, when it was sold off to Black Diamond Capital, would have benefited from a requirement in the sale to provide a net benefit to Canada.
We have been particularly hard hit in my own community of London. The city's manufacturing sector has been shrinking at a rapid rate, and the auto sector jobs have all but disappeared.
Electro Motive Diesel was one of those few plants offering good jobs that was still in operation. They were good paying jobs that helped support a family as well as an entire community.
I have heard from the families of the workers who have lost their jobs, people such as Michelle, who wrote:
My husband was one of the workers and he is devastated by the closure. How would people go about trying to attract a company like GE to come to Canada? It wouldn't be hard to line up a workforce for them. How do you get government to offer incentives that protect the jobs of Canadians? There must be something that can be done for these workers. I hope the government does something about Cat doing business in Canada and makes it give back the money that the company received or provide good compensation packages to these workers.
The London community has been very supportive. I have heard from many people who have offered encouraging words to workers and their families, supporters such as Gary, who wrote:
First of all, I give them credit for standing up to Caterpillar the way they did and for keeping a peaceful demonstration. They deserve every penny they earned while working to build the best locomotive plant in the world. Yet Caterpillar didn't appreciate all these workers and what they've done to build an excellent product and give Caterpillar fantastic profits, which would have continued if the workers had only been treated with respect.
Another London resident, Carl Campbell, headed out to the picket line and handed out $1,000 worth of $50 bills to locked out workers.
The loss of the Electro Motive plant will impact our entire community. I heard from the local United Way just this week. The workers at EMD were very generous. They had raised over $100,000 in donations and payroll deductions for the United Way during its most recent fundraising drive. Sadly, the majority of this money will not be donated. Those jobs have been lost. The EMD families can no longer afford to support our United Way.
Canadians are recognizing what is happening to our communities. It is not just a crisis in my community but in many others. They have written to me and pointed to the obvious.
For example, Beth from Stratford, Ontario wrote to the Government of Canada. She stated:
The situation in London, Ontario with Electro Motive, and similar incidents in many communities across the land, is destroying our country. I urge you to review the June 2010 purchase of Electro Motive by Caterpillar under the Investment Canada Act. If it does not adequately protect Canadian jobs and workers, then an overhaul to the act itself must be made and applied directly and immediately.
The EMD closure has been a hard lesson. What we have learned with the depletion of our manufacturing sector is that tax cuts to corporations are not a job creation strategy, nor do they keep good paying jobs here in Canada.
We have also learned that there are serious flaws in the Investment Canada Act that need to be addressed if we are to protect the remaining manufacturing jobs in Canada. We need to take action now. Communities across our country are begging this government to keep our jobs here. The families hurt by the loss of Electro Motive Diesel do not wish that any other family suffer in the way that they, as well as all of us in our community, have suffered in London, Ontario.
Ms. Lois Brown (Parliamentary Secretary to the Minister of International Cooperation, CPC): Madam Speaker, I listened very carefully to the comments of my colleague across the way. I would first ask her if she has ever run a business, because businesses have decisions they have to make every day.
The manufacturing jobs that have been lost in Canada have been replaced with high tech jobs and good paying jobs. Over 600,000 net new jobs have come into Canada since the worst of the recession that we saw in 2009.
I go to schools all the time in my riding and I speak to the young people in those classes and often to those in the grade 12 classes. When I ask them what their aspirations are, 100% of those young people tell me they aspire to go to university, that they want post-secondary education, that they are looking for high paying quality jobs in the high tech industry, which is what Canada is attracting.
I ask the member which students in her riding she wants to assign to continue on assembly line jobs when we have other high tech jobs that are coming here?
Ms. Irene Mathyssen: Madam Speaker, I am quite distressed that the member opposite would insult the people of Electro-Motive Diesel in the way that she has.
First, the government is a half a million jobs short in terms of its predictions, and that affects communities across Canada.
In terms of high-tech jobs, they were at Electro-Motive Diesel. These were the most skilled workers in North America in electro-motive and locomotive building.
Yes, we do indeed want our children to go to college and university so that they can make a contribution to this community and to our country. However, the kids of workers at Electro-Motive Diesel are not going to university or college because the government did nothing to protect the jobs of the workers who would have been delighted to send them there, if they had work.
Hon. Geoff Regan (Halifax West, Lib.): Madam Speaker, I will begin by commending my colleague for London—Fanshawe for bringing this issue before the House today. I think that the motion in general is a good one. The principle behind it is one that is well founded and I will speak more to that later this morning.
The Liberal Party is concerned about what has happened at Electro-Motive Diesel. This, as well as what has happened at Papier White Birch in Quebec City, has certainly been mentioned in question period in recent weeks.
When we think about the rules we should have in place on foreign ownership, it is incumbent upon us to think about what we might see in response from other countries as well as the value and importance of investment by Canadian companies overseas.
As the government wants to change the pension system in very negative ways, it seems that more and more it expects Canadians to rely on investments in private markets for their retirement income. In view of that, and of the fact that many Canadians do have investments, whether it be bonds or stocks in Canadian companies that invest elsewhere, what does the member think the importance of that kind of foreign investment from Canada is?
Ms. Irene Mathyssen: Madam Speaker, I thank my colleague from the Liberal Party for his concern about Electro-Motive Diesel. I would encourage him to please talk to his provincial counterparts in the government of Ontario to stand behind these workers and make sure that labour laws and protections are fully supported by the Liberal government of Mr. McGuinty.
The member is quite right, we have to have balance in this country and investment is an important part of that. When these investors come here, they benefit from the fact that we have a universal health care system, significant infrastructure and well-educated workers. They benefit from the roads, clean water and all of that. Therefore, they have an obligation when they come here because their investment is secured by what Canadian taxpayers have provided. They have an absolute obligation to provide assurances regarding the safety of that investment, of the jobs, and that they will be participating in the community for generations to come and not running away like Caterpillar did.
Hon. Christian Paradis (Minister of Industry and Minister of State (Agriculture), CPC): Madam Speaker, at the outset let me say that I am disappointed in Caterpillar's decision to close the Electro-Motive Diesel facility in London. This facility has had a long history in London. Our government sympathizes with the workers in London. We will continue to monitor the situation closely.
That being said, in essence this is a labour dispute between a company and a union in a provincially regulated jurisdiction. The federal government does not have the power to interfere.
Next, let me discuss the history of the Electro-Motive Diesel facility. As the facility is in the constituency of the member for London—Fanshawe, I am somewhat concerned that I need to inform her that this plant has never been Canadian-owned. It has been American-owned from the very beginning, back in the 1930s.
Electro-Motive Diesel was initially owned by an Ohio-based company. It was then purchased by General Motors who in turn sold it to American private equity firms back in 2005. Then Electro-Motive Diesel, including facilities in Canada, the United States and Mexico, was purchased outright by Caterpillar, another American company.
The history is important within the context of my second point. This transaction was not reviewable. The reason it was not reviewable is because the plant changed owners when Caterpillar, a company based in a WTO country, bought Electro-Motive, another company based in that WTO country, outright. Electro-Motive had assets in Canada.
With respect to those who have said that the government approved this transaction, they are mistaken. No such approval was required.
With respect to those who have said that we should retroactively review the transaction now, it is neither required nor allowed that a review take place in the first instance, so a second review would be totally out of the question.
Finally, with respect to the leader of the third party who on Monday asked in the House, “How could it be that the government could have allowed such an investment without receiving guarantees from the company with respect to its future intentions?”, this is the same law that his current party oversaw for 30 years and in such time did not see fit to block a single transaction.
There is also another misconception that I feel the need to correct. The member for London—Fanshawe has referred to a $5 million tax break in her public communications, and she appears to be under the belief that Electro-Motive Diesel received a $5 million subsidy. She is wrong on that point. In fact, she is so wrong that, with the greatest respect for my colleague across the way, she is either deliberately misleading Canadians or she does not understand how the tax system works.
For the sake of clarity, let me read the section of budget 2008 that addresses support for the purchase of new locomotives:
Both the Standing Committee on Industry, Science and Technology and the Standing Committee on Finance have recommended an increase to the CCA rate in rail equipment. Budget 2008 proposes to increase the CCA rate for rail wheel locomotives to 30% from 15%. This change will ensure that the CCA rate for rail wheel locomotives better reflects the useful life of these assets. It will also encourage rail operators to acquire newer, more fuel efficient fleets of locomotives. For example, hybrid locomotives, which provide a more environmentally friendly mode of transportation. This change is effective for new locomotives acquired on or after February 26, 2008 as well as for reconditioning and refurbishing costs incurred on or after February 26, 2008. It is expected to reduce federal revenues by a small amount in 2008-09 and by $5 million in 2009-10.
How this works is simple. Companies that buy locomotives benefit from a 30% capital cost allowance rate whereas they used to benefit from a 15% capital cost allowance rate. The manufacturers of locomotives get no special tax break.
This measure was brought in to promote the purchase of more fuel efficient locomotives. It was brought in with the enthusiastic cheerleading of the NDP. While that party did not see fit to actually vote for it in budget 2008, it did support the measure when it was recommended by the industry committee back in 2007.
The NDP understands how capital cost allowances work. The question is: why are those members now deliberately misleading Canadians in order to score cheap political points?
NDP members have voted against every single measure that we have taken to support manufacturing in this country, for example, providing tax relief to individuals, families and employers. They voted against enacting a 50% capital cost allowance rate for machinery and equipment. They voted against eliminating tariffs on machinery and equipment and industrial inputs. They voted against investing in skills training and infrastructure. They voted against supporting research and efforts to commercialize innovation. They voted against extended work sharing agreements to assist workers.
I could speak about forestry measures. The NDP voted against the softwood lumber agreement and against the black liquor $1 billion subsidy.
Those members voted against $1 billion for the community adjustment fund. They voted against the $1 billion community trust fund.
On the other hand, the NDP plans high taxes, carbon taxes, trade barriers, hiking gas prices by 10¢ a litre and opposition to our natural resources sector. That plan would erase all of that investment in the blink of an eye.
It is clear that the NDP economic thinking leads to false promises, dead ends and economic ruin.
On the strength of recommendations from the Competition Policy Review Panel, the act was amended to liberalize the foreign investment review process. Once in force, these amendments will raise the investment review threshold to focus our reviews on those investments that are most significant to the economy and to better reflect the increasing importance to our modern economy of service- and knowledge-based industries.
This cannot be a one-way street. By encouraging greater foreign investment in Canada, we are leading by example. If Canadian businesses hope to expand to new markets and compete successfully with the best in the world, we must walk the talk here at home and demonstrate to the world that protectionism is not the path to economic growth.
Make no mistake, when the foreign investor breaches undertakings that it had made to our government, we will not hesitate to take it to court to ensure it lives up to its commitments. That is exactly what we did in the case of U.S. Steel. We took U.S. Steel to court when we felt that it would not meeting its commitments. That action resulted in a new agreement between U.S. Steel and the Government of Canada. In that agreement, U.S. Steel agreed to important commitments. As well, U.S. Steel will continue to guarantee pension-funding obligations for over 15,000 current and retired employees. This means jobs and continued economic activity in both Hamilton and Lake Erie. So Canadians can rest assured that when the government believes that undertakings are not being respect, it will act.
The NDP would not do all of that good work. The motion before us demonstrates that the NDP wants to shut down foreign investment in our country, and at worst it exposes a reckless high tech dangerous plan for our economy.
Ms. Irene Mathyssen (London—Fanshawe, NDP): Madam Speaker, I would like to say to the minister that sympathy is not enough. When people need to feed their families, sympathy is simply not enough.
I am well aware of the CCA and the history of Electro-Motive Diesel in London, Ontario. I understand that companies were given a tax break to buy locomotives, but the point is that tax break benefited EMD. EMD benefited from that. It was a taxpayer-funded benefit to EMD. When the workers of EMD needed the federal government, it was nowhere to be seen. The Prime Minister of this country went into that plant, had a photo op and said, “Here I am and I am going to make sure that your jobs are safe”. When those workers were in trouble, he was nowhere to be seen. If this CCA benefit is so good, why is GO Transit now buying locomotives from Cummins in the United States?
I would like to know precisely what is wrong with fixing the Investment Canada Act to make sure that this travesty does not happen again? What is wrong with providing tax credits to create jobs instead of this