Senator Don Plett, Leader of the Opposition

Bill to Amend the Air Canada Public Participation Act and to Provide for Certain Other Measures

Second Reading

On the Order:

Resuming debate on the motion of the Honourable Senator Pratte, seconded by the Honourable Senator Gagné, for the second reading of Bill C-10, An Act to amend the Air Canada Public Participation Act and to provide for certain other measures.

Hon. Donald Neil Plett: Honourable senators, I rise today to speak to Bill C-10, an Act to amend the Air Canada Public Participation Act.

Colleagues, I am a free market, pro-enterprise, small-government Conservative. In general, I believe that privatization allows a company to flourish and contribute to economic growth. That being said, I have some very serious concerns with this legislation, including a very suspicious timeline.

Let me state some facts. On November 2, 2015, the Liberal government confirmed that they remain opposed to allowing jets into Toronto's Billy Bishop Airport, which effectively killed an order worth more than $2 billion to Bombardier.

The next day, November 3, the Quebec Court of Appeal agreed with Quebec's Superior Court that Air Canada did not fulfill its obligation as per the Air Canada Public Participation Act concerning heavy maintenance of aircraft in Montreal, Winnipeg and Mississauga.

On December 11, Bombardier formerly requested financial support of US$1 billion from the Government of Canada.

On February 16, 2016, Republic Airways filed for bankruptcy and cancelled its order of nearly 80 Bombardier C Series aircraft.

The next day, February 17, Bombardier announced it was cutting 7,000 jobs.

The same day, Air Canada agreed to buy 45 planes from Bombardier's struggling C Series aircraft line, with an option to buy 30 more. Air Canada then announced that it would participate in heavy maintenance on the C Series aircraft in Quebec and construct a centre of excellence in Montreal.

After this announcement, Minister Garneau said the government would lessen Air Canada's obligations under the Air Canada Public Participation Act, and on March 8, the minister put Bill C-10 on notice in the House of Commons.

On March 24, the minister introduced the bill in the house. The minister claimed this bill would make Air Canada more competitive internationally. This is another principle that I can confidentially support. I am less confident, however, that this legislation will actually achieve that goal, mainly because Air Canada never once listed aircraft maintenance as a financial concern in its submission to the Canada Transportation Act Review board.

Air Canada did mention air traveller security charges, rapid growth of airport improvement fees and many more items that the government could have chosen to act on to alleviate the financial pressure for Air Canada. However, Bill C-10 addresses none of those concerns.

Air Canada's president, Calin Rovinescu, when testifying at the house committee, stated that the Air Canada Public Participation Act should simply be repealed, which would allow for the complete privatization of the company. This would essentially rid Air Canada of any commitment to taxpayers.

There may be some merit in discussing whether Air Canada is still benefiting from the Crown to the extent that they should still be subject to the obligations they agreed to in 1988.

If the government wanted to repeal the Air Canada Public Participation Act, they could have suggested that. However, they are claiming to uphold some level of commitment from Air Canada, when in reality their obligations with respect to employment under this legislation have no practical significance.

Let's review the language. Proposed subsection (4) of the bill, "Maintenance activities," reads:

For the purpose of carrying out or causing to be carried out the aircraft maintenance activities referred to in paragraph (1)(d) in Ontario, Quebec and Manitoba, the Corporation may, while not eliminating those activities in any of those provinces, change the type or volume of any or all of those activities in each of those provinces, as well as the level of employment in any or all of those activities.

Colleagues, everyone in this chamber is intelligent enough to understand that this provision commits Air Canada to precisely nothing. As I said, if repealing this act entirely is the government's aim, then let's discuss that. But then we need to call it what it is, and if we are to repeal the act entirely, privatizing Air Canada without any obligation to the taxpayer, then the company should not be reaping taxpayer-supported benefits.

For example, today, Air Canada is the largest airline in this country and an important international player in the aerospace sector because of support from taxpayers over the years. Upon privatization in 1988, Air Canada inherited a fleet of 109 aircraft. Air Canada is the largest major carrier at almost every airport in Canada, with the exception of Billy Bishop and Calgary airports. This gives Air Canada significant influence over each airport's operation and access to the best landing slots in slot-controlled airports, including Reagan airport in Washington, Heathrow in London, and LaGuardia in New York.

Air France sold a pair of landing slots at London Heathrow for $75 million, colleagues. For perspective, Air Canada owns 150 weekly slots at that airport, worth an estimated total of over $5.5 billion. It may be time to revisit whether Air Canada's obligation to the taxpayer and perks from the Crown remain in balance and whether a further step toward complete privatization would be beneficial to the growth of the company and, therefore, to the economy. However, the government claims that through this legislation they are improving the competitive standing of Air Canada, yet nothing in the company's financial reporting would suggest that this bill would accomplish that.

As it stands, all this bill will effectively accomplish is the loss of thousands of Canadians' jobs.

Now, I understand, colleagues, that Quebec, after a net gain of $1 billion and a substantial number of aerospace jobs is now comfortable with this legislation. However, my province of Manitoba is home to a world-class aerospace industry. It is the largest in Western Canada with approximately 5,400 individuals employed directly and many more indirectly in related sectors.

The Aveos closure in 2012 impacted Manitoba greatly. In fact, we lost over 400 quality aerospace jobs. With respect to the job losses, I take objection to Air Canada passing responsibility off on Aveos and its closure when Air Canada was the main client of that maintenance company.

In February of 2006, the previous government in Manitoba submitted a request in writing that amendments to the Air Canada Public Participation Act be limited to expanding the geographical scope of Air Canada's commitments within Manitoba. Clearly, the amendments go well beyond that and essentially eliminate any obligation for the company to maintain high-quality, skilled, heavy maintenance jobs in Manitoba.

The combined benefit of this legislation and the Bombardier purchase guarantees Quebec at least 1,300 quality aerospace jobs. Manitoba has been told by Air Canada that they will guarantee 150 jobs beginning in 2017, which is a mere 37 per cent of the jobs that were lost. Keep in mind that this is predicated on the hope that Air Canada will, in fact, deliver. However, what is most concerning is that the precise commitments were made by the Minister of Employment, Workforce Development and Labour, MaryAnn Mihychuk, to Manitoba's previous government concerning significant investment in training in the aerospace sector in order to compensate for the job loss. The government has not yet delivered on this promise, meaning that there remains no net gain for Manitoba.

Again, colleagues, Manitoba's aerospace is world class. The largest aerospace presence in Western Canada, Manitoba's industry is recognized for the high value, challenging jobs it supports. Manitoba companies are at the forefront in making significant annual investments in capital, research and development. Manitoba companies like Magellan and Boeing and unique Manitoba facilities like Composites Innovation Centre are often the first to implement advanced manufacturing processes and materials. Manitoba's interests are clear: economic growth, high-quality jobs and a strong competitive aerospace industry.

We need to ensure Manitoba's aerospace industry emerges strengthened and not weakened by decisions of our federal government. A recent motion in the Manitoba legislature received unanimous all-party support.

Maintaining a strong aerospace presence in Western Canada is in the national interest. One of the largest aerospace hubs in the country, the continued growth of Manitoba's critical mass of equipment and expertise is dependent on investment and innovation as well as the continuation of fair and open procurement policies. Combined, these factors will allow firms to maintain both their local presence and their global competitiveness.

In recent weeks, Premier Brian Pallister met with the Prime Minister to push for a commitment from the federal government to ensure the ongoing strength of Manitoba's aerospace.

Colleagues, I am disappointed with the complete lack of engagement by Manitoba's government MPs on this issue. I find it unconscionable that Manitoba Liberals are not standing up for Manitobans. It is my hope, colleagues, that in the coming days the government will deliver on their very clear commitment to Manitoba. However, until we receive some assurance that they will fulfill their commitments, colleagues, this legislation should not move forward.

Thank you.

Some Hon. Senators: Hear, hear!

Hon. André Pratte: Would the senator agree to a question?

Senator Plett: Certainly.

Senator Pratte: I agree with Senator Plett that the loss of 400 jobs in Manitoba will certainly be a tragedy for the concerned workers, as was the loss of 1,600 jobs in Quebec after the failure of Aveos.

Does the honourable senator fear that if Bill C-10 is not adopted before the summer recess, the Quebec Court of Appeal decision will probably stand and, therefore, the centres of excellence both in Manitoba and in Quebec will probably not be built, resulting in a net loss of 150 jobs in Manitoba and 1,000 in Quebec?

Senator Plett: Thank you very much for that question, Senator Pratte, and I want to assure you I am very concerned about that same thing. I sincerely hope that members opposite and, indeed, the Government of Canada are equally concerned. All they have to do, Senator Pratte, is not make new promises, not make new commitments, but complete the commitment that they made to Manitoba in the last provincial election — clear, concise, a number. Fulfill that commitment. There's lots of time in the next week. The minister needs only to make an announcement that, "We are fulfilling our commitment to our friends in Manitoba," and all of this will happen. I am very concerned about the government waiting until the eleventh hour to do this.

Senator Pratte: Would the senator take another question?

Does the senator agree that it doesn't make sense that Air Canada, a private company now, is still obliged to maintain its airplanes like it did in 1988, according to the current Air Canada Public Participation Act?

Senator Plett: Again, Senator Pratte, thank you.

In my comments I did not say that that did not make sense. My concern is not with Air Canada's commitments. As much as I don't agree with some of Air Canada's reasoning, and I do find it suspicious that now the maintenance issue has become front and centre when in fact it never appeared to be, I certainly am a private enterprise individual and I support that.

My argument, Senator Pratte, is not with Air Canada; it is with the federal government. They are the ones who committed a significant amount of funds for aerospace training in Manitoba, and it only makes sense that the government would want to do that. They would not want Manitoba to lose all of their aerospace training that they have had over the years and lose more jobs. My argument is with the government and the Minister of Transport and the Prime Minister. Let's fulfill the promises that were made and not the new ones.

Hon. Percy E. Downe: Would you take another question?

You may or may not be able to answer this, but I'm curious about the rules set in 1988 that obviously gave benefit to Quebec and Manitoba. Why was the rest of Canada excluded from any benefit in these aerospace contracts that you are talking about?

Senator Plett: Senator Downe, I would have to say I have no idea why they were excluded. Winnipeg is Western Canada's largest aerospace industry, and I guess Quebec is Eastern Canada's largest aerospace industry. Mississauga was obviously a significant one, and that's why they were included. I was not helping in 1988, so I cannot answer why the rest were not included.

Senator Downe: Would you agree with me that, in the spirit of free enterprise, the other provinces that have aerospace industries, like Prince Edward Island, which employs hundreds of people, should have the opportunity to participate as well?

Senator Plett: Again, senator, I will not comment on what other jurisdictions should do, and I didn't in my remarks. Again, my argument isn't with Air Canada. I think I have said that very clearly. I certainly support Prince Edward Island's and New Brunswick's aerospace industries. And everybody's. I love everybody. Again, I even have a strong liking for Senator Mercer.

My argument, senator, is not with Air Canada, it is with the federal government. The federal government made a commitment. That's all I'm asking for.

Hon. Leo Housakos: Would Senator Plett take a question?

I want to expand further on the question from Senator Downe because I do agree with him in principle, and I do agree with your answer as well, because Montreal and Winnipeg are known as aerospace centres of excellence.

At the end of day, there are all kinds of talk about Air Canada, that once we get this new legislation in place it will create a new centre of excellence in Winnipeg to service the new C Series airplanes they are going to purchase from Bombardier. The reality of the matter is these centres have been centres of excellence for maintenance for many years, and Air Canada has decided to ship out the jobs in taking care of the maintenance of their fleet not to Nova Scotia, not to British Columbia but to Israel, the Far East and the United States.

Is there any explanation or reasoning behind why these centres of excellence have not been efficient and competitive enough for Air Canada, so that they choose to send their planes thousands of kilometres around the world to maintain them?

Senator Plett: Thank you very much, Senator Housakos, for that question.

As I did state, Air Canada never mentioned that this in fact was a problem. I think we all do agree with free enterprise, but that has never seemed to be a problem and not one of the reasons why Air Canada wasn't making money, and now all of a sudden, very suspiciously, that is a problem.

Senator Housakos, I certainly agree. Why are they not making sure that we keep good, well-paying jobs in the provinces of Quebec, Manitoba, P.E.I., New Brunswick and every other province in the country?

Hon. Serge Joyal: Would the honourable senator take a question?

Senator Plett: Yes.

Senator Joyal: Honourable senators, when I read the bill at clause 1(2), it states as follows:

Maintenance activities

(4) For the purpose of carrying out or causing to be carried out the aircraft maintenance activities referred to in paragraph (1)(d) in Ontario, Quebec and Manitoba, the Corporation —

These are the tricky words.

— may, while not eliminating those activities in any of those provinces, change the type or volume of any or all of those activities in each of those provinces, as well as the level of employment in any or all of those activities.

In fact, what we are being asked is to relieve Air Canada of any obligation anywhere in Canada, if they conclude that they can change the type or volume or the level of employment.

They could maintain two people in any airport to brush the carpet inside planes and that is all. In fact this clause, as I interpret it, offers absolutely no guarantee for the centres of excellence in Quebec, even though they signed a letter with the government that would not be enforceable in court against the section of the bill.

It seems to me that if we are to relieve the company from specific obligations in Manitoba, Quebec and Ontario, there should be a guarantee in the bill that there be a minimum level of maintenance activities, otherwise Air Canada is committing to maintain activities under the guise of good intentions.

They are going to fight that in court and say that we have decided, for X, Y and Z reasons, that Manitoba or even Montreal two years from now, with the reconfiguration of aeronautical activities, led them to conclude that it is no longer profitable and they will close it.

According to the letter of this bill, there is nothing that will be open to the governments of Canada, Quebec, Ontario or Manitoba to take them to court and say that you have failed in your obligations. The Quebec government has taken them to court and won twice in compelling them to maintain activities. Should we have a safeguard clause added to this bill to maintain a minimum level of activity?

Senator Plett: Thank you very much, Senator Joyal, for that question.

I certainly agree with every one of those statements. I'm reminded of my previous life as a contractor. My best friend, who passed away about a year ago of cancer, was also my main supplier, and I was always concerned when he came and put his arm around my shoulder and said "Trust me, Don." That's when I decided not to accept the prices he was giving me because "Trust me, Don" was not sufficient.

Air Canada is saying, "Trust us. We are going to do this with absolutely no guarantee that any of this will happen."

I certainly agree with Senator Joyal. Of course we are only in second reading and not at committee stage where some of that might be addressed, but thank you very much.

Hon. Pierrette Ringuette: Thirty-eight years of exclusive privilege in regard to Air Canada employment opportunities for Quebec, Ontario and Manitoba. As an Atlantic Canadian, I'm not aware of any other federal status that would provide such a privilege.

Senator Plett, since you believe so much in free enterprise, would you agree to an amendment that would remove the exclusive privilege of these three provinces with regards to maintenance service for Air Canada?

Senator Plett: You're absolutely right that I agree with free enterprise. You certainly make a valid point that we might want to consider at committee, and you might want to suggest that again. As I said to Senator Joyal, this is not the time to make amendments. Amendments are usually made at committee stage, and in the case of Bill C-14 they were made at third reading.

Hon. Terry M. Mercer: Perhaps Senator Plett could expand a little further. Other commitments were made by Air Canada those many years ago, and one of the commitments made was the fact that services from Air Canada would be provided to Canadians from coast to coast to coast in both official languages.

I don't know how many times I've been on a plane where the service was in only one language, and usually that language was English. So if I were a Canadian whose first language was French, I would not be getting the service that the airline committed to Canadians — not to me personally but to Canadians — that they would provide.

I would suggest that trust is a problem here. We trusted them. Your friend put his arm around your shoulder and said, "Trust me, Don" and you moved on to another supplier. Unfortunately, we don't have the opportunity to move on to another supplier, but this is an issue. Don't you think that as they continue to break their commitments to Manitoba, perhaps the next commitments they will break are to Quebec, and maybe even to Mississauga, and they will move their maintenance to Mexico or someplace else?

Is their commitment to provide service in both official languages going to be on the table next?

Senator Plett: Of course, I don't want to presuppose what Air Canada may or may not want to do next. Senator Mercer, I believe the fact that their head office is in Montreal had to do with their official bilingual status. I'm not entirely sure that wasn't part of it. That may not have been the reason. Nevertheless, they are in Montreal. They are supposed to be a bilingual airline.

I have not personally experienced what you are suggesting, quite frankly, in fairness to them. I'm sure it has happened. For most of the flights I have taken, French and English have been the two languages anywhere I have flown, and sometimes up to three or four other languages. Depending on what country I fly into, you can't get into a movie at all with all the languages they are speaking when they make announcements. For the most part, senator, where I have flown, they have had both French and English.

Senator Pratte: Senator Plett, don't you think people are a bit harsh? Don't you think people tend to forget that it took years for Air Canada to get rid of the many shackles it inherited as a Crown corporation? It nearly went bankrupt.

We are talking about trust here. Air Canada is recognized as one of the best companies in the world, one of the safest airlines in the world. It employs 33,000 Canadians and spends $10 billion a year in Canada. Maybe we tend to forget a few positive aspects of Air Canada.

Senator Plett: Senator Pratte, thank you. I don't think anything that has been said here today has brought Air Canada's professionalism into question. Certainly, Senator Mercer's questioning of their bilingualism is legitimate if he's on flights where they are not providing that service. That is a legitimate question.

I think Air Canada's safety record is great; it's second to none. The fact of the matter is how often have you heard of a United Airlines flight crashing in the last year or two? Not very often. I believe WestJet is a top-notch air carrier; Porter is a good air carrier, and certainly many of the United States and European airlines. I don't think that is a question here.

I'm certainly not questioning Air Canada's professionalism. I fly Air Canada at least twice a week and they treat me very well. I'm very happy with the service I get. There have often been comments made — and maybe not fairly — about Air Canada, that their slogan is "We are not happy until we know that you are not happy." That's not really always the case with them. They do treat us well.

Since I have the pulpit here, I can complain a little bit. Their on-time record isn't the best in the world. Nevertheless, they have always brought me safely to the other end, and that, to me, is the most important thing.

I think they are a professional company, a good company, and I certainly hope they will continue to do well.

You started off by saying that Air Canada took the company out of near bankruptcy to where it is now. I should be so lucky as to get 109 aircraft given to me by the federal government when I start a company.