44th Parl. 1st Sess.
May 19, 2022 10:00AM
- May/19/22 6:49:08 p.m.
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Madam Chair, Andrew Kendrick, who testified on May 13 at the Standing Committee on Government Operations and Estimates, mentioned that the major shipyards always transferred the risk to the smaller suppliers, the contractors, and that the costs associated with the risks were assumed by them. If they needed to boost the price, they just had to increase the bill and the government paid.
Why are the contracts written that way? Why is it always the taxpayers who pay for the cost overruns or the risks, which most often are passed on to the smaller players?
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- May/19/22 6:49:42 p.m.
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Madam Chair, we are really proud of our national shipbuilding strategy. The investments we make into that strategy pay off. The economic benefits pay off, and it is not just for the large shipyards. Small businesses benefit as well.
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- May/19/22 6:50:18 p.m.
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Madam Chair, what I would acknowledge is that COVID has had an impact around the world. With respect to the shipyards, there is no question that COVID has impacted costs of labour and supply chain issues.
We always work in a way to maintain having costs match up to the quotes that are given, but COVID has presented a number of challenges, not only in shipyards but also all around the world in supply chains and labour.
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- May/19/22 6:51:26 p.m.
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Madam Chair, I have had an opportunity to visit one of the shipyards, and the work that is going on there is second to none. To see the extent of what is taking place here in Canada, on Canadian soil, to produce these ships is absolutely fantastic. It is creating jobs and economic growth right here in Canada.
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- May/19/22 6:51:58 p.m.
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Madam Chair, nobody is questioning the shipyard employees' work. What we are questioning is the excessive cost overruns taxpayers have to cover for projects that, to make matters worse, are often delayed.
There are delays. Here is my question. Are these delays and cost overruns due to government management, or does the problem lie with the shipyards?
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- May/19/22 6:52:57 p.m.
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Madam Chair, Troy Crosby, the person responsible for National Defence procurement, told the committee that the ships are not being built fast enough and that they are costing more.
I want to know if the minister has sent the shipyards an official letter, directive or document of some sort expressing the Government of Canada's concerns about the delays and cost overruns. If so, when did she send it? If not, why not?
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- May/19/22 6:53:25 p.m.
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Madam Chair, we are constantly monitoring the progress of the shipyards. We are working very closely with the shipyards.
They are working very hard to keep their projects on budget and on time, but they have faced challenges, as I have already mentioned. We continuously monitor the situation and do whatever we can to assist to ensure that those ships are built as quickly as possible and with the amount that has been allotted.
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- May/19/22 6:54:25 p.m.
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Madam Chair, again, we are working with the shipyards. I would like to point out that we have actually had five large ships delivered already.
Three of the offshore fisheries science vessels have been delivered, and two of the AOPS have been delivered. Other projects are under construction. We are going to continue to work with the shipyards, and we will ensure that we continue to monitor the situation and do what we can to support them. We know how important it is to keep these jobs here in Canada and have this production take place here in Canada.
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- May/19/22 6:56:21 p.m.
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Madam Chair, we continue to monitor these ships as they are being built. The estimate for the ships that I believe the member is referring to, the two vessels, is projected to be $1.5 billion. We are going to continue to monitor the situation and ensure that the ships being built are required.
There may be instances, for certain ships being built, that the design changes, but we continue to work with the shipyard. We are also continuously monitoring the price to see if the ships are over budget. We are constantly looking at that and determining what is bringing them over budget, and we are keeping a close eye on it so we can continue to work with the shipyards and they can deliver things as quickly as possible and respond to the specs.
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- May/19/22 6:57:42 p.m.
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Madam Chair, we are open and transparent in the way we move forward. We have been clear about the benefits with respect to the shipyards and what they produce, such as the economic benefits and the jobs that are being created. We are open and transparent with those numbers because we know that is important to Canadians. We will continue to carry on in that way.
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- May/19/22 6:58:50 p.m.
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Madam Chair, again, throughout this process we are monitoring what the ships are going to cost, monitoring where the shipyards are at and working very closely so that we can be open and transparent with Canadians. That is the process we have undertaken thus far and we are going to continue that process.
The PBO did include taxes, so that may be part of the discrepancy, but at the end of the day, if there is any suggestion that we are not open and transparent about the numbers, I totally disagree with the member's premise.
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- May/19/22 9:10:50 p.m.
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Madam Chair, I strongly support the national shipbuilding strategy. We are creating jobs here in Canada. I had the opportunity to visit one of the shipyards, and I can tell the member that the work being done there by Canadians is absolutely phenomenal.
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- May/19/22 9:34:21 p.m.
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Mr. Chair, I want to take this opportunity to thank the men and women of our Armed Forces, a sentiment I know is shared by all sides in the House, for the incredible work that they do. I was pleased to join with almost everybody here to vote for a motion to increase our defence spending up to 2% of our gross domestic product.
We have made progress since 2015. In 2015, we were at about 1%. We are now at 1.37%, and with the additions in the budget this year, we are going to move up to 1.5%. We still have more to do, but we know, based on the threats in the world today, we need to invest in our Armed Forces.
I am so pleased that we are also creating economic benefits and good middle-class jobs here in Canada from coast to coast through substantial investments in equipping our military.
Let me talk about the national shipbuilding strategy. Over the last 10 years, we have invested $21.07 billion in NSS contracts to businesses across the country. Of these, approximately $1 billion went to small businesses of less than 250 employees, and this has created approximately 18,000 jobs being created or maintained in Canada, not to mention all of the spin-off jobs that are created from companies that do business with C-SPAN, Irving and Davie.
We have awarded thus far $6.52 billion to Irving; $5.26 billion to Vancouver Shipyards, which is C-SPAN; and $2.26 billion to Davie. Other shipyards have received $7.03 billion. We are also providing the most advanced military jets, the 88 fighter jets that are being ordered. At this point the contract is being negotiated with Lockheed Martin. They are the biggest investment we have made in the Air Force in a generation. We launched a transparent competition in order to procure those jets starting in December 2017.
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- May/19/22 9:36:55 p.m.
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Mr. Chair, we heard a little about the shipyards. My questions are coming from Richmond, British Columbia, so the marine sector is extremely important to us over here on the west coast. I am curious to know about some of the work that is being done at the Vancouver Shipyard, Seaspan and the economic impacts around that.
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- May/19/22 9:39:24 p.m.
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Mr. Chair, I would like to know why the icebreaker contract was split between two shipyards. That reduces the expertise, so I would like to know why the contract was split.
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- May/19/22 10:08:46 p.m.
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Mr. Chair, there is no question that COVID has presented challenges, and the shipyards are no exception to that. These challenges have involved problems with getting labour, as well as supply chain issues, and there is no question that that has resulted in some delays and some costs. I would confirm that.
I think the testimony the member is referring to was not testimony that was given by everyone, although I can appreciate that there may have been a person who gave that specific testimony.
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- May/19/22 10:10:31 p.m.
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Mr. Chair, I have no question at all about the economic benefits. I have no question about how hard the workers work in all the shipyards. The same work is getting done around the world using the same steel and the same technology, yet Canada still pays four to five times the amount.
Will the minister look into this and find out how this can be?
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- May/19/22 10:10:53 p.m.
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Mr. Chair, what I would say with respect to that question is that shipyards around the world are experiencing the impacts of COVID-19 and, as I have said, there are labour shortages and supply chain issues. There are a number of issues that have added to the complexity here.
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