May 28, 1984

PC

Paul Wyatt Dick (Deputy House Leader of the Official Opposition; Progressive Conservative Party Deputy House Leader)

Progressive Conservative

Mr. Paul Dick (Lanark-Renfrew-Carleton):

Mr. Speaker, I should like to make a short intervention relating to Bill C-25. The present Government has made much of this Bill and its companion piece of legislation, Bill C-24. The Government would have us accept this as a signal that it is trying to get a grip on Crown corporations and the multiple embarrassments which have been springing from them. In their rhetoric and fanfare, the Liberals would have us believe that there has been a miraculous transformation in the policy of their Party and in the thinking of the Government on this issue.

This Government would have the people of Canada, who have been sickened by weekly headlines relating to Crown corporations, believe that it has learned its lesson and is trying desperately to make amends for its past errors. The Government would have Canadian taxpayers swallow at face value its deathbed repentance. However, with the least amount of scrutiny, one can see that this transformation is nothing but mere lip service. The Government is paying lip service to the goals of greater accountability, greater control and greater direction of Crown corporations. It has no intention of fulfilling those goals.

Sown in this Bill C-25 are not the seeds of accountability and divestiture, but the seeds of more government intervention, the seeds of more government ownership, the seeds of more politicizing of what should be purely market decisions, the seeds of more heavy-handed intrusions for exclusively political reasons and, worst of all, the seeds of more deficit, a much larger deficit. This Bill to continue CDIC must be examined in conjunction with its predecessor in the last Parliament, Bill C-158, and with its companion piece of legislation in this Parliament, Bill C-24-the Government's alleged solution to its past disastrous policies on the growth of commercial Crown corporations.

The present Liberal Government indicates that the mandate of CDIC is to hold and manage assets. What a fine job it has been doing with Canadair and de Havilland! Also, the Liberal Government says that the mandate of CDIC is to effect divestitures. It has not divested anything yet. It has talked about divesting itself of Northern Transportation. A proposal was put in 1979 by an organization to buy that company when it was a going concern, but after the National Energy Program, there is nothing for it to carry up the Mackenzie Valley. It does not have the clientele it once had or carry the freight it once did. They are not going to be able to sell it for the same price they could have sold it for then.

The Government says the CDIC's mandate is also to make investments in a commercial manner as a federal agent. That is the intent. The Government wants to intervene some more. Then, for public consumption, the Government tacks on something else. It wants to accent divestiture. The CDIC now manages Canadair, de Havilland Aircraft, Eldorado Nuclear and Teleglobe Canada as wholly-owned subsidiaries, and manages the 48 per cent voting stock, 85 per cent of the actual shares of the Canada Development Corporation. Essentially

May 28, 1984

Development Investment Corporations Act this Bill is designed to regularize the incorporation of CDIC retroactively, making legal the illegal transfer of shares of Eldorado Nuclear and the CDC and granting responsibility for Teleglobe Canada to CDIC. The earlier transfer of those shares contravene both the intent of Parliament and the then existing legislation. The CDIC was set up illegally by this Government, which would now have us grant after the fact approval to this earlier illegal action.

The Minister responsible for this Bill has made much of it as a tool of management and divestiture, and downplays its role as a tool of investment. In other words, he downplays the fact that this Government wants to intervene more in commercial activity. Yet, on the other hand, both the chairman, Maurice Strong and the president, Joel Bell, of CDIC have publicly taken the complete opposite tack. They do not talk about divestiture; they have not mentioned it yet. Those two officials proudly enforce the view that the Government alone can respond to new economic challenges. They endorse the view that the appropriate response to those challenges is greater and more direct Government involvement.

Under Bill C-25, the CDIC gets a wide mandate, excessively wide in the view of this Party. I want to go on record as saying the Progressive Conservative Party is not against Crown corporations per se. We agree there is a role for Crown corporations. This Party was associated with the setting up of a number of Crown corporations many decades ago. In a country so wide and diversified as Canada and with so little population, sometimes there is the necessity for a Crown corporation to play a role. But it is the last choice. We would prefer the public sector pick up and do the work through companies listed on stock exchanges and so on.

The articles of incorporation of CDIC do not list any restrictions on the business it may carry jon. When we look at the illegal Order in Council which set up this corporation, we find it speaks of investing, assisting, expanding, widening and carrying out all activities in the best interests of Canada operating in a commercial manner. All activities. It does not mention divesting. We can only assume, therefore, that the Minister and the Cabinet, in talking about divestiture, are trying to pull a little ploy for public consumption while they hide their real intent. Make no mistake about it; both the present Government and present management of CDIC view the role of CDIC as that of economic intrusion under an exceedingly vague mandate. It is vague precisely so it can be used to serve essentially political goals and write blank cheques; so it can be used to duplicate all the past disasters of Crown corporations, meddling in what should be strictly commercial matters. Yet the Government would have us believe at the same time that Bill C-24, the companion legislation, will clear-up some of these problems. There is no clear, precise definition of the mandate or the objectives of CDIC anywhere. We know from past experience with this Government what that state of affairs leads to. It leads to disaster.

The Government has taken hold of a new catch-phrase, that of accountability. We on the Opposition side of the House, for the time being, have been talking about accountability for

almost ten years. For us it is not some mere catch-phrase. For us it is not designed as part of a public relations scam. For the Progressive Conservative Party, accountability is a commitment. What does Bill C-25 tell us about the depth of the Government's commitment? Under Clause 41, CDIC will be pointedly free or exempt from Section 24 to 26 of the Statutory Instruments Act with respect to any directives or orders made under Bill C-25. In other words, CDIC will be exempt from the provisions for public access to such statutory instruments. Why? The Government is trying to hide things again. The public can neither copy nor take away copies of such orders and directives. There is no permanent reference of such directives and orders to any of the standing committees of Parliament, whereas in the case of all other statutes, regulations and directives, they are all referred to the Standing Committee on Regulations and Other Statutory Instruments. In other words, Mr. Speaker, they have excluded CDIC from some fairly heavy and what could be onerous provisions but which are important for a company playing around with our tax dollars. So much for accountability. So much for public responsibility.

We are told that Bill C-24 is designed to enhance the control, direction and accountability of Crown corporations. We are told it is going to be the grand solution, the framework on which the future of public corporations will be made to adhere, and the framework which will clear up all that has gone wrong in the past. It is of such value to the interests of greater control, direction and accountability that in Bill C-25, introduced at precisely the same time as Bill C-24, we find that on at least six occasions the CDIC is either exempt from the application of Bill C-24 or the Cabinet is pointedly authorized to allow such exemptions. We need look no further than Bill C-25 to see the illusion of the present Government's commitment to accountability.

Last year, Bill C-158, the predecessor to Bill C-25 which we are discussing today, provided that Parliament would have seen the complete capital budgets of the CDIC after approval by Cabinet. One year later, this regime has decided that only summaries of corporate plans and capital budgets of the CDIC will be tabled. The Bill has been watered down already.

Under this Bill, Parliamentary approval will be required for CDIC to acquire new wholly-owned subsidiaries but, in the same breath, Cabinet is given an override on that requirement. Clause 41 waives the requirement to table before Parliament any information that the Minister feels would be detrimental to the commercial interests of either CDIC or any of its wholly-owned subsidiaries. These are major loopholes.

Let us not ignore the fact that under this Bill, CDIC has a $3 billion debt limit which includes the borrowings of subsidiary corporations. The CDIC is allowed to raise $3 billion in the form of debt and it will never have to come back to Parliament to ask for permission to do so. Some accountability that is. Aggregate payments of up to $1 billion from the Consolidated Revenue Fund can be authorized by Cabinet.

May 28, 1984

Some accountability that is. Parliamentary appropriations would only be required for payments in excess of $1 billion.

The Minister has attempted to sell this Bill and the CDIC as an instrument of divestiture. When we see a debt ceiling of $3 billion and an equity ceiling of $1 billion, we cannot believe for a moment that this is the true thrust of government policy. As if the ceilings were not high enough, and in fact we believe that they are already too high, the Government has carefully allowed in Bill C-25 for the ability to raise both the debt and equity ceilings through the simple expedient of a $1 item in the Appropriations Act. That is what Liberal Members call accountability.

It is apparent to those of us on this side of the House that the deficiencies of Bill C-25 are such that the CDIC can only become an instrument for more disasters and for what almost amounts to less accountability and management. We are told that the CDIC will resolve most of the problems which commercial Crown corporations have had when dealing with the Government and that it will make up for structural deficiencies. I would not want to count on that. As usual with this regime, the answer to every problem is to create a new layer of Government and a new layer of bureaucracy which by one more step protects diversions from public accountability and Parliamentary scrutiny.

We believe that the Liberal regime only pays lip service to divestiture. This Bill proves that. We know precisely what we will get if this Bill is passed. We will get more government involvement in commercial enterprise with minimal accountability. We will get more public investment in commercial ventures based on political motivations and not on economic ones. We will get more debt and more disasters. We will waste more money and we will have more misallocations of scarce resources. Unfortunately, worst of all, we will have more headlines to sicken the average Canadian taxpayer. Where, they will ask, was Parliament when this scheme was concocted?

In conclusion, I would like to say that at least we on this side of the House are here for this debate. We would like to try to alert the public to this latest government scam. We are prepared to fight this Bill.

Topic:   GOVERNMENT ORDERS
Subtopic:   CANADA DEVELOPMENT INVESTMENT CORPORATIONS ACT
Sub-subtopic:   MEASURE TO ESTABLISH
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LIB

Harold Thomas Herbert (Deputy Chair of Committees of the Whole)

Liberal

The Acting Speaker (Mr. Herbert):

There follows a 10-minute period for questions or comments.

Topic:   GOVERNMENT ORDERS
Subtopic:   CANADA DEVELOPMENT INVESTMENT CORPORATIONS ACT
Sub-subtopic:   MEASURE TO ESTABLISH
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LIB

William Kenneth Robinson (Parliamentary Secretary to the Minister of National Revenue)

Liberal

Mr. Robinson (Etobicoke-Lakeshore):

Mr. Speaker, the Hon. Member referred to Clause 41 of the Bill in which certain items considered as regulations or statutory instruments are not made available to the Standing Committee on Regulations and Other Statutory Instruments. I feel very keenly about that kind of thing because I happen to be a member of that committee and have been for quite a number of years. As a matter of fact, under the short rule of the former Leader of the Progressive Conservative Party, I was the co-chairman of that committee. I have a great deal of interest in what it does.

I do think that the Hon. Member should appreciate that it would not be in the best interests of this corporation for a

Development Investment Corporations Act committee of the House of Commons to be looking into the commercial nature of the various so-called regulations or instruments that should be provided but rather that the corporation should be placed in the same position as that of any other commercial corporation in the country. I wonder if the Hon. Member would care to comment on that.

Federal corporations or Crown corporations that are dealing with the public in the same manner as private corporations should be treated in the same way. Guidelines, instructions, documentation and regulations of private companies are not available to be scrutinized by the Standing Committee on Regulations and Other Statutory Instruments, nor should those of Crown corporations and public companies.

Topic:   GOVERNMENT ORDERS
Subtopic:   CANADA DEVELOPMENT INVESTMENT CORPORATIONS ACT
Sub-subtopic:   MEASURE TO ESTABLISH
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PC

Paul Wyatt Dick (Deputy House Leader of the Official Opposition; Progressive Conservative Party Deputy House Leader)

Progressive Conservative

Mr. Dick:

Mr. Speaker, the one big difference which the Hon. Member for Etobicoke-Lakeshore (Mr. Robinson) appears not to have taken into consideration is that the officers and directors of a private company are spending their own money. In the case of a public company, they are spending the taxpayers' money. That is the big difference between the two and that is why we must have a disclosure of what they are doing.

In the United States, such companies disclose almost everything. Here they try to keep everything secret. Even Subclause (2) of this Bill provides for tabling at a later time.

Topic:   GOVERNMENT ORDERS
Subtopic:   CANADA DEVELOPMENT INVESTMENT CORPORATIONS ACT
Sub-subtopic:   MEASURE TO ESTABLISH
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LIB

William Kenneth Robinson (Parliamentary Secretary to the Minister of National Revenue)

Liberal

Mr. Robinson (Etobicoke-Lakeshore):

Mr. Speaker, partly as a point of clarification, I would like to mention to the Hon. Member that there are shares in these corporations as well. Surely all shareholders should be treated the same. It is the shareholders' money. Whether it happens to be so-called government money or private money, it is still the shareholders' money. The federal corporations need to be accountable to their shareholders the same as private corporations need to be accountable to their shareholders.

Topic:   GOVERNMENT ORDERS
Subtopic:   CANADA DEVELOPMENT INVESTMENT CORPORATIONS ACT
Sub-subtopic:   MEASURE TO ESTABLISH
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PC

Paul Wyatt Dick (Deputy House Leader of the Official Opposition; Progressive Conservative Party Deputy House Leader)

Progressive Conservative

Mr. Dick:

Mr. Speaker, I believe that the companies which are specifically referred to in the initial part here like Cana-dair, de Havilland Corporation, Eldorado Nuclear and Teleglobe are 100 per cent owned by the Canadian Government. The Government is the only shareholder at this stage. Granted, only 85 per cent of the shares of the Canada Development Corporation are owned by the Government, but the Government has 48 per cent of the voting stock at the present time. The Hon. Member will notice that the majority of these companies are wholly-owned companies.

Topic:   GOVERNMENT ORDERS
Subtopic:   CANADA DEVELOPMENT INVESTMENT CORPORATIONS ACT
Sub-subtopic:   MEASURE TO ESTABLISH
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LIB

William Kenneth Robinson (Parliamentary Secretary to the Minister of National Revenue)

Liberal

Mr. Robinson (Etobicoke-Lakeshore):

Mr. Speaker, I have one further objection to make. Of course, these shares are held by the Crown corporations, but the suggestion in the Bill is that they could be sold off at the appropriate time. Whenever that may be is probably a question of when those shares would receive the greatest return for the public sector upon their sale. Certainly it is in the interests of all Canadians to see that these corporations are successful and receive a piece of the action if at all possible. The Bill specifically provides for a sale of shares to the public.

May 28, 1984

Adjournment Motion

Topic:   GOVERNMENT ORDERS
Subtopic:   CANADA DEVELOPMENT INVESTMENT CORPORATIONS ACT
Sub-subtopic:   MEASURE TO ESTABLISH
Permalink
PC

Paul Wyatt Dick (Deputy House Leader of the Official Opposition; Progressive Conservative Party Deputy House Leader)

Progressive Conservative

Mr. Dick:

Mr. Speaker, unfortunately, it is obvious that the Hon. Member did not hear my entire speech. If he would like to read it in tomorrow's Hansard, he would find that I spent a good deal of time talking about divestiture. The fact is that the Bill talks about planning for divestiture and says nothing whatsoever about actually divesting anything. Knowing the make-up of the people who will control this organization-Mr. Bell, Maurice Stong and Senator Austin-they will keep on hauling stuff in on their plate. I have never seen them give away anything or sell anything. I gave as an example the one company which the Government had suggested it was prepared to sell, and that was Northern Transportation. It takes freight down the Mackenzie Valley and it has other ancilliary types of business. I know personally that an offer was made to buy that company back in 1979-80. The Government has never acted on that offer. Since the National Energy Program, freight is no longer being transported to that area and the company is not worth very much. The Government is now willing to sell it. I do not think the Government will maximize its dollars as it could have back in 1979-80.

Topic:   GOVERNMENT ORDERS
Subtopic:   CANADA DEVELOPMENT INVESTMENT CORPORATIONS ACT
Sub-subtopic:   MEASURE TO ESTABLISH
Permalink
LIB

Harold Thomas Herbert (Deputy Chair of Committees of the Whole)

Liberal

The Acting Speaker (Mr. Herbert):

Are there any further questions or comments?

Topic:   GOVERNMENT ORDERS
Subtopic:   CANADA DEVELOPMENT INVESTMENT CORPORATIONS ACT
Sub-subtopic:   MEASURE TO ESTABLISH
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PROCEEDINGS ON ADJOURNMENT MOTION


[ Translation]


SUBJECT MATTER OF QUESTIONS TO BE DEBATED

LIB

Harold Thomas Herbert (Deputy Chair of Committees of the Whole)

Liberal

The Acting Speaker (Mr. Herbert):

Order. It is my duty, pursuant to Standing Order 45, to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the Hon. Member for Peterborough (Mr. Domm)-Metric Conversion-Enforcement of regulations- (a) Minister's statement (b) Salaries of Metric Commission executives; the Hon. Member for Surrey-White Rock-North Delta (Mr. Friesen)-Finance-Fuel tax paid by farmers and fishermen-Request for removal; the Hon. Member for Winnipeg North (Mr. Orlikow)-Immigration-(a) Recruitment of foreign executives by Bank of Montreal (b) Permission granted by government.

Topic:   PROCEEDINGS ON ADJOURNMENT MOTION
Subtopic:   SUBJECT MATTER OF QUESTIONS TO BE DEBATED
Permalink

GOVERNMENT ORDERS

CANADA DEVELOPMENT INVESTMENT CORPORATIONS ACT


The House resumed consideration of the motion of Mr. Bussieres that Bill C-25, an Act respecting the Canada Development Corporation, Canada Development Investment Corporation and certain other corporations, be read the second time and referred to the Standing Committee on Finance, Trade and Economic Affairs.


LIB

William Kenneth Robinson (Parliamentary Secretary to the Minister of National Revenue)

Liberal

Mr. W. Kenneth Robinson (Parliamentary Secretary to the Minister of National Revenue):

Mr. Speaker, I welcome the opportunity to participate in the debate on Bill C-25. This Bill, in conjunction with the amendments to the Financial Administration Act-Bill C-24-represents a new departure for the Government in its management and divestment of Crown corporations and other investments.

In recent decades, government has gradually acquired investments in companies of various kinds. The Canada Development Investment Corporation, as a special Act corporation, has the mission to manage government-owned assets that operate in the commercial sector. That is important to remember. It is the commercial sector which we are talking about. Crown corporations should be run according to commercial principles. That is a very, very important aspect. These investments have been made for pragmatic reasons.

Topic:   GOVERNMENT ORDERS
Subtopic:   CANADA DEVELOPMENT INVESTMENT CORPORATIONS ACT
Sub-subtopic:   MEASURE TO ESTABLISH
Permalink
?

Some Hon. Members:

For what reasons?

Topic:   GOVERNMENT ORDERS
Subtopic:   CANADA DEVELOPMENT INVESTMENT CORPORATIONS ACT
Sub-subtopic:   MEASURE TO ESTABLISH
Permalink
LIB

William Kenneth Robinson (Parliamentary Secretary to the Minister of National Revenue)

Liberal

Mr. Robinson (Etobicoke-Lakeshore):

Well, maybe some of the reasons are because of Opposition proposals. In any event, they are pragmatic reasons.

It is in the public interest that these companies operate on a sound commercial footing so that they can be returned to the private sector when the commercial opportunity arises. I am sure members of the Opposition would appreciate that this portends only good for Canada and for the corporations.

There is a history in this country of government investment in the economy. Governments in Canada, whether federal or provincial, Liberal, Progressive Conservative, New Democratic or Social Credit, have invested in companies when they saw a clear and pragmatic public policy need to do so. I could mention a number of examples; Panarctic Oils Ltd., Syncrude, and Petro-Canada. There are dozens of such companies- wholly government-owned and partly government-owned- from coast to coast. The Ontario Government has invested in Suncor. The Alberta Government has the Alberta Energy Corporation and it has invested in Pacific Western Airlines. The Nova Scotia Government has Sydney Steel.

It is a fact of public life in Canada that governments become investors in the economy and that they they become shareholders in companies. They do so for a variety of reasons which are of a pragmatic nature. But once governments are

May 28, 1984

shareholders, they must manage their shareholdings. It only makes good commercial common sense.

What lessons can be learned from the private sector in such cases? On the positive side, we learn the importance of major shareholder presence in a company, making its weight felt keenly. It is an investment to protect and, in most cases, it does so. On the negative side, we learn the lessons offered when this does not happen. For example, in the case of Massey-Fergu-son, the key shareholder stepped back from its responsibility as the major shareholder. We all know the outcome.

When anyone-a person, a private company or a government-is the key shareholder in a company, he must make his presence felt as a shareholder. That is fundamental. That is perhaps the major benefit which we can derive from CDIC. CDIC is a vehicle through which the Government can manage its commercial investments. It is designed to be a holding company in the best traditions of private sector holding companies; constantly reviewing the activities of its subsidiaries, developing and articulating the views of the shareholder, making sure that management knows what the shareholder expects and replacing management when performance is inadequate.

CDIC is doing that job and doing it well. The progress made by Canadair over the past year is one example of CDIC's value to government and to the country. We could imagine how much worse it would have been if we had not taken it over. Let me remind the House of what has happened with Canadair Ltd. since CDIC took over responsibility for that company.

What kind of problems did CDIC find? I will list them: First, a failure by management realistically to identify and address the business problems of Canadair. Second, inadequate disclosure by management of corporate information to Parliament, government and the board to allow for meaningful awareness and resolution of corporate difficulties. Third, the over-aggressive use of an accounting method that failed to reveal the full extent of the company's true financial difficulties. Fourth, a Challenger production rate in excess of market demand, with consequent excessive and costly inventory buildup. Fifth, outstanding delivery commitments of Challenger aircraft at prices less than the cost of parts and labour. That is a horror story. Sixth, marketing projections which were excessively optimistic and which were not subject to critical review. Seventh, a Middle East distributor agreement that was not in Canadair's best interests. Eighth, a corporate structure that lacked clear lines of accountability. Ninth, a level of production and managerial employees whose numbers were excessive in relation to the production and sales rates which the company could reasonably expect to achieve in the foreseeable future. Finally, tenth, a board of directors that did not adequately participate in the key decisions of the company. There are probably many more. We could almost go on ad infinitum with a company of this nature.

What did CDIC do about these problems? The most recent step was a complete re-organization of Canadair Inc., which is the U.S. marketing division of Canadair Ltd. Canadair Inc. has been cut in size and cost, but it will be more sales effective.

Development Investment Corporations Act Two new executives have been appointed to run Canadair Inc. They are key people who came from Gulfstream Aerospace Corporation, which is one of Canadair's main competitors. But, that is only the latest of many steps.

I would like to list some of the other steps which CDIC has taken to put Canadair on a sound footing. First, personnel changes have been made to strengthen the management group. The President of the company was replaced and four senior officers have departed. Second, there is a commitment to full and timely disclosure which includes an audited annual report and unaudited quarterly reports. Parliament has been provided with audited financial reports for 1982 and 1983, along with extensive financial data for ealier years. Those reports, together with the accompanying notes and commentaries, were designed to meet the reporting and disclosure roles applicable to companies whose securities are traded on Canadian stock exchanges. Third is the adoption of conservative accounting practices. Canadair used an overly-aggressive form of program accounting in recording certain costs and revenues for the purposes of Canadair's audited financial statements for 1981 and for prior years. Canadair's 1982 and 1983 audited statements were, therefore, prepared on the basis of a conservative, more traditional form of program accounting. In CDIC's opinion, those financial statements presented a more realistic view of Canadair's assets and liabilities.

Fourth, the strengthening of financial controls through the reinstatement of the office and function of internal auditor. The function had been eliminated in 1982. Fifth, the establishment of a lower Challenger production rate. In February, 1983, Canadair was producing Challengers at the rate of 30 aircraft per year. CDIC and Canadair's management concurred in reducing that rate to 24 aircraft per year. In July 1983, the Challenger production rate was again reduced, to 16 Challengers per year. In December 1983, steps were taken to permit production of 19 Challengers in 1984. The foregoing changes in production rate were made as a result of CDIC's assessment of the probable rate of Challenger sales in 1983 and 1984. To date, that assessment appears to be valid. By December 31, 1983, Canadair had delivered all but one of the Challengers built in 1983. No Challenger sales were lost in 1983 by reason of the unavailability of aircraft. The production rate reductions resulted in cash savings to Canadair in 1983 of $37 million and will result in further cash savings of $141 million in 1984. I am sure that is most heartening for Members of the Opposition. Of course, it is heartening for Members of Government as well.

Sixth, the enforcement of sound sales practices. All new Challenger orders are being signed at a price which recovers all costs, except interest on past debts and which, on the basis of 15 deliveries a year, results in a profit before interest for the program. With the recent capital restructuring of the company, Canadair's debt burden will be removed and the Challenger, at 15 sales per year at current prices, will yield a profit.

May 28, 1984

Development Investment Corporations Act

Seventh, changes in forecasting and marketing. Canadair has adopted a more realistic sales forecasting approach. It has also adopted a conservative method of counting new orders. I am sure Hon. Members opposite will appreciate that it is a "conservative" method. It lists only firm orders, and to be considered firm, an order must first be legally enforceable by Canadair. Also, it must be with a customer who has a clear ability to pay for the plane, and it must be with a customer who has not indicated any desire not to take the plane. In addition, Canadair has employed two major outside groups to provide a view of market prospects for the Challenger. On the basis of that view and other analyses, CDIC and Canadair have concluded that with a prudently conservative view of market shares, the Challenger program can generate a profit, including overhead but excluding interest on past debt. That is progress.

Eighth, the modification of Canadair's Middle East distributorship. Canadair has concluded a new representative and distributor agreement with TAG Aeronautics (Saudi Arabia) Ltd., and has settled an arbitration claim made by TAG through the International Chamber of Commerce. The two companies will be co-operating closely to realize Challenger sales opportunities in the Middle East.

Ninth, changes in management and management structure. After making a careful assessment of Canadair's management structure, CDIC concluded that significant changes were required. The structural changes which have been made were designed to produce a management team organized along functional lines. Authority and responsibility have been reallocated in accordance with the new structure and the management team is now functioning satisfactorily. The number of vice-presidents has been reduced from 22 to 12. I am sure you will appreciate that that is progress as well.

Tenth, the implementation of cost reductions. Significant reductions have been made in corporate overhead and operating costs. The savings to Canadair, once severance costs have been absorbed, will be $27.5 million a year.

Nothing I have said should come as news to this House. Indeed, the Minister responsible for CDIC spelled it all out in a report to Parliament on Canadair in March. The lessons were not easy ones; but we have learned them. More important, we now have in Canada a well diversified company turning out good products-products of which all Canadians can be proud-and going out into the world to sell them. Canadair's costs are under control, its orientation is more commercial, its lines of accountability are clearer. It is positioned for profitability and it is identifying new strategic opportunities for the future. What more can I say? CDIC has effectively carried out its mandate to bring commercial attitudes, businesslike management and a strategic mentality to Canadair. Over the coming year Canadair, as a result of CDIC's efforts, will become one of the exciting instances of dynamic corporate turnaround, we all hope.

Topic:   GOVERNMENT ORDERS
Subtopic:   CANADA DEVELOPMENT INVESTMENT CORPORATIONS ACT
Sub-subtopic:   MEASURE TO ESTABLISH
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PC

Dave Nickerson

Progressive Conservative

Mr. Nickerson:

Even you do not believe that.

Topic:   GOVERNMENT ORDERS
Subtopic:   CANADA DEVELOPMENT INVESTMENT CORPORATIONS ACT
Sub-subtopic:   MEASURE TO ESTABLISH
Permalink

May 28, 1984