[Recorded by Electronic Apparatus]
Wednesday, December 4, 1996.
.1533 
[English]
The Chairman: We'll begin with the order of the day: in accordance with the order of reference adopted by the Standing Committee on Industry on Wednesday, October 2, 1996, consideration of a conversion of the military industries to civilian purposes.
I must inform the group that there could be votes today, so we want to get on with business immediately.
Our first witness from the Department of National Defence, Pierre Lagueux, will begin. It'll be 10 to 15 minutes of notes or speech to the members and then we'll get right into questions.
I'd like to begin. Mr. Lagueux.
Mr. Pierre Lagueux (Assistant Deputy Minister, Materiel, Department of National Defence): Thank you, Mr. Chairman and members of the subcommittee.
First, allow me to thank for the opportunity to address the subcommittee and to contribute to your deliberations on the subject of defence conversion.
My comments this afternoon will touch upon all five areas of interest that I believe you are interested in and that were identified in the order of reference establishing your subcommittee.
First of all, I would like to offer an overview of the organization and structure of what is commonly being referred to as Canada's defence industrial base. Before I do that, let me provide a more global context.
During the Cold War the Soviet Union, as most of you already know, developed a huge military and probably the world's most comprehensive defence industrial infrastructure. Literally thousands of defence industrial complexes were built throughout the Soviet Union. Defence industrial policy became the prime national policy consideration.
At the same time, the United States maintained a large defence force and, to support it, a huge, complex and expensive defence industrial base.
In both the Soviet Union and the United States, the armed forces and defence industry became the key economic forces in the nation. They determined most budget priorities. To a large degree, they determined national economic policy. They drove national research and development policy and they provided more jobs than any other sector.
.1535
[Translation]
Canada meanwhile became a member of NATO and a leading proponent of United Nations peacekeeping. We maintained a very modest military, and we used our industrial capability to support our armed forces. The capability of Canadian industry to support our armed forces, however, developed very differently from that of the two superpowers.
[English]
Canada's military expenditures were and are among the lowest of any developed nation. We have a very small military and we did not develop and maintain a large defence industrial base. In fact, with the demise of the 1950s Avro Arrow project, Canada effectively quit the defence industry ``big league'', as one would know it today.
Today, Canada does not conduct research and development necessary to build major weapons systems. We do not build main battle tanks or fighter aircraft, for example. Even in the case of our newest frigates, we imported most of the actual weapons systems on those ships.
[Translation]
Canadian industry has, however, developed world class expertise in two areas associated with defence, and these areas tend to overlap. Canadian firms lead the world in some niche market technologies, components, and subsystems. Also, we lead the world in some dual use technologies and products. For example, Xenon Environmental Inc. of Burlington is a world leader in water purification systems. They sell these machines to military forces for use in peacekeeping operations around the world. Yes, they are defence sales, but they are also far removed from the popular notion of defence trade.
[English]
Many Canadian industry products are equally at home in the defence or the commercial sector. For example, flat panel displays are replacing the hundreds of gauges and instruments that you see in aircraft cockpits. The actual technology and product is virtually identical, whether it's being installed in the Boeing 777 or fighter aircraft. The same case applies to aircraft landing gear, where again Canada is a global leader.
I should point out that the Canadian aerospace industry sector is a real success story. It is outperforming all other sectors of the Canadian economy in export growth. In 1996 sales will exceed about $12 billion and sustain over 50,000 direct jobs. Canada is well positioned to have the fourth largest aerospace industry in the world by the year 2000. But it will be driven by commercial sales, with the defence share of the market continuing to decrease from about 32% in 1993 to 15% estimated by 1999.
However, more and more of the technology, the components and the subsystems, will be the same, whether they go into commercial or defence applications.
During the Cold War technology was driven by defence research and development. Defence technology was primary, and commercial spin-off applications, while important, were really secondary. Today the roles have changed. Commercial technology has become the driving force behind national R and D strategies. Commercial technology leads defence technology in many areas, including communications, computer hardware, computer software development, information processing and manufacturing processes.
[Translation]
Canada has very few firms that are solely in the defence business. Bombardier was the largest Canadian defence contractor in 1995, yet defence sales accounted for less than 4% of overall revenues. Our second largest defence contractor, CAE, received about 46% of its revenue from defence sales, but the actual products - flight simulators and training systems - were the same in terms of technology and application as their commercial products. This is a case similar to Xenon, where a Canadian company is a world leader, globally competitive, and sells virtually identical products into both the commercial and defence markets. Unlike the superpowers, Canada developed a highly competitive national industrial base, that secondarily is able to support certain defence requirements.
[English]
The high cost of the Soviet Union's massive defence forces and the huge defence industrial base necessary to support these forces were instrumental in bringing about the collapse of the Soviet Union. With that collapse, million of workers and tens of thousands of state defence enterprises lost their raison d'être and the nation approached fiscal bankruptcy. Industrial diversification or conversion was not an option for this country but a necessity for national survival.
.1540
[Translation]
At the same time, the United States began reducing military forces and focusing instead on international competitiveness abroad and economic growth at home. Military forces and defence procurement projects were slashed. Defence procurement cuts have resulted in the permanent loss of more than a million defence industry jobs. These cuts came from that highly specialized defence industry sector that had developed totally separate from its commercial counterpart.
[English]
U.S. defence industry conversion issues fell into two categories. First, defence technologies were made available to industry for commercialization. For example, non-destructive testing technology that used to examine nuclear warheads was made available to the medical equipment industry in the hope that it could be used for early detection of cancer.
Secondly, firms were encouraged to develop dual-use technology, that is, technology that had commercial application and that was also useful to defence. Looking at these two areas, I should note that Canada has been doing the very same thing for the past several decades. The real issue, though, is that due to the way the United States had developed a highly specialized defence industry, far removed from its commercial counterpart, defence conversion became a major concern when it was realized that over one million jobs were being eliminated.
The restructuring of the U.S. defence industry was led by a small number of large firms that decided to become the industry leaders. They in turn acquired many of the lesser players. These large firms did not pursue diversification initiatives by and large, but simply reduced their workforces through downsizing. The typical defence industrial worker displaced by this downsizing was unemployed for six months and took a replacement job at 20% lower wages than his defence job had been paying.
The overall buoyant nature of the U.S. job market and not conversion initiatives, it could well be argued, generated the replacement employment opportunities. Formal defence industrial conversion initiatives in the United States have accounted for really very few new jobs.
Coming back to the Canadian situation, today we have highly skilled people working in Canadian industry, both in support of the Canadian Armed Forces and exporting to foreign defence markets. As long as Canada has a military, there will be both an opportunity and a requirement for Canadian industry to support our operational requirements.
With the significant cuts in the Canadian defence budget, however, there is simply not enough domestic procurement to maintain the level of defence-unique expertise and support we feel we need. We are therefore meeting that challenge in three ways.
First of all, we are changing our defence procurement policy away from unique defence solutions to more commercial off-the-shelf products. In this process, we contribute to enhancing industry's international competitiveness in the commercial market. We already have numerous examples of this. Our new utility helicopters are commercial helicopters, with some minor military modifications, made by Bell-Textron in Montreal. Moreover, we will be using Bell's worldwide logistics systems to support the helicopters.
In effect, we are trying to use commercial specifications and practices wherever possible. We are turning to commercial industry to provide even more support through our alternate service delivery or ASD initiative. For example, we have contracted out the maintenance and support of our Camp Meaford facility in Ontario to industry. That creates private sector jobs, reduces DND costs, and frees up military positions, thereby allowing us to downsize and contribute to deficit reduction.
[Translation]
Secondly, we are assisting Canadian firms market their products abroad. This is actually a very difficult undertaking. With the global downsizing of defence budgets, there is increasing competition in the defence market. Every major nation is assisting their defence firms market their goods. Most nations have large defence marketing organizations. In the case of Canada, marketing to defence customers is conducted in accordance with our export control policy which is among the most stringent in the world.
.1545
I should note that DND helps Canadian firms in exporting, not as an independent defence activity, but also as part of our contribution to the government's international business development strategy, its Jobs and Growth program, and related economic development initiatives. That is not to say our intentions are totally altruistic. Helping our firms maintain their business through exports reduces overhead, maintains a Canadian source, and reduces our costs. It simply makes good business sense.
[English]
Finally, we do have some companies that are purely defence. An example is SNC Industrial Technologies Inc., or SNCIT, of Quebec. The Canadian military has, and will continue to have, a requirement for ammunition, even if it might be at a reduced level. It is Canadian government policy to maintain a domestic ammunition production capability. SNCIT represents a major part of that capability. Since this defence requirement will not go away, converting SNCIT facilities to some other product, even if it were possible, would represent wasting the investment that we have made in that company and would simply result in spending taxpayers' dollars to support similar jobs and capability elsewhere, most likely in the United States. Moreover, SNCIT, and firms like it with specialized munitions expertise, permit Canada to play a leading role in mine detection and disposal.
We have other defence firms, many of which tend to be affiliated with large foreign companies that have explicitly decided to remain in defence, such as General Dynamics and Lockheed Martin in the United States. These Canadian affiliates are undergoing downsizing and restructuring as well as part of the parent firms' global strategy; however, the parent firms often have a policy of remaining in the defence business so the Canadian affiliates may not be good candidates for conversion. Eliminating these firms would simply result in a loss of Canadian jobs, as again we would probably have to import their technologies or products, and probably at increased cost.
[Translation]
In looking at the experience of other nations, there are some important points to note. The Cold War environment of their defence industry was very different from that of its commercial counterpart. Defence industry was faced with one buyer, and that buyer determined the rules of procurement policy, contracting, quality assurance, manufacturing methods, and accounting.
That generated a cadre of expertise that was irrelevant in the commercial sector. When faced with conversion to commercial products in the environment of the open market, these firms and their managers were often at a great disadvantage, and as a result, very few conversion attempts were successful.
[English]
In summary, it is very difficult to make comparisons between that small part of the commercial Canadian industrial base that supports defence customers and the huge specialized defence industrial infrastructures that developed elsewhere. Canadian industry does not design or produce major weapon systems, but it does have globally competitive niche market technologies and minor products.
[Translation]
DND is supporting the further commercialization of Canadian industry by insisting on commercial products, specifications, and practices wherever possible. The jobs created and sustained by exports to defend customers are the high-tech, high valued-added jobs. Due to our very different circumstances, very little of the U.S. or Russian defence conversion experience has any relevance to Canada.
[English]
We are indeed fortunate in Canada. The defence and industrial policies that have been pursued over the past years have positioned us very well for the transition from the Cold War environment that was ruled by national security concerns to the new global economy, characterized by economic growth and international competitiveness. We have already transformed our industry to meet the challenges of this new environment, and we have already met many of the defence conversion objectives that are still being sought by other nations. The route we are on will ensure a strong national industrial base capable of meeting many of our defence needs, but firmly based on the international competitiveness of their commercial technologies and products.
Mr. Chairman, this concludes my opening comments. I would be happy to answer any questions the committee members may have.
The Chairman: Thank you very much.
Mr. Ménard.
[Translation]
Mr. Ménard (Hochelaga - Maisonneuve): Mr. Chairman, I believe we have a first turn of ten minutes and a second of five minutes. Are we operating like other committees? I imagine we are.
[English]
The Chairman: That is correct. We'll have 10 minutes, then 10 minutes, and then we'll go 5, 5, 5. Everybody will have a chance to ask questions.
[Translation]
Mr. Ménard: That's fine, Mr. Chairman.
First, I join you in welcoming the Assistant Deputy Minister.
I want to say that this has been a Bloc Québécois demand ever since we came to this Parliament, and we have had favourable feedback from our government colleagues.
We are all well aware that concrete assistance for conversion will come primarily from the Department of Industry. I did not expect you to say anything different here this afternoon.
.1550
Peace activists, of which I am one, will certainly agree with the main thread of your analysis, mainly that Canada has a very small army and that our circumstances are not at all comparable to those of the United States. This leads me to the two questions I have for you.
Is there anyone within the Department of Defence, either at the Deputy Minister level, or at lower levels, who is following examples of conversion throughout the world or in North America? Does that person have any databases or up to date expertise on what is done in military industry conversion or diversification in the United States, Europe or elsewhere? Perhaps you do this primarily with regard to military bases.
Secondly, would you agree that a number of industries that produce defence equipment also produce civilian technology? There are about 30 of these large corporations. You cited SCN Lavalin, we could name others.
Would you agree that right now, there is a cloud hovering over the defence industry? If our assessments are correct, given the fact that you are living with and will have to live with cuts in the order of 25% - there was unanimity among the parties in the House - if there are no public funds set aside to assist companies that produce munitions, subsystems or military communication systems, we will certainly lose 10,000 jobs in Quebec in the next five years, according to an assessment by the research group on military industries chaired by Mr. Yves Bélanger.
Could you state clearly before this subcommittee that without the help of public funds... I'm not necessarily talking about conversion of the industries, because we're also going to have to turn our attention to what we should do with closed military bases.
Mr. Lagueux: First, I will answer your first question concerning expertise within the Department of National Defence, because I think that was your point.
We have a group of people who are responsible for the industry and everything related. For us, at DND, the industrial base comes under the responsibility of the Department of Industry and not the Department of National Defence. We are on the defence side, not industry. But we have to have a competitive industry that can support us militarily by providing us with the greatest high-tech products and that can give us after-sales service.
It is very important to maintain our equipment, to keep it in good working condition, and so forth. So we certainly have an interest in ensuring that the Canadian industry is there to support us. Our equipment is repaired or maintained largely by Canadian industry. It is not done in a military depot, like the Americans do, for example, and in many other countries. We depend a great deal on Canadian industry for our third line support, that is the maintenance of heavy machinery.
Mr. Ménard: I just want to understand. Within the Department of National Defence, there are people whose job it is to track conversion and diversification experiences in North America or Europe.
Mr. Lagueux: The same group is in charge of tracking many aspects of the industry. They also track what is done in terms of conversion and industrial conversion around the world. That is not their only responsibility. I have no one specialized in that area.
Mr. Ménard: Would you agree to share any information your department has with members of this committee?
.1555
Mr. Lagueux: I believe this information is available. We have no information that is not available in the open media or elsewhere. We don't have any privileged information.
Mr. Ménard: I would be very pleased if there were no secrets between you and me. I know there are none, because you are a very transparent department. That starts with your minister, who is certainly one of the most likeable in this cabinet. But am I to believe that the department that is as well informed as yours has no other expertise in military conversion than what is described in the press? I can't accept that.
Mr. Lagueux: We have information through our contacts in the United States regarding what goes on there in terms of base closures, procurement approaches and purchasing and increasingly about what I call dual-use technology.
The United States are moving further and further toward commercial purchasing, and that is all part of the industry's conversion. We certainly have very close links with them in order to see how they are changing their approach vis-à-vis the industry.
Mr. Ménard: If you ever were to invite me to your department in the coming days, perhaps I could take a look at your documentation centre and judge for myself what information might be useful to our committee, while assuring you of my full discretion. That's one of my better known characteristics.
Mr. Lagueux: Mr. Ménard, it would be a slight exaggeration to say we have a data centre or a research centre devoted specifically to conversion. We have nothing specific. We can't say that we have a data centre or a library on this subject.
Mr. Ménard: Nevertheless, I am taking it for granted that if you felt that some written information could be useful to this committee, you would transmit it to us. I thank you for that in advance.
In your brief, you seemed somewhat sceptical, or at least less enthusiastic than I am, about the American experience in military conversion. I'm thinking of Vermont and Connecticut. Many governors were elected by making a commitment to have legislation passed, along the lines that Mr. Axworthy had when he was in opposition. That was certainly one of the most fertile periods of his life. He had tabled a bill to provide public funding for companies and groups that wanted to engage in conversion experiments.
Can we agree that, where there have been diversification experiences, that is to say, where companies have developed a different range of products or where there have been conversion experiences using DND equipment or bases for civilian purposes, these projects were supported by public funding, market research and planning?
One way that your department could cooperate with the communities where layoffs occur would be to find a way to make sure that equipment can usefully be taken over by the community.
Could this be considered?
Mr. Lagueux: Certainly, and I covered that in my presentation. They have had some success in the United States, but on the whole, the results were not as favourable as one could be led to believe.
With regard to the base closures, which is somewhat different than military industry conversion, several American States have made public funding available to small towns and villages surrounding those bases to help them close and specially convert bases to other purposes.
Certain measures were taken to encourage the industry or non- profit organizations to settle on the bases and use the infrastructure that existed there. There have been some successes and failures.
With regard to the industry itself and the conversion of equipment for commercial purposes, unfortunately, no examples spring to mind.
.1600
I think it would be difficult to convert equipment that was designed primarily for military purposes to commercial purposes. I'm not saying it's not possible or that it's never been done, but I'm really not aware of the details.
Mr. Ménard: I'll come back to that on the second turn.
[English]
The Chairman: Mr. Murray.
Mr. Murray (Lanark - Carleton): Thank you, Mr. Chairman.
Mr. Lagueux, it's good to have you here. I can't help but come to the conclusion, from listening to your remarks, that you may feel we don't need to worry too much about defence conversion. It seems in the past it's been a question of commercial conversion to defence, in the Canadian experience at least, as opposed to, as you described, the U.S. and Russian experiences.
I'm not trying to be facile with this comment. It just struck me that you don't apparently see that we have a major problem that needs to be addressed in terms of the defence industry's need to be converted to civilian or commercial needs. Is that an appropriate conclusion for me to come to?
Mr. Lagueux: Mr. Murray, your committee has a very important role to play in making clear to everybody in Canada what the situation is with defence conversion in Canada. I believe a lot of people are influenced by what they hear from the United States, from eastern Europe and from Europe in talk about defence conversion. Therefore they ask how come we're not doing the same thing here in Canada.
So it's very important that your committee now study this issue and make clear what the state of the defence industry is in Canada - where we are and where we are not, what we have to do with defence conversion and what we don't have to do. A lot of myths exist out there.
Your conclusion with respect to my comments is about right. Certainly the message I'm trying to give you today is that the Canadian experience and the Canadian situation are quite different from those in the United States, certainly Russia, eastern Europe and a lot of the major European countries. They had large industries dedicated to defence where they had a lot of defence R and D basically developing weapon systems from a blank sheet of paper on up. These industries were quite independent and separate from the commercial industry.
As I said in my comments earlier, we really have not been in that game since the 1950s, with the demise of the Avro Arrow. We have not been developing large systems. That is not to say that we don't have defence technology in Canada, that we don't produce certain niche markets and that we don't make some world-class equipment in Canada, but by and large we don't have the large, separate, focused industrial base that exists in certain countries around the world.
Therefore a lot of our so-called industrial base also is very much dual use. I pointed to flat panel displays, for example, which go into a variety of airplanes, whether commercial or military. I pointed to the simulators out of CAE, for example, which are dual use. A simulator can be a commercial aircraft cockpit simulator, a transport aircraft simulator or a fighter aircraft simulator - same technologies, dual use application.
That's really where our industry is, as opposed to the large military industrial complex that existed in the United States during the Cold War.
Mr. Murray: It's too bad you couldn't have come along for the ride when I flew one of those simulators out in Vancouver, long ago. I had the flight and the landing.
I want to look at R and D expenditures. If I'm reading this correctly, the total for 1996-97 is $177 million plus. That's dropping from previous years.
Mr. Lagueux: For National Defence?
Mr. Murray: Right, for National Defence.
Were we involved in any R and D activities with some of our NATO partners, perhaps, or did we get caught up in anything that changed as a result of the Cold War? Perhaps we got involved with some projects and then they were no longer necessary. Were there any problems like that in the last few years that may still be ongoing and don't appear to be needed any more?
Mr. Lagueux: First of all, you're correct that the defence R and D budget is going down. That reflects a few factors. One is that we're looking more at off-the-shelf projects and at commercial projects. Therefore we are looking at doing less and less specifically Canadian, uniquely military development.
However, we still need to have some R and D to ensure we stay on top of what's going on in the world and in the area of military. We do have cooperative R and D projects. We do those within very specific guidelines and boundaries, particularly with NATO countries or with our Australian partners. Those tend to focus on areas where we have common needs to develop some very specific niche areas.
.1605
For example, in Canada we have expertise in underwater detection. Our industry is specialized in that. We have some research and development capability in that. So we will work cooperatively with other countries which have similar requirements in those areas.
But again, we have not been involved in designing a new battle tank or a new fighter aircraft. We're not in this basic research as much as we are in development of things, as opposed to the United States, which does a lot of basic research right from scratch.
So yes, we do have cooperative projects that are ongoing. We find those an excellent way of leveraging the small amount of R and D we have by combining it with R and D funds from other countries.
Mr. Murray: I was interested in your comments about helping Canadian industry sell abroad. It sounds as if you didn't go out directly and beat the bushes, looking for opportunities; rather, you're feeding information to Foreign Affairs, International Trade, or the industry department on the opportunities you see. How does that work? Or do you have actual officers who are looking out for opportunities?
Mr. Lagueux: Mr. Murray, we're the Department of National Defence; we're not the ``Department of Commercial Sales''. But there is the CCC, the Canadian Commercial Corporation. There is the Export Development Corporation, Industry Canada, and of course in our embassies around the world there are commercial counsellors. We also have in the embassies around the world, some select embassies, defence attachés who as part of their jobs also look for what requirements armed forces around the world may have and see that there are capabilities in Canada in some of the dual-use technologies we have that perhaps can meet the requirement or some of the military equipment we do produce. For example, in London, Ontario, General Motors' diesel division produces a light armoured vehicle. It's a world-class vehicle and has been sold to several countries around the world.
The defence department is doing what we as a defence industry can do and what is unique but other departments can't do. For example, we can provide expert witnesses about the equipment. If we have it in our use already, military to military we can provide testimony about how well the equipment performs. An official from the industry department or the foreign affairs department could perhaps do that but wouldn't have the same credibility as the guy in the field who is working with the equipment. We also obviously have the ability to help industry meet other militaries, because of the military-to-military connections we may have.
By and large, we respond to industry's needs. We don't market equipment. We leave it to industry to do their marketing, as supported by Foreign Affairs and International Trade.
Mr. Murray: Mr. Chairman, there might be a few minutes left. I thought I might give Mrs. Brown a chance to ask some questions. We may get time after the votes.
The Chairman: I just wanted to tell you we have ten or twelve minutes before we need to leave and walk over for the vote. So I appreciate that. We'll give Ms Brown five or six minutes.
Ms Brown (Oakville - Milton): I did agree with Mr. Murray's conclusion that you seem to feel because we didn't do it the same way as the United States and Russia we don't have a problem, or maybe we're not quite such big sinners, therefore we don't have quite such a need to ``convert'', to use the religious analogy.
You said some things in your report I found interesting. For example, you talked about privatization or commercialization of the contract to manage and maintain the Camp Meaford facility because this reduces DND costs. Do you have any dollar figures on what that privatization did save the military? Have we an annual figure yet?
Mr. Lagueux: Yes, we do. Unfortunately, I don't have it off the top of my head.
Ms Brown: Could you provide that?
Mr. Lagueux: I can provide that for you, the estimates of what we anticipate to be the savings from essentially handing the support and maintenance of that camp to a civilian contractor.
.1610
Ms Brown: Thank you.
I'm fairly concerned about this business of our assisting Canadian firms to market their products abroad when they're defence products. As you know, there is a movement in this country that talks about arms exports and these arms fairs. Some people call these people the ``merchants of death''. It concerns me that our military is assisting them to sell armaments to other countries, some of which may be Third World countries. I understand that we are about the fourteenth largest exporter in the world in armaments, which doesn't put us at the top, but it doesn't mean we don't have to think about that and whether we want to do it.
You said that we do it under the government's international business development strategy and its jobs and growth program. Is there a piece of legislation that mandates DND to assist in this sales business?
Mr. Lagueux: I'm sorry, I wouldn't want to mislead you on this point. We support the defence industry in terms of their sales around the world within the export control legislation. It's an obvious point, but I just want to emphasize it. As I said in my comments, Canada has one of the strictest export controls in the world. Any exporting that an industry intends to do is subject to those rules and must be approved by Foreign Affairs before anything can be done in terms of export sales.
Ms Brown: Would you provide an expert witness before such a permit had been issued?
Mr. Lagueux: No. For them to market around the world and for us to participate, normally they must have presented their application for a permit to Foreign Affairs before we get involved.
You mentioned that we're ranked number fourteen in the world in terms of sales. I don't know the figures off the top of my head, but there's a big difference between the top three or four and number fourteen. It's not as if we're all bunched at the top. You must understand that.
Ms Brown: I understand that. I understand there is a huge difference between all other countries and the Americans and the Russians.
Mr. Lagueux: And the French and the British.
Ms Brown: Exactly, and I know that being number fourteen puts us near the bottom. On the other hand, when you're trying to lead the world in peacekeeping and in those kinds of values, it might be better not to be on the list. To say we're fourteenth and our numbers are small does not excuse us from keeping a close watch on and analysing those exports and what the military is doing to assist that.
Mr. Lagueux: Another factor one must consider is that a lot of what could be called defence sales involve, as I mentioned, pieces of equipment that are used in a variety of different ways - transport aircraft, helicopters, water purification equipment and so on. Militaries around the world are known for many things, and one of the things they often do is that in cases of national disasters and so on, they are there to help. Much of this equipment is the same equipment that is used to help in those cases.
So it's not entirely a black and white situation. One has to understand what's behind the numbers, and realize that a lot of the dual-use equipment we sell can be used and turned around by somebody else later on.
Ms Brown: I understand that it's not black and white. Mr. Chairman, I think that -
The Chairman: I need your direct comment because we're going to have a short question from Mr. Ménard, and then we have to go to the vote.
Ms Brown: I understand.
I may be sounding rather black, but you're sounding almost totally white in using water purification systems as an example of a defence export. There isn't a Canadian who would oppose that being sold any place in the world, and we're very proud of this company, but I notice that you didn't use any of the more noxious examples of things we might be selling. We would have had a clearer picture had you done that.
The Chairman: Mr. Ménard.
[Translation]
Mr. Ménard: Another comment. Canada also sells light armoured vehicles to Saudi Arabia and other countries such as Argentina.
Mr. Lagueux: Argentina?
Mr. Ménard: I have before me a list that indicates that Canada has sold light armoured vehicles.
.1615
Mr. Lagueux: I don't think we sold any to Argentina, Mr. Ménard.
Mr. Ménard: It mentions military exports to certain countries including Algeria, Germany, Saudi Arabia, Belgium, Spain, Indonesia, Portugal, etc. The list is very long, but that's not my question.
In your brief, you pointed out, and I quote:
- We have already met many of the defence conversion objectives that are being sought by other
nations.
Mr. Lagueux: Without having any specific objectives, I'm talking about the reduction in the number of industries that are solely defence-oriented. In Canada, we don't have many industries that are only defence-oriented. Most of our industries are commercial enterprises that produce a number of dual-use technology products or military products. The United States still have many companies whose sales depend solely or almost solely on military equipment. That's what I meant.
Mr. Ménard: We have about 20 that are 80% defence-oriented, but they are mainly located in Quebec.
Here's my last question. As an interesting contribution, would DND be kind enough to send the committee an exhaustive list of the military bases that the department anticipates closing? We saw one in the second to last budget, but it was not exhaustive. Even if you don't have a documentation centre, any other document that could shed light on this would be appreciated by members of the committee. I thank you for your presentation.
Mr. Lagueux: Thank you. With regard to military bases that are to be closed, I'm not aware of any, except those whose closure has already been announced in previous budgets. We already know those are going to close, but no decision has been made to close any others.
Mr. Ménard: No?
[English]
The Chairman: Thank you very much.
Unfortunately, we've been told that it's time to go to vote. I want to thank the assistant deputy minister for coming today to make a presentation. I'm sure that if there are any further questions, we'll need to talk to you some more, but I want to thank you for taking the time.
Thank you, members, for coming on time. I'll leave the next meeting to the chairman to call, as we get a little bit more organized. We will try to avoid having any meetings next week because of some other celebrations going on.
Thank you.
This meeting is adjourned.