By Roger Annis, A Socialist In Canada, Nov 29, 2015
On November 10, newly-elected Prime Minister Justin Trudeau met in Ottawa with the leadership council of the Canadian Labour Congress, the federation of trade unions in English-speaking Canada. Amazingly, this was the first such meeting of a Canadian prime minister with a national labour body since 1958. The event was very cordial, according to a report published in the Globe and Mail. The CLC group numbered some 120 delegates.
Unions have reasons to welcome the election defeat on October 19 of the anti-social Conservative government of Stephen Harper. The Liberal government has pledged to repeal two of the worst pieces of anti-union legislation of the Harper regime–Bills C-377 (financial reporting obligations) and C-525 (right to form unions). Other positive measures by the new government are suspension of the ending of home and office mail delivery, increasing the funding for the state broadcaster CBC, lifting of the muzzling of scientists working in government institutions, and putting a halt to some of the discriminatory legislative and judicial measures of the defeated government targeting people of Muslim faith.
But on the large and fundamental economic issues facing Canada today, with broad implications for the world’s global warming/climate change emergency, it is difficult to see very much new in the new Liberal government in Ottawa. And there are many reasons to be concerned that the country’s union leaders as well as elected representatives of the union-supported New Democratic Party in Parliament will acquiesce to the new government’s pro-business agenda.
New capitalist trade and investment regimes
The new government has played coy with the latest and largest-yet international trade and investment agreement cooked up by the large imperialist governments, the Trans Pacific Partnership. The TPP joins other such agreements in tearing down restrictions on the unfettered movement of global capital. It is sharply condemned by progressive forces in Canada, including many unions.
The Globe and Mail reported on November 18 that the new, Liberal government is “taking an officially neutral position on the [TPP deal], arguing that it needs time to allow for the consultations they promised during the recent election.” But Minister of International Trade Chrystia Freeland tweeted on Nov 27, “Looking forward to working together and increasing Canadian trade opportunities with Asia!”
Indeed. The Trudeau government is under intense pressure by the United States to sign the package. The U.S. and Japan scoff at any idea of re-negotiating any of the terms of the deal, if that is even something that the new government in Ottawa would dare to seek.
In the 1980s and early 1990s, Liberal Party of the day actually fought elections in the name of opposing the U.S. and then North American free trade deals. Only to calmly oversee the implementation of NAFTA when returned to office in 1993.
Another, giant trade and investment agreement on the government’s agenda is the Comprehensive Economic Trade Agreement between Canada and the European Union that the former Harper government negotiated on behalf of Canada. During the election campaign, Trudeau announced that he is “broadly supportive” of this deal.
Some capitalist governments in Europe are under great pressure to oppose CETA because of the threats it contains to economic and political sovereignty. As a result, more negotiations can be expected.
There was a time when the unions in Canada organized rallies and protests against such trade deals, notably against the North American Free Trade Agreement of 1994 and the Canada-United States Free Tade Agreement that preceded it. These agreements were recognized as serious threats to democracy, national sovereignty and existing and future social and human rights. ‘Free trade’ investment regimes hobble the capacity of people and governments to deal with global warming because “investor rights” are given legal standing equivalent to human rights, including the right to live in a healthy environment.
But the days of such protests by unions, it seems, are behind us, replaced by consultations that leave the polluters and the power brokers calling the shots.
The November 10 meeting broached the financial situation of Montreal-based airplane and rail transit manufacturer Bombardier, specifically, proposed government bailouts of the financially-stressed company.
Bombardier wants the Quebec and federal governments to invest billions of dollars in the company so that it will have the cash to complete its new, C Series passenger aircraft. The investment is considered by banks to be too risky for them.
The company tells the Canadian public not to be concerned, it’s a sound investment. But Bombardier is delivering a different message in Northern Ireland, where it is seeking salary and other concessions from its large workforce there. The Globe and Mail reported on Nov 12:
Bombardier Inc. is telling its aerospace workers in Northern Ireland that it is in “serious financial crisis,” as the company seeks deep concessions that it says are critical to its survival.
In a one-page summary of a contract offer handed to unionized workers in Belfast on Thursday, the Montreal-based plane maker paints a grim picture of its financial health and tells employees that it needs to cut costs at the city’s manufacturing site 20 per cent by 2017.
“Bombardier is in a serious financial crisis, threatening the future viability of the organization,” the company says in the summary, seen by The Globe and Mail. “We all have a responsibility to contribute towards cost reduction. This is critical to our survival.”
The article continued:
Even if it is a bargaining tactic, the alarming depiction of the company’s financial health and the threat of impending doom if workers don’t act are unusual for a Canadian company to make in writing during labour negotiations. They also stand in stark contrast with the reassuring tone Bombardier chief executive officer Alain Bellemare struck in media interviews after its third-quarter results were reported.
With a $1-billion (U.S.) investment pledge from Quebec and more money coming from the sale of a minority stake in Bombardier’s train business, Mr. Bellemare has said he feels confident that the company has enough cash to complete its current plane development programs, including the C Series jet and Global 7000/8000 business aircraft.
The Quebec government announced in late October that it would inject US$1 billion (app CAN$1.3 bn) into the C Series program, a decision welcomed by the Quebec division of UNIFOR, Canada’s largest industrial union. (The English-language website of the union reports nothing on the deal). The Trudeau government is under intense pressure to match Quebec’s investment.
Bombardier is one of the corporate entities in Canada considered by pro-capitalist ideologues to be ‘too big to fail’. Its aircraft division employs more than 25,000 people in Canada, principally in the Montreal region with a further 5,500 in Northern Ireland. The rail-transit division employs 27,000, most of those in Europe
The C Series passenger plane comes in configurations from 100 to 149 seats and will enter a highly competitive international market for planes of that size, going up against the Airbus 320 and Embraer’s E195 as well as manufacturers in Russia and China with programs in development for slightly larger configuration jets. Two C Series prototypes are undergoing lengthy, flight test programs.
Even Bombardier’s entrenched place in the under-100 seat jet market is under threat. On November 11, the first test flight of a 92-seat regional jet manufactured in Japan by Mitsubishi Industries took place. This is Japan’s first foray into the passenger aircraft market. Rob Morris, head of consultancy at Ascend Flightglobal Consultancy, told Bloomberg News, “In our forecasts, we have the [Mitsubishi regional jet] replacing Bombardier as the second-biggest regional jet supplier [behind Embraer of Brazil].”
After the meeting with the CLC, Trudeau affirmed that his government is favourably disposed to joining the risky venture with Bombardier. CLC President Hassan Yusseff urged him along this path when Yusseff spoke to media following the meeting.
Trudeau used the standard language of corporate welfare financing by past Liberal governments, and for that matter, by the recently-departed Conservatives, when he told media in Ottawa on Nov 10, “How we can best invest and support that kind of manufacturing [aerospace] needs to be done responsibly and with our eyes open, and not just based on emotion or politics or symbols. There has to be a strong business case. We’re going to make sure that decision is taken based on what is in the best interest of Canadians, writ large.”
There is a sharp contradiction in Quebec government’s $1.3 billion investment in Bombardier (and the support or acquiescence to that by unions in the province) because the government is simultaneously confronting a strike wave against austerity by the province’s public sector workers.
Investment in Bombardier rail transport
A parallel investment bailout has been made by Quebec’s public pension plan into the rail transit division of Bombardier, to the tune of US$1.5 billion.
Globe and Mail business writer Tim Kiladze described that investment as follows:
Complicated doesn’t begin to describe it. The term sheet for Bombardier Inc.’s financing with the Caisse de dépôt et placement du Québec is utterly baffling…
For example, Bombardier and the Caisse are not saying if the reported 9.5% [guaranteed] return on investment to the Caisse will be paid in cash or in more stock. It seems the latter.
The uncertainty fostered a sense of disbelief by some on the [media conference call announcing the investment]. Analysts desperately trying to wrap their head around the deal couldn’t understand the simplest of its terms.
The investment in Bombardier Transportation (rail) has the merit, at least, of resembling a forward-looking move, insofar as a climate-warming world needs more rail and transit to displace the private automobile. The same cannot be said of air travel.
Tar sands pipelines?
It is reasonable to assume that one reason for the Liberals to convene a meeting with the CLC was to sound out the labour federation on several of the large files on the government’s pro-business agenda. These include not only the Bombardier investment but also the proposed Energy East tar sands pipeline and possibly Canada’s long-delayed purchase of a new fleet of fighter jets. It’s not known if the latter two came up for discussion on November 10.
The Liberal Party is benefitting from a considerable reserve of good will as well as naïve illusion by large numbers of Canadians. But Energy East will put that to a severe test. The proposed, $8 billion-and-counting pipeline would cross nearly the entire breadth of Canada to deliver raw, tar sands bitumen, or a slightly processed variant, for export via the Atlantic Ocean port of Saint John, New Brunswick.
The pipeline would be a lifeline for expansion of Alberta tar sands production, which presently finds itself hemmed in by opposition to three proposed pipelines—Northern Gateway and Trans Mountain to the Pacific coast and Keystone XL to Texas. The recently ballyhooed oil industry policy of the NDP government in Alberta—said to address “climate change” responsibilities—will “cap” future tar sands production… at some 40 per cent higher than current production levels. But even with several other tar sands pipelines undergoing expansion, to the Enbridge company’s terminals in Superior, Wisconsin, and with the dangerous transportation of bitumen and crude oil by rail growing steadily, the industry has a very large production-to-transportation deficit. There is not enough transportation capacity to meet the industry’s insatiable appetite for expansion.
Energy East is supported by the industrial unions in the CLC and by the NDP. They say their support is conditional on initial processing of bitumen (“upgrading”) taking place in Alberta before the product is fed into a pipeline. But this is something of a ruse to sell the project to a wary public. For one, lots of the product is already upgraded. According to Alberta government records, in the first five months of 2015, app 40 per cent of tar sands bitumen was upgraded (into what’s called “synthetic oil”.) For another, oil industry titans want little to do with increasing that amount. Building upgrading capacity is extremely costly, doubly so in a world where Alberta synthetic oil fetches less than US$35 per barrel on world markets. Purchasers of Alberta bitumen want raw product which they can choose to upgrade and refine according to their needs.
Alberta produced an average of 2.3 million barrels of bitumen daily in 2014. Upgrading capacity in the province was 1.3 million bpd, or 56 per cent. Presently, there is only one upgrader under construction in Alberta and it is in deep financial trouble. According to a commissioned report by a former finance minister of the province earlier this year, the taxpayers of Alberta and Canada could be on the hook for as much as $26 billion in direct and indirect subsidy to that project over the course of 30 years of production, if construction is ever completed.
A familiar path of climate change denial
The proposals for billions of dollars of investment in Bombardier Aerospace and tar sands pipelines come at a bad time for planet Earth.
Concern is growing internationally–and is focused for the next two weeks in Paris–about the consequences of the world’s political and corporate leaders continuing to ignore the urgent recommendations of scientists that the human race sharply reduce greenhouse gas emissions from the expansion-at-all-cost capitalist economies.
Airline travel happens to be one of worst culprits in greenhouse gas emissions, contributing from four to nine per cent of total climate change impact by humans, depending on the measurement. Like the private automobile, aviation is one of the many industries where production and consumption must be curbed if the world is to avoid the worst of global warming. Alberta’s tar sands, meanwhile, are one of the world’s most polluting sources of energy and largest single source of emissions.
The oil, auto and aviation nexus is not only a deadly threat to the future of planet Earth’s ecology, it is wasteful even in capitalist terms. One of the leading research and activist groups opposing expanding fossil fuel production is Oil Change International, a Washington DC-based advocacy group. On November 11, it co-published a report tallying the amount of subsidy by governments of the G20 countries to the fossil fuel extraction industries.
The 103 page report, titled Empty Promises: G20 subsidies to oil, gas and coal production explains that some $452 billion in annual subsidy is provided to the industry by the governments of the G20 countries. The averaged figure for Canada in each of 2013 and 2014 was is $2.7 billion. (CBC news report here.)
As with oil, subsidizing of fossil fuel-based transportation is de rigeur in Canada. In 2008 and 2009, the governments of Canada and the United States bailed out Chrysler and General Motors to the tune of scores of billions of dollars. The amount in Canada was $13.7 billion, supported by the Liberals who were in opposition at the time.
According to the Financial Post in May 2013, taxpayers in Canada are still short $810-million on a $2.9-billion loan to Chrysler. The figures for loans and equity purchase to General Motors during the same time are more difficult to parse. The Post explains:
The original loan to GM in June 2009 was $10.8-billion. Since then, the governments garnered about $2.8-billion from GM repayments, interest, and proceeds from the sale of some government-owned GM stock in 2010. Still in government hands are shares worth an estimated $5.2-billion based on the price of GM stock at the end of May.
Add the payments from the GM deal ($2.8-billion) to the value of the shares ($5.2-billion) and the total is $8-billion. Subtract that from the original loan and taxpayers still face a loss in nominal terms of about $2.8-billion. That is better than when GM shares were worth less than now, about $35 a share. GM stock would still have to rise by 55% to about $55 for taxpayers to break even on a nominal basis.
In April 2015, the Canadian government sold its remaining shares in GM. The Globe and Mail reported, “All told, the government received about $10.2-billion from the sale of shares in both companies, repayment of loans and interest payments, leaving a shortfall of about $3.5-billion.” In the U.S., $82 billion was invested in the auto companies; $12 billion was never paid back.
Of course, the argument in favour of such wasteful spending is “jobs”, as if capitalists invest their money out of philanthropic concern to create jobs, not for the purpose of wresting maximum profits at whatever cost to the environment and the humans who inhabit it.
The fact is, placing these billions of dollars in alternative, forward-looking investments as part of the required social and ecological revolution (including jobs for workers transitioning out of the dying capitalist economy) will create many times more jobs.
Investment in real and meaningful social/economic transition will be the beginning of the end for the pointless—nay, highly destructive–growth-for-growth’s-sake capitalist economy. One immediate benefit will be to expand the social economy in order that refugees from wars and the many climate refugees and displaced persons to come will have proper communities to move into and futures to build.
 In 2012, this writer wrote a number of articles analyzing the auto industry in Canada, including a lengthy analysis in July 2012 of the auto industry policy adopted by the Canadian Autoworkers Union (since merged to create UNIFOR). The CAW policy paper was a climate change-denying argument in favour of support and promotion of the auto industry by the capitalist governments in Ottawa and the province of Ontario. My July 2012 analysis was submitted for publication to The Bullet, published by the Toronto-based Socialist Project, but the editors declined it. They have a long association with the CAW-UNIFOR.