The federal government announced on Friday a $3.4-billion deal with Boeing to buy four heavy-lift military cargo planes, but questions remained over which provinces will benefit most from lucrative spinoff contracts.

Gen. Rick Hillier, Canada's chief of defence staff, joined Defence Minister Gordon O'Connor, Industry Minister Maxime Bernier and Public Works Minister Michael Fortier at National Defence headquarters for the announcement.

The C-17 Globemaster III transport plane can carry any piece of equipment in Canada's military inventory, including tanks and armoured vehicles.
(CBC)

"This marks a beginning of a new era for Canada's Armed Forces," O'Connor said, citing the planes' flexibility for a range of missions.

"We will be faster and better in reaching out" to communities around the world in need of emergency aid by rapidly transporting Canada's Disaster Assistance Response Team, as well as better replenishing soldiers in the field, he added.

The first of the four planes will be delivered by the end of August, O'Connor said.

In June, the government set aside the funds for Boeing's C-17 Globemaster III transport planes, which can lift 76 tonnes and are capable of carrying any piece of equipment in Canada's military inventory, including tanks and armoured vehicles.

A beaming Hillier said the C-17 was a perfect fit for Canada's military needs.

"It's essential," he said. "It gives us a capability to move around the world that we have never had in our history."

The deal also brings $869-million worth of investments by Boeing in Canada's aerospace and defence industry, Bernier said.  

While the planes will be built in the U.S., the federal deal hinges on Boeing pledging to spend an amount equal to the purchase price on projects in Canada. The arrangement pitted Manitoba and Quebec against each other to obtain a large share of the benefits.

Provinces sparring for spinoffs

The deal was rumoured to have been delayed by almost two months over disputes involving the spinoff subcontracts, known as industrial regional benefits, or IRBs.

Quebec lobbied fiercely to get a majority of the industrial benefits the province argued it deserved, but is expected to get only about 30 per cent of the value of the contract in spinoffs.

Bernier would not give the percentage or which projects would go to Quebec versus aerospace companies in Western and Atlantic Canada, saying only that Boeing will announce individual contracts with Canadian suppliers in the coming weeks.

"This will benefit Canadian companies coast to coast," he said.  

The government's lack of detail on the spinoff projects drew immediate rebuke from Quebec, which is home to roughly 60 per cent of the country's aerospace industry.

"It seems obvious that Quebec should benefit in a substantial way," Quebec Premier Jean Charest told Radio-Canada Friday.
 
"They [the government] have the responsibility to make sure that it has an impact on jobs, [and] on the economy in Quebec," Parti Québécois finance critic Francois Legault told CBC News.

But Manitoba Premier Gary Doer said Friday he already knows there is good news for his province in the deal.

"What does that mean for Manitoba? It will mean that Boeing, over the next period of time, will go from 1,200 good-paying jobs at the Boeing plant here in Winnipeg, to 1,400 good-paying jobs in this province," he said.

"It will last for a long period of time because of the length of the contract and the length of the offsets. So we're very pleased about that."

The Conservatives promised in the last election campaign that they would buy the unique aircraft for the Canadian military so it could transport its own heavy equipment around the world.

The Liberals said the decision to buy the planes was made without a full tendering process, and Canada's Armed Forces could continue to lease or borrow transport planes from allies such as the United States or other NATO countries.