Bill C-38 (Historical)

An Act to amend the Air Canada Public Participation Act

Air Canada Public Participation Act

[Mario Laframboise, Bloc, Argenteuil—Papineau—Mirabel, QC]

Madam Speaker, today's debate on Bill C-38 is in connection with Air Canada's demands for a review of the ceiling on individual ownership of shares.

The Bloc Quebecois will support Bill C-38.

Of greatest concern are the speeches by the Minister of Transport and the representative of the official opposition on the future of Air Canada and airlines in Canada.

Bill C-38, a simple bill with only three pages, repeals section 6 of the act. I will read it for the men and women of Quebec. The Air Canada employees watching us surely understand it. The act contained, and I quote:

1. (1) provisions imposing constraints on the issue, transfer and ownership, including joint ownership, of voting shares...to prevent any one person, together with the associates of that person, from holding, beneficially owning or controlling, directly or indirectly...voting shares to which are attached more than 15% of the votes that may ordinarily be cast to elect directors of the Corporation—

What the Minister of Transport is proposing in Bill C-38 seems thoroughly harmless. It would, however, allow a single shareholder to hold more than 15% of shares. It would be this shareholder other shareholders or entities who would hold the shares. They would thus have the right to take over control or to take part in the control of Air Canada's board of directors.

Is this desirable? It is what Air Canada is asking for. It is thought that investors could be interested. Citizens and companies across Canada will probably want to buy Air Canada shares, ensuring with colleagues, friends or related corporations that they have a certain degree of control over the board of directors so as to be able to play a greater role in the company's decisions, to perhaps be able to run it better and turn a profit. This would surely allow them to make some sort of return on their investment.

What this means is giving Canada's business community a free hand to control, to continue to control and to increasingly control this national company, Air Canada.

This is cause for concern, because the minister has told us quite candidly what our neighbours to the south have done. He has told us in all sincerity that the Americans provided massive assistance to the airline industry, over $15 billion he tells us, and that was the figure. Five billion dollars in direct aid and $10 billion in loan guarantees. A choice was made. In the wake of the sad events of September 11, the Americans decided to invest heavily. The minister was quite open about this. The Americans invested heavily, he told us, and that is so. The figure mentioned was $15 billion to revive the airline industry.

Other countries in the world suffered, such as Switzerland's Swissair, which sought bankruptcy protection. Switzerland decided to invest heavily in a company called Crossair, a regional airline in Switzerland. This company will soon buy up Swissair's shares and revive the airline industry. Switzerland has made a choice. It decided to invest heavily in Crossair, which will soon take over the defunct Swissair. This is a choice as a society.

What is saddening to hear today is that Canada has decided to give the market free rein and not to make any massive investments to kick start the airline industry. Anything it does do is on a bit by bit basis. Canada's approach is a piecemeal one. At the outset, the minister announced investments to meet high insurance costs.

As a result of the sad events of September 11, the airlines were faced with astronomical hikes in insurance costs. Some carriers were no longer even able to insure themselves. The government therefore decided to compensate them for the astronomically high premiums they were being charged for insurance.

It then reimbursed expenses. Since the air space was totally closed down, all companies' equipment was grounded. The Government of Canada decided, still within its piecemeal approach, to announce one week later that it would offer compensation and assistance, reimbursing the airlines' losses that were the result of the six day closing of Canadian air space.

This assistance was in dribs and drabs. After that a loan guarantee program was announced, followed last week by another loan guarantee to Canada 3000 of $74 million.

The minister refers to a business restructuring. He spoke of massive staff reductions. Once again the minister helped out Canada 3000 once it had restructured and, in particular, made massive staff cuts.

The minister has told us very candidly that the government can help the five major carriers in Canada, including Air Canada, Air Transat, WestJet and Canada 3000. He said very candidly “once they have restructured”. Downsizing is an important part of the restructuring of any company.

This is a message to the employees of all these airlines in Canada and Quebec, saying “In the end, you are the ones who will pay for the September 11 events. We will help—as was the case with Canada 3000—once your company has restructured financially”. And the minister adds “once your company has reduced its staff”.

In order to get help from the federal government, airlines must absolutely restructure. They must submit a restructuring plan that includes staff reductions. This is very hard to accept for airline industry workers, because what happened on September 11 was not their fault. It is not their fault if their industry suffered such setbacks but they are the ones who are paying for this.

Again, this applies to four airlines at the exclusion of Air Canada. In the agreement and in the various acts, very important guarantees were demanded for Air Canada. Such guarantees were demanded by the Bloc Quebecois, which questioned the government in debates on the various acts establishing Air Canada as we know it today, and by others. Why? To protect the rights of workers.

Air Canada is the largest airline, with 80% of Canada's air traffic. Therefore, it is important that it be afforded some protection. When Canadian was integrated with Air Canada, we made sure that workers would not lose. As the minister said, we made sure that small municipalities would be served. This has always been a requirement in the original legislation that is now being amended. These requirements have not changed. Protecting the rights of workers and serving small municipalities are still requirements under the acts that established Air Canada and French in the skies.

It is sad to hear speeches such as that of the Alliance member in a country where there are two founding peoples, anglophones and francophones. Members will understand why, with such speeches, that sovereignty is not dead in Quebec. If we were to hear speeches like that of the Alliance member every day, I am sure sovereignty would take off for the pure and simple reason that francophone rights must be protected.

And the law provides for the protection of French in the air.

What is harder to accept is the fact that 136 complaints are before the commissioner of official languages. They were lodged against Air Canada because French is not respected in the air. This is the harsh reality.

It is hard to hear the representatives of the Canadian Alliance say, today, that it is time to stop protecting French in the air, a practice established by one of the two founding peoples, thanks to representations by the Bloc Quebecois, among others. Air Canada is Canada's largest airline, carrying 82% of the volume.

Obviously we must carry on and make sure that the rights of travellers are protected. As regards service to small municipalities—I am using the minister's expression—it must be protected. That is what the minister said earlier.

There are no large or small municipalities. Canada was built from communities that diversified their approaches. Communities were established around natural resources. Cities—this is the term we should use and not small and large municipalities—were established across Canada.

No law makes a distinction between towns and cities in Quebec. They are cities. There are no large and small cities in the Quebec Loi des cités et villes. There are cities. Obviously, there are cities in the regions and there are cities near major urban centres, and the law must protect and continue to protect service to cities in the regions.

Canada owes its existence to its natural resources and continues to be very much a country of natural resources. The future is very important for all regions of Canada. Such is the diversity of Canada, what makes it great. We are one of the largest countries in the world in which the decision has been made to allow the market to operate freely.

That is where the problem lies. In such a vast country, a country of such diversity, the strength of which depends in large part on the natural resources located in distant regions, the government has a duty to intervene in order to ensure that transportation services are maintained, including the most rapid means of transportation, air service, so that regional cities are connected with the major urban centres.

That is why it was hard to swallow today the statement in the minister's speech saying that, with Bill C-36 which merged Air Canada and Canadian, we obtained and included protection for service to small municipalities.

I hope he will rethink his choice of words. Cities in the regions have as much right to air service as major urban centres. That is reality. Just as Canada's francophone air travellers have as much right to service in their own language as anglophones.

I am proud that the act which created Air Canada protects the use of French in the air. I hope the rumours that Air Canada wants to abandon Air Canada Regional precisely because the use of French in the air is a constraint on the expansion of all the businesses that make up Air Canada Regional, are not true.

Apparently they want to abandon these businesses, sell them or transfer a part of their routes. That is the current rumour. This is an attempt to improve the bottom line and to avoid having to respond to the 136 complaints received by the official languages commissioner against Air Canada regarding the use of French in the air.

It is difficult and it is a hard fight but we must continue to fight to protect the rights of workers under the statutes that created Air Canada as we know it today. We must continue to protect service to cities in the regions, and not small municipalities as the minister said, and protect the use of French in the air.

This bill only changes the percentage of individual or group participation in the share capital of Air Canada. It only amends this clause.

The Bloc Quebecois will support Bill C-38 for the simple reason that the rights of workers at Air Canada will still be protected, as will service to cities in the regions, and the use of French in the air.

We must continue to fight so that cities in the regions of Canada and Quebec are better served and that the use of French, the language of one of the two founding peoples of Canada, is better protected in the air.

This is a commitment which the Bloc Quebecois is determined to defend in the House.

It is sad to see the federal government deciding to put its faith in the free market in something as important throughout Canada as the airline industry. This is a position strongly backed by the Canadian Alliance, which would like to go much further. It would be a disaster for Canada's entire airline industry for the good and simple reason that this great country of Canada, and of Quebec, needs flights linking cities in the regions with major urban centres. They do not all have the same number of inhabitants and are so diversified that we must support them. In my view, the Government of Canada would do well to do as Switzerland or the United States have done and provide massive aid to the airline industry. It is a vital part of our economy.

Companies such as Bombardier were able to create markets in aeronautics because we in Canada were heavy users of air services. The entire aeronautics industry is supported by the airline industry and we must encourage this industry and its workers. They should not have to pay for what happened on September 11. They should not bear the brunt of industries' losses through the loss of their jobs. We are condemning entire families to poverty just because the government decided to give the market free rein.

I call on the minister to rethink his position on this issue. I call on the federal Liberal government to start looking at the larger picture and to send out a clear message. I hope the Minister of Finance will understand and that in his next budget he will announce heavy investments to support Canada's airline industry. As in the United States, Switzerland and other countries, this industry needs significant government support right now, until business picks up. We all hope that business picks up in the airline industry. Only time will tell.

Working on security is a good example. I support the Minister of Finance with respect to the Government of Canada's investments in security.

The problem is that we did not do enough before September 11. This is why we now have to invest so massively in security. We did not do it before. In 1987 the government decided to move the RCMP out of all Canadian airports. The RCMP was responsible for monitoring and supervising security at airports. It is not just the Liberal government that made this type of decision. That decision was made by the Conservative government and was supported by the current Liberal government. Why? For reasons of economy.

The government delegated to so-called non-profit organizations the responsibility of managing and administering some of the duties relating to security at airports.

Today we are seeing some of the results of that decision. There has not been much investment. Instead, cuts were made. The government tried to transfer the burden of security to airline companies which, over the past 20 years, have undergone major changes, including bankruptcies and the merging of Canadian Airlines International and Air Canada. Meanwhile, it was asking airlines to pay for security.

It did so by investing as little as possible. Since 1987 Transport Canada has been responsible for security at airports. This is a civilian agency which over the past 15 years has been much busier dealing with disputes about the costs to airline companies compared to the services provided by non-profit organizations set up by the Government of Canada to transfer its responsibility. They tried to make it as inexpensive as possible and now we can see the results.

Today we are being forced to make massive investments and the Liberal government is now afraid that it will not have enough money, for the simple reason that we do not know exactly how much the security bill will cost. In the meantime, we are not investing in the airline industry, we are saving our pennies to invest in security and protect passengers, users and all Canadian.

This is a choice we as a society made, and today the airline industry is paying the price. The federal Liberal government does not want to invest like the Americans have done. Once again, I thought the minister's statement was quite frank when he said that the Americans had provided massive support for the airline industry, $5 billion in direct assistance, $10 billion in loan guarantees; $15 billion in all.

Switzerland made a choice, following Swissair's filing for protection under the bankruptcy act, when it decided to invest massively, with the purchase of 38% of the shares of Crossair, which will take over from Swissair in January. So, it is a societal choice.

In Canada, all that is being promised, all that is being offered to employees in the airline industry, which supports the aviation industry, airplane manufacturers, et cetera, is Bill C-38. The world's leading companies in aviation and aeronautics are here, there are manufacturers and companies that produce parts, and all that we can promise them today is Bill C-38.

We agree that individuals should be able to have more than a 15% control of shares if they want to. If this finally allowed a major investor to control Air Canada's board of directors and try to jump start the company and get it on track, this is a societal choice that the government of Canada has made.

We must think about the workers in the airline industry, in all the companies, and not just the five major ones. There are regional companies as well. This afternoon, Air Alma was mentioned. There is Air Inuit and all the other regional carriers, which were hit with the reduction in air traffic across Canada and around the world. They are not being helped by the measures the minister announced yesterday.

This afternoon in oral question period, the minister told us candidly that revitalizing the major companies was likely to give the smaller regional carriers a boost. This represents a choice not to support the regional companies, which are often family operations, and letting them go adrift. When they hit really hard times and are within inches of seeking bankruptcy protection the government might agree to guarantee loans for them, if things are really going bad.

No plan is in place to help the airline industry. They will deal with things piecemeal, day by day. They put out fires. That is how security was dealt with. When problems arise, they deal with them. Otherwise, they try to save as much as possible in security. This is the way they have operated since 1987.

They are making massive investments because there is a security problem but the passengers on the airlines are paying the cost in Canada. Today they have nothing more to sink their teeth into. They have a bill that will enable private investors to participate more in Air Canada in an attempt to revive it.

I hope and we will demand that the context in which today's Air Canada was established will be maintained. In other words, Canada and Quebec need a strong airline that respects travellers' rights, that serves the cities and the regions and that uses French in the air, for both founding peoples.

[James Moore, Canadian Alliance, Port Moody—Coquitlam—Port Coquitlam, BC]

Madam Speaker, it is my pleasure to stand in favour of Bill C-38, an act to amend the Air Canada Public Participation Act. This change is long overdue. It finally puts Air Canada on a level playing field with other Canadian air carriers with respect to the sale of its shares.

For the first time in Canadian history Canadians can buy, sell and trade as many Air Canada shares as they want, just as if they were shares of any other Canadian company. Bill C-38 represents a marked departure from the traditional thinking of Liberal governments.

Air Canada was created by an act of parliament in 1937 as Trans-Canada Airlines. It has been the subject of much discussion in the House since that time. For the first 40 years of the company's existence it was seen as an agent of the crown and as the federal government's principal policy instrument in the field of aviation.

That changed with the passage of the original Air Canada Act in 1977. For the first time Air Canada was required to borrow in its own name and was declared to be no longer an agent of the crown. It remained a crown corporation and cabinet retained the power to appoint its directors.

In 1987 the Progressive Conservative government passed the National Transportation Act. It fundamentally changed the rules of the game and attempted to introduce competition rather than regulation as the primary arbiter within Canada's domestic airline industry.

Within a year the Progressive Conservatives had correctly realized that in a competitive situation the government had no business owning one of the competitors, so the parliament of the day quickly passed the Air Canada Public Participation Act essentially privatizing Air Canada and turning it from a crown corporation into a regular company whose operations were subject to the Canada Business Corporations Act.

Paragraph 6(1)(a) of the Air Canada Public Participation Act limited the number of shares that could be owned by a single shareholder to 10%. This was done to ensure that Air Canada stocks would be broadly held by as many Canadians as possible. The section also put Air Canada on a level playing field with its principal domestic competitor, Canadian Airlines International.

Members must not forget that the Air Canada Public Participation Act was first read in the House on May 19, 1988. This was nearly five months after the January 1, 1988, birth of Canadian Airlines International from the fusion of all Air Canada's pre-1980 domestic competitors, Pacific Western Airlines, Transair, Nordair, Quebec Air, Eastern Provincial Airways and Canadian Pacific Airlines, into a single entity.

In 1988 Canadian Airlines parent company was governed by Alberta's Pacific western airlines act which set a 4% limit on the number shares any one group could control. In fact the 10% share limit set in the original Air Canada Public Participation Act was actually more liberal than the 4% limit set in the act governing Canadian Airlines.

Bill C-26 raised to 15% the number of shares that could be held in Air Canada following the takeover by Air Canada of Canadian Airlines in 2000. We are finally discussing whether to give Air Canada some of the same rights as other companies some 64 years after parliament first created a national airline.

If we were to believe government members, Bill C-38 would put Air Canada on a level playing field by striking down paragraph 6(1)(a) of the Air Canada Public Participation Act. Bill C-38 ostensibly puts Air Canada on that level playing field with all other airlines with respect to the way its shares can be bought, sold and traded by Canadian citizens. On that basis alone it should be supported, and the official opposition supports this legislation.

Bill C-38 does little to address the short term financial woes of Air Canada that led to thousands of layoffs at Air Canada, including the laying off today of 500 to 700 pilots. I will explain.

First, Air Canada does not obtain money when its shares are acquired by a new buyer unless Air Canada is the seller. Second, no single shareholder is currently restricted by the present 15% limit, that is no current shareholder owns 15% and has publicly expressed a desire to purchase more but cannot as a result of this section. Third, if people were not inclined to buy Air Canada stock before the legislation the fact that they can buy more of it is simply not an incentive.

There are only two ways that Bill C-38 would financially benefit Air Canada. First, some of the debt which the Caisse de dépôt et placement holds would have to be converted into shares. The caisse currently owns roughly 9% of Air Canada stock and converting its debt into shares would give the caisse roughly 18%.

First, this move, based on a $2.50 price for shares at the date of the transport minister's announcement of his intention to introduce this legislation, would allow the company to convert roughly $17.789 million worth of caisse debt into 9% of Air Canada voting shares. Second, an individual or group would have to take control of Air Canada with a clear plan to restructure the company. This would not be enough unless the restructuring plan were to meet the approval of the transport minister and be acceptable to Air Canada unions.

The bill is essentially political posturing. It lets the government claim to be addressing Air Canada's concerns while ignoring the company's plea for bigger and bolder policy moves such as the implementation of permanent new security regimes on the ground that are not only better but faster and more streamlined, placing air marshals on planes, and putting the issue of airline industry restructuring before the Standing Committee on Transport and Government Operations for immediate consideration and redeliberation.

Bill C-38 requires us to examine the Air Canada Public Participation Act. While I am in favour of striking down paragraph 6(1)(a) of the act we should not stop there. We should ask ourselves a basic philosophical question. As we enter the third millennium should the government continue to regulate the internal affairs of a publicly traded corporation whose shares it no longer owns?

Why should paragraphs 6(1)(d) and (e) of the Air Canada Public Participation Act require Air Canada to maintain facilities and/or offices in certain cities? Surely these decisions are the responsibility of the company's shareholders and board of directors.

Why should section 10 of the Air Canada Public Participation Act make the Official Languages Act applicable to Air Canada and no other Canadian airline? If the Official Languages Act applies to Canada's airline industry it should do so in the Official Languages Act and not in the Air Canada Public Participation Act.

It hardly seems fair to hold Air Canada to a higher standard than Toronto based Canada 3000, Calgary based WestJet or Montreal based Air Transat.

Why should paragraphs 6(1)(b) and (c) of the Air Canada Public Participation Act restrict foreign share ownership in Air Canada when a more equitable regime would see similar limits placed on all Canadian carriers? Paragraphs 6(1)(b) and (c) of the Air Canada Public Participation Act are wholly unnecessary. The transportation minister should know that there is already a prohibition against foreigners owning more than 25% of a Canadian air carrier in the Canada Transportation Act. Section 55 of that act defines a Canadian carrier as:

A corporation or other entity that is incorporated or formed under the laws of Canada or a province, that is controlled in fact by Canadians and of which at least 75% , or such lesser percentage as the Governor in Council may by regulation specify, of the voting interests are owned and controlled by Canadians.

Section 56(3) of that act gives the Canadian Transportation Agency the power to review all mergers and acquisitions in the airline industry and determine whether such activities would affect an airline's status as being Canadian. Paragraph 61(a)(i) requires a carrier to be Canadian in order to have a licence to operate domestic air service.

Section 69 only allows two types of carriers to operate international air service: Canadian air carriers and non-Canadian air carriers which have been designated by a foreign government or an agent of a foreign government to operate an air service under the terms of an agreement or arrangement between that government and the Government of Canada.

Under the Canada Transportation Act, if WestJet, Canada 3000 and Air Transat were to allow foreigners to acquire more than 25% of their voting shares they would no longer be Canadian. They would lose both their ability to serve domestic routes within Canada as well as international routes between Canada and another country. In essence, they would lose the value of any potential buyer. This restriction is utterly redundant.

Given the restrictions against foreign ownership already present in the Canada Transportation Act, paragraphs 6(1)(b) and (c) of the Air Canada Public Participation Act are wholly unnecessary. Even if there were no prohibitions in the Canada Transportation Act, Air Canada's board of directors would undoubtedly take actions to ensure that control of the firm remained in Canadian hands because of the convention on international civil aviation, more commonly referred to as the Chicago convention. It sets out the basis of international commercial aviation.

Internationally scheduled commercial air traffic is made possible through bilateral agreements in which governments exchange air rights for the benefit of their respective carriers. Each country can designate a national carrier on any international route.

Air Canada and Air France fly between Montreal and Paris. Air Canada and Korean Air Lines fly between Vancouver and Seoul. Air Canada and Cubana Airlines fly between Canada and Cuba. Only in the most exceptional cases will we find an airline flying between two cities where neither is in the airline's home country.

In virtually every case where a foreign airline flies between two foreign destinations it is only as an extension of a flight that started in the airline's home base. Air Canada flies between Sao Paulo, Brazil, and Buenos Aires, Argentina, but only as part of a Toronto, Sao Paulo, Buenos Aires service and only with the approval of the governments of Canada, Brazil and Argentina.

If Americans or people of any other nationality were to acquire a majority of Air Canada's voting stock, foreign governments might refuse to recognize Air Canada as a Canadian company and thereby deny it the ability to continue serving routes in those countries even without the safeguards of the Canada Transportation Act. Thus, if United Airlines and Lufthansa were to buy 51% of Air Canada's voting stock, the British, French and Chinese governments would have the right to deny Air Canada permission to fly to London, Paris and Shanghai.

Air Canada as an airline would cease to hold value for the investors who just purchased it without the ability to serve international routes. For this reason alone its board of directors would never allow foreigners to own a majority of Air Canada's stock.

We only need to look at the arrangement that American Airlines had with Canadian Airlines in 1999. Passengers were flown from the U.S. to Vancouver and then from Vancouver to Asia on Canadian Airlines jets. The reason for this was that American Airlines had only been granted routes to Japan from the U.S. and needed access to Hong Kong, China, Taiwan, Thailand and the Philippines. The Asian service provided by Canadian Airlines was based on bilateral agreements between Canada and the Asian countries concerned. American Airlines would have literally killed the goose that laid the golden egg had it taken control of Canadian Airlines.

I agree with repealing paragraph 6(1)(a) of the Air Canada Public Participation Act. The official opposition will support Bill C-38. However, having carefully examined the Air Canada Public Participation Act, we see no reason not to repeal the entire act itself.

It has at least four irrelevant sections. Section 4 deals with the transfer of shares to the Minister of Transport. Air Canada tells me these shares have since been sold. Section 5 deals with continuance. Presumably this has been achieved in the past 12 years since the act has been passed. Section 11 deals with the continued appointment of Air Canada directors past the privatization date. Presumably the terms of these directors have long since expired. Section 14 repeals the Air Canada Act. This section has also been spent.

The act also discriminates against Air Canada in four specific areas. Paragraph 6(1)(a) limits share ownership of an individual or group to 15%. Paragraphs 6(1)(d) and (e) make Air Canada maintain facilities and/or offices in defined cities. That is mandated by the government and is not a decision of the company. That is mandated against Air Canada and not levied against other businesses. This is a government regulation that retards the economy.

Paragraphs 6(1)(b) and (c) restrict foreign share ownership in Air Canada. Section 10 makes the Official Languages Act applicable only to Air Canada and not other carriers.

The transport minister says that because the head office is mandated to be in Montreal it somehow adds virtue to a discriminatory policy which handcuffs Air Canada but does not handcuff other carriers. He says that it is in the national interest. It is in the national interest if it is in Montreal but not if it is in Calgary or Vancouver. That is not in the national interest; Montreal is the national interest.

It is a rather perverted approach to public policy. Why does the government not just leave companies alone to compete on an equal and level playing field in the free market? It might try it once. It does wonders.

If the government is intent on putting Air Canada on a level playing field with its domestic competitors it can do this not only by removing the share limitation in paragraph 6(1)(a) of the act but by repealing the entire act itself. This is what the official opposition believes the government should do.

I intend to call witnesses before the standing committee to examine the practicalities of repealing the entire act and the best ways to put Air Canada on an equal footing with its domestic competitors while respecting the other priorities now contained in the act.

If the transport minister would like to come before the committee and tell us why Montreal is more a Canadian city than Calgary, Hamilton, Toronto or Edmonton, he is free to do so. I encourage him to do so. It would be the death of the government if he did that.

The legitimate policy aims which are contained in the act should apply equally to all Canadian carriers. Aviation law should apply to all Canadian carriers equally, not just to Air Canada.

The Air Canada Public Participation Act discriminates against Air Canada in ways that are utterly counterproductive and which retard the marketplace. Just because Air Canada is a corporation does not mean that the thousands of Air Canada employees should be held to a higher standard than their colleagues at other companies. Either we believe in fairness as a nation or we believe in double standards. The official opposition believes in fairness and competition. I hope the government's opinion of the air industry will one day be the same.

Since 1937 the federal government has regulated Air Canada mercilessly. It is time to throw off the shackles and let Air Canada be held to the same high standards and only the same high standards as every other Canadian carrier. It is time to repeal the Air Canada Public Participation Act and finally create the level playing field that people on both sides of the House keep saying they want.

I will be supporting Bill C-38, but I will also be introducing at committee amendments aimed at doing what Bill C-38 should be doing, which is putting Air Canada on a level playing field with its domestic competitors for the first time in its 64 year history; transport minister be damned.

[David Collenette, Liberal, Minister of Transport]

moved that Bill C-38, an act to amend the Air Canada Public Participation Act, be read the second time and referred to a committee.

Mr. Speaker, it is a pleasure to rise to speak to Bill C-38 this afternoon to try to get the sense of the House on furthering the improvement of airlines in Canada. This is a very short bill and it has one purpose: to amend the Air Canada Public Participation Act to eliminate the 15% limit on ownership of voting shares in Air Canada by any one person. I hope there will be speedy passage of the bill.

As most people know because we have been engaged in the airline file for a number of years Air Canada took on Canadian Airlines a couple of years ago. Over the last couple of years it has done a remarkably good job of merging the two airlines together.

There have been problems, not all of them of Air Canada's making. Some had to do with bad weather in the summer of 2000. Others had to do with the increase in air traffic when the economy was doing well. There was also an inability to merge the workforces on time.

All these things came together to create a situation that combined with high fuel prices and a declining economy in the last year caused problems for Air Canada before the events of September 11. Air Canada had publicly stated its need to get its house in order to attain more equity before September 11. The events of September 11 have compounded the problem and there is no question that Air Canada, as other airlines, requires a new infusion of equity.

Because of the constraints parliament imposed when Air Canada was privatized, it was impossible for the normal kinds of investment to occur in Air Canada that occur in other public corporations in the country. Investors who wanted a say in the direction of the company were stymied because of the legislation and the restriction on voting shares.

If we are asking the House to eliminate the limit on individual ownership it would be useful to give a bit of the history as to why the limit was imposed in the first place.

Air Canada was privatized in 1988 and 1989 under the enabling legislation which is before us and which would be amended by this bill. At the time the act contained a section that limited individual ownership of voting shares to 10%. The justification for the 10% limit was to ensure that voting shares would be as widely held as possible by Canadians.

Most people do not realize that the 10% limit was accompanied by a prohibition on association between persons who hold voting shares. This was designed to ensure these persons could not act together and take control thereby nullifying the concept of a widely held company. At the time no one thought much about that and the bill was passed. The 10% restriction remained in place until the year 2000 when we raised it to 15% by way of Bill C-26.

Members may remember that leading up to that bill there was an initiative by the government in the fall of 1999 to find a private sector solution to the woes that were bedeviling Canadian airlines. As a result of actions we took we precipitated a private sector solution. Two offers were before Air Canada at the time. One was from Onex Corporation. The other was a proposal that originated with the management of Air Canada.

I will not go into all the details, but people know that Onex withdrew and subsequently Air Canada's management made good on its promise to take over Canadian Airlines subject to certain restrictions. At the time in December 1999 there were intense negotiations between the government and Air Canada because with the demise of Canadian Airlines there would be one large carrier with 82% of the capacity in the country.

As a result of those negotiations, Air Canada decided on certain guarantees with respect to no involuntary layoffs and service to small communities. It has made good on its promises. I emphasize that during those discussions at any time the Air Canada board of directors was free to walk away from that initiative. It made a conscientious business decision which it had to live with in good times and in bad.

Of course the times right now are not as good. That is why the original objection by Air Canada management to changing the 10% and having single shareholders potentially own the company has changed. It has publicly stated its willingness to agree to this kind of a change. It is in agreement with it. Therefore I cannot see any great controversy.

The decision to move to the 15% limit was one we felt was at least in keeping with other crown corporations such as Canadian National Railways. We cannot take that particular comparison too far because the ownership limits on former crown corporations have been tailored to the specific industry sector. CN and Petro-Canada for example have a 15% limit but no limits on non-residents. Nordion for example has no individual share ownership limits except for the 25% for non-residents. Major Canadian banks will allow 20% but there is a fitness test. What we are proposing for Air Canada is appropriate to the Canadian air services sector at this time in our history.

As I said there has been some degree of support for this from Air Canada. In coming to the decision to remove the limit, I have been told by a number of people that any limit in the past has been a disincentive to an investor with serious intentions when investing to have a say in the company. That is why we have decided to re-examine the entire operation and to ensure that there is an equity infusion into Air Canada.

We have been fully engaged with all of the airlines since September 11 to look at their finances and ascertain their financial health. Obviously they have been adversely affected, as have airlines around the world. What we see in Canada is not unique to us; it is something that is being played out elsewhere.

We know what the United States government has done in the aftermath of the terrorist attacks. It came forward with a $15 billion package for the airlines, $5 billion for immediate compensation, $10 billion for loan guarantees. There was another $3 billion included in the $40 billion appropriations bill for reconstruction specifically for security measures. As I have said publicly, we are examining the efficacy of the Government of Canada taking on more of those security costs.

We have watched with some concern as airlines have faced difficulty. They have all reduced capacity and made many adjustments.

Just last week I announced a loan guarantee package for Canada 3000. That airline met certain objectives such as equity infusion by investors, reduction in capacity, the paring of workforces and most important, a business plan that would restore Canada 3000 to profitability.

What I said publicly last Thursday night is that kind of program will be available for the five principal airlines in the country that cover 95% of the market. I realize from questions in question period there are other smaller carriers that would like to avail themselves of a similar loan guarantee program, but they were covered in the initial compensation program. They were covered, as were all the airlines and airports, by our agreement to pick up the war risk liability for 90 days, the third party liability that was terminated by insurance companies which affected not only Canada's air industry but air industries around the world. We did this for the air carriers, the airports and Nav Canada. Everyone has benefited.

One has to draw the line somewhere in how far one goes in terms of loan guarantees. That is why we have said the five largest carriers that cover 95% of the market that are national in scope, they being Air Canada, Air Transat, Canada 3000, WestJet and Sky Service, would be eligible for the loan guarantee initiative. I am not sure that all of them will require it.

There is no question that air traffic has come back to some degree in the last number of weeks. It is gradually coming back to approximate pre-September 11 levels. However, that is not the case certainly on transborder traffic where there is still a significant reduction as compared to the period prior to September 11.

In looking at Air Canada in particular, we have said that perhaps by eliminating the single ownership limit the company would become more attractive to investors. It would allow more of an infusion of equity. It certainly would facilitate with the overall restructuring of the company.

We come with the message that we are preoccupied with the health of the transportation sector in general, but in particular the airline industry. We have made a number of changes to security regulations and safety regulations on board aircraft with the locking of cockpit doors and the strengthening of cockpit doors. In fact last Friday after I boarded the plane and before it left the gate, I was asked by an Air Canada pilot to see the new measures that had been put in place. I was quite impressed with how quickly that had been done and it had been done with the co-operation of Transport Canada. This is being done not only here but in the U.S. and elsewhere around the world. We are facilitating extra security on planes with the new regulations.

I hear my friend from the Alliance who is preoccupied with Americana and wants the provision of armed security personnel to be blanketed on Canadian aircraft. We have said yes for those flights to Reagan national airport, specifically because the American government has said that is a condition for Air Canada to go back to that airport. I think everyone in the House understands that. Anyone who has flown into that airport knows its proximity to the downtown core. It is not just any downtown core; it has the seat of government of one of the largest nations, arguably the most powerful nation in the world. Obviously there have to be some extra security provisions. We have agreed to that because Air Canada is unique on the open skies treaty in being able to use that airport. We did not want to inhibit Air Canada in any way, so we have agreed that the RCMP, Canada's national police, will be on those flights. I have said that we would consider it elsewhere.

However, our preoccupation has been to ensure that airport security be made more stringent and that those rules be put in place quickly and be enforced. Yes, there is some inconsistency across the country, but we are getting to that. We are dealing with that through inspections.

I was on the CBC town hall meeting last night. The Leader of the Opposition was on the panel. I was very happy when he agreed that the security regime has improved and that lineups at airports are diminishing as people get through the new rules.

Of course the one disagreement, in terms of substance, was the question of whether the government should go along with armed security personnel. As I have said publicly, we have that under advisement.

We have done much to help the airline industry and the airports. There are new regulations, new security regulations. I have no doubt that the security regime at Canadian airports, in the skies generally, and in other parts of the world is much better than it was before. I thought it was good before September 11 but it is much more stringent now. Canadians should feel very comfortable in flying. Indeed gradually people are going back. Even business class passengers who stayed away in droves following September 11 are starting to travel again, even some of them to the United States.

Our decision to amend the Air Canada Public Participation Act at this time is to provide another kind of assistance to Canada's largest carrier in its attempts to return to financial stability.

Air Canada is the world's 11th largest airline. It is an airline of which we can be proud. It has not been easy for Air Canada in the last couple of years with some of the problems that it has undergone. However, the quality of the professionals that work at Air Canada both in the air and on the ground is unparalleled. The quality of service we get on Air Canada is among the best in the world. It has been adjudged as such by international bodies.

We have an airline of which we can be proud. It is an airline that is having some problems, but it is an airline which I think has the ability to get over those problems. It is incumbent upon us as politicians and upon the House in general to facilitate solutions, certainly private sector solutions, on the part of our airlines, particularly Air Canada.

I am confident that if we enact the bill it will provide the private sector greater opportunities for investing in Air Canada which will contribute to a successful restructuring of the company. With the enactment of the bill, Air Canada will find itself on the same footing as all of the other airlines. No one else has a single ownership limit. We are not at this time proposing to raise the 25% foreign ownership limit. We do not think that is necessary. We are being consistent with many other countries around the world, including the United States, which keep that 25% limit. They believe inherently that an industry so fundamental to the economy, the fibre and the being of the country should indeed not only be operated by Canadians but controlled in effect by Canadians. If we need to change that we would not need legislation because current legislation allows that change to occur, at least the raising of the limit from 25% to 49%, by order in council. However we do not think that would be necessary.

We believe that the passage of the bill would be timely. It would give Air Canada the investment. As I said before, it is a very simple bill. It has three sections. The first removes the 15% limit and the prohibition on association. The second renders as null and void any other corporate documents that address the 15% limit. The third deals with when the changes will come into force.

I would hope that my colleagues would agree that this is just another step in the government's response and parliament's response to the tragic events of September 11. But in particular, it is also a response to the ongoing restructuring and realignment of the Canadian air industry which predated September 11. I hope that my colleagues would ensure speedy passage of the bill. Certainly at committee if there are any detailed questions members would like to ask, I am fully prepared to be there with my officials.

This is a bill that is in the national interests. It is certainly in the interests of airline passengers and all of those who believe that our national air carrier, Air Canada, should continue to be the great carrier that it is.

[Don Boudria, Liberal, for the Minister of Transport]

moved for leave to introduce Bill C-38, an act to amend the Air Canada Public Participation Act.

(Motions deemed adopted, bill read the first time and printed)

Fight Against Terrorism

[Peter MacKay, Progressive Conservative, Pictou—Antigonish—Guysborough, NS]

Mr. Speaker, I am very pleased to have an opportunity to respond initially to a new piece of legislation, perhaps one of the most comprehensive we will see in this parliament.

I want to begin by commending the minister, her department and all departments that have been involved in the process of drafting what is a very comprehensive, somewhat complicated but an extremely important piece of legislation.

We will obviously have an opportunity on the part of the coalition and on the part of members of the opposition to review this at the committee level. We will hear from experts and from those who may very well raise concerns about civil liberties. However, I believe an initial reading of the bill indicates that it sought to strike a careful balance between civil liberties and the protection of Canadian citizens, which is certainly very much the backdrop to Bill C-38 before us.

There are concerns with respect in particular to the preventive arrest provisions of the legislation. This, I suggest strongly, will have to be coupled with training and with follow up from municipal, RCMP and military police to ensure that there is no abuse of this element of the legislation. As well, I suspect there will be resources attached to this type of legislation. Clearly there has been an indication on the part of the government that this is forthcoming.

The Conservative coalition is tentatively supporting the legislation. We look forward to participating at the committee level to look at some of the gaps that the legislation seeks to fill. Other countries, including the United Kingdom, Australia and the European Union, have taken steps in this direction to comply with international conventions and to comply with this new threat that came to fruition on September 11, but has been with us for a long time.

The minister, in quoting the Prime Minister, stated in regard to the legislation that the campaign against terrorism would not be painless but would be won. We take them at their word, but it will take time. Obviously this type of legislation goes a long way toward giving our law enforcement community, our defence and internal security the tools they will require to embark on this lengthy and in many cases extremely dangerous venture to combat international terrorism.

The bill itself has safeguards for parliamentary review. Some have suggested that a sunset clause of sorts might have been preferable. However, a parliamentary review in three years certainly gives parliamentarians and Canadians an opportunity to try the legislation on.

We share the sentiment of all Canadians that the preservation of peace, order and good government is the primary objective behind this type of legislation. We in the coalition very much attach ourselves to the comments of the minister in that regard.

We look forward to reviewing, as I said, elements of the arrest provision. Investigative hearings is another element that is some cause for concern. We will look at the investigative tools themselves to see how far they will go and how far they might be carried out in the pursuit of curtailing terrorism in this country.

We look forward to working with the government and with all members of the opposition in the pursuit of this very lofty but extremely important activity which we are undertaking at this time to combat terrorism in this country and abroad.

Financial Consumer Agency Of Canada Act

[Ken Epp, Canadian Alliance, Elk Island, AB]

Madam Speaker, I am both pleased and somewhat distressed to speak on the bill today. The reason I am distressed is that after a long week of sleep deprivation I am not my usual bubbly self. I am struggling with a sore throat and other things. I feel sorry for myself and I am sure the Speaker does too.

Today we are dealing with Bill C-8. I have estimated that to read the bill would take 15 hours. If one were to read it with meaning, in other words read it to understand what is going on and actually verify some of its claims, it would take many more hours.

It is a huge undertaking for us today to go through Bill C-8, an act to establish the Financial Consumer Agency of Canada. The bill would basically set up the way financial institutions in the country are run.

On balance I support the bill, although I definitely have concerns. Ever since 1992 when the then Conservative government changed the rules for banks, there has been a need for revisions and for our banking sector to, if I can use the phrase, get with the times and be able to compete in the international market.

In a sense the bill is much overdue. The government moved very slowly in that regard. To make matters worse, in June 2000, not quite a year ago, the government introduced Bill C-38 in first reading. The bill then sat there and the government basically did nothing about it. It did not call for a debate on the bill in the House. It was a very slow process.

Then, to our chagrin, there was a totally unnecessary election in the fall which caused a great number of bills to drop off the order paper. The bills were enveloped into nothingness with the call of the election. The election was called for only one purpose, and that was a political purpose. The business of the country and helping our financial institutions with a new bill took a secondary position to the Prime Minister's overriding goal of getting yet another mandate. That seems to be so important to the Liberals, hanging on to power.

In retrospect we see that it was a good strategy, politically speaking. It is very much in keeping with a cartoon I saw in which the Prime Minister is shown reading a newspaper that says “Liberals have overwhelming third majority government”. The Prime Minister is saying to the people reading the cartoon “That is the best $200 million of your money that I ever spent”.

It is incredible that the government could drop all the business of the country and hold an unnecessary election one and a half years early, an election which cost the taxpayer $200 million and was conducted strictly and totally for political reasons. The Prime Minister wanted to win and did not care what it cost.

This bill along with many others was dropped and has now been resumed. It is interesting that Bill C-38 became with a few technical changes Bill C-8. If I wanted to reluctantly compliment the government I would thank it for bringing the bill back to the House with some urgency and allowing us to debate the issues in it.

Previous speakers, including my colleague from Prince George—Bulkley Valley, have spent quite a bit of time talking about the structure that is involved. It comes under the broad topic of having a bank we can trust. I really think that is important.

From my life experience and from having been on the finance committee studying this bill and other issues, it is my view that Canada is richly blessed with a financial system that is strong and trustworthy in the big picture.

In other words, we do not have a great deal of fear about our banks collapsing or about financial transactions not being completed in a timely fashion. As a matter of fact, and I do not believe this should be addressed in legislation, we should have a website where people can post their complaints about the banks for everyone in the country to see, unfiltered by the press. That would give huge accountability to the banks.

As a member of parliament I receive complaints, not many but some, about the banks. It says something about our post office that these days I receive more complaints about the banks than about the post office. Neither type of complaint is huge in number, although some are of significance to the people who visit their members of parliament on an issue. However by and large our banks are trustworthy and we can count on them.

We have a banking system in which we can conduct financial transactions and know that everything will work clickety-clickety-click. It is all very smooth. It is a well structured organization. That is due to the combined efforts of the Bank of Canada, which has been well run during the last number of years, and the individual banks that have taken their responsibilities very seriously.

I have a question for the banks if any of them happen to be listening. If I get a cash advance on a Friday it is posted within two seconds, but if I make a payment on that same advance I do not get the credit until the next banking day. Sometimes it takes two days if it is a weekend. I wonder why that is.

The banks should be consistent. If I bring a cheque to the bank I know it has the capability of cashing it and doing the electronic transaction immediately.—

[Dick Proctor, NDP, Palliser, SK]

Madam Speaker, I will go on with my speech. This legislation will help credit unions, designate a financial services ombudsman, something the NDP has been asking for for a long time, and create a consumer protection agency, that is called the financial consumer agency. It will launch a consultation process whereby the banks could legally be forced to provide a low fee retail deposit account. This is a position we have held for a long time in the NDP; however, nothing will happen in the short term. The bill will formalize a process of collecting data on small business lending but will not expand the banks' business powers into the areas of auto leasing.

These are some of the positive things in the bill. There are also in the 900 pages many things with which we disagree. Among those negatives is the wide ownership rules which lead to the concentration of banking powers in the hands of very few individuals.

This provides too much power to the Minister of Finance. Unlike parliament, the minister would then have the final say in virtually every major change that dealt with financial institutions, including mergers, acquisitions, regulations and ownership levels. It also fails to provide a real framework of accountability between large financial institutions and their local communities.

There is no community reinvestment act similar to the one in the U.S. which works very well. There is no effective improvement in accessing basic banking services, especially in rural areas. There is no right to lifeline, no cost accounting and no effective way to stop bank branch closures. Banks are only required to provide a four to six month window of notice to close under the legislation.

There are no teeth for the independent banking ombudsman and it reduces requirements for small banks. The Office of the Superintendent of Financial Institutions has been given more powers to deal with the potential for increased risk in the system, but there is no guarantee that the OSFI would be able to use these powers effectively because of the complex structures introduced in the bill, for example bank holdings and new ownership regimes.

There is nothing on the control and regulation of high risk derivative products and off balance sheet liabilities or on new monetary policy tools for the Bank of Canada.

We have dealt with some of the positives and the negatives. We note as well that it is a highly complex 900 page omnibus bill which changes eight major financial industry acts and is probably the largest bill ever to come before a Canadian parliament. Its main thrust is to increase competition, foreign and domestic, and flexibility through deregulation and re-regulation.

The Minister of Finance is easing entry requirements in the financial services market. He is purporting to broaden the powers of financial institutions including credit unions, increasing the flexibility and the complexity of ownership regimes, and allowing access to the payment system by non-bank entities, for example insurance companies. The legislation also creates a financial consumer agency, an independent financial ombudsman.

Bill C-38, its predecessor, included cosmetic measures to improve access to basic banking services and guidelines for a bank merger review process which were made available with the bill but are not included in the current version of the legislation.

The New Democratic Party opposes the bill. We emphasize that there is some support, as I have indicated in my remarks. We support parts of the bill, including the modernization of financial services, expansion of powers to credit unions, a potentially better deal for consumers, a better competitive position for insurance companies, and status quo on the distribution of insurance and leasing.

We would support the bill at third reading stage if changes to the wide ownership rules were rescinded, if it provided for more power to the House of Commons to review megabank mergers and if the government adopted an effective framework of accountability among banks, their communities and fully regulated bank holding groups.

In conclusion, there is quasi-unanimity among major financial industry players to speed up the passage of the bill which has incorporated the majority of the MacKay recommendations and has virtually gone through an invisible committee of backroom lobbyists. Bill C-8 is a done deal which the government is selling as a progressive financial consumer package.

[Pauline Picard, Bloc, Drummond, QC]

Mr. Speaker, it gives me great pleasure to speak to the motions brought forward by the Bloc Quebecois and supported by my colleague for Saint-Hyacinthe—Bagot, who worked very hard on this issue. He submitted a brief on the subject, listened to hundreds of witnesses and also took to heart most of the recommendations made by witness groups.

The problem with this bill, and it was mentioned earlier, has to do with banks with assets totalling under $5 billion.

We are also concerned with the recommendations made by the Association de protection des épargnants et investisseurs du Québec. It submitted a brief at the committee hearings on Bill C-38, which is now called Bill C-8.

The Association de protection des épargnants et investisseurs du Québec then said:

Bank ownership is widely spread in Canada and it is so intended in order to limit a big shareholder's capacity to control one or more financial institutions while these are considered to be public services. Unfortunately, this widespread shareholding has had a perverse effect—

I repeat, “a perverse effect”,

—by leaving way too much influence in the hands of the directors of major banks. This perverse effect could well be eliminated through some legislative changes to the Banking Act.

The Bloc Quebecois supports the recommendations made by the Association de la protection des épargnants et investisseurs du Québec, and that is why we brought forward the motions read earlier. We have moved many more in support of the association, but they were rejected.

The association has made numerous representations to the federal government, to the McKay Commission in 1997, to the Standing Senate Committee on Banking in 1998 and to the House Standing Committee on Finance in November 1998. Despite these many meetings, Bill C-38 and Bill C-8 did not take any of the association's recommendations into account.

For the most part, these recommendations refer to the recommendations made by the association. I would like to quote some of these recommendations if I have enough time, but I know that time flies.

First there is the restriction on the number of boards a director is allowed to sit on at any one time. Our proposal dealt with the restriction on the number of boards a director would be allowed to sit on at any one time. What exists now is the old boys' club rule where “You appoint me, I appoint you, and we appoint each other”.

[Yvan Loubier, Bloc, Saint-Hyacinthe—Bagot, QC]

Madam Speaker, I would like to go back to the comments made by the hon. member for Drummond on the importance of the whole issue of the classification of banks and the degree of ownership.

For the benefit of those who are listening, I should point out that the new bill on financial institutions establishes three categories of banks: major banks, that is those with equity of $5 billion or more; medium size banks, that is those with equity of $1 billion to $5 billion; and small banks, that is those with equity of less than $1 billion.

For each of these categories, the degree of ownership is different. For example, in the case of major Canadian banks, such as the Royal Bank, an individual cannot hold more than 20% of the voting shares, while 80% of the shares must be widely distributed among the public.

The bill has a major impact on medium size banks, such as the National Bank in Quebec. For these banks, including the National Bank, the new degree of ownership is 65:35. In other words, a single individual can own up to 65% of the voting shares and thus have full control over the National Bank, while the other 35% must be widely distributed among the public.

This new provision leads us to fear the worst in Quebec. This bill discriminates somewhat against the National Bank, the largest in Quebec, because the treatment of the Royal Bank, the largest in Canada, where one individual is allowed to own a maximum of 20% of voting shares, and the National Bank, where one individual may own up to 65% of voting shares, creates discrimination which is unjustified under the circumstances.

We are told that the purpose was to improve the National Bank's funding flexibility. I have often asked the Minister of Finance why one individual holding 65% of National Bank shares confers more flexibility than 65 individuals with 1% each. I have never had an answer. These new provisions are cause for alarm.

Recently I read comments by economists to the effect that this is no big deal, because the National Bank's equity is increasing by leaps and bounds anyway, and soon will be in excess of $5 billion. Such an analysis is wrong.

It is certain that the bill states that the banks can be reclassified. This means that, should the National Bank one day have over $5 billion in equity, it could be classified as a major bank and therefore the voting share split would be 20%:80%. In other words, with this bill a single individual could own 20% of voting shares and the other 80% of voting shares would be public, rather than the present 65%-35% split.

The point on which I disagree with the economic experts is that, under this bill, which must be read carefully, the Minister of Finance has three years to change the bank's classification. That time limit can be extended as he sees fit. In other words, even if the National Bank attains the $5 billion equity ceiling, the Minister of Finance could decide to wait three years before reclassifying it as a major bank subject to the 20%:80% split of individual and public voting shares.

Not only may he wait three years before recategorizing it, but he has the authority to extend this period. In other words, even with equity of $5 billion and more, the National Bank would not automatically be recategorized as a major bank and would therefore still be in the 65:35 category, that is 65% of shares held by one person.

There is a danger in this. Not only is the National Bank the biggest bank in Quebec, but it is also the bank that finances SMBs. As well, Quebec is proud to have such a large bank, which, through the contribution of people like Mr. Bérard, has grown at record speed to become the flagship it is today.

Concern about this is so great that even Mr. Landry, former finance minister and deputy premier, and now premier, of Quebec, wrote to the federal Minister of Finance last June 2 to suggest a number of public interest criteria for evaluating any banking operation involving a mid-sized bank.

To my great surprise, just before the election, the Secretary of State for International Financial Institutions had even agreed to these criteria being part of the banking bill. He had even signed beside the four criteria suggested by Mr. Landry, saying “Yes, provided that it is not only for Quebec, we can Canadianize—as it were—these criteria, and make them part of the bill”.

A few days later, the secretary of state changed his mind. I do not know why, but after putting his signature on this document, he changed his mind and subsequently refused to include these evaluation criteria in the bill.

There is no substantive difference between Bill C-38 as it was before the election and Bill C-8 today. When the Minister of Finance and the secretary of state released the new Bill C-8, they also issued press releases and attachments, one of which concerned the evaluation criteria for operations involving mid-sized banks, such as the National Bank.

On reading these criteria, we realized that the government had understood the message on additional criteria. We were satisfied with that, but only half satisfied. What we called for, and this is the heart of the amendment, it is the essence of the amendment we are proposing this morning, is that these criteria, which parallel the bill and are to be used as guidelines by the Minister of Finance in making a decision regarding the shares in a medium size bank, such as the National Bank, must not be left to one side and left out of the decision making process, but incorporated in the heart of the Bank Act, to ensure reference is made.

In other words, we are not telling the government to reject all transactions involving the National Bank. That is not the intent. We want to ensure additional security, additional criteria leading to the best possible decisions benefiting Quebec's economy and finances and the financial sectors of Quebec and Canada too.

We are not asking the government to be obtuse or to reject every proposal. We would be the first to criticize this sort of attitude, because we want our financial and banking institutions to move ahead and to take their place in the world, the National Bank and others too.

So, it is with an open mind that we are proposing these amendments and we hope that the government will accept them. I would say, and this is evidenced by all the representations that we have made, that since the beginning of the process, the McKay study, the white paper and the bill before us, the Bloc Quebecois has always looked positively at the reform of the financial institutions act, particularly since it is three or four years late. The delay is getting longer by the week, considering how quickly the financial sector is changing in Quebec, in Canada and in the rest of the world.

We hope this bill will be quickly passed. However, would it be possible for the government to show some openness for once? We are not asking much; we are not asking for a complete overhaul of the bill. We are simply asking the government to reassure Quebecers who are concerned about the new provisions that specifically apply to the National Bank. They hope that this new reform of financial institutions will have a positive impact on the financial sector and will not raise concerns about takeovers that would be detrimental, particularly to the interests of small and medium sized businesses in Quebec.

I urge the government which, through its secretary of state, has already agreed to the four conditions, the four criteria proposed by Mr. Landry in June, to include these criteria in the core of Bill. It recently tabled a document, along with Bill C-8, that includes these criteria, albeit in a different format, but it includes them nevertheless.

So, I am asking the government to simply show some openness by taking that document and including it directly in the core of the bill. If it does that, the Bloc Quebecois will support the bill.

[Gilles-A. Perron, Bloc, Rivière-des-Mille-Îles, QC]

Madam Speaker, since this is the first time I have addressed the House during this parliament, I am sure that you will permit me a small aside.

I wish to thank the 50% of the voters in the lovely riding of Rivière-des-Mille-Îles who voted for me in the last election and to assure the other 50% who did not that I am still their MP and I will represent everyone in my riding, regardless of how they cast their ballot.

Second, I especially wish to thank the volunteers, who played a big role in my getting elected, as you know from your own personal experience, Madam Speaker. It is thanks to the work of your volunteers and mine, who worked their hearts out, that we have a seat in this House.

Third, I wish to welcome the new recruits, particularly my friend, the member for Châteauguay. He will find the House a place of wonderful experiences.

Fourth, I would ask you to pass on a message to the Speaker and to all your colleagues who were elected and appointed. I am certain that you will do a splendid, non-partisan job, and that you will ensure that we pay careful attention to the rules and procedures under which we must operate. Madam Speaker, I thank you in advance for the work you will do.

Now for the main topic. As everyone knows, I rise this morning to address Bill C-8, an act to establish the Financial Consumer Agency of Canada and to amend certain acts in relation to financial institutions.

I will begin by giving a brief background to the bill. It will be recalled that the MacKay report was tabled in 1998. My colleague, the member for Saint-Hyacinthe—Bagot, was a key player, suggesting some interesting amendments.

However, although we supported Bill C-38 in theory, subject to certain amendments, there was an exchange of correspondence with Quebec's then finance minister, Bernard Landry, who is now, as everyone knows, Premier of Quebec.

However, this exchange of correspondence between the Quebec minister of finance of the day and the federal Minister of Finance went nowhere. Fortunately, Bill C-38 died on the order paper because of the call of the precipitous election in November, for wich most Canadians still doubt.

Here we are this morning debating Bill C-8, which replaces C-38. Basically, the Bloc Quebecois can live with it, so long as a number of amendments are made. We have noticed in the new C-8, which is almost identical to C-38, that a number of changes have been made as the necessary result of the exchange of correspondence between the two finance ministers.

However, it leaves a bad taste in the mouth, since the concerns of the Quebec finance minister of the day, Bernard Landry, are not included in the bill. They are, rather, included in a schedule setting out guidelines for the reclassification of the banks, which had been in schedule 1 previously and whose owner's equity was less than $5 billion.

With regard to this schedule, the Bloc Quebecois has some concerns, since the schedule provides that:

—the Minister of Finance, in his sole decision, shall take into consideration, before permitting an exchange or the sale of one bank to another, the security and solidity of the bank, the direct and indirect jobs, the location of the decision-making centre and the management of the bank, the needs of consumers, the banks business and activities and the banks prospects for the future in the context of world markets.

The six points I have just outlined are just wishful thinking, since the bill would allow the current Minister of Finance, who, I believe, owns a shipping company, has adopted the practice since, of being the only master on board, like the ship's captain, when decisions are to be made. So, the minister has all the powers to ignore these six points without us being able to say or do anything about it.

Bill C-8 is much too important to allow a single individual, a single captain, that is the Minister of Finance himself, make the decisions about any changes to this legislation. This is very close to dictatorship. It is also dangerous considering that the government opposite has a great tendency to engage in cronyism and take care of its friends. We should be careful.

I strongly suggest that the final decisions be made by parliamentarians. We are here to make decisions. We are not decorating plants, we must make decisions. We must really be careful.

Another issue that is of concern to me and certainly to my friend, the hon. member for Drummond, is that the bill is three tiered with the possibility for an individual to own a bank.

It begins with large banks, that is those with equity in excess of $5 billion. The limit on individual ownership of shares is 20% of the value of the bank.

The second group includes banks with equity of one to five billion dollars, such as the National Bank, the only Quebec bank with a federal charter. Since equity for these institutions is less than $5 billion, 65% of the shares of that bank can be held by a single shareholder.

So we are back to the style of our finance minister, our great shipmaster, the only person who can decide how a bank can run itself. Will the bank defend the interests of its shareholders? Surely, since it is the majority shareholder. However, it will defend these interests to whose detriment. To the detriment of service and employees. This is cause for concern.

Then there are small institutions with less than $1 billion in equity, which can be owned 100% by one person. Unfortunately, that was not what the MacKay report recommended, as it suggested that ownership rules be changed to allow and foster the regrouping of small and medium sized financial institutions in a financial holding.

According to the MacKay report, several small financial institutions could associate and form a large bank with equity of $5 billion or more.

I see that my time is up, but I will indicate two other issues of concern to me.

First, Bill C-8 does not meet the expectations of the Bloc Quebecois about community reinvestment, not in the least. Second, it provides no protection to savers and investors.

Standing Orders

[Ken Epp, Canadian Alliance, Elk Island, AB]

Mr. Speaker, frequently when we rise in debate we begin our speech by saying “I am pleased to be able to stand and speak to this debate”. I have the extraordinary honour today of being the leadoff speaker for the opposition on this government motion. Pursuant to Standing Order 43, I am going to jolly well take my time doing it before the government prevents us from speaking at all on anything at any time.

The House leader seems to pride himself on the fact that we are patterned after the United Kingdom parliament. He gets a little smile on his face when he says “Over there, every bill is time allocated”. He seems so happy about that. I am very concerned about it.

I became a member of parliament in 1993. I have been around here for approximately seven years. In that time I have given some serious thought to what this place is. I have often said that I wish I would have learned French when I was young. I lived far away from French speaking people and I was so interested in science and math that I took those options and did not learn French.

However, one of the words in French that I know is parlez-vous; parle. It has something to do with speaking, does it not? It has something to do with debates. If parliament is not the place of debate then what is it? What then is our purpose for being here if we do not have adequate opportunity to debate issues?

I am quite aware of the fact that the motion today has nothing to do directly with debate. It is dealing with the question of whether or not members of the opposition, or any other members, can propose amendments. Backbenchers really do not have that much freedom to propose amendments, although I suppose legally according to the standing orders they could. What is really being proposed is a limitation on members of parliament, who are not in the front inner core over there, to put forward amendments at report stage.

I want to interrupt the flow of my speech for just a second. I am aware that there are hundreds, probably thousands, of Canadians watching this debate. It is Monday morning. Out west right now it is approximately 10.30 a.m. There are a lot of people who said they were going to leave their jobs for a while, watch CPAC and this important debate. The whole future of our parliamentary system hangs on this debate. I believe they are glued and riveted to their television sets right now.

I want to interrupt the talk about the proposed motion to describe very briefly how things work around here. People out there ought to know that we have three readings of bills. The first reading is usually the introduction of the bill. It seemed strange to me, when I first came here in 1993, that there was no vote on the first reading of the bill.

The Speaker gets up and asks if the minister is present. The minister usually does not even rise. The Speaker will read the motion or the bill then the Clerk will stand and acknowledge it. Then it will be said that bill is deemed to have passed, or words to that effect. I see the House leader is having major problems with what I am saying.

The bill has gone through the first reading stage, which is the stage deemed accepted without a vote. I thought that was strange but I can see why. The introduction of a bill only needs to be deemed to have been accepted by the House. I can see why neither the government nor probably the other members would want to come into the House to simply vote for something that says that the bill will be introduced.

However, the government introduces a bill and it is put on the order paper. The bill comes up for second reading on a subsequent day as given by the government House leader. Second reading of the bill is a discussion on the principles of the bill. It is a relatively short discussion as the normal rules of debate limit that time. Most of us give 10 minute speeches at that level. After second reading there is a vote and the bill is referred to a committee.

I have enjoyed my committee work. I have had some frustrations there but committee work is very enjoyable and useful. Committee work has a lot of potential for being a really important and pivotal part of the democratic process, the process of producing bills and motions.

At committee stage, the committee does a number of things. It usually gives an opportunity for people at large, whether they are a group, members of an association or individuals, to appear before the committee. Depending upon the importance, magnitude or how far reaching the bill is, the number of witnesses may be relatively small or may be quite large.

For example, I was a member of the finance committee in the last parliament when it was considering Bill C-38, a bill which unfortunately died on the order paper. Bill C-38 would have amended the way banking structures would operate. The committee heard information from many interesting and informed guests.

To summarize the stages of a bill, there is first reading and introduction and then second reading. After debate at second reading, the bill is voted on, agreed to and then referred to committee for members to consider at committee stage. Before the bill is returned by the committee to the House, the committee looks at all the suggestions and presentations made by different people. Committee members, utilizing not only their own skills but the skills of other staff and experts, may come up with amendments to the bill or to the motion. There may be an amendment that says that we will change a section, delete a section or add something. Those are amendments that come from committee.

When the committee reports the bill back to the House it simply means that the committee has finished its process. The bill comes back to the House for debate and for a vote on the amendments. It is called the report stage of the bill. At this stage we look at the amendments that the committee brought forward. This is where the system falls down.

I believe the motion before us today is trying to kill a gnat with a sledgehammer. Because the committee stage does not work the Liberals want to bring into the House rules and regulations that would prevent backbench members and opposition members from having an opportunity to adequately put forward their motions or amendments to a bill or a motion.

If this particular motion is passed, and using the clout of the parliamentary majority that the government has I believe it will pass, I predict that the motion will be subject to time allocation. I will talk more about that a little later on.

The motion will prevent members of parliament from getting their issues on to the floor of the House. There is a rule right now, and the government House leader made allusion to the fact that there is a standing order which prevents members in the House from moving amendments that were already dealt with at committee stage.

If a committee brings back a report with proposed amendments that were defeated in committee, they cannot be brought in again in this place. A certain argument can be made for that since they were already presumably dealt with in committee. On the other hand, any amendments approved by the committee will be included in the report of the bill back to the House for the House to deal with them.

It has been my observation in the seven years that I have been here that pretty well every amendment passed in committee is passed there because the parliamentary secretary who sits on the committee brings in the information from the minister and the minions which says that they want the amendment. Very often they are government proposed amendments and of course they pass. However if an opposition member puts in an amendment it is almost certain to fail since the committee has more Liberals on it right now, because the Liberals are in government, than it has other opposition members combined.

As a result the only amendments brought in are those which have the approval of the minister. His tentacles reach into the committee and basically control what happens there. The Liberals present in the House may be howling in protest, but that is my observation. That is what I have seen.

I remember proposing some amendments after my first election in 1993. I do not even remember now what the bill was, but I remember that I proposed some good amendments very early on. They were so good that some government members on that committee told me privately they were good ideas and even went so far as to say that they supported them.

A week or two later, after we heard from some more witnesses in committee, we came to clause by clause consideration. For the benefit of those thousands of people watching CPAC today, clause by clause consideration is when the chairman of the committee simply goes through the bill and asks whether the clauses should pass. Sometimes he speaks much more quickly than I was speaking now, but I am trying to give a little consideration to the interpreters who are working so hard for me this morning.

We go through the clauses very quickly. If we have an amendment for which we have given notice, we must be right on the bit when the chairman asks whether a clause should pass. Right then we must jump up and say that we have an amendment. Even if we have given notice of it, if we do not move it right at that instant it will not be dealt with and the clause will have passed unamended. That is how that works in committee. The last thing is whether the title should pass.

After that has been dealt with, the chairman asks if the bill should be reported to the House. There are also usually enough members in the committee to cause that to pass. Then it is brought back here, and that is what we are dealing with now. The bill or motion is reported back to the House, having gone through introduction, second reading, and study and clause by clause consideration at committee stage. Then the bill is back here for report stage.

As I said earlier, any amendments which have been dealt with in committee, in order to avoid duplication, are not permitted to be brought up here. Any amendments that have not been brought up in committee can be brought up by any member of the opposition or any backbencher on the government side. The government can also introduce amendments at report stage in the House which have not been dealt with in committee. That would deal with last minute technical changes or things of which it becomes aware.

Then we vote on each of the amendments. This is where the problem comes in. This is where the government just has convolutions of hopelessness. If we have a lot of amendments and if we on this side of the House force a standing vote on it, as opposed to just a voice vote which is called on division, then the government members could be literally forced to stand for hours, one at a time, voting against our amendments to prevent any amendments from going through.

Again, if I can give my observation, over all the years that I have been here now, there have been maybe three or four amendments put forward by opposition members that have passed in the House. I remember I had one. It was the first one in the 35th parliament.

Financial Consumer Agency Of Canada Act

[Richard Marceau, Bloc, Charlesbourg—Jacques-Cartier, QC]

Madam Speaker, first I want to congratulate you on being appointed Deputy Chairman of the Committees of the Whole. I wish you all the best when you are called upon to referee our debates, which tend to be raucous at times. I know you are passionate about and attentive to the proceedings of this House, so I have no doubt you will do a very good job.

I feel like I am watching an old movie. Bill C-8, formerly Bill C-38, is one of these old movies being shown in the House these days.

We heard the same arguments a few months ago, the same issues were raised, and the same positions seem to be more entrenched now.

During the debate on Bill C-38, now Bill C-8, Bloc members had expressed several reservations regarding the bill, which were shared by the Deputy Premier and Minister of Finance of Quebec.

Mr. Landry had stressed four main points. Before Bill C-38 was introduced we had been told not to worry. They were going to deal with it, everything would be all right, our concerns would be addressed.

We were somewhat surprised—I would even say disappointed—to find the elements we wanted to see not in the bill itself, or in any piece of legislation passed by the House, but in the regulations that will be appended to the bill.

As members know, unlike a bill that must be amended by this House in order to be changed, regulations may be amended at will by the executive or the Minister of Finance.

Finally, we are being asked to trust this government and in particular the Minister of Finance and to hand over a blank cheque. You will understand that we have some difficulty with that, to say the least.

Bill C-8 gives full power to the Minister of Finance to decide on his own the fate of Quebec banks without providing any guarantee in connection with Quebec's distinctiveness. Heaven knows Quebec is different. The bill provides no specific measure.

Although I do not always share the very 1960s rhetoric of my NDP colleague, who said “wicked Americans, wicked capitalists, let us turn the world upside down”, I agreed with him nonetheless on certain points, including the importance of giving the disadvantaged, who are often left out, greater access to financial services.

Finally, Bill C-8 has no answer to the very well directed questions of my colleague from Hochelaga—Maisonneuve on community reinvestment.

My colleague from Hochelaga—Maisonneuve, we will remember, is the excellent representative of a region on the island of Montreal hard hit by poverty. He has introduced many good ideas on community investment—I will return to them—which, unfortunately were not included in Bill C-8. That is regrettable.

We can only be concerned by the fact that a single shareholder could, with the agreement of the Minister of Finance, hold 65% of the shares of the National Bank, the largest Quebec bank. It is the bank of the Quebec small and medium businesses. There is an economic model in Quebec, and the National Bank is one of the cornerstones of this model, based on entrepreneurship and the SMBs. Should Quebec lose control of as important a financial institution as the National Bank, I think it would be very bad for its economy.

We also need legislative guarantees against any negative impact these new ownership rules might have on the employment of professionals, consumer and small business services, decision centres and the role of Montreal as an international financial centre. The stakes are just too high for Quebec and its economy to be left to the sole discretion of one man, the Minister of Finance.

We want to make sure—and I would say our whole position on Bill C-8 is based on this argument—that the future of Quebec's banking system is not in the hands of one man. I think most people would agree with that. Giving anybody too much discretionary power is bad; giving a federal minister too much power over Quebec's economy is even worse.

Bill C-8 does not show a firm willingness to protect consumers, particularly low income consumers, on the part of the government. The bill provides for the establishment of the financial consumer agency of Canada. I have my doubts about the kind of authority such an agency could have in an economic climate which, unfortunately, does not look too rosy, as we know, as the United States are about to be hit by a recession. We must ensure that not only middle income people but also low income people have access to financial services. Unfortunately, Bill C-8 remains vague and has more wish than real policy with regard to accessibility and consumer protection.

Finally, I would like to return briefly to the importance of reinvesting in the community. As I said earlier, the member for Hochelaga—Maisonneuve introduced a bill in the last parliament which would have required financial institutions to reinvest in the communities in which they are located. It was based on the community reinvestment act, American legislation—so we cannot be accused of being leftist.

As my colleague said, this legislation would require a regulated financial institution to show that its branches serve the deposit and credit requirements of the community for which they are chartered. This is where this issue becomes very important for, as my colleague said, and I stress this point, branches have an obligation to help meet the credit needs of the local communities for which they are chartered.

In a global context, with people looking at the broader picture, there is also a tendency to move closer to one's own neighbourhood and community. While we believe that the Canadian financial system must be strong and able to withstand the buffeting of the global economy, this globalization must not leave out individuals and entire neighbourhoods who are unfortunately ignored in the rush to prosperity.

In conclusion, I strongly urge the government to include the four points we raised during consideration of Bill C-38 not in the regulations, where they would be subject to the discretion of the Minister of Finance, but in the actual legislation which will be passed in the House. I also urge it to include the main features of the bill on community reinvestment introduced and strongly defended by the member for Hochelaga—Maisonneuve.

With these inclusions, the government could expect a much more co-operative attitude from the Bloc Quebecois.

[Suzanne Tremblay, Bloc, Rimouski-Neigette-Et-La Mitis, QC]

Madam Speaker, I am pleased to take part in the debate on Bill C-8, an act to establish the Financial Consumer Agency of Canada and to amend certain acts in relation to financial institutions.

This bill replaces Bill C-38, which as they say died on the Order Paper when parliament was dissolved last October, after the Prime Minister decided to call an early election, having not yet completed four years of his mandate.

To begin with, this is essentially the same bill. Bills C-38 and C-8 are twins. But they are not identical because, in addition to a few minor amendments to ensure a closer match between the English and French texts, there is a major change with respect to the demands made by the Bloc Quebecois and by Bernard Landry, Minister of State for the Economy and Finance and Deputy Premier of Quebec, a change which would ultimately make the bill more acceptable by adding amendments anyway.

I was saying that the federal government decided to respond in part to the demands and expectations expressed by minister Landry by incorporating in its bill four points the Government of Quebec felt were important. However, these points were incorporated not in the bill itself, but in the guidelines on the reclassification of the banks listed in schedule 1 whose equity capital is under $5 billion.

The guidelines that accompanied the release issued on the day the Minister of Finance introduced his bill, clearly stated that, and I quote:

Any transaction involving a recategorization will be considered on its own merits, and should demonstrate that it would foster opportunities for the bank to grow and better serve the customers of the bank.

In considering whether a proposed transaction involving a recategorization is in the public interest, the Minister shall take into account all matters that the Minister considers relevant, including:

safety and soundness of the bank;

direct and indirect employment;

the location of the mind and management of the bank;

needs of consumers;

businesses and operations of the bank;

and prospects for the bank in the context of the global marketplace.

However, since these elements were not included in the act, they could be changed by the minister who could, for example, yield to the pressures of powerful international lobbies.

That being said, I must say without any hesitation that Bill C-8 raises many questions in my mind. When I think about what I have seen and observed with this government over the past eight years, I am concerned. I am concerned by, among other things, the government's arrogance, its contempt for democracy, its inability to fulfil its own promises and by the ease with which it yields to the pressures of the well-to-do and crushes the poor. I could go on and on, because there are so many reasons to be concerned about this government.

Let us take a look at a few things that are scary in this bill.

Bill C-8 gives full power to the federal Minister of Finance to decide, alone, the future of Quebec banks.

With Bill C-8, the Minister of Finance will be able to decide alone, at his own discretion, the future of Quebec banks. I find it truly unacceptable that this discretionary power is as strong as if not stronger than the act itself.

The Bloc Quebecois is concerned that a single shareholder could, with the agreement of the Minister of Finance, own 65% of the shares of the National Bank, the number one bank in Quebec. There is no need for the Minister of Finance to authorize this excessive control to ensure the flexibility of the National Bank. How is it that a shareholder owning 65% of a bank will give it more flexibility than 65 shareholders owning 1% each?

We need legislative guarantees against any negative impact these new ownership rules might have on employment, for example, on consumer services, on small business services, on decision centres and, most of all, on Montreal's role as a hub in the area of international finance. The stakes are just too high for Quebec to rely on only one person, the federal Minister of Finance, especially since Bill C-8 offers no real legislative guarantees. As I said earlier, the bill does nothing more than list some elements to consider that do not go far enough and that are under the sole control of the Minister of Finance.

Even worse, it seems to me that the finance minister's bill is full of holes which should be cause for concern to any person of goodwill. Why must the government write such thick bills if it does not seek clarity? How will this government be able to judge the clarity of others if it is incapable of seeing its own lack of clarity? One factor which contributes to clarity is precision. See for yourselves. On page 55 of the bill, clause 385 sets out the public holding requirement for banks. However, we learn a little further on, in clause 388, and I quote:

On application by a bank, the Minister may, if the Minister considers it appropriate to do so, by order exempt the bank from the requirements of section 385, subject to any terms and conditions that the Minister considers appropriate.

As well we see that the provisions of the act cease to apply if the minister so decides. In other words, this is a bill with flexible parameters, one that will allow Ottawa and the Minister of Finance to decide unilaterally on the future of the National Bank.

It is not obvious that the federal Minister of Finance's bill as presented will ensure healthy competition in the national market. Yet this competition is more important to future economic development than striving to be bigger internationally.

But the Minister of Finance has decided to make legislation in favour of the big banks, even if by so doing he has to sell out the banks of Quebec, including the National Bank, the one known as the bank of small and medium size business in Quebec.

When I think of the way certain individuals, including the Minister of Intergovernmental Affairs and member for Saint-Laurent, want to see Quebec suffer, I tell myself this is a really powerful weapon in the hands of the federal Minister of Finance, if ever the federal government decides to act.

In this case I say to my fellow Quebecers, here is another really good reason, just one more, to create our own country, so that we can make our own decisions on what we want to do with our banks.

As regards consumer protection, the Minister of Finance remains vague and expresses more wish than real policy.

Bill C-8 will establish the financial consumer agency whose purpose, according to the finance minister, will be to protect consumers.

The Bloc Quebecois is and has always been a protector of human rights and citizens as evidenced by the debate held in this House on Bill C-54 that dealt with the protection of personal information and died on the order paper in 1997 to be reintroduced as Bill C-6 and given royal assent on April 13, 2000.

I want to remind the House that Quebec already has several laws protecting consumers. For instance, there are the consumer protection act, the privacy act, as well as all the legislation on insurance companies, trust companies, savings and credit unions and securities.

This new agency will only create duplication in regulations, given all the measures that have already been taken by the Government of Quebec in this area which, need I remind the House, is under provincial and not federal jurisdiction.

The finance minister takes the credit for including in Bill C-8 a measure, the low-fee retail deposit account, as described in section 448.2, that would provide low income people greater access to financial services.

With regard to this famous low-fee retail deposit account, nobody except the minister knows exactly what it is all about. Nobody knows what are the prescribed characteristics mentioned in this clause and which would entitle an individual to a low-fee retail deposit account. Nobody except the minister of course knows whether such an account will be available everywhere, in every bank in Canada and Quebec.

How is it that, as we are talking, the minister is the only one who knows the answer to all these questions? It is very simple. The minister is the only one who knows, because all these issues will be defined in the regulations. As we are having this debate in the House, we do not have a clue about what will be in the regulations.

True enough, if the regulations had been made an appendix to the bill, it would have increased the thickness of an already voluminous piece of legislation. For the time being, all we have to go by is the minister's word.

Once bitten, twice shy, however. Members of this government have made so many promises during three election campaigns, in 1993, 1997 and 2000, without keeping their promises or being true to their word, that I must say the fine words from the Canadian Minister of Finance are not enough to be able to categorically state that consumers will be better protected under this new law.

I also question what is in the bill regarding branch closure; I wonder what will happen with the reduction in services available to consumers. The only measure provided by Bill C-8 is that a bank must give a four month notice before closing a branch.

Before, people learned about the closure the very morning their branch was to close. With the finance minister's bill, they will know about it four months ahead of time.

With this bill, the government can do precious little to prevent, through legislation or coercion, the anticipated closure of a branch. With a clause that is so unrestrictive, how can one claim, like the finance minister does, that this bill will improve access to financial services? The minister is the only one who can have this kind conviction and optimism.

Bill C-8 does not provide any concrete measure to ensure greater access to financial services for the poor. That would have been a step in the right direction. The minister should know by now that there is a real problem there. He could have made use of the bill introduced by my colleague and friend, the hon. member for Hochelaga—Maisonneuve, in the second session of the 36th parliament. The bill was entitled an act to amend the Bank Act and the Statistics Act (equity in community reinvestment). Its main goal was to ensure that certain branches of banks take measures to facilitate access to credit for persons who have a residence or a place of business in a federal electoral district in which the branches are located.

Bill C-8 does not give any guarantee that the minister will take into consideration the specificity of the financial system in Quebec. Madam Speaker, if you and I could have a conversation on the subject, I am almost convinced that you would tell me “The hon. member is well aware of the fact that the minister is himself from Quebec, and he takes Quebecers' interests to heart”. I would regretfully have to tell you that the minister is indeed the member for Lasalle—Émard, but that he ignores or purports to ignore that Quebec is a people whose financial system has its own specificities, and that the minister in no way takes that into account in Bill C-8.

I might add that we would have this conversation if you did not hold your present position. I know that you now have to be of the utmost neutrality. But if you were a backbencher, as I am, we could have had this little chat.

My colleagues, the members for St. Hyacinthe—Bagot and Drummond, who are finance critic and assistant finance critic, respectively, will propose amendments to Bill C-8 on behalf of the Bloc Quebecois to counter the inequity towards Quebec's major banks. I hope the extended Liberal caucus from Quebec will keep its promise of standing up in Ottawa for Quebecers. To this day, this caucus has given its support to the government each time it has introduced bills going against promises made during the recent campaign. Will I be forced, once more, to conclude that the population has been misled? I am waiting for proof and it is much too long coming.

[Pat Martin, NDP, Winnipeg Centre, MB]

Madam Speaker, the hon. member for Winnipeg North Centre asked me the number of bank closures in my riding in the past seven years. I can give her the number since I was elected in 1997. Twelve branches have closed in my riding alone during that period. It is an epidemic. It is an absolute flight of capital from the inner city, or at least the presence of bank branches.

The hon. member also asked what we would have liked to have seen in the legislation that might have mandated some accountability or some reinvestment in the community from the banks that have been allowed to prosper under their exclusive privileges. There were repeated calls at the committee stage throughout the development of Bill C-38 to put it in language similar to the community reinvestment act of the United States.

The United States is the ultimate free market country. Nobody is saying that the community reinvestment act somehow gets in the way of the free movement of capital. It is a sensible restriction on banks. Yes, they can make profits and yes, they can prosper and flourish, but some designated amount must be reinvested into the community that gave them the profits they enjoy.

It would not have been difficult to do this. It is a huge shortcoming in the bill and a missed opportunity for us to be advocates and champions for Canadians instead of being champions for the big banks.

I use the term corporate shill. Are we shilling for the banks with this legislation? Is that what we are really doing, or are we standing up on our hind legs and advocating on behalf of Canadians?

[Pat Martin, NDP, Winnipeg Centre, MB]

Madam Speaker, I am glad to have the opportunity to join the debate on Bill C-8. As has been pointed out by previous speakers, the bill is a reincarnation of Bill C-38 which died on the order paper last fall at second reading.

We can tell by the amount of debate in the House on this bill already today that there is great interest among all Canadians to see reform of our financial institutions and the whole financial sector. This stems from a growing feeling on the part of Canadians that our current financial institutions are failing to meet the needs of the average Canadian.

There is a growing sense that our chartered banks, which most people grew up with as symbols of stability, that they were something to be proud of and which were given charters for specific reasons, are failing to meet their mandates under the terms of which they were given their charter.

We all know that the five chartered banks have an exclusive monopoly on certain financial transactions, for instance, the right to process credit charges. These profitable transactions are huge. This is a sector that they have been given exclusive right to and the trade-off was that they would meet the needs of the average Canadian community and the average Canadian citizen for their basic financial services.

I can begin by saying that in the riding of Winnipeg Centre that has been anything but the case. In fact, there has been a flight of capital from the inner cities across the country, Winnipeg Centre being no exception. There is almost a seemingly vote of non-confidence in our communities as people watch these institutions fold up their tents, leave and not provide the basic services that they were charged with the responsibility to offer. In fact, they are doing anything but that. As was pointed out by the previous speaker, small businesses are not given a loan unless they can prove that they do not need it.

More and more of the basic financial services, such as having a neighbourhood branch within a reasonable distance for senior citizens or people of low income, are getting to be a thing of the past. These services are being taken over by ATMs or by large corporate branches that may be in the centre of the financial district, but they are not in the communities and they are not in the small towns in and around rural Manitoba.

There has been a growing resentment over this trend of bank closures. This came to light a couple of years ago when the banks were anxious to merge to form even larger institutions. Many Canadians mobilized at that time, specifically to stop the bank mergers. However, other realities came to the forefront. There has been a growing frustration with not only the lack of services in the communities. It forced Canadians to have a really serious hard look at what our major financial institutions were or were not really doing for us.

It has even mobilized people who own shares in the various banks. There is a growing shareholder movement among people who own shares in the five chartered banks. I had the privilege of going to two of the national shareholders' meetings recently. I never thought in my wildest dreams that I would be going to a shareholders' meeting of the Royal Bank or the Bank of Montreal. I do not own shares in either of those institutions, so I had to borrow some proxy votes in order to crash the gates and get in.

Our point was that at a time when the banks seem to be operating on their own and without any input from the Canadian people who cause them to be, we needed to seize the issue somehow and put a little bit of democracy back into the corporate system. In other words, if we were unable through our elected institutions to coerce the banks into doing their job of servicing Canadians, perhaps if we mobilized through a shareholders' rights movement we could coerce the banks into doing the job that they were hired to do or they were given the exclusive right of some financial transactions in exchange for.

It was rather interesting. I do not know, Madam Speaker, if you have ever been to a shareholders' meeting of one of the major chartered banks. Probably many of the people in the room have. I certainly had not. I was very surprised that as many as 1,400 people crammed the hall in a major hotel in downtown Toronto to attend the meeting. I thought it would be like other meetings of its type that I had been to, like union meetings where people would move a motion, have it seconded, debate it and the motion would either pass or fail based on its merits.

In actual fact, nobody there seemed interested in talking about very much except for the actual returns of that quarter of that actual fiscal year that was being reported on. We went there with a number of people who moved real motions that we thought would benefit the average Canadian. There were only nine resolutions put forward in the whole meeting. We moved all nine and I seconded all nine.

One of the resolutions was to limit the salary of the CEO of the bank to ten times that of the average employee, which he thought was kind of an innovative move. It was quite a fair resolution too when one thinks about it. If the average employee makes $40,000 or $50,000 a year working for the banks, the CEO would then get 10 times that or $500,000 or $600,000 a year. We would think that is pretty fair compensation.

That motion did not pass. We seconded it and argued it aggressively as to why that would be more fair. We even pointed out that the average CEO of a Japanese corporation makes 10 to 13 times that of the average worker of the enterprise over which they govern. In the case of the bank presidents of the Royal Bank and the Bank of Montreal that figure is 80, or 90 or 120 times the earnings of the average employee. Those are wildly and grossly inflated salaries to reward these bank presidents for doing what? For cutting off access to services for average Canadians. This seemed to be their reward.

Granted there were record profits involved and quarter after quarter they were making more money, but all the time they were raising service charges, closing bank branches and denying basic services like loans to small businesses. No wonder they were making a profit and rewarding each other very handsomely.

When we looked at that structure, no wonder they were voting each other big raises. They all seemed to sit on each other's boards of directors. I learned a lot when I crashed that shareholders' meeting. As a socialist and a trade unionist, attending a shareholders' meeting like that was a real education.

We learned that one of the boards of directors of the bank, I believe the Royal Bank, George Cohon, the CEO of McDonald's, sits on 50 other boards of directors. Each one of those boards meets about 10 times a year. That is 500 board meetings a year that presumably one would have to attend, but nobody can do that. The only board meeting one really has to go to is the board meeting when they vote on a raise for the board of directors. Then the other members of that board will come to that board of directors meeting and vote for a massive raise.

It becomes an incestuous little circle of people who vote each other massive pay increases. That is what motivated us to try to interfere with that whole circular process and cap it off. Whatever rate of pay one is paying one's employees, one can pay oneself 10 times that, but that is enough. Frankly, we do not believe that banks deserve to be rewarded for cutting off access of Canadians to basic banking services. That is one of the shortcomings that we pointed out.

Another motion that we moved demanded gender parity on the board of directors; 50:50, female to male. We came close on that. It is really ironic that the person that moved the motion was a famous Bloc separatist named Yves Michaud. He is the person whose motions I was seconding. The results of that vote were exactly the same result as in the last Quebec referendum, 49.6 to 50.4. There is something about that number that Yves Michaud seems to generate in people. I do not know if it is because he moved it. Perhaps I should have moved the motion myself. We thought that was a good idea. There was a great deal of interest.

One of the other motions that we moved was the very thing that I pointed out with the increasing of CEOs wages, salaries and compensation. Due to the fact that they all sit on each other's boards of directors, we also moved a motion that would limit the number of boards one could sit on to 10. If they all want to sit on each other's boards, let us make it a reasonable number. In this way we hoped to somewhat democratize the corporate structure and give the people who actually rely on the bank's services to some say on what the banks do or do not do.

In my riding of Winnipeg Centre, we have seen bank branches close in an almost epidemic way. The same is true for my colleague from the riding of Winnipeg North Centre. The banks are shutting down branches like there is no tomorrow in the hopes to increase their profits even more. The trade-off was supposed to be that we would give them the exclusive right to certain financial transactions in exchange for reliable adequate service and even some accountability to the community at large.

For instance, in the United States there is a community bank investments act which mandates that banks reinvest a certain amount of their profit into the community that they serve, even if it is not the most profitable venture, or a break even venture or marginal venture. If it is something of community interest, a non-profit group that wants to get started but is short of capital, the banks would be mandated by the community investment act to invest in at least some of these things to move the community forward for its own benefit.

Bill C-8 does one thing. It helps the credit union movement. I should say something positive about that. Many of those people are so disillusioned with the service, or lack of service, that they have been getting from the chartered banks. They have been gravitating toward the credit unions in order to get access to the financial service that every family and small business need.

One of the positive aspects of Bill C-8 is that it will finally allow a national structure for the credit unions, a credit union central, so that they would be recognized as an entity that way. We think that is a very positive step. We see it province to province. We have a Manitoba credit union central. Now there can be a national structure along those lines.

However, the shortcomings far outweigh those small benefits. Canadians are looking to the banks for support for the most basic of services and are being denied them. In a time when the banks are showing record profits, one would think that there would be some feeling that they should be able to enhance their service to Canadians instead of continually reducing them in spite of record profits quarter after quarter.

Our position is that the banks have done nothing to deserve being rewarded with the additional freedoms they would enjoy under Bill C-8. We believe Bill C-8 would, in a small way, enable the banks to achieve what they failed to achieve recently under the bank mergers. It almost institutionalizes the concept that banks will eventually merge, in that it specifically talks about that eventuality and the possibility it would be dealt with in parliament.

Instead of being dealt with on a random ad hoc basis, it more or less contemplates that mergers sooner or later will be a fait accompli. Canadians recoiled at the whole bank merger idea. The society of seniors spoke out vehemently that they were concerned that if banks were allowed to merge further and get even bigger, their interest in serving the small homeowners or small businesses would be even less.

We all know that much of the profit the banks are making now is really from their offshore and corporate customers, not from the average citizen and the small mortgages that homeowners might enjoy.

Another thing that comes to mind, and I wish we had thought of it at the shareholders' meetings of the banks, is to protest the fact that when the Minister of Finance outlined the recent round of tax cuts, the announcement that the corporate tax rate will go down from 17% to 16% slipped by without very much notice.

I have heard different figures as to what effect this will have on the chartered banks. One figure that I heard is that as much as $75 million a year will be kept by the banks as a result of that one percentage point change in the corporate tax structure.

I would ask the House of Commons and all Canadians what the chartered banks have done for us recently to deserve a reward like this, a kickback, if we will, of up to $75 million per year that they will now be able to keep above and beyond the record profits that they enjoy quarter after quarter?

One might sense that I am quite critical of our financial institutions. We were hopeful that Bill C-8 would come down hard and advocate on behalf of Canadians. We expected the Canadian government to be champions of Canadians and not, frankly, to cater to the interests of financial institutions and give them the enabling legislation they might need to go through with what they failed to do last year.

Many seniors have visited me in my riding to tell me how disappointed they were that their local bank branch was closing, and they wanted to know why. When they appeal to the banks they get a long, convoluted restructuring message on how the banks will be better able to serve their customers through e-commerce and ATMs, and that now people can bank on the Internet, switch on their home PCs and have all those banking services available to them.

That is not much consolation for a low income senior citizen on a fixed income. The seniors in my riding resent losing what they counted on as being part of their community and part of their neighbourhood. As I said in my opening remarks, it really looks like a vote of non-confidence in a neighbourhood when the local bank branch does not see fit to stick around because it does not sense enough economic activity to warrant keeping its doors open. What does a boarded up bank say about one's neighbourhood and about the viability of the town, the community or the inner city neighbourhood that one lives in?

Some people have called the attitude of the banks toward ordinary Canadians abusive and unaccountable to the community. What we had hoped to see in a bill dealing with financial institutions was a return to that accountability.

This reminds me of a parliamentary junket to Botswana that I was invited on. The outgoing president of Botswana, Masire, was one of those African leaders who really was committed to his community. It was one of those countries that was not corrupt and that worked hard in the post-war era to try to build a nation.

Masire had chartered banks in his country with the exact terms and conditions that we put on ours. That is what he said in a meeting with the minister, which we attended. However, the banks disappointed him and failed to meet their commitments in such a way that he said to hell with them. He said that he was going to invite the whole world to come and bank in Botswana because those to whom he gave that exclusive privilege had failed the country.

I am not saying we are at that point. I am not saying it is quite that drastic for us yet, but there is a growing feeling that we are giving chartered banks the exclusive right to some of the most profitable transactions. The processing of credit cards is one example. Every time a credit card is used the processing fee must be done by one of the chartered banks. If we give banks that exclusive right, we want something in return.

We do not want to see boarded up banks in our communities. We want a commitment to and reinvestment in our communities. Banks should take some of their record profits and do more than just donate to the Winnipeg Ballet or to some other arts program to improve their image. If they gave one-tenth of what they spend on TV advertising, which is a huge campaign to try to improve their image, people might feel compensated for some of what they have lost in service.

There are huge gaps in banking law. There is a real need to address the overall picture and the way Canadians view the banks, whether in terms of providing services, the insurance aspect of things, what the banks have been trying to grab, or all of their financial activities. We need to put the reins on them in some respects.

The bill, thankfully, stops short of giving them all they have asked for in terms of being a single window shopping centre for all financial transactions, whether auto insurance, life insurance or whatever. We have not gone that far.

We want to see that banks with some accountability to the community and not just to their shareholders. If they are to be motivated by profit alone and by no secondary objectives whatsoever, why are we giving them exclusive monopoly on certain transactions?

I predict there will be a growing shareholders rights movement and that more people will be buying 100 shares of one of the banks so that they can crash the shareholders meetings, hijack the meetings and get some of the amendments we put forward through.

If Canadians were polled, they would be horrified that some people make $8 million a year to run one of the chartered banks. The basic salary might only be $1.5 million a year, but when stock options and shares are added up, they are making $8 million to $10 million a year for not really doing their job. Why reward people for failing to do the job they were asked to do?