Debates of Dec. 5th, 1994

Canada Grain Act

[An hon. member]

On division.

[The Deputy Speaker]

Motions Nos. 3, 7 and 8 will be grouped for debate but voted on as follows: Motion No. 3 will be voted on separately; a vote on Motion No. 7 applies to Motion No. 8.

[Leon Benoit, Reform, Vegreville, AB]

moved:

Motion No. 3

That Bill C-51, in Clause 13, be amended by adding after line 15, on page 8, the following:

"49.2 (1) A person who proposes to operate a primary or process elevator or carry on business as a grain dealer without being licensed under this Act may apply to the Commission to be exempted by order under paragraph 117( b ) from the requirement to be licensed.

(2) Unless the Commission has reason to believe that the elevator is not suited to handling grain or that the person is not a suitable person to carry on business as a grain dealer, the Commission shall make an order under paragraph 117( b ) exempting the person from the requirement to be licensed.

(3) A person who is exempted from being licensed under subsection (2) shall display prominently a statement in the prescribed form that the person is not licensed under the Canada Grain Act to operate an elevator or carry on business as a grain dealer a ) at every place of business operated by that person at which a contract for the delivery of grain may be executed; b ) at every place where grain may be delivered to the person as an elevator operator or grain dealer; and c ) on every document that is, relates to or solicits a contract to deliver or handle grain.''

(4) Section 83 does not apply to a person who is exempted from being licensed under subsection (2).

Motion No. 7

That Bill C-51, in Clause 33, be amended by deleting lines 9 to 15, on page 15.

Motion No. 8

That Bill C-51 be amended by deleting Clause 34.

Mr. Speaker, I am pleased to rise today to speak to these three motions which have been put forward by the Reform Party.

The purpose of Motion No. 3 is to allow grain dealers or the operators of primary or process elevators the ability to opt out of licensing under the Canada Grain Act. This amendment would remove from these operators all of the requirements and restrictions under the Canada Grain Act.

This amendment also imposes certain conditions for opting out to make sure that it is very clear to people using these services that this particular dealer or elevator operator is not licensed and therefore meets no bonding requirements under the Canada Grain Act. That is an important protection which I think is necessary to make this opting out work.

The Canadian Grains Commission must allow the opt out on the part of the dealer unless it can show good reason that this person should not be allowed to carry on business or that the facility is not a proper facility to carry on a business.

All we are talking about there is the individual who is applying to carry on business should have a good credit rating, one that would not interfere with allowing him to carry on a business, and should not have a criminal record which would restrict him, which the commission would feel would not allow him to carry on his own business.

Those are the only restrictions. Barring those restrictions an individual who wants to opt out should be allowed to opt out.

This amendment would also allow those who have opted out to deal under the Canadian Grains Commission with grading and inspection services, to use its services. Unfortunately, it was not possible as far as I could tell to make this amendment require that the Canadian Grains Commission allow these opted out individuals to use its inspection and grading services. I would hope that the Canadian Grains Commission would feel an obligation because these people are in the grains industry and the Canadian Grains Commission says it is important to have the integrity in our business by having grading and inspection services. I would hope that the Canadian Grains Commission would allow for this grading and inspection even for those who have opted out.

That is the purpose of this amendment and I believe that it would allow these opted out people to operate. They can of course provide security on their own through some type of private insurance, some type of bonding. It would also allow groups like the special grains people who have expressed a real concern with this bill to opt out and then, especially small dealers, opt out as a group and form their own group, put their own bonding or insurance in place. They could be under the umbrella of a special grains group for example. It would allow these individuals to operate still using official Canada grain names where it applies.

I believe the purpose of this amendment would be allowed under these changes. Still, it would depend on the goodwill of the Canadian Grains Commission to allow for the grading and inspection services to be used because these people would have opted out completely from the requirements under the Canada Grains Act. That briefly is amendment number three. The hon. member for Kindersley-Lloydminster is going to speak later specifically about the special grains end of it later.

I think we can talk about Motions Nos. 7 and 8 together. Both of these motions are simply there to delete the changes that have been made through Bill C-51 to the act. What it would do is have these sections revert to the old language of the Canada Grains Act which does not specifically state that the governor in council, the cabinet, has the power to overrule the Canadian Grains Commission in these areas.

These two changes that were put into the Canada Grain Act under Bill C-51 specifically state that cabinet does have the power to overrule the Canadian Grains Commission.

It is political interference with a body that is supposed to be an arm's length body, a regulatory body. Those who are in favour of making the change under Bill C-51 which gives the cabinet the final say state that really all it does is give cabinet a power that it has over the entire Canada Grain Act anyway. That is true to some extent because the cabinet does have control. The minister and the cabinet do have control of the Canada Grain Act.

When I was in committee my question to the people in the Canadian Grains Commission who administer this act was why put these amendments in Bill C-51 which specifically designates this power to cabinet. I was given no answer.

All I am asking is that these powers which are specified under these section of Bill C-51 are again left out as they originally were in the act. I cannot understand why the Liberal Party would oppose this change. I would like to trust that the exclusion of this was an oversight on the part of the people who drafted this new legislation. The only other reason for adding it is to give cabinet hands on, more direct control over the Canadian Grains Commission in these specific areas of the act. That is the only reason to leave them in.

I would ask for support from all parties in the House.

[Réjean Lefebvre, Bloc, Champlain, QC]

Mr. Speaker, I will speak to the House about Bill C-51 and the grouping of motions 3, 7 and 8. I will start with Motion No. 3. This motion presented by the member for Vegreville is the result of complaints voiced by western producers, in particular special crop dealers. I understand that the purpose of this motion is to make it possible for elevator operators or grain dealers to be exempted from the obligation to hold a licence for selling or buying grain.

Before voting on the motion, we must consider the sections involved, as they appear in Bill C-51. According to what was explained to us, we understand that the amendment proposed by the bill is aimed at reinforcing the obligation to hold a licence. Bill C-51 clearly and explicitly prohibits the sale and purchase of grain without a licence. If a producer deals with an unlicensed merchant and if the latter goes bankrupt, the producer will receive no compensation from the CGC. Therefore, he does so at his own risk. The situation which led the CGC to include this provision in the bill could roughly be described as follows:

Certain new elevator operators are in the business of cleaning grain from special crops; their neighbours, too, find it practical to deal with them because they are closer and, possibly, because it is cheaper since they are not licensed, thus saving on license-related costs.

These costs can amount to as much as $20,000 a year. Eventually, the elevator operators offer to act as intermediaries for their customers and sell the grain they cleaned. It seems that there is some uncertainty in the act that would make this possible. This is why the government wants to go ahead and clarify this provision. The motion before us now would make it possible for small operators to be exempted from the obligation to hold a licence, thus allowing them to save the costs associated with such a licence.

At the present time, all elevator operators and traditional grain dealers hold a licence certifying that they meet CGC standards. The commission prohibits anyone without a licence from buying or selling grain. The CGC demands that licensees post bonds equal to the value of their highest monthly transactions. The reason for this is very simple. If they want to deal in grains, they have to prove that they have the financial capacity to do so.

There is a system of securities guaranteeing payment of delivered grains in the event of bankruptcy of the elevator operator or grain dealer. In the past, the CGC, and consequently taxpayers, had to pay for shipments made to two elevator operators who went bankrupt. The cost was $3.8 million. The motion by the hon. member for Vegreville would be especially worthwhile for special crops since the government intends to introduce a bill on that subject in the spring.

I suppose that we could then include a provision to that effect. What concerns me about the motion of the Reform Party is that it could lead to deregulation of the industry. With this motion, those who would apply for a licence exemption would get it unless the CGC proves that the elevator is not suitable for grain processing.

Given the cost of a licence, well-established companies, like Cargill, could ask to be exempted and the commission would be unable to refuse. Consequently, despite the underlying good intention of the motion, I must reject it because of the risk of deregulation.

As for Motions Nos. 7 and 8, grouped together, they puzzle me. They are mainly technical in nature. Lines 9 to 15 in clause 33, and clause 34 have been added to the bill to allow the CGC to change grade names more quickly. Removing these would block the process. I will therefore oppose the motion.

The confusion started in 1988 when the CGC wanted to be able to react more quickly when new grades were needed. An amendment allowing for the creation of grades and grade names by regulation was adopted in 1988. Although the amendment dealt only with grades and grade names, the approval of the Governor in Council was needed. From 1990 to 1993, the CGC used an invalid procedure to modify grades and grade names of grains. Prior to 1988, grades and grade names were specified in a schedule to the act and could be modified only by legislative amendment.

According to lawyers, a regulation made without Governor in Council approval cannot be implemented. The CGC did not see fit to have Sections 33 and 34 exempted from Governor in Council approval in order to speed up the process. Therefore, I will oppose the motion because we must abide by the law and also for the sake of efficiency.

[Elwin Hermanson, Reform, Kindersley—Lloydminster, SK]

Mr. Speaker, I want to speak briefly to the Reform motions that would amend the Canada Grain Act. I particularly want to speak as they concern the special crop industry.

I have spoken about the matter before in the House. I have a very relevant concern in that it is a growing industry in my constituency of Kindersley-Lloydminster. It is one of the bright spots in the agricultural industry throughout at least western Canada and possibly other parts of the country as well.

There have been a couple of minor problems, not minor for those involved but minor in the scope of the entire industry. Two facilities ran into disrepute. The one in my constituency was the Klemmer seed company and the other was Pro Star. The producers that delivered to these companies were not adequately protected.

The Parliamentary Secretary to the Minister of Agriculture and Agri-Food is also aware of some of these concerns and problems. It may be part of the reason some of the current amendments are put forward to amend the Canada Grain Act. However there have been discussions with the industry and it is proposing further changes in the form of a new special crops act that would adequately protect those who deal with this new and growing industry.

In the interim Motion No. 3 would, temporarily at least and ongoing if we did not change the act, allow special crop producers to opt out of the auspices of the Canada Grain Act which was first passed about 1912 and really does not fit the needs of the industry, because they are not Cargill, the Saskatchewan Wheat Pool or United Grain Growers. They are much smaller operators, almost taking the form of family farm operations in many instances. They not only provide valuable services to the special crops act but they are extending the viability of many rural communities through employment opportunities and through service to local producers in those areas.

The industry is a very conscientious industry and is promoting changes and regulations to protect producers. It needs time for the government to enact a special crops act so it can function and protect producers who deal with the industry.

Motion No. 3 would allow them to opt out of the auspices of the Canada Grain Act. That is not something that is unheard of in the current situation. For instance, right now feedlots which buy a lot of grain are able to opt out. They must clearly indicate that they are not under the constraints of the Canada Grain Act.

The hon. member for Vegreville has indicated that the same provision should be made available to other players in the industry. They must clearly indicate that they are not under the auspices of the Canada Grain Act so that those who would deal with operations such as Klemmer and Pro Star would not be under any illusions that they were being protected by the Canada Grain Act.

There have been a lot of allegations of political interference particularly in the Klemmer case. We may never know the full story behind that situation, but it is clear producers must be aware of where they are protected by the Canadian Grain Commission and where they are not protected.

With this motion the hon. member for Vegreville is attempting to clarify that and allow the special grains people to opt out so they can bring in their own special crops act, which would clearly protect producers who deal with them. Unlicensed individuals may still buy and sell using Canadian Grain Commission approved grade names if the commission would agree. It could perhaps even charge a modest user fee to provide that service.

As far as Motions Nos. 7 and 8 are concerned, they apparently clarify and revert to how the old act was structured. The amendments as put forward in Bill C-51 would clarify and give far more power to cabinet or to order in council decisions affecting the Canadian Grain Commission. If anything, we should be moving the other way where this quasi-judicial body would be at arm's length and cabinet would not be interfering in the daily work of the Canadian Grain Commission.

I also ask the House to consider support for Motions Nos. 7 and 8 so we can have better legislation to facilitate the work of the industry and we can see it progress rather than revert to the days of 1912.

[Lyle Vanclief, Liberal, Parliamentary Secretary to Minister of Agriculture and Agri-food]

Mr. Speaker, I would like to make a few comments on the three motions before us in this grouping, the first one being Motion No. 3.

I have to question something because I cannot quite figure out where Reformers are coming from when they talk about wanting some people to opt out. They want the Canadian Grain Commission to make the decision on whether somebody can opt out or cannot opt out. Let us look at the practical application of that. If someone asked for permission to opt out and the Canadian Grain Commission thought there might be some requirement for the elevator or operator and it was not totally satisfied the security was there without a legal bonding or security being posted, the commission could say that he should not opt out. What message does that send?

In other cases, as has been mentioned, some larger grain companies that might be considered to have all kinds of backing could opt out. As the member from the Bloc said, I could see a total breakdown in regulation and therefore deregulation of who was secure and who was not secure.

Having farmed for many years myself, not in the west admittedly but taking grains to elevators, I know farmers are busy. There is an assumption that if we know some elevators

have bonding or security we assume that probably others do. We could end up in a situation where an elevator had security posted and 20 or 30 miles away an elevator might have security posted because it chose to.

It is certainly not the intention of the government to leave in place a situation where everybody is not treated in the same way. Hopefully it will be some comfort to members that the Canadian Grain Commission realizes every operator out there does not do the same amount of business. They may not have a large volume of product in their facility or on their site at any one time. There is work being done as far as how smaller operators can collectively post bond or securities so they can be covered. We have to remember that.

What would it do as far as competitiveness between dealers or elevator operators is concerned if one had further costs due to posting security and another one down the road, 100 miles away or even 10 miles away, did not have those costs? It is certainly our intention to treat everybody fairly. It is not our intention at this time to encourage or to allow some dealers to be in the system and some dealers to be out.

In reference to the comments from the member for Kindersley-Lloydminister as far as special grains, he is right. The government is working with the industry to put a special act in place to cover those, the peculiarities and specific requirements there. There was some concern that we do it in Bill C-51 but the general feeling was that there were some things in this bill that we could and should do and get out of the way rather than holding all those things up. I see the member is nodding his head yes, get those done and then work with the special crops people to look after their needs which are otherwise there.

As far as Motions Nos. 7 and 8 are concerned, again I find the comments from Reform Party members confusing. It seems that if members of that party have questions on something that has happened in agriculture they do not like, the first person they turn to is the Minister of Agriculture and Agri-Food and ask: "Why did you allow that to happen? It is in your ministry, your department. Why did you allow that to happen?"

What we are asking here and what it does is it gives the minister the final say, the governor in council. The minister would have an opportunity to comment on it. It gives the minister the final say on these types of actions and that is where the responsibility is going to end up.

The intention is not to get into the day to day operations of the commission. If there are questions, these things will have had to be approved by the minister and the governor in council. This will enable the answering of questions the Reform Party seems to be in the habit of asking the minister as to why he allowed something to happen. It gives the minister the opportunity to review those types of decisions before they happen.

[Vic Althouse, NDP, Mackenzie, SK]

Mr. Speaker, I have just a few short words on these amendments.

Motion No. 3 proposes to allow people who operate a primary or process elevator or who carry on business as a grain dealer without being licensed under this act to apply to the commission to be exempted under paragraph 17(b) of the act. In effect it sets out a class that is not particularly well defined which may apply for exemption under the Canada Grain Act. That is probably rather dangerous for us.

We would probably be better to await a specialty crops act and deal with these kinds of issues properly. There is the possibility for the kind of anomaly that was raised by our friends from the Bloc. One of the large players might decide to opt out. It would make the whole marketing practice that Canada has been engaged in since the turn of the century very suspect.

What we have now is a system where product identification is absolutely secure. It is guaranteed in Canada. This is one of the tools that Canada has used for almost 100 years to break into markets. We are the quality product. We have made Canadian grains similar to what the Mercedes Benz is to cars.

We have to take some care in allowing people to opt out. I am sure that McDonald's would not permit some of its franchisees to opt out and still go on selling Big Macs. We have not designated with this opting out process whether Canada No. 1 can still be sold as Canada No. 1 even though there is a disclaimer on the bill of lading saying that the dealer did not comply with the Canada Grain Act. Customers are not going to understand this. It is only going to reflect badly on all Canadian farm produce. We would be just as well to stay away from it.

[The Deputy Speaker]

Is the House ready for the question?

[Some hon. members]

Question.

[The Deputy Speaker]

The question is on Motion No. 3. Is it the pleasure of the House to adopt the motion?

[Some hon. members]

Agreed.

[Some hon. members]

No.

[The Deputy Speaker]

All those in favour of the motion will please say yea.

[Some hon. members]

Yea.

[The Deputy Speaker]

All those opposed will please say nay.

[Some hon. members]

Nay.

[The Deputy Speaker]

In my opinion the nays have it.

And more than five members having risen:

[The Deputy Speaker]

The recorded division on the motion stands deferred.

The next question is on Motion No. 7. Is it the pleasure of the House to adopt the motion?

[Some hon. members]

Agreed.

[Some hon. members]

No.

[The Deputy Speaker]

All those in favour of the motion will please say yea.

[Some hon. members]

Yea.

[The Deputy Speaker]

All those opposed will please say nay.

[Some hon. members]

Nay.

[The Deputy Speaker]

In my opinion the nays have it.

And more than five members having risen: