Madam Speaker, I would like to commend the hon. member for Churchill for bringing this very important issue before the House.
I expect all hon. members are interested in better protection for the wages and pensions of Canadian workers. Employees play a vital role in growing and sustaining a company's operations. They put their hearts and souls, often during the best years of their lives, into making the business viable. Through their faith in their employers, workers often invest significant portions of their paycheques into company pension plans.
I believe that all sides of the House can agree that it is unacceptable for a company to shirk its moral obligation by neglecting to pay employee wages and pension benefits.
I have had the misfortune of being on the losing end of deals before and I can assure the House that it is no fun. As parliamentarians, if we are in a position to protect workers from suffering this hardship, then it is my opinion and the opinion of my esteemed colleagues in the Progressive Conservative Party of Canada that we should make sure to take the steps necessary to offer Canadian workers that protection.
This speaks to a sense of fairness that I believe can be found in virtually all Canadians, and that transcends party lines. All too often employees are left in a vulnerable position, both leading up to and during bankruptcy proceedings. Business owners often make the decisions that ultimately lead to bankruptcy. This fate is often as a result of circumstances beyond the control of the business owner, to be sure. However, as individuals charged with carrying out rather than directing company policy, many employees are not in a position where they can adequately assess the risks associated with their continued employment. When a business finally does declare bankruptcy, those same employees are equally at a disadvantage when it comes to assuming those risks through lost wages and pensions.
In my home town a number of years ago a particular furniture company went into bankruptcy. Some of the people who stayed on, employees of 30 and 40 years, to see the receiver through the bankruptcy portion of that company were deprived of their pensions when they finished. Some of those who had quit or retired four and six months earlier received their pensions. It just seemed totally unfair to me.
In this debate the House is being reminded that secured creditors are first in line to claim a company's assets during bankruptcy proceedings. Next in line are the preferred creditors, a group that is further subdivided into categories of preferred creditors. Employees currently stand fourth in line as preferred creditors when it comes to claiming that which they are rightfully owed. Employees also face strict limitations when it comes to exactly how much they can claim.
Current laws in Canada allow for the scenario where an employee has worked his or her entire life for a single company that then declares bankruptcy, leaving that employee with nothing. Now all of a sudden the employee has lost not only whatever wages remain outstanding, but also a lifetime worth of contributions to the company's pension plan.
Clearly, improvements in this area can and should be made. However, in making such improvements, we must be conscious of the unintended consequences of our actions. An unintended consequence of this very motion is that it may make it more difficult for start-up businesses and expanding businesses to obtain credit. We all know that entrepreneurs need capital in order to enter the market and grow their business. Most often this capital is obtained through a combination of equity and credit.
In making the necessary loans, creditors assess the risks associated with the business owner's ability to pay back the loan. If we were to change the Bankruptcy and Insolvency Act by downgrading a secured creditor's ability to recover the loan, creditors may react by further restricting the availability of loans by increasing the rate of interest that would apply. This could potentially lead to very serious and negative repercussions on our economy.
Canadians rely on businesses to drive our economy and provide us with new jobs. Without available credit, businesses risk losing the opportunity to expand their operations and hire new employees.
While it is clearly the intention of the motion to protect employees, it is quite possible that Motion No. 400 could actually have a profoundly negative impact on workers across Canada by indirectly limiting their opportunities to secure employment.
The House would be well advised to consider this motion carefully. In seeking to help workers, we want to make sure we do not do more harm than good, a very real concern.
The House had a similar debate in the spring of 2001 when the hon. member for Winnipeg Centre introduced a private member's bill that would have amended the Bankruptcy and Insolvency Act so that unpaid wages were ranked first in the order of distribution. In that debate, my colleague from Kings--Hants, who at that time was our party's industry critic, encouraged the House to consider the Australian model of employee protection during bankruptcies. I believe that suggestion is just as constructive and relevant today as it was then.
In Australia, various levels of government work together to provide workers with coverage during bankruptcies in an employment insurance type system. Given the current size of the EI surplus in Canada, it might make sense for us to consider extending employment insurance coverage to include a portion of back wages owed to employees during a bankruptcy. There are clearly other options available to us that would enable us to move forward in guaranteeing better protection to Canadians.
Progressive Conservatives recognize the need to better protect stakeholders during bankruptcies. As we move forward, we owe it to Canadians to carefully consider programs that are available in other jurisdictions. We must work to achieve a better balance between protecting access to capital in order to grow a stronger economy and protecting the ability of employees to secure wages and pension benefits that they have worked so hard to earn.