Morris Bodnar

[Bankruptcy And Insolvency Act, October 22nd, 1996]

Mr. Speaker, I am pleased to rise today to begin third reading of Bill C-5.

Hon. members will recall that the bill amends an act which was last changed in 1992. Before that, however, it had taken 40 years before legislators were able to bring bankruptcy laws in Canada up to date. That is because the laws are complex and there are many competing interests that must be taken into account.

When we debated this legislation on second reading we outlined some of the various interests that had to be considered: lenders and borrowers, businesses and consumers, insolvency practitioners and Canadian workers whose jobs may depend on effective reorganization provisions. These are just a few of the groups affected by bankruptcy law.

I remind the House that we were able to produce a piece of legislation acknowledging the needs of these competing interests because of the input we received from the Bankruptcy and Insolvency Advisory Committee.

This legislation was introduced last November during the last session as Bill C-109. In the months that have passed since then, insolvency practitioners and stakeholders have had a good opportunity to study the bill carefully and recommend ways to improve it.

One indication of the quality of their advice is that the legislation has now come back from the Standing Committee on Industry ready for third reading essentially intact. There have been many amendments designed to tighten up the legislation and clarify its intent, but in its fundamentals the bill is essentially unchanged.

The committee heard many witnesses who represented many different points of view. They provided advice on how to improve the bill, but they also agreed on the broad principles that Bill C-5 represents. The witnesses agreed that the intent of the clauses contained in the legislation was excellent, but they were able to suggest slight changes to the wording to clarify the purpose of the bill. That being said, I would be the first to acknowledge that the bill before us is a much improved version of the bill sent to committee for study.

I commend the work of the committee, chaired by the hon. member for Winnipeg North. Bankruptcy legislation is never easy. Members of the committee had to work hard to formulate the agreements and the compromises represented in the amendments before us. However, it is a tribute to the ability of all members, especially the chairman, to build consensus that the legislation has come before us in this improved form.

In that regard I would especially like to single out the contributions of the member for New Westminster-Burnaby. I think his colleagues on the committee would join me in acknowledging the role he has played in ensuring this legislation fairly addresses the issue of sexual assault judgments.

As a result, clause 105 has been changed. Awards of damages for assault are non-dischargeable in this legislation. Under the amendment proposed by the hon. member, this provision is expanded to clarify that it covers awards for intentionally inflicted bodily harm or sexual assault or wrongful death resulting from either of them.

Another important amendment concerns clause 15 respecting trustee personal liability for environmental damage. The super priority given to claims for costs of cleaning up environmental damages will be limited to crown claims. The intent of the legislation is clearer now. It will ensure that only ministries of the environment and not, for example, third parties will claim super priority for environmental clean-up costs.

Clause 42, affecting lease disclaimers, has been amended. The bill before us gives a disclaiming tenant more options in framing

his organizational proposal. He can now offer compensation based on the landlord's actual losses in all instances. This simplifies the laws considerably.

Clause 60, which involves the procedures for determining the surplus income of an undischarged bankrupt payable to his creditors, has been clarified.

Clause 87 deals with spousal support claims. It has been amended so that spousal claims provable in bankruptcy are as specified in section 178, and that they must be pursuant to orders or agreements made while the spouses were living separate and apart.

Clause 103 has been amended to clarify the responsibility on consumers to opt for reorganization rather than bankruptcy. By simply choosing bankruptcy instead of making a consumer proposal, the consumer should not be penalized when it comes time to decide whether to grant a conditional discharge. This legislation makes it clear that the option must be between bankruptcy and a viable consumer proposal.

Several provisions of clause 118 have been clarified, including the definitions of "securities firm" and "security". The provision that specifies the type of suspension of a firm authorizing a securities commission, securities exchange or customer compensation body to petition the firm into bankruptcy has also been clarified. As well, the provisions have been made more clear on which assets are to be included in the customer pool fund and on how these assets are to be distributed.

I emphasize that the amendments made by the committee do not undermine the fundamental principles of this legislation. For example, the provisions involving directors' liability remain fundamentally intact. It provides a due diligence defence for directors against civil liability. It also gives a provision whereby actions against directors may be stayed during reorganizations. Further, it provides that directors would be allowed to propose liability relief as an integral part of the reorganization plan submitted to creditors, and creditors, not governments, not the law, will accept or refuse to provide relief to directors.

Why are these provisions important? Because the thrust of the government's objectives in this framework law is to move away from liquidation in favour of preserving businesses and jobs. These provisions offer protection to board members so that they are encouraged not to leave the sinking ship. We want them to stay on to make the bold decisions to help reorganize the business.

Other elements of the legislation relate to the insolvency of farmers and fishermen. At present section 48 of the BIA provides that an individual who is solely engaged in farming or fishing cannot be petitioned into bankruptcy. Recent case law has interpreted "solely engaged in farming" quite strictly. Any revenue which is not generated by the farm will expose a farmer to petitioning.

As members of this House are well aware, to avoid insolvency most farmers and fishermen will turn to other means of employment in the off season. This is a responsible action on their part. The amendment in Bill C-5 restores the situation intended in the original legislation to protect farmers and fishermen from being petitioned into bankruptcy during the off season. Both the Minister of Agriculture and Agri-Food and the Minister of Fisheries and Oceans supported this proposed amendment.

Bill C-5 also addresses consumer bankruptcy. It provides an opportunity for debtor consumers to be rehabilitated quickly and to act responsibly. I believe the vast majority of consumers who run into major financial difficulties want to fulfil their obligations. I am sure we all know of stories where someone has run up their debts and regard bankruptcy as an easy way to discharge their responsibility, easier that is than taking the rough measures necessary to pay back creditors over time.

The legislation before us puts more pressure on debtors to rehabilitate. It encourages consumer debtors to act more responsibly by repaying at least a portion of their debts where they can.

The fundamental objectives of Bill C-5 remain. We have reformed both corporate and consumer bankruptcy law in Canada. Thanks to the work of the industry committee, the bill has been strengthened by several technical amendments. This is good legislation and it deserves the support of this House. I urge all members to vote for it.

[Bankruptcy And Insolvency Act, October 10th, 1996]

Mr. Speaker, the hon. member raised some interesting points on this motion. In particular, he spoke about the bankruptcy of students and the problems that arise in the student population. The government is well aware of the financing which students get during the time it takes them to get a university degree. Many times students spend large sums of money to get university degrees.

However, once a student gets the degree, that is not the time for the student to automatically declare bankruptcy to wipe out the loan. There is a grace period for the first six months after the student leaves university. No payment has to be made. After that first six months, if the student is not in a financial position to make payments and meets the criteria of the legislation, the student can get an extension of that grace period for another 18 months, making it a full two years that a student does not have to make payments on the student loan.

Statistics show that 70 per cent of students who go bankrupt do so during that first two-year period. They are going bankrupt during a period when there is no financial pressure on students to pay back. They have a six-month period of grace and they can get a further 18-month extension.

The argument of the hon. member is quite fallacious. He is saying that students are having difficulties in the first two years after completing studies or leaving university. It is not a wilful abuse by the students. However one has to question declaring bankruptcy during a period of time when there is not a requirement for making payments. It is for that reason we have a two-year period that is required before a student can go through bankruptcy. That is why it has been structured as such in the legislation.

The hon. member stated that the government must remain connected to reality. That is exactly what we have done. The reality is that students should not be going through bankruptcy and declaring their student loans in a bankruptcy if there is no financial pressure on students to do this. There is no requirement for them to make the payments during the first two-year period. Their going through bankruptcy is really not reality. We are bringing this matter back into reality.

It is interesting to note that the opposition to this portion of the bill has not been raised by the students, it has been raised by the hon. member opposite. The students have not been opposed to the two-year period and have not raised opposition at the committee level to this requirement.

I believe many students realize that there is reality. Students realize they have obligations. Many of them who graduate from university have one of the finest assets that can be had. The asset is a degree. It is a ticket to other employment. Allowing them to automatically be able to wipe out such a debt when there is not pressure on them would be grossly unfair.

As well, the amendment would repeal section 177 of the act. It deals with fraudulent marriage contract settlements as being grounds where the court can refuse to discharge a bankrupt individual. Let me read a portion of section 177: "If the debtor becomes bankrupt and it appears to the court that the settlement, et cetera, was made in order to defeat or delay his creditors, the court may refuse or suspend an order of discharge or grant an order subject to conditions in like manner as in cases where the bankrupt has been guilty of fraud".

Surely the hon. member does not want this portion of the legislation to be wiped out. Surely the courts should be allowed, when there are such fraudulent actions, to be able to defeat such

individuals from trying to take this action and prevent them from defeating or delaying creditors who have legitimate claims.

The hon. member's motion would repeal this condition. It would be grossly unfair if a debtor could become bankrupt but has made a fraudulent arrangement in a marriage settlement just to defeat creditors. This is not what we want to see in bankruptcy legislation. This is not what we want to see in our laws.

This legislation will prevent that from happening. It will prevent fraudulent actions such as this. As well, the bankruptcy legislation will prevent students who are not under financial pressure from going into bankruptcy during the first two years.

I should not put it that broadly because students can go into bankruptcy within the first two years. They would just not be able to declare the student loan as part of the bankruptcy. They may have other debts, and that is fine. They can deal with those but not with the student loan itself.

For the reasons I have indicated in dealing with the fraudulent marriage contract settlements and the provision in section 177 that would allow courts to not allow such settlements and for the reasons dealing with the student loans which I have indicated to the House, the government is opposed to this motion. It is the government position that this motion is fallacious and should not be passed.

[Pledge Of Allegiance, October 9th, 1996]

Madam Speaker, I have a few comments to make to the hon. member's submission.

I invite the hon. member to point out where the government would find the authority to freeze any acquisitions that do not violate the provisions of any statute enacted by this Parliament.

The government has no authority to freeze or block commercial transactions as he may be suggesting. In fact, he knows very well that his remedy is to go to his friends in the NDP in Saskatchewan. They are the ones who can remedy any matter about which he has complaints. But he will not go to those friends. He is trying to make this a political issue for the next election by simply running a smear campaign on what has been done thus far.

Second, freedom of speech is guaranteed under the charter of rights and freedoms.

Third, there are fundamental changes under way in methods of communications. Radio, television and now the Internet provide excellent vehicles for the exchange of information and opinion.

The hon. member made reference to certain political donations. It is interesting that he never makes any comment about the political donations being made by the Bank of Nova Scotia to the NDP. The donations being made by others pale in comparison to what the Saskatchewan NDP has received from the bank and he makes these comments in the House, which are very surprising.

The enforcement of the Competition Act is entrusted to the director of investigation and research who is an independent law enforcement official. His role under the merger provisions of the Competition Act is to review the economic implication and concentration of ownership. The director is not mandated to look at social issues such as editorial diversity which the NDP is pushing.

[Patent Act, October 8th, 1996]

That is what he wants, and that is what he has proposed to this House.

Now is the time to look for a balance in this legislation with a review of Bill C-91. It should not be dealt with in the theatrics that have been proposed by the hon. member in this House with this bill. He is trying to show how conscientious he is when he knows that a full review is coming before the industry committee on Bill C-91. I wish he would attend some of those meetings.

[Patent Act, October 8th, 1996]

Mr. Speaker, it is very interesting to listen to the political posturing of the hon. member for Regina-Lumsden. He knows very well that Bill C-91 is up for review in 1997. Unfortunately, he is trying to show how conscientiousness and how concerned he is about this matter.

I speak against the bill presented by the hon. member for Regina-Lumsden. I would like to explain why the bill is not appropriate.

First, it ignores the important role that intellectual property protection plays in the Canadian economy by reducing the patent term for pharmaceuticals and by reintroducing compulsory licensing.

The bill would shorten the patent term for drug patents to 17 years from the date the patent application is filed. It reintroduces the compulsory licensing regime that was eliminated when the Patent Act was amended by Bill C-91 in 1993.

The House will recall that before the Patent Act was amended, patented medicines did not enjoy full patent protection. Instead they were eligible for a period of marketing exclusivity for seven to ten years. This bill would not even allow innovative drug companies that protection. The holder of the patent under this bill would have only four years before the generic companies could copy the formula under a compulsory licence. The bill would allow the patentee to receive a royalty and the compulsory licence could be refused or delayed if a patentee has been unusually delayed in commercializing the medicine.

Perhaps the hon. member for Regina-Lumsden believes that these provisions would be sufficient to encourage companies to continue research in Canada. Perhaps he thinks that Canada would continue to attract R and D investment under these terms. Perhaps he thinks that these measures would be suitable in today's knowledge based economy. I assure the hon. member that these measures would not be sufficient. Why would a company invest in a country where it is not assured adequate property protection, including patent protection?

The hon. member should know very well that he comes from a province where the government quite often will attract businesses and will change the agreements for those businesses halfway through the agreement period. That is why that province is not attracting this type of R and D. In particular, the province of Saskatchewan does not attract this R and D because the government changes rules on companies that come into that province.

Since patent protection was first enhanced in 1987 through Bill C-22 the ratio of R and D to sales by pharmaceutical patentees has continuously increased. Last year the innovative companies spent $624 million on R and D. That represents 11.8 per cent of their sales revenue, nearly doubling the ratio of 6.1 per cent achieved in 1988.

The brand name pharmaceutical companies are among Canada's leading investors in research and development. Last July, when the publication Research Money listed Canada's top corporate R and D performers, 17 integrated brand name companies were among the top 100. This investment in research and development means highly qualified jobs for Canadians. It means jobs in the brand name companies, jobs in the universities and hospitals that support their research, and jobs in the many small and medium sized businesses that have flourished in the past few years as Canadians respond to the challenge of designing new products for the health care industry.

The growth of small and medium sized biotechnology companies has been particularly impressive. In fact, when we look at the Research Money list of the top 100 R and D performers, seven of the companies are Canadian research based biopharmaceutical firms. The growth and success of these young companies has been built on a solid foundation of world class intellectual property protection in Canada.

During this period of increased R and D, the prices of patented drugs have been kept under control. According to the Patent Medicine Prices Review Board, an independent body which regulates the price of patented medicines, the prices of patented medicines actually fell by 1.75 per cent in 1995. They dropped at a time when the consumer price index rose by 2.14 per cent. This is the second year in a row they have dropped.

Furthermore, an international comparison of the top 200 selling patented drug products produced by the Patent Medicine Prices Review Board showed that for the first time Canadian prices on average were below the median international prices in 1994.

If this bill was passed, Canada would become one of the only countries in the industrialized world where pharmaceutical intellectual property would not be effectively protected. Canada would become the only developed country in the world with compulsory licensing regimes for drugs. In addition to the detrimental effect on jobs and growth, we could expect a strong reaction from our trading partners.

This brings me to my second reason for opposing Bill C-311. The measures proposed in the hon. member's bill contravene Canada's international obligations under the World Trade Organization and the North American free trade agreement. The patent term of 17 years from date of filing for drug patents would violate Canada's international obligations under the WTO. These drugs require a minimum patent term of 20 years from the date of filing a patent application.

There is another aspect of this bill that runs counter to our international trade obligations. Both the WTO and NAFTA require that patent rights be enjoyable without discrimination as to the field of technology. A compulsory licensing regime for pharmaceuticals would constitute discriminatory treatment toward pharmaceutical patentees. We could expect action under both the WTO and NAFTA as a result.

The government has signed these international treaties because we believe they will promote economic growth. Canada must

compete with other countries not only for global market shares but also for investment and technology.

International trade agreements that provide for strong intellectual property protection create the necessary climate for investment and technology transfer. Canada, as a trading nation, is not prepared to ignore its international obligations. The challenge with Canada's drug patent policy is to ensure that it conforms with our international trade obligations and supports the development of our pharmaceutical industry while making patented drugs available at prices that are not excessive.

With respect to some of the comments that were made by the hon. member, it is very interesting that he referred to the growing revenues of these companies. He never referred to what their profits are. Revenues are not necessarily profits. It is also interesting that he wants millions of dollars to be spent by companies on R and D. Then he wants the fruits of this R and D, which is in the hundreds of millions of dollars, to go to other companies that have put no money into R and D.

[Oceans Act, October 7th, 1996]

Mr. Speaker, Canadians have one of the best and most advanced telecommunication systems in the world at prices that are among the lowest in the world. Canada has achieved one of the highest telephone penetration rates in the world, which is 99 per cent in 1995.

One of the objectives of the Telecommunications Act is to render reliable and affordable telecommunication services to all Canadians. Another objective is to foster competition in the provision of telecommunication services.

Since the late 1980s we have introduced competition in almost all telecommunication markets. As we move to more competitive markets, the government is committed to ensuring that all consumers, those living in rural and remote locations, those in low income groups and those with special needs, continue to have affordable access to central communication services.

Currently the CRTC is considering the need for specific means to ensure that local service continues to be universally accessible and affordable as we move to competition in this market. The government is monitoring these proceedings closely. Our goal is to have the most advanced and lowest cost telecommunications infrastructure in the world, one that offers consumers a broader range of innovative products, services and suppliers from which to choose.

[Telecommunications, October 2nd, 1996]

Mr. Speaker, the suggestion that has been made is a matter we will take under advisement and discuss with the Minister of Industry.

[Telecommunications, October 2nd, 1996]

Mr. Speaker, the position of the government has been to continuously allow competition to play an important role in the provision of services, including the area of telecommunications.

During this process, the CRTC has been involved. It is very important to recognize that during the restructuring in this area of telecommunications there may be inconveniences that arise.

However, the marketplace is an important place that sets the fee structures, and when the marketplace takes priority it comes up with a level of funding and a level of pricing that is superior with lower costs for the consumer.

[Return To Canada Of Karim Noah, October 1st, 1996]

Mr. Speaker, as the hon. member is aware, on May 13, 1996 the director of investigation and research commenced an inquiry under the Competition Act into allegations of conspiracy by gasoline producers and marketers. This inquiry was commenced after the initiation of a six resident application for an inquiry under the Competition Act by the member for Ottawa Centre. If evidence of a criminal offence is uncovered, I am sure appropriate measures will be taken by the director.

Some people are suggesting that prices should be regulated. The authority to regulate gasoline prices falls within the jurisdiction of the provinces. It is not a federal matter. In the member's province

of Saskatchewan it is for the NDP government to take action if it feels that gasoline prices should be regulated.

As a matter of general principle, the best regulator of gasoline prices is a competitive market. Prices set by government usually result in higher prices to consumers. This is in addition to the cost that taxpayers must bear to set up and administer a regulatory regime. The decision in July 1991 by the province of Nova Scotia to discontinue its gasoline pricing regime reflected in part a recognition that such decisions should be left to the competitive market forces.

Regulation would also remove the incentive for petroleum suppliers to be more efficient. Price controls weaken the stimulus for firms to either swiftly adapt themselves to change in demand or to develop more efficient methods of distribution. It is easier to ask the regulatory body to increase the controlled price than to attempt to lessen their operating costs.

In conclusion, it remains my view that the best interests of Canadians will continue to be served if gasoline prices are set in the competitive marketplace. As I indicated at the outset, unlawful anti-competitive behaviour will be appropriately addressed under the Competition Act.

Recently my colleague, the minister responsible for FORD-Q, discussed the issue of gasoline prices with his provincial and territorial counterparts.

[Prisons And Reformatories Act, September 24th, 1996]

Mr. Speaker, the Reform Party in dealing with this topic

seems to continuously deal with particular offences. Of course Reformers want to punish young offenders more.

Let us talk about young offenders. Let us talk about an eight-year old or ten-year old who may be stealing a candy bar in a store. If he or she struggles with the owner and runs away I guess that is a violent offence.

However, the Reformers never mentioned the fraud experts who steal hundreds of thousands and millions of dollars. There is no suggestion that any of those people should be thrown in jail to serve their full term, no suggestion that they are dangerous and maybe should be held in custody for the full term. There is no suggestion that they are dangerous offenders even though what they have done is taken funds from people and caused people to lose their life savings. Some people when they lose their life savings commit suicide.

What is Reform's position on offences such as major frauds in this country?