Bill C-24 (Historical)

Softwood Lumber Products Export Charge Act, 2006

An Act to impose a charge on the export of certain softwood lumber products to the United States and a charge on refunds of certain duty deposits paid to the United States, to authorize certain payments, to amend the Export and Import Permits Act and to amend other Acts as a consequence

The purpose of this enactment is to implement some of Canada’s obligations under the Softwood Lumber Agreement between the Government of Canada and the Government of the United States, by imposing a charge on exports of certain softwood lumber products to the United States and on refunds of certain duty deposits paid to the United States and by amending certain Acts, including the Export and Import Permits Act. The charge on exports will take effect on October 12, 2006 and will be payable by exporters of softwood lumber products. The enactment also authorizes certain payments to be made.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

No, Mr. Chair. I did take a breath and I'm going to actually take some water.

I would like then to come back to the fifth clause of his very extensive, rather mean-spirited motion, I would say--mean-spirited to the principle of having committees actually do their due diligence and do their work; that is, that clause-by-clause consideration of Bill C-24 be completed before considering any other committee business.

Well, Mr. Chair, this is perhaps the most important element. We have other committee business that has already been submitted, and as you are well aware, the committee business that I gave adequate notice of motion on...in fact, in one case we've had adequate notice of motion that goes back exactly two weeks. So we've had more than adequate notice of motion on these, yet if we look at his fifth clause that I'm proposing we delete, essentially what we are doing is eliminating any possibility of hitting these important bits of committee business that are already effectively on the agenda, because notice of motion has already been sent out.

First off, there is the issue of the motion that calls on the Government of Canada to stem the current market disruption, in specific categories, in the Canadian apparel industry, by immediately invoking article 242 of China's accession protocol to the WTO and putting in place restrictions or safeguards on the growth of specific categories of apparel imports from China.

This is a motion that I submitted on Tuesday, in good form, and the impact of the fifth clause--

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Mr. Chair, I'm raising new information.

I have not raised the concern that essentially other amendments we may identify would not be able to be brought forward because of Mr. Menzies' particular motion. It's November 7. After that, even if we discover an egregious short sight in terms of how this bill is structured, we will have already voted on all of those clauses. Very clearly, Marleau and Montpetit says we have the right, indeed the responsibility, to bring those motions forward.

What I am proposing is shifting Mr. Menzies' date to a much more reasonable date. The much more reasonable date is November 28. It is in three and a half weeks' time, Mr. Chair. In three and a half weeks' time, I believe we will have done the due diligence on the bill to actually go clause by clause and improve those clauses that desperately need to be improved.

As a member of the opposition, I would submit that by November 28 we would be willing to vote on all the proposals that do not have amendments. It could be done in one vote. We could also do it clause by clause. It can be done with cooperation, not with a date imposed of next Tuesday, but with a date that is reasonable.

Let me move to the fourth clause, Mr. Chair. We talk about Bill C-24 being reported to the House on Thursday, or as soon as possible. Very clearly, here is another issue. In previous clauses, clauses that are a precedent to this main fourth clause, which really is the heart of this.... We're going to vote en masse for all of these unamended motions. Regardless of whether we've done our job, we're going to put the bill out and report to the House on Thursday, or as soon as possible. On Thursday we will bring back a bill that is distinctively flawed. We are bringing it to parliamentarians who will actually know that it is distinctively flawed and that we as a committee have not done our due diligence. So fourth clause is really the heart of this motion. It is one that I think as parliamentarians we can all see is irresponsible.

On the fourth clause, Mr. Chair, what we do is take out the Thursday date and we allow for it being as soon as possible.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

What I would like to do now, Mr. Chair, is speak to the motion itself and to each of the individual clauses, because I think it's important for this committee to fully consider the impact of this particular motion and what this means for committee business.

I've had a moment during the break, Mr. Chair, to go to the washroom and reflect a bit on all of the aspects of this particular amendment and what this does to the committee's ability to work. So let us look at the subamendments I am offering.

Essentially, Mr. Menzies is imposing an artificial deadline, or the end of clause-by-clause consideration.

It is one thing to say that all clauses that have no proposals for amendments be treated in one vote; it is completely another to say that this committee, whether it's done its due diligence or not, will actually have a deadline set, at the end of the day--and it's hard to tell when that is. Is that 11 o'clock or 5 o'clock or midnight? There's no idea. but the committee as a whole will just throw what's left of Bill C-24, regardless of how bad the drafting is and regardless of the issues we've seen....

We've certainly seen an extensive number of issues that have come up in the course of that one hearing we held with Mr. Pearson and Mr. Feldman. They raised a wide variety of issues that were extremely important, extremely relevant to the bill as a whole.

To say that this committee has to finish the clause-by-clause consideration, no matter how poorly the work is done, no matter how poor the actual result is, would be, I think, a serious mistake, a serious error. It would be irresponsible to do that. We're talking about companies that are on the ropes. We've seen the job loss over the last couple of weeks since this deal was imposed.

Now we have Bill C-24. We have the time to consider it. The government has already made payments--$263 million to Tembec, for example--

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Thank you very much, Mr. Chair.

I will say you're guiding us very effectively through this.

I am pleased to be able to speak now to what we will be voting for together, which is essentially NDP-2.

There are two components to that. There is a link, as you mentioned, which is reducing the percentage that is paid--and the companies would be paying it in treasury bills--down to the inflation rate. We don't have those numbers yet, but presumably we would be able to get them at some point through the course of these hearings. I believe what we do find, as I mentioned earlier, is that indeed we would bring down the treasury bill cost to the inflation rate and then we would increase...in paragraph 4(2)(b), which would be from 2% to 4%.

Effectively, what is the impact of that? In this case, we are talking about moneys that, in a sense, the government actually owes to softwood producers. When we look through all the many clauses of Bill C-24, and I won't use the words “draconian” or “dictatorial”--somebody suggested mean-spirited--we see many provisions of the bill that are so. There's very little in this that actually helps to support the companies that are suffering the brunt of this across the country, whether we're talking about the seed for Alberta, Saskatchewan, or Manitoba...certainly northern Ontario, northern Quebec, and even the Maritimes.... We'll be coming back to the issue around the Maritimes a little later on in our considerations as we move through clause-by-clause.

I will come back to what these companies are suffering and how best, as a committee, to respond to what they've been going through over the last few years. What they've been going through is cruel, and certainly being punished by these illegal, punitive duties is something no industry in Canada has had to suffer to the same extent.

We come to Bill C-24, and to the interest charges that would be levied to them. Essentially, the way Bill C-24 was originally crafted, in subclause 4(2) it said:

For the purposes of every provision of this Act that requires interest at a specified rate to be paid on an amount payable by the Minister to a person or applied by the Minister against an amount owed by a person, the specified rate in effect during any particular calendar quarter is the total of

(a) the rate determined under paragraph (1)(a) in respect of the particular calendar quarter, and

(b) 2%.

If we look at line 35, at the rate determined, that is essentially the treasury bill rate that we mentioned earlier, the rate of the treasury bills. Essentially what we did, looking at NDP-1, which this modifies also...as you mentioned, it is consequential, so we have to, in a sense, go back and forth between the two amendments to ensure everyone understands the full ramifications of these particular amendments.

By going back and forth between the two amendments, and I am putting the primary focus of my comments on NDP-2, what we do, for the purposes of subclause 4(2), is we reduce the rate that would be paid by the government to the company, in the case where there's interest payable by the minister.

Hopefully, other amendments that we'll consider later on in our deliberations will also help to right the playing field that exists so that we're not talking about this mean-spirited bill, but something that softwood companies can actually use in a much more effective way to help them further their business interests.

One of the key aspects of that is furthering business. As you know, Mr. Chair, and any other member of the committee who has been involved in business knows, the cost of capital, the cost of money, is a key component to that. How do you access funds? How do you access funds that are actually owed to you by the Government of Canada?

Mr. Chair, there are a variety of ways of doing that. We've reviewed some of the calculations around the core measure of inflation and how that in effect lowers the cost of capital when companies owe money to the government. Essentially, because we're talking about a big, big stick contained within this legislation, when money is owed to the government those companies are very much in trouble.

So by lowering the rate of money owed to the government, or by lowering the cost to companies so that they're not paying these excessive punitive penalties, we've lowered the cost of capital, in a sense, to those companies. They won't be paying, and won't be seeing, corresponding increases in the amounts of money owed.

Where do those go? They go, of course,

to accounts payable.

Mr. Chairman, when I was taking financial management classes, proper management of accounts payable was considered extremely important. Businesses that know how to adequately manage their accounts payable are able to lower their costs, whether these amounts are owed to other businesses or, such as here, to the government. The ability to reduce these costs is extremely important. This is what we are doing here with the first amendment.

This will benefit small businesses like those of the Estrie, and more particularly in Northern Quebec, in the Saguenay—Lac-Saint-Jean area, in Northern Ontario, in Timmins, in James Bay and other regions, because they have very little room to manoeuvre. They have to make money every day in order to pay their bills and taxes. This is why properly managing their accounts payable is so important to them.

I often congratulate the member for Sherbrooke, because Sherbrooke University is a good university. I studied financial management there and I found that the approach they took to financial management of a business was very well balanced. One must begin by adequately managing accounts payable, and then reduce the cost of these payables. This is what we are doing with our first amendment.

This is why our motion reads:

That Bill C-24, in clause 4, be amended by replacing line 38 on page 3 with the following: “(b) 4%.“

Motions NDP-1 and NDP-2 go together. They are somehow twin motions. I agree to putting them to a vote together, even though I was less pleased with the fact that this was decided after the fact, but this has been corrected. Thank you very much, Mr. Chairman, for having made the correction.

By passing those twin motions, we will reduce the cost of accounts payable because we will reduce the interest rate on amounts owed to the Government of Canada. At the same time, this reduction, due to the wording of paragraph 4(b) which says that the rate should be based on the yield of Treasury bills, has a real impact on both money to be paid and money to be collected.

Therefore, if we lower the interest rate on the government's accounts receivable, we also reduce the rate it pays out to companies. This is an important aspect.

It is just as important to manage accounts receivable as accounts payable. Accounts receivable of a business are a very important asset when you have to go meet with your banker. We know that the government approached bankers to get them to push companies to sign the softwood lumber agreement, which they did. The reason why the government approached banks is that banks are important for businesses.

Banks play a major role, just like the network of credit unions, which is very extensive in Estrie and elsewhere in Quebec. The Mouvement Desjardins is the largest financial cooperative in North America and it has enormous capital at its disposal. This coop does a very good job with softwood lumber companies. But the caisses populaires, the credit unions or banks that finance those companies always want information on their accounts payable and the applicable rates of interest. The issue of accounts receivable is therefore extremely important. We should not underestimate its importance, because accounts receivable are more than simply being owed money. These accounts appear in the financial statements that are established at year-end. Accounts receivable can have very broad implications. This is not an insignificant subject we are discussing today.

What we are seeking is a better balance. On the one hand, we reduce the amount companies have to pay to the government by bringing down the interest rate. This is important in terms of the accounts payable. On the other hand, this does not reduce the interest rate that the Government of Canada must pay to those companies.

Let us take for example a small softwood lumber company located in Estrie. It deals with the caisse populaire of Sherbrooke, which is a credit union that has great involvement in the life of business people in this whole area. When the manager or the representative of that institution sits down with the representative or the head of that business, the first thing he or she will ask to see are the financial statements of the previous year and whether these have been audited by a chartered accountant. Without financial statements, you cannot even sit down with a banker. When you are dealing with a credit union, where people know each other better, the business person will be able to meet with the manager but will not be able to discuss financing without showing financial statements.

The first thing banks or credit unions look at in the financial statements of a business is the assets and liabilities, including accounts payable, their percentage, their turnover, whether they have increased or decreased over the last few months or the last year or couple of years, whether the business has financial difficulties, etc. All of those aspects are shown in the financial statements as audited by a chartered accountant. Accounts payable play an important role.

Next, banks will look at accounts receivable, at the assets of a business, whether there are substantial accounts receivable from the government and whether this will have an impact on the financing of the business. It is a critical aspect because if it appears that accounts payable increase and that accounts receivable decrease, the business will be told to at least try to get that money as quickly as possible. But the law gives very few tools to corporations to make the government pay them the money it owes, which is why we have a rather draconian way of doing things.

So, with those measures, companies cannot go to the government and insist that they immediately need the money owed them. We cannot ask these companies to live with such uncertainty. It is not only companies who are faced with uncertainty, but also their employees, the financial institutions that provide financing to them, such as caisses populaires, credit unions and banks.

These people look at every line in the financial statements to make sure that the business is solvent. One important factor in this review of financial statements is the turnover in the accounts payable and receivable, as well as the amounts that the business can expect to receive.

It is important to provide this service to softwood lumber companies, whether they be located in Estrie, in Abitibi, in Northern Ontario or in British Columbia. On Vancouver Island, for example, the softwood lumber industry is very strong. Local credit unions and lumber companies are jointly making a large effort, but nevertheless, due to the situation that we know all too well, 4,000 jobs have been lost over the last few weeks and many operations had to close. The situation is very serious for these people.

Bill C-24 allows us to offer something substantial to those companies. On the one hand, in terms of the credit unions and banks that provide financing to them, we must reduce the interest rate they pay when they owe money to the government. This is the first step, a first improvement. At the same time--and just as important--, when the government owes them money, they should be entitled to a better balance. I could read that subsection again, if a member so requested, but I do not think it is necessary. I believe everybody understands very well. We reduce the rate from the annual yield of Treasury bills down to the rate of inflation, while increasing from 2% to 4% the additional percentage paid to those companies.

Why is this important? We know that the lumber industry is seasonal, that the labour turnover is important at certain times of the year and less so at other times. Bill C-24 recognizes the seasonal nature of some parts of the industry, for example in the calculations based on the months of production.

Since Canada is a northern country, it is obvious that during the winter months, in some areas, it is not possible to log trees and to do all the field work that is required. We also know that in some areas, manpower is unavailable to the lumber industry at certain times of the year, for example in the fishing season or during periods when other primary industries are active. Therefore, we have workers going from the lumber industry to other industries.

Why is the seasonal nature of the softwood lumber industry significant? Because it is part of the factors that the industry and all businesses taking part in it must take into account in terms of financing. All companies must adjust to these fluctuations between periods in a year. We are not talking here about manufacturing a toy or a car, which entails steady levels of performance throughout the year.

Things are different in the natural resources sector. This is why financing is such a critical aspect for those companies. They have no other choice but to rely on the support of financial institutions. They are not doing so out of self-interest or because they like having a cup of coffee with the credit union manager, but because they have no other choice.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Thank you, Mr. Chair. I appreciate that, and I will be offering an amendment at the end of my speech, in reaction to Mr. Cannan's proposal.

Because indeed, Mr. Chair, that's what is at stake here. As we heard on Tuesday, we talked about draconian legislation. We have to make sure that every clause is fully amended, that every one of these punitive.... The punitive nature of the bill is quite incredible. But we have to make sure that essentially we're not jeopardizing the softwood industry, those poor softwood companies that have borne the brunt of the last five years.

So essentially because of that we have a wide variety of punitive measures, which have to be duly considered. They have to be fully considered because indeed what we are talking about is the future of our softwood industry.

Now looking at Mr. LeBlanc's proposals in clause 25, for example, he's offered a very extensive amendment at that stage, which I think is well thought out, as most of what Mr. LeBlanc does is thought out with a great deal of forethought and with the appropriate consultation.

Now this motion of Mr. Cannan's would basically eliminate any sort of in-depth debate on the provisions of that particular clause. We have Mr. Casey's amendments, and more from Mr. LeBlanc.

Then we have some of the elements around the punitive nature, which I mentioned—the 18 months certainly—but going further than that, the punitive nature of the government being able to go to softwood directors on an individual basis. This is after what is essentially an imposed assessment, because we've certainly heard from previous testimony that there is an assessment done by the Government of Canada. The assessment is done, but certainly the companies don't have the ability to respond to it. Effectively their recourse is tax court, which could take about a year, from the testimony we heard.

So we're looking at a procedure. If we adopt this bill without the amendments, as I believe Mr. Cannan is pushing, without the real in-depth discussion of the implications of each of these amendments, we would end up with a bill where the assessments are made, where the companies have no recourse in the short term, or recourse really in the medium term either, and then essentially the extremely punitive measures—a bit like what I see Mr. Cannan's motion as being, in trying to close off debate—take effect.

The punitive measures are as follows. The companies and the individual directors become responsible for those debts. Now these are assessments that are imposed, and the companies have no real way of reversing them in the short term. It's up to the minister.

From there, they're going through tax court. Perhaps on a long-term basis, they can expect to see some modification of the assessment. But the government has draconian tools, as Mr. Feldman testified, to go to those individual directors and say to them, you're responsible, and then look at those individual directors to see if they've transferred funds at any time. That's the way the bill is currently crafted.

The amendments we're bringing forward, that the opposition is bringing forward, are dying to address that. But imagine a company in Prince George, where a wrong assessment has been made and the company is going through the long process of tax court to try to get some repudiation of the assessment. Then the government can wade in, go to those individual directors and say to them, “Well, have you transferred money at anytime in your life? Do you have an educational trust fund for your kids? Have you transferred money to your spouse?”

They cannot only go after the individual, the softwood owner and director who started a small softwood company a few years ago in the Cariboo or Prince George, the areas of British Columbia that are highly impacted by Bill C-24—highly impacted if we do not do our job as parliamentarians to fully vet and investigate this bill....

What we see is that those directors and their spouses and their children could have the government going after them for moneys owed for an assessment that might well be incorrect. But the procedures, the systems of checks and balances that exist in other legislation, as we've seen, don't exist in Bill C-24. So that system of checks and balances that we as parliamentarians are responsible for maintaining does not exist. Essentially, a director can be...

pursued by the government, and the same goes for his or her children and spouse. If we are talking about the Abitibi, a small company could find itself in the same situation. The amount of money due would be determined by the government. The calculation is not always very precise and the company could not go after the government. It would have to rely on the tax court, and that takes time, sometimes up to a year. There therefore would be no recourse. These directors and their families would see the government go after them. There is no system of checks and balances vis-à-vis the powers the government is assuming under Bill C-24. Small softwood lumber company directors are seeking justice and fairness and they wish to be treated with respect.

Other punitive elements of this, Mr. Chair, lie in the fact that not only can the company directors have the government going after them, but you actually have commercial clients of these softwood companies.... For example, in Quesnel, British Columbia, if that small company gets an incorrect assessment, and essentially what they're doing is trying desperately to stay afloat, they have to pay the assessment. If they don't pay that assessment, their recourse in tax court takes too long, and then you can have the government, under the current wording of Bill C-24, actually go after their commercial clients.

What are the implications of that, Mr. Chair? What are the implications of this kind of draconian legislation that says now if you are a commercial client of a Canadian softwood industry...

Be careful, because if you are the customer of such a company, the government can go after you. This possibility would exist under the bill if it is adopted. Who would want to do business with a softwood lumber company from the North Shore, the Saguenay—Lac-Saint-Jean area or the Abitibi-Témiscamingue? Who would want to do business with a softwood lumber company in Northern Ontario?

Who would do business with a softwood company in Saskatchewan, Alberta, or British Columbia? If there are cashflow difficulties, we're in a situation under this draconian legislation that essentially what we could have is the government going after those clients.

So the perverse impacts of that kind of situation, once word gets out, if we were to adopt Mr. Cannan's motion and just ram it through with no due consideration of the amendments--just ram it through, and let's not go into any depth, let's just treat this as question period, very brief, nothing of any depth or any substance to it. The implications of just ramming this through are significant and they are irreversible, Mr. Chair--irreversible--because the decisions we make now could well run many of those companies that are already on the ropes right out of business, either directly, through the punitive measures that are imposed on those companies, the fines, the imprisonment, the fact that you can go after directors and certainly go after directors' families, but also because of the ability of the government to go after the commercial clients....

What we will see, those of us who've been in business, is a shying away of companies that don't want to get involved with companies that might be liable to draw them into legal difficulty with the government. Who would want that? What commercial client would want to be involved in a company that may have the government coming after them? Yet this is one of the very perverse and very unfortunate consequences of badly crafted legislation.

We have responsibilities. We have the responsibility as parliamentarians to fully vet this legislation. We have the responsibility to go through clause-by-clause in detail and indepth to ensure that essentially we do not at any time make decisions that would imperil the softwood companies that are left.

If we simply allow things to stand, if we simply allow the fines, the imprisonment, half of this legislation, more than half of the legislation...in fact, if we go from clause 50 on, I believe, we are looking at punitive measures, clause after clause after clause.

In the front portion of the legislation, we have legislation that imposes double taxation, double penalties. We have legislation that, at this point, desperately needs to be amended. That's whether we're talking about how the lumber remanufacturers are defined, which has been a serious issue that folks have raised, and the Independent Lumber Remanufacturers Association certainly raised that--and I'll come back to that in a moment.

In the back end of the legislation, as we've seen, we're talking about draconian measure after draconian measure--draconian measures that follow one after the other, penalties, fines, jail sentences, all for folks who just wanted to create jobs in their community and who just wanted to sell value-added softwood products. That's all they wanted to do.

So what we have when we go to the front end of this legislation, if we take Mr. Cannan's motion and if we have the government impose this on us, and what we have in the back of the legislation is draconian in nature and it has to be amended. We cannot simply allow the legislation to leave this committee as it is written. It simply cannot, and I don't see how any parliamentarian around this table would support such draconian measures for softwood companies in Quesnel, B.C., in Prince Albert, Saskatchewan, or in northern Alberta, and we can look right across the country, in The Pas, Manitoba--I'll certainly be going there to meet with folks in the softwood industry next weekend--and when we look at the north, northern Ontario, and certainly the reaction we've seen there in the softwood industry...a concern about the draconian nature of this legislation.

The representatives of the industry in Quebec are a little worried about this. And if you take the industry in the Maritimes, we have amendments...

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Mr. Chair, I do not believe it's the kind of motion that's in order. Certainly when we're dealing with clause-by-clause amendments, what we're dealing with is very important legislation, and we have to have the opportunity to express ourselves. So certainly all members from all parties have amendments that are brought forward to this committee. We certainly know, and we've heard from the testimony on Tuesday, that how we treat this bill is of utmost importance. If we make mistakes in how we treat this bill, mistakes on how we choose to amend the various concerns that have been brought to our attention, either through the witnesses we heard on Tuesday or those who were refused to be allowed to be witnesses through the discussions this morning.... So we have some very serious concerns.

This is a highly technical bill. It contains numerous clauses and subclauses, in each of which the wording will have fundamental impacts on the softwood industry across the country.

I was in Thunder Bay just a few days ago talking to softwood workers about the impact of Bill C-24. I believe, in fact, softwood workers in Thunder Bay were one of the first groups to write in to this committee to say they wanted to testify in front of the committee. They want to testify because they're concerned about the impact of the bill. They're concerned about the impact of the bill because they're not certain that the government will accept the amendments that have been offered from the opposition parties.

We've had numerous amendments from Mr. LeBlanc, which are important amendments that I think will have an impact on improving this bill. I'm not sure if it will be improved to the extent that it would actually be something that anyone could support, but certainly to improve it we've had amendments.

Mr. Cardin and Mr. André tabled amendments. This means that there are amendments that are important to the members seated around this table. The practice in the House of Commons is a very simple one. With regard to committees, we do not attempt to muzzle people who are trying to present amendments, who are speaking to them. Often, as the case may be, the interactive aspect of the debate around each amendment is extremely important, because it facilitates improving the bill. This way of doing things traces back to the very beginnings of Parliament. Committees have an important role to play with regard to amendments to bills. Each member has something to contribute. It is today completely out-moded, Mr. Chairman, to attempt to muzzle members of Parliament or to curb debate.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Thank you, Mr. Chair. I'm going to be moving to my conclusion shortly. I appreciate the committee's patience, because this is an extremely important issue.

How we calculate the inflation rate is something that I know all members find interesting, because it has such a marked impact on our daily lives. We need to know that our inflation rate is accurately calculated. It should include all of the essential goods that appear in the Bank of Canada calculation of the monthly variation in prices on which the annual estimate of the inflation rate is based. Certainly, the fact that there are regional variations is something we have to take into consideration as well.

We should be studying these regional variations with attention. Only careful study will give us an accurate picture of the inflation rates in each of the regions of our vast country, because there are significant differences, without a doubt. Because of the resource base in various parts of the country, there are substantial differences in the composition of our national basket of goods and services.

The Bank of Canada does a passable job in representing this core inflation rate. Surely no member of this committee would disagree with the idea that the inflation rate is much less punitive than imposing what we have in the current wording of Bill C-24, where we take the Treasury Board rate plus 4%. This ensures that we have an interest rate that not only respects the fact that the Government of Canada is not receiving those funds, but also respects how difficult it has been for softwood companies over the past few years and how difficult it will continue to be for them. Any interest that is owed is based purely on the core measure of inflation, as opposed to the kinds of penalties we see in clause 4.

I'd like to thank the committee for its indulgence in hearing me out on the inflation rate. It's certainly a passionate subject for me, and I appreciate the opportunity to speak on it.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Thank you very much, Mr. Chair.

Moving to amendment NDP-1, as was expressed in the brief hearings we had on Tuesday on Bill C-24, the concern here is the overall impact on the softwood industry. What we have in the current Bill C-24 is a case where moneys that are owed effectively to the Government of Canada are subject to a rate calculated through the Government of Canada treasury bills sold at auctions of Government of Canada treasury bills during the first month of the calendar quarter and 4%. Essentially, in this clause as it's currently crafted, Mr. Chair, what we're doing is imposing an additional penalty on softwood companies.

As witnesses on Tuesday attested, we know this is a pretty draconian bill. There are a series of penalties that we'll be discussing in the course of the next few days. But the reality is that a lot of these penalties are penalties that should not be imposed on the softwood industry. They've already suffered enough, and they're certainly suffering from the softwood sellout itself.

Now, if we look at Bill C-24, we have clauses that are additional penalties—additional punishments, if you like—on how these companies are treated. When there is interest to be paid at a specified rate—and we've already acknowledged that because of the decision of the Court of International Trade on October 13, these taxes and these penalties do not need to be paid—the way the bill is currently configured, what we end up with not only penalizes the companies having to pay these taxes that they shouldn't have to pay because we won in the Court of International Trade, but we're also very clearly including a 4% penalty on top of

(a) the rate that is the simple arithmetic mean, expressed as a percentage per year and rounded to the next higher whole percentage where the mean is not a whole percentage, of all amounts each of which is the average equivalent yield, expressed as a percentage per year, of Government of Canada Treasury Bills that mature approximately three months after their date of issue and that are sold at auctions of Government of Canada Treasury Bills during the first month of the calendar quarter preceding the particular calendar quarter, and

(b) 4%.

That's the way the bill is currently worded.

Assuming that the Government of Canada treasury bills are above the inflation rate plus the 4%, we have companies paying taxes that they should not have to pay, because, as I mentioned, the Court of International Trade said we don't have to have these self-imposed taxes. In addition, in clause 4, we have this quite egregious penalty.

As a result of that, what we have offered up is an amendment that would simply allow the rate of the interest penalty to be paid by softwood companies. These are small softwood companies right across the country. These are folks who are already going to suffer from many aspects of the bill unless we clean it up. To have them pay the treasury bill rate plus 4%, as opposed to what our amendment proposes—which is the rate that is the Bank of Canada core measure of inflation calculated in respect of that....

In other words, what we do by incorporating this amendment is, in some way, to soften the blow of the double penalties that these companies are going to have to pay. We're talking about an onerous administrative burden. We're talking about onerous financial burdens, as we've heard—and hopefully we'll have the time and due diligence to go through clause 18 to eliminate the double taxation that occurs.

It seems to me quite straightforward and quite simple that we don't want to penalize and doubly penalize companies that have been operating in good faith, companies across the country that have paid the price of this agreement.

Mr. Chairman, what we are proposing is very simple. We are proposing to replace the suggested wording, in other words, the rate that is the simple arithmetic mean of Government of Canada Treasury Bonds. I have read the text in English, and there is no need for me to repeat it in French.

We are proposing an interest rate that would be the average return on Government of Canada Treasury Bonds, plus 4%. Very clearly, the effect of the bill would be to penalize, to attack, to harm these companies, who are already paying double: first of all, they are getting less money than their rightful share, money that was illegally collected by the government of the United States. Secondly...

[The Chair, Conservative, Leon Benoit]

We will now then go to the next order of business, which is clause-by-clause of Bill C-24.

We're just going to change and get Susan in position here to answer any questions on the process.

Do you have a point, Ms. Guergis?

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Certainly, Mr. Chair. I apologize.

Let us take Bill C-11, for example, which is being considered in the transport committee. We have now had four weeks of hearings from witnesses across the country on that particular bill, and in fact we are looking at a period of six weeks to submit amendments.

In this case, the opposition was extremely cooperative. Eight days after receiving a clause-by-clause report, it submitted clause-by-clause amendments to the bill. That level of cooperation is something that wasn't seen either in this or the previous Parliament.

So I would hope that the government would cooperate back, given that we have made concessions, both in terms of the time required for amendments and also in extending the time today for the hearing.

Mr. Chair, I'd like to come to the most important thing, the actual witnesses themselves, and what they have said in requesting to be heard in front of this committee. Whether it's by teleconference, video conference, or in person, I think this is of much less important than the fact that they want to appear.

Russ Cameron of the Independent Lumber Remanufacturers Association stated the following. He urges you to convene committee meetings so that the parties affected by Bill C-24 may appear as witnesses and express their views on this pending legislation:

We realize that sessions were held earlier in this process as we appeared at them, but things have changed a great deal since that time. For example, we were originally assured that all our interest would be returned to us, but now Canada will take some of it too. We were originally told in writing that we would get all our money back if we elected not to sell to EDC at a discount, but now Canada is imposing a special charge and will take that money from us too. We were originally told that 95% support was required, but when it was not there, Canada changed that requirement. We were originally told that all litigation must be dropped, but when it was not dropped, GOC changed that requirement too.

We have yet to see the much changed final agreement that the GOC plans to force upon us, yet we are currently operating under it. We now have experience with what this agreement will do to our industry and we need the opportunity to relate this new knowledge to the Committee.

At the July 31 Trade Committee meetings, a motion by Mr. Julian was passed to take the Committee to the affected parties and hold meetings in BC, Quebec, and Ontario. This has not yet occurred

--and we ask you to follow through with this motion.

The Independent Lumber Remanufacturers Association represents 120 B.C. companies, employing over 4,000 Canadians. Our annual sales are $2.5 billion on four billion board feet.

So that's Russ Cameron from the Independent Lumber Remanufacturers Association writing to urge this committee to have hearings on Bill C-24 before we move to clause-by-clause consideration.

We have a letter from Frank Everett, and Bill Derbyshire, who's president of Local 1425--

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Mr. Chair, with respect, that's not a point of order. What we're talking about here is that folks across the country, with a level of expertise, have written to this committee, written to you, through the clerk, to indicate their interest in testifying. That is a completely different situation from what members might be submitting as lists of witnesses for consideration.

What we're seeing here is a reaction across the country. It's called democracy, and it's a welcome thing.

That people who have a real interest in the future of the softwood industry would write to us, would write to you, through the clerk, I think, indicates a level of interest, number one, in Bill C-24, but number two, and more importantly, it indicates the level of concern. Some of these perverse impacts of Bill C-24, if they're not appropriately considered.... If we don't get the type of due diligence and the type of input that we certainly need from these folks across the country, what we may indeed be seeing is the adoption of clauses or amendments that will have perverse impacts. We certainly heard on Tuesday that those impacts could be very serious.

I'd like to come back, Mr. Chair—

[Peter Julian, NDP, Burnaby—New Westminster, BC]

I would now like to move the first motion:

That the Standing Committee on International Trade hear testimony from those organizations, businesses and municipalities that have recently written to the Committee to request to testify on Bill C-24, and that they be heard either in person, or by video, or telephone conference before the beginning of clause by clause consideration of Bill C-24 by this Committee.

I'm moving this motion because on Monday of this week the government started making payments to the EDC. It's taxpayers' money, but it provided the support to the softwood industry that we've been advocating for many months. For nine months we've been saying that the government has the ability to do this. On Monday, the government made an initial payment of $950 million. We credit the government for doing that. It would have been better if it had been six or eight months ago. The important thing is that those funds from taxpayers are now going to the softwood industry. This allows the committee the opportunity to do our due diligence on Bill C-24.

As we heard from witnesses on Tuesday, there are some critical aspects of this bill that need to be considered. On Tuesday we received an important bit of information from the only witnesses we brought in, aside from departmental witnesses. Credible as government witnesses are, it's important to hear from outside folks. We heard that there is a risk of double taxation in clause 18. That's one element that we heard about on Tuesday.

The second element, which is a very important one, was the question of the actual language of Bill C-24. Mr. Pearson provided strong testimony that if we have loose language, or language that is vague or incomplete, we may be setting ourselves up for litigation that would happen almost immediately.

So the few witnesses we have heard informed us of important risks. If we don't do a measured, complete due diligence on Bill C-24, we could well end up provoking a further crisis in the industry, either through continued litigation, because Bill C-24 hasn't been drafted with the required exactitude, or through double taxation components or other perverse impacts. If we don't do our due diligence, we may indeed find that we're doing more harm than good.

These were the only witnesses we invited. Members around this committee table were invited to submit names, and I did so. Some colleagues haven't, but that may be understandable in light of who we requested. This is a different situation. We're talking about folks across the country who have indicated their interest in coming and speaking to us on Bill C-24, providing their expertise. Whether they come from industry, whether they're workers in the softwood industry, or whether they're municipalities, they're impacted by Bill C-24. There is real concern across the country about what this committee may be doing. From the letters we've received, we've gotten a clear indication that these groups, these folks who are experts in the area of softwood lumber and understand the impacts of Bill C-24, want to be heard. And they want to be heard before we enter into clause-by-clause consideration.

Let's look at who's asked to appear before us. We have Russ Cameron, the president of the Independent Lumber Remanufacturers Association--

[The Chair, Conservative, Leon Benoit]

Good morning, everyone. Let's get started.

We're here today to deal with Bill C-24, An Act to impose a charge on the export of certain softwood lumber products to the United States and a charge on refunds of certain duty deposits paid to the United States, to authorize certain payments, to amend the Export and Import Permits Act and to amend other Acts as a consequence. We're here today to give clause-by-clause consideration to this bill.

We have as witnesses, from the Department of Foreign Affairs and International Trade, Stephen de Boer, director, softwood lumber; Carl Hartil, deputy director, softwood lumber; Dennis Seebach, director, administration and technology services; John Clifford, counsel, trade law bureau; Michael Solursh, counsel, trade law bureau; and from the Canada Revenue Agency, Ron Hagmann, manager, softwood lumber; and Cindy Negus, manager, legislative policy directorate.

Welcome to you all once again. You're getting to be familiar faces here, but hopefully not for too many more meetings.

Before we get into the meeting itself, I want to mention a few things. The officials are here to answer questions on the implications of amendments. There is also, of course, a legislative clerk to answer questions on procedure, and she will be moving over here when we get through the initial business. The officials really can't comment, of course, on any political questions. They're here to speak to the amendments and not from a political commentary point of view, so if you go there, I'll certainly interrupt at that point.

The committee has packages of amendments. They have been distributed to all members to facilitate the work. Part of the package is a package of sheets that show certain clauses in the softwood lumber agreement that are also included in other acts. They're kind of standard clauses that have been used in other acts, such as the Air Travellers Security Charge Act, the Excise Act, the Excise Tax Act, the Income Tax Act, and so on. This is to make you aware that these are clauses that are used elsewhere. You are aware of the other contents, but I simply wanted to point that out.

I'd like to thank the members for respecting the deadlines for amendments. At this time I'd also like to say that we've had three motions from Peter Julian--proper notice has been given--and we will deal with two of those motions right now, Mr. Julian, if you're ready. The third one will be dealt with after clause-by-clause is finished, because we had agreed to proceed with clause-by-clause. That's the agenda. It has nothing to do with clause-by-clause consideration of the softwood lumber agreement, so it will be dealt with at the end of the clause-by-clause procedure.

You can go ahead with the other two motions, Mr. Julian. Please go ahead and read the first one.

[Russ Cameron]

Thank you very much for having me out here. I will take every opportunity I can to try to get you not to pass Bill C-24.

[Russ Cameron]

This has not occurred, and we ask you to recommend that the House follow through on this motion before passing Bill C-24.