Bill C-501 (Historical)

An Act to amend the Bankruptcy and Insolvency Act (termination and severance pay)

This enactment amends the Bankruptcy and Insolvency Act to ensure that the claim of a clerk, servant, travelling salesperson, labourer or worker who is owed termination and severance pay by a person is secured as of the date of the bankruptcy or receivership by security on the person's current assets.

Bankruptcy and Insolvency Act

[John Rafferty, NDP, Thunder Bay—Rainy River, ON]

moved that Bill C-501, An Act to amend the Bankruptcy and Insolvency Act and other Acts (pension protection), be read the second time and referred to a committee.

Mr. Speaker, I am pleased today to introduce my private member's bill, Bill C-501, for debate.

Canadians know that New Democrats have always, in good times and bad, looked out for the interests of hard-working men and women in Canada, and that we have done so from day one. We are also the only group of parliamentarians that has always made pension security a top concern. Like our member for Hamilton East—Stoney Creek, I am proud to continue this strong and principled tradition today.

Bill C-501 will do, suprisingly, what has never been done before. It will secure the pensions of all Canadians whose employers have fallen on hard times, that have undertaken restructuring, entered bankruptcy protection, or have collapsed entirely and had their assets sold off.

If passed, Bill C-501 should mean that every working Canadian can take comfort in knowing that their pension, their retirement, is secure in its entirety.

I am sure that all members in this place, no matter what region they represent, have constituents in their ridings whose pensions have been lost due to bankruptcy or the restructuring of their employer, and have many others whose pensions are at risk today. This is, sadly, something that we all have in common, but it is also something that should unite us in a common cause.

Record job losses, the decline of entire industries, like forestry and manufacturing, the collapse of large employers, like Nortel Networks and AbitibiBowater, are throwing tens of thousands of hard-working Canadians out of work. These hard-working Canadians, through no fault of their own, are finding out, after years and years of work, that their pensions and retirement income are threatened.

With thousands of pensions lost in recent years and many thousands more under threat, I would not hesitate to call what we are experiencing a full-blown pension crisis. The forestry sector has been in a near-decade long decline and has taken many large corporations and mills down with it.

AbitibiBowater, one of the largest employers in my riding, is undergoing restructuring after filing for creditor protection. When their books were finally opened, it was found that the pension fund, which holds the retirement income of nearly 20,000 hard-working Canadians, was underfunded by about $1.3 billion.

Literally thousands of people in my riding of Thunder Bay—Rainy River, who counted on their pensions being there when they retired, were faced with losing up to 40% of their retirement income. That was not just money that they were given or promised, that was money that they have earned.

At town halls meetings, in correspondence and in phone calls, my constituents have asked me to help them, to fix this problem, to bring them justice, and to secure their pensions. Bill C-501 is my response.

Bill C-501 is a simple, effective bill that should secure every pension in Canada without costing the Canadian government or Canadian taxpayers a cent. It will secure termination and severance pay in the event of bankruptcy. It will mean that unfunded pension liabilities and the shortfalls in pension plans are moved from unsecured status to secured status. It would close loopholes that have allowed companies that go into restructuring proceedings to leave their retirees high and dry.

The changes to existing legislation that are contained in Bill C-501 are simple, effective, and could secure more than four million pensions in Canada at no cost to the government.

As this bill moves forward and we examine the contents and the possible effects of this bill, we must do so knowing that there is no social or economic problem that exists in a vacuum. A pension problem of one employer affects not just the retirement income of one employee but more often than not that of their spouse as well.

A loss of retirement income means a loss of security, a loss of wealth, a loss of independence, and a loss of dignity for workers, their spouses and their families as they try to enjoy the peace and rewards of their retirement.

A loss of retirement income will also affect their children who, though most of them will be adults, worry as all children do about their parents as they enter what should become their golden years. It may mean that those children spend more of their time, energy, and financial resources to secure their parents' retirement, to help them live in the dignified peace that they are entitled to.

A loss of pension income for one worker will likely be accompanied by the loss of pension income for hundreds, if not thousands of other workers. Such a large scale loss in one local economy is sure to take its toll on small and local businesses.

Take 40% of the household income of 1,000 families out of a local economy and see if commerce does not suffer. Local commerce will suffer, small businesses will go under, and more jobs and pensions will be lost.

For many small northern and rural communities where a single mill, mine or manufacturer employs a huge percentage of the local population, a loss of pension income, just like the loss of jobs, is devastating to the local economy.

Living in northwestern Ontario, I have seen such loss with my own eyes, but I have made a commitment to the people who have elected me. I have promised them to do my utmost to ensure that I support policies that save our local jobs and protect our local pensions.

Earlier, I mentioned the many constituents who have raised their concerns about pension security with me in various ways, so I would like to take a moment to acknowledge them on the record for raising their concerns. They are: Marvin Pupeza of the Ontario CEP; George Chabot and Bill Shine of the CEP in Fort Frances; Gary Bragnolo and John Jaciuk of the CEP in Thunder Bay; and many hundreds of citizens in Thunder Bay--Rainy River including: Robert Elvish, Dr. Bob Lidkea, Barry Bailey, John McGrath, Joe Hanlon, and all our friends at USW. They have all indicated to me that something needs to be done.

There are many others, too many to name today, but I would also like to thank them all for taking the time to raise my awareness about their situations.

I would like to conclude my remarks by saying that this legislation is long overdue. Hard-working Canadians are entitled to their compensation, to retire in dignity, and to know that their pensions are secure under any circumstances.

They earn their pensions and those pensions must be there when they retire. We must close the loopholes that allow underfunded pension plans to be put at the back of the line of claimants and creditors, when a company enters restructuring or declares bankruptcy or has its remaining assets sold off.

They should know that I, like all the members in this place, would like to see all creditors receive all that is owed to them in these unfortunate circumstances. There can be no question of that.

I believe that, while banks and investors should be paid, it is the people who must come first. With so many companies undergoing restructuring, in bankruptcy, or even worse, we must remember that there are many more who are on the verge. With so much economic uncertainty still we must pass Bill C-501 and we must pass the bill quickly.

Those millions of Canadians who are facing an uncertain future deserve to know now that their pensions and their retirement income are secure.

I have talked to many members in the House about this bill, hoping to get their support. I have talked to a number of Conservative members. The one question they always have is, what about the investors, if we move workers' pensions from unsecured to secured, people will not want to invest any more?

This is my response. My response to that has been and will always be this. Are they telling me that people do not invest in companies because they have great management? Do they not invest in companies because they have a fabulous product, they have great workers, they have a wonderful plant, they have a terrific future and wonderful marketing, and they are likely going to make a whole lot of money? Do people not invest in companies like that or do they invest in companies, so they can use someone else's money for their cashflow or investments?

I would suggest that people invest in companies because they are good companies. Moving pensions from unsecured to secured would ensure that these companies have excellent workers and they will continue to be because they will go to work every day knowing that some day, after 30 or 40 years of work for a company, they are going to have a retirement that they can count on. That is what we are doing today.

I urge all members of the House from all parties, from all regions of Canada, to help pass the bill quickly on behalf of my constituents and on behalf of their constituents. Let us prove the skeptics and the naysayers wrong and show that we can all work together in this place, that we all can get things done for people who have placed their trust in us.

[Mike Wallace, Conservative, Burlington, ON]

Madam Speaker, I want to thank my hon. colleague for his speech and for presenting this bill to the House. As a member of the finance committee, we are now in the midst of a study on pensions. We have had a tremendous number of individuals and organizations come to see us.

I want a small clarification on the bill. The people who have come to see us have been asking for legislation to move from unsecured individuals or creditors as pensioners to preferred secured, not oversecured and not super ahead of creditors. There is a request for preferred status whereby a group of employees would receive their wages owed first, then the secured creditors, then the other creditors. Is this bill moving them ahead of the secured status to the super secured status, or is it doing what people have been asking for, which is preferred status, below secured?

[John Rafferty, NDP, Thunder Bay—Rainy River, ON]

Madam Speaker, it sounds, certainly, as if the folks on this side of the House are going to be supporting this and I am glad to hear that. It is a very good question. I am not sure exactly what the member means by super creditor status.

The way the bill is designed is that the secured status that I am asking for in the bill falls actually in the fourth category from the top, so that would not be called a super creditor. I think the super creditor, in fact, is the Crown and it is the one who always get the money first. Anyway, we are in the fourth category. As I said earlier, everyone in this House wants to see this succeed. Everyone in the House has indicated that we need pension reform and we need lots of other pension reform. Of course our party has a wonderful platform already on all sorts of pension issues. This is a small part of the puzzle, but a small part that we can all pass quickly.

[Alan Tonks, Liberal, York South—Weston, ON]

Madam Speaker, I wonder if the member could give the House a little bit more information. How would the approach of his bill compare to, for example, the government following the lead of some of the provincial premiers who are talking about establishing a supplementary Canada pension plan that would allow Canadians to put their extra savings toward future retirement income?

The second initiative that has been talked about is to roll underfunded pension plans into the Canada pension plan. These are two approaches. I know the member is dealing with the residual in terms of insolvency and who should be protected in that case, but I wonder if there is a macro plan that could deal on a larger scale with the whole issue of pensions in addition to the initiative that he has entrenched in his private member's bill. How does that approach compare with the approaches that have been talked about from time to time?

[John Rafferty, NDP, Thunder Bay—Rainy River, ON]

Madam Speaker, those are really two separate issues. The things we are calling for, and which I believe the Liberal Party supports, involve the Canada pension plan and more people having more access. It is the most successful retirement plan in Canada. It is not for profit and a wonderful plan that can be enhanced for everybody.

This bill deals with one particular element of pensions that has only been brought forward in the last year and a half after a number of closings and bankruptcies. The urgency is that we do what, quite frankly, most of the other western industrialized countries have done, which is play catch-up and move our pension systems out of the dark ages and into the rest of the western world.

This bill is the very first step. It deals with one particular item but I am sure that over the next couple of years there will be a lot of pension discussion on the wide-ranging issue of pensions and, in particular, CPP.

[Mike Wallace, Conservative, Burlington, ON]

Madam Speaker, I am pleased to speak to the important issue raised in Bill C-501 put forward by my colleague, the hon. member for Thunder Bay—Rainy River, dealing with unfunded pension liabilities.

The bill is a sign of his and his party's concern about pensions and the income security of Canadians in or approaching retirement. This is a concern shared by the government as evidenced by the number of initiatives that we have undertaken in response to the concerns of many Canadians across the country.

We appear to be coming out of the recent economic downturn experienced by countries all around the world. In that regard, I am pleased to point to the April 7 OECD interim economic assessment report that noted that the Canadian economy grew 6.2% in the first quarter of this year compared to 1.9% overall growth estimated for the other G7 countries. Our economy will continue to expand in the second quarter at 4.5%, twice the G7 average.

I mention this because a healthy economy can only be good for the stability of companies, the pension funds they support and the employees who will benefit from them. However, I do not suggest that this is not a reason for concern for individuals and for their companies that have not weathered the economic storm well.

During the downturn, which has led to a number of employers filing under insolvency legislation, many people, especially senior citizens, were understandably concerned that their pensions would be affected. While Canada is showing signs of emerging from this downturn, the financial well-being of these older Canadians must not be taken for granted.

Although the government has undertaken a number of specific initiatives to deal with those heartfelt concerns, debate on this bill allows us an opportunity to stand back and see where we are when it comes to our pension and bankruptcy legislation. The best place to start is in understanding exactly what the current legislation covers.

Canada's insolvency regime relies mainly on two statutes: the Bankruptcy and Insolvency Act, often called the BIA, and the Companies Creditors Arrangement Act, or the CCAA. These two statutes set the rules for the process of bankruptcy or, in the alternative, companies restructuring. Both are important pieces of marketplace framework legislation. They influence Canada's economic health, so much so that we must take great care not to tinker with their provisions on a piecemeal basis.

In broad strokes, the following is how the legislation works.

In bankruptcy, a trustee in bankruptcy seizes the non-exempt assets of the bankrupt company and sells, liquidates and distributes the proceeds of the sale among the creditors according to the distribution scheme set out in the BIA.

In the alternative, a company may choose to restructure. In restructuring, the company becomes a debtor rather than bankrupt. Rather, it works with an insolvency professional to try to find a repayment scheme for its debts that will satisfy the debtor's creditors and allow the firm to continue perhaps in a different and restructured form.

Historically, creditors receive better recovery under restructuring than they would if the debtor simply became bankrupt. Furthermore, it is better for jobs, growth and opportunity as it allows for the quick redeployment of assets from insolvent businesses to new and profitable ventures in a controlled and orderly manner, which is essential in today's economy.

That brings me to today's debate. One of the objectives of the insolvency legislation is to balance the competing interests of creditors, including employees and pensioners, for the scarce resources available in insolvency files as there is not usually enough money to satisfy the full claims of all creditors.

Great care must be taken when amending insolvency legislation because if the proper balance is not achieved, it is possible that the cost and availability of credit for companies with defined benefit pension plans could be negatively affected. This could, in turn, reduce the ability of companies to create or continue to fund benefit pension plans for their employees.

We also should be mindful that while exploring the various ways to help pensioners of insolvent companies, we do not impose additional constraints on reorganizing firms that could interfere in the reorganization process and eventually push still viable businesses into bankruptcy. Evidence has shown that restructuring and reorganization, as opposed to bankruptcy, provide better recovery for creditors and help to save jobs, which ultimately protects employees' wages and pensions.

I leave it to my colleagues to go over in greater detail the factors of which we must be mindful in considering the implications of pension protection in insolvency for the interests of stakeholders and the economy as a whole.

In the Speech from the Throne, the government committed to explore ways to better protect workers when their employers go bankrupt, and it certainly understands the value of secure and sustainable pension plans.

In order to promote more secure private sector pensions in the federal sphere, in October 2009, the government announced a comprehensive reform plan for the federal private pension plan legislation and regulatory framework. Many of these significant pension reforms announced by the finance minister are to be implemented through Bill C-9, the jobs and economic growth bill.

The Minister of Finance has also announced consultations with Canadians to obtain their input on this important matter, as well as consultations with his provincial and territorial counterparts that are currently ongoing concerning retirement security. A review of policy options is scheduled for the finance ministers' meeting to be held in May 2010.

In considering this bill, we must be mindful of the larger issue of pension and retirement income security. We must consider as well the interaction of this bill with the initiatives that are currently ongoing to promote the security of pensions as an important component of the retirement income security system. The government is considering all of these factors in fulfilling its commitment to explore ways to better protect workers whose employers go bankrupt.

I have a final note on this issue. Based on our experience at committee, I want to be clear on the present structure of the BIA. In fact, there is a super-priority group of current employees of a company that is looking at bankruptcy. That money that is available goes to those wages that are earned but not paid and they are a super-priority.

The next level is the secure level of debtor, which, to be frank, is the banks, those that have security against the bankrupt company in terms of hard assets and so on. It is really the banking level that most people consider.

The third level at present is everybody else, which includes the pensioners but also includes the suppliers, bondholders and a number of other debt instruments that companies use to operate.

This bill, from my understanding, and I will need some clarification as we debate this bill further, would move the pensioners above the secure level into the super-priority area. That was what was indicated in the speech by the mover of the motion. I will check into that further. However, what the Nortel employees who came to see us at the finance committee said is that they do not want to be a super-priority. They do not believe they could qualify for the secure level but they would be interested in a preferred position, ahead of suppliers and ahead of bondholders.

Through the debate over the next number of weeks on this and if it makes it through to committee, those are the questions that, as a member of the finance committee, I will be asking the mover to ensure we have clarification on what this bill would do. We need to be very careful when making these changes to the Bankruptcy and Insolvency Act to ensure everyone is treated fairly through this process.

[Judy Sgro, Liberal, York West, ON]

Madam Speaker, I am pleased to have an opportunity to address Bill C-501, An Act to amend the Bankruptcy and Insolvency Act and other Acts. I say I am pleased because, as the opposition critic for seniors and pensions, I have been following this issue for quite some time. More importantly, I am glad to see Bill C-501 come to the floor because of the impact it could have for all Canadians.

In recent weeks, people such as the former and current employees of Nortel have come to understand that their pension benefits are in real jeopardy due to the financial insolvency of their employer. Many Canadians have followed that discussion and have seen the rallies that have happened all across Canada. In many cases, after working for a lifetime, these workers and many like them will be placed at the end of the line when it comes to benefiting from a Nortel settlement agreement.

Our current laws have done nothing to right this long-standing wrong. I for one will be voting to send Bill C-501 to committee where it can be explored and finally set into motion various actions that could help thousands of people across Canada. This measure has been a long time coming to the floor of the House, mostly because the government has been so desperate to stonewall on the entire issue of pension reform.

When I first raised the issue of pension reform with the Minister of Finance, I was met with a flat refusal to tackle the issue. The minister emphatically stated that this issue has no place in the federal realm and that it is a provincial responsibility. I pressed for federal leadership on this issue, citing the toll that was being taken on Canadian families and seniors. Again, the minister and his representatives told the House that this matter was best left to the provinces.

In October of last year, I called a group of experts and stakeholders together on Parliament Hill, over and above the round tables that I have held for well over a year across Canada. We set aside politics and explored some of the problems and potential solutions for Canada's retirement income security, coverage and adequacy systems. Once that convention was over, I shared the unedited finding of the group with the minister and offered my help in crafting a thoughtful response to the growing pension crisis. Again, the minister chose to keep his head in the sand.

The minister's parliamentary secretary went even further than that, openly mocking the entire event as recently as Friday's question period. Sadly, those taunts showed the existence of an even greater problem facing all of us and facing Canadians. Simply put, the government does not believe that there is a role for government to play in preserving the fiscal security of Canadian seniors.

To their credit, this is not a new position for the Conservatives. For example, I recently came across a November 8, 1963 edition of the Montreal Gazette. If one were to read that, one would see how the Conservatives of the day back in 1963 were hoping to derail the creation of the Canada pension plan. They said that the Liberal-sponsored plan would upset credit markets and undermine the private sector in Canada. It is now more than 40 years later and the sky has not fallen.

This trend of Conservative opposition to pension reform continues in more recent times. The same arguments the Conservatives used then are the same arguments they use today. When the current Prime Minister was the leader of the Canadian Alliance, he advocated for the elimination of the Canada pension plan in favour of super savings accounts. The premise of his plan was simple. Seniors would not get a Canada pension plan cheque each month, but they would be given the opportunity to put all of their extra money into a bank account for a really great interest rate.

The problem is that by eliminating the Canada pension plan, the Conservatives would have eliminated the source of income for tens of thousands of Canadian seniors. Imagine where we would be today if the Conservatives had been successful in thwarting the creation of the Canada pension plan, or if they had been successful in collapsing the Canada pension plan in favour of bank accounts for extra money. Let us just say that Canadian seniors have every right to be happy that the Conservatives' short-sightedness did not prevail. This brings me back to Bill C-501.

The bill clearly will have its flaws and we will all need to work on it to make sure it accomplishes the intent, and that is to protect pensions across Canada when companies are going bankrupt, but what it represents is a step in the right direction. It also can represent another step forward for Canadian seniors and pensioners.

The Liberal Party has a very long history of protecting and preserving Canada's retirement income, security and adequacy systems. While the caucus does not have a party position on Bill C-501, I would suspect Liberal members would work to ensure that Bill C-501 makes its way to committee without any further stalling by the government.

Even the NDP obviously acknowledges that the issue of pension reform is not cut and dried. After all, Bill C-501 is a re-write of Bill C-476, which had its first reading in the House of Commons on November 3, 2009.

[An hon. member]

Aren't they the people who stole $50 million from the public service pension?

[An hon. member]

And they still haven't put it back.

[The Acting Speaker, NDP, Denise Savoie]

Order, please. I am sure the hon. member looks forward to answering questions, but I would ask that we allow her to finish her comments. The hon. member, please.

[Judy Sgro, Liberal, York West, ON]

Madam Speaker, both legislative packages sought to place people further up the list of priority in cases where an employer becomes insolvent. I believe this would help to enhance fairness during bankruptcy proceedings. It would also serve to help protect people from having the rug pulled out from under their feet when their employer becomes insolvent after a lifetime of work and investment.

I also believe that Bill C-501 would complement some of the other reforms that the Liberal Party has proposed, things like creating a supplemental Canada pension plan, establishing a stranded pension agency and measures such as those contained in Bill S-216. I should mention that Bill S-216, which was introduced by a Liberal senator, would seek to do some similar things with disability benefits as Bill C-501 seeks to do with pensions.

Despite the past denials and the stall tactics put forward by the government, I know that pension reform is a subject members of all political persuasions can support. With that in mind, I want to pay tribute to my colleagues, such as the member for Thunder Bay—Rainy River, the mover of the motion, the member for Ottawa—Vanier, the member for Madawaska—Restigouche, and the member for Random—Burin—St. George's. These four members and many others have made pension reform a top priority, and I thank them for their efforts.

I am pleased to offer my support for Bill C-501 and I eagerly look forward to collaboratively dealing with it further in committee.

I certainly renew my calls for the Minister of Finance, his parliamentary secretary and the government as a whole to get on board with the need that exists out there. Current seniors, former and current employees of companies like Nortel and AbitibiBowater, and future pensioners all have a right to expect that we will take this matter seriously.

Canada is sitting on the cusp of an unprecedented population shift. The baby boomers are getting ready to retire and that will present a range of challenges for the social structures of this country. The upside is that we can see it coming, so if we adopt a proactive approach, many of those challenges can be mitigated or resolved in advance. If we sit idle, I fear those challenges may overwhelm our ability to deal with them, a scenario that would threaten the future income security of an entire generation of Canadians.

I am pleased to lend my support to current seniors, former and current employees of companies like Nortel and AbitibiBowater and future pensioners alike. I certainly hope that all members of the House will support sending the bill to committee.

[The Acting Speaker, NDP, Denise Savoie]

I am sorry, there are no questions and comments.

The hon. member for Rivière-des-Mille-Îles.

[Luc Desnoyers, Bloc, Rivière-des-Mille-Îles, QC]

Madam Speaker, I am pleased to take part in this important debate, in light of the situation facing Canadians and Quebeckers.

We have weathered all sorts of financial and economic crises, but now, because of a major pension plan crisis, pensioners are faced with major reductions in their pensions. I am talking about people like the employees of Nortel, Atlas Stainless Steels and the Jeffrey mine. We have to look at all the possible solutions to these problems.

Bill C-501 amends the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act to ensure that unfunded pension plan liabilities are accorded the status of secure debts in the event of bankruptcy proceedings. It also amends the Canada Business Corporations Act to provide a new procedure by which former employees of a bankrupt corporation who are owed amounts by the corporation can proceed with claims against its directors.

In times of economic crisis, pension funds lose value when security prices drop. If a company goes bankrupt at that point, its pension fund will not be able to cover retirees' pensions.

I would now like to talk about the protections that pension plans currently provide. Under the new provisions in the legislation, regular contributions that have not been paid when a company goes bankrupt or into receivership take priority over all the debtor's assets. But the same does not hold true for unfunded pension plan liabilities.

Regular contributions that have not been paid at the time of bankruptcy include the amounts deducted from employees' paycheques to be paid into the pension plan and all unpaid employer's contributions. This priority does not apply to special payments ordered by the pension regulator to liquidate an unfunded liability or claims related to such unfunded liability.

The limited super-priority ranks below the rights of unpaid suppliers to repossess goods under section 81.1 of the BIA; the claims of farmers, fishermen and aquaculturalists in respect of unpaid products supplied to the bankrupt or insolvent employer, under section 81.2 of the BIA; unremitted income tax deductions, which are deemed to be held in trust; and priority wage claims.

Bill C-501 contains three measures. First, it would give priority status to pensions plans with unfunded liabilities. This way, in case of bankruptcy, retirees will be among the first to be paid and will have precedence over the banks.

Second, the bill ensures that the assets guarantee the termination or severance pay of any clerk, servant, travelling salesperson, labourer or worker.

Third, it offers retirees who were wronged by their employer a procedure that is supposedly more effective for making claims against directors—members of the board of directors. In fact, subsection 119(1) of the Canada Business Corporations Act states:

Directors of a corporation are jointly and severally, or solidarily, liable to employees of the corporation for all debts not exceeding six months wages payable to each such employee for services performed for the corporation while they are such directors respectively.

The Bloc Québécois supports workers and retired workers. We have always promoted social justice.

We can understand the frustrations and the concerns of people who have lost their retirement income because their retirement fund was inadequate at the time the company they worked for ceased operations. They are unfairly deprived of a source of income they were counting on.

For a long time, we have been wanting to look at giving pensions plans with unfunded liabilities preferred creditor status, as well as making directors accountable.

We feel these measures are fair as long as they do not compromise business development or competitiveness or unduly affect the labour market.

The Bloc Québécois would like to hear from witnesses in committee in order to understand these effects. For example, an increase in unemployment and social assistance recipients would be too high a price to pay to protect pension funds against stock exchange fluctuations. Other measures could then be considered.

We must remember that despite the urgent need to help pensioners who were hard hit by the economic crisis, the Conservatives prorogued Parliament, thus slowing down the process of studying bills.

The Bloc Québécois' interest in protecting pensioners and workers is not a recent phenomenon. Not only have we waged a lengthy battle to stop the looting of the employment insurance fund and increase benefits for recipients, but we have spoken in favour of many other initiatives, including wage protection in the event of bankruptcy and the creation of a tax credit to protect pensions, which are measures that we ourselves proposed.

During the summer of 2009, we defended Nortel pensioners and we continue to do so. At that time, we should have given them the opportunity to appear before the committee that was studying the impact of the sale of, among other things, Nortel's wireless division to Ericsson in order to allow them to share their fears and questions with elected members. Unfortunately, the Conservatives and Liberals preferred to shut down the debate.

This fall, to deal with the pension situation, the Bloc Québécois proposed a series of measures, one of which was that the federal government follow Quebec's lead and take trusteeship over the pension plans of federally regulated bankrupt businesses. This would prevent these pension funds from being liquidated while the markets are at their lowest.

Another proposal was to get rid of the six-month delay for the wage earner protection program. Victims of massive layoffs followed by delayed bankruptcy, which is something we have seen, would then be eligible for the severance they are due.

We also proposed raising the contribution limits for pension funds to 125% of the break-even point, which would encourage a pension reserve. The government went back to this after trying to pass the buck to the provinces.

Another measure is Bill C-290, which would provide a refundable tax credit equal to 22% of the loss sustained by beneficiaries of a pension running a deficit. Despite Conservative opposition to the bill, it will soon be studied in committee.

We are also talking about changing the threshold for automatic review of foreign acquisitions from $1 billion to $300 million. Such a measure would ensure that companies like Nortel would not be sold off at a discount or piece by piece.

We are also discussing bringing in preferred creditor status for disabled employees who lose their benefits following an employer's bankruptcy. These people are desperate and destitute because, in Nortel's case, they will lose over 70% of their benefits even though they still have to cover significant medical costs. None of these people were negligent. They had every reason to believe that they were properly insured by an insurance company.

The Bloc Québécois supports pension supervision to help avoid high-risk investments, such as numerous investments in a single company. We have to consider all of our options.

Lastly, workers expect to benefit from the pensions funds that they spend their lives contributing to. Parliament cannot ignore the needs of these workers and those who have already retired.

That is why the Bloc Québécois supports Bill C-501 in principle.

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

Madam Speaker, I am very pleased to finally have the opportunity to rise and speak to this most important issue. I thank the member for Thunder Bay—Rainy River who has taken up this bill. In 2008 the NDP started looking at the problems with pensions. Over the period of late 2008, early 2009, we had two consultative meetings and one of the things that began to surface were the stories around the serious situation of Nortel.

In 2009 I introduced a bill very similar to the member's, Bill C-476. It was the hope of the NDP, me and the people at Nortel that the bill would have been dealt with. We hoped that by February of this year we could have had it through all stages in the House, to committee and back to the House. It would have allowed for action that would have helped the situation of the Nortel workers in particular. Unfortunately, the government took the decision to prorogue and as a result there was a delay.

My Bill C-476 would not make it here except with the unanimous consent of the House. I raised it in this place and both sides of the House said no. Therefore, it put us in the position of having the good member for Thunder Bay—Rainy River using his order of precedence to put this bill forward, and that is important. A private member only has so many opportunities to move a bill and he set aside his own critic area in order to do the right thing for the workers of AbitibiBowater, Fraser Papers and others.

As we went forward in the debate, the Liberal Party spoke about 1963 and The Gazette, referring to the opposition. I will remind this place that it was Stanley Knowles who first proposed CPP and under a minority government of the Liberals, it was put forward.

Last fall, on the steps of our Parliament, speaker after speaker addressed the 4,000 Nortel workers about what we would try to do for them. In a subsequent throne speech, the government of the day said very clearly that it would look at the situation of bankruptcy, insolvency and pensions.

However, we have to change the debate. When we listen to the business community and certain people in the House, they talk about payroll taxes. When we think of pensions and the assets of them, those are deferred wages. Had the employees of those companies decided they wanted to invest on their own, they would not have negotiated with their companies to have a pension plan in the first place.

Imagine the horror when they wake up to a newspaper headline like the workers at Nortel did. Nortel had $2.4 billion in cash assets and $4 billion in other assets. It said that it would not cover the shortfall in the Nortel pension. Today, because of the delay of prorogation, because this matter did not get to the House, Nortel workers face a pension of 69%.

About two weeks ago, a couple that had retired from Nortel just before the 1990s visited my office in Hamilton East—Stoney Creek. Their pension to begin with was small because it had not had the growth period of the big money. They were going to lose 30% of their pension and their benefits. Along the line before of Bill C-476, I also put in Bill C-487 to address the long-term disability problems faced by workers at Nortel. In December some 400 of these good folks will lose all their LTD benefits. These workers are not re-employable and to be quite frank it is a tragedy because they will wind up on welfare.

Last week I stood with a Bloc member as the Bloc put forward a bill to address the guaranteed income supplement. In the House last June, we had an opposition day motion from the NDP. The first part of that motion was to address an immediate increase to the GIS. We also talked about doubling CPP, a national pension insurance plan. I was proud of members of the House because the motion passed unanimously.

Over the summer, I went to 19 different communities across the country. I listened to seniors talk about their fears on their pensions. One of the things that surfaced repeatedly was how low the GIS was and how it did not rise with the rate of inflation. This varied across the country. People who had retired from major corporations and thought their company had no chance of failure now faced problems.

We have heard about AbitibiBowater in the House many times from me, from the member for Thunder Bay—Rainy River and other members, particularly from Quebec and Northern Ontario. I ran into workers in B.C. who lost their pensions because the forestry industry had been wiped out. They clearly did not know what they were going to do.

In the House today is my good friend from Outremont, who at my request moved a motion at finance committee to have it look at pensions. Eighty-eight witnesses came before that committee and gave testimony about the situation faced by Canadians and Canadian pensions.

I have noticed, with concern, that the speaking notes of government members have changed. In committee, they were saying that they would look at this, that they were consulting. They were referring to the parliamentary secretary who was traveling the country, as was I. They made reference to those consultations. Now they are starting to talk about the opposition coming up with answers too quickly. I am afraid I have to disagree with that.

The NDP started on this file in 2008. We consulted with people during 2009. I went to 19 communities, now up to 26. We have listened to people.

We have listened to such people as Joel Harding, the CLC pension expert, Monica Townson, from the Canadian Centre for Policy Alternatives, Bob Baldwin, a pension expert, Don Drummond, an economist with TD Canada Trust and a gentleman whose name is used in the House quite frequently, Mike McCracken from Infometrica, Glen Hodgson, the senior vice-president and chief economist from the Conference Board of Canada, and others.

Members on all sides of the House have to really pause for a second when we look at Bill C-501. We need to understand the change in language of deferred wages.

Deferred wages means, very simply, it should be considered the property of the pensioners who will use that money for their retirement. Deferred wages are not a gift that the company has decided to set aside for them on their retirement. This is a sharing in a process that put aside moneys to give them dignity in their retirement.

Members of the government have talked to me about seeing their constituents leave their office and then going into food banks. We have heard the stories of Canadian veterans moving to food banks. Our seniors deserve much more than that.

In the opposition day motion about which I talked, the NDP proposed an immediate increase to the GIS, similar to what the Bloc and others have spoke about. We also talked about doubling the Canada pension plan.

Some people in the provinces and in the Liberal Party have talked about a supplementary voluntary CPP. In Canada 63% of working Canadians have no savings and no pension. It is very clear that the only way they will have a pension in 40 years is if we invest. If we grow the core assets in the CPP, and we do not have to add administration, then we can go forward. However, it must be mandatory to ensure that in 35 to 40 years Canadians will have a pension to rely on, a foundation for a pension plan.

Again, I thank the member for Thunder Bay—Rainy River for moving Bill C-501. I look forward to the support of the entire House when the bill comes to committee.

[Merv Tweed, Conservative, Brandon—Souris, MB]

Madam Speaker, I too welcome the opportunity to speak on the issue of pensions, the proposed amendments to the Bankruptcy and Insolvency Act, and the Companies' Creditors Arrangement Act as envisaged by Bill C-501.

I think it is certainly appropriate that we have these conversations and discussions in regard to dealing with the issues that impact Canadians in such a way. My comments today will be on the necessity that we must always keep in mind the potential economic effects of a higher priority in insolvency for unfunded pension liabilities, and in particular the importance of considering the impact such a priority may have on capital markets and the access to credit for Canadian companies.

I would like to begin by acknowledging the challenges that are being faced by today's Canadian pensioners and their families in this uncertain economic environment, and it is for that reason that our government has taken and will continue to take measures that will better protect the pensions and pensioners.

Indeed, the government committed, through the throne speech of last March, to explore ways to better protect workers when their employers go bankrupt. Canada's insolvency and restructuring laws are an important part of our economic framework legislation and play a key role in making our economy strong and stable. They strive to find the proper balance between the competing interests of debtors and creditors as well as those between the various categories of creditors. I say competing because, of course, there are usually insufficient assets in the debtor's estate to satisfy the entire amount of debt owed to creditors.

To meet that test of balance, the law has to be fair and be seen to be fair by all those who might be affected by its provisions. To do otherwise could lead to unintended consequences.

It is of fundamental importance that insolvency legislation be structured in such a way that it does not impede our ability to promote a competitive marketplace nor impinge on our ability to increase the availability of credit to businesses and maintain efficient capital markets.

Rational and reasoned legislation contributes to building confidence in the economy, to improve the competitiveness of Canadian businesses, and serves to make Canada a more innovative and productive country. Without such a principled approach, our efforts could result in little long-term relief for potential aggrieved parties.

While assessing the various ways to protect workers and their pensions, the government must be mindful of the effects such changes may have, including the effect they could have on credit markets, which are integral to the smooth operation of businesses in Canada.

Here is what is critical. Amounts related to unfunded pension liabilities can represent significant claims in bankruptcy and can arise without any wrongdoing on the part of the employer. Let me emphasize this point, if I may. Several external factors, such as investment performance, can affect the funding level of a defined benefit pension plan. Therefore, a plan can be underfunded even if the employer provides for all regular contributions, which are already protected by a super priority in insolvency and other required payments in a timely manner.

We should remember that, when a company is insolvent, its assets are usually insufficient to cover all the claims. This means that everyone will not be fully paid. I will continue.