Madam Speaker, I am here to speak to something that is very important and it is good that this Parliament is bringing this forward. I think Bill C-25 is a positive initiative.
The minister mentioned the Marrakesh Treaty. That was a treaty that Canada signed onto through a bill passed here, which was important for the blind and for other Canadians, for larger print. It is one of the indications that we can actually move things through the House of Commons and we can have things done for Canadians.
The bill is movement in the right direction. As New Democrats, we are going to support it, for sure. There is no way that we would not support the initiatives of the bill, but there are some shortcomings with the current proposal. We will point out a couple of those, but we want to hear testimony from witnesses as well.
Bill C-25 is an act to amend the Canada Business Corporations Act, the Canada Cooperatives Act, the Canada Not-for-profit Corporations Act, and the Competition Act. Essentially what we are talking about is boards of governance in general, when we put the three core elements together. It is an opportunity to update and to include modern changes that are reflective. On the private sector model with the private corporations, blue chip corporations, and others, they have been very derelict, quite frankly, across the world in not having more of an inclusive nature. This is why it has come to the forefront, not just in Canada but across the world.
When we look at Europe and even at the United States, Canada has become known as a laggard with regard to this and there is no doubt about it. When the Conservatives talk about this getting through, after the 10 years it took them to bring something forward, right now we are happy to do so. Unfortunately, we are getting into a bragging competition between the Liberals and the Conservatives about this. However, I wonder why the bill is being launched again, another year and a bit later, basically the same as what it was before, especially given what we have seen with the more fundamental changes that are taking place in Germany and other places, which I will get into later, that are very important.
We are here today to at least take that first step forward in this process. To be clear, the most recent change to the measures in the bill was in 2001. That was just prior to my time here. It was under Jean Chrétien's government at that time, and prior to that it was decades before. We are really looking at nearly 40 years of letting them have the whole show so to speak. Right now, and this is how far things have come along and how difficult it still is, we require a legislative arm on this because still the right thing is not being done. Our corporate boards and tables across this country, where decisions are made about employees and about Canadians, do not even reflect anywhere near the diversity they should, and that is a shame. It is a shame that we have had to come this far.
Hence, one of the amendments that the New Democrats will be bringing forth is to have some type of a review of this process in the legislation. There will be a good debate. I know some civil society organizations and some governance organizations, especially related to the advocacy of women, have questioned the voluntary element in this initiative and said that there should be some monitoring of that.
The one way we can do it, and it is a very respectful way, is to make sure we have this coming back to Parliament so that we and Canadians have a voice to ask why a company is not complying and being reflective to some degree of the Canadian people, or at least coming to the benchmarks, generally speaking, that reflect our society. There are those people historically who have popped through the different barriers that take place. However, I have a concern because of the thoughts we have had in the past related to boards. They were referred to as the “old boys' club”, and that is very real.
It is also an indication that not only is this an issue of gender, ethnicity, and diversity, but also of social class. We have people who are basically disavowed and ruled unable, unequal, or unworthy of rising through the ranks. They have to go through exceptional circumstances to break those barriers, and they have been some of the most ingenuous people we have had. However, the time and day has come when everyone should count on who they are, what they think, what they do, and how hard they work, versus whom they know or who their family are, or at the very least, what their gender is.
We need to make sure that a number of things will be looked at here. These are very important.
The bill would have annual elections for directors. Right now, it can take up to three years for a director to be looked at. An annual director position can set the course on how a corporation responds to its shareholders.
If we believe in the essence of capitalism at face value, the argument there is that the shareholder is a voter and that in a democracy there are voting rights as a shareholder for the board and the CEO who controls it at that time. However, the current situation is that those meetings are not held, and if there is not that connection between the board and the shareholders, accountability can be avoided. Accountability can also be avoided by not publicizing meetings, or by not making sure that there is enough time in advance so that people can attend the meetings. Therefore, barriers can be created, similar to what I would call “non-tariff barriers”. When we are trying to sell products in another country, we cannot do so, because the non-tariff barriers or rules are so bad. It is the same with shareholders.
When we talk about shareholders, we are talking about ourselves. They are people who have invested their pensions or earnings. They buy those shares and the company gives them that equity in it, but if they cannot have any direct control whatsoever in terms of voting, because the CEO does not have the proper rules in place or has not been following them for up to three years. Then it becomes a problem. Therefore, the bill would require an annual meeting, which we are very supportive of.
Also, there is the structure of the old boy's club that was there regarding the election of directors as individuals. They used to run slates in the old boy's club, so to speak, making it more difficult for some other individuals who were trying to advance because the old boy's club was grouped against them. We would call that bullying today, but the reality is that we had a number of people who could not get through because the fix was in, so to speak, and the slate was developed. Now, with individual votes for those board members, at least there will be an individual case to made for each person.
I think that is the right way to do it, because, for example, some slates carried baggage where one could basically say, “I like three of the four, and I can live with them”. They would come out with a number of different things, as opposed to giving the right and basically saying that a single selection should be the way to go. I think that is going to be a good advancement.
On the issue of comply or explain, I noted that different countries have done different things. However, comply or explain is a way to bring the numbers up, and the current 18% or less share of women on boards is obviously not reflective of our society. With women making up over 50% of the population, but occupying less than 18% of board positions, it is an obvious problem that has to be fixed.
In surveys we have found that when comply or explain was used in the past in other countries and there have not been improvements in these numbers as a result, they have argued that not enough qualified people applied. That is the ceiling that is created. It is hard to challenge that, because we cannot have access to the confidential documents and information about who applied, who got left behind, and a number of different personal things that are very complicated, and so the target does not move at all. That is one of the reasons Chancellor Merkel in Germany moved legislation on this and now has a target of 30%.
Germany was simply fed up and said that for CEOs and blue-chip corporations the rate would be 30% and that they would have some time to bring that in. The time was shortened because they would need some time to comply or explain. For German not-for-profit boards and others, the rate is going to be 50%. There is a difference between 30% and 50%.
I was not privy to the debate and have not looked at what has taken place in the German legislation, but I am sure it will come out in testimony. Not-for-profit boards are found in hospitals, public institutions, and so forth. On those boards, of course, the rate should be 50% because taxpayers pay for those boards, and with 50% of our population being women they are directly paying 50%. We know that to be a fact. They need to have the same representation. In fact, they deserve to have the same representation. It is an absolute shame if they do not. This can be easily corrected. If women are supposed to be equal, then they deserve an equal voice in running those boards. We New Democrats are arguing for at least a review of this.
This goes back to what we are proposing in terms of an amendment, so that people at the very least are made aware of this. There might be others who do more on comply or explain. There could be a better amendment, and New Democrats are open to that. However, we are not going to give a blank cheque to this piece of legislation. There is no way we are going to let this legislation go through without fighting tooth and nail to the end, without adding accountability to change the current situation. We will not let that happen. We have not come this far on so many other measures, and we still have much further to go, that we would basically put up our hands on the bill and say good luck, we will leave it to the other guys, and we will see everyone later. We are not going to do that. We have done that enough. I have seen that happen too often here in the chamber, most recently with another bill that looked at gender parity with respect to electoral reform, and it was turned down in the House. Sadly, it was another lost opportunity.
This cannot be another lost opportunity. This cannot go back in the record books for another 40 years without any action taking place. That is why I am particularly interested in the German case. Germany has gone through it and has changed.
We do know that the provinces have moved on this as well, and it will be interesting to hear the testimony at committee. They have moved on comply or explain and a few other things. We will be getting some of the results from them as well. I will be interested in hearing what is going on out there in committee. That will also give us a better sense of things.
Maybe we are wrong in the sense that corporations and not-for-profits will act quickly on this. I worked in a not-for-profit industry for a number of years and was successful in bringing in this model. Not-for-profits will comply and move toward that. This is our opportunity to bring it to Parliament and to Canada as a whole. We can find out if those who are laggards have a problem with it and how they are going to fix the problem. That is what we are going to see with this legislation. Hopefully we will see amendments that would make this happen, because we are just not going to leave it alone.
Another missed opportunity with respect to this issue is corporate CEO compensation. We are calling for more shareholders and investors to have a say on CEO pay. We are interested in looking at executive compensation as it is a part of the package. We have seen in Canada and around the world CEOs getting big bonuses while companies tank, and fire their workers left, right, and centre at the same time. We have to look no further than the CEOs at our banks. Their compensation was increasing at a time when banks were having some problems and we had to backstop some of them. The banks had record profits and their CEOs received increased compensation. During the last financial crisis, the average increase in their compensation was about 19%.
How is it that so many Canadians and so many small businesses are going through this problem that we have had. The challenges and the insecurity and the services they are supposed to get are challenged; government, which is funding this, is going into massive debt; and CEOs get almost 20%. Those banks have some the highest credit card costs not only in Canada but across the world. When it comes to credit card service fees, just talk to small merchants. Look at what is happening in Australia. Australia has a 0.5% cap and it is reviewing this and lowering it because banks are still making lots of money. It is bad for small business.
Here our small business people struggle when they go to the banks to get loans, and if they can get them, they are at high interest rates. Or public institutions like the BDC, or credit unions, have stepped in on riskier loans. What do the banks do in response? They fire more workers, close more branches, and they increase service fees. They do all of those things and the Conservatives set up what is basically a voluntary system for credit cards. It is like playing hockey and getting a penalty for cross-checking someone, but it is a voluntary penalty and if players want to go in the penalty box they can time themselves out if they want to. If they do not, that is okay, play on, play on.
Meanwhile CEOs are making 20% profit. This sends a message that bad behaviour is rewarded. What person does that? We do not do that in our home life. We do not reward bad behaviour, and if we do, it will probably not lead to a good solution in the end. No one does that kind of stuff and that is what we have done with CEO compensation.
Look at Target, for example. It came in and took over a Canadian company, Zellers, which was making a profit. That is key. Zellers was making a profit. It also had a unionized workforce and a wage just over the minimum. It had some benefits and it was making a profit. It was a company that was fulfilling its mandate for people, being a place to work, a place with benefits, a place that respected Canadian laws, but Target came in and what did it do? It ended up going bankrupt and shutting Zellers down, and the CEO of Target, Gregg Steinhafel, received a severance package of $61 million, just $10 million shy of the total severance package for the entire Target workforce. Great, that is capitalism at its best. That is a wonderful example of the Canadian dream being fulfilled.
I recently reviewed the Investment Canada Act, which has had so many changes made to it by previous Liberal and Conservative governments, it is in shambles with regard to this type of behaviour. There was nothing wrong with forcing Target to have some type of mandate or guarantees when it came into this country, so that we could preserve these workers' jobs and stop a bunch of black holes in shopping malls in communities across this country just because of corporate greed.
At the end of the day, with $61 million I am sure that the former CEO is not in our country. The people with the compensation are here and wondering what to do. Guess what we do as taxpayers? We have to fill in the pensions, the employment insurance, and we have make sure that employees get retrained or find other jobs. So CEO compensation is significant and it goes on. The CEO with the highest pay, but worst stock return, is Donald Lindsay. His compensation right now is $9.6 million and there is no remorse on his part. Encana Corporation compensation is $10.8 million. Scott Saxberg of Crescent Point Energy Corporation gets $8.8 million in compensation, despite the company's shareholder falling by 34.5%.
All of these things are taking place that detract from what could be in the bill and what could be greater accountability for Canadians. When we review the bill, let us make sure we crack open the elements that are necessary for full accountability. The big difference and why Canadians need to care more than ever before is that many Canadians are now investing in their own funds for their future. They go online and make purchases and that is why we need to make sure they have their rights protected.