An Act to amend the Pension Benefits Standards Act, 1985

Sponsor

Bill Morneau  Liberal

Status

Second reading (House), as of Oct. 19, 2016

Subscribe to a feed (what's a feed?) of speeches and votes in the House related to Bill C-27.

Summary

This is from the published bill. The Library of Parliament often publishes better independent summaries.

This enactment amends the Pension Benefits Standards Act, 1985 to provide a framework for the establishment, administration and supervision of target benefit plans. It also amends the Act to permit pension plan administrators to purchase immediate or deferred life annuities for former members or survivors so as to satisfy an obligation to provide pension benefits if the obligation arises from a defined benefit provision.

Elsewhere

All sorts of information on this bill is available at LEGISinfo, provided by the Library of Parliament. You can also read the full text of the bill.

Opposition Motion—Minister of Finance and Conflict of Interest ActBusiness of SupplyGovernment Orders

October 23rd, 2017 / 5:45 p.m.
See context

NDP

Marjolaine Boutin-Sweet NDP Hochelaga, QC

Mr. Speaker, I will be splitting my time with the member for Windsor West.

Today we are debating an NDP motion calling on the Minister of Finance to apologize to the House and to Canadians for breaking their trust and calling on the government to close the loopholes he exploited in the Conflict of Interest Act, in order to prevent a minister of the crown from personally benefiting from their position or creating the perception thereof.

There are some people in this life who are clearly lacking in subtlety, and the Minister of Finance is unquestionably one of them. Fortunately, this gave us the chance to note that the minister had placed himself a situation that, at the very least, presented the appearance of a conflict of interest, that he had abused the trust of the House and the Canadian people, and that he had used a loophole in the Conflict of Interest Act for his own personal gain.

The Conflict of Interest Act clearly states that:

...a public office holder is in a conflict of interest when he or she exercises an official power, duty or function that provides an opportunity to further his or her private interests...

In the weeks following his election in 2015 and his appointment as finance minister, the minister suggested that he had complied with the Conflict of Interest Act, which, generally speaking, requires members to divest themselves of their shares or to place them in a blind trust if their duties could place them conflict of interest. However, we recently learned that this is not what the minister actually did. Instead, as we finally found out, the minister took advantage of a loophole in the Conflict of Interest Act to place his half of his shares in Morneau Shepell in numbered companies. In other words, the finance minister no longer holds shares in Morneau Shepell; the numbered company does. However, since he is the sole shareholder in the numbered company, this is just a matter of semantics.

The minister betrayed the trust of Canadians and the House by leading them to believe that he had followed the spirit of the Conflict of Interest Act when really he had made use of a loophole. The spirit of the act serves to ensure that those serving in the role of minister do not find themselves in a real or perceived conflict of interest. If he had truly been abiding by the spirit of the act, the minister would have placed his shares in Morneau Shepell in a blind trust or simply divested himself of all of his shares.

Instead, what he did was use a loophole to circumvent the spirit of the act and put himself in a position where he could personally benefit from the policies he implemented as the Minister of Finance. He did that for two years.

None of this passes the sniff test, especially since we are not talking about pocket change here. The shares in Morneau Shepell that the Minister of Finance directly or indirectly owns are valued at over $20 million as of October 20, 2017. It seems to me that any reasonable person standing to become finance minister that owns more than $20 million in shares in a company that bears his name would have seen a huge red flag with the word “danger” flashing in neon lights, and perhaps asked himself whether he should put all those assets in a blind trust so as to avoid the appearance of conflict of interest. That all seems like common sense to me.

There is more, however. On October 19, 2016, on the first anniversary of his election by the way, the Minister of Finance introduced and sponsored Bill C-27, an act to amend the Pension Benefits Standards Act, 1985, which would increase the use of target benefit pension plans. The Minister of Finance's former company, Morneau Shepell, is a strong proponent of target benefit plans and manages related services. Those plans are that corporation's bread and butter. Should Bill C-27 pass and come into force, the company stands to be one of only four corporations in Canada that would benefit from the new pension administration rules.

While the current finance minister was in charge of Morneau Shepell prior to being elected, the company lobbied for greater use of targeted benefit retirement plans and became the Government of New Brunswick's lead consultant in implementing its new pension plan.

The Minister of Finance's company would absolutely cash in by helping existing clients switch to targeted benefit plans and producing the annual actuarial valuations that would be mandatory under the new law. The current system requires them only every three years. That would generate even more business for his company. Clearly, as a major shareholder in his company, the minister would derive personal financial gain if this bill were to become law.

The worst of it is that the Minister of Finance is the one sponsoring this bill. Ordinarily, because he still holds shares in a corporation that would directly benefit from the legislation, he should have declared his interest and recused himself from any cabinet discussion of the bill. Instead, he celebrated his first year in office with the gift of bill sponsorship. That is a pathetic way for a Canadian finance minister to behave.

To top it off, within days of the Minister of Finance introducing Bill C-27, Morneau Shepell shares were up almost 5%. We can all agree that that is no coincidence.

I repeat:

...a public office holder is in a conflict of interest when he or she exercises an official power, duty or function that provides an opportunity to further his or her private interests...

We are no longer talking about appearances here. The Minister of Finance is in a direct conflict of interest, but he waited for it to be discovered and for the media to report on it before fixing the problem. On top of that, when he was elected in 2015, the value of the minister's shares in Morneau Shepell was $32.1 million. As of last Friday, as I mentioned earlier, his shares were worth $42.6 million, which means that his shares generated a profit of over $10 million in the past two years. If he still owns half of what he had in 2015, that means an extra $5 million in his pocket, while he is the Minister of Finance.

When the information was made public last week about his shares in the company bearing his name, it took us asking him nearly 20 times before he would finally confirm that he still has considerable holdings in Morneau Shepell, as though he had something to hide. This Minister of Finance is like a kid who was caught with his hand in the cookie jar, with chocolate around his mouth, but who still denies doing anything wrong. This reminds of the time when one of my brothers was caught licking another brother's ice cream cone, and he said that his tongue simply fell on it.

This is not a matter of cookies or ice cream. We are talking about millions of dollars. When the minister finally held a press conference to announce that he would divest himself of his shares, the price of his company's shares dropped by $0.41 in the three following hours, costing the minister an estimated $410,000. It is easy to see why he hesitated to respond and do what was necessary to put an end to this situation, which was strongly perceived as a conflict of interest. How can the minister continue to try to lead us and Canadians to believe that he went into politics for the right reasons and that he is really working in the interests of the middle class and those working hard to join it?

How many middle-class Canadians earn $5 million in two years? We now see why the finance minister was reluctant to tax the wealthiest Canadians. I grew up in a family where my parents had to work hard to make sure that their children had everything they needed in life, and I want to thank them for that here. Thank you, Mom and Dad. I decided to go into politics to help families have the same opportunities that my parents gave me. We are not here to help the rich get even richer.

At the very least, the minister should apologize to Canadians and members of the House for betraying their trust and leading them to believe that he was carrying out his duties in the interest of the public, rather than in his own personal interest. Ministers have lost their limos for far less than this. The government must also immediately commit to eliminating the loophole in the Conflict of Interest Act to ensure that the sorts of antics we are seeing today never happen again and that the spirit of the Conflict of Interest Act can no longer be circumvented by semantics.

Opposition Motion—Minister of Finance and Conflict of Interest ActBusiness of SupplyGovernment Orders

October 23rd, 2017 / 5:25 p.m.
See context

Green

Elizabeth May Green Saanich—Gulf Islands, BC

Mr. Speaker, this is my first opportunity to take the floor in this debate on the matter of supply relating to the problem of ethics and the finance minister. I would like to thank my friend from Vaughan—Woodbridge for his speech and ask his indulgence that I state, on the record, my deep concern that Bill C-27 must be withdrawn. It appears to me that there is a blatant conflict of interest in the finance minister bringing forward this measure.

As for much of the rest of the debate, I find it regrettable that we cannot focus on the need to bring into this place, and it is part of the motion before us today, ethics rules that are binding. The code of ethics for members of Parliament that we find in our Standing Orders book says very clearly that we must avoid conflict of interest and the perception of conflict of interest, but as far as I can see, it is impossible to commit an ethical violation. On this, I refer to more than the hon. Minister of Finance, but to other members in this place who have committed, in any common-sense understanding, a violation of their conflict of interest guidelines, the guidelines are unenforceable. Would my friend from Vaughan—Woodbridge agree that we should make them enforceable?

Opposition Motion—Minister of Finance and Conflict of Interest ActBusiness of SupplyGovernment Orders

October 23rd, 2017 / 4:55 p.m.
See context

NDP

Murray Rankin NDP Victoria, BC

Mr. Speaker, as Jack Layton used to say, I rise more in sadness than in anger today and I resent very much comments that somehow the motion today involves, to quote the member from Hamilton, a “personal attack”. If one were to read the motion before Parliament today, one would understand that we are seeking amendments to avoid the situation that the finance minister found himself in.

Legislation in other jurisdictions, I will say, adds not just the term “conflict of interest” but “apparent conflict of interest”, which has been the standard, for example, in the province of British Columbia's legislation for decades. Had that section been in the act, I do not think we would be here, because most Canadians would accept that there is the perception that a reasonable person would have, reasonably well informed of the situation, that the minister has been in an apparent conflict of interest.

Whether the letter of the Conflict of Interest Act was broken, how many people could say with a straight face that the spirit of the act has not been broken? We want to avoid that in the future. Ever since the Sinclair Stevens scandal of many years ago, people have consistently sought for an apparent conflict of interest standard to be added to the legislation. When the ethics committee met in 2014 under the leadership of Pat Martin, it was accepted that there should be amendments to the legislation, and the Conservatives did none of it. After two years, the Liberals have done none of it, and here we are today.

If the finance minister had accepted the letter of the law and had simply told the Conflict of Interest and Ethics Commissioner that he would have a conflict of interest screen, then he would have had a staff member decide when he was or was not in conflict, whether that was adequate, and whether they were “controlled assets” because they were in a numbered company controlled by the member and then those shares were held by another company controlled by the member. If somehow Canadians thought that was just fine, surely the abysmal failure, error of judgment, of the minister has to be examined here today. That he is in an apparent conflict of interest that a reasonable person would have to conclude exists seems beyond doubt today.

However, even if it is wrong for a finance minister who regulates the pension industry, who gave a speech in 2013 concerning Morneau Shepell's work in New Brunswick, arguing for target pension plans instead of defined benefit plans, which clearly would benefit a company like his, and then introduced Bill C-27 in October of 2016, a bill that would make the world safer for companies like Morneau Shepell, what kind of judgment does the finance minister have in doing so? How can Canadians have confidence in the minister, even if the technical requirements of the Conflict of Interest Act, weak though everyone knows it to be, including the commissioner, that error of judgment stands apart.

That is what the NDP is saying today. It is calling for an urgent amendment to the Conflict of Interest Act. If Liberals do nothing but add what British Columbia has had for decades, that there should be an apparent conflict of interest where a reasonable person, well informed, looks at the situation and says there is a reasonable suspicion of conflict, that would be enough. Then the commissioner would be able to hold a minister to account where that standard was breached.

My province is no stranger to conflict of interest. That is the section that has been used countless times by commissioners in the past. That is the section that the commissioner and others have sought to have added for years, but yet nothing gets done. We find ourselves in this embarrassing situation today, a situation, according to Bloomberg News, where the minister himself called for legislation allowing target benefit plans in a 2013 speech on the company website of Morneau Shepell and then his shares rose 4.4% in the week after the legislation, Bill C-27, was introduced, where the benchmark TSE composite index actually went down 0.2% during that period.

Canadians get it. This was a colossal error, unless the minister recused himself. After countless efforts to have him acknowledge or explain, I do not believe today we have had an explanation as to whether he recused himself, as the act clearly requires in circumstances of that sort. That is what is at issue. That is why we are here today.

Did he divest himself of the shares? Did he put them in a blind trust? Not really. Did people believe that he had done so, including his Liberal colleagues on Twitter? Yes, they did. However, suddenly, because The Globe and Mail reported that he did not do that, he decided it was time to clear the deck.

He owns a numbered company, which, as the commissioner quite properly says, is a separate legal entity. A corporation is different from the individual minister. I understand that. However, if he owns shares of a company that owns shares of a company that he controls, and he watched his shares go up by $2 million, allegedly, during that period, after he chose, as the minister responsible for pensions, to introduce pension reform, do Canadians expect that not to be something a responsible opposition would bring forward?

The Prime Minister the other day said that this is “petty politics”. This is somehow “gutter politics”. With respect, this has to be fixed urgently. That is what the tenor of this motion is. It talks about calling on the Minister of Finance to apologize for breaking trust and about calling on the government to immediately close the loophole in the Conflict of Interest Act, as recommended by the Conflict of Interest and Ethics Commissioner, to prevent a minister from personally benefiting.

This is not about intent. This not about us alleging that this was or was not done knowingly. That is not what is relevant in the current conflict of interest test. The test is whether a reasonably well-informed person would think that it has caused a problem.

Professor Lorne Sossin, the dean of Osgoode Hall Law School, when he testified in 2013 before the ethics committee, talked about lots of jurisprudence on the reasonable apprehension of bias test. It seems ironic that regulators are constantly subject to that reasonable apprehension test, which is whether a reasonable person would perceive a lack of impartiality, when a minister of the crown is not. This seems to be where we are today. That is why it is argued that this legislative change is so urgent.

When he testified before that same committee, British Columbia's conflict commissioner, Mr. Fraser, said that “if there is a suspicion or if there's a taint [of conflict of interest], then that's enough for an investigation.” That, of course, has occurred on countless occasions in British Columbia, but there is no such test in the circumstances here.

This is the problem of judgment that really needs to be addressed. Should the minister have recused himself? Yes, he should have. Should he have divested before he made decisions, as the regulatory minister for pensions, that had an obvious impact that would benefit him and his company, in which he held so many shares. Yes. Knowing that, and simply saying that because we have a conflict of interest screen, that is sufficient, suggests an error in judgment that Canadians have a right to have addressed today.

In summary, the NDP is asking for the Conflict of Interest Act to be amended. It is asking for the minister to finally apologize for breaking the trust and giving politicians of all stripes a bad name. Most significantly, it is asking to get this legislation fixed so we can join the 21st century, as other provinces and jurisdictions have, so this kind of conflict does not occur again.

Opposition Motion—Minister of Finance and Conflict of Interest ActBusiness of SupplyGovernment Orders

October 23rd, 2017 / 4:55 p.m.
See context

NDP

Sheila Malcolmson NDP Nanaimo—Ladysmith, BC

Mr. Speaker, I note the Ethics Commissioner's direct advice to the finance minister was, “...if an official function provides you the opportunity to further your private interests, those of your relatives or friends...you are considered to be in a conflict of interest situation.” On that basis, the minister should not have been the one to introduce Bill C-27, flawed or not. He should have taken the highest standard as recommended in his mandate letter, and he has failed to do so.

Opposition Motion—Minister of Finance and Conflict of Interest ActBusiness of SupplyGovernment Orders

October 23rd, 2017 / 4:50 p.m.
See context

Liberal

Bob Bratina Liberal Hamilton East—Stoney Creek, ON

Mr. Speaker, the matter before us is about the ethical standards of an individual who has had an unassailable person history of ethical behaviour of the highest order. On the other hand, the important issue has been the potential impact of the proposed tax measures and subsequently the impacts of Bill C-27. What we are hearing is that the same question was asked 20 times over, so what we have had on behalf of the Canadian public is what to my mind is a terrible waste of time.

We had consultations, for instance in my own riding, on the tax reforms. We brought those consultations back. They are being reviewed by the finance minister and his staff. I just put further information before his staff and those people are happily engaged in dealing with those issues. However, we have not heard very much at all from the other side about the specifics of those reforms and the changes and potential changes. All we are hearing is an incessant personal attack against a man who has lived a life of very high ethical behaviour. Therefore, to my friend across the way, are you serving the public interest, the interest of your constituents, by avoiding the real issues, which are the tax reforms and the details of the bill, versus personal attacks against an individual?

Opposition Motion—Minister of Finance and Conflict of Interest ActBusiness of SupplyGovernment Orders

October 23rd, 2017 / 4:40 p.m.
See context

NDP

Sheila Malcolmson NDP Nanaimo—Ladysmith, BC

Mr. Speaker, I am honoured to be sharing my time with the member for Victoria.

This is such an interesting discussion. The member lauded the performance of the finance minister, but I want to take us back to the mandate letter that was given to the finance minister by the Prime Minister. He called on him to respect the values of a government. It stated:

We have promised Canadians a government that will bring real change--in both what we do and how we do it....We have also committed to set a higher bar for openness and transparency in government....It is important that we acknowledge mistakes when we make them. Canadians do not expect us to be perfect – they expect us to be honest, open, and sincere in our efforts to serve the public interest....you must uphold the highest standards of honesty and impartiality, and both the performance of your official duties and the arrangement of your private affairs should bear the closest public scrutiny. This is an obligation that is not fully discharged by simply acting within the law.

In summary, to me, this meant that not only the letter of the law must be upheld; the Prime Minister asked his ministers to go well beyond the letter of the law.

The finance minister let the public believe, including his fellow Liberal MPs and Bay Street colleagues, that he had placed his assets in a blind trust and he let them continue to sustain that belief for two years without correcting the record. Instead, he has been in a position to profit from policies he has advanced as finance minister over that two year period. The finance minister let that untruth stand. He took action last week, two years too late. It seems the only reason he took that action was because he was finally caught.

The finance minister was directed to take the highest ethical path. Instead, the government is barely scraping by. The minister's self-congratulatory tone last week about his belated tidy up of his ethical lapse is totally out of line. He belatedly took action that he should have taken two years ago if he had followed the Prime Minister's direction or the Ethics Commissioner's secondary advise, and if he had any common sense or clue about how this would play out in public.

This is particularly troublesome, given the hard summer we have had in the small business and entrepreneurial community, being accused of similar ethical lapses and exploitation of tax loopholes.

Paul Williams, a constituents from my riding of Nanaimo—Ladysmith, wrote:

While I certainly believe in tax fairness, I do not support what the Finance Minister is proposing and the uncertainly and harm that will result. The changes being contemplated go against the notion of tax fairness. In essence, the changes being contemplated will single out privately held business owners--many of whom are middle-class income earners--treating them worse than publicly held and foreign controlled businesses.

I have hundreds of letters like this. The finance minister's proposal scared small business owners and it unjustly accused them of wrongdoing.

As it turns out, the real tax loophole exploiter was the finance minister, which really is the icing on the cake of a really bad four months in the government. His self-congratulatory air last week of suddenly dismantling a so-called tax fairness proposal, which he said back in July he would not change a word of, and had in fact already written the legislation, was also out of line. If he had done what a real legislator would have done, he would have said that it was a consultation and he would have asked people what they thought. He would told people not to be alarmed, that he might or might not do it. Now, all of a sudden, he says that he is willing to hear the advice and willing to keep his election promise on the small business tax cut, which he previously said he would cancel.

He is now dealing with legislation. He is going to accept the rules that our NDP parliamentary leader proposed on facilitating the transfer of intergenerational companies. Six months ago, the Liberals voted it down. Then last week they used it as cover for a real mess. That shows they really do not have the ear and the tone of the country.

At the time of his election, the finance minister owned two million shares in Morneau Shepell worth $32.1 million. Apparently, that holding, as of Friday, would be worth $42 million. That means he has profited over $10 million over the last two years as finance minister.

However, he did not put them in a blind trust. He did not sell them in an arm's-length transaction, as required, within 120 days of taking office. It has since been revealed that Morneau Shepell has a contract with the Bank of Canada worth more than $8 million. The finance minister was asked nearly 20 times about his million shares that he still owns in Morneau Shepell, worth $20 million, before he admitted that he would actually give an answer. Finally, he failed to reveal the corporation that houses his French villa. CBC maintains that the minister only disclosed that corporation to the Conflict of Interest and Ethics Commissioner just last month, after CBC discovered its existence, and, really, that is when he started to answer questions on it.

It is undeniable, when we turn to Bill C-27, that if it were to become law, Morneau Shepell would significantly benefit in business and revenue, and as a massive investor, the finance minister would personally benefit from the passage of that bill. The minister brought that bill to Parliament. He could have had another member of the party do that, but, instead, he was the lead on it. This was done without consultation and certainly not with the support of constituents in my riding.

Morneau Shepell is a strong proponent and manager of the services related to target benefit pension plans, and could be just one of four firms in the country that would benefit from new pension administration rules if Bill C-27 becomes law. In fact, when the finance minister was at the helm of Morneau Shepell, it lobbied for increased use of target benefit pension plans and became the lead consultant for the Government of New Brunswick in exactly implementing this.

Five days after Bill C-27 was tabled, the value of shares in Morneau Shepell increased by almost 5%, which is an increase that could have allowed the minister to make as much as $2 million. This is really not a middle-class problem. At the very least, this is a striking perceived conflict of interest, since the minister was in a position to further his own private interests through his public duties as a finance minister.

Bill C-27, as much as it benefits Bay Street, would significantly harm workers and pensioners.

Here is what residents of Nanaimo—Ladysmith have told me about Bill C-27.

Pieter Terpstra from Nanaimo writes:

Please, say NO to bill C-27. I am a retired school teacher/logger/proprietor who relies solely on small pensions to survive. I do not want them converted to a target benefit plans. I spent my life working at many different jobs and it's wrong, for them to take away my security in my old age.

It's shameful that [the Prime Minister] promised to protect Defined Benefit Plans and now the government is considering this Bill to change that.

We also have a description of how harmful this is from Deborah Zellermeyer from Ladysmith. She writes:

Bill C-27 allows employers to convert good, defined benefit pension plans, which provide secure and predictable pension benefits, into a much less secure form of plan. Target benefit plans only aim to provide benefits, and they shift all the risk to active plan members and retirees.

Even Harper did not propose the bill, although he floated it, and the opposition was so strong.

The Ethics Commissioner said that she outlined the possible conflict when the finance minister met with her two years ago. She said that there is a loophole she thought should have been fixed, as had been recommended to the previous government as well. Therefore, as New Democrats, with our leader, Jagmeet Singh, we are trying to propose positive alternatives.

We want the Ethics Commissioner to launch a formal investigation into the finance minister. We want the finance minister to withdraw Bill C-27. We want the Liberal government to take the advice of the Ethics Commissioner and close these loopholes so that no future minister ever stumbles into the same morass that the finance minister has, fulfill the promise that Liberals offered to voters two years ago, and restore some faith in the current government.

Opposition Motion—Minister of Finance and Conflict of Interest ActBusiness of SupplyGovernment Orders

October 23rd, 2017 / 4 p.m.
See context

NDP

Pierre-Luc Dusseault NDP Sherbrooke, QC

Mr. Speaker, I would like to thank my colleague for sharing his precious speaking time with me, allowing me to address the House concerning the motion before us today that we have been debating since this morning.

We have heard opinions from both sides of the House, but the Liberals have yet to say anything impressive in defence of the Minister of Finance. Rather, they have tried to change the channel. They have tried to take the focus off the problem at hand. For my part, for the 10 minutes allotted to me, I will stick to the motion before us.

The first part of this motion sets out the facts regarding the matter at hand, namely, the situation with the finance minister and his company, Morneau Shepell. The minister led us to believe that he had placed his shares in Morneau Shepell in a blind trust when in fact he had never done so. His story was even corroborated by his Liberal caucus colleagues. The minister had many opportunities to clarify this situation. Everyone believed that he had placed his holdings in a blind trust. The media reported that such was the case, and the minister even allowed his own company to believe that that is what he had done. When the truth came out, everyone saw that he had not in fact put his holdings in a blind trust. The minister had never bothered to set the record straight since being sworn in two years ago. Everyone believed that he was telling the truth about his holdings. The first part of the motion points out the discrepancy, which the Minister of Finance never bothered to clarify.

The second part of the motion deals with the fact that the minister used a loophole in the Conflict of Interest Act. I can confirm that there is indeed a loophole, not because I used it like the finance minister, but because I heard witnesses talking about it when they appeared before the Standing Committee on Access to Information, Privacy and Ethics, which I chaired for two years.

The Ethics Commissioner appeared before the committee to present her recommendations following her five-year review of the Conflict of Interest Act. That happened in 2013. The next review will take place in 2018 and will be a good opportunity to close the loophole that we are talking about today.

In 2013, the commissioner made over 70 recommendations to update the Conflict of Interest Act. Those recommendations apply to ministers and public office holders. They do not apply only to ministers, but also to some senior officials in the Canadian public service. These public office holders must obey this law. In 2013, the commissioner pointed out a number of problems with the act and proposed ways of making it more effective and updating it to reflect changes in technology.

In her report, she clearly states that the wording of the act specifies direct control, saying that a minister cannot have direct control over a company’s shares. She says that, according to the language, a minister could have indirect control. She raised this question as if she were a visionary who could see that infringements of the act might occur. A public office holder may decide to comply only with the letter of the law, that is, to avoid exercising direct control over a company’s shares, without complying with the spirit of the law.

I can just see the Minister of Finance and his army of lawyers and accountants going to the Office of the Conflict of Interest and Ethics Commissioner and asking a lot of questions, and being told that he cannot exercise direct control over shares, but that he can exercise indirect control over them.

His advisors and lawyers tell him that the only thing to do is to register a company without bothering to give it a name. He can just give it a number, then register it in Alberta where corporate income tax rates are lowest. He can register all of Morneau Shepell’s shares in his company. Thus, he will be the sole shareholder of a numbered company in Alberta.

His lawyers are very smart, and we must give them credit, because their job was to find loopholes in the act, and that is what they are paid for. They did what the minister asked. He asked them to find a way of allowing him to control his shares while complying with the letter of the law.

They told him that they found the solution, that all he had to do was register a company. That is what he did and, for two years, he has had us believe that his situation was in order and that he had even placed his assets in a blind trust. Of course, the blind trust would respect both the letter and the spirit of the law, although this raises questions in any case, because, at the end of his term, the minister can always put the assets back in his name.

There are some misgivings about blind trusts, but that would have at least complied with the spirit of the law. However, the minister decided to do something else, and that is why he is being asked today to apologize to the House. He put himself in a conflict of interest or in a situation strongly suggesting a conflict of interest.

If any ethics professors are looking for the perfect example of a situation that suggests a conflict of interest, I think this situation with the Minister of Finance is ideal.

The minister is still in control of his shares in a large Canadian company, Morneau Shepell. This company sometimes deals directly with the Government of Canada. In general, it specializes in pension administration.

The company's value even increased when the Minister of Finance, who still had control over his holdings, introduced a bill that was good for his company. We are not the ones who came up with the idea that Bill C-27 would benefit his company. He said so himself in 2013 that a bill like this could benefit his company and would be the ideal thing for the company's growth and positioning. He said that in 2013 when he was still part of the family business. We did not come up with the idea that he profited from this. We can simply look at the numbers and see that this was indeed the case. The market responded favourably when the bill was introduced even though it had not yet been passed.

As soon as the bill was introduced the markets responded favourably because investors felt that there was a potential for growth for Morneau Shepell.

The minister personally profited from the increased value in his company when he introduced the bill. Imagine what things would look like if the bill had passed.

The bill is still on the order paper, but it has not yet been passed. However, we can just imagine how much this company would profit from the bill passing.

Who benefits in the end?

The Minister of Finance does.

However, he finally gave in to the evidence and acknowledged his mistakes by changing his financial situation with the Conflict of Interest and Ethics Commissioner as a result of public pressure. He did not seem thrilled to do so. He had probably worked out some elaborate strategy to maintain control, but under pressure, the minister finally decided to change his situation.

He did so because he saw that he had no other choice.

I mused earlier about the minister and his lawyers before the Conflict of Interest and Ethics Commissioner, and I can also imagine another scenario, one where the Prime Minister called him and told him to sort this out or find another job.

I would say he did not have much choice. To suggest today that he did so willingly and because he wants to serve Canadians would be to take us for fools. I hope he apologizes so that we can turn the page on this once and for all.

Opposition Motion—Minister of Finance and Conflict of Interest ActBusiness of SupplyGovernment Orders

October 23rd, 2017 / 3:50 p.m.
See context

NDP

Charlie Angus NDP Timmins—James Bay, ON

Mr. Speaker, it is always a great honour to rise in the House to represent the people of Timmins—James Bay.

Over my last 14 years in Parliament, I have seen all manner of scandals. I have seen scandals that were just plain idiotic, tawdry behaviour, and scandals that were not really scandals at all, just that sometimes people made mistakes and had to account for errors in judgment. However, they were still accountable to the people of Canada. What we are talking about today in terms of a conflict of interest with the Minister of Finance, to me, speaks to the cynicism of the government and its approach to ordinary working Canadians who work hard and play by the rules.

The conflict of interest we are seeing with the finance minister is that, as the privatized pension king of Canada, he had a very clear financial interest in changing pension legislation. When he was presented as the finance minister for this Parliament, he did not explain to Canadians that he had set up—how would one even describe it—this numbered company that he moved his dividends and profits into, which maintained his connection to Morneau Shepell, the privatized pension operation of Canada.

What we hear from the Liberals is that this is a separate account and not really something that he had control of. It is the same as folks back home putting $100 into a cookie jar, being asked if they have $100, saying no, the cookie jar has $100, then being asked who owns the cookie jar, saying they do, being told that means they have $100, and them saying no, it is in the cookie jar. However, we are not talking about $100. We are talking about millions of dollars of direct benefit for Morneau Shepell.

I want to talk about three issues. The first is the Barbados tax haven that the finance minister has interest in and has been negotiating treaties for without recusing himself. The second is the issue of Bill C-27, which he brought forward without explanation or any prior public consultation, that would benefit the investors at Morneau Shepell, and the third is the one before us today across Canada, the abominable treatment of Sears workers. We were all shocked and appalled when we heard that Sears executives attempted to cut off the financial, dental, and medical rights of Sears pensioners as Sears was facing bankruptcy and, at the same time, paying $9.2 million to its executives. That kind of pension theft is not only legal in Canada, but executives get corporate bonuses for doing it.

I have been attacked on Twitter by the Liberal trolls who said that this was no bricks and mortar issue, it just went the way of the dodo. Sears was a top-notch corporation that was run into the ground by the hedge fund operator Eddie Lampert, who pretty much lost $10 billion of value. One does not cry for corporate bandits like Eddie Lampert and his crew, because as Sears was getting into trouble, its hedge fund operators basically loaned $500 million to Sears through taking 46 key properties as collateral assets. If Sears went down, those hedge fund operators walked away with the property. Therefore, they are sitting pretty.

We approached the finance minister and asked him to change that loophole to protect the pension rights of Sears workers. That is not asking for anything special. It is asking to ensure that when people have paid into a pension for their whole lives, it is not at the back of the line when creditors come, that it is considered part of the credit that has to be protected. The finance minister will not do it, and we did not know until October 17 that Morneau Shepell was getting the contract for the Sears workers. Is there a direct link? The direct link is that the dividends go to Morneau Shepell investors, of which the finance minister is one. That needs to be explained to Canadians.

I am deeply concerned about Bill C-27, because in 2013, as the head of Morneau Shepell, the current finance minister talked about the role that Morneau Shepell played in moving towards targeted benefit plans and how there was a need in Canada to change the legislation to benefit the investors of Morneau Shepell. When he became finance minister, he introduced Bill C-27, which was the legislation to do just that. What is striking about Bill C-27 is that there were no prior public consultations or public meetings. Therefore, who gave the advice to the finance minister to change legislation that would have an enormous impact on the company that he and his father helped found?

Bill C-27 is a clear conflict of interest. It is a conflict of interest that touches Canadians who are worried about the future of their defined pension benefits across the country. It is a right of Canadians to believe that parliamentarians will put the interests of the public ahead of their own pecuniary interests. That is the whole question of conflict of interest.

In the case of the Minister of Finance, bringing forward legislation that would have a direct benefit to his company without recusing himself is an abuse of his role as a minister of the crown and needs to be explained. It is also an abuse of the House, because we did not know that he was receiving dividends from Morneau Shepell throughout this period.

To note, I will be splitting my time with the member for Sherbrooke.

Now we find out about the Barbados tax havens. The Minister of Finance is signing a tax treaty with Barbados. I know Barbados sounds like a great place for sand and hanging on the beach, but it is notorious as a fiscal paradise for companies that do not want to pay their share. What is really disturbing about Barbados is that we found out that Morneau Shepell is involved down there. There is a direct financial interest. The minister did not recuse himself. How could he be working on a treaty with a place that is a notorious fiscal paradise when Canadians are paying their fair share and they are looking to the Minister of Finance for accountability?

I know my friends in the Liberal Party are in trouble on this issue, because whenever the Liberals are in trouble on a file, they start throwing out the term “middle class”. In fact, they say the “middle class and those wanting to join them”. Folks back home, if they were in some of kind university drinking game, where every time the Liberals said that in a speech they had to take a shot, they would be bombed at the end of the first five minutes.

I guess the Minister of Finance grew up in a different middle class than I grew up in. His middle class is going after dentists and farmers. His middle class is going after people who are suffering from diabetes. His middle class is going after employee discounts at restaurants in order to tax them. Meanwhile, the one first promise that the minister broke was the $840-million corporate stock loophole that would protect 8,000 insiders on Bay Street. He reassured Bay Street that he would have their back.

Right now the Liberals are saying that they are doing all of this for the middle class. They are setting up a tax haven treaty with Barbados for the middle class. The Minister of Finance is attacking the pension rights of Canadians across the country, through Bill C-27, for the middle class. Of course, the Sears workers, well, they are out of the middle class altogether.

It reminds me of when the Liberals were caught out on the Saudi arms deal. They were dealing with House of Saud to help the middle class. That was the Prime Minister. On their abandonment of electoral reform, he said we had to do it to protect the middle class. Cash for access was the golden one, where Chinese billionaires were paying $1,500 to meet with the Prime Minister. He was asked, “What could you possibly be meeting with Chinese billionaires about that was not a conflict of interest?” He said that they were talking about the middle class. Imagine that. Imagine that is what billionaires talk about.

This is about abuse of public trust. This is about a Minister of Finance who has broken the trust of the Canadian people and who owes an apology to this House. This is about a government that has to retract Bill C-27, because it is a clear conflict that will benefit the insiders of the Liberal Party and not Canadians.

We need to have some clarity. Canadians need to have trust that the government they elect is not going to be just looking after the interests of their friends on Bay Street but is going to pay attention, finally, to the Canadians who work hard, pay their taxes, and play by the rules, unlike the government.

PensionsOral Questions

October 23rd, 2017 / 2:35 p.m.
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NDP

Scott Duvall NDP Hamilton Mountain, ON

Mr. Speaker, it is simple. The finance minister still owns a million shares in Morneau Shepell, a company that would directly profit by the passing of his bill, Bill C-27. This is a major conflict of interest.

Also, the government could have prevented the devastating effects of the Sears bankruptcy by simply changing Canada's bankruptcy insolvency laws. However, in true fashion, the Liberals continue to protect their rich corporate friends instead of protecting the pensions and benefits of middle-class Canadians. When will the finance minister stop this attack on workers' pensions, abandon Bill C-27, and protect workers?

EthicsOral Questions

October 23rd, 2017 / 2:30 p.m.
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Conservative

Maxime Bernier Conservative Beauce, QC

Mr. Speaker, we have questions about the minister's conflicts of interest.

He tabled a bill that will benefit him personally. He told Canadians he would put his assets in a blind trust but then failed to do so. He is up to his neck in conflicts of interest.

All we want to know, yes or no, is whether the minister recused himself from all discussions, especially those around Bill C-27.

EthicsOral Questions

October 23rd, 2017 / 2:30 p.m.
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Conservative

Shannon Stubbs Conservative Lakeland, AB

Mr. Speaker, last October, the current finance minister himself introduced Bill C-27, which will set up the same target benefit plans that he had called for as executive chair of Morneau Shepell. The finance minister has finally put his assets in a blind trust, but that does not fix the problem. Canadians are concerned about how he has admitted that he has no moral compass of his own. For the last two years, he introduced and crafted legislation that directly benefits himself and his billion-dollar family company. Why did the finance minister not recuse himself from all discussions about Bill C-27?

EthicsOral Questions

October 23rd, 2017 / 2:25 p.m.
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Conservative

Shannon Stubbs Conservative Lakeland, AB

Mr. Speaker, there is nothing virtuous about a circle where the finance minister uses his power to make decisions to benefit himself and his company. In 2013, when the current finance minister was the executive chair of Morneau Shepell, he said, “We need legislation enabling Target Benefit Plans.” Then, once he became the finance minister, he introduced that very legislation. The finance minister has been receiving roughly $65,000 a month from Morneau Shepell the entire time. That is an obvious conflict. Did the finance minister recuse himself from all discussions about Bill C-27?

EthicsOral Questions

October 23rd, 2017 / 2:20 p.m.
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Conservative

Gérard Deltell Conservative Louis-Saint-Laurent, QC

Mr. Speaker, that is precisely the problem. They take action only when they realize they have been cornered and people are criticizing them. That is what is happening with the Minister of Finance.

Morneau Shepell is applying the government's laws and the Minister of Finance is the one writing those laws. It is a direct conflict of interest and we saw that with Bill C-27.

My question is quite simple: when did the Minister of Finance get permission from the ethics commissioner to introduce Bill C-27?

EthicsOral Questions

October 23rd, 2017 / 2:20 p.m.
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Conservative

Pierre Poilievre Conservative Carleton, ON

Mr. Speaker, the reality is that the minister keeps blaming the Ethics Commissioner for his own actions but, wait, the minister committed to that same commissioner, in writing, to abstain from matters related to Morneau Shepell.

Again, did the finance minister get written permission to introduce Bill C-27, a bill that profited him and his family business?

PensionsStatements By Members

October 23rd, 2017 / 2:10 p.m.
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NDP

Scott Duvall NDP Hamilton Mountain, ON

Mr. Speaker, for two years, I have called on the Liberal government to keep its election promise to improve the retirement security of Canadians. Unfortunately, the government has failed to respond. Now the government wants to wage a war on secure defined benefit plans, which many Canadian workers depend on for their retirement.

Bill C-27 would make it easier for companies to convert their defined benefit plans to targeted benefit plans. Employers would benefit by facing much less risk. Employees would be given all the risk. Gone are the days when people could look forward to retiring with a pension that allowed them to live with the dignity they deserve. The finance minister's company will make millions off of Bill C-27. In fact, the value of his stock went up almost $2 million in the five days after he introduced the new legislation. That is more than most Canadians make in a lifetime.

Is this a conflict of interest? Canadians certainly think so. Do the right thing for Canadian workers and withdraw Bill C-27 immediately.