Bill C-405 (Historical)

An Act to amend the Pension Benefits Standards Act, 1985 and the Companies’ Creditors Arrangement Act (pension plans)

This enactment amends the Pension Benefits Standards Act, 1985 to authorize the administrator of an underfunded pension plan, in certain situations, to amend the plan or to transfer or permit the transfer of any part of the assets or liabilities of the pension plan to another pension plan. The amendments also provide for the tabling of an annual report respecting the solvency of pension plans.
The enactment also amends the Companies’ Creditors Arrangement Act to provide for conditions respecting the approval of any plan offering incentives to certain directors, officers or employees to remain in the company’s employ.

Pension Benefits Standards Act

[The Assistant Deputy Speaker, Anthony Rota]

The time provided for the consideration of private members' business has now expired and the order is dropped to the bottom of the order of precedence on the Order Paper.

The House resumed from October 17 consideration of the motion that Bill C-405, An Act to amend the Pension Benefits Standards Act, 1985 and the Companies’ Creditors Arrangement Act (pension plans), be read the second time and referred to a committee.

[Erin O'Toole, Conservative, Durham, ON]

Mr. Speaker, it is my privilege as the member of Parliament for Durham to rise to speak again at second reading debate on my private member's Bill C-405 on pensions, and particularly bringing to the attention of all Canadians the risks that are inherent with defined benefit pension plans that are underfunded at a time that the company is approaching insolvency challenges.

In my last speech, I spoke a lot about the underpinnings of insolvency law in Canada, both the Bankruptcy and Insolvency Act and also the Companies' Creditors Arrangement Act, which is for larger companies.

Many Canadians might be aware that there have been a lot of challenges with pensioners' benefits—

[The Assistant Deputy Speaker, Anthony Rota]

I am afraid I am going to have to interrupt the hon. member for Durham. We had a bit of confusion here. The hon. member spoke to this already. The hon. member is going to have the right to reply, but we will move on the hon. member for Sherbrooke at this point. There was a little mix-up here, my apologies.

The hon. member for Sherbrooke.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Mr. Speaker, I am sorry for the confusion about the debate on the bill introduced by my colleague who has just spoken.

I am pleased to provide our party's recommendations on the bill. He is to be commended for his contribution to the debate and the quality of his approach.

Mr. Speaker, can you remind me of the number and title of the bill, please?

[The Assistant Deputy Speaker, Anthony Rota]

It is Bill C-405, an act to amend the Pension Benefits Standards Act, 1985 and the Companies’ Creditors Arrangement Act with regard to pension plans. We are at the second reading.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Mr. Speaker, my apologies. I was not exactly sure which bill we were debating today.

My colleague's bill, Bill C-405, deals with Canadians' pension benefits. Clearly, this is an extremely delicate subject, as we were able to see with the government's approach to Bill C-27. This sought to allow Crown corporations, and ultimately all other employers in Canada, to change the category of defined benefit retirement plans to target benefit plans.

The direction that the government took is really bad. Thanks to the pressure from many Canadians and from unions, the government seems to have decided to keep the idea of introducing target benefit plans on hold. That means that retirees' benefits will change over time.

When you sign a collective agreement and a defined benefit pension plan, you know what to expect when you retire. With Bill C-27, the government was ready to move forward and change that standard, replacing it with a target benefit plan, that is, one in which benefits can change over time. If that were the case, employees would not get the same amounts as if the defined benefits were maintained.

My colleague's bill is similar to that one. It seeks to enable employers who already offer defined benefit pension plans to convert them into target benefit plans or defined contribution pension plans, which are slightly different, and thereby transfer all of the risk to workers and absolve employers from the obligation to provide their employees with predictable pension benefits.

Pension plans are deferred wages. As I said earlier, they are often negotiated as part of collective agreements.

This bill would change benefits that were negotiated ahead of time and, as I just mentioned, it would also transfer the burden to employees since, in a defined benefit pension plan, the burden is on the employer to deliver what it promised to its employees.

In target benefit plans or defined contribution pension plans, the burden is on employees, who are forced to bear the brunt of any losses that may occur if a company, Crown corporation or government can no longer fulfill its retirement obligations. There has been a lot of debate about that in 2018. This reality has been catching up with workers over the past several years. Employers, whether government or private, are waking up to the fact that, in the future, they will not be able to fulfill the working conditions and retirement pensions that they promised to employees, even though they signed agreements to that effect, and so they are changing the benefits along the way. They are changing conditions that were negotiated. That is unacceptable. It goes completely against the spirit of negotiation and violates a signed agreement to which the two parties agreed and in which both parties must keep their commitments.

Unfortunately, we know what side the Conservatives are on in this kind of debate that affects workers and employers. They always side with the employer. What we are seeing today with Bill C-405 is nothing new.

The bill before us is diametrically opposed to the NDP's proposed approach to correcting major shortcomings in Canada's bankruptcy and insolvency legislation and protecting Canadian workers' and retirees' pensions and benefits. This is 2018, and workers are facing a whole new reality. We have seen it in the past, and we saw it again recently with Sears. Not only can the pension benefit terms and conditions be changed, but pensions can be cancelled altogether. I know workers in Sherbrooke, my region, who worked for 30 years and then suddenly found themselves in that very situation. The employer went bankrupt and closed up shop, and workers' pensions evaporated.

Those employees worked for years to build up their pensions. That money belongs to them. It is deferred income. They worked their whole lives to save that money, and then from one day to the next, their employer was no longer in a position to give the money that belongs to them.

Sears is the latest example, but this is something we have seen in Estrie as well. I know a person who worked at Olymel in Magog. That person, along with everyone else who worked there, lost their pension because their employer suddenly announced that it was no longer able to honour the conditions they had initially agreed to. The workers' money went up in smoke.

That leads to very sad situations. Some of these people are elderly and have to go back to work because they lost all the benefits they were promised initially. They are left in the lurch. They have to go back to work and, for some of them, the working conditions are not nearly as good as when they were working for a business that was thriving and prospering but suddenly had to shut down.

Unfortunately, the Conservatives are unlikely to surprise us today with such a bill to stop executives from giving themselves excessive bonuses in any liquidation and bankruptcy procedures.

I mentioned Sears, but there have been other cases of bankruptcy where the executives took off with the employees' savings. That money does not necessarily always go to the creditors. Sometimes it winds up in the pockets of the executives of those companies. Then the executives or shareholders tell the board of directors that after liquidating the company's assets, that is, before putting the money in their own pockets, there is nothing left for everyone else. There is nothing left for the other creditors.

We in the NDP believe that workers are the priority creditors. That has always been our position. When a company goes bankrupt, the priority creditors are the workers. Whether it is salaries, unpaid sick leave or pensions, priority must be given to what has already been promised, before the banks are even consulted to proceed with the liquidation and pay out the creditors. The workers should always come first.

Unfortunately, once again, we know whose side the Conservatives are on: the employers and the executives. They allow these unacceptable situations to continue, and that is a shame. Bill C-405 does not solve anything. On the contrary, it makes matters worse.

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

Mr. Speaker, perhaps my friend from Sherbrooke might have misunderstood what the bill sets out to do. It does in fact set out to address many of the problems he identified in his speech. There is certainly a problem with the way pension assets are addressed in a bankruptcy proceeding. I completely agree with him on that point. This legislation is part of a solution to some of these issues.

In a free and competitive economy, firms compete with each other for goods and services to consumers. This is the most efficient and effective way for people to get what they want.

However, in a free society with a market economy, businesses will fail from time to time. When a business fails, we need to have appropriate laws in place so companies that have to restructure under bankruptcy remain viable, but can minimize losses to investors, to creditors, to past and present employees and ensure fairness.

Bill C-405 addresses a weakness in Canada's balance between these competing interests in its approach to pensions and bankruptcy and insolvency law. The bill provides a timely and practical approach to an issue that concerns unfunded pensions and bankruptcy cases.

Before speaking further on the content, I want to take a moment to thank the member for Durham for tackling this issue through a private member's bill.

Private members' bills are a great way for opposition members from all parties, as well as non-government members within the governing party, to contribute to the legislative process even if they are not members of the government.

The legislation is great example of a way, through Private Members' Business, we can tackle a problem with a precisely targeted practical and non-ideological approach to a national problem. I encourage all my colleagues from all parties to support this common sense bill.

Canada's current bankruptcy and insolvency laws suffer from weaknesses, which exacerbate unfunded pensions when a business fails.

First, when administering pension plans during bankruptcy proceedings, Canadian companies are required to purchase annuities in order to make payments in the plan. These annuities return only a fraction of what pensioners are owed and prevent pensioners from agreeing to other investment options to salvage their contributions. It often has the effect of forcing the conversion of pension assets at precisely the wrong possible time.

Corporate bankruptcies are more likely to happen at exactly the same time as a general downturn in the economy and in financial markets. What actually causes the bankruptcy in the first place will also cause a conversion of pension assets at the least advantageous time and at the least advantageous valuations. It creates a perfect storm that can destroy pension assets. Administrators of pension plans currently have no flexibility for how best to preserve existing assets in a pension fund.

The second problem is that companies at any time undergoing bankruptcy proceedings need to have strong leadership to guide them back to profitability. They need to have their best employees in order to have any chance to recover.

However, at the same time, paying retention bonuses to executives or key employees of firms with an unfunded pension liability is unfair. Employees do not want to see company executives receiving bonuses, while they are losing their job, having their wages or hours reduced or simply having to endure the strain of uncertainty during a difficult time. Key employees are going to be needed to somehow be retained if a business is going to survive. Limiting or putting conditions on key employee retention payments are needed in cases where a business that has failed has an unfunded pension liability.

The third problem is that pension plans often are opaque. Important information about a pension plans sustainability can be difficult to access by its members. Canadians should be able to see how their pension plan is doing and be able to press their employer to adequately fund a pension.

The best way to solve the problem of unfunded pension liabilities is to not allow a pension to become unfunded in the first place.

By introducing Bill C-405, the member for Durham proposes a solution to these three problems.

The bill would allow pension administrators to secure approval from pensioners to amend the plan or to transfer assets to other plans instead of having to buy annuities at the worst possible time. This would allow more funds to stay in the plan or be reinvested to continue earning returns while bankruptcy proceedings were in progress. It would give administrators more flexibility to salvage the value held in the plan and it would give plan members more say in how their plan would be managed. The bill would ensure plan members themselves would be the ones who would determine whether the administrators would keep the assets invested or convert them to annuities.

Bill C-405 would also improve fairness when restructuring companies have unfunded pensions. It would limit the key employee retention payments that executives could receive during the restructuring, setting pre-conditions for such payments to be made and limiting their size. These measures would prevent executives, officers and owners from profiting from mismanagement and would incentivize them to keep pension plans in good order.

The bill sets the right balance between protecting employee assets and ensuring the business has the best opportunity to recover.

Third, the bill would give past and present employees greater access to information about their plan by requiring an annual public report on its health. It would also facilitate coordination with provincial governments and securities regulators around pension sustainability.

Again, the most effective way to deal with the problem of unfunded pensions is to stop or discourage them from becoming unfunded in the first place. Greater transparency is a key to that objective. With greater transparency comes greater incentive from management to ensure pensions are viable.

These are reasonable means to increase protection for Canadian pensioners, without harming competitiveness and access to capital. The member for Durham explained these points in detail in the first hour of debate, but I will focus on why these measures are superior to other proposals that have been put forward, in particular, the option of creating a super-priority for pensions, which some members of the House would prefer.

Like many of my parliamentary colleagues across Canada, I have received many letters from constituents urging me to protect Canadian pensioners through the creation of a super-priority for pensions in bankruptcy and insolvency cases. They often mention particular examples that are heartbreaking in the way employees have lost their savings after working for many years. They mention companies like Sears, Algoma, Nortel and many others.

We all are tremendously sympathetic to pensioners of companies like those and other failed businesses when the business could not meet its pension obligations. However, creating a super-priority for pensions will not fix the problem. In fact, a super-priority would probably make the problem worse.

Super-priority for pensions would risk creating disincentives to outside investment. It could undermine investor confidence, which would mean more business failures, bankruptcies, lost employment and lost pensions. Super-priority would also make it much more difficult for a business that is being restructured to attract investment at a critical time.

I recognize that some in the House might disagree with me on the issue of super-priority, but why not support the bill anyway? The bill clearly would move the balance of competing interests in the event of a corporate bankruptcy toward workers and pensioners. The bill is surely a move in the direction that those who favour super-priority would want to take us.

The bill would do many things. Therefore, I encourage members to vote for it for what it does rather than what it does not do. The bill would change the current rules to allow more businesses to recover from bankruptcy, more pension assets to be salvaged during bankruptcy, regulate retention bonuses to be paid during bankruptcy and increase transparency on pension plans before they become subject to a bankruptcy proceedings in the first place. The bill is good for workers, for pensioners, for shareholders and creditors.

In conclusion, Canadian workers deserve practical laws that protect their interests and the years of hard work they have put into their companies and pensions. Such laws must strike the best balance between allowing companies to restructure and not being a disincentive to investment. This bill would achieve that balance. I encourage all members of the House to support the bill.

[Jennifer O'Connell, Parliamentary Secretary to the Minister of Finance (Youth Economic Opportunity), Lib.]

Mr. Speaker, I am glad to have this opportunity to speak with my hon. colleagues to Bill C-405, which would amend the Pension Benefits Standards Act of 1985, or the PBSA, as well as the Companies' Creditors Arrangement Act, or the CCAA.

Before turning to the bill, I want to remind us all that Canadians work hard and expect their government to do the same. They expect us to make smart and responsible investments that grow the economy now and for the long term. Canadians understand that when we invest in the middle class and in people working hard to join it, everyone benefits.

Canadians expect their hard work will bring about a better quality of life, one where their families and children have greater opportunities and a bright future ahead of them. As well, after a lifetime of hard work, Canadians have earned a safe, secure and dignified retirement. That is why we have some concerns with the bill before the House today.

Bill C-405 was introduced in the spirit of providing greater flexibility for companies to address their pension deficits and protecting Canadians' retirement security. However, the bill contains problematic and unnecessary changes that would endanger Canadians' hard-earned pension benefits.

To give a bit more context, I would like to remind the House of some of the measures the government is undertaking to support Canadians' retirement goals.

In June 2016, we reached a historic agreement with the provinces to enhance the Canada pension plan. The strengthened CPP will provide more money to Canadians when they retire, so they can worry less about their savings and focus more on enjoying time with their families. Increased CPP contributions will be slowly phased in over a seven-year period, starting next January. It will take roughly 40 years of contributions for a worker to fully accumulate the enhanced benefit, which will raise the maximum CPP retirement benefit up to 50%.

To make this clearer, I will provide an example. Today, the current maximum benefit is just over $13,850. If the CPP enhancement were fully in place today, it would represent an increase of nearly $7,300 on that amount, to a maximum benefit of more than $21,100 in today's dollars.

The increase is due to two changes. First, the government is increasing the level of earnings replacement provided by the CPP from one-quarter to one-third of eligible earnings. This means an individual making $55,000 a year in today's dollars over their working life will receive approximately $4,500 more per year when they retire.

Second, it will increase by 14% the maximum income range covered by the CPP, so those who earn more will receive more in retirement.

Now that similar enhancements to the Quebec pension plan are also in place, all Canadian workers can look forward to a more secure retirement. In 2017, the government built on this achievement by reaching an agreement with provincial partners to further strengthen the CPP. Budget 2018 included measures that will give greater benefits to parents whose income drops after the birth or adoption of a child. It also included measures that will provide greater benefits for persons with disabilities, for spouses who are widowed at a young age, and for the estate of lower-income contributors.

These new benefit enhancements will be implemented without raising CPP contribution rates. Strengthening the economy and growing the middle class are important, but so too is making sure people working hard to join the middle class have the help they need to succeed. This is why the Government of Canada has taken steps to ensure more and more people benefit from Canada's economic growth.

In addition to enhancing the CPP, the government also strengthened the guaranteed income supplement. This action provides greater income security for close to 900,000 low-income, single seniors, 70% of whom are women. The enhanced guaranteed income supplement has lifted 57,000 vulnerable seniors out of poverty.

Coming back to Bill C-405, this bill would weaken the security of retirement benefits for workers and pensioners, undermining the government's achievements in enhancing our retirement income system.

The bill would allow the restructuring of employees to reduce pension benefits, subject only to the consent of a minority of plan members. It would allow employers to walk away from their pension promises instead of fulfilling their legal obligation to fully fund all benefits.

As such, the bill runs counter to the government's commitment to find a balanced way to address retirement security. The bill would also harm the ability of companies to retain key employees when undergoing restructuring proceedings. This could make it more difficult to complete a successful restructuring that keeps the company in business and preserves jobs.

In conclusion, over the last three years, our government has been focused on strengthening and growing the middle class, offering real help to people working hard to join it. The government is also focused on building an economy that works for everyone, and the results speak for themselves.

Since we came to office, Canadians have created more than half a million new full-time jobs; the unemployment rate is at the lowest level this country has seen in four decades, and the youth unemployment rate has dropped two percentage points since the beginning of last year. The Canadian economy was also remarkably strong last year, with growth that outpaced all the other G7 countries. It is expected that Canada will remain among the fastest-growing economies this year and next.

We are proud of these achievements, because they are proof positive that our investment and innovations are reaping rewards for all Canadians. However, Bill C-405 would weaken benefit security, running counter to the achievements our government has made and those we are pursuing. For that reason, I urge every member of this House to oppose the bill.

[Anne Minh-Thu Quach, NDP, Salaberry—Suroît, QC]

Mr. Speaker, I would like to begin my remarks by saying that today is indeed a very black Friday for workers.

In addition, the government has introduced a bill to require Canada Post mail carriers to return to work, despite the fact that they were in the middle of negotiating a collective agreement freely and in good faith. After only 11 months, the government has decided to intrude on these negotiations and force them back to work. We are being allowed less than three hours of debate for the bill, which we have already started debating and will continue to debate this afternoon. This is abominable conduct from a government that says that workers' rights should be very important. It says it respects bargaining rights, but its actions paint a different picture.

What is more, in 2011, when the Conservatives imposed back-to-work legislation for these same Canada Post employees, the Liberals got all worked up, saying that it was terribly disrespectful and violated workers' rights. Now they are doing exactly the same thing, with even fewer scruples, because they are giving MPs even less time to debate and defend workers.

In addition, today, the Conservatives are introducing a bill that will make pension benefits even more precarious. Bill C-405, an act to amend the Pension Benefits Standards Act, 1985 and the Companies’ Creditors Arrangement Act with respect to pension plans, which was introduced by the member for Durham, seeks to transfer all the risks of deferred wages to workers by replacing defined benefits. Under defined benefit plans, when someone is working, a portion of their salary is deferred, set aside for their retirement. They know exactly how much money they will receive every year from the day they retire.

The Conservatives are doing the same thing as the Liberals did with Bill C-27. However, that bill has been put on hold for the time being because of the outcry from workers. It actually made the headlines. The NDP denounced the situation. My colleague from Hamilton Mountain did a tremendous job of demonstrating how this change would put the future of workers at risk and create two pension plans, one for those who have already accumulated some pension money and another for young people who are just entering the workforce. The young people would get a different and much more precarious pension plan. I will explain as I go along.

The end result would be that even though people would continue to have a known fixed amount at retirement, instead of receiving a fixed payment, the benefits would vary depending on the performance of the investments and the market. That is what the Conservatives are proposing. We know that investments sometimes do very well. They can yield a good amount one year, and then the next year, if the performance is negative, there might be no money for pensioners.

Do workers really want an income that fluctuates from year to year, an income that they cannot predict? I do not think so. Do they want a negative differential of $15,000 from one year to the next? How can they budget for renovations? How can they deal with a contingency? How can they plan a trip? Pensioners have contributed and set aside money their entire lives, but that money could go up in smoke because of this bill.

This goes against NDP values. It should also be contrary to what the Liberals are proposing in the way of protections for workers. This really puts the future of workers at risk.

That is like telling young people entering the workforce that even though they do the same work and make the same contributions to their pension, they might not get the same pension as those who have been working for the same company for 10 years. That is what will happen under Bill C-405. Is it fair for every worker to pay the same amount but not get the same pension at the end of the line? No. I think the answer is obvious.

The NDP is strongly opposed to this type of bill. Just look at what happened in the Sears scandal. Legislation is indispensable for protecting workers' pensions when businesses go bankrupt, and Canada's legislation in this area is woefully inadequate.

Pensions are supposed to be paid, and deferred wages are supposed to be paid for by creditors, but that is not happening. Under the current Bankruptcy and Insolvency Act, secured creditors always get paid first. Workers' pension funds always come second. In fact, that money is always the last to get paid out. In almost every case, there is practically nothing left to pay back the workers' pension fund.

Retired Sears employees were not the first to be severely affected by the bankruptcy of a Canadian company. Many will remember the collapse of Nortel. The star of Canada's high-tech industry was snuffed out in 2009. It was one of the largest bankruptcy cases in Canadian history. Thousands of Canadians lost their jobs, with no severance or termination pay. Nortel's pension plan had a $2.5-billion shortfall. After eight years of negotiations, Nortel employees learned that their pension benefits would be cut by 30% to 45%.

Let us go back to the Sears case, which happened not long ago. Thousands of employees were laid off without severance or termination pay. However, we know that Sears executives paid themselves bonuses totalling several billion dollars, while their employees were thrown out on the street. Many of them had to find new jobs, which can be hard for people who worked in the same place for 25, 30 or 40 years. Some had no degrees. They found themselves in a tough spot, because it is extremely difficult to find a job at age 50 or 55 these days.

The NDP supports the idea of making it illegal to pay loyalty bonuses to executives who drove a company into bankruptcy. We also want companies to be required to keep their pension plans solvent and to limit unfunded liability. When companies are allowed to get out of these payments, they are essentially stealing workers' pensions, and this is unacceptable.

I do not find this legislation particularly surprising coming from the Conservatives. However, on this dark November 23, at a time when the government is trying to stop free negotiation for postal workers, this bill comes at a bad time.

We will certainly oppose this bill because we want to protect workers' pension plans for all generations, including workers in my generation and our children's generation, and we want to make sure that the risks are shared. In fact, the NDP does not want there to be any risk at all. We believes that all generations of workers who contribute should receive fair, defined benefits.

[Gérard Deltell, Conservative, Louis-Saint-Laurent, QC]

Mr. Speaker, I am very happy to speak to Bill C-405 at this stage. It was introduced by my colleague, the member for Durham, as distinguished an MP as ever there was, who had a brilliant career as a military officer. Before being elected by the people of Durham and serving as a minister of the crown in the Harper government, he was also a corporate litigator, so he knows this issue inside out and knows the concerns of businesses, suppliers and employees.

As a result, we believe Bill C-405 strikes a balance between all parties—the business, its employees and its suppliers—when a business, unfortunately, goes bankrupt.

Let me say that our thoughts are with all those who worked very hard for their company over the years and who were left in the lurch when their employer went belly up.

In my riding, there are people who worked for Sears and other companies. I cannot say his name since I was not able to obtain permission ahead of time, but I want to acknowledge an outstanding volunteer in my riding who is involved in charitable activities. He works a lot with the Montcalm Knights of Columbus in Loretteville. I want to acknowledge him because he has brought up the the Sears situation often enough with me. I think of him when I rise in the House to talk about this subject.

As I said earlier, when it comes to pension funds, we need to find a fair balance between the workers—who are the first to be affected by a bankruptcy—and the other parties involved. This includes the company itself, which never wants to go bankrupt, unless it is run by scoundrels or boors, and the suppliers, who put their trust in the company and the owners, and who also end up high and dry when their partners unfortunately go bankrupt.

In our minds, Bill C-405 gives business owners the flexibility they need to avoid bankruptcy, and it gives employees the chance to come out on top. In addition, the bill would prevent partner companies, like the suppliers of the company affected, from having to pay the price for the mismanagement, tough breaks, or problems that led the company to bankruptcy.

This bill will give company managers more flexibility. However, the bill requires these managers to be more transparent about how they had been managing the company, especially with respect to the pension fund. This bill also provides for safeguards to prevent company administrators from playing around with the workers' pension fund.

Because it strikes that balance, we believe that this bill deserves to be appreciated and passed. It offers a solution to this very serious problem. Ultimately, we hope that all companies can avoid bankruptcy. However, it does happen that businesses go bankrupt and have no other choice but to make necessary but unfortunate decisions. Most importantly, this bill gives businesses the flexibility they need to take a step back before getting back into business in a more positive and constructive way.

Once a company goes bankrupt, it is hard to go back. As the perhaps somewhat overused saying goes, “you can't put the toothpaste back in the tube”. Once a company goes bankrupt, it has to live with the consequences, so it is important to prevent that from happening.

In general, what can be done to prevent a company from going bankrupt? First, it requires sound management. Second, the government needs to stop increasing the tax burden on businesses. This may not be the main topic of my speech, but it is important to remember that imposing a Liberal carbon tax will not do anything to help our businesses prosper.

Maintaining or adding more taxes, as the Liberals have been doing for the past three years, will not help either, nor will mounting frontal attacks, as the government did when it had the Minister of Finance table the proposed tax changes for small and medium-sized businesses on July 18, 2017, in which the government treated business owners as potential fraudsters who were abusing the system. As someone already said outside the House, not all small business owners behave the way the Prime Minister does in his business dealings, quite the contrary.

That is why we need to do everything we can to prevent companies from going bankrupt. The best way for the government to do that is by reducing red tape, by offering more flexibility for financial transactions, and most importantly, by not creating any new taxes as the government has done.

I am pleased to close by saying that, for us, this bill is a step in the right direction to solve the problem facing pensioners in bankruptcy proceedings. It is about having the option to prioritize the status of pensioners when companies are dealing with bankruptcy. As we know, pensioners currently rank in sixth place when a bankruptcy is being finalized. Perhaps we could increase the margin. I have spoken with unions, union members and bankruptcy trustees about this. They all say that, generally speaking, if that is done at the very beginning, it could create more problems, because it will hamper the company's access to financing and greater flexibility in an effort to possibly avoid the bankruptcy. No one wants that.

Giving employees super priority is more likely to create problems in the medium and long term than provide any short-term solutions and could have critical repercussions. That is why we think Bill C-405, an act to amend the Pension Benefits Standards Act, 1985 and the Companies’ Creditors Arrangement Act with regard to pension plans, introduced by my colleague from Durham, deserves the support of all members of the House.

[The Deputy Speaker, Bruce Stanton]

The hon. member for Durham has up to five minutes for his right of reply.

[Erin O'Toole, Conservative, Durham, ON]

Mr. Speaker, there has been much confusion today and much surprise, frankly, at the fact that my NDP colleagues did not even know the name, number, or the content of the bill. That should concern all pensioners. The speech given by the member for Pickering—Uxbridge shows that she did not know the bill either and spoke about unrelated terms.

I am seeking a compromise. It reminds me of the humourist Stephen Fry who said, “Compromise is stalling between two fools.” Maybe I am one of those fools, but certainly when my other friends in the House today did not speak on the content of my bill, it shows that we cannot seem to get anything done.

I would welcome my friends from the NDP making comparisons with Bill C-384, which will not pass the House. If they want to talk about super-priority and a whole range of other issues related to defined benefit risks in insolvency, vote for this bill and bring forward witnesses at committee. This is a substantive measure to make progress.

I have never suggested this is the magic bullet that will solve all issues, but of the 19 million workers we have in Canada, only about 4.2 million still have a defined benefit pension plan. If a company is approaching insolvency and has an underfunded plan, those people are at risk. Our Companies' Creditors Arrangement Act allows for the preservation of firms. I have worked on this as a corporate lawyer on the preservation of Air Canada, and many members will be taking that airline home this weekend. It did not go bankrupt. All the retirees were not left in the lurch. The suppliers' jobs were preserved. Keeping a company a going concern is the goal of CCAA proceedings. We do not want to see liquidations. That is the intent. Make progress on three key areas and that is what Bill C-405 does.

First, it allows pension administrators to preserve and enhance the funds that are left. As my colleague from Calgary said quite eloquently, when there is insolvency and liquidations, there are usually bad economic times. That is the worst time possible to annuitize that remaining fund. If it is already underfunded and only 80% of the funds are available for retirees, the annuity they have to purchase at the worst time to preserve payments might take another 10% or so away from that. We need to preserve and enhance those funds. That is one thing the bill would do. Why would anyone oppose that?

If we want to argue about the threshold of how many pensioners have to vote for approval of the administrator to merge the fund with another plan or do something to preserve and enhance those assets, let us debate that at committee. Let us have experts say whether the threshold should be that one-third reject the plan or that one-third approve it, but at least we need to have options to preserve and potentially give pensioners better returns in the future. Keep that fund going with enhanced pooling of resources and all the benefits of the plan. That is one thing.

The second thing the bill does is eliminate the abuse and unfairness of key employee retention plan payments. My friends from the NDP talked a lot about Nortel and other companies, with $200 million being paid out unfairly in many people's view to senior executives. This would constrain that. This would curb that by changing our insolvency regime, by denying companies' ability to make unfair, large bonuses and payments while there is an underlying pension liability. It would also allow national reporting to the OSC at the provincial legislatures, because pensions are provincial and federal.

I would like to thank many people who have helped me in the process. There is Brian Rutherford, my pal from GENMO. Even though they do not agree with the substance of some elements, this is what I brought forward. There are also Don Raymond, Keith Ambachtsheer, Rob Corkum, Paul Forestell, Andrea Boctor at Stikeman Elliott, and Natasha Monkman, a pension lawyer from Curtis.

Pensioners are emailing all of us. Yesterday, I spoke with Vic Morden who worked on these issues for a union for many years. He thinks the bill is a step forward. Wayne Routley, Jennifer Bankay, Charlotte Wooler, Margaret Ann Dobbin, Thomas Airey and Alexander Fox all have have concerns about the viability of their pensions in the future or their security in retirement.

Bill C-405 would make tangible steps and we should send it to committee. If the NDP want to look at super-priority or other issues, those can be considered at committee.

We are in a situation where the Liberals would rather have no progress than make substantive progress in the three areas I mentioned. I predict that a bill on super-priority will not pass in this Parliament. Therefore, why would we not at least provide the certainty for pensioners that this bill does?

I would like the other parties to put politics aside. Let us make steady progress, pass the bill at second reading, and let us talk more about the risks to pensioners at committee.

[The Deputy Speaker, Bruce Stanton]

Is the House ready for the question?

[Some hon. members]

Question.