Thank you, Mr. Chairman.
My name is Warren Everson. I am from the Chamber of Commerce. With me is Jonathan Allen from RBC Capital Markets.
Thank you very much for inviting us to appear.
The Canadian Chamber of Commerce is Canada's most representative business association. Through our network of over 400 local member chambers of commerce, we speak on behalf of 192,000 active companies of all sizes across Canada.
My part in our presentation today will be to outline the policy concerns of our members who offer defined benefit pension plans and whose businesses would be fundamentally affected if pension plan liabilities are accorded the status of secure debts in the event of a bankruptcy.
Then I'm going to ask Mr. Allen to quickly speak to Bill C-501 from the perspective of a debt market expert.
It's clear to everyone in this room that pensions will be the dominant public policy issue in finance over the next few years, and presumably would have been, had we not experienced the meltdown we did in the last couple of years.
I wish we could support a bill that deals with such a significant issue and such an emotional one. However, this particular bill does not attract our support. We're here today because of significant potential for damage that could be done to many of our members and to millions of Canadians who invest in them if this bill moves forward.
I'd like to deal immediately with two misapprehensions regarding Bill C-501.
The first misapprehension is that Bill C-501 would help members of pension plans whose sponsors have already declared bankruptcy. I think members of the committee heard in the last couple of days that this is not the case. This is not a bill that would rescue Nortel pensioners.
The second misapprehension is that companies who sponsor defined pension benefits have been underfunding their plans. That's not the case. The current underfunding of defined benefit plans is a result of a combination of unusually severe financial circumstances, the 2008 collapse in equity markets, and a very significant decline in long bonds to a level not seen in 50 years. I think it's important for the committee to recognize that we're dealing with a once-in-50-years circumstance.
We do think there are several unintended and adverse consequences in granting creditor protection to defined benefit pensions for employers, for plan sponsors, and for millions of Canadians.
I'd like to ask Jonathan to speak to that.