Industry Committee on Nov. 30th, 2010

[Anne Clark-Stewart]

Yes, I do. I know that WEPPA was introduced in September 2009. It was made retroactive to the end of January 2009, just missing the Nortel employees by about two weeks, and that would have guaranteed them $2,000 of severance pay.

There's no way the legislation in WEPPA is going to repay or pay up the severance pay that is owed to the employees. Nortel did not pay severance when they went into CCAA.

I was on long-term disability when that happened. Because I had heard they were talking to bankruptcy lawyers and I knew the situation of the company and I knew my long-term disability benefits were self-funded, I decided to apply for my pension. Now, when I applied for my pension, I was eligible for what they called a transition retirement allowance, which, again, was deferred wages that we would receive when we retired. That amount was $150,000. Because my pension did not start until two weeks after Nortel went into bankruptcy protection, I lost that $150,000. Nortel stopped paying all transition retirement allowances--all that were in process. You could take it either as a lump sum or monthly over a five-year period. I had chosen a lump sum.

So everybody who had that has lost out. Those claims now are a claim on the estate. We'll be lucky to get 15¢ on the dollar for that claim.

There are a whole bunch of issues related to employee claims for which we're going to be in desperate straits. That $150,000 was to pay off my mortgage. Three years ago I downsized to come to Ottawa to help look after my aged parents as much as I could. I'm now in a situation where I'm faced with selling this house I downsized to and moving into an apartment. Having been at an executive level with Nortel, and one of the few females, I must add, when I was an executive--there were only five other females in the 1,500 who were executives--I never expected to be in this situation in my life now.

So there's the severance pay. There's the people who were terminated and who are still not employed because of the narrow skill set they had working in the company. There are people who have gone to the other companies that bought out part of Nortel businesses who have been laid off from those businesses, because they are restructuring and downsizing.

[The Chair, Conservative, David Sweet]

Thank you, Madam Clark-Stewart. Thank you, Mr. Bouchard.

Now we'll go on to Mr. Lake, for seven minutes.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

Thank you, Mr. Chair.

Thank you, Ms. Clark-Stewart, for coming before us today.

I want to ask first about the amendments themselves, because that is why we extended into these extra meetings. It was to hear how these amendments changed or didn't change witnesses' views on the legislation.

Can you tell me whether the NDP amendments change your organization's position on this legislation?

[Anne Clark-Stewart]

No, they don't change our position. We feel that the fact that you've included the solvency ratio versus the unfunded liability is most important, because the unfunded liability just means that it's an ongoing concern.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

Based on the testimony you heard from other witnesses, do you think this is likely? Are these changes major in terms of people changing their positions on the legislation because of these amendments? Do you anticipate that any of the other organizations will?

[Anne Clark-Stewart]

I think the other organizations that were in favour of Bill C-501 will be more in favour of Bill C-501 as a result of this.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

And the organizations opposed to Bill C-501 would probably still be opposed, I would say, right?

[Anne Clark-Stewart]

I think those organizations would be opposed to anything that would benefit employees.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

That's pretty strong language.

[Anne Clark-Stewart]

Well, I've been listening to all of the presentations. I've been here at all of those committee meetings, except one, and I've read all of the transcripts.

I am absolutely appalled--and that's the word I'm going to use, “appalled”--that businesses say that they cannot keep their commitments to their employees for business reasons, for increased credit.

The other point I want to make is that most of those people who were against the bill were saying, well, this could happen, this may happen, this is probably going to happen.

Where's the definitive indication that it will happen?

When the other bill on WEPPA was introduced, with retroactive legislation, there was no going to the Supreme Court with that. When the asset-backed paper case went in in 2007, and that was retroactive legislation to favour the banks, there was no appeal to the Supreme Court on it.

So I think there's a lot of fearmongering, from my perspective--i.e., if we do that, then this is going to happen and people are going to object.

Let's look at the needs of Canadians and the needs of the seniors, the frail, the elderly. These are people who are in nursing homes right now who are going to have to leave their environments. They are going to have to go to other nursing homes that are cheaper. They're going to have to uproot from all of their contacts. The average age of our pensioners is 74, and with these seniors, this is very disruptive for them.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

There's no question that bankruptcy, in general, is disruptive.

[Anne Clark-Stewart]

No question.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

It's disruptive to suppliers, though, as well. It's obviously disruptive to the thousands and thousands of Canadians who held Nortel in their RRSPs. It was very disruptive to them as well. It's disruptive to pension funds, union pension funds, that held bonds. You know, it's disruptive to them and those pensioners as well.

Bankruptcy is disruptive. It's terrible. It is very hard to hear what Nortel pensioners are going through. I find it very difficult to see what the long-term disability folks are going through.

[Anne Clark-Stewart]

Absolutely.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

Bankruptcy is devastating. There's no question.

[Anne Clark-Stewart]

I just have a comment on bonds in pension funds. They do not have Nortel junk bonds in pension funds. They're below investment grade.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

I just want to talk a little bit, if I could, about the unintended consequences we heard about. You've said that it's fearmongering, but the....

You said that you were an executive at Nortel, right?

[Anne Clark-Stewart]

Yes.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

So you understand, probably, a little bit about access to capital and the positive and negative impacts on a company depending on whether they're able to access capital.

Do you not believe that for companies going through or acting in this very difficult global economic environment, access to capital has been a pretty critical issue over the last little while?

[Anne Clark-Stewart]

Yes, I do. But I also know that if a company wants to get into a market, they will do whatever they have to do in terms of the capital expenditures.

I was involved in mergers and acquisitions in the 1980s and 1990s with the wireless division. I was AVP of business planning. We went into France, and we bought a company in France called Matrikon. Going into France, we not only had to pay for all of the employees who were foreign service, as you call it. We had to pay equivalent taxes that they would have paid in France as employees of France. We had to pay twice that mount. That was a cost of doing business to get into that market.

So I think you will find that most businesses that want to get into a market will do whatever is necessary to get into that market.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

As members of the industry committee, I would imagine that we all, over the last couple of years, though, heard from companies that their challenges with access to capital were putting them in danger of not being able to operate any more, not being able to continue, because of some of the challenges they had.

In those circumstances, companies that may not have had access to that capital may have gone bankrupt. They may have had to lay off employees. They may have faced fairly devastating circumstances. Their suppliers may have had significant struggles as well.

What do you say to those suppliers out there who might have had challenges running their own businesses, who may have had to face the possibility of laying off employees?

[Anne Clark-Stewart]

I suggest they go to the Royal Bank of Canada and get involved with them, since they have a $3 billion profit every quarter. They have lots of capital.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

Our banking system is one of the strongest banking systems in the world. We hear that time and time again. That's a strength of the Canadian economy. It's one of the reasons we're not facing some of the challenges that countries like Ireland and Greece have faced over the last little while.

When we talk about unintended consequences as we go through this, I hope you understand that when we're making decisions on legislation like this we're trying to weigh everything we hear. We're trying to avoid creating a situation that's worse than the situation we have now.

I understand it's difficult when you're here looking at the specific situation as it relates to Nortel. There's no question that situation is very difficult. But as we process this, as we hear what various witnesses have to say, we have to make a decision on the basis of the overall economy in Canada and—

[The Chair, Conservative, David Sweet]

Mr. Lake, I'm sorry, I have to make a decision too.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

—ensuring we're not going to create very similar situations for other Canadians.