Industry Committee on June 1st, 2021

[Scott Duvall, NDP, Hamilton Mountain, ON]

Thank you.

What I found, if I'm hearing correctly—and I'll likely ask Mr. Lemieux—is they're willing to compromise a little bit about where the pecking order would be, because these are deferred wages. We have to remember that these are actually deferred wages, and I hope we can all agree to that.

I just want to confirm that what you're talking about is keeping the big banks ahead of the actual workers' pension plan.

[Dominic Lemieux]

Thank you for the question, Mr. Duvall.

We are both former Stelco employees. I know the bill is not perfect, but there is a sense of urgency during this pandemic. We have to take the opportunity offered by the present circumstances. We must not get bogged down in minor details. This is not a perfect bill, but we have to seize the opportunity, during a pandemic, to boost pensioners' ranking among creditors. Certainly, in an ideal world, we would prefer to see pension plans be placed ahead of banks, but in the present circumstances, I think the bill has to be passed as it stands and we have to accept that pension plans will come after the banks.

[The Chair, Liberal, Sherry Romanado]

Thank you very much.

I have something to ask the committee.

As you know, it takes about five to 10 minutes to switch over to an in camera meeting, and we have a hard stop at 1 p.m. today. Is it the will of committee to try to get the first four slots of round two in and then go in camera for the report, or would you like to stop here? Could you give me a sense of where you're at?

Seeing no comments, I'm assuming we will stop now and thank our witnesses for being with us today.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

I'm sorry, Madam Chair, I would like to go to the next round if it's possible. It's going to take 10 minutes, maybe.

[The Chair, Liberal, Sherry Romanado]

The next round will take 15 minutes, and then it will be an additional 10 minutes to go in camera.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

I'd like that.

[The Chair, Liberal, Sherry Romanado]

Is it the will of the committee to continue? I see agreement.

Okay, perfect. We will start our second round of five minutes.

Mr. Généreux, you have the floor for five minutes.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

You understood why I wanted the committee to proceed with the second round, Madam Chair.

I am going to play devil's advocate. I support the bill, but I want it to move forward for the right reasons.

Mr. Lemieux, you just said that the bill is not perfect. For it to achieve perfection in your eyes, would retirees have had to be ranked before the banks? That is my first question.

Moving on to my second question.

I have been a mayor in the past. Earlier, you mentioned the City of Baie-Comeau or the City of Sept-Îles, I don't remember. You said that a company owed $10 million to that city and that it had been paid before the pensioners. As a creditor, that city is acting as the representative of all of its residents. In a city like Sept-Îles or Baie-Comeau, $10 million in unpaid taxes represents considerable lost earnings. Are you saying that this is less important than the pensioners' money?

I am trying to understand what might have been included in the bill to mitigate the repercussions on both sides. Clearly, even if the pensioners receive 100% of their money, they are still city taxpayers, and if the city has $10 million in lost earnings, the pensioners' municipal taxes are inevitably going to go up.

[Nicolas Lapierre]

Thank you very much, Mr. Généreux.

To answer your first question, I would say yes, the bill would have been perfect if it had ranked pension plans before the banks. However, that is not what we are asking for, because we understand the need to achieve a satisfactory compromise.

More concretely, in the case of Sept-Îles, for example, yes, there would have been an impact on taxpayers, inevitably. However, there is a very important difference to note: the City of Sept-Îles, unlike the company, cannot declare bankruptcy. The city would have had to pool the losses and spread them over 20 or even 30 years. A retiree aged 75 or 80 who is all alone and has to choose between paying for groceries and meeting other essential needs cannot pool the risks and spread the losses out over time, since they may have only five or ten years to live. That is the difference.

Certainly, a bankruptcy is not perfect for anyone.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

I agree with you.

[Nicolas Lapierre]

However, in that case, it is an acceptable compromise, in that the cities can pool the losses and spread them over time.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

I understand. I wanted to hear you say it. As I said at the outset, I am playing devil's advocate.

As an entrepreneur, I tell myself that if I had a pension fund at my company, it would be essential to capitalize it. An employer that makes a commitment has to make sure that it pays its full contribution.

As my colleague said earlier, in a bankruptcy, the entrepreneur starts by stopping investing in the pension plan. The funds are eroded bit by bit, and ultimately there is nothing left.

Although creditors would like to recover all their money in a bankruptcy, that probably does not happen often.

[Nicolas Lapierre]

You are entirely correct.

This bill is not intended to guarantee that creditors will recover all their money. Its objective is to give retirees a better chance to recover the most money, given that they will be ranked higher in the order of priority among creditors. This is not a guarantee, however, because each situation turns on its facts. It may vary from one situation to another, depending on the value of the assets and the size of the deficit in the pension plan.

The Sept-Îles case offers a very concrete example of how, if pension plans had been ranked above municipalities, the company pension plan could have been 100% replenished.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Mr. Lemieux, when I asked what would have made the bill achieve perfection, Mr. Lapierre said that you would actually have liked to see pension plans rank ahead of the banks. They would potentially be second in line. But what about subcontractors?

As my colleague correctly noted, some subcontractors also have employees. Sometimes those employees are unionized, sometimes they are not. When a subcontractor suffers a loss after a company goes bankrupt, it has no protection. The financial losses suffered will probably have repercussions for all employees of the subcontractor in question, whether unionized or not.

In the case of companies like Stelco, where you worked, there are often millions of dollars at stake for subcontractors. Those companies signed huge contracts with subcontractors and there are large sums of money at stake.

Do you think this bill can provide a solution, or is this impossible?

[Dominic Lemieux]

I will talk about priority rather than a solution. Do we prefer to prioritize the most vulnerable people in our society, like seniors who have worked for 30 or 40 or 50 years, or workers my age, who may still be able to find another job and continue to live decently? Personally, I think we have to prioritize the most vulnerable people, and they are pensioners.

[The Chair, Liberal, Sherry Romanado]

Thank you very much.

Our next round of questions goes to MP Ehsassi. You have five minutes.

[Ali Ehsassi, Liberal, Willowdale, ON]

Thank you, Madam Chair. Allow me to start by thanking all the witnesses for their incredibly helpful testimonies today.

Now, if I could start off with Mr. Yussuff.... Is Mr. Yussuff still with us? I don't see him on the screen.

[Chris Roberts]

No, he's had to depart.

[Ali Ehsassi, Liberal, Willowdale, ON]

Okay, then I will open it up to any of the witnesses.

One of the issues that we have heard about is obviously pension deficits and shortfalls, which should be of concern to every Canadian. In Mr. Yussuff's testimony, he did allude to the fact that after the Sears bankruptcy proceedings, employees who were in Ontario received better treatment than employees across the country in other provinces.

Could any of the witnesses could tell me, out of all the provincial schemes that we have—the one that readily comes to mind is the Ontario Pension Benefits Guarantee Fund—which one of the provinces has a better plan for making sure that these guarantees are there in the event of bankruptcy proceedings?

[Chris Roberts]

There's only one province, one jurisdiction, in Canada that has mandatory pension insurance for private sector DB plans, and that is Ontario, with the PBGF. Otherwise, some countries have similar arrangements. Mr. Powell mentioned the United States and the PBGC. The United Kingdom has a pension protection fund as well.

The differences within Canada when there's insolvency of this sort are very clear: Pension plan members who happen to reside in Ontario have their benefits protected up to $1,500, while those members of the same plan who happen to reside outside of Ontario take the full brunt of the pension terms.

[Ali Ehsassi, Liberal, Willowdale, ON]

Thank you, Mr. Roberts.

We have heard in testimony today that perhaps the federal government can assume a leadership role in encouraging provinces to set up these guarantees. Does anyone have any suggestions as to the best means to encourage other provinces to do so?

[Dominic Lemieux]

I have a suggestion to make. Given that the United Steelworkers is a member of the Canadian Labour Congress, I can answer that question.

Yes, the provinces can do things. In Quebec, for example, we have the Supplemental Pension Plans Act, which requires that companies fund their pension plans better. I am going to draw a somewhat caricatured comparison with credit cards. It is as if a credit card issuer allowed companies, in the past, to repay only the minimum required amount, and then they found themselves in trouble ten or 15 or 20 years later. Now, the companies are being made to pay 95% of their pension plans.

There are a lot of other things that the provinces can do. However, we need to seize the opportunity that is presented today. You, our parliamentarians, have the opportunity to provide security for 1.2 million Canadian pensioners. I would note that 76% of the population agrees that a way must be found to protect pension plans. The COVID‑19 situation calls for us, as a society...

[Ali Ehsassi, Liberal, Willowdale, ON]

Mr. Lemieux, I agree with you, but I think a big part of the problem is that various provinces have different plans.

Does anyone have any suggestions as to how we can ensure that the other provinces have a scheme similar to the guarantee scheme in Ontario?

[Dominic Lemieux]

We believe that the solution is not necessarily to have a system like the one in Ontario. Rather, legislation that requires employers to fund their pension funds should be passed.

Earlier, the example of Sears was cited. The shareholders were paid $500 million, while the pension fund had a deficit of over $300 million. So if the provincial law had required that Sears fund the pension fund, the retirees would have been hit a lot less hard.

So rather than create a fund, I think we would strike a better balance by requiring companies to fund their pension funds.

[Ali Ehsassi, Liberal, Willowdale, ON]

Absolutely.

Thank you, Mr. Lemieux.

Mr. Powell, would you comment?