Evidence of meeting #42 for Industry, Science and Technology in the 43rd Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was retirees.
A recording is available from Parliament.
Nicolas Lapierre Representative, Regional Office - Sept-Iles, United Steelworkers
Yes, I hear you very clearly.
Representative, Regional Office - Sept-Iles, United Steelworkers
Thank you very much, Madam Chair.
Thank you also to the committee members.
I would simply like to add one point. The reason why the previous bills were not accepted by the various parties is that pension plans were treated as claims that took priority over banks, which made it difficult for companies to get back on their feet.
I participated in the lobbying in 2018‑19. As my colleague Mr. Lemieux said, we met with 250 MPs and senators and the fact that pension plans were ranked ahead of banks was a concern.
Under Bill C‑253, pension plans would not be ranked ahead of banks, but would be ranked ahead of school boards and municipal taxes. We believe that this would allow for a balance to be struck between employees' rights, pension plans, and the need to keep companies operating.
In the very concrete case of Cliffs Mining on the North Shore in eastern Quebec, among the creditors, the City of Sept-Îles ranked before the pension plans. This meant that the city received $10 million in unpaid taxes, the equivalent of the shortfall in the pension plans. This very concrete case shows that if pension plans had ranked before municipalities and school boards, the retirees' pensions could have been secured.
Of course, passage of Bill C‑253 by parliamentarians would not guarantee that the money would always be available, since every case is different. However, it would give us an additional chance, since pension plans would go up in the ranking of creditors. It would be a good compromise in order to balance the economy, workers' rights and retirees' rights.
To some extent, this bill reflects the lobbying we did with you. It also reflects your concerns. It is more flexible, but it would be a giant step forward for pension plans, which would be ranked ahead of municipalities and school boards. It is therefore important to see this bill as a way of providing the necessary balance that you, our parliamentarians, expressed a desire to see during our lobbying efforts.
Liberal
Emmanuella Lambropoulos Liberal Saint-Laurent, QC
Thank you very much. Personally, I am entirely in agreement with that recommendation.
Mr. Roberts, would you like to add as well? I see your hand up.
Chris Roberts Director, Social and Economic Policy, Canadian Labour Congress
I was simply going to try to respond to what I understood to be your question, which is how Canada's insolvency process compares to other jurisdictions in the way it treats workers and pensioners.
I would say, “Poorly.”
The insolvency process in northern and western Europe, I think, produces far better outcomes for workers and pensioners for a whole series of reasons, in part because there are more mechanisms to prevent companies from entering bankruptcy and insolvency liquidation with pension deficits that result in workers and pensioners being harmed. As Mike alluded to, there are pension protection funds in the U.K. and other places as well to catch plan members.
Really, Canada treats the most vulnerable the poorest, I would say.
Liberal
The Chair Liberal Sherry Romanado
Thank you very much.
Mr. Lemire now has the floor for six minutes.
Sébastien Lemire Bloc Abitibi—Témiscamingue, QC
Thank you, Madam Chair.
I particularly liked what Mr. Lapierre had to say.
I have a question for either of the Steelworkers representatives.
In concrete terms, what will the repercussions of Bill C‑253 be for the government and taxpayers? What financial impact may it have on balanced budgets?
Director, District 5 - Québec, United Steelworkers
Thank you, Mr. Lemire.
I think there will be no impact on Canadian taxpayers. Bill C‑253 would be zero cost to the government, since we are not asking that pension plans be financed.
As my colleague Nicolas Lapierre said, this bill will even help companies to recover. When a business is in financial trouble, then, of course, the employees' representatives are concerned. We have to remember that the company needs the banks' money in order to restructure.
That said, Bill C‑253 is zero cost to Canadian taxpayers and the Government of Canada. That is why we are saying that it is a good compromise: while it is not perfect for anyone, it would be a giant step forward. I think we can set politics aside and work together to protect Canadian retirees, particularly during a pandemic, and help them to maintain a decent lifestyle.
Bloc
Sébastien Lemire Bloc Abitibi—Témiscamingue, QC
So this bill would have no repercussions for the government.
Would it have repercussions for workers? We are talking about 1.2 million Canadians. What would the repercussions of the bill be for workers?
Director, District 5 - Québec, United Steelworkers
Workers, that is one thing. Take me, for example. I am 43 years old and I work for the United Steelworkers. If the union declared bankruptcy tomorrow morning, a portion of the pension benefits I would be paid later would be reduced. However, at 43, I would be able to find a new job, to cut back a bit on my expenses, and to change my lifestyle.
For pensioners who are 75, 80 or 85 years old however, it is truly a disaster. When the North Shore was hit, pensioners had to decide to stop taking their prescription drugs, because they could no longer afford them: they had to choose between grocery shopping and buying medicine.
This bill would offer pensioners some security. They are already worried because of the pandemic. In addition, people who have worked for a company for 30 years and have been retired for 20 years are worried about what might happen if the company's financial situation goes bad. A bill like this would offer some security for seniors, who are often among the most vulnerable in our society.
Bloc
Sébastien Lemire Bloc Abitibi—Témiscamingue, QC
I completely agree with you. Thank you for your work on this.
I would now like to talk to you about the deadline. This is June 1, and counting today, there are 17 sitting days left before the summer vacation. So we have very little time left. It is urgent that we finish our examination of this bill in committee so it can be sent back to the House. With the rather persistent rumours of an election being called this summer, we are hoping to be able to act in time.
How do the Steelworkers see the urgency of sending this bill back to the House so that it does not die on the Order Paper? That would be a shame, given all the progress we have made and the consensus there seems to be around the table today.
Director, District 5 - Québec, United Steelworkers
I am happy to see this consensus. I also think the time is right. Everyone has softened their position a bit. I am pleased to see that Mr. Poilievre seems to support the bill. I think that parliamentarians, together, can set politics aside to move forward on this issue once and for all before the next election is called.
My opinion is that the urgency is combined with this being the right time, and we must not get caught up in minor details. We have to move forward so we can offer our pensioners some security.
Bloc
Sébastien Lemire Bloc Abitibi—Témiscamingue, QC
Some companies have availed themselves of the Canada emergency wage subsidy during the pandemic. This is a sort of artificial support that could postpone the timing of a bankruptcy in some cases. I am afraid that in the fall, when the various subsidy programs end, we are going to see a number of bankruptcies.
Are you afraid of this? If we do not pass Bill C‑253 before the fall, what might the repercussions be for workers and pensioners?
Director, District 5 - Québec, United Steelworkers
We have to acknowledge that the government has done a remarkable job to support the Canadian economy, particularly with the CERB and the Canada emergency wage subsidy. But all good things come to an end. I believe that when these assistance measures end, Canadian businesses are going to seek the protection of the Companies' Creditors Arrangement Act and ask the banks for help to restructure. In that case, I believe that this bill will motivate the banks to invest in those businesses' economic recovery, since their investments in those businesses will be protected in the event of bankruptcy.
So we will be killing two birds with one stone. First, the bill will offer greater security for workers and Canadian businesses. Second, it will offer greater security for our retirees who are living on their pensions and have no way to make up losses.
Bloc
Sébastien Lemire Bloc Abitibi—Témiscamingue, QC
Madam Chair, without making an official motion, I would ask that you consider the possibility of starting the clause by clause examination of the bill as quickly as possible.
My last question is for Mr. Lapierre.
Could you tell us about the human experience of the Cliffs employees and retirees? Could you tell us about what they have been through?
Representative, Regional Office - Sept-Iles, United Steelworkers
In the Cliffs Mining case, at first, the employees, the retirees, were to have their pensions reduced by about 21%. We succeeded in recovering a few million dollars, but ultimately it was still short almost 9%.
As my colleague Mr. Lemieux said, retirees came to my office to tell me they were no longer able to buy medicine. Given that they had lost $400 or $500 a month, if they wanted to buy groceries, they could no longer buy medicine. It also has to be noted that they had lost their prescription drug insurance.
As parliamentarians, you have an opportunity to take a giant step forward to prevent all these human tragedies. We have found a fair and necessary balance; it is a matter of compromising. Everyone should approach this question with all possible goodwill and diligence so that we have...
Liberal
The Chair Liberal Sherry Romanado
I am sorry to interrupt you, Mr. Lapierre, but we have gone well beyond the time allocated to Mr. Lemire. We have to move on to the next member.
Liberal
The Chair Liberal Sherry Romanado
Our next round of questions goes to MP Duvall.
Welcome to INDU. You have the floor for six minutes.
NDP
Scott Duvall NDP Hamilton Mountain, ON
Thank you very much.
Welcome, everybody, and thank you for attending on this important issue.
Coming from my background, I have actually lived the experience of going through a bankruptcy at Stelco and the first CCAA, and I can tell you that it is disastrous. It's disastrous for the working people and it's disastrous for the retirees. All I saw during that time of two and a half years of CCAA protection was lawyers who made millions of dollars and executives who got rich on bonus payments, and it all came at a cost to the workers and the retirees.
As for what they did, the very first thing was that they wiped out all the retirees' health benefits. Then they suspended all the payments from the actual pension plan. Also, if they do liquidate, people get hit again. As well, all the termination severance pay for the people who are laid off is wiped out, and then they have to go and collect pennies. It is disastrous, and I believe it's unfair.
This question is for anybody who wants to answer. During a bankruptcy under the current legislation, are workers and retirees at a significant disadvantage when the company deals with creditors such as large financial institutions?
Anybody can respond.
President, Canadian Labour Congress
First of all, of course, I think workers are at a disadvantage compared to the banks. The law clearly requires that banks be at the head of the line with regard to how the assets are going to be divided. Fundamentally, they have always been the benefactors of a company that's in bankruptcy.
Over the decades that we've been arguing about this and debating this—it has been decades—in almost every Parliament that I can remember over the last 22 years, there have been some initiatives to change the bankruptcy law in this country to make it somewhat fairer for working families and for workers who are dealing with bankruptcy with regard to their pensions. Despite that, of course, we haven't made any significant progress in moving workers' priority. There have been some changes to the legislation to deal with some of the challenges, but the fundamental question is why workers have been put at the back of the line when it comes to dividing the bankrupt assets of the company and to not paying into the assets of the pension plan.
I think this Parliament has a unique opportunity. Clearly, the opposition has put forth the bill, and I think it is critical for Parliament to consider it, recognizing the inequality between workers and banks in the current legislation. Banks are always going to be the priority—
NDP
Scott Duvall NDP Hamilton Mountain, ON
Thanks, Mr. Yussuff. I want to ask another couple of questions, because what you're saying is what I'm verifying from the other parties from talking to them, especially after the Sears bankruptcy: It was that something had to be done.
Yes, there were legislative changes in 2019, but it was just a bunch of makeup. It didn't do anything to secure and safeguard pensions. I think all parties agree that we need to do something.
Maybe I can ask you this, Mr. Roberts: What is the best way to address the unfunded liability or the solvency deficit of pension plans without affecting the ability of companies to raise capital? What is your suggestion?
Director, Social and Economic Policy, Canadian Labour Congress
There are a number of ways to do it. Remember that wage claims—unpaid wages—were initially debated in the same fashion. Should they be granted a superpriority and placed ahead of secured creditors, or should there be a fund set up to ensure that workers would be made whole and the government would be able to subrogate those rights and pursue those claims in insolvency?
That's what we did when we set up the wage earner protection program in 2005. We could do the same with the pension deficit. We could establish a national mandatory pension insurance so that there's no conflict for secured creditors, but pensioners and workers are made whole in terms of their pension entitlements through an insurance scheme.
The other way to do it, though, is to examine the priority of claims under the Bankruptcy and Insolvency Act and see what material difference might have been made if the pension deficit had been, as the Syndicat des Métallos has said, immediately behind the secured creditors but ahead of other unsecured creditors—essentially, a preferred claim. My guess is that there would be a material and significant improvement in the payouts to pensioners and plan members. The problem is that we don't have the data.