Debates of Oct. 25th, 1994

Supply

[Dick Harris, Reform, Prince George—Bulkley Valley, BC]

The government should never say never to taxes. We have income taxes, consumption taxes, property taxes, visible and invisible taxes, all under the assumption that government is better than the private sector at redistributing wealth to create economic growth and jobs in the country. I would argue that this is fundamentally wrong thinking. The surest way to create growth in the economy is to leave more money in the pockets of the investors and the consumers. Let them decide where their money will be spent, invested or even donated.

People speak of an impending tax revolt. I would suggest the tax revolt is well under way, considering the record of the Liberal government and the management of its financial house. An underground economy is flourishing. It is estimated at over $100 billion a year.

The government and its predecessors believe in the fallacy that increased taxes bring in a proportional share of increased revenues. That is absolutely ludicrous thinking. Taxes upon taxes upon taxes create disincentives to employment and investment. Will these shortsighted Liberals ever see that simple truth? I think not. As Michael Walker stated, such disincentives are creating a generation of workers who see no point in tiring themselves for paycheques that increasingly go to the government.

Apparently the government has been through some sort of magical awakening in the last few weeks. It is the recent contention of the Minister of Finance that "whatever fiscal action is taken, the bulk should come from cuts in program spending". Reformers rejoiced when they heard that; if only we could believe it.

In February the minister boosted the budget of his own department by $1.4 billion for 1994-95. He raised DIAND's budget $400 million and nudged citizenship and immigration up $80 million. In that same budget the Minister of Finance launched 18 new programs and 15 new studies.

February's budget also introduced a $6 billion credit card infrastructure program. As we heard earlier, among other things the program involved the covering of boccie courts, building stands and hockey arenas in my colleague's home town, and building the canoe hall of fame in the Prime Minister's own riding, a $6 billion borrowed money program that is still to this day staunchly defended by the Minister of Finance as necessary to stimulate the economy.

Now a few months later the Minister of Finance is looking for $9 billion in cuts. Has he suddenly become a believer in balanced budgets, a firm believer in the problems debt and deficit cause in economic growth?

Considering the flip-flop, how can Canadians be anything else but confused? How can they have confidence in a government whose initial vision was to spend, spend, spend to create wealth and growth in the economy and then a few months later its vision is that it cannot spend, spend, spend to create growth. This has to be confusing to a lot of Canadian taxpayers. Canadians want to know what the vision of this government is. All we have had so far is talk. They want to see a clear vision, not confusion, not flip-flopping.

This government is content to stumble around in the dark attempting to determine if it is time to spend or cut. It is certain of one thing and it is something Canadians are becoming increasingly tired of. When in doubt, if you lack the political guts to make necessary cuts you raise taxes.

If the government is looking for cuts it need look no further than its own crown corporations. VIA Rail, the CBC, the St. Lawrence Seaway, CMHC, and Ports Canada consume $3.6 billion of taxpayers' money. I would suggest if these are not viable corporations, if the government cannot operate them without incurring deficits then why does the government so steadfastly cling to them? Literally, we simply cannot afford arguments over sentimentality in order to justify the government taking financial shortfalls in these companies.

If the government cannot at least break even in these operations then maybe it is time to cut them loose, turn them over to the private sector. It is unfair and indeed ludicrous to return to the Canadian taxpayer year after year requesting more money to prop up a multitude of failing government business enterprises. The government should get out of the business if it cannot run it at least at a break even point.

If we take the $3.6 billion spent on these crown corporations and add it to the $6 billion wasted on the credit card infrastructure program, we arrive at the $9.6 billion in cuts, or approximately what the finance minister is now seeking.

I want to talk about public input. This government continues to speak of consultations with the public, not just any consultations but consultations which are successively unprecedented. The Minister of Finance once again has promised unprecedented consultations on the run up to his new budget. This was promised before the February budget.

How many Canadians favoured the removal of the capital gains exemption? How many Canadians favoured adding some $34 billion to the national debt? I would be interested in seeing those numbers but I do not think this government has them. I do not think they exist.

This government's definition of run up consultations is a sham. Extensive unprecedented consultations are a fabrication of this government. The Minister of Finance admitted as much before the Standing Committee on Finance when he stated: "Government by necessity has the final word". Remember this when the government says: "We know you do not want RRSP contributions taxed but by necessity we have to levy a tax on them". Or the minister might say: "We know you do not want to pay higher income taxes but by necessity we have to raise them".

This government should put questions concerning cuts or taxes to the people, really to the people, through a referendum or through their respective MPs in this House. Do not patronize them by considering the issues to be too complicated for them to understand and do not patronize them with arguments of necessity.

If this government were truly looking at a new vision for its role in the economy it would be looking to the people for direction through referendum or through the people's MPs to determine where to spend, where to save and where to cut. Instead unfortunately, the taxpayer is handed lines about necessity as the government makes unilateral decisions.

In conclusion, the government should be looking at lowering taxes and cutting spending in order to eliminate the deficit and eventually the debt. It should be looking at unloading a number of unprofitable crown corporations. It should be looking at removing itself as the blockade to Canadian ingenuity and entrepreneurship.

Instead, from this government we see a spendthrift budget followed much later by calls for thriftiness. We see a government hiding behind claims of necessity instead of actively consulting with taxpayers on how their money is spent. We see no vision, but we see more finger pointing at who got us into this mess. We hear of more consultations and we hear of more taxes.

With such a strategy for our country's economy, investor and consumer confidence will continue to deteriorate. Our impending financial crisis will continue to loom. All I can say to the Canadian taxpayer is: Hold on to your pocketbook as long as the Liberals hold on to power.

[Dennis Mills, Liberal, Parliamentary Secretary to Minister of Industry]

Mr. Speaker, after listening to the hon member's speech, it is obvious he does not understand the role crown corporations play in this country. The member said that we should put the existence of some of these crown corporations to a public vote. That is a pretty good idea because I believe the reason we have crown corporations is that they fill a role that a lot of private corporations would not take on. I am talking about services to remote regions and disadvantaged regions.

I think of Pacific Western Airlines, for example. It needed the Federal Business Development Bank for its initial loan in order to get off the ground. It was a government instrument that assisted that company in getting started. We can go from airports, trains and post offices to the Canadian Broadcasting Corporation. The CBC is an instrument which pulls this country together. In some parts of Canada the CBC is the only communication Canadians get. These Reformers just want to cut, cut,

cut to a point where there will not be anything left to hold this country together.

We on this side of the House realize that we have to run a lean government. However, we are not going to buy their notion of turning it into a mean government.

I wish the Reform Party would also spend some time talking about some strategies for growth. Put some ideas forward that will help small business. The hon. member is sitting next to his colleague who worked very hard for seven months to put some specific ideas forward to help small business get access to capital.

The Reform Party should spend a little less time on the deficit and a little bit more time on how we create jobs.

[Dick Harris, Reform, Prince George—Bulkley Valley, BC]

Mr. Speaker, asking me how to create jobs is the easiest question in the world to answer, and I will answer it for this hon. member.

The biggest impediment to economic growth in this country is the cost of doing business. Our taxation levels are among the highest in the world. We have taxed ourselves out of the competitive market in our manufacturing, our service, our production. The answer to getting business and industry off the ground is to give them some tax relief.

If the government had turned the $6 billion it spent on the infrastructure program into a $6 billion tax break for private business, it would not have just created the 7,000 or 8,000 jobs that it did, it probably would have created about 40,000 jobs. As a matter of fact, I could be corrected but I believe the Minister of Finance some time back said that it would create 40,000 jobs but that just did not come about. If the government would get off the backs of private businesses and give them some tax breaks, some tax incentives to expand and develop and to grow and hire more people that would create economic growth.

I want to talk about the crown corporations. I realize that some crown corporations play a vital role. However that is no excuse for the government's inability to run those crown corporations at least at a break even point. We are not asking the crown corporations to make any money, just break even at least.

The hon. members on the other side always make Reformers out to be the slash and burners, the hackers and cutters. All we want is a government that can operate something at least at a break even point.

[Ronald J. Duhamel, Liberal, Parliamentary Secretary to Minister of Public Works and Government Services]

Mr. Speaker, for one year now that party has been the party of gloom and doom, the end of the world is coming. It has been the cut, cut, cut party. In fact if those members are looking for an alternative name they might call themselves the gloom and doom party or the cut, cut, cut party. I rather prefer the second because it has more rhythm.

Looking at the opinion polls, why is it that Canadians have favoured the Liberal Party, the party that is in government today, with its gradual approach to the creation of jobs and the reduction of the deficit and the debt? Why is it that their party's support, whatever little support it had, is evaporating quickly? Surely the majority of Canadians have a good sense of judgment. Surely the majority of Canadians know what is happening.

Those hon. members talk about the infrastructure program as being inappropriate. First of all, they know as well as I do that it was not new money, it was reallocated money. I wanted to correct that.

Is the hon. member supportive of his other colleague's remarks that the infrastructure program is not good for Canada, that the infrastructure program jobs are not appropriate jobs? I want him to confirm or deny that. Because the infrastructure program has created a better, superior infrastructure, does that not make it easier and better for us to be competitive, thereby creating long term jobs?

Will the cut, cut, cut party, the gloom and doom party respond to that please?

[Dick Harris, Reform, Prince George—Bulkley Valley, BC]

Mr. Speaker, I prefer to refer to our party as the party of reasoned logic. There were a number of questions. I would like to answer them one at a time, if I may.

The hon. member referred to Canadians as being supportive of the Liberal government and what it is doing. We know how polls work. If we make 1,000 phone calls, 500 of them are made in the province of Ontario. Of those 500, 400 are probably made in metro Toronto. The same ratio applies to the province of Quebec. Those provinces are in pretty tough shape because of mismanagement by not only the federal government but also the provincial governments. In British Columbia and Alberta where the economy is better because we did a better job of it out there, it is not exactly the same as what the polls indicate. Let us be fair about the polls.

The hon. member talks about this $6 billion as being reallocated money. He is talking about taking the $6 billion savings, the savings in Liberal terms, from the helicopter deal and reallocating it to the infrastructure program. That money was not spent yet on the helicopter program. It was cancelled. Just because you do not spend the money that is not savings. This government chose to spend it. It chose to borrow $6 billion and go in the hole $6 billion more.

There is a simple truth and it is worth repeating. If the government formula of funding to create jobs, the billions and hundreds of billions of dollars that the Tories spent and the Liberals spent before them and now the Liberals are spending again worked, everyone in this country would have about six jobs for goodness sakes.

[The Speaker]

My colleagues, we have about one minute to 6.02 p.m. I think I will call it 6.02 p.m. and then we can get on with the rest of it.

As it is 6.02 p.m. sort of, it is my duty to inform the House that pursuant to Standing Order 81(19), proceedings on the motion have expired.

The House will now proceed to Private Members' Business as listed on today's Order Paper.

The House resumed, from June 9, consideration of the motion that Bill C-237, an act to amend the Bankruptcy Act (priority of claims), be read the second time and referred to a committee.

Bankruptcy Act

[Jon Gerrard, Liberal, Secretary of State (Science]

Mr. Speaker, thank you for this opportunity to participate in the debate on this bill presented by the hon. member for Portneuf that would give employees and travelling salesmen higher priority than other creditors in the proceeds realized from the property of a bankrupt party.

The bill before us provides for payment up to a limit of $9,000 per person as the first priority in bankruptcy proceedings. The existing legislation does, in fact, cover workers. In it, workers benefit from a preferred claim to cover wages they earned during the six months immediately preceding the bankruptcy, for up to $2,000. The current legislation is not a perfect solution to the wage earner protection issue, but it is an immense improvement from the situation that existed before the Bankruptcy and Insolvency Act was amended in 1992 as a result of Bill C-22.

Hon. members may recall that before then, workers had a preferred claim for only up to $500 in unpaid wages and commissions. That level was established in 1949, when $500 represented three months' wages. Since 1949, numerous attempts have been made to improve wage earner protection. In 1970, the report of the study committee on bankruptcy and insolvency legislation recommended doubling the preferred amount, from $500 to $1,000.

Bill C-60, tabled in 1975, contained a provision for the full super-priority of wage claims up to $2,000.

In 1980, the Standing Senate Committee on Banking, Trade and Commerce assessed three possible solutions. The first was to establish a super-priority for wage claims, ranking them before all secured creditors' claims. This is the solution proposed to us today by the hon. member for Portneuf.

The second proposal was to establish a modified priority for wage earners, ranking their claims before claims of creditors with security on current assets, such as cash, inventory or receivables.

The third possibility was the creation of a wage earner protection fund.

The committee maintained that administering super-priority and modified priority would be very difficult, the biggest problem being how to share the burden among the secured creditors, given the large number of possible guarantees. Super-priority was very likely to limit access to credit for labour-intensive industries. Payment would certainly not be guaranteed, much less the speed of payment.

The Senate committee recommended establishing a wage earner protection fund that would be financed by all employers, based on the number of their employees, and by employees themselves, who would contribute a modest amount.

So it went, that between the Senate committee report of 1980 and the new Bankruptcy and Insolvency Act of 1992, several more reports were to address the same perplexing issue of protecting the interests of wage earners.

In total, there have been seven bills and seven reports all trying to address this recurring issue. Super-priority has been proposed before. It has been examined and rejected, as has the proposal of a fund from government revenues or a tax.

In the coming months, the Minister of Industry will receive the recommendations of the Bankruptcy and Insolvency Advisory Committee that has been struck to look into reform of the Bankruptcy and Insolvency Act. In the meantime, Industry Canada has been collecting data to help us make more informed decisions. When we examine these issues, we need to know the full extent of the problem, and how much it would take to resolve it.

We must be able to answer a number of key questions before we can make intelligent choices on the options available to us.

In how many bankruptcies do employees lose their wages? How much have they lost so far? Do the trustees refund part of the wages owed to them? How soon are these refunds made? To date, how much money has been available from the bankrup parties' property to pay creditors?

I am sure that my colleagues on both sides of the House will want to reflect on these questions before they set about to reform the bankruptcy laws to provide some kind of wage earner protection. We do not have the answers now. We cannot assess the impact that Bill C-237 might have. I would suggest that this House let the government proceed with its fact-finding. I would also suggest that it give the government time to receive the recommendations of the advisory committee. On that basis, I

will vote against the legislation before us, and I recommend that my hon. colleagues do the same.

In total there have been seven bills and seven reports all trying to address this recurring issue. Super priority has been proposed before. It has been examined at some length and rejected as has the proposal of a fund from government revenues or a tax.

In the coming months the Minister of Industry will receive the recommendations of the bankruptcy and insolvency advisory committee that has been struck to look into reform of the Bankruptcy and Insolvency Act.

I believe we need to know and have this report before we can proceed in the best possible way.

[The Speaker]

Order.

[Jim Abbott, Reform, Kootenay East, BC]

Mr. Speaker, this bill is one that I really want to speak in favour of. As a business person prior to coming into this Chamber, I am very much aware of the fact that the success of any enterprise can only broaden on the basis of the input of the people who are working for that enterprise.

Very frequently in small enterprises we have the entrepreneur who goes to the wall in terms of his own personal finances, the entrepreneur who puts absolutely everything on the line and probably pours an inordinate number of hours into the work. Then the entrepreneur, his wife, his immediate family or relatives might get one or two more people working. At some point we have employees coming into this growing business.

I will make up a word picture to have a look at what is happening. The entrepreneur has $50,000, for the sake of discussion, that he can bring to the table. Perhaps he collapses some RRSPs or whatever the case may be. He decides he is going to go into the pizza business. He suddenly uncovers the fact that he is going to require at least $150,000 worth of equipment in order to just be in the basic pizza business. If he is going to actually get into a restaurant, the number is going to go way up from that point.

Where is he going to go and where is he going to get the money? Let us step aside for a second and talk about the large enterprise, not perhaps as large as General Motors, but a larger enterprise that might have 100 or 200 people working for it that is in business at the moment. It is not infrequent that at this particular point in time that entrepreneur who perhaps has been in business longer, where there are now millions of dollars actually invested in the firm, will still have his house tied down with the bank as security.

I say I want to speak in favour of this because I am sympathetic toward the motivation. After all is said and done, employees are simply an extension of the business owner, of the entrepreneur, of the corporate culture. When a business is reaching a point of downsizing and things are closing in, those employees can make the difference of whether that enterprise will work or not.

With this kind of protection they might be more inclined-after all we do have to look after ourselves in the business world-to give of themselves and be more sympathetic and actually make this enterprise continue to work. If they do not have any protection it is conceivable that either the larger or the smaller business could miss a pay day or two. We are looking at the pension side of things. It is entirely possible that by continuing to work the employee is actually working to his or her own personal detriment.

If we want to have them completely on side and in the back of their minds they are working to their own detriment, is it not better to have this legislation in place?

I repeat, I want to speak in favour of this bill, but I cannot. The reason why I will not speak in favour of this bill is because the biggest single problem, particularly for small business in Canada today, is working capital or equity or just the wherewithal to get the job done.

At the moment it is not infrequent that businesses are faced with a situation of triple or quadruple security. The first thing the bank is going to say is: "We want your inventory". If that happens to be men's socks or widgets, flanges, gaskets or car parts, it does not make any difference. The bank says: "We want security over your inventory". It will not apply any value. It will not actually give any value. It just wants it.

Second it says: "We want your accounts receivable". That makes sense because in business terms we have converted an asset to a negotiable security, as it were. This is an account payable. If it is 60 days or under it is a current asset. This is something that the bank by assignment can actually make use of. However it is not at all infrequent for the bank to say: "We are only going to give 75, 65, 50 per cent of the value of your 60 day's accounts receivable". This is the reality small business is faced with.

We come back to our little pizza shop owner. The bank will also say; "By the way, we also want to have some way of attaching a mortgage to your equipment". Everything is absolutely tied down.

I suggest to the hon. member who proposed this bill, and there is no question in my mind that it was proposed in good faith, that if he actually speaks to the small business people in his constituency he will find that everything is completely tied down. Can he imagine that the bank or the lending institution of the business person's choice is now going to be told: "Oh, for every employee that I get, I will be guaranteeing up to $9,000 for that employee that you will not be able to touch".

That will be first charge. You will not be able to get to your pizza oven. You will not be able to get to your metal press. You will not be able to get to anything until that $9,000 per employee is satisfied. I suggest to the member that we would be shutting down the ability of small and medium sized businesses to get the cash they require to do business on an ongoing basis.

I want to vote in favour of this. I understand the motivation of the member in proposing it. I want to support the employees because they deserve support. I want to support them because they are the lifeblood, the reason why a business is going to succeed. I want to vote in favour of it but I will not because without the ability to have access to adequate funding, in putting employees first the business will not exist and the employees will not even have a job to go to.

It is with regret that I must say I will be voting against the member's bill.

[Dennis Mills, Liberal, Parliamentary Secretary to Minister of Industry]

Mr. Speaker, I am happy to have an opportunity to speak on Bill C-237, which provides a super priority for wage earners and travelling salesmen who can claim up to $9,000 owed to them in the event of bankruptcy.

I would like to begin by picking up the point of the Reform Party member about how difficult it is for small and medium sized businessmen and women to get access to capital today. Because small business has a difficult time in getting access to capital, quite often the supporting suppliers to a small business will put their product or material into the business knowing that they have put themselves in a secure position. In fact when small businesses cannot get capital it is their suppliers that keep them going and help make them viable.

This bill is not only going to affect the way the banks look at financing small businesses but it will also create a situation with the suppliers where they will be hesitant in putting their product into a small business environment at a very generous credit condition.

We realize first of all that bankruptcy and insolvency are very complex issues. In the event of a business failing and going bankrupt there is only one pie to divide. If suddenly the priority is put on the wage earners and the travelling salesmen at a $9,000 level, not much room is left in many instances for the other components in the business equation.

I would like to repeat that the intention of the member is right. It is a complex issue. We amended the Bankruptcy Act just two years ago. Currently the Minister of Industry has the department developing a database on all the activity around bankruptcy cases. These studies are ongoing.

I really believe it is inappropriate to support this bill at this time. We should wait until we have the results of all that data which is being collected.

The member for Kootenay East has said something about the importance of the employee to the viability of the business. I share his view and I obviously believe that would be the view of the member for Portneuf as well.

In a case where we are putting all of the employees in a business in a super priority position at $9,000 per person, this would really affect the ability of a small businessman or woman to obtain the support that is usually required from banks. As we all know, even in the current condition banks are making it very difficult for small businessmen and women to obtain the necessary capital to meet their business plans and their objectives. Until we have the banks acting more progressively and until their attitudes change toward small business, this bill should be defeated.

The other thing I mentioned has to do with suppliers. I believe that if we sent a signal in a business that if the employees want to show confidence in what they are doing they should not be doing it by putting themselves in the priority position to the tune of $9,000 a head. That in turn might have an adverse reaction on the suppliers to the business. Quite often in small business situations these suppliers can make the difference in viability, as I mentioned earlier.

[Ian McClelland, Reform, Edmonton Southwest, AB]

Are you talking about somebody working on a loading dock?

[Dennis Mills, Liberal, Broadview—Greenwood, ON]

We are talking about wage earners and travelling salesmen. The bottom line is as the member for Kootenay East said, if you have a small business it might only employ 10 to 20 people. You are talking about a priority call of $180,000 just on 20 people. A first charge of $180,000 on a business is a heck of a lot of money.

Everyone knows I am a believer in equity participation. I used to work at Magna International. I believe one of the reasons that company has grown from seven employees to 20,000 is because every employee has shares in the company. They have a piece of the equity. That is the reason they make better products at more competitive prices. But that of course is not what we are debating here today.

I would ask all members that we defeat this bill and that we wait until the final results of the study come from Industry Canada on all the current activity in the bankruptcy area as a result of the last bill.

[Francine Lalonde, Bloc, Mercier, QC]

Mr. Speaker, even if there are limits to what one can say in this House, I am outraged and shocked at what I just heard. On the one hand, very generous speeches on workers and employees, all those people who make it possible for the big shots to get richer. On the other hand, a

compassionate one on those poor small and medium-sized businesses having serious difficulties, and I agree businesses do experience difficult situations. But who do we want to protect here? The banks? In that case-

[An hon. member]

The suppliers.

[Francine Lalonde, Bloc, Mercier, QC]

They can go back at any time and get all of their supplies back from the businesses.

This is a ludicrous situation that has been going on for years. I worked in labour organizations at one time, a while ago, but in those days, I must tell you I fought hard for the value of employment to be recognized. I will come back to that aspect some other time. For years now, workers have been in a situation where they are thrown out on the streets without notice and with no means of getting paid for salaries owed to them, no pension fund and no vacation pay, compensations they earned by working hard and that are owed to them. They are totally helpless and deprived of everything. Now we say it is because of the banks.

This all powerful House of Commons could certainly give some thought to this issue. I think members here must vote according to their own consciences because we all know this is a matter of principle. It suggests that the government deal with this issue as a priority.

I understood very well the speech made by my friend-I am sorry, I meant my colleague-here besides me and I cannot say I am insensitive to what he said, but I will reply the same way. We cannot let others tell us what to do regarding workers who have earned salaries, small salaries, when we see banks threaten not to finance them.

I am proud of my colleague who is here in the House. Let me explain that the maximum of $9,000 he mentioned when he introduced this bill, would, of course, be an exceptional situation because in most cases, employers pay salaries on a weekly or bi-monthly basis. It is an exceptional situation, but there have been cases where some very substantial amounts have accumulated.

The hon. member also pointed out that if they are protected, employees will be more inclined to take a chance to help a small business through a rough patch, if they have the assurance-as my colleague argued-that they will recover their stakes. This aspect can be extremely important for a small business because, as far as I know, the banks often do not treat them very well and give no warning before they pull the plug, as they say.

Consequently, it is important for small businesses to know that employees will have certain guarantees and will be able to stick with their company, even when times are hard. Today, however, employees bear the brunt of these hard times, while when business is good, they do not get any of the profits.

To me, it is a case of elementary social justice. I think we should look at what we can do to make the banks take this into consideration. In fact, the government has promised it will prepare a plan for small business financing and for dealing with their specific problems. But it should not let the success of small businesses depend on their ability to avoid paying the wages, annual leave and pension benefits to employees who earned them.

I expect the House to vote in favour of this bill. It is a vote that reflects a principle and a commitment and tells the government: Do what governments have been promising all along and what workers now consider to be a running gag. If that is what the unions think, you can imagine what non-union workers are saying.

[Ben Serré, Liberal, Timiskaming—French-River, ON]

Mr. Speaker, it is a pleasure to rise today and discuss Bill C-237. This bill proposes to change the priority of payment of claims provided for in the Bankruptcy Act so that employees be the first to be paid in case of their employer's bankruptcy.

The hon. member for Portneuf is proposing to pay these claims, up to a limit of $9,000, to each employee of the bankrupt business. I congratulate him for this very commendable initiative.

At first glance, and before thoroughly examining the consequences of this bill, I would have been tempted to support it. However, after some deep thinking and research on the issue, I came to another conclusion, at least for the time being.

I would like to remind the hon. member that the contents of Bill C-237 have been proposed many times in the past. And each time, that proposal or another one such as this has been thoroughly examined. I am alluding here to seven pieces of legislation that have been moved since 1970 on the issue of employee protection, as well as seven other reports that were tabled on that issue since that time.

Finally, these failures led the previous government to forgo the provisions relating to the wage claim payment program in order to have other provisions of the Bankruptcy and Insolvency Act adopted. There should be a clear message here.

There is still room for improvements, but the present situation is better than the one which prevailed in 1992, when the act was reviewed.

At that time, employees could expect only $500 if they lost their jobs when their employer went bankrupt. Now, workers have a privileged claim up to $2,000 for the six months preceding the bankruptcy. The new provisions of the legislation provide that no tribunal can approve a proposal unless it includes payment of wages owed to the workers up to $2,000 per worker.

Bankruptcy and insolvency are complex issues, but the general picture is easy to grasp. There is a single cake of finite size. If you cut a bigger slice for one group, let us say the employees, clearly the remaining slices will be smaller. If a super-priority is given to one of the parties, it will be more difficult to pay the others, including secured creditors.

We have no other choice but to look at the whole picture, which requires time, expertise and concerted efforts. We must, at least, have a good idea of the impact one priority will have on all the others. Even if all parties co-operate and work harmoniously, a certain balance will have to be struck when dividing the cake.

Who should carry the burden of paying the employees up to $9,000 in the present difficult situation? What would the consequences of such a measure be on credit institutions, when fledgling or shaky companies come knocking on their doors with a potential debt of $9,000 per employee? What will they say to these companies who might employ more people than they should? Can we accept that they be penalized because they created jobs in an economy where jobs are difficult to come by?

Moreover, should employees show solidarity and assume, with those who really benefit, part of the financing necessary to protect a large work force? Briefly, let us say that we do not know precisely what measure would protect the workers more effectively, but Industry Canada continues to collect data, while the debate goes on. At the very least, establishing a super-priority, whether for employees, creditors or consumers, would have serious implications for everybody concerned.

The whole economy will feel the consequences. Until the government has answers to these questions and many other crucial and closely related questions which directly affect the superpriority issue, it is useless to try to deal with the complexities of specific priority claims. The claims of employees are part and parcel of the larger issue of bankruptcy reform, that we will be debating in upcoming months.

I would be hard-pressed to choose between the priority rights of the employees, or those of the suppliers, who have the right to take back their merchandise, or those of the buyers who made their purchases in good faith, not knowing that those goods were about to be repossessed. Again, if we put companies in such a position that they have to close down or if we create a situation where their available capital will disappear, their employees will have to look for jobs somewhere else.

We are still at an early stage, maybe not so early if one considers the history of Canadian workers, who had been expecting for a long time what they finally obtained in 1992, but nevertheless it is early in the context of the new legislation and of the related review process which should be completed by 1995.

It was a fierce battle from the beginning, and it took 40 years before we could get a revision of the Bankruptcy Act in 1992. There was widespread consultation of the people concerned because lots of diverging interests were at stake.

Perhaps those questions should not even be discussed in the context of general legislation on insolvency. The government must consider a debtor company's capacity to negotiate its successful restructuring.

Again, this is a web of very complex problems. In order to devise legal options that really work, the people concerned and the government must co-operate. We must all work to maintain the process by means of a review after three years and people must inform the government of any aspect which is of importance to them.

Another way to protect the reform, in political terms, is to try to guarantee government the largest possible consensus among stakeholders on any future reform. That is what we are trying to do with our consultation and partnership approach.

I am convinced that the member for Portneuf has no desire to introduce a bill that would imperil the jobs of those very workers that he is trying to protect. I am equally convinced that he would not want to help a small number of workers at the expense of the majority. In no way am I questioning the good intentions of this bill's promoter. I am not necessarily taking sides in this matter. I am merely trying to obtain more information in order to understand the real effect of this superpriority.

In my opinion, the House should consider employee protection in the larger context of bankruptcy, and to do so, it should wait for the results of studies already under way. I also feel that it is too early to evaluate the repercussions of the priorities which, as I said, are mentioned in the new Bankruptcy and Insolvency Act. We must tackle the various aspects of bankruptcy, ranging from the international to the individual level.

The House should go ahead with its review and allow the government enough time to receive its advisory committee's recommendations on the matter. Consequently, the House should reject Bill C-237, at least for the time being.

[Monte Solberg, Reform, Medicine Hat, AB]

Mr. Speaker, it is a pleasure to rise today speak to Bill C-237, an act to amend the Bankruptcy Act.

When I review the intent of the bill a couple of things strike me. First, the intention behind it is certainly good. It says something about the person who has moved the bill, that they want to protect the employees of a business that has gone bankrupt. Certainly all Canadians sympathize with people who would be denied their wages because a business has gone

bankrupt and they are not at the top of the list of the secured creditors but are well down the list.

Having said that, I am also struck by another concept that I read about some time ago and recently reread. It just really impressed upon my mind how often we get away from this whole idea in government when we are making important decisions that can affect individuals and businesses across the country.

I remember reading in a book by an economist by the name of Henry Hazlitt about how often one of the greatest failures of economists and people who are making decisions that affect economies is to not foresee the secondary and unseen effects of the measures they are proposing. With respect to my hon. friend in the Bloc I think that is what we have done in Bill C-237, an act to amend the Bankruptcy Act.

One of the unseen effects of the legislation-and other members have referred to it-is the kind of incentive there would be for banks and providers of capital to continue to provide that capital to businesses.

Banks are already very reluctant to provide capital to businesses for a number of reasons. My hon. friend from Kootenay West went through a litany of the things that banks require before they will lend a business money. Now the amendment to Bill C-237 is proposing to put one more impediment in place that would cause banks to think twice about funding a business.

That is a great concern to me. It is a great concern to the government across the way and I believe to the Bloc. As has been referred to many times in the House, the great engine of the economy in Canada is small business. Small business creates 85 per cent of all jobs in the country.

On one hand the bill appears to be protecting employees. On the other hand we do not see all the jobs it would prevent from being created because banks and other providers of capital would be reluctant to lend the money knowing their loan is not secured under the proposal.

That is something we have to be conscious of, particularly in the competitive environment we have today not only within Canada but within North America and certainly around the world. There are all kinds of different advantages that other countries have and will try to use against us to get their share of the market.

We are a relatively wealthy country. We can attribute that to the small and medium sized business to a great degree. We have to be conscious of the types of burdens we impose upon them when we propose to do what seems on the surface to be a very good thing. Canadian businesses, small business in particular, are the creators of jobs and all that wealth out there.

I am not certain the hon. member has really taken that into consideration. Banks and anybody else who provides capital have many options when they think about where they want to invest their money. Capital is very fluid. It flows to where it gets the highest return and where the risk is the least. One thing that may happen if the bill were passed would be that banks would start saying that they do not want to fund small businesses because they are not going to be a secured creditor. Another thing that could happen is that they would fund them but raise interest rates. They would put on a risk premium because they are concerned about losing their money.

We already have a problem in the country where we have some of the highest real interest rates in the world, which again hurts our competitive position. We have to think long and hard about the repercussions. If we are in that position where businesses are forced to pay higher interest rates then we will have a situation where there will be less jobs created.

Those are the things we never see and are never reported in the newspapers: the jobs that are not created and the businesses that are not started because of legislation. It is very easy to point to a plant closing somewhere and say: "Is it not a shame those people did not get their two weeks' pay?"

Is it not also a shame when people do not go into business because they know the bank is going to turn them down? The bank is not confident it will get its money back because it is not at the highest level on the list of claims; it is not a secured claim.

We can take a look at what the government is proposing in many areas. Infrastructure would be a good example. Any time the government prepares to intervene in the economy we have to think about the secondary and unseen effects.

There is another aspect that I would ask hon members in the House to consider. What if a supplier to a business is barely hanging on and has a lot of employees who are trying to keep their jobs? They do not want to end up on the unemployment or welfare rolls, yet all of a sudden the position of the struggling business is not secure any more. The government has extended the misery a little further down the line. The next guy down the line is in a position where he may be forced into bankruptcy and people may be out of a job because of the situation the government has imposed by approving Bill C-237.

There are effects that go beyond the banks and interest rates. There are also the effects on suppliers. Suppliers may be very reluctant to extend supplies or inventory to anybody but the most secure businesses.

In this environment in this day and age we know that no such businesses can be completely guaranteed against failure. Over the last recession we saw businesses fail that were in operation for not only tens of years but in some cases over a hundred years. That speaks volumes about the competitiveness of the environment and perhaps a bit about the instability of the business environment. Even in the best of times businesses cannot be counted upon to survive because they always have more and more competition.

I know members of the Bloc are supporters of free trade. We now have trade deals with the United States and Mexico. I am not aware of any such legislation in either the United States or Mexico that would parallel this legislation. In other words, we would be putting a burden on Canadian businesses, Canadian suppliers and Canadian providers of capital that does not exist in some other countries around the world, in this case particularly the United States and Mexico.

A couple of things could happen. First, businesses in the other countries will have a competitive advantage over Canadian businesses. Entrepreneurs from this country and Quebec can go south of the border. Perhaps they can go to Mexico if they have any type of business idea that will prosper no matter where it starts up. They can go there to escape the type of legislation we are talking about here.

Another thing that can happen is that capital can flow out of this country to more friendly environments where capital is treated with a little more respect. Maybe another way to put it is that the business environment is a lot more friendly. As I pointed out a minute ago, capital always flows to where it can get the best return and where there is the least risk.

In this day and age in this environment in Canada we have a $535 billion debt and we are going into debt at a rate of $40 billion a year or perhaps even more than that. We have some of the highest interest rates in the world. We have some of the highest taxes in the world. We have all kinds of competitive disadvantages. We have hot competition because of free trade with the United States and Mexico. Through GATT we have more trade pressures from around the world. Given all these factors I think it would be foolhardy to support the legislation. Therefore I will be voting against it.

[Yves Rocheleau, Bloc, Trois-Rivières, QC]

Mr. Speaker, it is with great pleasure that I rise in this House today, October 25, 1994, a year after the election. I would like to thank the people of Trois-Rivières for having placed their confidence in me and I hope that I have been worthy of it. I can assure my constituents that I will do everything in my power to keep their trust.

I would also like to briefly thank my organizers at the time, 800 party workers who, on October 25, 1993, worked for my election under the capable leadership, I would like to point out, of Diane Talbot to whom I paid tribute this morning.

I am pleased to take part in this debate on Bill C-237, An Act to amend the Bankruptcy Act (priority of claims). The bill's explanatory note reads as follows:

The purpose of this bill is to change the priority of payment of claims in case of the bankruptcy of an employer, in order that the wages, salaries and pension plan contributions of an employee, up to a limit of nine thousand dollars, be paid in priority to any other class of claims.

At this stage, I wish to commend my colleague, the member for Portneuf, for his determination, insight and courage in presenting this very socially-oriented bill, it must be said. Some societal choices are implicit in such a bill, in such a way of looking at things.

This issue was discussed in Parliament for the first time in 1919. However, even though most of the discussion on this idea of priority or super priority of wage claims has occurred over the last 20 years, the bank lobby always seems to win out, at the last minute. That is obvious in all the documents one can read on the issue.

When a bankruptcy occurs, there are secured creditors, preferred creditors, and then common creditors. Workers rank fourth among the preferred creditors.

We have to realize that a bankruptcy means something painful and sad which someone has to pay for. Since we can identify at first glance four types of major players that are always there: the government, the suppliers, the lenders and the workers-there are always four types of players-we must ask ourselves who is in the best position to assume the loss. Who is the most vulnerable? We could quickly analyse this.

Is it the government that has the most to lose? If it assumes some losses, despite the disastrous budgetary situation that it is in right now, this will always represent, in terms of revenue, of shortfall, a drop in the ocean. If ever the situation that is advocated became as dramatic as that in terms of lost revenue, the government could always change the act, since it has this legislative authority as well as being a player in the debate.

There are the suppliers who can pay, and they are increasingly better protected by the new Bankruptcy Act that was changed last year. If they sustain losses, they can file them as bad claims which will reduce their income tax accordingly.

There are lending institutions, particularly banks, for which these are bad claims, first on the accounting level. They could see here a means of improving their social responsibility, of improving their follow-up advice on the case, and perhaps a means of better disciplining themselves, knowing that they will now have something to lose if they pull the plug, as was mentioned earlier.

Finally, there are the employees, who have no leeway whatsoever to make up for the loss that they fall prey to in the case of a bankruptcy when we decide, under the present act, that they will have to pay. They have no way out.

I will put forward a principle that has not been proposed yet, the principle of the most vulnerable. Who is the most vulnerable? A quick analysis shows that in a case of bankruptcy, it is obviously the workers, who foot the bill, and not only directly, since they will not receive any salary and wages and they will have incurred expenses during that period. I am talking about expenses in terms of transportation, meals, clothing and even housing in some cases. And then they find out one, two, three or four weeks later that they will not get any wages, they will not be able to provide a decent living for their family for that period. Moreover, they will have spent money to go to work for an employer who is not able to pay them, which is contrary to the intent of our legislation where a service is provided for a salary.

They say that from now on, banks would be very reluctant to loan money. I take this opportunity to invite people to read the report the industry committee has just tabled. It mentions that the Small Businesses Loans Act will be broadened to include exporting businesses. The Bloc Quebecois made a special recommendation to the effect that the Small Businesses Loans Act should apply to all businesses with respect to loans and working capital. If our recommendation were to be accepted, it would make banks feel more secure when things go sour, since the loans would be guaranteed by the government, which would lessen their losses.

I take this opportunity to say that this is an excellent piece of legislation and that, contrary to those who would like to narrow its scope, I, for one, claim that if we were to review this act which guarantees bank loans, we should make a cost-benefit analysis, taking into account the jobs it creates, the taxes it generates, and the savings in unemployment insurance and welfare it represents.

Once again, I congratulate my colleague. Mr. Speaker, I am quite sure that you would like to know that the sovereign Quebec of tomorrow will be a little bit like this. It will respect individuals who are the driving force of any activity, be it economic or otherwise.

[The Speaker]

My colleagues, the time provided for the consideration of Private Members' Business has now expired. Pursuant to Standing Order 93, the order is dropped to the bottom of the order of precedence on the Order Paper.

A motion to adjourn the House under Standing Order 38 deemed to have been moved.

[Charles Caccia, Liberal, Davenport, ON]

Mr. Speaker, on October 3 I asked the Minister of the Environment a question about the toxic substances policy she announced on September 27. I asked her when the measures on pesticides would be implemented and what the timeframe for the policy was.

The minister replied that she had the intention of introducing implementing legislation in the early spring. Some suggestions might therefore be in place here tonight.

The goals of this toxic policy are as follows. First, to virtually eliminate from the environment substances that are the result of human activity, persistent, bioaccumulative and toxic. Second, to ensure that all other substances of concern are adequately managed throughout their use so that there is minimum impact on the environment and human health.

Those substances which are persistent, bioaccumulative and toxic are to be virtually eliminated from the environment through a management program that ensures "no measurable release" of each substance. However, when it comes to substances which cannot be controlled, measures will be taken to prevent their generation and use. The onus will be on industry to demonstrate that the proposed management program will ensure that there is no measurable release of the substances into the environment.

The first point that I need to make here tonight is that if we are to have a sound toxic policy in Canada we must ensure that it is based on sound concepts. Clearly pollution prevention is at the crux of this policy. Is it adequate to say that pollution prevention is the control of the release of toxic substances rather than the reduction in their generation and use? Will control of release be adequate to protect human health and the environment?

Second, the term reverse onus is used throughout the discussion paper. Reverse onus is actually intended to mean that no production or use of substances is allowed until it is proven that these substances are not toxic. This burden is intended to fall upon industry and not on the government. Therefore I would suggest the proposed reverse onus should be expended so as to apply to proving the safety of the substances first and then to the management plans.

Third, the definition of toxicity. It is based on the Environment Protection Act definition which states that the substance is toxic if it is present in the environment and in a quantity or concentration that may have a harmful effect on the environment or may cause an endangerment to human health.

Why not then adopt a definition of toxicity that does not have thresholds so high that the scope and effectiveness of the policy is thwarted? For example the policy proposed by the government is intended to apply to all substances used and released into the environment. Is this definition broad enough? Should it not include threats posed to human health on sites where these substances are used prior to the release of the substance into the environment?

Fourth, the concern that for a substance to be considered toxic it must meet certain threshold levels in three different criteria; persistence, bioaccumulation and toxicity. For some reason the proposed policy contains threshold levels that are often higher, less stringent than those proposed by the Ontario government, the priority substance list of the Environment Protection Act. Should we not ensure that we have stringent threshold levels to ensure the safety of human health and the environment?

To conclude, the success or failure of the proposed toxics policy rests on definitions and criteria. If they are too weak then the rest of the policy will be ineffective.

My question to the minister is will the proposed definitions and levels be re-examined and brought up to levels required to protect all life in the long term?

[Clifford Lincoln, Liberal, Parliamentary Secretary to Deputy Prime Minister and Minister of the Environment]

Mr. Speaker, in reply to the hon. member for Davenport I would mention that a toxic substances management policy was released on September 27 and given a period of 60 days for consultation and comments from the public and other interested bodies.

This period is going to end on November 30, 1994. Obviously among the comments I expect to be received include the key questions raised by the hon. member such as what really constitutes pollution prevention. Today the minister alluded to pollution prevention in a statement in the House as part of the very basis of our objective in trying to pursue environmental and sustainable development goals.

The question of pollution prevention, the definition of toxicity, the whole concept of reverse onus, the whole question of levels raised by the hon. member are obviously going to come up. These concepts or ideas require co-ordination with existing instruments, as rightly underlined by the member, with CEPA and with the other policies and programs of government.

What I strongly suggest to the hon. member is given the high regard in which he is held by all his colleagues in regard to environmental questions, including by the minister herself, is that he provide his input into the consultation process on these very issues that are so crucial to a reliable toxic substances policy.

I would suggest to the hon. member that between now and November 30 he let the minister have his thoughts and I can assure him they will be taken with very serious and constructive consideration.

[Ron Fewchuk, Liberal, Selkirk—Red River, MB]

Mr. Speaker, on October 19 I rose in the House to ask the Minister of Foreign Affairs what leadership role Canada would undertake to restore the Ukrainian economy after decades of economic and environmental mismanagement under the former Soviet regime.

I was very pleased to hear the minister indicate to this House that last July in Naples the G-7 countries endorsed the proposal of the Prime Minister to host a conference on economic reform in Ukraine.

As a Manitoban and a Canadian of Ukrainian descent I am very proud that the economic conference will take place in Winnipeg on October 27. The meeting will be attended by officials from the G-7 countries.

I understand that a proposal at this meeting is to discuss Ukraine's plan for economic reform and international support for Ukraine's economic transformation. I know that it is important that Canada and the G-7 countries encourage Ukraine to implement an economic reform program in co-operation with international financial institutions.

I was very pleased to hear that Canada is totally committed to Ukraine and has committed over $41 million to over 70 projects. It has been brought to my attention that Canada will further pledge up to $20 million in aid to help Ukraine transfer its economy to a western style market system.

I strongly believe that these projects are an investment in the future of Ukraine and an investment for Canada. These projects will be beneficial for all parties involved. This will open up a whole new market for Canadian businesses. Presently Canada and the United States are the only countries which have pledged their assistance.

During the Winnipeg meeting officials are expected to encourage the G-7 countries to pledge aid. I would very much like to get clarification on exactly how Canada is investing in the future and fostering better ties with Ukraine.

I am also very concerned about the environmental mismanagement that occurred under the former Soviet regime. Therefore I would like to know exactly what is going to be done concerning the environmental cleanup and the prevention of further pollutants being released into our environment.

[Jesse Flis, Liberal, Parliamentary Secretary to Minister of Foreign Affairs]

Mr. Speaker, I thank the hon. member for Selkirk-Red River for raising this issue and a number of issues especially when the President of Ukraine is visiting here in Canada.

Canada's special relationship with Ukraine is based on the close ties established with the 1 million strong Ukrainian Canadian community. The Prime Minister has worked to put the G-7 focus on Ukraine.

Canada is hosting, as the hon. member has already said, a conference on partnership for economic transformation in Ukraine in Winnipeg on October 27 which will include representatives not only from the G-7 countries but the European Union, IMF, World Bank, European Bank, Russia and Turkmenistan.

Canada has encouraged the Ukrainian government to adopt genuine economic reform that would be supported by IMF and World Bank lending. We welcome President Kuchma's new reform program which represents a bold step forward.

Canada will continue to play a leading role in supporting reform in Ukraine. Canada and the United States were the only two countries to make pledges during a recent IMF meeting which considered Ukrainian financial needs for the fourth quarter of this year.

During the visit of President Kuchma to Canada this week several new initiatives have been announced. This package includes $23.8 million in technical assistance initiatives which target policy advice on reform, private sector development and nuclear safety issues; $13.5 million in balance of payments support and a new $20 million EDC line of credit.

Protection of the environment is of critical importance to Ukraine, and Canada is demonstrating its leadership in this area through a number of technical assistance initiatives targeting water resource management and nuclear waste management.

Canada was the first donor country to implement a major environmental project in Ukraine.

We are currently supporting a $5 million, three-year project to assist with the rehabilitation of the Dnipro River, the source of drinking water for 70 per cent of Ukraine's population and one of the country's most pressing environmental problems.

[The Speaker]

I thank hon. members for their interventions.

Pursuant to Standing Order 38(5), the motion to adjourn the House is now deemed to have been adopted. Accordingly, this House stands adjourned until tomorrow at 2 p.m., pursuant to Standing Order 24(1).

(The House adjourned at 7.14 p.m.)