Debates of Nov. 30th, 1994

The House resumed from November 29, consideration of the motion that Bill C-57, an act to implement the agreement establishing the World Trade Organization, be read the third time and passed.

(The House divided on the motion, which was agreed to on the following division:)

World Trade Organization Agreement Implementation Act

[The Deputy Speaker]

I declare the motion carried.

(Bill read the third time and passed.)

The House resumed consideration of the motion.

Budgetary Policy

[Don Boudria, Liberal, Glengarry—Prescott—Russell, ON]

Mr. Speaker, a point of order. I believe you will find that the members of Parliament who just voted on the previous motion could be recorded as having voted on the next motion, with Liberal members voting yea. The whips of other parties will indicate how their colleagues are intending to vote.

[The Deputy Speaker]

Is there unanimous consent to proceed as proposed?

[Some hon. members]

Agreed.

[Gilles Duceppe, Bloc, Laurier—Sainte-Marie, QC]

Mr. Speaker, Bloc Quebecois members oppose this motion.

[Jim Silye, Reform, Calgary Centre, AB]

Mr. Speaker, I think you will find all the Reform Party members present today will vote yea.

[John Solomon, NDP, Regina—Lumsden, SK]

Mr. Speaker, as the New Democratic Party caucus whip, New Democrats in the House today vote no.

(The House divided on the motion, which was agreed to on the following division:)

[The Deputy Speaker]

I declare the motion carried.

It being 6.38 the House will now proceed to the consideration of Private Members' Business as listed on today's Order Paper.

Executive Salaries

[John Harvard, Liberal, Winnipeg—St. James, MB]

moved:

That this House support the principle of disclosing the salary ranges of all senior executives of crown corporations and publicly traded companies incorporated under federal charter.

Mr. Speaker, in this motion I am asking the House to support the principle of disclosing the salary ranges of all senior executives of crown corporations and publicly traded companies incorporated under federal charter.

I admit right off the top that I do not think this motion really goes far enough. That was suggested by the Globe and Mail newspaper which suggested that the motion include boards and commissions of the federal government.

I tried to keep the motion as simple as possible. Adding other entities, in my opinion, only complicates the issue. I wanted, in a fashion, to set the bar as low as possible so that we could get some kind of easy discussion on this matter.

I wanted to discuss this issue so that Canadians can get an idea of how members of Parliament feel about generous and sometimes extremely lucrative benefits which executives of public companies and crown corporations receive.

Why did I introduce this motion? It has not been designed to settle the impossible question of what executives are worth. I am not trying to do that in this motion. After all we live in a free market economy in which employers can pay employees whatever they feel is acceptable.

If my purpose is not to determine an executive's worth then why the motion? Consider how the public would feel if both politicians' and senators' salaries and benefits were not disclosed. People would be very unhappy. People want to know how public servants or public representatives treat themselves. Similarly, and I think in a growing fashion, people want to know how powerful, influential people in the private sector treat themselves.

Also consider the province of Ontario which under its securities act requires companies currently trading on the Toronto Stock Exchange to disclose the compensation packages of senior executives. Ontario is the only province with this requirement. The Ontario example provides a basis for us. Summaries of all companies should be required regardless of location in Canada and whether that company is publicly traded or a crown corporation; in other words, extend the Ontario example right across the country.

Ontario's securities act was implemented several years ago. It was implemented to force companies trading on the Toronto Stock Exchange to disclose the compensation packages of senior executives. As well, the Ontario legislature has given first reading to two private members' bills relating to salary disclosure.

Bill 108 would amend provincial access and privacy statutes to provide access to information relating to the salaries of public service officers and employees at the provincial and municipal levels. Bill 114, entitled an act to provide for the disclosure of executive compensation in the public sector, would require the Ontario government to report annually the salaries of the five most highly paid officials in each government ministry and crown corporation.

Perhaps through example we can more clearly understand the motivation for the introduction of disclosure regulations. Let me give some examples.

Hartland MacDougall, the former chairman of Royal Trust was handed a combined salary, bonus and severance package of $2.9 million for 1993. That came after the collapse of Royal Trust.

Marvin Marshall is CEO of Bramalea Ltd., a real estate firm. In 1993 even though Bramalea lost something like $90 million Mr. Marshall was paid almost $1 million in salary, $971,225.

Bill Stinson, CEO and chairman at Canadian Pacific, received a 31 per cent increase in salary in 1990, earning $1,181,895 despite the fact that Canadian Pacific's profits declined by 52 per cent in that same year.

Paul Stern, former CEO of Northern Telecom, left that company in 1992, receiving $164,000 for two months of employment. Stern also took with him a compensation package totalling $6 million. Also we cannot forget another $1.5 million in stock options.

When Stephen Banner joined Seagrams he received a signing bonus of 200,000 Seagram shares with a market value of $5 million as well as his salary and a bonus package worth $1.2 million. In addition Mr. Banner received a $1 million interest free loan to buy a house in Montreal and additional stock options

worth $2.1 million. As for his performance that has to be yet evaluated.

Those are examples. Some people might say those are examples of lucrative benefits. Some people might say that is an example of greed. There are cases where greed is not so apparent.

Paul Desmarais, the chairman of Power Corporation of Canada, a Montreal based firm, paid himself $1.6 million while the firm's net earnings were $201 million.

In my opinion such salaries become more than a simple matter of disclosure, but disclosure is at the heart of this issue. Executives of large firms and crown corporations are powerful people, perhaps in some instances more powerful than ministers or even the Prime Minister. In this respect there needs to be some legislation to inform Canadians how corporate moneys are dispensed with or spent.

One reason for introducing this as a motion rather than a bill is that several legislative changes would be required in order to facilitate salary disclosure. I do think though that salary disclosure means that salaries or compensation packages would be tied more closely to performance: the better the performance, the better the compensation package; lower performance, lower remuneration.

Disclosure at the federal level would require all kinds of legislative changes. For example, under the existing legislation in section 3(19)(iii) of the Privacy Act the federal government is now required to only disclose the salary ranges for senior civil servant positions. The Federal Court has interpreted salary range as meaning the exact salary amount of officials and shall remain personal information and not subject to public scrutiny. However, the Canada Business Corporations Act does permit public access to documents such as letters patent and annual returns which do not include certain information on a corporation's directors.

Federally there has been an effort to amend the Privacy Act to require the exact salary to be announced with order in council appointments. In a 1987 report the Standing Committee on Justice and the Solicitor General recommended but did not implement the amendment which would have made specific salaries of government officials mandatory.

Financial institutions are major corporations incorporated under federal charter. Several acts would have to be amended to effect this change, namely the Bank Act along with its counterparts, the Insurance Companies Act, the Trust Loan Companies Act, and the Co-operative Credit Associations Act.

The Canadian Business Corporations Act could also be amended to include an order to state executive remuneration. When filing annual returns with the Superintendent of Financial Institutions a corporation could be required to report the salaries of its senior directors. This information would be accompanied by a report of the corporation's operations and activities of its directors already provided to the superintendent in accordance with section 262 of the act and open to public scrutiny as required under section 266.

It may also be necessary to make an amendment to the definitions in the Privacy Act to clarify the intent and need for salary disclosure for the sake of public interest. The amendments mentioned here could sufficiently cover the salaries of private sector executives.

Those are some necessary legislative changes. That is down the road. Right now we are more or less talking about the principle of disclosure.

As politicians we are continually reminded of the notion that absolute power corrupts absolutely. I am not trying to imply that senior executives are morally corrupt or have ethics that are worse than any other person. I do not think they are any more greedy than anyone else, but I do think that because of their influence and power they may be in a better position to act upon the greed they may possess. I suppose we all have some greed in us.

I am saying that senior executives are so powerful that even though they are technically employees their compensation can be extreme relative to the company's economic performance. Currently some executives can virtually set their own salaries and bonus packages. I suspect there would be a considerable debate on this point, but they are very powerful, especially in their own realm within their own companies.

Senior officials are also in a position to stack or heavily influence advisory boards or shareholder boards with friends and allies. Corporations are not the most democratic institutions. One might ask at this point: Why not leave this matter to the shareholders?

I do not expect private companies to be as democratic as this old institution we call the Parliament of Canada is. Given the fact they are not that democratic I do think that shareholders need a little helping hand to open up the process and to provide better disclosure. We have to remember that shareholders in private corporations are a disparate group and are spread all over the place. It is very difficult for them to get together to make things happen.

Legislation would do executives a favour in some instances, in those cases where salary and compensation packages are reasonable relative again to company performance. They would receive strong public support and it would be good for their image. In cases where remuneration is unreasonable there would be some reason to worry and they would have to bring about some adjustment on account of adverse public opinion.

Countless times executives are quoted as saying that the government should cut back on its expenditures. What I am proposing in this motion would require that private sector executives practise what they preach. Or, if one believes that executives in private corporations already practise what they preach maybe this kind of disclosure would ensure that they would continue to practise what they preach.

During the recent recession a number of companies lost a great deal of money, yet executives of some of these companies were rewarded handsomely. In some cases executive salaries went up despite the fact that the performance of their companies went down. The greatest irony is that in many of these cases it was these individuals who made decisions which cost their firms a great deal of money, yet they were in receipt of greater rewards and greater compensation. Should we be rewarding bad decisions and bad choices? If we do that then I suppose the Conservative Party would still be ruling this country.

Crown corporations also play a significant role in the economy and should be subject to the same rules of disclosure. The fact that executives can earn more money while the companies they work for lose money suggests that executives have the power to design their own packages in secrecy, behind closed doors and out of sight of public scrutiny. The public should know how the packages of crown corporations are established.

In recent days there has been a controversy surrounding the head of CNR. We discovered that as part of his package he was in receipt of a $300,000 loan interest free, which probably makes it worth another $30,000 or $40,000. There is no need in my opinion to hide that kind of thing. If in this case the head of the CNR deserves that kind of assistance, if we want to put it that way, then it should be open and above board. He has no reason to hide it. My guess is it was made as obscure as possible because the man involved did not want that kind of information out. He probably thought it would add to his discomfort.

Disclosure is not intended to embarrass executives. It simply outlines the need for constraint. Disclosure gives us those constraints.

Initially this action may be considered intrusive. However, in the case of crown businesses they are the businesses of the government. Because they use government money they are using tax dollars. Furthermore, these businesses are important to the Canadian economy. Consider for a moment the significance of General Motors, Canadian National Railways, the Bank of Canada and the Department of Finance.

In conclusion, I wish this motion had been made votable but the powers that be decided otherwise. I wanted it to be votable because it would have given us the vehicle to express ourselves on this issue. I think Canadians want parliamentarians to express themselves on this matter.

In the remaining 40 minutes of this debate, I welcome the comments and the insights of my colleagues. If there are members who believe that executive compensation is nobody's business but their own, then let us hear about that. If in the opinion of some members disclosure is deemed to be harmful to the public interest or harmful to the private sector, I would like to hear about that too. Let the debate continue.

[René Laurin, Bloc, Joliette, QC]

Mr. Speaker, I would like to start by commending the hon. member for Winnipeg St. James on the way he presented his motion. His motion was well researched, and his arguments were excellent. I just wanted to say that. I would also like to take this opportunity to bring another perspective to the subject of this motion.

The hon. member for Winnipeg St. James moved: "That this House support the principle of disclosing the salary ranges of all senior executives of Crown corporations and publicly-traded companies incorporated under federal charter". I think I should add, for the benefit of those who are watching and listening, that there are three types of companies. First, private companies which usually belong to a single owner or are family-run businesses. Publicly-traded companies are usually big corporations or could be SMEs but, as a general rule, they are traded on the stock exchange market and the owners are shareholders. Finally, we have a third type of company, Crown corporations, which have a single owner: the government.

I may recall that in October 1993, the TSE, following the example of the New York Stock Exchange, required companies traded in Toronto to disclose the salaries and bonuses of their five most senior executives. The remuneration of these executives includes salary, bonuses, options or share premiums as agreed by the issuer. It also includes allowances, annual dues and life-insurance premiums. This policy applies to all companies trading on the TSE and the Montreal Exchange. Companies trading on both exchanges are subject to the regulations set by the TSE.

With this measure, the Ontario government makes it incumbent on heads of Crown corporations to give an account of their remuneration to shareholders. The TSE's policy follows the example of American exchanges, and about 3,700 Crown corporations have been affected by the TSE's new policy.

Quebec, however, seems to be the exception in North America. The Montreal Exchange requires only disclosure of the total remuneration of the five best paid executives of companies trading on the exchange. Toronto requires disclosure of the salaries of these executives, while Montreal simply wants to

know the total amount, without requiring detailed information in each case.

In December 1993, the Quebec minister responsible for finance, Mrs. Louise Robic, said that she did not believe that it was necessary to require the disclosure of individual salaries of executive officers of companies listed on the Montreal Stock Exchange. She mentioned their need for privacy.

The Conseil du Patronat in Quebec was of the same opinion. Its spokesperson, Ghislain Dufour, opposed the Ontario policy for the sake of protecting the right to privacy.

Yet, the Ontario policy already applies to a vast majority of companies listed on the Montreal Stock Exchange. These companies are usually listed on both exchanges and, since they must abide by the rules of the Toronto Stock Exchange, they have to make public the salaries of their best paid executives. At the time, Mr. Dufour praised Mrs. Robic's decision.

We should add to this the opinion the Deputy Premier of Quebec, Mr. Bernard Landry, expressed when his party was in opposition. He said, in January 1994, that his party was totally in favour of the disclosure of executive salaries. He said and I quote: "We are following the example of the Americans", and he went on to say that the public and semi-public sectors would have to follow suite.

The Parti Quebecois favours openness. "What worker would agree to make sacrifices if he felt that the salary spread was much too great?" asked Mr. Landry. He points out that during its first term in office, the Parti Quebecois came very close to making the individual disclosure of top executives' salaries mandatory. But at the time, it was not a requirement in Toronto, and such a discrepancy in the rules of both stock exchanges could have been a problem.

It is important to note that, in October 1994, the Quebec Deposit and Investment Fund issued a different policy in this matter. It is opposed to the individual disclosure of top corporate executives' salaries, preferring instead the policy adopted by the Montreal Stock Exchange. However, the fund adds in its regulations that it expects corporations to abide by the disclosure rules established by regulatory agencies such as the Toronto Stock Exchange.

The Quebec Deposit and Investment Fund clearly states its preference for a policy like that of the Montreal Stock Exchange, although it expects companies listed on the Toronto stock exchange to obey TSE regulations and authorize disclosure, as well as other companies entitled to follow the applicable regulations. Companies are expected to comply with these regulations.

Let us go back to Motion No. 309 tabled by the hon. member for Winnipeg St. James. It is apparently aimed at extending the policy adopted by the Toronto Stock Exchange to everything under federal jurisdiction, including Crown corporations and publicly-traded companies incorporated under federal charter. Crown corporations have a single owner and are not currently required to follow the policy of the Toronto Stock Exchange since they are not listed on the TSE.

To give our viewers an idea of what these Crown corporations are, I would like to identify some of them. The list of parent Crown corporations includes the St. Lawrence Seaway Authority, the Canadian Wheat Board, the National Capital Commission, Canadian National Railways, the Canada Council, Canada Development Investment Corporation, Atomic Energy of Canada, the National Gallery of Canada, Canada Post Corporation, Canada Mortgage and Housing Corporation, the Canada Lands Company, the Canadian Broadcasting Corporation, VIA Rail Canada, etc. These are examples of what we are thinking about when we talk about parent corporations.

This motion would require not only parent corporations but also other companies incorporated under federal charter to disclose the salaries of their senior executives.

The situation of publicly-traded companies incorporated under federal charter is more complex. We must keep in mind that most of these companies are listed on the TSE but that some Crown corporations are not. This matter comes under provincial jurisdiction and does not require the adoption of a federal law.

In fact, the federal government has been unsuccessfully trying for several years to control the securities industry. In any case, I do not think that this law should apply to publicly-traded companies incorporated under federal charter.

The motion should be restricted to parent corporations, although federal public corporations are already subject to Ontario or Quebec laws. I think that we should let them administer their own affairs as they see fit and let the provinces continue to regulate them as they have done until now.

[Chuck Strahl, Reform, Fraser Valley East, BC]

Mr. Speaker, the motion that stands before us today is interesting because it highlights a problem that has existed for many years.

In particular, I would like to address the issue of disclosure of the salaries of the executives of crown corporations. The motion strikes at the balance between the right of the individual to his

own privacy and the right of the taxpayer to know where his tax dollars are being spent.

Allow me to quote from Hansard of November 21, 1983, just about 11 years ago to the day. Hansard records a question in the House of Commons on that day, a question that arose out of the tabling of a report detailing all the orders in council appointees by the government, a report that is still regularly published today. The report was 264 pages long. It gave the salary ranges, not the actual salaries, of all order in council, and by that I mean cabinet, appointees.

On that November day 11 years ago, a Conservative member asked the Deputy Prime Minister why salaries of the heads of crown corporations were not publicly disclosed. In his characteristic fashion, the Deputy Prime Minister replied: "The information that was tabled was in compliance with the law passed by the Parliament of Canada. Obviously with respect to public servants we have made public the range of salary. In this particular case, because it is impossible to find anything equivalent to a range, we have shown the maximum salary and the minimum salary".

I am not sure exactly what that means but in any case the former Deputy Prime Minister in perfect Liberal fashion avoided answering the question altogether. That member is of course sitting in the Senate today.

The answer more coherent people usually give to this question is that while the public has a right to know what civil servants are being paid, those who are heads of crown corporations work at arm's length from the government. They are not purely public servants and therefore they have a right to their privacy when it comes to personal information like salaries. In a grand Canadian fashion we have compromised and split the issue right down the middle by publishing salary ranges, allowing us to say that we know but we do not know at the same time.

It kind of reminds me of the question: "Why did the Canadian cross the road?" The answer of course was to get to the middle.

Almost immediately after the Conservative government took power in 1984, it began to publish more accurate salary ranges of the heads of crown corporations because they had been the ones asking the government to do that for some time.

Please notice that it did not publish the actual salaries of the executives either, but it published the ranges with one significant difference from the Liberals. The ranges it began to publish were much narrower than had been previously published.

We learned from another question in the House asked by another Conservative member, again in November 1983, that the salary range of 18 employees of Canada Post was at the time $63,000 to $228,000 a year. Given this range, appointees could receive a salary anywhere within that range, maybe $170,000 a year. That is a range.

That gave very broad anonymity to all 18 executives appointed to Canada Post in 1983. Today the situation is much different.

The salary range for the chief executive officer of Canada Post is more accurately stated at $255,000 to $319,000 a year. This still leaves the actual salary of the CEO unknown, but it gives such a revealing hint that there is very little left to the imagination.

In addition, most order in council appointees are given a ranking number, called a governor in council rating that falls between 1 and 11, each showing a progressively higher salary with a range somewhere between $20,000 and $30,000. The yearly reporting of order in council appointees called "The Governor in Council Appointment Guide" also gives a complete list of 15 CEO salary ranges of senior executives of crown corporations and a few other executives. The salary ranges given have about $30,000 between the minimum and maximum salaries for these positions.

Over the last decade and a half a trend toward greater disclosure has been established until we have today reached what I would call almost virtual disclosure. Although interest was high when salaries were fully veiled, now less is being left to the imagination, so interest in the topic I think is naturally waning.

If I were the CEO of a crown corporation I would argue that my salary has been virtually revealed and there is no more danger to the public from the small amount of secrecy that still exists. What is the harm in a little bit of secrecy?

On the other hand the taxpayer would argue what would it hurt to know the exact salaries? Since a trend toward greater openness has already been established over a period of years and since we already have full disclosure in all but name, since the privacy of these individuals with respect to salary is only a charade anyway, what is there to lose by revealing all? The taxpayer would feel that a corporation may well be at arm's length from the government in the legal sense, but the taxpayer is not at arm's length in any way at all.

Every time the CEO receives a pay cheque the taxpayer feels it directly in the wallet. The taxpayer would argue that he has a compelling interest in full disclosure, knowing the exact salary he is paying anyone, be it a clerk in a UI office or the chairman of CN rail. We have two opposing arguments with two competing interests. The question then becomes: Which group has a more compelling interest, the taxpayer or the one who serves the taxpayer either as a public servant or as an arm's length quasi-public servant?

In my former life I operated a contracting company with about 230 employees. As the manager of those employees I had to know their exact salaries or I could not have run the company. The requirement of full disclosure is not only important, it is necessary for the manager. Just let the listener try to run his or her own household when they do not know all of their expenses. It is, of course, impossible.

If full disclosure is necessary to the financial manager, it begs an important question. Just who is the boss of Canada? Is it the government or the people who elect the government? I would say that the people of Canada are the boss and they have hired this government for a short period of time to manage the public affairs for them.

The government is not the boss, it is the servant. It is impossible for the taxpayer, the employer of the government, the real boss, to adequately judge the performance of its servant without exact information. This applies across the board, not just to the salaries of chief executive officers, but to government information across the great span of the federal government.

As a matter of principle, the taxpayer deserves full disclosure of all government expenditures. By receiving employment from the public purse and by fulfilling some type of a public mandate through their work, an individual gives up his or her right to privacy regarding salary. We can see why this principle is so important.

Just a few days ago the CEO of Canadian National revealed that in addition to his salary of something between $324,000 and $377,000 he has received an interest free loan of $300,000 to mortgage his house. This practice of mortgage perks is longstanding. I would refer the listener to the 1981 report of Petro-Canada where we first got wind of this in which $16.5 million was listed as mortgages. Is there anything else that the president of CN receives today for instance?

How can the ordinary member of the public judge whether the taxpayer has received a fair deal without knowing the details of the remuneration? If I owned a company and I found out that my manager was hiding important financial information from me, we all know what I would do. I would require that manager to tell me everything immediately or I would find a different manager. The principle becomes much larger and much more important when the poor taxpayer begins to delve into the government books and finds out how huge the whole system is.

The governor in council appointment guide I referred to earlier now has well over 286 pages in it, not 264 as in former times. The guide has a list of political appointees, 51 pages long. There are 2,500 names on the list.

If we are to assume that each one of those persons receives $70,000 a year, which is a fairly conservative estimate, it means that the salaries paid to those political appointees amount to $175 million a year. If we consider that these employees receive salaries within a range that is perhaps $30,000 a year more, then the salaries build to $250 million and so on.

The electorate will never see this information because it is hidden. The Liberal government, I would propose, has carefully hidden it so that we will not be able to see who gets what.

When we move on to other sectors of government full disclosure is even more necessary. For instance, the Department of Canadian Heritage gives out $552 million in grants to 10,000 different groups every year. It is a shame. On August 18 I asked for that list. It is somewhere in the bowels of the department. I cannot get it. They will not give it to me.

To summarize my remarks today, the taxpayer has a compelling interest in full financial disclosure from the government. There are many aspects of individual privacy about which the public does not have a right to know. When it is an individual employed by the taxpayer to fulfil a public mandate in service to the taxpayer, the interest of the taxpayer to know outweighs the right of the salary to be held secret.

Disclosing where the taxpayers' dollars are being spent and just who are the beneficiaries are valid principles. Where the motion helps to accomplish this, I think I could support that.

[Alex Shepherd, Liberal, Durham, ON]

Mr. Speaker, I am very happy to take part in the debate on a very worthwhile motion by the member for Winnipeg St. James. I am very much in favour of his motion.

The motion really addresses, even though it does not quite say so, the concept of transparency and the possibility that people should be remunerated based on their performance. I do not think there is anything particularly wrong with that. In the case of crown corporations the customers are the taxpayers of Canada.

I have been involved with the Lobbyists Registration Act. People are concerned about the accountability of government and people working with government and interrelating with the public in general. Basically the motion attempts to address that accountability.

The Ontario Securities Commission requires the reporting of salary ranges in publicly traded corporations. This is a jurisdictional problem as the previous member from the Bloc pointed out. One advantage of having federally chartered corporations respond in that way is that it will actually be spread across the country. We could have federally incorporated companies which operate mainly in Vancouver now coming under the guise of this legislation.

Another important aspect, although it was not really addressed in the member's motion, would be to deal with some of the problems of the securities exchange commissions in the country. I firmly believe there is a definite need for a national securities commission that would have a uniform standard of

securities legislation across the country. There are many people who believe that as well. It has an additional advantage in that it could possibly create new capital markets for small and medium sized businesses. That is an issue for another day.

We speak about transparency in corporations. The shareholders are very interested in what their executives are being paid. I can remember during some of the bad troughs of the last recession when our banks were having problems with Canary Wharf. I actually watched some of these institutions raise the salaries and remunerations of their executive officers, the very people who had made the decisions concerning that project. It was amazing to note at the same time that some foreign banks, especially some in the United States, were actually firing those people. It gives a different onus.

I am sure the people in the Royal Bank and others were very happy to receive at least the information. Although they might not have liked the results, they were certainly pleased to be in receipt of the information that these people had decided to give themselves a salary boost.

The transparency aspect in the recording of salary ranges is not a matter of simple curiosity. The reality is that when we expose them people start thinking the very thing we are thinking: "What is it that you did to earn that money?" Having crown corporations provide that information is nothing but good.

For instance, Canada Post was mentioned earlier in the debate. Why should its remuneration not be more directly linked to its actions as a crown corporation? In other words there should be a portion, if not dollar for dollar, of its remuneration directly related to customer satisfaction which is basically the people of Canada who use Canada Post services.

Today I attended an interesting interview. Some people from IBM were telling us how they run their corporation these days. Ten per cent of the remuneration of their employees is now based on a combination of five per cent on the profitability of the corporation and five per cent on customer satisfaction. They have a way of measuring customer satisfaction. We have to go more toward that in our governmental institutions.

I take the train to Ottawa quite often. I have often thought the executive officers of VIA Rail should possibly be paid, at least partially, based on the performance of that service. It seems that every time that train is late we should focus on the profitability of VIA Rail and customer satisfaction. Of course a lot of people would understand that these people may well have to pay money to work for VIA Rail today. If that focus were available, we may well get more efficiency in government as well as in our private sector.

I will conclude to allow other members to discuss the motion by raising the aspect of the civil service. I do not want to be getting into a position where I always seem to be bashing the civil service. Many civil servants do worthwhile jobs. I am very conscious of their concern for the Canadian citizen. I would, however, like to restore the word civil to the term civil servant. I looked it up in the dictionary on the way to the Chamber today and the word civil means belonging to the citizens, polite, obliging and not rude. Those are some of the things that we would address by making the remuneration more directly related to the citizens of the country.

I am very supportive of the motion of the member for Winnipeg St. James. It is quite appropriate that he brought it before the House tonight.

[The Deputy Speaker]

I might indicate that the debate is to end at 7.37 p.m. If there are two members who wish to speak, perhaps they could divide the time.

[Julian Reed, Liberal, Halton—Peel, ON]

Mr. Speaker, I will be quite brief. I rise in support of the motion. I congratulate the hon. member for Winnipeg St. James on his motion that will help to bring Canada fully into the 20th century in terms of business.

Other countries are ahead of us by many years in terms of the requirement to disclose. I approach the question perhaps a little differently than my colleagues who have spoken before. It has to do with the question of fiduciary responsibility. We know the term fiduciary responsibility applies to business, to stock companies and so on. That responsibility is to the stockholders, to the people who buy the stocks, who are entitled to attend annual meetings and who presumably are entitled to all pertinent information about the company, the financial information particularly.

We have lagged behind in this country by not acknowledging that salaries, especially significant salaries of senior executives, have been exempt. It would seem to me, and I do not want to comment on the size of the salaries or the stock options, the perks or whatever, that a lot of senior executives probably deserve more than they are making. Perhaps some of them deserve less. Those are privately held opinions as often citizens hold about members of Parliament as to whether their salaries are adequate, overadequate or under, or whatever.

Since the incomes of those senior executives have a direct relationship with the profitability of the company and with the dividends that are paid and so on and presumably in the end the value of the stock that it would be in the positive interests of that business if those things were revealed. A prospective sharehold-

er then would not be made aware of only part of the financial information it needs but would have all of the financial information. I believe that is correct.

In the case of crown corporations naturally the fiduciary responsibility is to the people of Canada, to the citizens. It seems to me that they are as entitled to that kind of information as are private shareholders in companies.

It is for those reasons that I rise in wholehearted support. I hope this goes ahead and the thrust of this motion prompts us to adopt legislation that will bring us into line at least with other countries we compete with around the world because it will be good for our business and good for investment in this country.

[Sue Barnes, Liberal, London West, ON]

Mr. Speaker, I rise today to speak on the motion put forward by the hon. member for Winnipeg-St. James respecting the principle of public disclosure of salaries of senior executives of publicly traded private corporations and crown corporations.

Unfortunately because of time I do not think I am going to get through my whole presentation but I thank my hon. colleague for sharing the time.

The issue as it relates to provisions of the Canada Business Corporations Act rests mainly with my colleague, the Minister of Industry.

For Crown corporations the government has a more direct responsibility because of the public policy purposes these corporations serve and has a strong interest in ensuring appropriate compensation levels.

The subject of salary disclosure of executives in Canada's corporate world has always been one of great debate and great importance. Our government has traditionally attempted to balance the right of the public to access information concerning both public and private institutions against the rights of individuals to privacy.

Disclosure rules in the private sector for publicly traded corporations reflect an increasing desire on the part of investors and creditors to exercise their corporate governance rights and responsibilities in ways that ensure that compensation packages to management harmonize to the degree possible with the interests of the shareholder. Compensation should reflect corporate performance and industry standards.

Provincial securities legislation deals with disclosure rules for public companies. For example, Canadian companies which do or may file debt securities which trade under the Ontario Securities Commission jurisdiction are required to file information on executive compensation for the presidents of the companies and the four most highly compensated officers. These rules appear to be well designed to meet the needs of private investors and creditors. They provide assurance and accountability.

Disclosure of compensation for CEOs and chairpersons establish a reasonable and welcome degree of public transparency concerning corporate affairs for some of Canada's most important corporate bodies whose shares trade on the open market.

Sound corporate governance for crown corporations continue to be a matter of concern to this government. This past October the President of the Treasury Board hosted a conference of chairpersons and CEOs of crown corporations to discuss ways of improving the performance and accountability of crown corporation boards.

I think it is fair to say that all crown corporations represented displayed sensitivity to the public's changing expectations concerning the responsibilities of corporate boards. This sensitivity extends to the development of appropriate compensation policies for corporate employees.

In recent years a number of studies in the area of corporate governance, including the report prepared by Mr. Peter Dey for the Toronto Stock Exchange, have addressed the changing role of the board of directors.

Crown corporation boards face difficult challenges complicated by the need to balance the corporate agenda with the public policy agenda. They also face problems similar to those in the private sector such as ensuring open communication programs with shareholders, stakeholders and other affected parties, and that includes the taxpayers of Canada.

In the Dey report there is a particularly challenging concept of a modern business corporation put forward by the Canadian Centre for Ethics and Corporate Policy. The centre sees "the modern corporation as both an economic institution and a social institution". The role of the "economic institution" is "to conduct affairs with activities with a view to enhancing profit for the benefit of the shareholders". This of course is the traditional role.

However, I think we can go further and say that "as a social institution a corporation in the conduct of its business activities must take into account those ethical principles and considerations that are reasonably regarded as appropriate for the responsible conduct of business" in Canada. This expands the traditional view and puts the onus on boards of directors to become accountable for much more than only the bottom line on a set of financial statements.

Crown corporations by their very nature have always had to consider the public policy principles and considerations to a much greater degree of public scrutiny than private sector corporations.

Furthermore, the Treasury Board secretariat continually reviews corporate government issues as they relate to federal crown corporations. The review of annual corporate plans and budgets, including salary budgets, is one aspect of their work. In addition, much information on crown corporations is now publicly available.

Hon. members are probably aware that for crown corporations, directors, chairpersons and chief executive officers, these are appointed by order in council and have their remuneration fixed by the governor in council. Salary ranges for these appointees are in fact now very much public information. The practice has been to provide easy access to information concerning the salary range of a particular person. This protects the privacy of the individual concerned, especially with respect to exact salary, while allowing the public to have access to significant information. Similarly, the salary schedules of senior appointments to federal agencies and commissions are publicly available.

Crown corporations seeking to issue debt instruments follow rules established by respective provincial securities commissions. They too are subject to disclosure requirements as are their counterparts in the private sector.

With respect to the current public sector wage freeze, all crown corporations have been asked to follow government policy. Order in council appointments such as board chairs have had their wages frozen. Senior crown corporation officials who are not government appointees have had their compensations set by the boards of directors of their corporations. Crown corporations subject to access to information or privacy legislation can be required to provide salary ranges and discretionary benefits of a financial nature for these officials.

The Financial Administration Act requires as well that any benefits other than remuneration paid to directors, chair or chief executive officers shall be fixed by the board of directors in accordance with the regulations made under this act. The regulations require that these benefits do not exceed any industry norm.

I would like to emphasize that federal crown corporations are subject to more stringent accountability and control rules than are publicly traded corporations.

The Financial Administration Act, part X, sections 83 to 154, establishes very thorough and comprehensive reporting requirements. This law requires corporations to submit annual corporate plans and budgets to Treasury Board for approval.

Corporations must conduct internal audits as well as being audited externally. In most cases, external audits are undertaken by the Auditor General who is empowered to make special reports on the matters he believes require the attention of ministers and Parliament.

In addition, crown corporations under part X must undergo a special examination at least once every five years. These examinations are established to ensure that systems and practices respecting financial and management controls are maintained in order to provide assurance that the resources of the corporation are being managed effectively and efficiently.

How much more disclosure is reasonable for other crown corporation executives? Is there a further need to add more rules for Canada's 48 crown corporations? Should smaller corporations which do not issue debt instruments and have only a handful of employees be treated in the same manner as a larger corporation? It would be premature to go beyond what we now have in the area of salary information reporting by crown corporations. Public accountability for crown corporations is now well and adequately established under a sufficiently rigorous statutory and regulatory framework.

The corporate form together with this framework has served Canadians well. In the 1993 report to Parliament, the Auditor General of Canada stated:

In 1991, we reported that the control and accountability framework established in 1984 represented a vast improvement over the previous situation and provided for greater vigilance and stability. It has, in our view, improved the management of crown corporations as well as the receipt of essential information by Parliament on a more timely basis.

The government will continue to monitor this system to ensure its effective functioning and make whatever amendments are needed.

[The Deputy Speaker]

Under Standing Order 44, the member who began the debate is entitled to approximately two minutes in which he might close the debate.

[John Harvard, Liberal, Winnipeg—St. James, MB]

Mr. Speaker, I am not going to use up the whole two minutes.

In closing off the debate I want to express my sincere thanks to all the members who participated in the debate. I want them to know that I really appreciated their participation and contribution.

Tonight's debate, even though we did not have a vote, indicates that there is an interest, there are different points of view and we should not let this debate go. Perhaps we can pick it up again under some other format at some other time.

The public is interested and they too would not want us to let this go. It is a matter of importance to all of us. We in Parliament truly believe in transparency, openness and disclosure whether it applies to crown corporations or private sector corporations.

Again, I want to thank all those members of the House who took part in tonight's debate.

[The Deputy Speaker]

The time provided for Private Members' Business has now expired. Pursuant to Standing Order 96, the order is dropped from the Order Paper.

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

[Len Taylor, NDP, The Battlefords—Meadow Lake, SK]

Mr. Speaker, I rise tonight to again raise the issue of the northern tax allowance, a matter that I and my constituents have expressed concern about for many years. This was an issue that concerned my constituents and other Canadians during my first election campaign in 1988. It was an issue that the Mulroney government completely misunderstood and in responding to the complaints raised it made the situation worse.

I have always seen the northern tax benefit program as a simple acknowledgement that not all taxpayers in Canada have equal access to the programs and services to which they contribute as taxpayers. Northern residents live at a considerable distance from the majority of federal government services and the northern tax program provided them with some relief on their income tax as a result.

For example, an individual living in Pierceland, Saskatchewan has less access to federal government programs and services than does an individual living in Saskatoon. Therefore, it seemed the right thing to do when the original tax benefit program was initiated and brought into being.

However, there were problems in its implementation. Some communities achieved northern benefit status and others did not. There were arguments about why the residents in one community received benefits while residents in another did not. Instead of reviewing the criteria for the program and finding ways to increase its fairness, the Mulroney government appointed a special task force which reported to Parliament in October 1989.

The task force recommended that instead of fixing the problems the federal government should simply move the eligibility line so far north that few communities would argue about where the line was drawn. In other words, the task force recommendation walked away from the problem, took the easy way out and completely ignored the needs and desires of the people who were living in the area previously defined for eligibility.

According to the Mulroney government, which accepted the task force recommendations, the people who were receiving the benefits would be best served if they lost those benefits, not all at once but slowly, phased out over three years.

Despite their protests, these residents will see the end of the northern tax allowance this year. When taxes for 1994 are calculated and the benefit taken into account, that will be it. In 1995 these hard working Canadians will lose their benefits.

As a result it also means that each and every one of these tax paying families will see a dramatic increase in their tax bill beginning in the 1995 tax year. At the time of the task force report, I said it did nothing but address the cash grab needs of the federal government and completely ignored the needs of the people who live in the areas designated to receive the benefits.

I acknowledged the unfairness of the existing program, but I suggested that a review and some new criteria would be better than completely removing the benefits from so many tax paying residents.

Although the Liberal government since its election one year ago has refused to review the northern tax allowance program at my request, I decided last week to try once again so that in the development of the 1995 budget the government might consider reinstating the program to ensure that additional tax increases are not going to be unfairly forced on northern residents.

I was pleased to learn there is the possibility of a review. I hope the government will again tonight confirm that it is going to look at this program and give the residents of a part of my constituency and other northerners some reason to be optimistic.

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

Mr. Speaker, the hon. member has asked that the government reconsider the phasing out of the tax benefits for residents of the north and isolated areas.

I would first like to clarify that the program is not being eliminated at the end of this year. Rather, a new approach to providing benefits to residents of the north was implemented at the beginning of 1991.

This new system was accompanied by a transition period ending this year for those communities whose benefits were being reduced or eliminated. I can appreciate that some individuals living in communities no longer eligible for some or all of the benefits might oppose these changes.

However, after reviewing the events that led to the implementation of the current system, I believe that the zonal approach is the right one. The current system was the result of a comprehensive study. It was implemented on the basis of the recommendations of the task force on tax benefits for northern

and isolated areas established in 1988 and of further consultations as well.

The previous community by community approach to allocating benefits was widely criticized as inherently unfair because it created border problems between adjacent communities that were treated differently for tax purposes.

The existence of ill-defined boundaries made inequities inevitable. The new system is based on carefully delineated broad zones and it minimizes inequities. I believe that the current policy will prove to be fairer, simpler and more effective than any of its predecessors, providing tax assistance to residents of northern and isolated areas.

[Jan Brown, Reform, Calgary Southeast, AB]

Mr. Speaker, I asked a single question of the Minister of Canadian Heritage during question period on Friday, November 25.

I asked the minister to explain why cabinet had decided to order a review of the CRTC exemption order on direct home satellites. Even though cabinet had made its decision for the review, even though cabinet had directed the details of the review to be gazetted, even though cabinet had decided who would conduct the review and who would be on its advisory council, even though cabinet had decided that the CRTC would not be the body to conduct the review, the minister refused to answer the simple question I posed.

I was aware of the details concerning the review. Surely the minister was informed so he could respond to my question. It is unfortunate that he could not explain the reasons supporting this decision. The decision had been made on Tuesday and yet three days later, on Friday, he still refused to explain fully to Canadians the basis of the decision and why it was made.

Telecommunications policy in Canada is rapidly being outpaced by the developments that are being made in the industry. Technological convergence is occurring at an exponentially increasing rate and the government must recognize that it can no longer adequately regulate the industry while providing fair treatment.

Competitive fairness is what this issue is about. The Reform Party does not oppose the idea of a review of the direct to home satellite distribution policy. We encourage such a review. However, we must ensure at all times that this review like all matters of government is dealt with fairly.

In order to maximize the level of fairness the process should be as unbiased as possible while still securing a high level of competency. At no time has it been suggested that competent people should be excluded from making contributions to the debate. However, we must ensure that no one interest is given more weight or is seen as being given more weight than any other.

The cabinet also decided to appoint three members from private industry to advise it on the decision. First, I would like to know the criteria for the selection process. Second, how much will this six month process cost? Third, how much are these advisers to be paid? Fourth and last, what exactly is their role?

It is not even clear why the government needs advisers on this issue. Surely there are competent people within heritage, industry, and the CRTC who understand how DTH policy will affect both the industry and Canadian culture.

As well, the review calls for interventions from the public and then it allows for comments on the interventions. Without advisers the only one who could influence the process would be the minister. However, if the minister wants an independent review of DTH policy and how it affects Canadian culture, then he should either let the CRTC do it or give it over completely to an independent public panel where there will be no undue influence.

In conclusion, I support the review of this policy. It is important that we ensure government regulations accurately reflect the needs of the industry and allow for all interested parties to compete on a level playing field.

Unfortunately, the minister's in house review with advisers who many in the industry believe will favour one company over another cannot accomplish these goals unless he makes it non-partisan. No matter what decision results from the review it will be viewed with skepticism from the industry because it will appear to have been influenced. The only way to ensure a quality review is to overhaul the process before it begins.

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

Mr. Speaker, the Minister of Industry and the Minister of Canadian Heritage have launched a review of policies relating to direct to home satellite distribution undertakings because of the impact these new services will have on Canada's broadcasting and telecommunications system.

The new generation of direct to home satellites combine the use of high powered satellites, digital technology and small dish receivers to provide up to 200 channels of broadcasting and other services.

Some of these systems are operating now in the United States and there are plans to have Canadian direct to home systems in the near future. However, if Canadian systems are not competitive with the U.S. systems, then Canadians may choose to get their TV direct from American suppliers which have no requirement to offer any Canadian programming at all.

On August 30 the CRTC exempted Canadian direct to home undertakings from licensing provided that they meet a number of criteria. Some of these criteria limit the ability of the

Canadian direct to home undertakings to compete with cable systems and with American direct to home undertakings.

On September 12 the Ministers of Industry and Canadian Heritage announced their intention to review policies governing direct to home undertakings. There is in no way an overruling of the CRTC decision. The CRTC has enunciated its views on how it would issue such orders in the future.

A notice was published in the Canada Gazette on November 26 seeking public comment on a range of policy issues raised by the introduction of direct to home satellite undertakings in Canada.

Issues to be examined include competition, Canadian content, programming distribution rights, and the use of Canadian satellite facilities among other concerns. In addition, as the member recognized, the Ministers of Industry and Canadian Heritage have announced Gordon Ritchie, Roger Tassé and Bob Rabinovitch as the panel who will review submissions and make recommendations which will assist the government in formulating policy in this area.

Although some have argued that the matter should have been referred to the CRTC, it is the government's responsibility to establish policy and the CRTC's job to implement it.

The introduction of direct to home systems will have an impact on individual Canadians and on a range of industries. Concerns have been brought to the government's attention from a number of sources on this issue. We intend to balance the interests of all parties and consider the best interests of the Canadian public in formulating policy in this area.