Debates of Dec. 1st, 1994

Department Of Industry Act

[The Acting Speaker (Mrs. Maheu)]

Pursuant to Standing Order 76(1)(8) a recorded division on the motion stands deferred. The recorded division will also apply to Motions Nos. 4, 5 and 7.

[Werner Schmidt, Reform, Okanagan Centre, BC]

moved:

Motion No. 9

That Bill C-46 be amended by deleting Clause 14.

As with respect to our amendments to clauses 8, 9 and 10, we wish to address the amendment to clause 14 with the same kind of principles we used to evaluate and analyse the others.

In particular, we want to suggest to the House again that it is the obligation of government and it is and should be the intent of legislation to provide checks and balances to ensure openness, integrity and honesty in the performance of the duties and responsibilities incumbent upon government.

Second, the marketplace should determine winners and losers, not the government or intervention by government or its ministers in that marketplace.

Finally, the role of government is to provide a level playing field so that competition can be equal, fair and on a level playing ground so that the refereeing of the game of business is in fact conducted in a manner that provides success for as many as possible.

The results of the application of these principles is confidence for business and government and it certainly enhances the international competitiveness and the ability to provide for changes in the new economy that is coming.

I wish now to address the particular amendment to clause 14 which really is to eliminate and delete from the bill the total clause. There are a number of reasons we would like to propose that clause 14 be deleted from the bill.

Clause 14 gives to the minister a tremendous range of powers. May I just quote briefly from the provisions of the bill. The bill suggests that the minister under this act may:

(a) make loans to any person;

(b) guarantee the repayment of, or provide loan insurance or credit insurance in respect of, any financial obligation undertaken by any person; and

(c) make grants and contributions to any person.

The broad range of power given to the minister under this section is such that it makes it possible for that minister to intervene directly in the marketplace on behalf of or against any business or individual or group of persons, organizations or associations.

We believe that that provision is most objectionable and must not be allowed to stand. It allows the minister or through the minister under certain conditions that follow in the other sections the cabinet to pick winners and losers in the economy.

The authority violates a fundamental principle of openness, honesty and integrity. As we know, and history has shown over and over again, power tends to corrupt and absolute power tends to corrupt absolutely.

The provisions of this act are such in this clause that the minister can without reference to anyone do the kinds of things we talked about: make loans, give grants and things of this sort.

The government's role is to regulate the marketplace so that it is level but not to intervene and choose winners and losers by that intervention. If business is to succeed then it must be allowed to do so without having competitors gaining unfair advantage as a result of government intervention of one kind or another, particularly when it has to do with monetary assistance in particular areas.

If a business or a business sector is going to fail, it should do so because it lacked the competence or for some other reason it did not succeed. The government assistance should not be used to prop up a business that cannot survive in its own right. If the only way a business can survive is by government intervention and by shoring it up then indeed that business is of questionable integrity and questionable work in the economy.

I would like to refer particularly to what can happen when government intervention of this kind takes place. I refer here to the 1993 Auditor General's report with regard to the then Department of Science, Industry and Technology now known as the Department of Industry.

There we have a very interesting situation. In 1985, the cabinet authorized the Minister of Finance to provide an equity injection into the Federal Business Development Bank to enable that bank to purchase a $69 million special issue of preferred shares.

Subsequently, that was increased to $79 million, only $10 million more. The investment of the company was made pursuant to a directive of the governor in council and executed by the Minister of Regional Industrial Expansion, then Industry, Science and Technology and currently Industry. It was done under this clause and a subsequent clause in section 14.

On October 26, 1986, the government signed a share subscription agreement with a company for a two stage $260 million plant modernization project.

The information provided to cabinet for its approval on October 7, 1986, identified a specific Russian technology for the project. This technology was described as the newest and best available in the world. The company decided to switch from the Russian technology to new German technology which it purchased in September 1986.

Cabinet was not informed of the major change in this project. What was the result of all of these kinds of changes? The company's new plant using the German technology attempted startup in December 1989 and suspended operation in March 1990.

In December 1992, two years later, the company advised the Department of Industry that it could not complete stage one before December 31, 1992, for reasons beyond its reasonable control thereby suspending its obligation under the agreement.

In 1990 the department estimated that the Federal Business Development Bank was unlikely to recover its investment or earn any dividends. To date, the bank has received no dividends. In fact the Federal Business Development Bank wrote that particular investment down to zero. The agreement, however, remains in force until the year 2006.

The company's audited statement of total capital expenditures for the project at May 31, 1990 indicated that the company had incurred costs of $161 million. With $134 million that came from the federal government and some from the British Columbia government, the company was out of pocket $27 million and then only because of cost overruns. Had these cost overruns not occurred, the company's share in the project at that point would have been zero.

That is not the way to use taxpayers' money. The emphasis on it being best left to the private entrepreneur is the principle the government should observe and not use tax dollars to do these kinds of things. This clause of the bill should be deleted.

Many of the clauses are unclear. They are intrusionary. They are elitist. They allow the government and the minister in particular unlimited opportunities to interfere in the free market, and the cabinet as well under another section. In my remarks today I have shown that the legislation needs clarification. There are things that should be deleted from it. There are powers that should be circumscribed; the minister and the cabinet should not have these powers. They unbalance the very fundamentals of our economy and can strangle our treasury, as was already indicated in the Auditor General's report.

We should get to the point where the government does not take winners and losers but in fact develops a level playing field. The Department of Industry can be the department to bring about a strong engine that will drive the economy and bring about a balanced budget. That is what the department should do. However the way to do that is not by intervening directly in the marketplace through particular regional development programs or by providing loans, grants and subsidies to industries. The minister has the right to do this for any particular person and is not obligated to require that certain conditions be met for those loans.

At this point the legislation, the way it is being proposed, needs to be amended as we have suggested.

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

Madam Speaker, my Reform Party colleague from Okanagan made so many assertions in his speech that I do not know where to begin. I challenge his statement that this clause works against open government.

That is just not so. In his discourse the member referred to detail about the Federal Business Development Bank. It was proof of public accountability for nearly every transaction that goes on in government and specifically in Department of Industry. The blue book details-and the people of Canada should know it-every decision and every taxpayers' dollar spent by this department.

To suggest that clause 14 allows the Minister of Industry to go around with a chequebook in his pocket so that if he happens to run into somebody he likes or he thinks has an interesting idea he can write a cheque is not what it is all about.

This clause is about our space arm. Spar Aerospace was an example of the taxpayers of Canada investing approximately $140 million in 1979, 1980 and 1981. When that arm opened in outer space and the word Canada was on the side of it, I do not think there was a Canadian who said anything other than bravo. Today that space arm technology has brought the country a tenfold return.

What about the McCains? The Reform Party member said we should listen to private entrepreneurs. That is an example of a private entrepreneur in Atlantic Canada who got his $4 million kickstart from the Government of Canada in a DREE loan. Right now he is employing close to 20,000 Canadians in every region of our country, all the way from processors to marketers to packagers to truck drivers and so on. He is a private entrepreneur and has paid back in tax dollars and employee tax dollars a thousand times the investment. What about Bombardier? It is

selling monorails all over the world right now. It is doing all kinds of stuff.

I will talk about a personal experience I had. I was involved with a company called Magna International that received taxpayers' money. It not only paid it all back but this year it paid the treasury $145 million in tax. It employs 20,000 people and is flying. The company needed it. It was the story of an entrepreneur getting a bit of a push for his idea, his technology. That company makes the best automotive product at the most competitive price and is recognized as one of the leaders in the world.

What about Northern Telecom? What about MacMillan Bloedel in western Canada? What about the oil and gas industry? These are concrete examples of entrepreneurs, men and women, who went through due process and received taxpayers' money.

There is another thing Reform Party members do not understand. They think if someone has an idea he or she knocks on the door of Industry Canada and there is a cheque writing machine there.

I like to think I am an entrepreneur. I find the whole process of dealing with bureaucrats to be very frustrating. They want paper and more paper. They want to make sure the promised job creation objectives are being met with the taxpayers' money. They come in and do audits. There is scrutiny beyond imagination.

I would be the first to admit that the Government of Canada has made mistakes from time to time. If they add the last 20 years of taxpayers' money invested in R and D, in new technology and in regional development projects versus the return, Reformers would suddenly come across the Chamber and join us.

[Darrel Stinson, Reform, Okanagan—Shuswap, BC]

Then why are we so far in debt? Why is the country so far in debt?

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

Madam Speaker, I want to take a minute to answer the question about why are we so far in debt.

We should not be punishing or casting aspersions on entrepreneurs who have had some financial support from the Government of Canada and have more than paid back the investment not only in terms of payback on loans but also in taxes. It is not relevant but I will deal with the member's question. Why the debt? They should not hang the debt on the entrepreneurs of the country. If that is what the Reform Party is doing now, hanging the debt of the country on the entrepreneurs, the small and medium sized business-

[Darrel Stinson, Reform, Okanagan—Shuswap, BC]

No, it is your policies.

[Some hon. members]

Oh, oh.

[The Acting Speaker (Mrs. Maheu)]

Would the hon. parliamentary secretary continue.

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

Madam Speaker, it is interesting to hear the Reform Party. We have been in the House one year and now the Reform Party is against entrepreneurship.

[Werner Schmidt, Reform, Okanagan Centre, BC]

We are against your pork barrelling. That is what we are against.

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

I quote directly from the member's speech: "Government assistance should not be used if a company cannot make it on its own".

There is not a single entrepreneur in the country, whether it was through the tax act, some form of grant, loan assistance or whatever, who has not received some sort of recognition and support from the Government of Canada or the various provinces.

All they have to do is look at the tax act of Canada to see $40 billion worth of tax grants buried there. Most of them are going to businesses in the member's riding and now he is against entrepreneurship. We will not support this amendment.

[Gaston Leroux, Bloc, Richmond—Wolfe, QC]

Madam Speaker, I am a little surprised to hear what the hon. member from the Reform Party had to say immediately after the speech the hon. member for Fraser Valley West had given, emphasizing that the government was to step in only when necessary. He was in fact leaving the door open to some government involvement, while in the amendment and the remarks made by the hon. member for the Reform Party who spoke just before me, the door is totally closed.

Deleting, in Clause 14, lines 19 to 47, on page 7, and lines 1 to 8, on page 8, is absolutely unthinkable, as far as we are concerned. Let me explain. Again, this Reform Party proposal shows that this party is totally out of touch with economic reality. It cannot conceive the role of the State as that of an economic leader, a developer. It sees it more as a wait-and-see role, if not that of a killjoy.

By deleting large portions of Clause 14 which enables the government, through its Minister of Industry, to influence small and medium size businesses to facilitate the implementation of programs or projects under the act, the Reform Party shows, once again, its commitment to fostering wild liberalism: "Let us go. We will see where it leads us".

The Bloc Quebecois can only condemn such an attitude, an attitude of permissiveness with respect to the market economy. You cannot just say: "Go at it, any which way you want". I think that the State has a role to play as an economic leader, and a

promoter of development. I think that is part of the responsibilities of the State.

Therefore, we think it is essential that the government be able to have a say concerning loans that may be made, guarantees that may be given and loan insurance or credit insurance that may be provided, as stated in paragraph 14(3)(a).

Unlike the Reform Party, we feel it is also essential that the government be able to make loans and guarantee the repayment of any financial obligation or provide loan insurance ir credit insurance and make grants and contributions.

The Premier of Quebec made it clear -he sent clear signals- when he said that the State must be an active player in the economy. It must not assume the role of a banker, but its certainly can guarantee repayment for SMEs, which are recognized as creating the most new jobs, to promote their development and help them face this free trade, global market, high-tech, competitive context. In a nutshell, support the development of businesses. The primary role of the state is to be an economic leader and developer.

Quebec, as we know it today, is the product of the emergence of a state actively involved in the economic development of its territory since the beginning of the 1960s. Take for example the great success of Hydro-Québec, the major role played by the Quebec deposit and investment fund and, more recently, the success of the Solidarity Fund, which go to show that the economy of the community has to be made available to small and medium size businesses, indeed, the ones that generate the most employment.

Minister Paillé has just implemented a program for SMEs, to guarantee repayment to a maximum of $50,000 for SMEs, people who have ideas, who can implement ideas, create jobs and develop them.

That is what we call economic support. Action must be taken to support the people who are very active in terms of development and job creation. There are many out there who have ideas and can set up businesses.

The Bloc Quebecois can only express disagreement with this presentation and the Reform Party amendment. Because we recognize that any State has a role to play as a developer and must support economic development, particularly as regards SMEs, we are clearly opposed to the amendment brought forth by the Reform Party.

[The Acting Speaker (Mrs. Maheu)]

Is the House ready for the question?

[Some hon. members]

Question.

[The Acting Speaker (Mrs. Maheu)]

Is it the pleasure of the House to adopt the motion?

[Some hon. members]

Agreed.

[Some hon. members]

No.

[The Acting Speaker (Mrs. Maheu)]

All those in favour of the motion will please say yea.

[Some hon. members]

Yea.

[The Acting Speaker (Mrs. Maheu)]

All those opposed will please say nay.

[Some hon. members]

Nay.

[The Acting Speaker (Mrs. Maheu)]

In my opinion the nays have it.

And more than five members having risen:

[The Acting Speaker (Mrs. Maheu)]

Pursuant to Standing Order 76(1)(8) a recorded division on the proposed motion stands deferred.

[Gaston Leroux, Bloc, Richmond—Wolfe, QC]

moved:

Motion No. 10

That Bill C-46, in new Clause 21, be amended by replacing subclause 2 with the following:

"(2) The Minister shall, at least 60 days before the date on which the Minister fixes or increases a fee under sections 18, 19 or 20, cause to be published in the Canada Gazette and in no fewer than two leading newspapers in each province a notice clearly indicating a ) the products, services, rights, privileges, regulatory processes, approvals or use of facilities provided under these sections; and b ) the fees to be fixed or increased pursuant to these sections.''

Madam Speaker, the Official Opposition has a pretty straightforward position on clause 21(2). Our amendment is aimed at putting things right side up instead of upside down.

This clause of Bill C-46 found in the third report of the industry committee says in part (2) that, after setting fees under sections 18, 19 or 20, the minister has 30 days to publish these fees in the Canada Gazette so that Treasury Board can pass regulations to authorize them.

People are notified 30 days after the fees have been set. This is totally unacceptable. This is a devious way to increase taxes without notifying taxpayers or notifying them after the fact. Something is wrong here.

We also detect an attempt to give disproportionate powers to senior officials, since this clause enables them to set fees without the approval of the House of Commons. They will simply bypass those elected by their fellow citizens to manage the affairs of state.

This provision of the bill is clearly undemocratic, in our opinion, since fees can be set without the approval of lawmakers. The doors are wide open. That is why the Bloc Quebecois tabled this motion:

(2) The Minister shall, at least 60 days before the date on which the Minister fixes or increases a fee under sections 18, 19 or 20, cause to be published in the Canada Gazette-

Not 30 days after but 60 days before, so that we can respond and look into the matter.

Let us be serious. I am telling the Liberal government to stop using devious means to increase taxes and make all Canadians poorer.

The Bloc Quebecois is simply asking the federal government to stop managing the Quebec economy, either through fee-setting policies or regional development. That is why we oppose this amendment.

[English]

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

Madam Speaker, the member raises a very good point here. The part of his address I want to deal with is the statement he made that this basically overrides the rights of the legislators.

Members of our statutory instruments and regulations committee brought that very point up about three weeks ago, that the flaw did exist in the bill. The government recognized this was an override. We believe our amendment deals with this in a constructive way so legislators are not bypassed. I believe my colleague critic from the Reform Party shares that view.

I want to say something to the member dealing with this whole notion of overriding legislators. The Prime Minister, whom I have had the pleasure of working with since 1980, who has come up through the ranks as a parliamentary secretary, a young MP, is very sensitive to making sure the individual roles of legislators in this House of Commons are meaningful.

The Prime Minister has stated this on several occasions. It is part of the red book. We do not come to this city day in, weekend in and weekend out, making sacrifices with our families and friends to be subservient to unelected officials or bureaucrats. That is why our committee process has reached in my judgment a new level of reform.

Our committees are almost independent now. I would not want to say we are totally independent because the government obviously has a majority in terms of the members. There is a push by the Prime Minister to encourage MPs to develop their ideas, to get control of their own agenda and do what they believe in.

I believe the amendment we proposed in committee meets the concerns the member from the Bloc raised in his address. We would be supporting our own motion and we therefore would not be supporting his.