Debates of April 26th, 1994

Pearson International Airport Agreements Act

[Lucien Bouchard, Bloc, Lac-Saint-Jean, QC]

The Liberals seem to have forgotten that I resigned from government in May 1990. I am a free man. I am very happy to be that and have been very proud of it for the last three years.

There was pressure of two kinds. First, there was the lure of gain for a friendly regime. Second, there was the desire on the part of the government to please those friends. That explains the unseemly rush during the last days of the Conservative regime to conclude a deal where everyone stood to gain except the public at large. The privatization was suddenly not motivated by any need on the part of the federal government of the day to get rid of burdensome installations since according to the airport financial statements transmitted to Mr. Robert Nixon, the Prime Minister's special investigator, the airport would have made profits in the region of $23 million in 1993 and that is without taking into consideration rental revenues from terminal 3.

Let us not forget that Pearson International Airport is the most important airport in Canada. It employs 15,000 people. According to a Transport Canada study dating from 1987 it has direct economic side effects for the Ontario economy amounting to $4 billion. Approximately 57,000 passengers pass through the airport every day, that is to say 20 million passengers each year. About 800 aircraft land and take off daily for 300 destinations in 60 countries.

It is in fact the only Canadian airport which could be termed a hub for air traffic in Canada, a status that Vancouver is about to

attain and that Montreal could reach if only the government would give it the necessary boost.

Yet it is the lure of profit that is the primary source of all the political and media tumult now obliging the Canadian House of Commons to come to a decision on the bill. If the Parliament of Canada has to be called in, the backroom ministerial manoeuvrings have to be particularly scandalous.

The intrigues surrounding this case since the beginning started as soon as the government announced its Canadian airport management policy. As I said earlier, this policy was made public in April 1987, and the following June, the government asked the Airport Development Corporation to build and operate Terminal 3 at Pearson Airport.

In September 1989, Paxport Inc. submitted to the government a proposal to privatize Terminals 1 and 2. This proposal was rejected because the government policy was not to privatize. I was then a member of the government.

One year later-I had since resigned-the federal government took the lead in inviting, without further explanations, the private sector to participate in the upgrading of Terminals 1 and 2.

In March 1992, the government officially requested proposals to privatize Terminals 1 and 2. But unlike what was done in awarding the contract to build and operate Terminal 3-a two-phase process consisting of the request for proposals and the selection of candidates-, the bids to privatize Terminals 1 and 2 were only subject to one 90-day selection phase.

Why the rush? Did the upcoming election spur them into action? In early June of the same year, perhaps because of the extremely tight deadlines set by the government, only two proposals were received, one from Paxport Inc. and the other from Claridge, already at work on Terminal 3.

On December 7, 1992, the government approved the bid submitted by Paxport, which had until February 15 to demonstrate the financial viability of its proposal. But that was not to be since, less than two months later, a financially-troubled Paxport had to merge with its only competitor, Claridge Properties, to create the T1 T2 Limited Partnership consortium.

Is it not rather surprising that the government awarded a 57-year contract worth millions of dollars to a financially-troubled management company that was also close to the political party in office?

We know that one of the arguments put forward by the government to justify its decision to award the contract to Paxport had to do with encouraging healthy competition between the manager of Terminals 1 and 2, Paxport, and the manager of Terminal 3, Claridge. How virtuous can you get?

Here is a government which, although it wants to privatize, wants to do it according to the rules of the private sector, by encouraging competition. How can we explain this about-face by the government which accepts without objecting the merging of the two competitors? Under this submission, those two competitors who were adversaries one day became united friends the next. The government could have rejected that submission, but it did not even bat an eyelash, thereby accepting to deal with only one entity, after having sung the praises of competition and insisted on its necessity.

Is it not strange that when the only two bidders for such an important contract form a monopoly, the government accepts that? Is it not strange that the period for making submissions was only 90 days, as in the case for an ordinary call for tenders, while the duration and the complexity of the contract are way out of the ordinary? Why limit that period? Is it to allow interested parties already familiar with the issue to review their submission? After all, Paxport had already submitted a privatization plan in 1989, while Claridge was already managing terminal 3 at Pearson Airport.

Obviously somebody somewhere deemed appropriate to bypass the bureaucratic system and infiltrate the government political machine to gain some privileges, this in contempt of the official principles of equity. Is this not a clear and particularly cynical example of private interests being more concerned about their revenue than the common good? And what about the elected officials who caved in to them?

The Nixon report judges them severely: "It is clear that the lobbyists played a prominent part in attempting to affect the decisions that were reached, going far beyond the acceptable concept of "consulting". When senior bureaucrats involved in the negociations for the Government of Canada feel that their actions and decisions are being heavily affected by lobbyists as occurred here, the role of the latter has, in my view, exceeded permissible norms."

This strong statement should have convinced this government to take every measure to find out about the role played by lobbyists in the dealings related to the privatization of Terminals 1 and 2. Instead, the government decides to turn the page, and tries do so in an incredible way, after a five-minute speech by the minister responsible, who is not even here for the debate that follows. The minister is in fact asking the House of Commons to cover his acts. He wants to use a vote in the House to cover acts which should be made public. Instead of trying harder to discover the facts and to look in detail at the actions and motives of those involved, he tries to close the case by tabling a piece of legislation.

Who can doubt that, if it is passed by the House, Bill C-22 will close the book for good on this shocking issue? Lobbyists and others involved in this operation will be able to relax. Some who are not lobbyists but who were bidders might even be compensated by the minister. Madam Speaker, you might wonder to which stakeholders I am referring? The act is silent on this and merely excludes refunding lobbyists fees and anticipated profits. Everything else is at the discretion of the minister and depends on his generosity.

Everyone knows that lobbyists abound on Parliament Hill and are involved in every important issue. I agree that some lobbying is acceptable. In this regard, I support the comments made by the Standing Committee on Consumer and Corporate Affairs and Government Operations which, in its report on lobbies released last year, said that lobbying is a necessary component of a modern decision-making process, and that the right to lobby is a fundamental one in a democracy.

However, the committee also added that, when lobbying takes place without the public's knowledge, there is a greater risk of decisions being made against its interest.

If there is an example in our political history which confirms the validity of the committee's comments, it is the Pearson Airport dealings, which were conducted clandestinely, behind the close doors of ministers offices, with political operators, people who influence governments, political contributors and lobbyists.

If we need an example of the need for public disclosure, which was one of the priorities of the Commons committee on lobbying, we have it right here. And if there is any lesson to be learned from the Pearson airport affair, it is that something must be done to change the rules of the game.

In the case concerning us today it is clear that lobbying played a preponderant role. The final result will cost the taxpayers millions of dollars. That is what I call overstepping the mark and it is why I am inviting the Prime Minister to submit concrete proposals to make that very significant activity as open as possible.

His government could suggest putting more teeth into the act respecting the registration of lobbyists, an act which lacks consistency to say the least.

In its report on lobbying the standing committee draws attention to several flaws and suggests some useful solutions. In particular the committee considers inadequate the requirements regarding the registration of tier II lobbyists, a group which is very poorly defined in the present act and which has only to disclose their names and the names of their employers.

The committee report says: "Such disclosure gives no indication as to the type of questions which could be of interest to the organization", to say nothing of the fact that the actual function of lobbyists could easily be disguised through the use of various legal tactics.

Concerning the matter of the disclosure of the objectives sought by the lobbyists, the requirements of the act are not sufficiently forceful and the provision concerning the registration of lobbying activities is so vague as to be useless.

To close the loopholes in the current legislation on lobbyists, we should at least consider a system of disclosure, under which the public office holder being lobbied would have an obligation to disclose his professional contacts with lobbyists. Transparency would no longer apply only to the wish list of the lobbyists but also to the public office holders being lobbied.

Similarly, the quality of our political and democratic system would be enhanced by imposing a code of ethics on elected representatives and senior officials. We could take our inspiration from the bill now before the U.S. Congress, where they have understood the need to provide a framework of measures designed to preserve the integrity of the political process.

In fact, even the Liberal Party, during its period of abstinence when it was seeking power, had taken a position on this issue, and as far as I know, it still stands. The red book, which is constantly being quoted in this House and which was launched with lot of hoopla during the election campaign, clearly says on page 95, and this is from the Liberals before they came to power, and I quote:

-we will develop a Code of Conduct for public officials to guide cabinet ministers, members of Parliament, senators, political staff and public servants in their dealings with lobbyists.

The red book, still the red book, also promises:

In particular, a Liberal government will appoint an independent ethics counsellor to advise both public officials and lobbyists in the day-to-day application of the Code of Conduct for public officials. The ethics counsellor will be appointed after consultation with the leaders of all parties in the House of Commons and will report directly to Parliament-

Where is this independent ethics counsellor? When does the government intend to consult us? Why has it been dragging its feet for six months? Where is its political will? Where is the transparency? Nowhere, because today, the Liberals form the government and, by the same token, are in no rush to keep their promises.

These are only a few examples, not only of the shortcomings, omissions and vagueness of the Lobbyists Registration Act and the questions it raises, but also of the ways which this transparency can be guaranteed. We must go further and apply the same principles to political party financing. In fact, if the government in its concerns for transparency intends to give all citizens equal access to public decision-makers, why does it refuse to make political party financing more democratic? Good question.

How can the Liberal government expect to make the system more transparent when it too depends on donations from large corporations. For example, in 1992, the last year for which data are available, the six largest Canadian banks-I will not bother to name them since we all know which banks are involved-donated nearly $500,000 to Liberal and Conservative party coffers. These two parties received $244,301.54 and $241,493.92 respectively. Canadian banks have a sense of election parity since the total amounts donated to each party were virtually identical. As we all know, the party in power today could be replaced by another tomorrow, and the banks are big on insurance policies. They like to keep things even, especially when their interests are at stake and especially when it is a matter of influencing government by the decisions they make.

In Quebec, under the guidance of René Lévesque-yes, René Lévesque, a name not spoken in this House-this process was brought out into the open. The act of cleaning up our political standards and practices which ensued today stands as proof of the pride and democratic vitality of Quebecers.

[Some hon. members]

Hear, hear.

[Lucien Bouchard, Bloc, Lac-Saint-Jean, QC]

It is vitally important that the process of donating funds to political parties be democratized. The need to do so transcends partisan political divisions, given that the democratic well-being of the people is at stake. It was in this spirit that my colleague, the hon. member for Richelieu, tabled a resolution respecting donations to political parties. I wish to take this opportunity to invite all members of this House to reflect on this issue and to bring pressure to bear on the government to launch this process of democratizing political party funding as soon as possible. Our political system must be hooked into today's reality and made more open and accessible to the ordinary citizen. This process will breathe new life into the system.

Everyone is well aware of the deals made between large financial backers and certain political parties, mostly the major parties and who can disagree that the Liberal Party is a major party? The Liberals are the first ones to say that theirs is a major party. The well-known deals and arrangements between these large political parties and the big financial backers have led the public to have an unhealthy distrust of our political institutions. There is not one member in this House who has not seen on numerous occasions how deeply suspicious his constituents are of the hidden, close, clandestine, almost incestuous relations between the big financial backers and the major parties that form the government.

All members of this House are aware of this fact. Which ones will put pressure on the government to force it to adopt once and for all a fundamentally democratic measure which is desperately needed and to follow Quebec's example? I am referring to limiting to individuals, the right to donate to political parties a practice which we advocate and follow. It allows us to keep in constant touch with our fellow citizens and gives those who make donations a real voice in the political process. At the same time, it leaves the legislator perfectly free, because his first duty is to the public, not to groups operating behind the scenes.

By raising donations in this manner, we will ensure that the party remains in the hands of the members, irrespective of the ongoing pressure exerted on the party's elected representatives to adopt sectarian positions. This process has a name: transparency. Transparency serves a purpose, that is the promotion of democracy. It is this same democracy that enables all of us here today to represent our fellow citizens. Transparency should be the cornerstone of the governing process. It is imperative that all government business be conducted in a transparent manner, including decisions to award contracts such as the one involving Pearson Airport.

The same holds true with respect to financial backers associated with the government. Here again with the Pearson Airport deal, it is clear that the first and sole beneficiaries of the government's largesse in the contract adjudication process have ties to the previous Conservative government as well as to the present Liberal government. If I may echo the enlightened words spoken earlier by the member for Richelieu, the Lortie Commission which was set up several years ago to consider reforms to the Elections Act and which had a mandate to examine this particular issue, could have given serious consideration to party fundraising practices and could have made more substantial recommendations as to how the process could be made more democratic. However, it did not have the guts to do so.

Although these days, as my colleague said, major companies account for only half of the electoral contributions to political parties, it is still too much because the amounts are still large and this obsolete system leaves plenty of room for all kinds of political schemes.

Lobbyists do not only give money or cold hard cash to election campaigns; they give of themselves.

They are high powered campaign workers. They rarely work for small fry like an ordinary backbencher. They prefer to work for ministers and even the Prime Minister, if possible, and their political zeal is apparent not only during elections, because leadership races appeal to their tireless devotion as well.

And lobbyists are not at all partisan. Every time the government changes, we see them shuffling their deck and generously hiring lobbyists from the winning side. Lobbyists are wonderfully open-minded.

So there are natural ties between contributors, lobbyists and elected candidates. This buddy-buddy relationship is particularly noticeable when a juicy government contract is at stake.

The Pearson contract was a juicy one. In 1993, Pearson Airport made a profit of $23 million, not counting terminal 3.

The rent to be paid by the Pearson Development Corporation was about $27 million the first year, $27 million the second year, $28 million the third year, $29 million the fourth year and $30 million a year from the fifth to the tenth year.

At first glance, renting the facilities for $27 million the first year might seem to be a good deal for the government, compared to the $23 million it makes from it now.

But if you take a closer look, you see that is not at all the case. Indeed, after renovating the air terminal buildings, the Pearson Development Corporation intended to raise the rates charged to airlines from $2 to $7 a passenger, which would have meant millions and millions more income every year. For the whole airport, it is $100 million a year, but since the rate in terminal 3 had already been raised to $7 per passenger, the additional charges for terminals 1 and 2 are quite a lot.

Now who would have paid this additional charge per passenger? The travelling public, of course. In this regard, we were not surprised to learn that, to win Air Canada's support for this privatization, the government had agreed in July 1993 to pay 15 per cent of the rent for that airline and foreign airlines operating in terminal 2.

Since Air Canada's present lease expires in 1997 and the new lease would run for 37 years, this measure alone would have cost the federal government some $70 million.

I think that all these shady dealings are suspicious enough to raise serious questions about the management of public funds, but there is more.

You will see that this huge waste of taxpayers' money has many ramifications. For example, I said a moment ago that these higher rates would have brought in tens of millions of dollars a year, which the federal government could very well cash in if it keeps control of the airport and makes the necessary adjustments and raises the rates itself. These rates would be the same as the present rate at terminal 3 and at most major North American airports.

Of course, this higher rate provided for in the agreement would not have taken effect immediately, but only after the Pearson Development Corporation invested the $700 million it had promised.

But this investment itself is a problem. Pearson had initially promised to invest $100 million of this amount to modernize terminal 1.

However, to encourage the initial investment, the government had agreed to collect only $16 million of the $17-million annual rent, which amounts to a 40 per cent rebate for 1994, 1995, 1996 and part of 1997. Although these amounts were to be paid back subsequently, with interest, by deferring these payments the federal government was actually helping to finance the upgrading of Terminal 1, when it had specifically said it would not do so.

Let us not mince words to describe the scheming and artful dodging that went on around an agreement that was unworthy of the trust that should exist between citizens and their government. The players in this political-financial saga ignored the most elementary code of ethics that should guide the relationship between the electorate and their elected representatives. By their greed they undermined the very foundation of our political system. They made a travesty of the very essence of the social contract that binds society together, to satisfy a craving for profit at any price, and the disclosure of their dealings discredited what was left of the government in power at the time.

It is rather difficult to understand why, after all this, the minister should seek authority to pay them compensation. I think we must ask this question: Is it necessary, appropriate and legitimate to pay these bidders compensation, considering the circumstances in which they operated? Only a thorough public inquiry would reveal exactly who did what and who is entitled to receive compensation and how much.

A number of players seem to have tried to take advantage of their political connections. This was hardly the average business operation you could brag about on the campaign trail, so the friends of the outgoing government and those of the incoming government acted like sensible people and reached a very sensible compromise. They said: "Let us stop fighting. Let us merge our Liberal and Conservative interests". Together, they were to conclude very quickly, before the election, a deal which until then had eluded them.

Not only Conservative lobbyists and personalities were involved. The government has presented this bill as through it were St. George slaying the dragon, in this case the Pearson contract. Away with this shameful Conservative contract and let the House help me raise a wall to protect the citizens of Canada from this contract!

Not only Conservative lobbyists and personalities were involved. Both traditional parties, as they like to call themselves, are represented in this mixed bag of moneylenders, fundraisers and lobbyists.

One of the directors of Claridge is the Liberal senator who received the future Liberal Prime Minister at his residence in Westmount at a $1,000-a-plate reception in the middle of the election campaign.

[An hon. member]

That's indecent!

[Lucien Bouchard, Bloc, Lac-Saint-Jean, QC]

Another lobbyist for Claridge was the present Prime Minister's former organizer, so we should not be misled by the present government's insistence on its role in cancelling the contract. The government knows perfectly well that this tainted contract was produced by the entourages of both camps, and not only by the Conservatives. The government knows perfectly well-my speaking time is not limited, Madam Speaker.

[The Acting Speaker (Mrs. Maheu)]

No, I apologize for interrupting the minister.

[Lucien Bouchard, Bloc, Lac-Saint-Jean, QC]

He is getting upset over there because he doesn't like what I am saying. He would prefer to see this legislation go through the House like so many bills, after a quick vote. That will not happen, however. There is a debate here in this House.

[An hon. member]

Right on!

[Lucien Bouchard, Bloc, Lac-Saint-Jean, QC]

Canadians and Quebecers are entitled to hear the truth about this bill.

[Some hon. members]

Let's hear it for political patronage!

[Lucien Bouchard, Bloc, Lac-Saint-Jean, QC]

The government knows perfectly well that an enquiry would bring many of its fundraising friends scurrying out of their hiding places. We know that both camps worked together on this deal.

There is a lesson here, and it is that like great causes and great ideas, money sometimes makes strange bedfellows.

The author of the Nixon report is a former treasurer of the Ontario government. He is not a member of the Bloc Quebecois.

He is a respectable man, probably a federalist-and I respect him none the less for that-who was closely involved in the running of democratic institutions in Ontario, a well-known man, a man of integrity. In a word, the man I am about to quote-and you will notice that his criticism is even harsher than mine-knows what he is talking about. He has submitted the contract to a thorough examination, and was commissioned to do so. What did he find? He said: "To leave in place an inadequate contract, arrived at through such a flawed process and under the shadow of possible political manipulation, is unacceptable".

In other words, Mr. Nixon, who had neither the time, the means nor the power to conduct a comprehensive investigation was only able to get a glimpse, through the curtain, through the smoke in the ante-rooms of power, of possible political manipulation. Now that we know about this possibility, we must act. We must gather information. We must find out who the players were and who engineered this, if only to make sure they do not receive compensation they do not deserve.

Should an in-depth investigation show that some of the people involved acted in an unlawful, unacceptable or unethical manner in this matter, would we still be expected to pass clause 9, and especially clause 10, that allows the minister to pay them generous compensation? Certainly not! But, unbeknown to us, this doubt, this terrible, gnawing doubt, was put in our minds by the findings of the investigators.

"Possible political manipulation", that is heavy stuff. I could not bring myself to utter those words in my speech, but that is how the formal investigation report was worded. Do we stop here, in case the commission of inquiry decides some compensation is in order? That is a possibility. We do not know. We do not have all the facts. There may be people in there who acted in good faith. Maybe, maybe not. We would need to know which were honest and which were not. Otherwise, the good guy is going to pay for the actions of the others. We would have to sort all that out in a public inquiry that would show to everyone that justice has been served.

In addition, if this commission found that some compensation was called for in certain cases, it could determine the amounts openly and publicly and much more objectively than any Liberal minister, including the minister responsible for this case. We could also protect ourselves in the future by identifying clearly the people who pulled the strings on the Liberal side. We know they are there and we could identify them, thus preventing them from acting the same way with the current government in other cases.

I therefore ask the Prime Minister to set up such a royal commission of inquiry, which is the only authority capable of sorting out the real responsibilities of the parties involved in this case. It is also the only way to promote, in the general population as well as in this House, a healthy debate on the links that should or should not exist between a democratically elected government and partisan political entities interested in promoting private interests.

Such a commission could also, in the course of its work, study the issues underlying all these manipulations such as the management of federal airports. In the current economic context, who is in the best position to guarantee the viability and profitability of airport development? Is it the federal government? Is it non-profit agencies created for this purpose or other formulas? Would it not be better to turn their management over to local administrations, like in Montreal, as advocated in Transport Canada's policy during the events examined by Nixon?

Who in this country is best equipped to manage airports? It is an important question. It appears that even the current Prime Minister is not sure as he objected to Pearson Airport's privatization only on the last day of the election campaign, when it

became obvious that the public was outraged by the deal's secrecy.

We all have a duty to be transparent. It is this transparency that made Nixon say on page 11 of his report: "Failure to make public the full identity of the participants in this agreement and other salient terms of the contract inevitably raises public suspicion. Where the Government of Canada proposes to privatize a public asset, in my opinion, transparency should be the order of the day. The public should have the right to know the full details of the agreement".

On this point, the Bloc can only support the opinion expressed by the fact finder, Mr. Nixon, and demand that the government truly take note of his comments and puts an end to this era of confusion which has everyone wondering.

Openness is a political virtue which has been absent in the country for many years now. Openness is a constant guide. It represents security and inspires confidence. We all know that confidence is a flower that has faded in recent years in Canada.

The disengagement of citizens, smuggling, the black market, general cynicism, all these social phenomena are the products of apparently very disparate factors. They can all be traced back to the same origin: the lack of openness on the part of the state which operates behind closed doors concerned, I would say obsessed, with management matters, too often oblivious to the real needs of all those men and women upon whom it must depend for its very legitimacy.

The time has come to go back to the basics and restore political transparency so as to once again give meaning to Canadian democracy. The Bloc will oppose Bill C-22. First, because this legislation is premature. First and foremost because a royal commission of inquiry must be appointed to clarify this dark episode in which the ethical behaviour of the government and some related players was not up to par.

Moreover, and I will end on that, it is imperative that, before anything else, and especially before trying to hide the reprehensible actions which were taken, strict measures be taken to control the activities of lobbyists. This is the very basis of my amendment.

Therefore, seconded by my colleague the member for Beauport-Montmorency-Orléans, I move:

That all the words following "That" be eliminated and replaced by the following:

That this House refuse to proceed with the second reading of Bill C-22, an Act respecting certain agreements concerning the redevelopment and operation of Terminals 1 and 2 at Lester B. Pearson International Airport

Because the bill is flawed since it does not provide measures to ensure the transparency of lobbyists' activities.

[Ed Harper, Reform, Simcoe Centre, ON]

Madam Speaker, I appreciate the opportunity today to speak on Bill C-22.

This whole Pearson revitalization and the studies that have been done raise many questions. I am hoping that the debate we are about to embark on will provide some answers to the questions. Actually Mr. Nixon's review demands a response. I would like to quote from the press release that came out with Mr. Nixon's review: "My review has left me with but one conclusion, to leave in place an inadequate contract, arrived at with such a flawed process and under the shadow of possible political manipulation, is unacceptable. I recommend to you that the contract be cancelled".

Those are very strong words and I think in those words there is a message that we must be fair. I was interested in the minister's comments when he spoke earlier this morning about being fair. The minister said that there may be those who would question any moneys being paid because of manipulation. He acknowledged that there may have been some manipulation. However he wanted his government to be fair and reasonable.

To whom are we going to be fair and reasonable? Will it be the taxpayers of Canada, the people who are paying the bills, or the lobbyists who are to profit from any moneys that are exchanged here? I think we have to be fair and reasonable. My priorities are that we have to be fair and reasonable with the taxpayers of Canada. We have an obligation to be fair and reasonable to those whose names and reputations have been called into question in all of this. They should be given an opportunity to clear themselves if that is possible. There should be no tax dollars spent until the air is clear.

Bill C-22 is virtually unprecedented. However I would suggest that the circumstances here are virtually unprecedented. We have accusations of patronage, accusations of political interference, accusations of excessive lobbying and apparently the elimination of competition.

The government has said much about honesty and fairness. I would like to quote from the red book on page 91. Chapter 6 begins:

If government is to play a positive role in society, as it must, honesty and integrity in our political institutions must be restored.

The most important asset of government is the confidence it enjoys of the citizens to whom it is accountable.

Bill C-22 does nothing toward this goal. Full disclosure of all that has taken place would go a long way toward achieving this. Let us review the background and the history to bring us up to date on the Pearson revitalization. There are many conflicting and contradictory positions.

Through a series of complicated deals two companies merge as partners: Paxport, which is controlled by Matthews Group Limited with very strong Tory connections, and Claridge investments, a company with very strong Liberal connections. These two companies are joined together as the Pearson Development Corporation.

Bill C-22 is the beginning of the end of a process which started in 1987 to move airports across Canada into local hands. Generally airports across Canada have gone into the hands of local airport authorities. The ones they have tried so far have met with some excellent results.

Pearson airport was a different case. The former Tory government was determined to privatize Pearson for the benefit of a number of its friends, among them David Matthews, a former Tory president and fund raiser and former Tory cabinet minister. Otto Jelinek joined Paxport, which is Matthews owned, shortly before the election. He is on its board of directors and president of its Asian wing. Excessive amounts of lobbying went into the privatization of Pearson airport. At least 10 firms were involved.

One of the clearest parts of this whole deal is the fact that the Liberals are heavily involved. Since the Liberal government has been in power it has appointed a former provincial Liberal cabinet minister to lead the review and the Prime Minister's former law partner to lead the negotiations for compensation.

These may be very capable and honest people. However the circumstances dictated that direct political connections should have been avoided. A suspicious and secret deal by the Tories now looks very much like a suspicious and secret Liberal cancellation.

[Stan Keyes, Liberal, Hamilton West, ON]

Madam Speaker, I rise on a point of order. I am curious to what extent the Chair will go to allow the remarks of the member to potentially put into disrepute those individuals of whom the member speaks, especially in light of the result of the report of Mr. Nixon.

[The Acting Speaker (Mrs. Maheu)]

I am sorry but that is a point of debate rather than a point of order.

[Ed Harper, Reform, Simcoe Centre, ON]

Madam Speaker, actually the history going back to 1987 was when the Parliament of Canada passed the National Transportation Act which set the stage for a newly deregulated Canadian airline industry.

On April 8, 1987 the Government of Canada issued its policy on the future framework for the management of airports in Canada. It envisioned local airport authorities as the preferred method of airport management. Privatization was only given passing mention.

Three months later we had a reversal. On June 22, 1987 the Airport Development Corporation was the preferred developer to construct and operate terminal 3 at Pearson. The Matthews Group of companies sponsored an unsuccessful bid in this competition. However it will reappear.

In September 1989 the Matthews Group submitted an unsolicited proposal to the Government of Canada to privatize terminals 1 and 2 at Pearson. This proposal was not accepted. However no costs were expected at that time.

In October 1990 the government announced that private sector participation in the modernization of these two terminals would be sought through a future request for proposals process. No details were provided. As a matter of fact attempts by local airport authorities were rebuffed or rejected. They were not even encouraged to bid in spite of the success of airport authorities in Vancouver, Edmonton and Calgary.

On March 11, 1992 the government issued a request for proposals with 90 days provided for responses, placing heavy demands on those submitting a proposal. This gave the Matthews Group an advantage since it had previously submitted a bid in 1989. Two groups bid on the project: Paxport controlled by the Matthews Group and Claridge.

It must be noted that 90 days is a very short time to allow for proposals on a project of this magnitude. Another thing worth noting is that this was a one stage process. When T3 was considered it was a two-stage process, the first stage being to solicit and short list bidders and the second stage being to encourage detailed bids. This was not the case when we were looking at T1 and T2.

Another interesting aspect was that passenger volumes were open to projections by the bidders. A significant amount of information and coming up with a price was left open to those who were going to be bidding.

At that time there were many firms looking for work and yet so few were given the opportunity to bid on this project.

In December 1992 Paxport Incorporated was announced as the best overall proposal. It had to demonstrate its viability by February 1993. By that time Paxport found it did not have the financial backing it needed so it turned to Claridge for support.

The question here is how could a project of this magnitude proceed without financial ability as a prime consideration. Having discovered that it did not have the financial ability, the

questions arise: Why Claridge? Was no other option available to Paxport?

In February 1993 Paxport and Claridge announced a joint venture partnership which became T1 T2 Limited Partnership and eventually the Pearson Development Corporation with terminal 3 to pursue the redevelopment according to Paxport's proposal.

The request for the proposal implicitly said that there must be competition between T1 T2 and terminal 3. As a matter of fact Paxport in its bid highlighted the importance of competition in its bid. However in joining forces the competition that was to be there was eliminated.

In May 1993 Claridge had assumed effective control of the joint venture. Competition is lost and yet Paxport is still there.

In June 1993 the Pearson Development Corporation and the government signed a letter of understanding as to the substance of the previous agreement. Just prior to that a member, Huguette Labelle, a former transport deputy minister, was moved out of her position because of her opposition to the government's movement.

On August 30 the Minister of Transport announced that a general agreement was reached with Pearson Development Corporation to redevelop T1 and T2 and indicated the agreement would be finalized in the fall with a legal agreement for the long term management operation and redevelopment of the terminals. This is with the election only days away. On September 8, 1993 the election was called.

Prior to the conclusion of the legal agreement the Leader of the Opposition, the present Prime Minister, had indicated clearly that parties proceeding to conclude this transaction did so at their own risk and that a new government would not hesitate to pass legislation to block the privatization of terminals 1 and 2 if the transaction was not in the public interest.

At this time the chief negotiator of the Government of Canada sought written instructions about whether to complete the transaction.

On October 7, 1993 the Prime Minister at the time gave written instructions to complete the deal. We were in the middle of an election and those instructions were given. One has to ask the question: Why?

On October 7 the legal agreement was made to complete the Pearson privatization. At this point we were only 18 days away from an election. Knowing it was going to be an election issue, knowing it would be cancelled if it did not prove to be in the public interest, the government proceeded with the undertaking.

On October 28, 1993 the Prime Minister appointed Robert Nixon, a former Liberal cabinet minister, to do a quick review of the Pearson deal.

There is much that has gone on in the background and, as I said at the beginning, there are many questions that have been raised here. In fact there are questions that are crying out to be answered.

We should take a minute to review some of Mr. Nixon's comments and his opinions in the process. On page 8 of his report he states:

The request for proposals having as it did only a single stage and requiring proponents to engage in project definition as well as proposal submissions and all within a 90 day timeframe created, in my view, an enormous advantage to a proponent that had previously submitted a proposal for privatizing and developing terminals T1 and T2.

[. . .] With little consideration and development occurring others should have been sought and given reasonable time to participate.

The role of lobbyists and political staff, as stated on page 9 of the report, reads:

It is clear that the lobbyists played a prominent role in attempting to effect the decisions that were reached, going far beyond the acceptable concept of consulting. When senior bureaucrats involved in the negotiations for the Government of Canada feel that their actions and decisions are being heavily affected by lobbyists, as occurred here, the role of the latter has, in my view, exceeded permissible norms.

As well, there was the perception that political staff were interested in this transaction to a highly unusual extent; indeed, this climate of pressure resulted in civil servants being reassigned or requesting transfers from the project.

In closing, this was a flawed process that would appear to be killing this project. Mr. Nixon in his review said that the project should indeed proceed. There are five chairpersons and 32 municipalities which support that position.

There is also a safety angle here. Pilots have been stressing this safety factor. I quote from an article in the Toronto Star that was reported in response to some airline pilots who attended a committee hearing.

As pilot Rick Anderson noted, "planes are designed to land in the wind. Crosswinds can cause problems, especially on slippery runways. When heavy crosswinds are blowing, a second north-south runway would be safer to use than the existing east-west runways, and cut delays as well. While the value of the latter cannot be underestimated as we pull out of this recession, since planes burn about 1,360 kilograms of fuel an hour while waiting to land, travellers, airlines and environment all would benefit from reduced travel time, fuel costs and air pollution".

There are thousands of construction jobs at stake. The delay in this project is hurting job creating projects around the province, and indeed in Canada. Mike Sifton, president of Toronto Airways, stated that "airports create jobs and business. The real

jobs an airport creates are one and a half miles down the road from the runway".

This review need not and should not hold up construction. Currently some Toronto MPs are delaying this for purely local concerns. Canadian jobs and growth are at stake. Pearson is a national issue, not a local issue, and jobs are at stake in Kitchener, Windsor, North Bay, Kingston, Oshawa and Barrie.

There is much at stake here: honesty and integrity in the system, confidence and trust in politicians, potentially millions of taxpayers' dollars, the names and reputations of many people, Pearson's revitalization, thousands of jobs and future growth in the economy.

Bill C-22 in my view does nothing to address these issues. We will be supporting the Bloc amendment. I would move an amendment to the Bloc amendment. I move:

That the amendment be amended by adding immediately after the words "more open" the words "in Canada".

[The Acting Speaker (Mrs. Maheu)]

I would like to advise the hon. member for Simcoe Centre that we will take his proposed subamendment under consideration.

For the moment I will resume debate with the hon. Parliamentary Secretary to the Minister of Transport.

[Joe Fontana, Liberal, Parliamentary Secretary to Minister of Transport]

Madam Speaker, before I get into the text of my speech I wonder if I could make a couple of observations that are rather striking and troublesome.

We have heard from both the Bloc Quebecois and the Reform Party. They have questioned the way the Pearson deal came about and the substance of the deal. We all agree that the process and the substance were seriously flawed in many ways because the Canadian public interest was not protected. Yet both opposition parties are voting against the bill.

That is rather curious. I must admit I was rather surprised that the leader of the Bloc Quebecois would take the time to address this issue. He talked about a number of things, from lobbyists to other circumstances. He went on ad nauseam about the fact he had left the government before he had anything to do with it. I believe that perhaps he has a guilty conscience.

He is right. He left the government in May 1990, but he was part of that gang, part of his colleagues, part of the cabinet, part of the so-called friends he now wants to deny he ever had anything to do with who put this darned bad deal together. It is rather curious that the Bloc leader would go on at length trying to divorce himself from a bad gang, as Canadians would know it, as he knew it. Yet he participated maybe not in the Pearson deal, but right from the beginning he knew exactly what was going on.

He went on and on. He must have a guilty conscience about the fact that he had anything to do with the gang that operated in Ottawa for nine years.

He then starts talking about the bill being a smoke screen and in fact talks about Pearson being a very important economic instrument and transportation mechanism. What does he ask for? A public inquiry that would probably cost millions and millions of taxpayers' dollars and waste a lot more time. We need to get on with the planning of Pearson. The bill needs to be put in place to effect the cancellation because the former government did not put a cancellation clause in the agreement.

I find it rather curious that the Bloc talks about integrity. It is really talking about wasting a heck of a lot more time so that we cannot get on with the business of deciding what we need to do in the public interest with regard to Pearson.

The comments of the Reform Party were equally absurd. They talked about the flawed process, about the flawed contract. Yet what is it talking about? It is talking about delaying.

The member for Simcoe Centre said that Pearson was an important employment generator. We can put people back to work. Yet he said Reformers could not support the bill until certain other things happen. That is not being fiscally responsible, like the Reform Party likes to pretend it is, at least in the minds of Canadians. I do not really understand where the Reform Party is coming from in terms of delay and timing. We want to do exactly what I thought the member said, and that is get on with planning the future of Pearson and national transportation.

I am pleased to have the opportunity to participate in the debate on this important legislation, Bill C-22. I want to add my support to the Minister of Transport who has brought this legislation forward to cancel the agreements entered into by a previous government for the operations of terminal 1 and terminal 2 at Pearson International. This is a necessary step not only to ensure the future of Pearson but also to restore the faith of Canadians in their democratic institutions.

We are not cancelling this deal because it was fashioned by a previous government. To do so simply for partisan reasons would be unjustifiably frivolous. Rather the government has said that we will build on some of the previous government's initiatives when, and I emphasize when, such works serve the interests of the people of Canada. Pearson airport did not serve those interests.

The people of Canada voted in the last election for open and transparent government. The process that led to this deal was neither open nor transparent, nor did it stand up to scrutiny byan impartial observer, Mr. Robert Nixon. As we all remember,Mr. Nixon, the former Ontario treasurer, advised the government to reject the deal saying: "To leave in place an inadequate

contract, arrived at with such flawed process and under the shadow of possible political manipulation, is unacceptable".

I want to digress perhaps a little for a moment, although it is related. One of our important commitments as a government is to renewing Canada's infrastructure and that includes our transportation system.

As my hon. colleague, the Minister of Transport, said in his speech in February, we intend to help Canadians build a stronger economy. One way to do this is through policies that bring immediate gains in transportation efficiencies. This kind of forward thinking will contribute to long term economic growth by enabling Canadians to do business and move goods quickly and efficiently at competitive costs. Yes, we need to improve our transportation infrastructure but not at the expense of the long term interests of the people of Canada.

To get back to this particular deal, perhaps it would be useful to look at some history, to get some perspective on where things started to come apart. I know that other speakers have already indicated that. On April 8, 1987 the then Government of Canada issued its policy framework for the management of airports in Canada. On June 22, 1987 the government selected the Airport Development Corporation to construct and operate Pearson's terminal 3. I should point out at the same time that the Leader of the Opposition was in the Conservative cabinet.

The Falcon Star Group which included the Matthews Group of companies was an unsuccessful bidder in this competition back on June 22, 1987. In September 1989 the Matthews Group submitted an unsolicited proposal to privatize terminals 1 and 2 but this proposal was not accepted by the then government in September of 1989.

In October 1990 the then Minister of Transport announced the government would privatize terminal 1 and terminal 2 at Pearson. A year and a half later on March 11, 1992 the government issued an RFP for the privatization and redevelopment of terminals 1 and 2. The original RFP provided only 90 days for response, although that was extended, if we can call it that, by an additional 30 days.

It is not as though the construction industry was booming in southern Ontario in those days. Yet no other firms were given reasonable time to participate, so the process was flawed right from the beginning.

On December 7, 1992 the government announced Paxport's proposal was the best overall, but Paxport still had to demonstrate that its proposal was financially viable. When it could not do this it turned to Claridge, its rival for financial support. By February 1, 1993 Paxport had joined forces with the other original bidder in a joint venture partnership which became T1 T2 Limited Partnership.

By May 1993 when most outstanding issues had been dealt with sufficiently for formal negotiations to start, we now find that Claridge, the second place finisher, in effective control of the joint venture.

On August 30, 1993 the then Minister of Transport announced that a general agreement had been reached to redevelop and operate the two terminals. Then just nine short or long days later, depending on your perspective, on September 8, 1993 the government called the long awaited election. We all remember that campaign well and we all remember the concerns raised by the public and media about the Pearson deal.

The soon to be Prime Minister warned the parties to the deal not to sign it, that a new government would not hesitate to cancel it if it was not found to be in the public interest.

It should perhaps be noted that the circumstances were such that the government's chief negotiator asked for written instructions about whether to complete the transaction. That chief negotiator got those instructions on October 7, 1993 despite the concerns expressed by many Canadians, the soon to be former Prime Minister issued explicit instructions to conclude the deal. We now know where the push came from. It seems that the Canadian people had some doubts as well and we know how they expressed themselves at the ballot boxes.

What would the Government of Canada have gained by the agreement? Remember the terms of the lease was 37 years with an option for an additional 20 years. This means the government could well have been signing away control of a major national asset for almost three generations.

The agreement also included a constraint on alternative airport development within a 75-kilometre radius of Pearson. How did the previous government suppose this government would serve the people of London and the rest of southern Ontario by this kind of provision in the agreement?

Extensive reviews have shown that the airport facilities in the area of south central Ontario must be co-ordinated. Southern Ontario airports must, for planning purposes, be considered part of a single integrated system. This clause alone would have severely constrained future governments, eliminating many sound planning options. Under the agreement the government could have done nothing to alleviate the pressures of growth at other airports until Pearson topped 33 million passengers a year.

As Mr. Nixon said in what I take to be restrained understatement, the agreement did not serve the public interests.

I know my allotted time is running out, but I cannot leave the matter without some mention of the appearance of cronyism conveyed by this deal. It is this appearance that is so corrosive to public confidence in the government and its institutions. While we are not suggesting that anything illegal was done by any of

the parties, some of their actions conveyed the impression that they had something to hide.

Everyone knows how much concern was expressed about lobbyists and political staff seeming to have an inordinate influence on decisions that should have been made on the basis of public interest, influencing them so much that senior public servants felt pressured.

We have a long tradition that requires openness and transparency in any undertaking that involves the public purse. Canadians are entitled to disclosure when it comes to a deal affecting their assets.

I am afraid there is much more, but time does not permit me to examine the rest of it. What is also important now is that it is time to move forward. The government understands that the people of Ontario, in fact all Canadians affected by Pearson's operations, would like a prompt decision on how we are going to manage Pearson. That is one good reason for proceeding with the bill, to cancel the agreement as we must formally through this legislation as quickly as possible. Pearson is too important a national asset to languish while we debate. The Minister of Industry said when he introduced the bill: "We need to get the cancellation over with so we can get on with the job of planning for its future operations".

However, as has been clearly stated by the Minister of Transport, we will not be put in the untenable position of cobbling together a solution. Pearson is too important and we are too much aware of our responsibility to Canadians to rush simply for the sake of doing something, anything, as some members opposite seem to want us to do without proper care for the long term effects of our decision.

The fact of the matter is that the decisions we take at Pearson do not just affect that single airport. That is why we are consulting with a great many people. Yes, we are consulting with our Toronto members of Parliament. They were elected and are the rightful voice of their constituents in Parliament, in our caucus and in our government. We will consult with provincial, municipal and regional governments and local community leaders. We are doing that and the minister is doing that. We intend to do it right, not like the previous government has done.

In fact, as some of our other counterparts have indicated in the debate this morning, Pearson is not a local airport. It is a national airport and we are seeking national consultation.

The fact that our party is a national party with representatives from all parts of this country is a positive for us, not a negative. I cannot say that about the Bloc which only has members in one province nor the Reform Party which has members in only two or three provinces. We are a national party with national representation. We will consult with our national caucuses as to what to do about our national airport.

The government intends to make a final decision on Pearson's administrative structure before the end of this year. It is now time to close the book on this sorry chapter and move forward with planning for the future of Canada's transportation hub. Passing the legislation will allow us to plan the future of Pearson unencumbered by these flawed agreements.

No one should be surprised by anything in the legislation. It is nothing more than what we said we would do before the election, after the election, and when we introduced the legislation.

We will negotiate only for out of pocket expenses. We will not negotiate for lost profits and we will not negotiate for lobbyist fees. We are doing what the Bloc has indicated we should not; we are doing what the Reform has indicated we should not, which is to negotiate lobbyist fees. We will not pay for lobbyist fees. We will not pay for lost profit. We will pay for out of pocket expenses.

The legislation does not limit the amount of any potential payment nor does it preclude any continued negotiations because negotiations must continue. It does make clear to all the parties what the government is and is not prepared to consider. It makes it clear that these negotiations cannot go on indefinitely.

We are not saying that lobbyists should not be paid. We are saying these parties should take up the matter with the people who employed them, the developers, and not the taxpayers of the country.

I would like to close with this reminder. The most important asset a government can have is the confidence of its citizens. During the nine years of the previous government-and I was happy to hear the history lesson from the leader of the Bloc Quebecois because he participated in part of those nine years in that government-we saw a steady erosion of confidence in the public sector.

This erosion had many causes, from the behaviour of certain elected politicians to an arrogant style of political leadership. One of the key causes of this erosion was the practice of conducting public business behind closed doors giving the idea of favouritism.

Canadians deserve better. The government intends to do better by delivering to Canadians the leadership and the innovation demanded by today's changes backed by integrity and supported by principles that will never be sacrificed to expediency.

We look forward to working with both parties at committee to improve the legislation, if we can. We need to get on with the business of planning Pearson's future. We cannot unless we pass the legislation. I look forward to the comments of members from both sides.

[The Acting Speaker (Mrs. Maheu)]

Prior to going to the questions and comments section, the subamendment as proposed by the hon. member for Simcoe Centre is procedurally acceptable, as long as he is asking that we insert the words "in Canada" after the word "lobbyist". Is that correct?

[Ed Harper, Reform, Simcoe Centre, ON]

That is correct, Madam Speaker.

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

Madam Speaker, I would like to place a couple of comments on the record before putting a question to the hon. parliamentary secretary.

Bill C-22 is reasonable, prudent and protects the Canadian taxpayers. After all, the developers behind the Pearson deal were warned. The Liberal Party stated long before the 1993 election that it smelled something rotten in this deal. We put it on record that we would take this action if we found there was something rotten about the deal. The Nixon report confirmed that and now we have Bill C-22. It is the only course of action to take.

Leading up to my question I am glad the government is taking this action. It indicates to me that the government is committed to transparency and accountability.

The House probably already knows that airport authorities are being proposed for other centres in Canada, including my home city of Winnipeg. The hold-over model proposed by the former government for the proposed airport authority in Winnipeg is flawed.

In my opinion the accountability under the plan proposed by the Conservative government is weak. Transparency is not there. For example there is no provision for the public tendering process. The conflict of interest guidelines are a joke and representation can certainly be improved.

If we are going to go ahead with establishing airport authorities, be it one to replace the Pearson deal in Toronto or to replace other Transport Canada management at other centres in the country, let us get it right. Let us get it down so we do have public accountability, transparency and so on.

Perhaps the hon. parliamentary secretary could answer my questions. Are we going to establish further airport authorities of the kind proposed in Winnipeg, not for profit but still an airport authority, a kind of privatization? When these airport authorities are established will public accountability be the top priority?

I do not want private clubs operating airports. I want bodies that operate airports in the public interest and have public accountability at the top of the list.

[Joe Fontana, Liberal, London East, ON]

Madam Speaker, I appreciate the comments made by my colleague from Winnipeg St. James. He has touched on a number of important issues with regard to local airport authorities. He is absolutely right that we want to get it right, that we want to do it right.

The government has learned from mistakes made by others. The Minister of Transport and Transport Canada are looking at ways of fixing those flaws the member talked about with regard to local airport authorities. There are tremendous opportunities.

The minister sees it that way. Transport Canada sees it that way. Local communities can play a positive, constructive and proactive role in running airports to be the economic instruments they can be, but not to the detriment of public interest. We are defining what that public interest is in terms of safety and other matters.

The member is right on. We intend to make sure the local airport authority provisions are enhanced to make them much more accountable, much more transparent. We intend to ensure there is broad representation on those boards, to ensure the bottom line is that the interests of the community are always at the top of the heap so to speak.

I thank the hon. member for his constructive suggestions. We hope to have those revisions in place as soon as possible. As the member has indicated a number of communities are looking at opportunities.

As the Reform Party keeps reminding us, the government wants to be as effective and as efficient as it possibly can to save taxpayers money. If the local airport authorities can do the job well and protect the public interests as well as further their own local objectives, why not? The government is prepared to look at that.

[Michel Guimond, Bloc, Beauport—Montmorency—Orléans, QC]

I detect some contradiction in the words of the Parliamentary Secretary to the Minister of Transport, and I will explain why.

It seems to me that the parliamentary secretary is speaking from both sides of the mouth, not at the same time, of course, but I will explain myself.

On March 10, the Minister of Transport, in response to the Budget Speech of the Minister of Finance, said in several places-I do not have the Hansard with me, but I studied his speech very well-that several activities currently conducted by Transport Canada would have to be sold and privatized.

I would like the parliamentary secretary to indicate to me whether there is not a contradiction in what he was saying earlier about the fact that the Pearson airport should continue to be part of the public heritage.

[Joe Fontana, Liberal, London East, ON]

Madam Speaker, I appreciate the comment and question by my colleague the transport critic for the Bloc.

The minister and the government have indicated that Transport Canada and our government want to look at commercialization opportunities. Commercialization does not necessarily mean the same as turning over or privatizing so that the private interest is protected and the public interest is not.

The member will know we have already announced some measures such as the air navigation system. We will be consulting all the stakeholders to find out if there is a better way of controlling our air navigation system to make sure that safety is paramount, that all the stakeholders have input into the system, and at the same time save the taxpayers some money.

I do not have to tell the member why we need to look at opportunities for saving money. We have a deficit and a debt to deal with. The taxpayers also demand that this government look at every opportunity to make sure we are as efficient and as effective as possible, but not to give up the public interest.

We are not in any position to make an announcement as to how we will deal with Pearson. That announcement will come as the minister indicated and as I indicated in my speech. By the end of the year we will put forward our plan of action for Pearson, not only the administrative structure but also the plans we have for its future. We are consulting.

It is not inconsistent nor is it talking out of both sides of the mouth to say that the deal structured by the former government was a bad deal. It was badly structured. It was a bad process, repugnant to taxpayers. The detail and substance of the deal were bad and not in good public interest.

We do not intend to make the same mistakes. We have learned from other people's mistakes, hopefully. We will put together a plan for Pearson, other airports, other modes of transportation, be it the seaway, be it rail, be it marine, be it highways, to work in co-operation with all the stakeholders, the provinces, municipalities, communities, anyone we have to, to make sure that Canada has the most effective, efficient, integrated transportation system to serve Canadians.

At the end of the day Canadians have to compete with the Americans, with the Mexicans, with the global community. Unless we can move goods and people as efficiently as we possibly can and at the best costs we cannot compete. If we cannot compete we do not have jobs and if we do not have jobs we have economic and social problems.

I would hope that commercialization is not a bad word. It is an opportunity that the government wants to look at to see how much more efficient and effective we can be in all modes of transportation.

[Michel Guimond, Bloc, Beauport—Montmorency—Orléans, QC]

Madam Speaker, you will understand that, as transport critic for the Official Opposition, I am extremely interested in Bill C-22 which was presented at first reading on April 13, 1993. I also carefully reviewed the report Mr. Robert Nixon submitted to the hon. Prime Minister on November 29, 1993.

I did not waste any time in studying the contract signed on October 7, 1993 by the Government of Canada and T1 T2 Limited Partnership. I also asked certain employee associations for their opinion and consulted with some airport managers. I will not violate any official secrets by saying that, after these consultations and all that reading, I agree with the amendment proposed by the Leader of the Opposition and ask this House to authorize a Royal Commission to hold an inquiry on the circumstances surrounding the deal entered into by the government and T1 T2 Limited Partnership.

In its present form, Bill C-22 contains a dozen clauses. We agree with some of them but cannot support the wording of subsection 10(1), and I quote:

If the Minister considers it appropriate to do so, the Minister may, with the approval of the Governor in Council, enter into agreement on behalf of Her Majesty to provide for the payment of such amounts as the Minister considers appropriate in connection with the coming into force of this Act, subject to the terms and conditions the Minister considers appropriate.

During the election campaign, the leader of the Liberal Party of Canada, the present Prime Minister, made it very clear to the parties involved that he would have no qualms about cancelling the deal after he was elected. Following this statement, the chief negotiator for the former government requested written instructions on whether to complete the transaction. The then Conservative Prime Minister specifically requested that the agreement be signed that very day. However, concluding a transaction of this magnitude in the midst of an election campaign, effectively tying the newly elected government to the previous government's policies, flies in the face of normal democratic practices.

We must admit that the new Liberal Prime Minister, who was elected last October 27, wasted no time in dealing with the situation, announcing on December 3, 1993 the cancellation of the Pearson Airport privatization deal. Unfortunately, he probably soon realized that some of the people involved in that deal belonged to his party. It is probably why, on April 13, 1994, his government presented a bill to finalize the cancellation while reserving the right, under subsection 10(1), to enter into

agreements on behalf of Her Majesty to provide for the payment of such amounts he himself considers appropriate.

You will understand that to exclude Parliament from such an important decision and to give a blank cheque to Cabinet, especially the minister of Transport, is unacceptable.

During the last campaign, our party mentioned that the Liberals and the Tories were so similar that they were like two peas in a pod or "blanc bonnet, bonnet blanc", as we say in Beauport and on Île d'Orléans. This bill confirms it.

It is unacceptable for payment of compensation to be authorized without even being sure such compensation is warranted. When examining all the documents, and particularly the lengthy Nixon report, I wonder if there was any wrongdoing in that operation and I am very concerned about the answer.

After the royal commission of inquiry has made its review, after its decision and recommendations, maybe we will come to the conclusion that it is rather T1 T2 Limited Partnership that should pay compensation to the Canadian government. If however the royal commission concludes that there is compensation to be paid, Parliament will still be in a position to make a fair and enlightened decision.

I mentioned that we were not in agreement with section 10(1), but I would like to add that there should be another section in the bill saying who should manage Pearson International Airport. We all know that Transport Canada still operates the airport, but we would have liked to see this bill determine clearly that the Toronto airport should be under the management of a non-profit organisation just like the Montreal, Calgary, Vancouver and Edmonton airports.

In these cases, management is a group of people from the local community so they are quite capable of defending the interests of those they represent. Let me just give as an example Aéroports de Montréal, the corporation that operates the two Montreal airports; the members of its board come from the business community and are also board members of the SOPRAM, the corporation responsible for the promotion of Montreal airports.

The eighth member is the president and chief executive officer of Aéroports de Montréal, ADM if you will. It is also interesting to note that SOPRAM is a non-profit organization comprising 21 members appointed by the following organisations: the City of Montreal, the City of Laval, the Conférence des maires de banlieue, the Chambre de commerce du Montréal métropolitain, the Board of Trade of Metropolitan Montreal, the Corporation de promotion de l'aéroport de Mirabel (COPAM), the Société montérégienne de développement (SMD) and the city of Longueuil.

This kind of representation means that the corporation is sensitive to local interests and has a perspective rooted into the business community. This is a prerequisite that we would have liked to see in Bill C-22. I would like to come back to the royal commission we are requesting. Why should we have a commission of inquiry? There are several reasons.

The first would be to determine why, on March 11, 1992, the government asked formally for proposals regarding the privatization of Terminals 1 and 2 of Pearson Airport. There would be only one phase and no prequalification, contrary to the process for Terminal 3, which was to be in two phases.

The second reason is that, looking at the Nixon report, we note that the call for tenders left only a very short time, 90 days, which meant that only groups closely connected with the operation of the airport, like Claridge and Paxport, could possibly submit a valid tender. This explains why only two tenders were received. Paxport had already submitted a privatization plan in 1989, but had had to withdraw, and Claridge was operating Terminal 3.

The third reason is to determine why the contract was signed on October 7, 1993, during the election campaign, and despite the fact that the very hesitant chief negotiator had asked for written instructions before signing the deal.

The fourth reason is to determine what role did the lobbyists played and whom they lobbied. The fifth one, to determine the cost to the public of this hasty decision, and who really benefitted from it. The sixth one, to establish why the Conservative government sought to privatize Pearson Airport, the most profitable in Canada. The seventh reason, to find out why the government allowed T1 T2 Limited Partnership a rate of return of 24 per cent before taxes and 14 per cent after taxes.

The eighth reason is to see why the Nixon Report recommends that no compensation be paid for lost business opportunities and lobbying costs. Have the commissioners uncovered even more irregularities than we know of?

The ninth reason is to determine the role of certain stakeholders closely linked either to the Conservative Party or to the Liberal Party of Canada.

The tenth reason is the answer to the following question: Why did the government not include in Bill C-22 a clause allowing it to transfer the Pearson Airport administration to a non-profit organization?

These are some of the reasons why a royal commission of inquiry is needed to arrive at a well advised decision. It is also important that the commission clearly indicate the impact of lobbyists in this case. It must examine the costs to the taxpayers,

the impact on jobs in the Metro Toronto area, and especially, the impact on transportation in Canada.

I will be focusing in particular on the repercussions of this transaction on Canadian transportation. My colleagues will discuss not only the impact on public finances and on jobs in the Metro Toronto area, but also the role of lobbyists in this affair.

Airports, along with aircraft and human resources, are the mainstay of the air transport industry. Airport facilities allow you to increase the number of destinations, accommodate various types of aircraft and provide different kinds of services.

Air transportation has a great influence on the overall economy of a region. An airport is the point of arrival for foreign investors and the point of departure for local human and non-human resources. For the region where it is located as well as for the destinations it is linked with, an airport is considered a significant economic lever.

According to a study conducted by the École des hautes études commerciales of Montreal in the late 1980s, the contribution of Montreal airports to the Gross Domestic Product in terms of value added in 1992 was expected to be $1.3 billion in direct effects only and $2.2 billion in both direct and indirect effects.

To show just how airport facilities can influence regional development, let me quote from an IATA report issued in December 1991. In Toronto, the addition of a runway would mean $3.5 billion more in revenues for the region over the next 15 years and $9 billion more for the province. The impact on the employment situation would be significant: locally, the addition of the runway would create 3,300 new jobs every year and 3,700 jobs throughout Ontario, which comes to over 7,000 new jobs for Ontario.

Also, in its October 1992 issue, the magazine L'Actualité reported that the number and frequency of air transport communications between major cities is the fifth criterion used by potential investors.

The air transport industry depends directly on airport facilities. Carriers are the primary clients of airports and it is thanks to the serviceability of airport facilities that airlines can develop and generate by their activities considerable revenues for the community.

The main cause of these decreases is quite clear. In the mid 1960s, projections for future passenger and cargo traffic led authorities to plan the building of a second airport in Montreal, that is Mirabel. According to the projections made in 1967 for the 1980s, we were to expect 14 million passengers and 2,020,000 tons of cargo by 1985.

Also in the mid 1960s, we anticipated a 15 per cent growth rate for passenger traffic in the Montreal area, that is approximately 10,600,000 passengers for 1975, the year Mirabel was going to be inaugurated.

Lastly, Mirabel was to be the sole gateway in Canada for all transatlantic flights and, eventually, for all international flights other than transborder flights.

Things did not turn out that way. In 1985, the combined passenger traffic for Dorval and Mirabel was 7 million passengers, that is half of what was initially projected. In 1985, the combined cargo traffic for Dorval and Mirabel was approximately 105,000 tons, which is less than what Dorval handled alone in 1975. This cargo is 5 per cent of what was projected in 1967.

In the years following the inauguration of Mirabel Airport, Montreal lost the preferential status that it had been promised. Mirabel is no longer the only gateway in Canada and more and more airlines are authorized to offer direct flights from other Canadian airports to foreign destinations.

Between 1966 and 1975, passenger traffic in Montreal grew by about 9.9 per cent, which is 5 per cent less than expected. However, the growth rate did not remain steady after 1975. Between 1975 and 1984, passenger traffic grew by only 2.24 per cent, which represents an annual growth rate of less than one quarter of one per cent. So, the growth rate at both Montreal airports was about 10 per cent of the Canadian growth rate during the same period.

Between 1975 and 1984, increases in passenger traffic occurred mainly in Toronto, Vancouver, Calgary, Edmonton, Ottawa and Halifax. Montreal accounted for only 1.86 per cent of the overall growth in traffic in Canada during this nine-year period. Also, during the last ten years, that is from 1981 to 1991, the growth rate of passenger traffic in Montreal was minimal compared to the 44.55 per cent rate recorded in Toronto.

In 1981, Dorval and Mirabel handled 7.5 million passengers a year, whereas Toronto handled 14.7 million. The slow growth of airport activity in Montreal since the early 70s is especially notable compared to what happened in Toronto over the same period. Statistical data are a proven measure of airport activity.

Therefore, one can imagine that the negative impact of this shift in economic activity from Montreal to Toronto has played a major role in the erosion of Air Canada's pilot base in Montreal in favour of Ontario's capital. For example, in 1979, Air Canada had 461 pilots based in Montreal and 451 in Toronto, a difference of 10 in favour of Montreal. Some 13 years later, in 1992, Air Canada had 301 pilots based in Montreal and 781 in Toronto, a difference of 480 in favour of Toronto. Over a 13-year period, Montreal lost 160 pilots whereas Toronto gained 480 pilots. This

about-turn is due mainly to the fact that Montreal has lost its privileged status with regard to direct flights to Europe, which allowed a shift in economic activity from Montreal to Toronto.

In closing, I would like to quote the words of Mr. Tory Hine, financial analyst for Scotia McLeod, as reported by the magazine Wings , vol. 5, in the fall of 1992.

"We have an airline industry concentrated on a single hub, Pearson International in Toronto, with secondary hubs in Vancouver, the Pacific gateway and Montreal. The position and dominance of the Toronto hub is the single asset of Canada's industry. The potential for Toronto to be the North American scale hub is important for the jobs and revenue which would be created in the Toronto area, but it also provides an important link which enables Canada to participate fully in both the Canada-U.S. and North American free trade agreements. The split of Montreal's two airports between international services at Mirabel and domestic and transborder services at Dorval means that the two airports are relegated to serving primarily the local market. Montreal as a result has not emerged as a full hub".

Again, if Montreal could have maintained the status it enjoyed in the seventies, it would not have to limit itself to serving local routes.

In conclusion, the Montreal airports authority manages Montreal's two airports very well. Business people and airport people are talking to each other and the best solution will soon be found. Hopefully, the Montreal airports authority will try to convince airlines to have their inspection and maintenance work done in a place where air traffic is already heavy. This would have a major impact on employment at the Air Canada technical maintenance centre in Montreal, where close to 3,500 people work and which is known around the world for its excellence and expertise.

My party does not intend to take the place of local people when it comes to deciding whether there should be one or two airports in Montreal. We are convinced that they are able to make the right decisions.

The government will soon have important decisions to make concerning Pearson Airport, and I am not talking about compensation, but about its future and administration. Before making decisions that could result in one area of the country being more prosperous than another, would it not be a good idea to review the whole Canadian airport system, to discuss with business people and specialized agencies, and to involve the provincial governments so that all regions, and not only one, can prosper?

[Barry Campbell, Liberal, St. Paul's, ON]

Madam Speaker, I rise in support of Bill C-22, an act respecting certain agreements concerning the redevelopment and operation of terminals 1 and 2 at Lester B. Pearson International Airport.

This is the bill to cancel the agreements made by the previous government for the operation of terminals 1 and 2 at Pearson airport. As my colleague, the member for London East, made clear a few moments ago, it is time we close the book on this ill-conceived project so that we can get on with the important work of planning Pearson's future.

I support the bill for a number of reasons because it puts an end to agreements contrary to the public interest reached through what have been described charitably as a flawed process. The legislation enables the government to get on with planning the future of Pearson airport and air transportation and that future is too important to be tied up in procedural knots.

Most of all, the bill should be supported because it clears the decks for the serious work of rebuilding Canada's transportation system, including our air transportation network which has Pearson as its hub.

One of the government's first priorities is to secure Canada's economic future, a task in which transportation plays a key role. There is no question that the cost of moving goods and people is a major factor in our nation's economic health. For Canada it is a daily challenge.

The growth and prosperity of the country have always depended on transportation. This was true before Confederation and it is true today. It is even truer today; a fast, reliable, low cost transportation system is vital to Canada's prosperity. It is the life support system of the country's exports and a critical factor in our competitiveness. It is transportation which keeps us together as a nation.

Air travel plays a particularly important role in binding the country together. It is how we travel when we go home for the holidays, when we take a vacation, when we seek out new business. Pearson is the hub of air transportation in Canada, our largest airport, one of North America's busiest gateways. One-third of all air travellers in Canada pass through Lester B. Pearson International Airport. Twenty-one million people passing through on their way to visit friends and family make business connections or even take their first steps on Canadian soil.

As Mr. Nixon said in his report to the Prime Minister, Pearson is a critical national gateway and a hub service to travellers, families and shippers. It cannot be duplicated by any other facility in the area, indeed in the province or in the country.

However Pearson is more than a transportation hub. It is also an economic generator for southern Ontario. The airport generates employment for 57,000 people directly and indirectly, including 14,000 people who work on site, and these jobs generate almost $2 billion a year in personal income. Add to that the almost $4 billion a year in direct revenue for local businesses and tourism and the $633 million in taxes from airport activity that go to various governmental jurisdictions. That gives us some idea of the airport's economic contribution to southern Ontario, the greater Toronto area, and all of Canada.

When we consider its economic and social importance to the region, the provinces and the country we see that Pearson is far more than a transportation facility. It is one of the most important public assets in our economy, an airport which serves the entire region, Ontario and all of Canada.

It is incredible to me that the previous government would have planned to sign away this vital asset in the heat of an election campaign without financial prequalification and constraining airport development in the entire region.

As Mr. Nixon concluded, this was an inadequate contract, arrived at in a flawed process and under the shadow of possible political manipulation. This deal was contrary to public good.

Being against the Pearson deal is not the same as being against renewal of our transportation system; far from it. As the Minister of Transport said in his response to the budget, the government is fully committed to helping Canadians build a stronger economy. An essential part of this effort is renewing Canada's infrastructure and that includes our transportation system. This renewal will contribute to long term economic growth by enabling Canadians to transact their business and move their goods quickly, efficiently and at competitive cost.

The government is committed to improving transportation effectiveness, but we must avoid simplified solutions that stem from a political agenda rather than clear eyed planning. We must avoid sacrificing the interests of the nation as a whole to serve a narrow, ideologically based vision.

That is why the government is developing a national transportation policy, a framework to allow us to retool our facilities and services to meet current and future needs.

To meet these needs we need to develop an integrated transportation system. To get maximum benefits from transportation we have to focus on the entire system, not on its parts, its many parts. The transition may be difficult, especially for aspects or facets of our struggling transportation industry but it must be done.

We must also encourage and stimulate competition. Government can do this by providing the regulatory framework, incentives, and infrastructure the private sector needs to deliver transportation services competitively and safely.

The government intends to pursue a pragmatic mix of modal integration, innovation and realism. Transport Canada is reviewing all its policies and programs. This review is intended to address the challenges and pressures facing Canada's transportation sector through a comprehensive, coherent strategy of reform.

Being against the flawed Pearson deal does not mean being against private sector participation in what were once viewed as traditional government activities.

The government does not believe that it has to own and operate a system in order to achieve its public policy goals, but government does have as role to play as a facilitator, as a catalyst, setting goals, providing direction, monitoring performance, making sure the job gets done fairly and effectively.

Yes, the federal government has a responsibility to ensure that Canada has the national transportation system it needs and we intend to live up to that responsibility. We see no reason why the private sector should not be invited to do what it does best. The government believes that commercialisation is an attractive option, one that brings business discipline to the provision of services that have traditionally been delivered by government.

However commercialisation does not necessarily mean outright privatization. It can take many forms, ranging from the contracting out of services, public-private partnerships, non-profit entities, special operating agencies, crown corporations.

Regardless of what form it takes, what is essential is a business like approach to the provision of services, an approach that is more efficient, more responsive and less dependent on the Canadian taxpayer.

This will result in better capital planning, access to private financing, faster approval, easier introduction of new technologies and more user and client input. For example, the government sees great potential for commercializing the air navigation system. The International Civil Aviation Organization cites a clear trend toward the establishment of autonomous authorities to own and operate AMS facilities around the world.

Commercialization in these and many other areas of government activity can bring major savings to taxpayers and better service to clients. Any move to commercialization must always maintain Canada's high transportation standards. Cancelling this deal is not an attack on the private sector. It is an attack on what is a flawed, suspect deal contrary to the public interest.

Our action in regard to this transaction does not rule out future involvement by the private sector in some of the activities now undertaken by government. We will look at every opportunity to collaborate with the private sector to provide transportation services to Canadians.

The private sector has a role to play in airport operations. Non-profit private sector management groups now have responsibility for five of Canada's major airports. We must take the necessary action to terminate the ill-conceived terminals 1 and 2 deal and allow the government to move forward with its plans for Pearson.

Under the proposed legislation the government may make a payment to developers, but this will not include lost profits or any fees paid for lobbying. The Minister of Industry said when he introduced the bill: "We publicly asked the previous government and the company not to conclude this highly controversial deal during the election campaign. They chose to proceed anyway".

The legislation does not stop or hinder any negotiations or compensation. It simply sets the necessary limit on how long this process should go on, how long negotiations might block resolution of this matter.

The government prefers a negotiated settlement. However once this legislation is passed and proclaimed the government and the developers will have 30 days to come to an agreement. After that there will be no further discussion and no additional compensation. After all, the government has been negotiating with Pearson Development Corporation on behalf of T1 T2 Limited Partnership since last December when the Prime Minister announced that the government would cancel the agreements.

I remind the House that the legislation is required to finalize the cancellation of this contract because the original agreement negotiated by the previous government did not include a cancellation clause.

The transport minister has said decisions affecting airport expansion projects are linked directly to decisions on the airport's management structure. These decisions cannot be made as long as the previous agreements are in place. That means nothing can move forward until we have cancelled this agreement which should not have been made in the first place. Our decisions with respect to Pearson can no longer be held hostage to those agreements.

One result would be that there would be no new construction this year on terminal 1 and terminal 2 development or runway expansion projects at Pearson. I am sure we would all agree that it is in the best interest of the people of southern Ontario and the country in general to move as quickly as possible to develop a new administrative structure for the airport so that we can move ahead in making the critical decisions to maintain Pearson as a vital economic asset for the entire country.

The time to act is now. We can no longer allow this to proceed. The passage of the legislation will allow the development of Canada's air transportation hub to proceed in the public interest unhindered by yesterday's mistakes. We must proceed now.