Debates of June 9th, 1994

Yukon First Nations Land Claimssettlement Act

[Keith Martin, Reform, Esquimalt—Juan de Fuca, BC]

Mr. Speaker, the costs of these land claims are absolutely enormous to the Canadian taxpayer. It will cost over $260 million to settle these four claims. Something is missing in this equation. No one is standing in the House today speaking about the non-native Canadians.

Who is standing up and speaking for them? Who is speaking about their responsibilities and their ownership of other parts of the country?

Is it not that Canada from sea to sea belongs to all Canadians, native and non-native alike? Are all of us here interested in the well-being and the welfare of the native peoples in this land claim? What will the land claims do to benefit the native people? Is there a better way of doing this, is there a better way to help the welfare of the native people? What responsibility or what accountability is there going to be to the non-native people in these land claims as they are going to impact dramatically on the taxpayers of Canada.

[Charlie Penson, Reform, Peace River, AB]

Mr. Speaker, I thank the hon. member for his questions. I think they are very important questions.

We are going through a situation in my riding where agriculture has been hit very heavily with the trade war that has been going on for over 10 years. I have a lot of constituents who have lost their farms, lost their land and I think they would ask that question and it should be answered. These people are finding it very hard going.

The Canadian debt is very high and it is part of the reason these farmers are losing their land. They are paying so much in taxes at a time when we are giving land to native people in big land claim settlements. I do not believe that can be supported and I do not believe that the Canadian public will support it.

We have to settle these land claims but we have to have some self-reliance and self-sufficiency built into them. That is not my understanding of what is being done in these two bills. It is sort of an open-ended arrangement where we really do not know what the cost is going to be. In effect we are giving a blank cheque. It would be one thing if they were signed, sealed and delivered and that was the end of it but that is not my understanding of the two bills that are before us today.

Some very important questions have been raised. I think that has to be built into the legislation and I would encourage the members of government to entertain some amendments to make these more effective so they can be sold to the Canadian public.

[Harold Culbert, Liberal, Carleton—Charlotte, NB]

Mr. Speaker, I wonder if the hon. member has any idea of the mass of land in the country and in the particular case of this bill what was available to the native people in the Yukon at the time when the settlers came forward.

It has been suggested that the bill overextends the number of square miles, acres, whatever you want to take it in, per capita, per family. I would suggest that we have to consider where those rights were and what amount of space actually was considered as part of their homeland. When the early settlers came to this country and went to the far north in some cases they were welcomed and in other cases they were not. However over a period of years they took over and operated those masses of land.

There has to be some responsibility of government, of members on all sides of the House, as Canadian citizens, for our actions today and the actions of our predecessors, our ancestors and our family line.

This bill finally takes some responsibility for the people of today's First Nations and takes that responsibility very seriously. I think this government should be commended for finally taking those actions after these many years.

[Charlie Penson, Reform, Peace River, AB]

Mr. Speaker, I thank the member for that question. It is a very important question and one that we have to give considerable thought to. Essentially when the white people came to Canada the Indians had all of Canada. Surely the member is not suggesting that we try to redo that wrong because it simply would not work.

I understand that there are some Indian bands in British Columbia that would take back the city of Vancouver. It simply cannot be done. In British Columbia they tell me there is 130 per cent of the land mass claimed in land claims because there is some dispute as to which ones own certain properties.

Therefore, you are absolutely right. We do have to have a fair settlement. I guess it is a matter of debate as to what is fair here.

I have raised a family of six children on considerably less land and I certainly did not have any cash settlement along the way. I think this is overly generous.

[Jack Ramsay, Reform, Crowfoot, AB]

Mr. Speaker, could you advise me of the time that I have left?

[The Acting Speaker (Mr. Kilger)]

I will be glad to indicate to the House that we will terminate at 5.50 p.m. and move to Private Member's Business.

[Jack Ramsay, Reform, Crowfoot, AB]

Thank you very much, Mr. Speaker.

I listened to the very eloquent, warm and generous tone of the Bloc member who spoke a short time ago. I listened intently to what he had to say. As he spoke I could not help but compare what is happening in Yukon through this land agreement with what the situation would be if a similar occurrence were happening or the same situation were occurring in the province of Quebec.

I wonder what the member from the Bloc would say about that kind of an agreement if the James Bay Cree, if the Mohawks and the aboriginal people in northern Quebec had been granted huge blocks of land over which they would have complete control and an agreement that would give them the right to create their own constitution, to create their own legislative assemblies, to determine citizenship and the rights of citizens in that area, to determine laws that would deal with non-aboriginal people when they came on to that land, and the right to set up their own justice system and to administer the affairs of huge chunks of what is now the province of Quebec.

Would it be looked upon as fair to them if this agreement were centred in Quebec rather than in Yukon?

I have already in the early debate on Bill C-34 mentioned my concern in the particular area that all of these rights and entitlements contained within this document are based upon race.

Like the Indian Act that was based upon race, and they were discriminated against based upon race as the Indian Act discriminated against them and the interpretations of that act discriminated against them, this document as well is based upon race. I wonder about that. I wonder if that is wise.

They are going to have rights on the land that is designated to them. Are they going to be Canadians? I would hope they would remain Canadians. That would mean they would have rights. They would be Canadians plus.

They would have all the special rights that they would enjoy on the land area they are granted. If they moved off that land which they would be entitled to they would enjoy all the rights they and we as Canadians enjoy.

What about the rights of the non-aboriginal people who move on to those lands, whether it is to go fishing, as the hon. member from the Bloc suggested, or to set up a business or simply move in and establishing a home, a living quarters on that land? What would be their rights?

I see this bill creating a two tier system of laws within this country to the benefit of the aboriginal people or one sector of Canadian society based upon race.

I have the deepest feeling for our aboriginal people. This is going to go through. There is no question. When the treaties were signed so many years ago there was no real record, no real fleshing out of the spirit and the intent of those treaties. All we have on the one hand is what the white man recorded in the treaty and the notes and the remembrance by the aboriginal people of the intent and the spirit of those treaties.

We have been arguing about that for almost 100 years. This time around because it has been brought into this House, certainly the aspects that we have had time to examine are going to be placed upon the record. As this program goes forward and as this agreement takes effect we are going to be able to then judge whether it is has been a wise deal or not and whether the wisdom of the people of this country on both sides of the issue has been applied to this agreement. We will be able to judge the fruits born by this agreement.

Therefore, if it is a good deal it will have the support of all of us. If it fails we will be able to go back on the record and see those concerns raised by elected representatives of this country in this House.

In summing up, I say to the aboriginal people who are going to benefit from this program, God bless you and the very best to you. Surely if they take over that part of Canada they cannot do a worse job than the governments of this country have done to this country when we look at our debt, our justice system and other matters where this country has really run amok as a result of the direction of the people we have elected to this House.

I wish them the very best. I have reservations but I say God bless them and the very best to them.

[The Acting Speaker (Mr. Kilger)]

It being ever so close to 5.50 p.m. by my clock, I cannot extend questions and comments but I will ask members whether they are ready for the question.

[Some hon. members]

No.

[The Acting Speaker (Mr. Kilger)]

It being 5.50 p.m. the House will now proceed to the consideration of Private Members' Business as listed on today's Order Paper.

Bankruptcy Act

[Pierre De Savoye, Bloc, Portneuf, QC]

moved that Bill C-237, An Act to amend the Bankruptcy Act (priority of claims), be read the second time now and referred to a committee.

Mr. Speaker, the purpose of this bill is to change the priority of payment of claims in case of employer bankruptcy, in order that the wages, salaries and pension plan contributions of employees, up to a limit of $9,000, be paid in priority to any other class of claims.

The Bankruptcy and Insolvency Act passed in 1992 maintains preferred status for wage and entertainment expense claims in the event an employer goes bankrupt. The limit was increased from $500 to $2,000 with regard to wage claims, and from $300 to $1,000 in the case of entertainment expenses claims.

When an insolvent employer offers to restructure his company, unpaid wages up to a limit of $1,000 have to be paid to employees as soon as the restructuring plan had been approved by the court. The issue of wage claims in the event of an employer becoming bankrupt or insolvent was widely debated in Canada in the context of the legislative reform on bankruptcy.

In the last bill to amend the Bankruptcy Act, which was tabled in 1991, the government proposed to establish a compensation fund for unpaid employees. Because of the opposition to the tax intended to finance the program, however, this measure was withdrawn and replaced by a simple change in priority, which has been granted to wage claims for years in Canadian legislative enactments on bankruptcy.

When the Act to amend the Bankruptcy Act, since renamed the Bankruptcy and Insolvency Act, received royal assent on June 23, 1992, the Minister of Consumer and Corporate Affairs stated his intention of striking a joint committee of the House of Commons and the Senate to examine the issue of salary protection in case of insolvency. This committee which was to table its report by June 1993 was never established.

Now, Mr. Speaker, let me provide the House with some background information to put the problem with this bill in full context. It all started in 1919, with the Bankruptcy Act giving wage claims priority over unsecured debts for a period of up to three months before the bankruptcy. Wage claims came third at the time, after professional, trustees and seizing creditors fees.

The Bankruptcy Act of 1949, maintained the priority given to wage claims for a period of three months before bankruptcy occurred, but also set a $500 limit per claim. Travelling salesmen were allowed to claim $300 more for unpaid expenses. Thereafter, wage claims ranked fourth in the order of priority of preferred claims.

Toward the end of the 1960s, a committee was appointed to review and report on the Bankruptcy Act. With this committee, known as the Tassé Committee, the government embarked upon a legislative reform on bankruptcy. In its report presented in 1970, the committee recommended that the period in question be limited to three months, but that the limit on preferred claims be raised to $1,000.

Five years after the Tassé Report was tabled, on May 5, 1975, Bill C-60 was introduced in first reading in the House of Commons by the then Minister of Consumer and Corporate Affairs who has since become Minister of Foreign Affairs.

The purpose of that bill was to give wage claims of up to $2,000 per employee top priority over any other secured or unsecured creditor. Fiercely criticized, this "top priority" proposal was rejected by the Senate Standing Committee on Banking, Trade and Commerce in its report on the bill. The committee argued among other things that this top priority did not ensure employees would be compensated and could in fact disadvantage borrowers trying to obtain credit, especially in labour intensive sectors. As an alternative, the committee recommended establishing a government-operated employee compensation fund to which employers and employees would contribute and from which wage claims of up to $2,000 could be paid to employees. However, none of the three bankruptcy bills tabled in the Senate in 1978 and 1979 provided a compensation fund for employees or superpriority. Employees instead kept their status as preferred creditors and the amount of wage claims was increased to $2,000 plus $600 for business travel expenses and up to $500 for contributions to pension plans and fringe benefits.

In 1980, another bankruptcy bill, C-12, was tabled in the House of Commons by the same minister. It contained the same salary protection provisions as the previous Senate bills. After considering it, the Standing Senate Committee on Banking, Trade and Commerce again recommended creating an employee protection fund. The committee thought that the fund which would pay salary compensation of up to $2,500 should be financed from employer contributions and administered by the Superintendent of Bankruptcy. The fund would be subrogated to all employee claims against a bankrupt employer.

In this context, the Minister of Consumer and Corporate Affairs in 1980 asked a task force to look into the question of employee protection. Although the Landry Committee saw there was a problem with unpaid wages, it said in its 1981 report that it could not determine its scope. It thought that no permanent solution to the problem could be found until the extent of the problem was known and federal and provincial policies were co-ordinated. The committee favoured creating a salary protection fund and recommended a temporary solution for three years during which the treasury would pay salaries due, including benefits, up to $1,000.

Although tabled in 1980, Bill C-12 was only referred to a parliamentary committee in October 1983. The Minister of Consumer and Corporate Affairs then proposed amending it so as to give superpriority to unpaid wages, not counting severance and termination pay, of up to $4,000 if an employer went bankrupt. The amendments would have allowed a bankruptcy trustee to borrow to pay wage claims and to secure the loan. The recommendations of the Landry committee were rejected because of budget constraints and because of the lack of foolproof data on the wages lost as a result of bankruptcy and the problems that could arise if a wage protection fund were created. The minister was also concerned that if such a fund existed, employers would no longer feel compelled to pay their employees' salaries on time.

Bill C-12 which died on the Order Paper was reintroduced as Bill C-17 on January 31, 1984 by Mrs. Judy Erola who was the Minister of Consumer and Corporate Affairs at the time. However, it did not contain any amendments respecting first priority. That same year, however, the Minister of Consumer and Corporate Affairs brought in new amendments which would give first or superpriority to salary claims up to a limit of $4,000, including legal costs up to a limit of $600.

In late 1986, the Minister of Consumer and Corporate Affairs released a working paper on proposed amendments to the Bankruptcy Act. The proposals flowed from the report of the advisory committee and from consultations between the minister and concerned groups and provinces.

The working paper called for a salary compensation fund to be established to cover possible cases of bankruptcy or receivership. The fund would have paid up to $2,000 in unpaid wages, including statutory benefits and up to $1,000 for unpaid expenses incurred on the employer's behalf.

The fund would have been financed through employer and employee dues and would have been administered by the superintendent of bankruptcy. Pursuant to the bill's provisions, the federal fund would have priority over provincial laws, would be subrogated to the rights of employees and would constitute a preferred creditor.

The department estimated that the fund would pay out between $30 million and $50 million annually.

In 1989, another report recommended creating a national wage earner protection fund. The Advisory Council on Adjustments, which was asked to examine adjustment issues arising from the Canada-U.S. Free Trade Agreement, supported creating a national wage earner protection fund which would pay workers up to a maximum of $4,000 and would be financed by contributions from employers.

In June 1991, new bankruptcy legislation, Bill C-22, was tabled in the House of Commons. The new measures provided for a wage earner protection program similar to the one proposed in 1988. The program was included in a new act, the Wage Claim Payment Act.

The bill was referred to the Standing Committee on Consumer and Corporate Affairs and Government Operations for preliminary consideration. Most witnesses appearing before the committee favoured a wage protection program, but many objected to the program being financed by a tax on wages.

In its preliminary report, the committee rejected the concept that a wage protection fund was the only way to guarantee recovery, and it proposed a combination of superpriority and a wage protection fund. The committee also noted that the fund proposed in Bill C-22 would not protect employees who had not been paid because the employer had abandoned the business. It recommended that the government consider ways to reimburse wage arrears in such cases.

The government rejected the committee's recommendations. Procedural problems within the Standing Committee forced the government to reverse its position on wage protection, however, and in May 1992, the Minister of Consumer and Corporate Affairs announced the withdrawal of this part of the bill.

As a result, the Bankruptcy and Insolvency Act passed in 1992 maintains the status of secured creditor with respect to claims for salaries and representation costs in the case of employer bankruptcy, but claim-limits were increased from $500 to $2,000 for salaries and from $300 to $1,000 for representation costs.

The Bankruptcy and Insolvency Act provides for a review of the provisions of the act by a parliamentary committee three years after coming into effect.

I would now like to address Bill C-237. The proposed legislation would amend the Bankruptcy and Insolvency Act to give claims arising from salaries and unpaid contributions to pension plans priority over all other claims in the case of the bankruptcy of an employer, including claims of secured creditors, up to a limit of $9,000. This bill reflects the provisions of a previous bill that would have given wage earners superpriority over other creditors.

As we have seen, granting superpriority to unpaid wages raises a number of problems. First, superpriority does not guarantee that wages owed by a bankrupt employer will be paid. The available assets of the bankrupt are not necessarily adequate to cover the amounts claimed.

Second, superpriority of wage claims might reduce the amount of credit offered to labour-intensive businesses.

Third, it might be difficult to distribute the burden of superpriority among creditors.

Fourth, some lenders might be tempted to circumvent superpriority by demanding that the loan be in the name of an affiliated company that would own all the assets of the borrower.

Finally, since wage claims can only take precedence once bankruptcy proceedings have started, secured creditors might be tempted to exercise their right outside the bankruptcy process to preserve their priority.

I am sure you will agree that wage earners deserve special treatment when their employer becomes insolvent. For many wage earners, their job is their main if not sole source of income. One of the most common ways of ensuring that workers get their unpaid salaries in case of bankruptcy is to give priority status to their claims.

A preferred creditor is an unsecured creditor who has the right to be paid before other unsecured creditors. This means that salaries are paid, or could be paid, out of the assets of the bankrupt, but before payment of secured creditors.

Under the terms of the current Bankruptcy and Insolvency Act, salary claims and disbursements of travelling salesmen have priority in case of bankruptcy but, as we said, there is a limit of $2,000. As a result of inflation, this is a very small amount which does not give much protection to employees.

Several arguments can be used to justify a superpriority of claims. First, the present system which gives preferred status to salary claims is seriously lacking, and the same can be said for the claims of secured creditors and preferred creditors of higher rank that must be paid first.

Second, with a superpriority, employees would have a better chance of being paid quickly. Very often they would not have to wait until all the assets of their employer have been disposed of.

Third, a superpriority would enable employees to be paid at no cost to the government or taxpayers. Recently, some people proposed setting up a fund managed by the government. I remind you that this proposal was rejected. With a superpriority, it is up to the employer to pay salary claims, and they are paid out of his assets.

Fourth, the danger that such a superpriority would hinder a company's borrowing power is probably exaggerated. Some say that if salary claims had superpriority, companies would have trouble getting credit because wages would come before securities such as mortgages and bonds.

The bill contains provisions limiting the impact of wage claims on other creditors. Employee claims would not all be honoured in full. Priority would be limited to wages and pension plan contributions for the six months preceding the bankruptcy, up to a limit of $9,000.

Moreover, the present Bankruptcy and Insolvency Act now gives unpaid suppliers the right to reclaim their goods from bankrupt buyers, which in fact places them ahead of secured creditors.

I believe I have demonstrated how important Bill C-237 is. The historical background of this issue, which I just presented to the House, proves beyond any doubt, that wage protection in a bankruptcy context has been justifiably a main preoccupation of the House since 1919, and especially in the past few years.

I then clearly explained how Bill C-237 was in the same line as previous bills and how it avoided problems associated with a compensation fund and superpriority.

Today, I am asking the House to take a step forward towards wage protection in a bankruptcy or insolvency context, and when the time comes, to support Bill C-237, and send it for review to the Committee on Government Operations so that workers in this country can enjoy the wage protection they so rightly deserve.

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

Mr. Speaker, I am pleased to rise in my place today to respond to the bill of the hon. member for Portneuf.

Bill C-237 would adjust the priority of claims of the Bankruptcy Act so as to provide employees with the first priority of the proceeds of a bankruptcy, up to a limit of $9,000 per person.

I would remind the House that in 1992 the Bankruptcy and Insolvency Act was revised for the first time in 40 years. There had been six previous attempts to reform the act and they all failed.

Hon. members who were present during the last Parliament will no doubt recall that one of the most controversial aspects of the original legislation was the proposal for a wage claim payment act that would enable employees to obtain wages and expenses after a company has gone bankrupt.

The debate focused on the best way to finance the payment of this type of claim. Several methods were recommended. The original bill provided for the creation of a wage claim payment program, that was to be financed through a tax paid by the employer and collected with UI contributions.

Many members of the Standing Committee on Consumer and Corporate Affairs and Government Operations, however, argued against that method of financing wage claim payments. They maintained it was not right to impose an additional tax burden on business in the name of helping the employees of bankrupt companies. The act might only succeed in driving more companies over the edge and into bankruptcy and the last thing Canadians needed was legislation that might kill jobs. Therefore the government of the day dropped the wage earner protection provisions in the interests of getting the bill through Parliament.

We must examine very carefully the eventual impact of the various proposals, as well as the results of the 1992 amendments. The consequences of the priorities established in the new Bankruptcy and Insolvency Act will help us better understand what works and what does not.

Let me provide an example. The 1992 act gives unpaid suppliers the right to repossess goods sold and delivered to a debtor if the debtor is bankrupt or in receivership at the time the supplier demands the return of the goods. This rights comes into effect when the following conditions exist.

The supplier must demand repossession in writing within 30 days of delivery. The buyer must be bankrupt or in receivership. The goods must still be in the possession of the buyer, trustee or receiver, be identifiable and in the same state as when delivered, and not have been resold or subject to an agreement of sale.

A supplier's right to repossess goods supplied ranks ahead of any other claim against the goods, except that of a purchaser who bought the goods in good faith and for value without notice if the supplier has demanded repossession.

The new bankruptcy laws make other provisions in the case of farmers, fishermen and aquaculturalists. Usually the goods they provide are perishable and the normal 30-day period would not respond to their needs. The goods they provided would already have been processed or resold. The act gives them a super priority over all holders of security in respect of unpaid amounts on inventory supplied within the 15-day period. There is no need to establish the existence of products supplied because they are perishable and will likely be disposed of shortly after delivery.

We must ask ourselves whether the solution proposed by the hon. member will help workers or make life more difficult for them.

If workers were asked what they would prefer, super priority in the event of a bankruptcy or a chance that the company will survive and they will keep their jobs, I am sure there would be no difficulty getting a response. Workers might value a higher priority in bankruptcy proceedings but not at the expense of putting jobs at risk in the first place.

Lending institutions maintained they would raise the interest rates they charge on business loans if super priority were given to wage earners. They say they would be inclined to charge higher rates of interest to labour intensive firms. They say they would be less willing to provide a loan to a company facing tough times and they might move more quickly, regrettably, to realize their securities.

The banks might call the loan before the company declared bankruptcy. Calling that loan would unfortunately result in creating the bankruptcy.

That is what credit institutions said to the various committees that have considered this issue in the past. I do not necessarily agree with them on this. There may be ways of reviewing wage earner protection while guaranteeing the availability of capital. We however need more information than what is now available to us to understand the impact superpriority will have.

At the same time there are other issues that must be addressed in assessing priorities of creditors in the event of a bankruptcy. I wonder if the hon. member has given some thought to protection for consumer deposits, for instance.

A consumer who makes a down payment to a retailer for the purchase price of a good or a service may be left with only a claim as an ordinary creditor. If the retailer goes bankrupt or into receivership before delivery, current law relegates the consumer cannot establish ownership in particular goods to ordinary creditor status. Consumers who pay for goods yet to be identified or not yet produced will be ordinary creditors as will buyers of unperformed services.

Is this fair? Consumers do not intend to give credit and do not see themselves as creditors when they give deposits or make down payments for consumer goods or services.

Consumers are vulnerable. They cannot easily obtain information on the seller's financial situation. They cannot afford multiple risks when they buy. Neither can they realistically expect their deposits to be guaranteed.

The argument can be made that consumers are in as much need of protection as suppliers and wage earners. If we give suppliers protection and wage earners super priority, what are we to do for consumers?

Once again we get into the same difficulty. Any gain for consumer buyers arising out of a privilege would be offset by a corresponding loss for other creditors. Special treatment for consumers would depart from the principle of equal treatment of creditors. This protection might have a detrimental impact on the availability of credit.

There is one more example of the complex issues that arise. Under the Income Tax Act the crown has a super priority to a bankrupt's unremitted source deductions for income tax, Canada pension plan and UI. Bill C-237 puts the wage earner's super priority ahead of the crown's right. The employee might get compensation for wages lost in the bankruptcy, but the crown would find it difficult to have funds to make UI payments. Premiums might have to be raised. The cost of business would rise and more businesses might well fail.

It all has a ripple effect, and I do not believe the bill pays enough attention to the impact it would have on business viability or job creation. We need to examine impacts more closely. We need more information.

Hon. members may be aware that the Bankruptcy and Insolvency Act provides that after three years a parliamentary committee will review both the new provisions and the operation of the act. This provision was established because we do not want to wait another 40 years before we can change the bankruptcy legislation again. We want to keep the act up to date and successful.

According to the act, the review to be conducted after three full years should be held in 1995. We will soon have to study these questions in detail but, for the moment, what we should consider is the big picture.

To prepare for the review the government has created a bankruptcy and insolvency advisory committee. It is a representative group of insolvency stakeholders. The object is to bring together representatives from all interests affected by the law. These groups often have interests that compete with one another, so we want to try to build a consensus on what is fair and reasonable before the government introduces changes as part of the three-year review.

Since its establishment, the committee has created eight working groups that have submitted their preliminary recommendations. This month they will review the recommendations and send them back to the working groups for fine tuning. I hope the report will be complete by the end of this year. The minister will then be able to use these recommendations to draft a new bill.

As you can see, Mr. Speaker, we will have to answer not only the many questions related to the reform of the Canadian bankruptcy legislation but also those concerning wage earner protection. The fact that the previous government could not find a better way to protect wage earners did not make anyone happy. A piecemeal approach to the problem is certainly not the solution.

I believe the House should vote down Bill C-237 and prepare instead to look at wage earner protection as an integral part of the larger issue of bankruptcy reform we will address in coming months.

[John Williams, Reform, St. Albert, AB]

Mr. Speaker, I rise to speak this evening on Bill C-237, an act to amend the Bankruptcy Act.

I appreciate the history lesson from my hon. colleague in the Bloc who went through all of the trials and tribulations to tell us how we managed to arrive at where we are today. I also appreciate the comments by my Liberal colleague who explained the Bankruptcy Act and the fact that a great deal of thought went into the Bankruptcy Act as it is today.

It is rather ironic that I stand here to speak on amendments to the Bankruptcy Act when I was an intervener back in 1991, three years ago when it was being reviewed. I guess we have come full circle. I now stand in the House making comments on potential revisions to the act when three years ago I was making revisions as an accountant on behalf of an organization that had an interest in representing its members as far as the Bankruptcy Act provisions at that time were concerned.

Speaking to the amendments, I find the bill poorly drafted, I am afraid to say. We cannot agree and support the measures being put forth. We do not feel a great deal of thought has been put into the bill. Unfortunately I see it as being ideologically driven, wherein the workers have been put first and absolute in front of everything else with no real consideration to the other parties that have or may have input and deserve consideration in the event of bankruptcy.

It is a socialist position, not only a position of the Bloc separatists. It seems to be socialist as well and perhaps the position of successors to the party that has one or two members on the backbench here.

The first line of the bill states:

Notwithstanding any law or any other provision in this or any other federal or provincial Act-

This puts it as number one, right up there with the charter of rights or perhaps even ahead of the charter of rights. It is a constitutional document because it puts it ahead of all provincial acts at the same time.

If every bill we debated in the House of Commons were to start by saying notwithstanding any other provisions or any other law, how would we ever determine which one would take precedence? It would be impossible. That is why I say even the wording is poorly drafted law. We cannot support the way it is presented.

Subclause (a) talks about giving protection to employees in the amount of $9,000. Three years ago the act allowed $2,000. We have not had inflation of the kind that we would want to multiply it by four and a half times to get up to $9,000 today.

The mover of the bill is also saying that in the event of a bankruptcy and money owing to an employee in an amount of up to $9,000, that money can either be paid into his pension plan or paid to him in cash less normal deductions.

It does not say which one because it says the money could be put into his pension plan as well as wages, salaries, commissions and so on. "As well as" does not tell us which one would take priority. If a trustee in bankruptcy were to put the money into the employee's pension plan while the employee was destitute and the employee was denied access to the money even though it was in his name, how better off would he be?

As it is written, Bill C-237 says that the trustee has a choice. He can put it into the employee's pension plan or he can give it in cash less deductions. He does not even have to take the employee into consideration to see what is most beneficial to him. Unfortunately the act is poorly drawn.

It rearranges the whole order. The act as it currently stands gives priority to secure claims. My hon. colleague on the Liberal side talked about the super creditors and so on. Notwithstanding, as it stands today first are the secured creditors, followed by funeral expenses, undertaker's expenses and so on to look after the unpleasant side of things that the trustee should pay for in the case where the bankrupt is deceased. Then it goes on to pay the trustee's own expenses and talks about wages and salaries.

Wages are number four because the first three items are important. We would not want to pay an unsecured creditor and not pay the undertaker. How would we ever get trustees to wrap up a bankruptcy if their fees took less precedence than the money paid to wage earners who are unsecured creditors? Who would ever do the job? Who would ever pay them? That is why

the Bankruptcy Act as it reads today puts these things ahead of payments to wage earners.

As an hon. colleague asked, what about the banks? What is their attitude to the situation? Let us take the situation of a good sized company of 110 employees. If it had not paid its employees it would have a liability of $1 million. That is the first priority ahead of all other laws, notwithstanding any other law, provincial act or anything else. Are the banks going to lend that company money? Of course not. There is no way that a bank is going to lend money to a company when there is a potential liability of up to $1 million that it will always rank ahead of the government or the bank security.

Therefore business will find that it is unable to raise cash because of that point. Business will decline and unemployment will go up. There will be more and more bankruptcies created by this particular change in the law. I do not think that was the intention of the member who moved the bill.

I do not think it was the intention of the mover to create unemployment. I think the mover was coming at it from the point of view of trying to protect the rights of wage earners. I have no problems with that whatsoever, but we must recognize that the member is actually proposing in the law to create more unemployment and to cause more business failures. He is going to deny business the ability to borrow money. By doing all these things the matter is being made worse rather than better.

The member talked about the compensation plan that was proposed before, but who was supposed to pay for it? The idea was to lump the cost and pass it on to the employer.

The employer is the guy who takes the risks. He is the guy who gets the money left in the till at the end of the day after he has paid for all other obligations, including wages to his people. If there is next to nothing in the till, that is all he gets for his hard work.

I had an accounting business before I got into this political game and I used to deal with many small business people. I said to them that unfortunately in many cases small business people work twice as hard and earn half as much as the people they employ. They said that was right but they enjoyed the freedom of having their own business and they accepted the risks. Unfortunately I saw cases where some businesses did not make it. The point is that they were working hard and as best as they possibly could for the benefit of themselves and the people working for them.

That is the recognition of the role small businesses play in our economy. We should not hamstring small businesses to the point that we expect or assume they are out to gouge their employees and to take them to the cleaners. I can assure the hon. member that in all my experiences with small business people they have gone to great lengths to ensure that their business is viable and that they can look after their employees to the best of their ability.

In wrapping up, I have looked pragmatically at the bill as a Reformer. I recognize the hon. member is trying to protect wage earners, but if he really looked at what this bill would do, he would find that is not the case. Hopefully the hon. member will come around to seeing it in the same way Reformers do. Unfortunately the bill is not acceptable and therefore the Reform Party will not be supporting it.

[Gaston Péloquin, Bloc, Brome—Missisquoi, QC]

Mr. Speaker, if you look closely at Bill C-237, which was tabled by the hon. member for Portneuf, you cannot help but think of an expression often used in this House but particularly appropriate in this case: social justice. This is what the bill is all about.

The amendments proposed today to the Bankruptcy and Insolvency Act do a lot more than would mere technical changes to this federal act, since they give it the human and compassionate dimension which it needed so badly. Indeed, Bill C-237 aims at giving wage claims priority over any other claim.

The current situation regarding commercial bankruptcy is simply unfair to those who are the real engines of our economy. Workers should be the first ones to be paid when the assets of a bankrupt business are liquidated. I should point out that, under the current act, workers are not at the bottom of the priority list. This shows that the legislator already recognizes the importance of giving priority to claims related to unpaid salaries, expense accounts of travelling salesmen, contributions to retirement pensions and other benefits.

Indeed, under the current Bankruptcy and Insolvency Act, salaries, commissions, and fringe benefits are said to be privileged claims. This means that they come before unsecured claims, but after secured liabilities. Some might say that this is pretty good, but the reality is that once secured creditors have been paid, there is often hardly any money left to pay salaries and commissions to workers. Consequently, the term privileged or preferred is misleading. One has to go beyond the semantic meaning of the word and see the hard reality which workers have to face when their employer goes bankrupt.

The status of preferred creditor is no better than if you were offered the most comfortable seat in a theatre, but that seat was right behind a big post blocking the whole view of the stage. In spite of its comfort, that seat would simply not meet the primary requirement of offering a good view of the stage.

The federal government likes people to think it is doing a great job. It keeps them from noticing the big post and gives everyone the impression that everything is fine. This is more or less the situation with the current Bankruptcy and Insolvency Act. Salaries are considered a privileged claim, but that nice status does not guarantee at all that the creditor will get any money. In this case, the big post is represented by the secured creditors whose claims have priority over wage claims.

Many people cannot see the stage because the government has not yet amended the Bankruptcy and Insolvency Act so as to ensure that salaries are the number one priority when the assets of a bankrupt company are liquidated. It is certainly not normal to see municipal taxes having priority over people's livelihood. And yet, since 1919, several attempts have been made to give wage claims the place they deserve on the list of priority claims.

Several task forces have looked at this issue and recommended all kinds of solutions designed to favour workers. The reports of these committees are still gathering dust today on the shelves of the National Archives. Also, several bills were presented to remedy the situation but were abandoned for lack of time and especially because successive governments lacked courage and political will. As a result, the improvements were timid and inconsequential.

People who are laid off after their employer goes bankrupt already suffer enough from the loss of their livelihood; they should not, on top of that, lose the salary owed to them.

When a bank agrees to invest in a company, it usually knows the risk it runs. Furthermore, the interest rates it charges reflect these risks of financial loss.

Perhaps employees do not invest their money, but they devote themselves body and soul to their employer in exchange for a salary that is often too small, but that still lets them meet most of their financial obligations.

Bill C-237 is thus intended to correct the injustice being done when a bankrupt company's assets are liquidated. This amendment goes further than any previous attempt in favour of workers' rights.

My colleague, the member for Portneuf, was not satisfied with reupholstering the comfortable seat behind the column; he is moving this seat and giving back to workers their rightful place.

This is the sort of measure which the people of Canada and Quebec expect of their government, initiatives that reflect the legitimate needs and aspirations of the Canadian working class. Of course, the big secured creditors will surely not appreciate this legislative amendment since they will see their claims fall on the priority list of payments in case of bankruptcy.

And the effects of the financial losses on them would be much less than for the average Canadian worker who, in losing his salary, is losing his only source of income.

As I said earlier, it is a question of social justice and the government should try to consider it more often when the time comes to present bills that might affect people's lives.

[John Godfrey, Liberal, Don Valley West, ON]

Mr. Speaker, I thank you for this opportunity to join the debate on Bill C-237 which is presented by the hon. member for Portneuf to guarantee superpriority to employees in the proceeds that would be realized from the bankruptcy of their employer firm.

This compelling issue, le célèbre fauteuil de mon collègue en face, has been the object of repeated parliamentary and provincial examinations before our Parliament, in seven bills and seven reports. Not only has superpriority been consistently rejected before, but also a fund from government revenues has been refused as was the tax.

In 1992 the previous government was obliged to drop the provisions for a wage claim payment program so as to ensure that the other provisions of the Bankruptcy and Insolvency Act referred to by my previous colleague on this side would be accepted. It did give workers a preferred claim to cover wages earned during the six months that preceded the bankruptcy, up to a limit of $2,000 a person. In striking contrast, the bill before us provides a first priority payment up to a limit of $9,000 per employee in the context of bankruptcy proceedings.

What the act also did, and this is important to our debate today, is it instituted a three-year review to examine the matter of bankruptcy and debt. So it is important not to jump the gun and obliterate that concerted effort of government and stakeholders.

With the passage of the 1992 act a consultation committee was struck, the Bankruptcy and Insolvency Advisory Committee, or BIAC. The government should be given time to exercise the three-year review. This committee, BIAC, co-ordinates consultations of insolvency stakeholders on a multilateral basis. BIAC is enabling us to bring stakeholders into the policy development process early on, and keep them on board right through to the end in a systematic way, to look at the issues and then to recommend options.

In the meantime, Industry Canada has been gathering data on the impact the 1992 revisions have had on the economy. We need to know the full extent of the problem and what is required to resolve it. For example, in how many insolvencies do employees lose wages? How much have they lost in total? Do they receive any of the wages owing from the trustee? How long does this

process take? In past cases how much money was available in the estate for paying creditors?

Related issues abound, many of which are fundamental. Here is one example of an important issue facing BIAC. The Colter and Tassé committees have recommended amendments to the Bankruptcy and Insolvency Act to deal with the increasing problem of international insolvencies. Indeed, in a global marketplace cross-border insolvency problems are not rare. This possibility is gaining huge significance in light of free trade and the NAFTA.

I ask you to bear with me, Mr. Speaker, as I move to a second point, which is one of the absolute issues arising from the legislation that is presented to us today, one with which you are abundantly familiar. As my hon. colleague has referred to previously, that is the priority of the crown which is above all would-be super priorities. The hon. member for St. Paul's gave us a tantalizing glimpse of the problem under this rubric. I wish to reinforce and amplify his remarks.

By way of explanation, under the Income Tax Act the crown has the super priority to a business's unpaid deductions for income tax, Canada pension plan and unemployment insurance. Bill C-237 would put the wage earners super priority ahead of that of the crown.

What is the end result if you do that? The employee might well get compensated for wages lost in the bankruptcy but the crown could find it does not have enough funds to make up unemployment insurance payments. Premiums would have to be raised. The cost of business would necessarily rise. More businesses already facing tighter loan money because of added responsibility for the wage earner super priority would face bankruptcy.

In a telling metaphor the hon. member for St. Paul's spoke of a vast ripple effect. I do not believe this bill pays enough attention to the ultimate reach of that ripple effect on business viability and job creation.

What is a priority? It is a moving, subtle thing that can apparently seem to defy logic. I will give one example, and it will be my final one, in an area touched by the committee on Canadian heritage of which I have the honour to be the chair.

Priority becomes a far more fragmented thing within the information based marketplace. To put it at its simplest level, the government has been approached by one set of representatives of that market and to get to cases I mean authors who are often their own copyright holders.

What happens to a copyright holder when a publisher goes bankrupt? An author-and I can claim to be a modest one in this regard-put years into writing a book, his or her whole life in some instances, his or her mind and spirit, and yet receives little or nothing if the publisher collapses leaving royalties unpaid. The unpaid author has to watch while suppliers quite possibly recover the cost of paper and ink that delivered his very book to print.

There is a system in place that may shed new light on these many interrelated problems that must be addressed together if any hope for a resolution is to be realized. It is in the interest of this country and of its labour force, which this bill wishes to help, that we give our review system, the one I referred to previously, a chance and that we allow a solution to come forth from the concerted effort of government and stakeholders.

It is equally in our national interest that we develop a global approach that allows our businesses to reorganize or to catch their second wind and have another go at it. We do not need or want a piecemeal approach which will only be remembered for its disastrous consequences.

This government wants a concerted effort that has regard for all workers, creditors, consumers and of course the crown itself. For this reason and at this time I do not support Bill C-237.

[Paul Mercier, Bloc, Blainville—Deux-Montagnes, QC]

Mr. Speaker, our current legislation on bankruptcy and insolvency does not fit the social philosophy of our time. One could say it has lagged far behind.

It provides that in the case of bankruptcy, hypothecary creditors take precedence over wage earners, or to put it bluntly, it provides that money takes precedence over human beings. I do not think you have to be a socialist, as the hon. member for the Reform Party said, to get upset about this kind of situation. It is intolerable that in 1994, we should still let money take precedence over human beings, and I certainly do not think Socialists have a monopoly on the indignation this kind of situation arouses.

In fact, our so-called capitalist society is concerned about the problem, and it has been since 1919. The hon. member for Portneuf recalled what has been done about this problem over the past 75 years, but so far, all attempts to bring divergent interests together have failed. I would like to mention three particularly significant developments that occurred during that time.

First of all, in 1975 we had the Liberal Bill C-60, which I believe mentioned for the first time the possibility of superpriority for wage earners.

This admittedly generous and fair legislation met with objections from the Senate Committee on Banking, Trade and Commerce which would have preferred to see a wage protection fund administered by the State. Understandably, there were bankers

and businessmen who preferred to let taxpayers pay the cost of administering this fund.

In any case, nothing happened, and later on-this is the second development I wanted to mention-we had the Landry Commission, which pointed out, and it was probably right, another drawback to this protection fund. To a certain extent, the fund might have been an incentive for unscrupulous employers not to do everything in their power, in case of bankruptcy, to pay their employees, since a fund would do it for them.

The third and most recent development was in 1992, when the Conservatives appointed a joint committee to examine these issues, but unfortunately it too failed in the attempt.

My point is that the hon. member for Portneuf is to be commended for resurrecting a problem that is certainly not recent and which so far has remained unsolved. His solution is realistic and humane, and here it is in a nutshell: it gives absolute priority to the payment of wages and salaries owed, and it raises the limit of such payments.

This bill, like any bill designed to resolve differences and overcome opposition, is certainly not perfect. There is, of course, no solution that can satisfy everyone. Claimants may argue that the bill weakens their position. We must, however, admit that the employees are the people closest to the business and the most affected by its closing. Therefore, there is no doubt that, from a moral and social perspective, they must have priority.

Finally, I think this bill is quite timely because it fits in with a new school of thought, a new trend we are happy to see emerging between the unions and the employers. Of course, their interests being at odds with each other, there are still tensions, but we must admit that unions look harder now than 20 years ago for opportunities to co-operate with business. In the current recessionary climate, this co-operation often takes the form of major concessions from the employees in the new collective agreements.

This effort to bring employees and employers together to try to solve the problems-and we know that our society now faces many problems-is very much in line with today's spirit of understanding and employee co-operation that the unions are displaying more and more these days. It should not be a one-way street. In return, legislators should ensure that the employees receive what is owed to them.

[The Acting Speaker (Mr. Kilger)]

The period provided for the consideration of Private Members' Business has now expired. Pursuant to Standing Order 96(3), this item is dropped from the Order Paper.

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

[Ted McWhinney, Liberal, Vancouver Quadra, BC]

Mr. Speaker, on May 9, 1994 I asked the Minister of Foreign Affairs a question regarding the role of the United Nations in the continuing tragedy in Rwanda.

My question then was directed to chapter 6 of the United Nations charter which clusters together the UN processes for peaceful settlement of international disputes.

In its best known manifestation chapter 6 connotes peacekeeping in the classical form first suggested by Lester Pearson who resolved the Suez crisis of 1956 and for which he later received the Nobel Peace Prize.

That is the interposition of an unarmed international peace force between combatants who have been in direct armed conflict in order to separate them and allow a necessary cooling off period preparatory to elaboration of a formal peace accord or other formalized truce.

Peacekeeping under chapter 6 of the charter is to be distinguished from peacemaking under chapter 7 which connotes the direct interposition in military force through the medium of UN military contingents under UN command and authority and which is specifically empowered to use armed force to resolve conflicts.

It is to be noted, however, there is an increasing reluctance of UN member states to utilize the chapter 7 processes in part because of recent unhappy experiences in problem areas like Bosnia-Hercegovina and Somalia where the line between classical peacekeeping and peacemaking became increasingly blurred and confused.

It may, however, be suggested that the problems there have arisen more from lack of a clear advance definition or instructions as to the UN roles and missions in the particular cases than from any defects inherent in the chapter 6 and chapter 7 processes as such.

In the context of Rwanda my suggestion is directed to the fact that once the internal ethnic strife had transcended national frontiers with the waves of refugees from Rwanda escaping to neighbouring states and thereby imposing severe burdens on those neighbouring states' economy and health and social welfare resources and personnel, the Rwanda conflicts had ceased to be purely internal or national, if they ever were, and had taken on a larger international dimension, with major implications in the new humanitarian international law.

For this reason while noting the considerable humanitarian aid already given within Rwanda by Canadian emergency relief personnel, both civil and military, to relieve the human suffering involved in the ethnic conflicts, I would ask the Parliamentary Secretary to the Minister of Foreign Affairs what further steps, within the ambit of chapter 6 of the charter and under the UN aegis, the Canadian government might recommend to the United Nations for purposes of collective, world community action, or what action we might be prepared to take on our own initiative to save human lives and to alleviate further human suffering in Rwanda.

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

Mr. Speaker, no formal decision has been made concerning Canadian participation in an expanded United Nations assistance mission in Rwanda.

The UN has informally asked us to provide communication specialists and if we decide to participate in the expanded mission we are considering sending some 300 such specialists.

Countries have started to answer positively to the UN request for personnel and equipment. At the close of a recent regional summit the president of Zimbabwe stated that 14 African countries were prepared to respond affirmatively to a UN request for material and troops.

Since the outbreak of violence in April CIDA has contributed $4 million and pledged another $7.6 million in emergency aid to Canadian NGOs, the United Nations High Commissioner for Refugees, and the Red Cross.

A Canadian military aircraft based in Nairobi is the only link between Kigali and the outside world. As a result of a new attack on the airport on June 5, humanitarian flights have been suspended until a new truce is negotiated.

General Dallaire together with 10 other Canadians continues to play a key role in leading the United Nations missions, serving as intermediary between the warring parties and participating in humanitarian operations.

The Canadian general is doing his utmost to obtain a ceasefire but the Rwandan patriotic front, the RPF, seems more determined than ever to take power by force before deployment of the UN force. They took the Kigali airport on May 22 and continue to progress. Many members of the government left Gitamara for Kibaye near Zaire on May 28.

The Department of Foreign Affairs has summoned the Rwandan ambassador to encourage his government to negotiate in good faith and put an end to the killing and has sent a similar message to the Rwandan patriotic front.

I wish to thank the hon. member for Vancouver Quadra for all his representations in helping to bring this dispute hopefully to a peaceful resolution as he recommends using chapter 6 of the United Nations charter.

[Stéphane Bergeron, Bloc, Verchères, QC]

Mr. Speaker, early last March, the U.S. government reactivated an extraordinary trade measure, the Super 301, which allows it to impose sanctions on any country which it considers guilty of unfair trade practices. In reintroducing the Super 301, the United States was primarily targeting Japan, a country with which it has a large trade deficit. Dissatisfied with the progress of talks on the opening up of Japanese markets to American goods, the United States is now using strongarm tactics to bring an unco-operative Japan into line.

The United States and several other countries have been complaining for years about the non tariff trade barriers erected by Japan to keep out foreign goods and services. Having grown impatient with the lack of progress made following Japan's promises to open up its markets, the United States recently set quantifiable and measurable objectives which Japan must meet in certain specific economic sectors. Japan refused to go along. The reintroduction of the Super 301 has been denounced by the Secretary General of the GATT, by a number of western politicians and by the Canadian Minister for International Trade as a trade practice that is not in keeping with the spirit and rules of international trade. However, U.S. requirements as to quantifiable objectives resemble a form of managed trade and these too are incompatible with free market principles.

In the past, the United States has used the Super 301 in response to certain trading partners whose practices were deemed to be unfair. These partners included Japan, Brazil and India in the late 1980s. Canada also got a taste of the Super 301 in 1990 when U.S. sanctions targeted Canadian beer exports.

Under the Super 301, the United States has until September 30, 1994 to compile a list of countries which it feels have erected unreasonable barriers to keep out American products. This so-called black list is based on the National Trade Estimates , an annual report released by the U.S. trade secretary on March 31 of this year. Measures will subsequently be taken against all blacklisted countries.

The latest edition of the National Trade Estimates contains 12 pages of complaints about a number of Canadian trade practices, primarily those involving beer, agriculture and domestic procurement policies. While the U.S. Super 301 is directly aimed at Japan, the fact remains that the procedure applies to any country found guilty of trade practices deemed unfair by the United States.

It is to be feared that, to appease the wrath of the United States, Japan could come to favour openly the access of Ameri-

can products and services to its market and this, at the expense of other trading partners, including Canada.

On the one hand, the verbal match between the Americans and the Japanese has subsided considerably over the past few months, Japan having expressed the intention of steering the course of deregulation, which should make access to the Japanese market easier for foreign products.

On the other hand, the war of words between Canadians and Americans has picked up. The Canadian ministers of international trade and agriculture had a few well-chosen words about the scare tactics used by the Americans. Disagreement is obvious from agricultural disputes concerning durum wheat, poultry and eggs for example, disputes which undermine trade relations between our two countries. A fragile and incomplete settlement has just been reached in the Canada-U.S. trade dispute on beer.

So, the fact remains that Canada is among countries that the United States complains about profusely. Therefore, nothing stops them from applying or threatening to apply their Super 301 to some specific sectors of our economy.

In fact, the question I put to the Minister of International Trade on March 25 last has not lost any of its relevance or topicality, since Canada appears on the list of countries found guilty of unfair trade practices in the latest American National Trade Estimates . The United States who have until September 30, 1994, to complete their blacklist, could still be tempted to add or threaten to add Canada to their list in order to pressure us into settling certain trade disputes in their favour.

Canada must not give in to blackmail and intimidation. It must continue to protect its economic interests. That is why the Bloc Quebecois urges the Minister of International Trade and the Minister of Agriculture to oppose steadfastly certain American claims considered illegitimate.

The Bloc also advises the government that it would be unacceptable to the people of Quebec and Canada to fall for the American trap and play off the interests of one region against those of another in hope of settling the dispute as a whole.

[Mac Harb, Liberal, Parliamentary Secretary to Minister for International Trade]

Mr. Speaker, I thought when the hon. member raised his question we answered it fairly well.

In his presentation he was trying to question the commitment of the government in protecting the interest of Canadians. I want to bring to his attention that the Minister for International Trade criss-crossed the planet probably four times, reaching out and trying to promote the interests of Canadian business and Canadian companies in order to promote trade internationally.

This minister as well as this government are not afraid to stand up and protect the interests of the industry. I would like to bring to his attention a few articles, one in the Globe and Mail with the headline stating: MacLaren blasts U.S. on trade''. Another one in <em>Le Devoir</em> says:MacLaren lance un avertissement aux Américains''. The Financial Post says: MacLaren lashes out at the U.S. on trade''.MacLaren blasts U.S. on trade'', says the Toronto Star . ``U.S. risks trade shell, MacLaren warns'' is in the Gazette . The list goes on and on.

This government is not lying dead. It is the opposite. We are proactive. We understand that there are problems. The hon. member must understand. When you have trade between Canada and the United States in excess of $270 billion surely you are going to see difficulties in certain aspects of trading with your largest trading partner in the world.

If the member is suggesting we should declare war on the United States, I would suggest to the hon. member that those days have gone by. The answer for all of this is through the international forum, the World Trade Organization, which is going to take place in 1995, through GATT which is now functioning and through the NAFTA agreement which we have in place.

Only through dialogue can we resolve some of those disputes which I might suggest do not account for more than 3 per cent of the total.

As for 301, I want to tell the hon. member that the United States never named Canada under Super 301. They have taken measures against Canada under section 301 of the 1974 Trade Act. The current disputes with the United States are covered by the NAFTA dispute settlement mechanism and the general agreement. Canada will make full use of these agreements to protect its interests.

I just want to say to the hon. member that when Minister MacLaren appeared before the House of Commons Committee on Foreign Affairs and International Trade, he said that it is not right for the Americans to use bilateral instruments which could indirectly affect other countries. We continue to defend the interests of Canadians and of industries.

[Charlie Penson, Reform, Peace River, AB]

Mr. Speaker, I have asked for time this evening to speak because there is a big problem in the Department of National Defence which is not being addressed.

I have asked several questions of the minister over the past three months that I do not think have been properly dealt with. The federal government moves up to 20,000 households per year, three-quarters of which are military personnel. The cost of these moves is up to $100 million. Once storage, real estate fees, legal charges, mortgage expenses and other benefits are thrown in the tab comes to well over $200 million. You would think that a big customer like the federal government which accounts for

up to 35 per cent of Canada's moving business would pay rates somewhat less than the industry average. Instead, the government pays 23 per cent more than the CBC, Canadian National Railways, Northern Telecom and Canada Post. How can this be?

Moves are handled by a four member committee representing National Defence, the RCMP and Supply and Services. This committee has its own bureaucracy of over 105 public servants, many of them located in defence headquarters.

To begin with, what are military men doing handling household moves? These trained military personnel should be doing things like peacekeeping and organizing food aid.

The federal moving business is tendered but it all goes to four major moving van lines. These van lines were convicted of price fixing in 1983 and fined $250,000. They are now under investigation again for various irregularities. The van lines get the government business and then dole it out to their carrier agents. You would think that the government could get better prices by tendering to more than just four companies. But the government's own rules prevent it from doing so.

It requires companies that bid to have exclusive carrier agents in at least seven provinces capable of handling 55 per cent of the government's business.

Such restrictions do not exist in the United States. In the U.S. local moving companies can represent up to three different van lines. These ridiculous restrictions guarantee the government's business to the four van lines, three of which are 100 per cent American owned.

There are move management companies which say they can save the government between $10 million and $25 million on its moves, given the chance to prove themselves. In fact, the previous government disbanded this moving committee and ordered that the two private sector companies be given the chance to administer government moves in a pilot project. But once elected, the present government cancelled this pilot project which seems odd given its stated commitment to ferret out waste and cut costs.

One move management company which could have participated in this pilot project has been doing moves for the House of Commons. This company says that it has saved 35 per cent in current tariff costs. In addition, this company collects its fee not from the government but from the mover. The government's moving committee, the one that was to be disbanded, said that it cost them only $100 to manage each move. My understanding is that the defence department's own audit staff has found the management costs per move to be significantly higher than $100.

I wonder why this audit, which was completed in February, is taking so long to become public? I have raised several points here which I would like to repeat: Military men should not be involved in household moves. Private sector move management companies should be given a chance to prove that they can save the government millions of dollars while providing the same level of service.

The van lines which have been convicted of price fixing in the past and which are under investigation today should not be given a monopoly over government moves.

I am sure the defence department is on a limited budget and has certainly seen restrictions. I know that it could well use this $25 million that is estimated to be saved in these household moves in areas such as better equipment for our peacekeepers.

I would ask the minister and the parliamentary secretary to pursue this.

[Fred Mifflin, Liberal, Parliamentary Secretary to Minister of National Defence and Minister of Veterans Affairs]

Mr. Speaker, I want to cover three areas, the cost savings, the tendering process that the hon. member talked about, and the openness of the process to public scrutiny.

He is right, DND accounts for 75 per cent of all the moves and in the past four years the government tariff has been reduced by 25 per cent, which actually represents savings of about $45 million to the government.

The government tariff has a special clause agreed to by the van line that guarantees the lowest tariff. Although you might have isolated examples of lower cost moves, the fact is that the government is guaranteed the lowest rate by the moving industry.

The cost of a move can be influenced by different factors, such as the distance involved, the volume and weight of the furniture, the time of the year, the destination, et cetera. So making comparisons can be very difficult.

Regarding the tendering process, no carriers in Canada are excluded. The 900 moving companies across Canada are affiliated with and represented by the van lines which bid on the government tenders. All will have an opportunity to share the government business this year.

The current government procedures for dealing with van lines were thoroughly reviewed and endorsed by officers of the Department of Industry and they do not contradict the 1983 prohibition order against members of the moving industry. The member is right. The potential bidders must meet a certain criteria and these criteria have been relaxed somewhat to encourage competition inasmuch as the requirement for the fiscal year 1994-95 called for local representation in at least seven provinces representing 55 per cent of the business done by the interdepartmental committee to meet departmental location requirements. The previous requirement was 85 per cent in all the provinces.

The tender for the fiscal year 1994-95 closed on February 11 this year and the results have been determined. The government is going to realize savings in the millions of dollars as a result of a reduction of over 7 per cent from last year's government tariff. Our officials are continuing to pursue other costs savings initiatives in this area and details of the winning bid will be made available to anybody on request subject of course to considerations of privacy and commercial confidentiality.

I trust that this update is helpful to the hon. member.

[The Acting Speaker (Mr. Kilger)]

It being 7.15 p.m., this House stands adjourned until tomorrow at 10 a.m., pursuant to Standing Order 24(1).

(The House adjourned at 7.15 p.m.)