Mr. Speaker, it is an honour to make comments about Bill C-109, a bill dealing with the bankruptcy and insolvency of certain businesses and individuals. One thing that appears in the bill is a demonstration of humanitarianism during bankruptcy.
This is a particularly meaningful amendment to the bankruptcy act. In 1992 there was an amendment to that act. That amendment took place 40 years after the initial bankruptcy act was enacted; 40 years of unamended legislation. In 1992 a three-year review clause was introduced which brings the act to our attention now, which is too short a period of time. Not enough experience was obtained as a result of the amendments made in 1992. Now the proposal is that the next amendment take place seven years hence. That makes really good sense.
What is the bankruptcy act all about? It is supposed to protect three categories. The first is consumers. We want to protect that group. We want also to protect the creditors who have loaned money to other people. We want to protect the economy. Bankruptcies are disruptive to individuals, to industry and to the economy in general.
We want to protect the consumer in the sense that he or she should not enter into debts which he or she cannot afford to repay or that somehow he or she has not planned to repay properly.
How big is this problem of bankruptcies in Canada? I have a statement of September 1995 which I will go through to give a perspective of how big this problem is. I start with Newfoundland. In September bankruptcies amounted to $32.1 million; in Nova
Scotia, $59.7 million; in Prince Edward Island, $3.9 million; in New Brunswick, $35.2 million; in Quebec, $1.52 billion; in Ontario, $1.932 billion; in Manitoba, $32.3 million; in Saskatchewan, $49.475 million; in Alberta, $294 million; in British Columbia, $275.1 million; in the Northwest Territories, $1.97 million; in Yukon $29,267.
Let us put that all together. Bankruptcies in Canada in September represented liabilities of $4,268,000,000. That is a significant sum of money. That is what we are talking about when we deal with bankruptcies. That is one month. It is not a small issue we are dealing with here.
There seems to be a psychosis developing. We have a government that has incurred debt upon debt. It calls it deficits from year to year. As that deficit accumulates from one year to the next, it becomes a debt on the present year. The deferral of these payments keeps adding up, until now it is $567 billion. That is the debt the Canadian government has incurred on behalf of the people of Canada.
We look at the government and say if it is all right for the government to keep on borrowing money, maybe we can do the same and so we have credit cards. I do not know how many of us here in the House have more than one credit card, but I dare presume there are a number of people who do. My colleague says he does not. He has one. It is probably so big that he can buy a car on the basis of his credit card. He is probably not the only who can buy a car on his credit card.
People have added debt upon debt and they follow the example of government. The other day the Conference Board of Canada made an observation that the individual Canadian has a debt load probably larger than it should be.
We have at least a threefold issue being dealt with here in bankruptcy: the individual consumer, the creditor who has lent this money or provided service or material, and the economy on a larger basis.
This bill is trying to reach an equilibrium that encourages rehabilitation, so that individuals or a company or corporation that finds itself in a situation in which they cannot repay their debt will be able to reorganize, restructure in such a way that they can rehabilitate themselves and again become a contributing element in our economy. We have to compare that rehabilitation over and against the obligation they have to pay off the debt they have incurred on behalf of someone else, on behalf of themselves, or on the basis of a director of a particular company.
If a business goes bankrupt, how does it affect the economy in which we live? The first thing that happens is taxes go down. We do not collect the amount of taxes we ought to.
My colleague from the Bloc indicated very clearly how disruptive it is to the employee of a company that goes bankrupt. The individual does not have a job any more. This has an effect on the family structure. It puts stress and strain on the relationship between husband and wife, between the parents and the children, between the children and their parents and it becomes increasingly complicated. It has an effect on the mortgage payments they have to make, the credit card bills they are responsible for, and a chain reaction develops.
Therefore, what seemed to be one case becomes a multiplication factor that finds its way in a variety of cases all the way through to the grocery store, the furniture store, the clothing store and so on down the line.
In Canada we need an economy that builds, that grows, that develops. This will not happen in a situation in which people are fearful that their business is going to go down. In one month we see liabilities of $4 billion being accumulated. That is very extensive. This is no small issue that has to be dealt with.
I will deal with some of the provisions of the bill. The bill deals in a variety of areas with very technical issues. Two-thirds of the bill, as I understand it, have to do with technical amendments that try to harmonize the provisions of this legislation with the legislation that exists with the provinces and in other areas. It comes to grips with issues such as international creditors and bankruptcies on an international basis, securities firms and how they operate, and it brings into focus more accurately the situation as it exists between those people who are earning their livelihood in part from farming and fishing and in other parts from other kinds of income they might have.
The old act stated that persons who declare bankruptcy, if their sole income is from farming and fishing, can declare bankruptcy in that particular area. In today's economy there are many people whose main income comes from fishing but it is not sufficient for them to earn a living and they have to supplement their income. In other cases people have a professional job and they have a hobby farm. Sometimes they will declare bankruptcy on the one side but not on the other. This bill brings those things into reality and harmonizes and balances them.
I would like to speak on the humanitarian aspect of the legislation. There is one aspect in particular about which I would like to speak, and that has to do with the situation where a divorce has taken place and an individual is obligated to make support payments to the spouse or children. Some of these individuals decide to declare bankruptcy rather than make the support payments. If
they declare bankruptcy they will no longer be liable for the support payments. This bill deals with that issue. It states that the obligation for support payments of either a spouse or children are part of the liabilities, as is the case with a mortgage or a loan. In fact the bill goes so far as to say that support payments are a priority on the list of creditors to be paid. That is a very humanitarian approach, which is necessary.
The bill adds another clause, which is equally significant to the one I have just referred to, and that has to do with difficulties that arise because of an assault. On that basis, the person declaring bankruptcy is liable and a creditor can make a claim.
The third area has to do with student loans. At the present time there are a number of students who are experiencing great difficulty in making their student loan payments. They graduate from university or from some other post-secondary institution where they have incurred an extensive debt and they find they cannot make the payments. They have no prospects for a job, at least not immediately. They look at the situation and say: "There is an easy way out of this. I will declare personal bankruptcy and then I will no longer be liable for the debt. It will all be over. After having lived the good life and behaving myself, my credit rating will be built up again, this will not be held against me, and my debt will be discharged".
That will no longer be possible under this bill. Students who incur a loan and who plan to escape from paying that loan by declaring bankruptcy will still be liable two years after the date on which their bankruptcy has been declared and accepted. Two years from that date they are still liable to make their student loan payment. At that point a new provision kicks in, which suggests that if the student is still having difficulty and cannot meet their financial obligations, other arrangements can be made. I believe that is a fair and equitable provision.
The other point I want to raise has to do with the situation where creditors and debtors cannot agree and they fight with one another as to what is a reasonable settlement in terms of the portion of the debt that can and should be paid by the person who has declared bankruptcy. The bill provides for a mediation process and mediators so that these people do not have to go to court and incur expensive legal costs. Rather, mediation can take place and the matter can be settled out of court as expeditiously as possible. I think that is an excellent provision in this particular piece of legislation.
The other elements in this legislation that we want to commend at this point have to do with the recognition that there are certain international insolvencies that take place. At the present time it is difficult to move across boundaries. You have to move assets, papers and things like this across borders and cases cannot be heard in another country. The legislation now provides for those hearings to take place within the country where the insolvency takes place or they can be heard where the individual resides.
Another area the bill deals with has to do with securities firms that go bankrupt. These are particularly difficult and highly complicated situations. These are securities firms ranging all the way from brokerage houses to houses that deal with only mutual funds and the complications that can arise in those situations. This is where I think the bill is somewhat deficient. There are clarifications that need to be made in this bill as to just exactly how those kinds of bankruptcies can be resolved and dealt with. The length of time it takes to deal with some of the details here is rather substantive. In the meantime, many things could have changed and probably have changed.
It becomes very necessary for us to recognize that while this bill has some very positive things in it, there are some deficiencies in it.
When we go into the technicalities of the bill, the bill has done some things I really found rather humorous when I looked at them. In the existing act it states that there is a two-day time frame in which to present a particular proposal. In the new act it states that it is going to change to three days. In another instance three days becomes five days. In another situation 14 days becomes 15 days. In another instance 15 days becomes 14 days. In another situation 90 days becomes three months. In other cases three months becomes 90 days.
When I asked the people who put the bill together why they did this, they said they wanted to be consistent so that it would be very specific. I asked a question about the old bill, which stated 90 days, and the new proposed bill before us states three months. Mr. Speaker, you and I both know that three months are not necessarily 90 days; it could be more or less than 90 days. In that instance, we need to recognize that the apparent consistency is lacking. Perhaps the people in the committee should look at this in some detail and say let us be consistent: if we are going to use days then let us use days and if we are going to use months then let us use months, but let us not confuse it by moving back and forth. It is not a reasonable thing to do. That is one area we need to look at.
The other thing the bill does, which I found very interesting, is there is no such thing as a man or a woman in this bill. There are only creditors and the people who are bankrupt. This is very interesting. I guess in order to be politically correct we no longer speak about men and women. We now speak about creditors and bankrupts. I do not know how significant this is, but there it is. A whole bunch of money and a lot of time has to be spent to change the legislation so that it becomes politically correct by taking gender references out of the particular legislation.
I think I am getting very close to the end of my time for today. I would like to touch on the area of directors' liability, but rather than starting halfway through here I will stop my intervention at this point and defer the directors' liability portion to the next opportunity I have to rise in the House.
