Debates of May 15th, 1995

Health Insurance And Services

[Margaret Bridgman, Reform, Surrey North, BC]

moved:

That, in the opinion of this House, the government should consider allowing the provinces greater flexibility in the provision of health insurance and services.

Mr. Speaker, the request in my motion is simple. The Reform Party, like all Canadians, Canadian political parties, Canadians working in health care and a multitude of other Canadians, including the provincial premiers, recognizes the provinces have been delegated legal and constitutional responsibility to provide health insurance and services in Canada.

As the provision of health services and insurance has been delegated to the provinces, I am asking they be given the authority to achieve it or to carry it out.

The actual delegating of this task is not the hard part. The giving up of the authority over the actual control of how the task is carried out is the hard part. Unless the delegator, the federal government, is willing and able to devise the plan, update it as necessary and authorize each aspect of it prior to its implementation, in which case this is not feasible, the delegator must be prepared to delegate out some authority and in order to achieve what they want they identify what is to be achieved by the provinces, what components or principles are to be included and what standards of performance are expected. Then they give the authority necessary for the provinces to achieve this.

As a national government we can legislate these guidelines, standards or principles, or both, or whatever else we should call them. We have done this via the Canada Health Act. We have established five fundamental principles to be incorporated by each province in its approach to providing health insurance and services. The principles are accessibility, comprehensiveness, portability, public administration and universality.

The Reform Party believes these are sound national principles. The problem is not the principles themselves but the accompanying description or definition applied to each of them. For example, in the act the definition or interpretation of accessibility includes only one aspect of what access to care can actually mean, based on a person's ability to pay. That is commendable, as it opens the door for all Canadians regardless of their personal financial position to receive or have access to health care.

However, another aspect of access is when does one have the access to the actual treatment necessary for the condition one is presenting. I am thinking now in relation to the when part from a clinical or medical point of view. If a person requires a hip replacement, for example, or finds a lump on their body in some area it should not be, to get access to treatment can take sometimes weeks or months. Access to treatment from a medical and clinical aspect is extremely important, sort of the stitch in time premise.

Early intervention in many situations saves future grief and discomfort for the individual as well as saving health care dollars in the long run, as one is addressing or presenting a condition much earlier than one would be by leaving it for months or weeks and so on.

There are other problems with the Canada Health Act. There are restrictive clauses that create these problems. Portability comes to mind as another one.

These problems must be addressed and resolved. The act needs revising and updating, allowing for more flexibility for the provinces not only in the administration and management of the service but also in the actual meaning or interpretation of the five principles. The meaning of decentralization of authority must play a much larger role in our health care system to preserve it.

In the Financial Post on April 22 of this year an article was written by Alan Toulin entitled ``Decentralization Appeals to Canadians' Desire for Control''. Alan Toulin is saying Canadians want more control over the things that directly affect their lives, and governments at all levels are feeling the pressure of this growing public sentiment.

He also quotes a leading business figure from Quebec, André Bérard, the National Bank chairman and chief executive officer.

Mr. Bérard apparently delivered a speech in Ottawa on how the process of decentralization is an inescapable force for both businesses and governments at all levels.

Mr. Toulin makes reference that Mr. Bérard argues that those levels of government responsible for the spending of the money are the ones who should decide how health care, education and income security should be organized:

Citizens are more vigilant and can have more direct control over the actions of provincial and local governments when it comes to the spending decisions on behalf of the public interest, Mr. Bérard believes. In a country as large and diverse as Canada it is clear that many citizens feel Ottawa is a remote, lumbering government that cannot be controlled by them.

"The nearer the level of government is to the citizens, the more merciless these citizens are when they see public waste. They know that they are the ones who will ultimately pay. They are merciless because they know that they will have real power; that their voice will be heard; that their vote will not be diluted by millions of others", Bérard said.

He goes on further to sing the praises of decentralization.

That is basically what we are saying in this motion. There needs to be more flexibility. That kind of authority can go to the provinces and they can get on with providing health care according to the five major principles. Then they will be evaluated by the people in the province.

Another component in the health care system that needs some serious revamping is funding. The initial agreement between the federal government and the provincial governments was a 50:50 split. Over the years that has eroded. We have a system of tax points and cash payments known as established program financing. Because the tax points grow over time as the economy grows, the cash portion of EPF is shrinking. It is down to 23 per cent now from 50 per cent.

Established program funding was introduced in 1977, replacing the cost sharing of post-secondary education and health care with a fixed per capita block funding transfer. That was the first time federal funding growth was unrelated to provincial program costs. It was designed to increase the rate of growth in population and in the national economy.

Over the years further amendments were brought into the EPF system. In 1986, Bill C-96 reduced the growth of the EPF transfer. The payments were still tied to economic and demographic growth but their annual per capita growth rate was 2 per cent lower than what it would have been under the old formula.

In 1991, Bill C-69 froze the EPF transfers at their 1989 levels. That was to be applicable for two years. In 1991 Bill C-20 extended the freeze on the per capita transfers to provinces for another three years. Therefore the provincial entitlements will continue to increase at the same rate as the population.

Beginning in 1995-96 the rate of increase of the EPF entitlements will be limited to per capita rates of increase in the GNP minus 3 per cent. We continue to play little games in the funding component of our health system.

Instead of just health and post-secondary education in the block transfers, government has added welfare into the block. From an article on April 13 in the Globe and Mail entitled ``Ottawa is trying to heal health-care strife'', by Edward Greenspon, he says:

Part of the logic of lumping the three programs into a single fund was to allow Ottawa to blur their minds of where cuts fell and to pass to the provinces the hot potato of how to distribute the pain.

Further along in the same article, he goes on to say:

Figures in the budget show that Ottawa will, in fact, reduce its cash transfers over the next three years to $10.3 billion from $17 billion, a rollback of almost 40 per cent. And the government has given no assurances of when it will end.

Federal funding in support of health insurance and services should be unconditional and should recognize different levels of economic development in the provinces.

The federal government has established five fundamental principles via the Health Care Act. It needs to be looked at from the point of view of interpretation. It is a little ambiguous in that the government can interpret it one way and the provinces can see a different interpretation. We also need to look at whether we actually need the cash component of the EPF as a whip to keep the provinces in line. Is that really necessary?

In the article to which I made reference, I beg the question whether it is actually necessary to have that kind of control over the provinces. If one decentralizes it into the provincial area, the people will rise up and say what they want. If they are not happy with what they are getting, especially if they have the five guiding principles from the national government to make some sort of evaluation judgment, they will rise up and tell their government to spend their health care dollars with less waste or they can vote the government out and get one which will provide the services.

Put the control there. Let the provinces establish the methods of providing health care according to the five basic principles, and define them a little better so they are not ambiguous interpretations, and let the people judge whether they are satisfied.

In the Ottawa Citizen on May 1 an article entitled, Time for a tonic'' stated:The provinces-are demanding more leeway in controlling their costs. And increasingly, provincial cost-cut-

ting measures are running afoul of the federal government's reading of the Canada Health Act".

To my mind the word "leeway" in that article is very suggestive of flexibility. The provinces are asking for flexibility. The article also makes reference to the government's reading of the act. That could be interpreted as suggesting different methods of interpreting how one can read the act; the federal government reads it one way and the provinces may read it another way. That again points to the need for revision of the act, allowing for broader and more flexible definitions. At the same time the need for using the cash payment as the whip should be addressed.

The government must do something concrete and substantial. It must take some positive action to preserve the health care system for Canadians. It has been stated it is a priority of the government by both the Prime Minister and the health minister. However, when we consider the financial threats which our health care system is facing and the lack of action by the government to diminish those threats we wonder what kind of a priority it is.

The most apparent action to date has been on a reactive or defensive basis. With respect to the user fee situation in British Columbia and the private clinic situation in Alberta, the government's action was based on its interpretation of the ambiguous accessibility clause of the health care act That has to be addressed. So far that is the most assertive or aggressive type of behaviour we have seen from the government in relation to health and it has been in a defensive mode.

Other actions taken by the government tend to leave us confused and without a sense of direction. It campaigned in 1993 on no cuts to health care. During its first year in office it continued to say that it would protect the health care funding to Canadians. However, earlier this year we started hearing things like "cuts to social programs, including medicare. We have to address all social programs. If they are all going to be cut, then health care will be rolled in there with them".

We also heard the system needs to be reformed, that there are problems with the health act and those problems must be addressed. We also heard from various ministers the provinces should be given more flexibility to manage their affairs.

Block funding was set up, including the three components: health, post-secondary education and welfare. This is being sold, to my mind, as an opportunity for provinces to have more flexibility but in a sort of backhanded way. They are given less money and then told they have three components where they can be flexible applying that money.

That is not what we are saying in our flexibility plan. It is what the government is trying to sell when it says that flexibility must be given to the provinces. I think it was Ted Byfield who said we have inflexible flexibility, which is basically what we are looking at here.

Reformers believe that the provinces are fully capable of providing quality health care to their residents as long as they are allowed the stable funding to do so. They need the resources. A workman is only as good as the tools he has.

The leader of the Reform Party said it best in Toronto last November to the Ontario Hospital Association. I would like to quote him. "It is the provinces, not the federal government, that have the constitutional jurisdiction to operate on our health care system. It is the provinces, not the federal government, that provide the bulk of health care funding. And it is the provinces, not the federal government, that have the greatest experience in health care delivery".

I suggest a prescription. If the decision is to devolve health care to the provinces what does this mean in a detailed type of prescription? I would like to make three suggestions: first, transfer tax room to the provinces; second, define core health services; and third, amend the Canada Health Act with those things in place on a national basis. The provinces would have the guidelines and authority to get on and provide a health care program that we can not only afford but want as well.

The Reform Party taxpayer budget outlined how we could decentralize health care by ceding addition tax room to the provinces. This would ensure more stable funding for provincial health care over time. The provinces would not have to worry about what new legislation, steps or cuts the federal government would be making from year to year or the interpretation that each different government would make to the various components of the health act.

At the end of the process of the transferring tax room, provinces would present the revenue levels and flexibility necessary to fund health care according to the demands of the electorate and within fiscal restraints.

Decentralization of health care would ensure that services were delivered and funded by the level of government closest to the people. I made reference to that earlier.

From the point of view of defining-

[The Acting Speaker (Mr. Kilger)]

The member's 20-minute period is up. I wonder if she might give us some indication of how much more time she might need to conclude her remarks, and I say this respectfully, as the mover of the motion. Will the member for Surrey North give us some indication whether she could summarize and close within the next minute or so? I am very reluctant to cut off anyone who moves a motion, but the rules are very clear that the mover has 20 minutes.

[Margaret Bridgman, Reform, Surrey North, BC]

I will be about a minute, Mr. Speaker.

In conclusion, I proposed this motion because the federal government seems unwilling to address the fundamental problems facing health care in Canada: declining federal financing, combined with the lack of provincial manoeuvrability. The government has ruled out amending the Health Care Act and the minister has portrayed herself as a defender of it and thus medicare. This is not so and we must defend it.

[Hedy Fry, Liberal, Parliamentary Secretary to Minister of Health]

Mr. Speaker, it is my pleasure today to speak to the motion of the hon. member for Surrey North. I have worked with her on the standing committee on health and have great respect for her thoughtfulness.

The hon. member raised the issue of more flexibility for the provinces. The provinces already have flexibility. The provinces are responsible for managing the whole system of health care for people in their provinces. The flexibility depends on the needs of their people. The provinces decide where the services go, how they are done and by whom and the payment for people who deliver those services. They have all the flexibility they need within the parameters of the Canada Health Act and within the parameters of the five principles of medicare which the member has just agreed that she supports wholeheartedly.

The member said that she supports those five principles. Then in the next sentence she said that she disagreed with them because she does not like what they mean. How can one support the principles and then not like what they mean? It is inherent that a principle means something. I find that a little confusing.

Those five principles have helped our health care system to become one of the best systems in the world. If we want to judge the best systems in the world, we should judge them by the outcomes. Canada ranks second or third in the world depending on how we look at the outcomes of some of those services. Canada has one of the best health care systems in the world. That is not only in terms of mortality, how people live or die, but also the quality of their lives. This defines the kind of system we have. We stand tall in terms of our health care system.

The member talks about problems of accessibility. Accessibility has made our system what it is. Accessibility means that as Canadians we all have access to health care services when we need them, regardless of the size of our wallets. That is probably the single most important thing about our health care system that makes it unique. The size of a person's wallet does not dictate the kind of health care received or the kind of health care we have access to. The only thing that dictates the kind of health care received is the clinical symptoms, depending on whether it is needed, how urgently, and when and how much is needed at the time. A very appropriate way to deal with health care services is to define them according to clinical methods rather than pocketbooks.

The member also talked about problems of portability. The whole idea is that Canada is one country and this is a national system and Canadians move across borders daily, weekly and yearly. Our parents may live in one province, our children in another and our grandchildren in another. The fact that we can move across the country knowing that we have health care coverage when we get sick no matter where we are in the country is one of the most important strengths of the Canada Health Act and of medicare. To ask that portability be removed and try to balkanize medicare would do the country a great disservice. It would destroy the strength of the program.

The member also said there are decreases in funding of programs. Every reputable study done around the world tells us that money is not the major and only criteria for a good system of health care. If it were, the United States would have the best health care system in the world but it does not. At the moment Japan has the best health care system in the world according to outcomes and it spends the least amount of money on health care. Money is not the only criterion. There is also how and when the service is delivered.

Eventually we must look at issues like health promotion, prevention, the quality of life, poverty, and other things that define health care. Those are the things we need to look at, not costs. All of us know and all the studies tell us that we could spend a lot less money on our health care system. If we provided proper services and managed them appropriately we could have an even better health care system.

When we talk about accessibility and outcomes, let us look again at the United States where there are such poor outcomes. The United States spends the most of any country in the world in percentage of GDP on health care and it has the worst outcomes of any developed country. In fact, the United States sits among the developing countries somewhere between Cuba and Czechoslovakia in terms of its outcomes.

I do not understand what the member means when she talks about the fact that she disagrees with these issues because they are not borne out by fact nor by statistics.

The member is also concerned about the health and social transfer, the fact it has become one massive block fund and that it is a negative thing. This strengthens and interdigitates services that rely upon each other. We know poverty is one of the major determinants of health. It stands to reason that in a block transfer, social assistance should be lumped alongside and close to health. If we are going to concentrate on prevention then one of the issues we are going to have look at is the issue of poverty and how people should live in this country to give them a better health status.

Another thing the member says is that she wishes the Canada Health Act would recognize the different economic development of provinces. We do. It already does. When we look at transfer payments and equalization payments it is built in to

ensure that provinces which are not as wealthy as others have been brought up to a level at which they can provide these services.

I do not understand what the hon. member is concerned about when all of these things are already being addressed in the system of medicare and within the Canada Health Act.

Decentralizing, as the hon. member suggests, will give us less control and will completely decrease, diminish and eventually kill medicare.

The hon. member talked about evaluation. That is exactly what the Canada Health Act does. It evaluates the system to see whether or not it does follow the five principles of health care. Again, I am a little confused as I try to understand what the member wants when these things are already in existence. Perhaps the member is not familiar with what these things really mean.

The provinces are asking for more flexibility. The whole Canada health and social transfer has been made to give the provinces more flexibility. The provinces already have total and complete flexibility in how they deliver services.

For example, not one single principle or clause of the Canada Health Act prevents innovation and renewal of the health care system which is what we are talking about today when we talk about the health care system. It allows the greatest flexibility.

If we look at some of the other provinces like British Columbia, it is moving closer to home. New Brunswick has closed down hospitals and brought community care to the forefront. Ontario is looking at regionalization and is looking at how it can provide services in different ways.

Some provinces provide different providers to give care and other provinces do not. Who gives care, when they give care, where they give care, how they give care is completely under the jurisdiction of the provinces. Therefore, the hon. member perhaps needs to reconsider her motion and wonder if she is asking for things that are not already built into the system.

The strength of this system is that the provinces can manage a system and deliver the care. They are able to respond better in terms of practical availability to the needs of their own regions. Within each province there are differences between regions including the urban and rural regions whose needs are very different. Provinces have the ability to do all of that.

The only thing the federal government does is to enshrine the five principles within the Canada Health Act which says this is one country. We will all have certain principles that will ensure every Canadian has access to health care regardless of ability to pay and regardless of how chronically ill they are or what genetic illnesses they have. All of that does not make any difference to the quality of health care or their access to it.

In the United States it does happen. Those who have a chronic disease are uninsurable. No matter how wealthy they are, they cannot buy insurance. That does not happen in this country. The strength of this country is the fact that each province does what it does best in its own local way, providing good services for the community. At the same time the federal government ensures medicare, which is the heart and soul of what Canada is, is kept sacrosanct across the country so we can continue to have universal, accessible, portable, comprehensive and publicly administered health care.

If we listen to the member's motion, actually she does agree with the system the way it is.

[Pauline Picard, Bloc, Drummond, QC]

Mr. Speaker, I welcome this opportunity to speak to the House for the next few minutes and comment on the motion presented by the hon. member for Surrey North. The motion seeks greater flexibility and thus greater autonomy for the provinces in the provision of health insurance.

For some time now, the Canadian health care system has been at the centre of a wideranging debate on its current, disturbing state, its uncertain future and indeed its very survival. There are many who maintain that our health care system has reached a critical point in is history. We on this side of the House deplore the fact that Canada's Department of Health is consciously absent from the debate, since we believe that the main cause of the sorry state of health care in this country is the federal government's decision to make drastic cuts in funding.

We must not forget that federal cutbacks in health care funding have serious consequences for the public finances of Quebec and other provinces. Quebec Finance Minister Jean Campeau told Quebecers last week about the impact of federal offloading on Quebec's commitments, commitments the Quebec government cannot ignore. The federal government, however, is doing just that, with predictable consequences for the provinces.

The federal government saved several billion dollars at the provinces' expense by unilaterally imposing a freeze on transfer payments for health care.

Moreover, in the last budget, Minister Martin made it very clear that the government would continue to save money at the provinces' expense by cutting $2.5 billion in 1995-96 and about $4.5 billion in 1997-98.

By the end of 1998, $8 billion will have been cut since 1982. And people are surprised to see Minister Rochon cutting mil-

lions of dollars in order to be able to keep providing health care services. Eight billion dollars, Mr. Speaker, can you imagine? What can the provinces do in the face of this kind of offloading?

It should come as no surprise that a motion is before this House, asking the federal government to give the provinces more flexibility so they can decide how to meet the challenge of providing adequate care services to their people.

Members of the Bloc Quebecois cannot support this motion because we feel this would let the government off the hook for the harm it is doing to the entire system. It would be too easy.

It has been some time since the federal government met the commitments it made to its provincial partners in 1977. Today, however, we are being asked only to seek more flexibility which, at best, would mean privatizing certain services or approving the use of private clinics and double billing.

For us there is only one solution: the federal government must withdraw altogether from this provincial jurisdiction and give the provinces fair compensation in the form of tax points.

It is clear that the federal government has reneged on its initial commitments to the provinces. It is also clear that by continuing to apply its standards to an area that falls under provincial jurisdiction, while refusing to pay the real cost, the federal government is like someone who asks you out to dinner and leaves you with the bill.

Although at the time it was very critical of the policy initiated by the previous Conservative government, the present government is accelerating the advent across Canada of a two-tier health care system, with on one side, basic services covered by medicare and on the other, specialized care and advanced technology available to those who can afford it. This means waiting lists for some, but no waiting if you can afford to pay.

Without comprehensive reform and the vision that is necessary for a balanced health care system, excessive funding cuts will set the new standard for the health care system.

They can promise deep reforms all they want, and a national forum presided over by none other than the Prime Minister, it will mean nothing until they go beyond those empty promises.

The problem is that the Minister of Finance could not wait to impose his reforms. In addition, just like his predecessors, he coupled his unilateral, insidious and heavy cuts with mandatory health care system reforms.

You would have to be naïve not to realize that the Canada social transfer is just a veiled attempt to slash funding for education, social assistance and health. You would also have to be naïve to believe the Minister of Health when she says that the Canada social transfer will actually ensure that the health care system stays the way it is, yet give Quebec and the provinces more room to manoeuvre. How can the minister actually say such things, and believe them?

Let us be serious now; there is a paradox in the federal government talking about giving Quebec and the provinces more room to manoeuvre so that they can dispense quality health care services yet all the while continuing to increase the burden placed on the public finances of the provinces.

In 1977, when the federal government created the Canada Health Act, it agreed to assume 50 per cent of the cost of maintaining the health insurance system. Over the years, we have seen that contribution shrink to 38 per cent. Betraying the campaign promises made in the red book, the current government would reduce its share to 28.5 per cent.

The federal government still does not understand that all of these years of offloading to the provinces has aggravated their financial situations as much as it has jeopardized the survival of social programs. What is more is that by imposing overlaps in areas that its own constitution does not give it powers, and by continuing to cut funding, the federal government is preventing Quebec and the provinces from finding real solutions to the financial crisis they are fighting.

As many studies have shown, the federal government's financial intransigence is propelling our health care system towards radical changes. Nevertheless, Quebec and the provinces are all trying to come up with solutions to forestall the disappearance of the current quality standards.

The very essence of the motion before us today bears witness to the will of Quebecers and Canadians to pull out all stops to find a solution. Everybody is working towards this goal, except the centralist government which refuses to live by its own constitution and to respect the provinces' exclusive power over health care.

What is sad, and history proves it, is that the federal government has always had the same ambition: being the only government in Canada.

In conclusion, the Bloc Quebecois cannot support the Reform Party's motion. Although this motion supports certain principles that we defend and denounces to a certain point the federal government's unilateral pull-out from the Canada Health Act, the contract it signed with the provinces in 1977, it does not get to the crux of the matter.

In our opinion, the provinces should be the only operators in the area of health care. From parliamentary commissions to consultations of all kinds, Quebec and the provinces have demonstrated that they are capable of rising to the health care challenge. If only the government would stop penalizing them with cut after cut without any financial compensation, they

would be able to guarantee dignified health care services which treat people with respect. That is the real solution.

[Randy White, Reform, Fraser Valley West, BC]

Mr. Speaker, I am pleased to speak in support of private member's Motion No. 424, tabled by my colleague from Surrey North.

The motion is straightforward. It asks that the government allow the provinces greater flexibility in the delivery of health services. The motion before us recognizes that we have reached a watershed in health care funding in Canada. The old system is becoming increasingly unsustainable as federal and provincial governments groan under the weight of a $72 billion doctors' bill.

The challenge facing these governments, which the hon. member for Surrey North addresses in the motion, is how to reduce funding without threatening the fundamental principle of medicare, which is that no Canadian will be denied access to health care based on an inability to pay. What we now have to ask ourselves is how this can best be done. I believe that Motion No. 424 identifies the proper course.

Before discussing the motion, I would first like to provide you with an explanation of how the health care funding crisis came to pass. The starting point in all of this is to acknowledge that health care falls exclusively under provincial jurisdiction. No one disputes that fact. The only reason the federal government is involved at all in the funding of health care is that 30 years ago it promised the provinces it would pay 50 per cent of the tab if they played by some of the rules. The culmination of this dollars for influence funding arrangement was the Canada Health Act, which was passed in 1984.

While the Canada Health Act may have been enacted with the best of intentions, it effectively restricted the ability of provincial governments to innovate and experiment in delivering health services. Creative ideas and efforts in cost control were automatically excluded from consideration. The straitjacket of the Canada Health Act was not so onerous to the provinces when the federal government was paying up to 50 cents of every provincial health care dollar. However, beginning in 1977 the federal share of health care spending began to decline. First the government shifted to a block grant, then it imposed restrictions on the grant's rate of growth, and finally, in the last budget, the federal government announced that the cash portion of the grant would be reduced by 39 per cent over three years.

Today the federal share of health care spending in Canada has shrunk from 50 per cent to only 24 per cent. The cash portion of that share is only $7 billion, which is 10 per cent of the $72 billion we will spend on health care this year alone.

In coping with cuts of this magnitude the provincial governments face three stark choices: they can try to make up the lost federal dollars by raising their own revenue; they can cut the level of quality of their health care services; or they can find newer, leaner ways of providing the level of services constituents deserve. Clearly, the first two are not options. Provincial governments are just as financially strapped as is the federal government. Raising taxes simply is not a viable solution any longer. Indiscriminately slashing programs is not an option either. The only realistic avenue open to the provinces is to come up with new ways of providing these services more cheaply, more quickly, and better than before. However, the Canada Health Act is standing in their way. The provinces do not have sufficient flexibility and freedom to institute the kinds of reforms that can put medicare back on a sound financial putting.

This places the ball back in the federal government's court. It has two options: either continue to insist on preserving the rigid interpretation of the Canada Health Act, in which case Ottawa will have to resume picking up 50 per cent of the cost, or amend and reinterpret the act to give the provinces the freedom they need in order to meet the funding challenges ahead. No party can pretend that the first is a realistic option. The federal government cannot now nor will it ever again be able to pick up half the tab of medicare as it exists today. Health care consumes 10 per cent of our nation's GDP, a greater proportion than any other nation except for the United States.

What this motion is saying is that the federal government can no longer have it both ways. The longer we insist on having it both ways the greater the chance that our national health care system will collapse under its own weight. The only realistic course of action is the one this motion recommends; that is, giving the provinces the ability to redesign their health care services, allowing them to experiment and to improve on old ways of doing things, and ultimately letting the voters of each province decide how much health care they are willing to pay for. This is the approach taken by Reform.

What we have said in our blue book and what we have reiterated in the taxpayers budget is that a Reform government would provide unconditional federal funding in support of health care services. While our taxpayers budget proposed reducing current funding levels by $800 million, it also included a pledge to turn over to the provinces additional tax points, which would grow along with the economy.

What the present health care debate comes down to is the question of trust. Reform is saying that provincial governments can be trusted to uphold the fundamental principle of Canadian health care: that nobody will be denied adequate health care based on inability to pay. By refusing to amend or reinterpret the

Canada Health Act, this Liberal government is effectively saying that the provinces cannot be trusted to uphold this principle.

My question for the government is this. Why on earth can the provinces not be trusted? After all, medicare was not dreamed up in Ottawa. It originated from one province experimenting with new and better ways of caring for its people. Medicare itself was born precisely because the federal government of the day provided provincial governments like Saskatchewan with flexibility in the field of health services.

I would also ask the government why it questions the provinces' commitment to health care at a time when the federal government itself is steadily reducing its own share of the burden. Cash transfers for health amount to less than 6 per cent of total federal program spending. Yet the provinces typically devote between 30 and 40 per cent of their budgets to health care.

Who are the true guardians of health care in this country? It would seem to me it is the provinces. From a more pragmatic viewpoint, why would this government doubt for a moment that the voters of any province would allow a provincial government to undermine the fundamental principles of medicare?

In closing, I would like to point out that the governments closest to the people are held closest to account. Ultimately, in a democratic society it is the people who should decide how a province fulfils its constitutional duty to provide health care services, not a federal bureaucracy.

I hope everyone will give their support to Motion No. 424.

[Stan Dromisky, Liberal, Thunder Bay—Atikokan, ON]

Mr. Speaker, I an indeed pleased to be able to participate in this debate. I personally believe very strongly in the principles of medicare and I know that they are also of great importance to people not only in my own riding but across the country.

The Canada Health Act is a brief, simple act. It sets out the five principles: public administration, universality, accessibility, portability, and comprehensiveness. It has a few definitions and deals briefly with penalties for failure to achieve these principles. It does not, could not, and should not set out how provinces operate their systems.

The preamble of the Canada Health Act is clear on this. Provinces are free to build their own systems within the broad framework of the Canada Health Act.

The guiding principle of medicare has long been that Canadians' health and access to quality care should not depend upon their financial means. In 1984 the Canada Health Act was introduced by a Liberal government and passed unanimously. The preamble of the Canada Health Act recognizes that "Continued access to quality health care without financial or other barriers will be critical to maintaining and improving the health and well-being of Canadians". This concept is also brought out as the primary objective in Canadian health care policy: "to protect, promote and restore the physical and mental well-being of residents of Canada and to facilitate reasonable access to health services without financial or other barriers, as described in section 3 of the act". It is within this framework that I wish to address the motion before us today.

Contrary to what some members in the House would have us believe, the government does not have a rigid view of how health care should be organized in Canada. The provinces already have a large degree of flexibility in the organization and provision of health insurance and health services. They have had this flexibility for many years. The only conditions the federal government assigns are that the provinces respect the requirements of the Canada Health Act.

Within the requirements provinces can experiment and change the way they deliver care, and many have been doing so. Nothing in the Canada Health Act limits the flexibility of provinces to realign the delivery and organization of their health care systems. Almost all provinces have embarked over the last few years on major reforms of their health systems.

The public administration criterion of the Canada Health Act presents a good example of the flexibility inherent in the act both in the provision of health insurance and in the delivery of health services by the provinces. The criterion applies to provincial health insurance plans and not to the administration of individual components of the health care system such as hospitals. This means, for instance, that private sector management of publicly owned hospitals is permitted. In addition the criterion allows administration authority of a provincial health insurance plan to be delegated to an agency if that is the wish.

Another example of flexibility inherent within the Canada Health Act relates to hospital services. These services are not directly tied to an institutional setting. Thus it is permissible for acute care to be provided in the community in a patient's home, for instance. It is always the provinces, not the federal government, that determine which services will be given in which setting.

The extramural hospital in New Brunswick is an example of provincial use of the flexibility. Under the program the patient is formally admitted to the acute care program. However, all required services are brought to the patient's home and not to the most expensive operating unit within the hospital structure called the emergency ward.

I emphasize, however, that the government recognizes the need for flexibility. On other hand it will not compromise on the fundamental values upon which the Canada Health Act and medicare in Canada are based. We are and we will continue to be flexible in our approach to health care, but we will not permit financial barriers to impede access to health services. If flexibility means turning our health care system into a private one that profits from the misfortunes of Canadians, the government

wants no part in it. We will not tolerate direct charges to patients for medically necessary care.

During this period of constraint creative processes are being produced by creative individuals in every province in handling these fiscal problems. There are solutions and money can be managed much more effectively than it is at the present time.

One of the most cherished services enjoyed by Canadians is the health care system. Health care issues constantly rank as number one across a variety of polls. The federal government is the ultimate torch bearer of the one of the last truly national programs. The central government, therefore, is morally obliged to defend the Canada Health Act against policies that seek to destroy it.

I believe as do many Canadians that the Canada Health Act should be kept as it is. Undoubtedly any changes to the fundamental principles upon which health insurance is founded would cripple the most notable gains attained by the Canadian health care system.

We need only look south of the border to realize how fortunate we are to enjoy the health services we do. In the United States approximately 35 million people are without adequate health coverage. Health care horror stories abound south of the 49th parallel. Even Americans who have medical insurance can be hit by very high medical bills. In some cases, because of poor family coverage, if a family member has a serious illness or an accident the extra bills can be financially devastating. Moreover American company medical insurance plans lock many Americans into their jobs. This is because once a person develops a chronic illness no other insurance company will provide insurance at reasonably affordable rates.

Certainly wealthy Americans can receive the finest possible health care. However this is certainly not the case for the middle and lower socioeconomic classes. It is interesting that the opposition in the House is advocating a very similar system to that of the Americans.

Some detractors of our health care system indicate that we can no longer afford medicare in its present form as a result of our fiscal situation. However most health economists agree that it is not our medicare policy in and of itself we can no longer afford, but the inefficiencies in the manner in which medicare is implemented and delivered.

Significant improvements could be made in a number of areas without compromising national standards. For example, the unbridled growth of unproven and costly new medical technology has ballooned health care costs without any apparent return on the money spent. Another problem pertains to the manner in which drug prices have skyrocketed over the recent past. As well it appears supply and distribution of our medical manpower need improvement.

These are but a few of the areas where efficiencies, if introduced, could reduce the cost of delivering health care in Canada. Above all, provinces must listen to those who deliver and maintain health care services as well as those who receive the services. Although some problems exist we must do what we can to improve the system without destroying it. In a nutshell, the difficulties facing our health care system are the result of unlimited demands upon a limited pool of resources.

I feel compelled to rise today before the House to speak against a motion that would ultimately lead to the dismantling of the health care system that is dear to the hearts of many Canadians. In sum, Canadians demand and expect direction from the federal government for the preservation of our most sacred national program. The government has a moral right and the legal authority to ensure that this is the case. That is why we must vote against the motion before us today.

[The Acting Speaker (Mr. Kilger)]

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

On the Order:

May 5, 1995-The Minister of Transport-Second reading and referral to the Standing Committee on Transport of Bill C-89, an act to provide for the continuance of the Canadian National Railway Company under the Canada Business Corporations Act and for the issuance and sale of shares of the Company to the public.

Cn Commercialization Act

[Douglas Young, Liberal, Minister of Transport]

Mr. Speaker, I move:

That Bill C-89, an act to provide for the continuance of the Canadian National Railway Company under the Canada Business Corportions Act and for the issuance and sale of shares of the Company to the public, be referred immediately to the Standing Committee on Transport.

I am pleased to open debate on Bill C-89, an act to commercialize the Canadian National Railway.

This is an historic occasion, one that marks a very clear turning point in the history of transportation in Canada. In 1923 the federal government completed the amalgamation and takeover of five privately run railways: the Grand Trunk, the Grand Trunk Pacific, Canadian Northern, the Transcontinental and the

Intercolonial. CNR was the result. With the help of the deep pockets of Canadian taxpayers, CN grew into what it is today.

Rail is not the only transportation method available now. Our shippers have other choices: the trucking industry, which has taken on a large part of the business; air freight; or through the seaway and the Great Lakes by ship. There is potential for strong competition in transportation in Canada, which is absolutely essential in any modern economy.

The legislation is part of our government's intention to have the private sector operate in areas where it can do the job best. The Minister of Finance said in the budget last February:

Our view is straightforward, if government does not need to run something it should not, and in the future it will not.

[Translation]

Under this bill, 100 per cent of the government's share in CN will be sold in a public offering. All Canadians, including CN employees, will have a chance to buy shares. A maximum of 15 per cent of shares may be held by any one individual or company; there will, however, be no restriction on foreign investors.

CN employees will continue in their current positions in the new CN, and their pensions will be protected under the Pension Benefits Standards Act. A standard stock savings plan will be offered to CN employees to encourage their participation in the new company.

The Head Office will remain in Montreal, and the Official Languages Act will continue to apply to CN employees. These provisions will have not impact on CN's "saleability", because they have both been in place for a long time and have served the CN and its customers well.

We believe that putting CN on a solid and viable financial footing is the best way to ensure that it will be able to maintain coast to coast rail service. CN must have every opportunity to compete fairly and aggressively with all its competitors, primarily, the trucking industry, CP Rail and the U.S. railroads.

To achieve these objectives, we have struck a balance between the obligations we wish to impose on the new company and the negative effects these could have on both the viability of CN and on the value of our equity.

The size of the public offering of CN stock is the largest in Canadian history and makes this balance a very delicate one. We need to be careful about imposing too many restrictions on CN. We must attract international investors, especially those in the U.S., with positive experience in rail investment. We want to ensure that the CN is free to function and finance its operations as its competitors do.

It is not our intention to impose onerous foreign ownership and service obligations on the new CN that do not apply to CP. We want to make sure that control of CN is broadly based so that no single individual or company controls more than 15 per cent of the shares.

CN has to be put on a sound financial footing. To achieve this, CN's current debt of $2.5 billion will have to be reduced to approximately $1.5 billion. CN's debt will have to be reduced to a level where it will receive an investment grade rating similar to that of its main Canadian and U.S. competitors. Our goal is to have CN in a capital position that would allow for at least a BBB bond rating.

The company is expected to raise funds to reduce debt prior to the sale by selling assets such as CN Exploration, which it has recently done, and the Scribe hotel in France which is currently being marketed. CN is also currently pursuing the sale of CANAC and its AMF maintenance shops in Montreal as well as some leasehold interests. CN's Canadian non-rail assets are not part of the deal. They will be retained by the crown. Our intention is to put the new company in a competitive position, not to tip the level of the playing field in CN's favour.

The legislation represents the government's firm commitment that both the company and the taxpayer must be treated fairly when the shares go to market. We have put together a unique structure to manage what will be the largest initial public offering in Canadian business history.

We have an agreement with three investment banks, ScotiaMcLeod Inc., Goldman, Sachs and Company of New York and Nesbitt Burns Inc., to form a consortium for the purposes of leading the deal. The arrangement will allow the Government of Canada and CN to draw on the resources and experience of these institutions in the decision making process.

Competition and a viable railroad system from coast to coast is burdened by the current regulatory environment. It is my intention to present to the House legislation that will chart the way to major reforms of our regulatory regime before summer. The legislation will provide the regulatory framework for the future of transportation in Canada. It will encourage the creation of short line railways and it will provide for real competition.

The regulatory process will ensure there will be no abandonment of service unless no one, private sector or government, wishes to take up the line. That will be the most obvious benefit of the reform but it will go much further. It will also provide the framework to allow all modes of transportation to perform efficiently and effectively without needless government intervention.

The aim is to put in place the framework for integrated transportation based on a policy that is consistent, transparent and fair for everyone. Transport Canada will focus its efforts on maintaining and improving the world class safety record enjoyed by our transportation industry, whether on the surface, in the air or on the water.

Our transportation system must be modern, dynamic, innovative, growing and as unrestricted as possible. We must constantly move forward to find newer and better ways to move our goods and our people if we are to remain competitive as a nation.

The air sector has been modernized with a national air force policy, open skies, bilateral agreements with the U.S., the international air routes policy and the commercialization of the air navigation system that will take place in April 1996. We will also announce the marine policy initiative the government intends to pursue before the end of 1995.

I support the motion to refer this legislation to the Standing Committee on Transport for review prior to second reading. I believe the Standing Committee on Transport will be well able to handle this task, as evidenced by the national marine strategy report tabled recently by the chairman, the member for Hamilton West. I look forward to hearing its suggestions and views on this legislation.

Over the years successive governments have attempted to maintain a reasonable level of competition in our rail transportation system. That strategy has only been relatively successful. It is time now for the government to withdraw from the direct operation of railroads and let the private sector do its job. It is time to put the private sector entrepreneurial skills we know exist to work to make CN a viable, successful and competitive operation.

I have every confidence that with this legislation the government is taking another step in its commitment to providing for an integrated, affordable, viable and competitive transportation system in Canada.

[The Acting Speaker (Mr. Kilger)]

Before following up on the debate, I remind the House the debate will be at the maximum 180 minutes-three hours-before the question is put. Interventions will be no more than 10 minutes without questions or comments.

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

Mr. Speaker, the Bloc Quebecois approves in principle the government's proposal to sell CN to private interests. However, it has serious reservations about certain provisions of Bill C-89.

I will propose amendments to these provisions in committee. We object to clauses 8 and 16. We will also recommend an amendment to clause 6 regarding CN property that may be transferred to the Minister of Transport so that he can put it up for sale later.

Let us start with clause 8. One purpose-undoubtedly laudable-of its seven subsections is to prevent any individual, corporation or associate as defined in subsection (4) from holding more than 15 per cent of voting shares.

Notwithstanding these provisions, subsection (5) allows two such associates to disassociate, so to speak, from each other for the purposes of the act by submitting a statutory declaration stating that they are not acting and will not act in concert with respect to their interests in CN.

Each of the declarants may acquire voting shares up to a maximum of 15 per cent as if he or she was not associated with the other person. This dispensation, which broadens the pool and purchasing power of potential buyers, is probably necessary given the size of the operation. However, CN administrators must still be able to check if, in fact, declarants comply with the terms and conditions of their statutory declarations.

We feel that such control would be difficult to exercise in the case of foreign buyers. We are therefore proposing an amendment under which subsection (5) respecting the statutory declaration would be restricted to Canadian buyers. As a result, two or more foreign associates will not be able to exceed the 15 per cent limit by submitting statutory declarations.

If clause 8 aimed at preventing an individual or corporate takeover of CN must be approved in principle, the same cannot be said of clause 16. Regrettably, even in this bill whose provisions should have been purely financial in nature, the government could not resist, once again, one of its old demons: trying to invade an area of provincial jurisdiction.

Clause 16 may appear harmless. It reads as follows:

(1) The railway and other transportation works in Canada of CN, of every subsidiary of CN and of every corporation formed by any consolidation or amalgamation of any two or more of those corporations are hereby declared to be works for the general advantage of Canada.

The catch is that, once they are declared to be for the general advantage of Canada, these works will be subject to federal legislation. If CN reaches a joint ownership agreement with a short-line railway, this railway will shift from provincial to federal jurisdiction, as suggested in the Nault report, we should point out. And the deed will be done.

Not only is the principle of this federal encroachment on a provincial jurisdiction unacceptable, but so are the economics of it, as we all know that one of the main reasons short-line railways can operate on sections considered non profitable by major companies is that they are not subject to cumbersome

federal railway regulations. Short-line railways need the operating flexibility provincial regulations give them, at least in Quebec.

This federal initiative is therefore likely to discourage the creation of short-line railways and limit their numbers. We must realize that each one of these railways is a section saved from abandonment. If the government now interferes with the development of short-line railways, this will mean that a larger part of the rail network in Quebec and Canada will be abandoned. So, we suggest that only interprovincial works of CN and its subsidiaries, and not those works which are entirely comprised within a province, be declared to be works for the general advantage of Canada.

Moving on to the intention expressed by the minister to purchase and sell separately CN non-railway assets, including AMF, a Quebec company. This company employs some 1,300 people whose jobs could be endangered if the company's ties with CN were severed. Under clause 6 of the bill, the minister may, while CN is a Crown corporation, direct CN to transfer such property. We will move an amendment providing that, before selling these companies, the minister, to protect jobs, will ensure that they are viable and, if need be, will take steps to ensure that they are.

To conclude, while agreeing in principle with privatizing CN, the Bloc Quebecois cannot help but notice that, far from resulting from a rail policy based on the requirements of the economy, this transaction pursues the purely budgetary goal of bringing in a lot of money very quickly. It is not a rational choice. It is a fire sale by a hard-pressed government.

Pressured by creditors, obsessed by Moody's downgrading of its rating, the federal government is putting up for public sale one of our crown jewels, a national treasure, because it desperately needs money to pay the interest on the accumulated debt caused by 20 years of mismanagement. There may be no other way out, but what an admission of failure.

We are witnessing, stunned by such incompetence and the misfortune of being governed by such poor leaders, the decline of a government that had its heyday before the current Prime Minister began, some 20 years ago, as the then finance minister, to dig this bottomless grave into which our national debt is dragging us, and the proceeds from the sale of CN will be but a shovel full of dirt in this grave.

In the face of this failure, how can one resist the temptation of comparing the Canadian federal system to a father who has to sell the family furniture and silver to pay household bills after getting deep into debt because of profligate spending and improvidence? No wonder, Mr. Speaker, that we, Quebecers, are anxious to get out of the house.

[Jim Gouk, Reform, Kootenay West—Revelstoke, BC]

Mr. Speaker, when I made my first speech in the House I stated I was not here to oppose for opposition sake. If the government brought forward good legislation I would be the first to congratulate it. I also stated if I thought the legislation was not good I would offer constructive alternatives as to how the legislation could be made better. Bill C-89 covers both of these situations.

There is no denying the primary concept of the bill, to privatize CN Rail, is a good move. It is something the Reform Party has been pushing for since before the election. I spoke strongly in favour of privatization during transport committee hearings with the NEWCO concept and again when I made a presentation to the all Liberal task force on CN Rail.

The tone of the discussions by the members of the all Liberal task force raised the concern with me they might not be working toward the privatization of CN Rail. I am very pleased to see the government finally got around to doing the right thing. It is certainly better late than never.

In keeping with the first part of my maiden speech, I congratulate the government for accepting yet another Reform policy. However, as it seems to be a constant pattern with the Liberals as they adopt Reform ideas and policies, they lose most of the common sense in our ideas when they put their own stamp on them. This brings me to the second part of my first speech, constructive alternatives needed to make a badly worded concept a viable reality.

The Reform Party will support Bill C-89 at first reading so it can be sent to committee where I hope the government will be as receptive to amendments necessary to make this legislation work sensibly and fairly as it was in following our idea on the concept. In supporting the bill at first reading, I can assure the House it is the concept and not the content we are in favour of.

With regard to the content, there are many problems I will be addressing at committee. Areas of concern include the minister's unrestricted power to reduce or even eliminate CN Rail's debt. In this there is a potential for disaster for both the Canadian taxpayer and the rail transportation industry. If the minister plans only to do what is reasonable then he should not mind restrictions in the bill to confirm this. If he plans to go further than is reasonable then he must be stopped.

In the same area of concern is the question of the real estate assets of CN Rail being separated from the rail operation to be sold. The sale of these assets should be the primary method of debt reduction of loans carried by CN Rail. That sale should go to the private sector, not from the taxpayer owned corporation to a department of the government using the taxpayers' money to buy their own assets from themselves. This action would bring us to a new height of creative accounting.

There seems to be some confusion between government departments, the Liberal dominated Standing Committee on Transport and the minister as to what is really planned. The Reform Party is quite prepared to help them sort that out in committee.

I am also concerned about the section which limits the share of purchases to a maximum of 15 per cent of the total shares. In marketing the shares of CN Rail to the public there are only two types of investors who would look at such an offer. One is the common investor made up of individuals, companies or investment groups. This type of investor buys shares primarily for a return on investment. CN Rail's track record does not provide a very rosy picture for this sort of investor unless they feel a new private sector operator can run the company much more efficiently than it has been run in the past.

This brings us to the second type of investor: a company or a group of individuals who believe they can operate the rail company much more efficiently than in the past, thus raising the value of their investment. Such an investor would be far less likely to invest if they felt they could not purchase a large enough portion of the company to ensure that the needed new operating efficiencies would be implemented. Let us not kid ourselves, the general investors are not going to be lining up to purchase a company with such a losing track record as CN Rail has had.

Two provisions contained in the legislation that would create restrictions on a new company when formed are neither common to their competitors nor necessary. These two restrictions are the requirement to maintain the corporate headquarters in Montreal forever and the requirement to maintain the current official language policy of the government. It makes no sense to require a company to maintain its headquarters in any one city, nor to require it to follow any other restrictions that are not followed by the rest of their industry. As I said earlier, this company is going to be hard enough to market without placing a bunch of ill-conceived restrictions in the way of the sale.

Other concerns involve items that are not contained in the legislation. These include some measure of protection for Canadian investors, including individual workers and unions in the company. The rail industry in Canada has occupied a special part in the building of this country. Many Canadians may want to try to be part of the revitalization of one of our national rail companies and certainly should be given every opportunity to participate. One way to ensure they would have this opportunity would be to restrict the sale of shares upon introduction to Canadian individuals and companies before opening it up to the international market. I know that it will likely take an international market to sell off all the shares of CN Rail, but what is wrong with offering a little benefit to the Canadian people who we are here to represent in the process?

Another area to be considered is the suggestion I made in my presentation to the all Liberal task force last year. That idea involves the consideration of selling only the rolling stock and buildings of CN Rail and retaining the track infrastructure to form a common rail system that would be open to all railway operators on a cost recovery basis. This would include revenue from diesel fuel taxes paid by the rail companies. To be successful this would have to incorporate CP Rail's track as well, but it would not have to be government owned. It could be set up as an industry and user operated system, just the same as we are in the process of doing in the aviation sector with air navigation services. This would open up the track to any rail operator, which would greatly enhance the potential for short line operators.

These are some of the concerns I will be bringing to the committee stage of the legislation. The government has shown good sense in accepting the concept of Reform policies on this issue. I hope the good sense will continue, so that they can also accept the amendments necessary to change this from a good concept to good legislation.

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

Mr. Speaker, I am pleased to participate in the debate on Bill C-89, particularly after hearing the objections made by the hon. member for Kootenay West-Revelstoke to the CN head office's remaining in Montreal. I simply want to thank the hon. member, because he is helping us win the upcoming referendum. We often hear members from English Canada say that Quebec gets too much and that the federal government is too generous with our province. It is just incredible to hear such comments.

That being said, my purpose is to tell those Canadians who are watching us today about this important bill.

This will only be a foretaste, if I can put it that way. Indeed, the real fight will come in committee, where our party intends to condemn this bill. The Minister of Transport will appear before committee members tomorrow afternoon, at 3 p.m. We hope that he will answer our questions in a more explicit manner than he has usually done in the House, where he is arrogant and often hurls insults at the opposition.

As well, I can hardly wait until Wednesday, when the transport committee will welcome CN's president, Paul Tellier, the one who benefited from a generous interest-free loan of $300,000 to buy a $345,000 house in Westmount. This will be my first encounter with Mr. Tellier, since that generous loan was granted to him.

And now for the most important aspects of this bill. In committee, our party, the Bloc Quebecois, will seek amendments because of two major objections we have to this bill. The first one concerns clause 8. This clause is very important because it imposes limits on the total percentage of shares that may be owned by a person or a group of persons.

Let me tell you about some of my concerns. For instance, I am afraid of an indirect U.S. takeover through company affiliates. Presumably, the minister or the parliamentary secretary will say that they plan to cap the percentage of shares held by Canadian or foreign companies at 15 per cent and that this point is very well covered. My point is that, as happens from time to time, some companies might have certain agreements. I am not talking about collusion. Certain agreements might be made under the table, as they say where I come from, in order to do indirectly what they could not do directly.

Clause 8 also contains the provision that CN shall maintain its head office in the Montreal urban community. Obviously, Mr. Speaker, unlike the Reform Party, our party cannot object to this recommendation.

Subclause 2 of clause 8 refers to strict provisions that will be enforced in the case of non-compliance with the 15 per cent limit. Of course, there is no restriction on shares held by the Government of Canada.

Subclause 4 provides a detailed definition of the term associate. The Standing Committee on Transport will have to consider this point later on. We find subclause 5 very disturbing because it provides for exceptions to subclause 4. That is something we will have to discuss in connection with the 15 per cent ceiling on ownership of CN shares.

Another point that will also gain by further study is the provision that the directors of CN shall determine whether persons in the group comply with the statements in a statutory declaration and are acting independently and not in concert. The reason the government included this paragraph is probably that it did not want to exclude companies which are part of vast financial consortiums with independent subsidiaries from becoming shareholders in CN.

I will give you an example. Could Bell Canada Enterprises buy a 15 per cent share; Northern Telecom, 15 per cent; Montreal Trust, 15 per cent; and Bell Canada itself, another 15 per cent? This would be tantamount to the situation I mentioned earlier in which one interest could indirectly achieve what it is prohibited from doing directly. The related companies I just named could take a 60 per cent share of CN. That is food for thought. In itself, this exception is certainly important, but it is not particularly worrisome because clause 8 prohibits companies from associating to form a controlling interest in CN.

Another paragraph of clause 8 defines control. Essentially, "control" means control in any manner that results in control in fact, whether directly through the ownership of a majority of shares or through negotiations between shareholders. Regarding the definition of a voting share in clause 8, I would like to ask what is the technical implication of the stipulation that a voting share is a share carrying voting rights, including a security currently convertible into such a share and currently exercisable options and rights to acquire such a share or such a convertible security? The Standing Committee on Transport will have to get answers to these questions.

With respect to clause 8, I have set out our party's position very clearly for you. The Bloc Quebecois will propose an amendment to close the gap we found in the bill.

We also strongly disagree with clause 16. We disagree with it completely, because we believe it gives the federal government the option of getting involved in what we in Quebec call the CFILs, local trains, or what the rest of Canada calls short lines.

We consider this clause particularly underhanded, because it declares Canadian National works and subsidiaries to be works for the general advantage of Canada and implies that these subsidiaries and works will remain under federal jurisdiction. Thus, under any joint ownership agreement CN concludes with CFILs, these short lines will come under federal jurisdiction. In Quebec, a CFIL was set up for the lines linking the Abitibi and the Saguenay-Lac-Saint-Jean regions, where employees agreed to operate the CFIL according to an agreement with CN.

Therefore, we consider that clause 16 flies in the face of CFILs as an intraprovincial form of transportation, one that operates within the province, which are thus currently under provincial jurisdiction.

I do not claim to have a monopoly on truth. The people at Transport Canada, the minister and Mr. Tellier will tell us the opposite, but our understanding of clause 16 is that it will make this means of intraprovincial transportation-that is, within the province-, currently under provincial jurisdiction, come under federal jurisdiction.

As you no doubt know, Mr. Speaker, our party, which has repeatedly had occasion in this House to reject all the federal government's attempts at centralization-what the Prime Minister calls flexible federalism-will not let the federal government try to lay its hand on this field of provincial jurisdiction. In any case, this also came up in the Nault report, which suggested that CFILs should come under federal jurisdiction.

You remember the Nault report, the work of a partisan group comprising only Liberal members and one Liberal senator and excluding the opposition parties, the democratically elected

Bloc Quebecois and Reform Party. This is part of what we consider totally inadmissible, and we will call for amendments to clause 16.

In closing, there is a third point where we require more information. It concerns the future of CN's current subsidiaries such as the AMF locomotive works in Montreal or the Can-Car plant. We also want reassurance about the future of these subsidiaries with a privatized CN.

With that being said, the best is yet to come on Tuesday and Wednesday before the Standing Committee on Transport.

[Garry Breitkreuz, Reform, Yorkton—Melville, SK]

Mr. Speaker, I am pleased to make my contribution as one of the first speakers on Bill C-89, which would privatize CN's rail assets, including their track, rolling stocks, buildings, et cetera.

Unfortunately, the bill excludes a major part of CN's assets, such as non-railway real estate assets, probably the most valuable part of the company. Reformers would like to see these assets sold off before the privatization effort takes place, in order to reduce CN's debt load.

My hon. colleague has described a number of flaws with the bill that need to be fixed. These include prohibiting the government from arbitrarily cancelling all or part of CN's debts prior to privatization; removing the requirement to leave CN's headquarters in Montreal; removing the requirement that CN comply with the government's policy of official bilingualism; and removing the 15 per cent ownership restriction.

I want to use my time today not just to point out the obvious flaws in this bill but to talk about privatization in general and introduce a number of ideas for consideration by the government before this bill is sent to committee.

The privatization of CN is a good thing, but the government has an opportunity to make it a great thing. I want to suggest the government use this, its first effort at privatization, as a testing ground for the privatization of all crown corporations.

In 1987 Madsen Pirie, president of the Adam Smith Institute in London, a world renowned expert on privatization, spoke at a Canadian symposium on privatization organized by the Fraser Institute. He had this to say about the fundamentals of privatizing a crown corporation:

When government engages in an activity such as privatization, it is speaking to several audiences. Among the audiences that government speaks to are the managers of crown corporations, the workers who are employed in them, the members of the general public who are customers of crown corporations, the general public who are taxpayers and who pay subsidies to support the losses of those corporations, potential investors who might buy shares in those corporations, the financial and business community which takes an interest in their performance, and the media commentators who observe this process and comment on the results and declare it to be a success or a failure. Every act of privatization speaks to all of those audiences, and every act should be tailor made to maximize the support of each of those different groups.

When reviewing this bill we should test it against Dr. Pirie's list of vested interests or audiences. Bill C-89 must address each of the groups affected by the privatization: the managers, the workers, the customers, the taxpayers and the investors. If Bill C-89 does not specifically address each of the needs and interests of these groups, amendments will be necessary.

Dr. Pirie also outlined three key principles of privatization. First, never cancel a benefit. If people are deriving a benefit from the public activity of a crown corporation, never cancel it, however unjust it is.

Second, make friends out of your enemies. Find out who the people are who might lose on the privatization process and structure the policy to make sure they gain instead.

Third, disarm the opposition. Identify all possible objections to privatization and tailor make the policy so every single one of these objections is dealt with in advance. The government should ensure it has considered each of Dr. Pirie's three principles in planning for the privatization of CN and the necessary legislative measures are included in Bill C-89.

Based on these audiences and principles I believe that every privatization initiative must have a list of groups with a vested interest in the sale of CN and give them the first opportunity to buy CN shares. CN employees should be given the first opportunity and the highest priority. CN customers come second on the priority list and Canadian taxpayers and investors are third.

I would also like to explore some new ideas for consideration by the government before Bill C-89 becomes the law of the land. What about linking two or more government objectives into one?

For example, the government is giving landowners in the west a one-time payout for eliminating the WGTA subsidy for the railways, commonly known as the Crow rate. Would it be possible to give western farmers the choice to have their Crow rate buyout in the form of shares rather than cash? Farmers could then have a direct financial interest in the economic performance of CN. If done properly, the government could overcome opposition to both the Crow rate buyout and the privatization of CN with one move. I offer this idea to be explored by the government to lessen some of the negative effects of both programs.

In 1986 the Economic Council of Canada published the report: "Minding the Public's Business". In chapter five titled "Government Enterprise and Business" the economic council made the following recommendations:

Entry into rail carriage could be promoted in different ways. The provisions in the proposed legislation could be expanded to make running rights more easily available and to open entry into rail carriage to anyone who can meet the basic requirements related to safety and liability coverage. Instead of regulating the activities of CN and CP in their capacity as providers of the roadbed, the management of all track could be assigned to a new publicly owned track authority. This would require the nationalization of CP's roadbed and the separation of CN's track from the other components of its operation. Alternatively, a public track authority could be created, based exclusively on the infrastructure of CN.

This is an idea whose time has finally come. The government should give serious consideration to establishing a public track authority which would operate similarly to our highway system. This would eliminate the tax disadvantage placed on rail companies because while they pay fuel taxes, they also have to pay the full costs of maintaining their own railbed. Trucks on the other hand pay fuel taxes but their roadbed, the highways, are maintained at public expense.

Such a public track authority could charge user fees to rail companies based on the use they make of the tracks and as a result could be self-financing. At some point in the future even the public track authority could be privatized.

The Canadian Chamber of Commerce supports a fully user pay rail infrastructure. It had this to say in its 1994 submission to the special joint committee reviewing Canada's foreign policy:

Canadian businesses are increasingly pointing to an unlevel playing field between the Canadian and U.S. commercial environments-.One tangible example among many can be found in the Canadian transportation industry. Rail, for example, provides the most economic mode of transportation for a large part of Canada's freight and for many shippers is the only cost effective mode. It is fundamental to Canada's trade, moving 40 per cent of Canada's exports and provides a fully user pay infrastructure not liable to ongoing public funding.

Finally, I would like to comment on the importance of the port of Churchill to the farmers of Saskatchewan and Manitoba. The privatization of CN should be seen as an opportunity to privatize, expand markets, modernize and increase exports and imports through the port of Churchill.

This will take more than just the privatization of CN. It will take the co-operation and likely the privatization of both VIA Rail and Ports Canada. It will take the co-operation of the federal government, the governments of the provinces of Manitoba and Saskatchewan, and the co-operation and support of every community and producer whose future will be improved by taking advantage of the most cost effective shipping route for bulk commodities to our customers in Europe, Africa and South America.

I respectfully ask the government not to look at the Churchill line and the port of Churchill as a liability but as an opportunity requiring creative thinking and a co-operative creative privatization strategy. I hope to have an opportunity to comment on a few of these ideas in future debates on Bill C-89.

I would like to close with the comments Dr. Pirie made at the 1987 Fraser symposium. He describes the most exciting part of the privatization process. He said:

You will find privatization enables you to bring opportunities to ordinary people. It gives your citizens a chance to take part in the wealth creating process. It speeds up economic growth. It cuts the costs of government. It turns losses into tax revenues. In Britain, it is ending the old politics of division-the old politics of "us who don't have it and them that do".

These are the real reasons that Reformers support privatization of crown corporations.

[Bill Blaikie, NDP, Winnipeg—Transcona, MB]

Mr. Speaker, I would like to begin by commenting on the process here. As I understand when the procedure for referring a bill to committee before second reading was thought about in the standing committee on procedure some time ago, frankly I do not think this was the kind of bill we had in mind for referral to committee so early on. In my judgment this is the kind of bill on which there should be a full second reading debate on the principle of whether or not CN should be privatized.

I would like to register my objection to what I would consider to be a misuse of this particular procedure. Presumably it is in order to avoid just that kind of full scale debate about the privatization of CN, although I do not know why the government would bother to avoid it. Obviously there is a great deal of agreement between itself and at least the Reform Party on this measure.

Also, the government has an obligation to instruct or ask the committee, whatever is appropriate, to consult with the communities and other stakeholders that will be affected by the privatization. Just to have the hearings in Ottawa without going to Winnipeg and other places where people have good reason to be anxious about the effect of the privatization of CN is a mistake. It is certainly something the government should reconsider although I do not expect it too. It seems to be in an unholy rush to have this all over and done with, a rush which I do not understand.

This is a very sad day for me. I will have been in this House 16 years come next week. I have spent those 16 years defending and promoting the role of CNR as a publicly owned railway compa-

ny. I had hoped and for many years I had thought that this day would never come. I certainly did not expect it to come under the auspices of a Liberal government.

At times I felt if the Conservatives had been re-elected that at some point they would have done this. I remember back in 1978 when I was just a candidate for Parliament and had not yet been elected. I was critical of Harvie Andre, then a Conservative member of Parliament for Calgary for his proposal to privatize the CNR. I always thought that this was something in the back of the collective Conservative mind. The fact that it is happening now under a Liberal government to me simply makes the point-I wonder if the Bloc Quebecois could have their caucus meeting somewhere else, Mr. Speaker. I am trying to make a speech.

[The Acting Speaker (Mr. Kilger)]

Order. Our colleague is seeking the co-operation of the House. I would ask those who wish to talk to do so outside the House if possible.

[Bill Blaikie, NDP, Winnipeg—Transcona, MB]

The fact that this is now happening under a Liberal government is proof positive to me of the consistency and the continuity of the corporate agenda which involves deregulation, privatization and free trade. I have to say that even I, and I have been here for a long time and know just how devious and how flexible shall we say the Liberal Party is, find the initiative taken by the government for the privatization of CN to be deeply surprising and deeply wounding.

In my own case, I do not think there is a person in my family for three generations who has not worked for the CNR at one time or another or worked there their entire life. That is true of a lot of people in my home town of Transcona where the main back shop for the CNR is.

I understand the position of the Bloc Quebecois in defending that part of the legislation which calls for the retention of Montreal as the location for the headquarters of the new privatized CN. However, I hope it will be equally understanding when it contemplates my anger that my community is not protected in the same way. Transcona is every bit as much a part of the history of the CNR as Montreal, going back to pre-CNR days when the shops began to be constructed in 1908 and 1909 around which the town of Transcona was created.

I object to the notion some people are protected by this legislation and others are not, that Montreal is protected; where the headquarters of the CNR is and will be is protected. Transcona's role in the life of the CNR is not protected. Presumably Transcona shops can be sold, cannibalized, balkanized, anything can happen to them. This legislation does not even acknowledge the existence of that place. Therefore I would like to register my objection to that.

I find it doubly insulting, offensive and tragic that not only is CN to be privatized but it could very well be sold to a variety of foreign interests. I see the solicitor general across the way. I remember being inspired when I was yet a high school student by the Gray report on foreign ownership of the Canadian economy. We have come a long way since then. We have come a long way since we hoped to repatriate elements of our economy that were under foreign ownership. Now we have a Liberal government, of which that same member is a member, privatizing and at the same time making it possible for foreign interests to own significantly Canadian National.

There is nothing in the bill to prevent the wholesale dismantling of the CNR or its being broken up into a number of fragments and sold off. I just finished reading this bill carefully and there is nothing in it to prevent an informal alliance of interests by which four or five American railways or other companies could buy 15 per cent each of the CNR and through that natural convergence of interests that does not fit any of the legal descriptions we find in the bill manipulate the future and the nature of the CNR to their own advantage in a way that may not be to the advantage of Canada.

Perhaps that is the point. Perhaps it is passé to talk about Canada. Perhaps it is passé to talk about making the economy or the marketplace accountable to something called the country or something called the public interest. Over time we have seen that notion erode and finally, I think with this bill, completely fall away so that voices like mine sound vaguely romantic or unrealistic in this context.

Nevertheless, I think I speak for a notion of the country which many people still cherish and which they regret seeing disappear as a result of this.

There is no provision in here for the future of VIA. It says the new CN can continue to charge VIA whatever it pleases. I would like to have seen something in here which would have demanded some accountability for what the new company would charge VIA. Is this to be the way VIA will disappear because the new company will charge VIA rates not tenable and therefore the next thing to go will be VIA? I would like not to have seen any of this but if it has to happen I would like to have seen consideration of the notion of having all the track in Canada owned by the government so that at least the government would continue to have a stake in our transportation system.

Finally, I believe none of this had to happen. I believe with the proper reregulation of our railway system the CNR and the CPR could have been healthy and viable. Instead, thanks to deregulation, thanks to imitating things happening south of the border we allowed ourselves to evolve to a point at which our railways are no longer viable.

With the appropriate policy changes on the tax side and various other changes we could have built a transportation system publicly owned on one side by CNR and privately owned on the other by CPR which would have been environmentally friendly because it would have been in favour of the railways. We have failed to do that. This will only lead to more trucking and to a transportation system which in my judgement will be less fit for the future than the one we have now.

[Pauline Picard, Bloc, Drummond, QC]

Mr. Speaker, I am happy to participate in the debate on Bill C-89. You may wonder why the health critic is interested in privatization or in Bill C-89. I am interested in this matter because CN trains go through my riding; they even go through one of the largest cities in my riding.

This bill would allow the government to privatize the most symbolic of Crown corporations: CN. It is surprising, to say the least, to see how fast symbols are disappearing from Canada these days. Institutions that were previously considered a sacred trust are now faced with the sorry state of government finance.

The CBC's mandate has gradually eroded, since the government no longer gives this corporation the financial resources needed to meet its original goals. The Canadian health care system is also caught in our government's financial mess. While some still see our health care system as the great Canadian unifying project, many realize, in the light of what is happening across Canada, that the provinces can only do so much given the federal government's unilateral cuts.

Privatizing CN would remove another page from our album of Canadian symbols. No other institution has done so much to help shape Canada as we still know it today.

How many towns and regions took shape and developed around the railways? Yesterday's symbols are being destroyed by the government's financial impasse. Through this bill, the government wants to establish a mechanism that would allow it to remove one of these symbols from its public accounts.

By and large, we agree with this move. We will, however, monitor this operation very closely so that privatization does not become a mess like the recent shady deal relating to Pearson airport in Toronto. We clearly cannot let the interests of the government's wealthy financial backers prevail over those of taxpayers, who own CN. There are some justified fears that the Pearson airport mess does nothing to allay.

The bill says that the shares of CN will be transferred to the Minister of Transport, who will hold them in trust for the Government of Canada. On the direction of the Minister of Transport, CN will have to submit an application for a certificate of continuance under the Canada Business Corporations Act. In fact, CN will cease to exist as a crown corporation and become a business corporation.

The bill imposes certain constraints on the new articles of continuance of CN. First, the voting shares that an individual or group of persons can hold is limited to 15 per cent; second, the head office is to remain in Montreal; and third, once privatized, CN will remain subject to the Official Languages Act.

If passed, this bill would authorize the Minister of Transport to deal with shares of CN with the approval of the Minister of Finance. The Bloc Quebecois has nothing against the principle of privatizing CN. However, we hope that CN will really see its efficiency and competitiveness increase as a result of privatization, as the government claims it will. To ensure that the transaction will produce the expected level of competitiveness for the new owners, CN should not be sold at reduced price. We intend to monitor the government closely in that regard, to prevent taxpayers from making a nice big gift to a privileged few.

So, reviewing the provisions of this bill, we find certain flaws that we would like to see remedied before final approval. Clause 8 of the bill imposes a constraint on the total percentage of shares that an individual or group of individuals can hold. The limit is set at 15 per cent. On the other hand, under clause 8(5), a group of individuals known to be associates would be allowed to hold more than 15 per cent of CN shares on presentation of a mere solemn declaration to the effect that these individuals will not act in concert.

It would be up to CN management to determine whether the group in question stood by their solemn declaration and really acted independently rather than in concert. Our main concern is that this leaves the door wide open for a foreign takeover, since a holding could meet these conditions. Several companies operating independently may in fact have the same majority shareholder. This provision, combined with the lack of constraints on foreign ownership, makes us fear a possible loss of Canadian control.

It is the minister's responsibility to keep this asset, built with money from the taxpayers of Quebec and Canada, under Canadian control. It would be unacceptable, after investing billions in public funds in that railway network, to let it fall into the hands of foreign interests. CN must remain under Canadian control to avoid a rerouting of its traffic to feed American railway companies.

Clause 8(5) is unacceptable in its current form, since it allows a foreign group made up of related companies to acquire a majority of CN's shares. The only protection against an effective takeover is a decision by CN's board members to the effect that these businesses comply with their pledge not to act in a concerted manner.

As you know, a company acts first and foremost with its shareholders' interests in mind. If the companies which own CN's stocks are all owned by the same shareholder, they do not have to act in a concerted manner to do the same thing. Consequently, Clause 8(5) must be reviewed or, at least, its application should be restricted to Canadian groups.

We also object to clause 16, where railway and other transportation works, as well as every subsidiary of CN, are declared to be for the general advantage of Canada. That clause would allow the federal government to interfere in areas which fall under provincial jurisdiction, such as short-line railways. It would be totally unacceptable, as well as economically inefficient and unjustifiable, to have these railways come under federal jurisdiction.

These companies successfully operate sections which are considered to be unprofitable by major railway companies. They can do so because they are not subjected to the numerous federal regulations on rail transport. These companies need the flexibility afforded by provincial regulations to operate successfully. This attempt by the federal government could deter the development of such companies and could limit their number. It must be understood that each of these short lines operates on sections which were going to be abandoned. If the government interferes with the development of such short lines, more lines in Quebec and in Canada will be abandoned.

I am also concerned about the survival of existing CN subsidiaries whose activities are not related to railway transport. The minister said that those CN subsidiaries which are not directly related to rail transport will be sold separately. These subsidiaries include some Quebec companies which are currently experiencing financial difficulties. We will have to ensure that these companies can survive without CN, and that their current level of employment is maintained.

In conclusion, we will have to review major elements of this bill, so that a badly planned privatization does not result in a waste of all the money the taxpaters of Quebec and Canada invested in CN.

[Myron Thompson, Reform, Wild Rose, AB]

Mr. Speaker, it is about time a Liberal government realized the private sector can operate and manage a commercial enterprise far better than government can. I have been waiting a long time to hear that.

We on this side of the House support ending government involvment in the financial sinkhole of political policy that operated CN Rail. We do, however, have some concerns about the manner in which this government is turning the former government operated financial sinkhole into a commercial operation.

As members know, when government sold off the money losing Air Canada to private interests government also wrote off Air Canada debt, which caused other Canadian airlines grievous harm. The question to be asked is whether this government will have the political courage to rid taxpayers of the money losing CN without causing unjustified harm to Canadian Pacific. Will this Liberal government act fairly, or will it continue government intervention into private industry? I fear that on both counts the answer if no.

This Liberal government has already written into this legislation interventions that will severely harm CP Rail and place manacles on the new owners, if any, of CN. This government, in its usual haste to appear to do something, has allowed the taxpayers to once again bail out previous government errors.

Instead of ending government involvement in CN, this Liberal government divorced one sector of CN holdings from the other. Instead of having taxpayers bail out debt, why is this government not selling off CN real estate assets and using that money to pay down the debt? Why is government holding on to the assets instead of sparing taxpayers further pain?

This Liberal government is asking taxpayers to forgive debt that is rightly payable by CN. They ask taxpayers to once again pay for governemnt mismanagement. This governent is also asking anyone who purchases CN to be bound by rules and regulations that will hamstring its future owners.

Why is this Liberal government making as a condition of sale that the head office for future CN owners must remain in Montreal? If this condition does not or will not make good business sense, must the future owners be shackled with another political decision? If CN is to be privatized, let the new owners be free to decide what is best for the railway and its customers.

Why does the Liberal government always preach freedom of enterprise and freedom for private business to operate in the marketplace yet always place restrictions upon private enterprise? That is anything but free. This governemnt states that private industry can operate better than governemnt in the marketplace, but then this government places cost consuming measures, such as maintaining an official languages policy, on prospective purchasers. Again, we have this government stating one goal while doing everything in its power to prevent accomplishment of that goal.

Why can this government never get it right? Why can this government not understand that intervention in the freedom of the marketplace or in constituents' lives will not encourage growth and prosperity? We on this side of the House understand fully that private initiative is the best means to economic growth and wealth and that private initiative reacting to a free market-

place will create opportunity for Canadians. Unfortunately, this government cannot or will not believe that independent Canadians know what is best for a continuation of prosperity.

The members opposite continue to believe that private property owned by free citizens must have government interference to be viable. With that in mind, why is this Liberal government restricting ownership by any one sector to 15 per cent of outstanding shares? What if western grain producers and operators can afford to and wish to purchase as much of CN as they can to maintain a say in what prices will be charged to move their grain to market? What if western interests want to make certain CN will charge the price that is necessary to move the grain and make a profit but prevent outside interests from arbitrarily setting extremely high rates to ship their grain? What if these Canadian interests wish to purchase more than 15 per cent? Why can they not?

Why does this Liberal government continue to talk free enterprise but always intervene in the free market? Why does the government always put up barriers to the free movement of goods, services, and enterprise? Can it not understand that its outdated measures are holding back the future growth and the competitiveness that are required to make Canada an effective force in the world market?

Several ideas have been forthcoming that would allow hard-pressed taxpayers to recover some of their investment in CN. One idea is rationalizing the CN operation for public sale based solely on offering rolling stock, trucking, and real estate for public tender and having government retain ownership of the iron highway. Taxpayers have purchased the asphalt highways in this land. Why not allow taxpayers to keep the iron highways they have purchased?

Just as government levies a fee to use the open road, a realistic fee could be charged to all users of the iron highway. This measure will allow taxpayers to receive some return on the investment that opened this land from sea to sea. This measure has been tried and found to be viable in Great Britain. Granted, some may shout that government has no place in the iron highway, and some may point out that there are wrongs to this plan, but why does this government not allow discussion on this point? This government is quick to shout that it has consulted on many items in the agenda. Why is this government afraid to consult on this measure in the House?

Do not misunderstand my criticism, Mr. Speaker. I am a firm supporter of privatization, a firm believer that private industry can operate an enterprise far more effectively and efficiently than any government. I am a firm believer that private industry can create jobs and economic wealth far better than any government. However, there are several issues in this legislation that do not offer the best value for the dollar to Canada's hard pressed taxpayers. Make no mistake, it was tax dollars that created the CN this government now wants to pass to private ownership. I have no problem with that decision. I only have a problem with the manner in which this initiative takes place.

Taxpayers deserve maximum return for their investment. Taxpayers deserve liquidation of CN real estate assets to pay down the CN debt, which may make this sale unattractive to some purchasers. Taxpayers do not deserve to have their hard earned dollars used to rid this company of one cent of debt while any asset remains.

Taxpayers do not deserve to have a hidden agenda set by this Liberal government, such as head office location or official languages requirement, which other private enterprises can forgo, to hinder the sale to and the profitability of future owners.

I believe I have raised several issues that require answers. I believe I have pointed out to taxpayers why this government is not giving them the best value for their dollar. It is now up to the government to answer those concerns, and I challenge them to do so.

[Bernard Deshaies, Bloc, Abitibi, QC]

Mr. Speaker, I welcome the opportunity today to speak on second reading of Bill C-89, whose purpose is to privatize Canadian National, a decision that was announced in the last budget and is well on its way to being implemented.

However, before this bill does what it is supposed to do, which is to privatize CN, there are a few points I would like to raise for the benefit of the Minister of Transport and his colleagues, and I am referring to the importance of the railways for resource rich regions like the Abitibi in Quebec, the riding I represent in this House. My concern is that this bill should benefit, not penalize the railways.

The railway system was one of the keys to the economic development of the Abitibi and, as we all know, was also instrumental in the development of many other resource regions in Quebec and Canada. I often wonder, when I see these small rural municipalities along the railroad tracks, whether they grew up around the railway station or attracted CN to the area so they could expand.

We have to ask whether this government, like previous governments, will again be wide of the mark with its railway development policy and this new policy of privatization.

Could it be that once again, Quebec has been the first to realize the importance of having a modern railway adapted to the needs of today's economy?

We all know that the decline of our Canadian railways is not a measure of their usefulness, since during the recent debate on

special legislation tabled by the Liberal government to put the railway companies and their employees back to work, much was made of the importance of the railways for the economy in general.

Oddly enough, the railways were called an essential national service. so that the government could force a settlement during this latest dispute, while in our region we had to fight to justify maintaining sections of the railway network in order to preserve our principal means of shipping our natural resources, our mining and forestry products.

Despite the importance of the railways, the reason for their decline is simple: no government has ever made a serious attempt to remedy the situation when there was still time, although it provided substantial grants for operating the railways.

We have been trying to placate unions for too long, instead of searching for efficient or cost-effective solutions for both the employer and the employee. What effort has this government or previous governments made to promote this means of transport over the past 20 years? Absolutely none. We can sum up the actions of the successive governments by the word "cuts" and the federal leitmotiv "we cannot afford it". Infusions of capital were certainly not the best solution, as we can see by the results today.

Over the past twenty years or more, the only notable things about the coast to coast rail system have been staff cuts, abandonment of lines and cuts to client services. Instead of investing in this great Canadian asset and creating jobs, the government is cutting.

On the other hand, the government found a way to meet the needs of western grain transporters, justifying itself by saying that we need international trade and that our wheat producers have to be competitive. Why did the government not place the same importance on the transport of wood and minerals from northern Quebec and northern Ontario?

Natural resources, and the jobs they create, are the foundation of our economy. The executives controlling rail transport in this country exhibited a flagrant lack of leadership skills. They failed to rationalize an essential service and to make it cost effective when they had the chance. They neglected their responsibilities by letting rolling stock age without replacing or improving it.

The longer they let it go, the higher the costs of getting the equipment back on track. They had gotten so behind in their upkeep and replacement of rolling stock that the situation came to a head at the beginning of the 1970s. The situation only worsened under VIA which, with the weather beaten material it inherited from CN, was never able to break even.

Furthermore, the leaders at the time denied the importance of also maintaining efficient, competitive and aggressive passenger service, deeming it less profitable than freight transportation and not essential because road transportation was available by car or bus. Through its policy, the government supported this situation rather than look for solutions that would put the industry back on a solid footing and would serve the real needs of the communities affected by the flood of lost jobs and services.

Is the government trying to isolate distant localities once and for all by taking away their trains, airports, TV stations and even the social programs the people have contributed to in large and ever growing measure? No study has compared the huge costs of highway maintenance with rail line maintenance in northern regions such as Abitibi, with its notorious climate. The potential end of rail transportation could mean increasingly poor roads. The people in my riding know about this problem. They are faced with increasing numbers of trucks on the road, since the railway was not competitive and lacked the services to compete with the trucking industry.

In my region, this type of transportation is causing a lot of problems, since the highways were not designed to take such heavy loads. It is always the same problem, unfortunately-a lack of consultation. Government makes decisions without consulting the regions and without taking their particular needs into account. Even today, privatizing CN as outlined in this bill does not guarantee that services will be maintained in outlying areas. In spite of this, the federal government gives itself the power to interfere in short-line railway operations through clause 16 of Bill C-89.

This is totally unacceptable, since short-line railways were created thanks to the initiative of rail staff and unions, who took the risks that our leaders had avoided taking in the past. These people feel that some sections abandoned by CN and the government can become profitable through sound management. To fulfil their potential, short-line railways also needed the operating flexibility that only provincial regulations could provide.

It would be dishonest for the government to discourage the creation of short-line railways, or to try to hamper the development or operations of those already in existence by interfering whenever it feels like it. The short-line railway in my riding of Abitibi is a very good example of a CN section. It meets with the Lac-Saint-Jean line. We managed to rescue it from abandonment with all the attendant advantages for our region in terms of jobs, economic benefits, development, transport, and so on.

I would also like to take this opportunity to address clause 8 of this bill. As it now stands, this clause is unacceptable. Let me explain. The government plans to sell most of CN, an institution over 100 years old, through the largest share issue in Canadian history, which would amount to some $2 billion.

Like my Bloc colleagues, I deplore the fact that this government did not include in the bill a clause explicitly prohibiting foreigners from holding a majority of shares. Today, I will try to explain to the Minister of Transport and all his colleagues how important it is to encourage local purchase by local investors if possible or any concrete gesture through short-line railways.

Railways have played an important part in the development of my region and many others, and they can still play this role if we make the effort of identifying the needs of people in the regions and helping them meet these needs. May I point out that we are not dependent on the U.S., and yet the danger is real. The presence of Goldman Sachs, an American firm, among the brokers appointed by the government confirms the government's need to issue shares outside the Canadian stock market.

We also know that American investors are used to assessing railway companies. There are at least a dozen on the stock exchange list in the U.S., while in Canada, there is only CP, hence the risk that less informed Canadian investors may not recognize a good deal when they see it. That is why I propose that clause 8(5) be deleted or at least amended to apply only to Canadians.

To conclude, if the railway system was the connecting link for all the regions of this country, and promoted its development, why is it that today, on the eve of the 21st century, we are not able to find innovative ways of making it profitable? The railway is an essential public utility, connecting people and businesses.

If a committee to save the railway system were set up, I am sure that we could come up with solutions, because I am still convinced that solutions do exist and that short-line railways are part of the solution. Personally, I think that privatizing CN is not a bad idea in itself since investors are needed to boost the rail industry if it is to become more performing and modern. And I think that regional business functions may offer solutions.

Privatizing must take place in the interests of all stakeholders: customers, employers and employees. In terms of profitability, CN is not doing as bad as in 1992, with estimated profits for 1994 between $240 million and $250 million.

Perhaps we have the time and resources to make the right choices. Let us take the time to weigh up the pros and cons of Bill C-89 to try to make up for the mass of not so great decisions made by rail officials and our governments over the past 20 years.

[Réjean Lefebvre, Bloc, Champlain, QC]

Mr. Speaker, I am pleased to participate in the debate on Bill C-89, which seeks to privatize CN. First, it should be remembered that the Canadian National was always a symbol of unity, with its lines crossing the country from east to west and going deep into remote regions. However, that symbol is disintegrating, just like federalism, and no longer meets the aspirations and needs of Canadians.

I agree with the Minister of Transport when he says that, given its current structure, CN is not a profitable venture. And CN must remain competitive. Maintaining our national railway in the long term implies government ownership in the short term.

For reasons of profitability, and in an effort to find solutions to eliminate CN's growing deficit, the government must ensure the maintenance of an adequate service, particularly in remote areas which are not served by any other public means of transportation.

Let me give you some figures. My riding of Champlain is served by two CN-operated railroad lines, Montreal-Senneterre and Montreal-Jonquière. According to a 1992 Via Rail survey on the origin and destination of travellers, 56 per cent of passengers on the Montreal-Senneterre line were either going to or coming from a remote destination. Twenty two per cent of the respondents said that their point of departure or their destination was otherwise only accessible by bush roads. In the early nineties, Transport Canada found that 38,000 trips were made on that line, with over 60 per cent of them originating or ending in remote communities or places otherwise only accessible by bush roads.

The same survey showed that 26 per cent of all passengers on the Montreal-Jonquière line were going to or coming from a remote community. Seven per cent of respondents said that bush roads were the only alternative. In 1992, Transport Canada found that close to 20,000 trips were made on the Montreal-Jonquière line, with over 26 per cent of them originating or ending in remote communities or places otherwise only accessible by bush roads.

It should be noted that, after a decrease in the number of users in 1990, there has been a significant increase, in the last two years, in the number of travellers on these two lines, in spite of a lack of marketing and poorer services, a well-known fact. Just think of the environmental disaster resulting from the derailment in the Tawachiche ZEC, close to the municipality of Sainte-Thècle, in my riding of Champlain.

Of course, the railway service in the southern part of these two lines has to compete with other means of transportation. Given the length of the trip, the unaccommodating schedules, their infrequency and our individualized travelling habits, the train in its current incarnation is not competitive.

However, it does contribute to the autonomy of residents of remote areas, it is an efficient evacuation method in case of natural disaster and it could be at the heart of economic development or promote tourism, if it were more enthusiastically supported and its publicity campaigns better targeted.

After reading Bill C-89, one has to wonder how the privatization of Canadian National will affect the maintenance of infrastructures in remote areas and one has to ask oneself if the Minister of Transport can guarantee these people access to public transportation where roads are not adequate?

This question is even more pertinent, since clause 16 of the bill before us gives the federal government the right to meddle with the property of short line railways. It is particularly unacceptable and even economically inefficient and unjustifiable for the federal government to take over all or even some of these small operations.

One of the main reasons that these short line railways can make a profit operating short lines is that they are not heavily regulated by the federal government. These operations need the flexibility which they enjoy under the jurisdiction of the provinces. This federal initiative could discourage the creation of short line railways and limit their numbers. We must not forget that each of these operations saves a railway line from abandonment.

If the government impedes the development of these small operations, an increasing number of kilometres of track in Quebec and in Canada will be abandoned.

Another aspect of Bill C-89 which makes me fear for the future of remote areas is the lack of controls regarding foreign takeovers of CN holdings.

The aim of the Minister of Transport in presenting this bill is highly praiseworthy, but his prime obligation is to ensure that all Quebecers and Canadians, who paid the cost of building and operating the national railway, continue to have the service available to them. One way for this to happen would be to limit ownership of CN to Canadian interests.

Clause 8(5) is unacceptable in its present form, because it allows a foreign group of associated businesses to acquire a majority of CN shares. The only thing blocking an effective takeover in such a situation is the decision by CN directors that the companies in the owner consortium will stand by their statutory declaration to not act jointly. A company acts first and foremost in its own interest and in the interest of its shareholders. If the companies owning CN's shares have common shareholders, they would not need to act jointly in order to achieve the same end.

Therefore, clause 8(5) must be deleted in order to limit ownership of CN to Canadian groups.

In closing, I would remind the Minister of Transport that he is responsible for keeping control of Canadian National within Canada, because it was built with the tax money of Quebecers and Canadians. With billions of dollars of public money already poured into this rail system, it would be intolerable if it were now to be taken out of the hands of Quebecers and Canadians. Furthermore, if we are to keep CN rail traffic from heading south to the American rail systems, it is vital that CN remain under Canadian control.

In the past two quarters, CN has recorded profits of over $200 million. Now that it is beginning to make money, we sell it. CN must be well managed, serving the needs of its clientele and of the remote regions.

[Gilbert Fillion, Bloc, Chicoutimi, QC]

Mr. Speaker, I welcome the opportunity today to speak to Bill C-89 which, as we know, will have the effect of privatizing Canadian National.

This bill will also determine the mechanism that will be used by the government to implement the process. As soon as the legislation is passed, CN will no longer be a crown corporation. It will become a business corporation.

When I began to examine this bill, I soon realized that some of its clauses were cause for concern.

Clause 6 of the bill allows the transfer of CN property to the government. Under this clause, the government will be able to take possession of CN affiliates and real estate not directly related to the railway sector.

We also know that the minister made it clear he wanted CN to keep only those assets directly related to rail transport. Assets related to other sectors will be privatized separately.

I would like to take as an example the intermodal station in the riding of Jonquière, next door to my own riding. If the station is closed, all freight will be transferred to Quebec's highway network, more specifically the highway through the Parc des Laurentides wildlife reserve.

We know the Minister of Transport has no long term policy for the road network, which means that the entire road network in Quebec will be penalized. Safety will be a casualty as well. People will have to cope with larger numbers of heavy trucks on our roads.

To me, this clause rang some alarm bells. We know that CN affiliates include businesses that are not in very good financial shape but still manage to do the job thanks to CN.

One wonders whether these businesses will be viable without CN and whether they will maintain the same employment levels. Will these levels be maintained? I think this is a very important question.

Eighteen months ago, throughout the election campaign, the Prime Minister's main platform was creating jobs for the people of this country. Eighteen months later, we see this promise was not kept. Even worse, in the last budget the Minister of Finance failed to include measures for direct job creation. I would even

go so far as to say that the budget's impact will be the reverse of what was promised in the red book.

In my riding, things are very bad, with over 30 per cent of the population on unemployment insurance or welfare. Of this group, a number of people have decided to give up looking for jobs. They have stopped looking for jobs because there are none. We are gradually killing off an entire generation.

Jobs in CN affiliates must be guaranteed so that we do not get thousands more unemployed people looking for jobs. This is particularly crucial when we realize that this government is doing little or nothing to deal with this problem.

The Prime Minister seems to have forgotten the golden rule which says that when you are the boss, never take on a task your assistant will not be able to do. Let me explain. Clearly, neither the Minister of Labour nor the Minister of Finance are in a position to keep the government's promise that it would put people back to work and provide for economic recovery.

CN itself has concerns about this bill. I will take the specific example of AMF Technotransport Inc. of Montreal, which employs 1,300 people but, on its own, without the support of CN, it may get into financial difficulty, which will add to the unemployment statistics of the province.

Again, this bill does not contain any provision to protect jobs in subsidiaries. This could be very dangerous, leading to jobs cuts, layoffs and perhaps even businesses closing down. We cannot afford this kind of luxury.

Another clause that would require further consideration is clause 8. My colleagues mentioned it earlier, but I would like to address it anyway, particularly as regards paragraph 5, which, as it stands, authorizes a foreign group of corporations which are associates to acquire majority control of CN.

The only thing that stands in the way of an effective takeover in such circumstances under this clause is the judgment of the CN board of directors, which they have shown in negotiations, and collective bargaining in particular, with employees at every level. Collective agreements were signed that were considered generous at the time, but then the company only tried to take these hard won rights away from the workers later on. They tried to do so by seeking legislation like the bills that were brought before this House a few months ago. Knowing how much common sense the CN directors responsible for determining whether the corporations in the owners group are complying with their statutory declaration not to act in concert really have, I doubt this can be achieved.

Everybody knows that corporations are guided first and foremost by the interests of their shareholders, and that is absolutely normal. So, if the corporations that own CN all have the same shareholders, they do not need to act in concert to act along the same lines. It is therefore essential that clause 8 be amended.

Need I remind you that this railway system was built with money provided by the taxpayers of Canada and Quebec? It would be unacceptable for control over a railway in which billions of dollars of public money were invested to be lost to Canadians and that CN traffic be redirected toward U.S. rail systems.

Finally, at a time when the provinces are asking the federal government to give them more flexibility and to withdraw more and more from certain jurisdictions, clause 16 authorizes the federal government to interfere in a wide variety of provincial jurisdictions through short-line railways.

In closing I would like to add that these entities should be protected so that they can be sold to private sector enterprises, but enterprises truly owned by Canadians and Quebecers.

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

Mr. Speaker, Bill C-89 is a very important bill to the railway industry and for the future of transportation in the country. I appreciate the number of members who have spoken and the vast number of questions which will be answered in due course in the committee hearings to commence tomorrow.

I want to extend appreciation to the opposition parties, the official opposition, the Bloc Quebecois and the Reform Party, for their support in principle of the bill. I understand it is conditional support at this point in time and that we will endeavour to answer their questions at committee. I should point out that the NDP continues to be in a time warp. It believes the government must own and operate everything to ensure that it is run efficiently. Most members have indicated that we have a tremendous opportunity to create a new CN with greater efficiencies.

I highlight two questions that have been posed to the government. The first concerns no restrictions to foreign investment. The Canadian taxpayer has helped to build Canadian National and the Canadian taxpayer deserves to get the maximum benefit for that investment. Therefore the experts have indicated to us that to ensure the maximum benefit, one cannot impose certain restrictions on the share offering to try to get the best possible value for Canadian National.

Second, we have put a restriction on individual shareholdings to a maximum of 15 per cent. A number of opposition members have indicated that certain unaffiliated or unrelated companies could band together to essentially take over Canadian National. I want to say with regard to that concern that the experts have told us it is impossible. The reason we have drafted the bill with

such detail is to ensure that unrelated companies and individuals could not band together to essentially have control of Canadian National.

I want to make two other points. The Minister of Transport indicated this morning that regulatory reform would be coming up soon. It is as important as CN's privatization to ensure that we have an efficient railway transportation system.

We all agree that transportation is key to our competitiveness, to creating jobs and to exporting. That is why we want to create a national, affordable integrated railway system in the country that will allow us to be able to move goods and people as efficiently and as effectively as we possibly can, and to ensure that those jobs remain in the country and that we continue to export.

Bill C-89 is going to committee and when it comes back I am sure we can look forward to the support of all members of the House.

[The Acting Speaker (Mr. Kilger)]

Pursuant to Standing Order 73, it is my duty to interrupt the proceedings and put forthwith the question on the motion now before the House.

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

[Some hon. members]

Agreed.