Mr. Speaker, we are debating whether Bill C-91 should be referred to the committee before second reading. In many ways that is positive in the sense that it opens up the debate and allows elements to be raised which would otherwise be restricted because of the conventions of the House. I hope that will be the case and that it will not be a way to circumscribe or limit certain amendments or debate which might otherwise receive the light of day in the House.
I have concerns about Bill C-91 which we ought to look at before we submit it to committee. Changing the name of this bank I do not think will change anything at all. It will cost a lot of money to print new stationery, to put up all the new signs and all those things. What will changing the name do to the actual purpose, function and operation of the bank? I submit it will do nothing.
It sets up a crown corporation which has as its capitalization part a number of instruments which are being used. It has common shares which have a par value of $100. It has preferred shares which are unlimited in number, as are the common shares. The preferred shares have no par value. Hybrid capital instruments will be part of the capitalization. These will be paid in capital by the Parliament of Canada by a parliamentary appropriation but there will be no indication as to how much. There will be retained earnings and contributed surplus to a maximum of $1.5 billion.
There are other provisions which I will draw to the attention of the House, particularly sections 21 and 22, specifically section 22(e). Section 22 includes the ancillary powers but section 22(e) is particularly interesting. The bank may acquire, hold, exchange, lease, sell or otherwise dispose of any interest in real or personal property and retain and use the proceeds of disposition. That kind of provision raises some very interesting questions. How much real estate will the new business development bank of Canada be prepared to buy? What will it do with that real estate? Will it deviate from its traditional role, which
has been to lease real property in which it carries on its business, or will it develop a series of branches throughout the country?
Other sections of the bill also give to the board, to the Minister of Finance and to the cabinet powers which rightfully belong to the Parliament of Canada.
Section 27 gives some very specific powers to the board:
Subject to the approval of the governor in council on the recommendation of the Minister of Finance, the board may make bylaws
(a) setting out the rights, privileges, restrictions and conditions attaching to preferred shares, creating one or more additional classes of preferred shares and generally determining the rights and obligations of the holders of preferred shares, including
(i) limiting the right of the shareholders to specific dividends or repayments, whether fixed or variable,
(ii) authorizing the purchase or redemption of the shares by the bank, either at the bank's option or at the shareholder's request, and
(iii) limiting or extending the rights of the shareholders in any other way;
That is the second class of shares which makes up the capital of this bank, which really gives to the board the authority to determine how the bank shall be structured. That kind of power ought not to be given to a cabinet. It ought to exist with Parliament because this bank through the Minister of Finance and the cabinet, given this provision, allows that group to create a liability of $18 billion for the Canadian taxpayer.
Who is the shareholder talked about in section 27? The shareholder is the Government of Canada. The Government of Canada now will be told it may or may not own these preferred shares. It may or may not be paid a dividend. It may be paid this much of a dividend or this little of a dividend. That becomes the issue.
Other provisions of the bill ought to be of direct interest to each of us. In particular, I would like to look at subsections 18(4) and (6).
Subsection 18(4) states that the bank may enter into any transactions for the financial management of the bank, including any financial instrument of financial risk such as interest rate or currency exchange agreements, options, futures contracts and any other similar agreements.
Another way of looking at this is that these are derivatives. It permits the personnel of the bank to enter into futures contracts, options, purchasing and selling of options with public money which should be considered a sacred trust. If we look at the way the options market operates and the futures contracts work it means the bank is speculating with Canadian money or has the opportunity to do so.
I am sure the argument will be presented that it will use this only for purposes of hedging interest rate and currency fluctuations. If the bill specified that there were limitations one might not have such grave concern. Because there are no limitations it does not prevent the manager or the president or whoever is in charge from getting into the market directly. It should be a major concern to all of us. Just remember what happened in the Barings bank.
Other sections of the bill should give us grave concern. The designated minister is identified in section 21. Who is the designated minister? At the moment it is the Minister of Industry. It is possible that cabinet could designate any other minister. For example, FORD-Q is one of the regional development portfolios. We heard the Minister of Industry say this morning that one of the purposes of the new mandate is to expand it so that it would include regional development and things of that sort.
Would it not be interesting if for certain matters the Minister of Human Resources Development were designated as the minister of the bank and could direct the bank? In another instance it could be the minister of FORD-Q and in a third instance it could be the Minister of Industry and so on down the line. There is nothing in the bill to prevent that sort of thing from happening.
The obvious questions we have to ask is what can this bank do that the other banks cannot do. What can the other banks do that the this bank cannot do? If it is none of those things and this bank is doing nothing more or less than what the other banks are doing, what in the world are we doing this for?
Some specific arguments ought to be addressed as well. The indication is that this bank shall be complementary to the existing financial institutions, particularly the banks. Then the bill does not define the word "complementary". The only reference in the proposed bill that deals with the previous act is that complementary is taken as that section which deals with the previous section saying that it must be the bank of last resort. In other words, the applicant has to be refused by some other institution before he can apply for money here.
Does complementary mean that it will make loans of an operational capital requirement? Does it mean that it will become a deposit taking institution? What will the Business Development Bank of Canada do that other banks do not? I submit that it will do nothing more or less than is currently available in the marketplace and it is not required.
I want to throw out two more questions. First, will the bank be able to expand its network of offices? Second, which is more important, is: What is a hybrid capital instrument? It is not defined in the bill. When asked what this means certain officials were unable to answer that question but more significantly than that hybrid financial instruments are different from any other capitalization that is provided for in the other sections of the bill.
The other one says that common shares, preferred shares and hybrid capital instruments are not given to the government but may be given to private individuals or persons other than the government. What does it mean?
We must answer these questions before the bill is presented seriously to the House.