Mr. Speaker, in the spirit of co-operation, with regard to the amendment proposed by the Reform Party to its Motion No. 7, I do not believe we have any objection to that technical amendment but we are opposed to its Motion No. 7 and I will deal with that now.
Motions Nos. 6, 7 and 8 each propose amendments to clause 12 which provides the minister with the ability to deal with CN's capital structure. In order for CN's share issue to be attractive to investors and for CN to affordably finance its operations into the future, CN's debt needs to achieve an investment grade bond rating prior to the sale. In order to achieve such a rating CN's debt will need to be reduced. The exact magnitude of the debt reduction will not be known until the bond rating agencies begin to familiarize themselves with CN and discourse between the agencies, the government, and CN addresses the issue.
Any debt reduction will have three parts. First, in order to reduce its debt CN has already undertaken to sell several of its non-rail assets, such as CN Exploration. The proceeds from such divestitures will go to debt reduction. Second, in the spirit of selling CN as a core rail operation the government has proposed that CN transfer its non-core real estate assets to the government for fairconsideration prior to the share offering. This will also help to reduce CN's debt.
Any further debt reduction will be carefully considered by the government, taking into account the need to put CN on a level playing field with its competitors and ensure that it will remain viable in the future. However, the minister needs to retain maximum flexibility in making these decisions in consultation with the Minister of Finance. Any requirements to have such actions reviewed and approved by the House of Commons, a committee of the House, or the auditor general would limit the minister's flexibility and could therefore impede the transaction from proceeding in a timely and efficient manner, consequently affecting the value.
Therefore, these motions cannot be supported.
Motions Nos. 9 and 10 and the new clause 13.1 the opposition is proposing would remove from the Minister of Transport the flexibility he requires in dealing with the transfer of assets in the context of CN commercialization.
The commercial nature of the transaction dictates that any transfer be efficient and timely. The requirement to report to the House or have the auditor general review any such transaction before the transfer can proceed would seriously impair the minister's ability to direct that such transfers be undertaken in a timely manner. By impairing the efficiency of the transfer process the value of the transaction may be affected.
Moreover, to the extent that such assets are transferred to another crown corporation, they would be recorded in the crown corporation's corporate plan, a summary of which would be tabled in Parliament on an annual basis. This would allow all members to review the value of the assets in that crown corporation on a regular basis. In addition, the auditor general would have the opportunity to review such transfers in the normal course of events.
In addition, the commercial nature of these assets in some cases calls for confidentiality, which could be jeopardized should the minister be required to report any such transaction to the House.
Therefore, because of the need of timeliness, efficiency, and confidentiality, these amendments cannot be accepted.
I want to take a little more time with respect to Motion No. 11, which deals with the CN employees and pensioners. We also agree that these men and women who have worked and continue to work for a great corporation need to understand and know how they are going to be treated with regard to their CN pension.
The pensions of all CN employees and pensioners are protected in a number of ways, but first under the Pension Benefits Standards Act, 1985. They will continue to be protected following the commercialization of CN. The Pension Benefits Standards Act, 1985, sets out the rules for pensions of all federally regulated companies. It therefore is a means by which to treat all those who are members of such pensions equally, including employees and pensioners of CN.
Following the sale of Canadian National to private investors all the pension promises made under the CN pension plan will continue to be honoured. The CN pension plan will not participate in the share offering. The CN pension plan is a defined benefit, which means that regardless of the vagaries of the marketplace an employee is promised a pension. That pension is calculated according to a fixed formula and the only variables in the formula are average earnings and years of service. The plan is federally registered under the Pension Benefits Standards Act, as I mentioned before, which is administered by the Office of the Superintendent of Financial Institutions, and under the Income Tax Act, which is overseen by Revenue Canada.
Pension promises are documented in the text of the CN pension plan, which describes the entitlements of the 50,000 pensioners and surviving spouses as well as the approximately 25,000 active members. These pension promises are supported by the assets of the CN pension trust fund, which do not form part of the assets and revenues of CN. Legal title to the assets of the fund is held by the trustee of the fund, the Montreal Trust Company of Canada.
The CN pension plan and fund, in addition to being regulated by the Office of the Superintendent of Financial Institutions and Revenue Canada, are audited by the company's internal auditors as well as by external auditors. The financial, actuarial, and administrative aspects of the CN pension plan are also reviewed by the CN pension board, which is composed of five company representatives, five union representatives, five pensioners, and one representative of CN non-scheduled employees. As well, the CN pension plan and fund are subject to periodic actuarial evaluations by the external actuary, whose reports are presented to the CN pension board, submitted to the board of directors, and filed with the regulatory authorities.
The foregoing processes exist to safeguard the accrued pension entitlements of all members of the CN pension plan, pensioners, surviving spouses, and active members. A condensed version of this information was printed out on the April pension statement of all pensioners in answer to their most commonly asked question about the security of CN pensions. The April 1995 issue of "Keeping Track", a monthly newsletter sent out to all active employees and pensioners, featured the chart.
The government is committed to protecting the pensions of CN employees and the new corporation. This is our commitment. The amendments as proposed by the opposition would open it to employees of federally incorporated companies coming forward and seeking their own additional protection. This could potentially lead to a mixed bag of statutes protecting different players with different benefits for each group, rather than the consistent and clear protection currently found in the single piece of legislation. This inconsistency would not serve Canadians as efficiently as keeping all provisions under a single act.
Therefore, since CN employees and pensioners already have protection under the law, which would not be affected by commercialization of CN, the government does not support this amendment.
