Mr. Speaker, when Bill C-89 was first introduced, I stated that I supported the intent but not the content. Since that time the bill has been through committee, witnesses have appeared, amendments have been offered but very little has changed.
Speaking first of some of the restrictions in the bill, I cannot see any business reason for the insistence that CN's headquarters remain forevermore in any one city. Contrary to the Bloc's rhetoric, this is not a Quebec issue.
The concern on this clause is that a private company should not be restricted to any one location no matter where the location
is. I would have the exact same concern if the restricted location were elsewhere. The issue is the restriction, not the location.
During debate at report stage the Liberals stated that the headquarters are in Montreal, they have always been in Montreal and it is reasonable that they remain Montreal. Therefore, this is a good restriction. If the last part of the statement is true, then I would ask why they need the restriction placed into the legislation.
Likewise another restriction requires that CN maintain the federal official languages policy as if it were still a crown corporation. This is not necessary. Again, the Liberals used the illogical approach that CN is already following the Official Languages Act and therefore would continue to do so in any event. If this is practical to do, CN will likely continue to do so. If it is not, then it should not be required to continue it, at least not indefinitely.
An alternative which I offered on both of these clauses as well as the clause dealing with share restrictions was to include a sunset clause which would have provided that these restrictions would have been in place when the new company was formed initially but cancelled after a five-year period. CN would then be guided by market needs instead of political needs. This seems to me to be a reasonable compromise between Liberal needs and marketplace common sense. Unfortunately the words reasonable and compromise do not seem to be in the Liberal vocabulary.
The third restriction in the legislation is restricting the maximum number of shares in CN owned by any one person or company to 15 per cent. Most committee stage interveners from the financial sector stated that there was no particular advantage to this restriction but it would not cause a problem in the short term. The obvious implication is that this would cause problems in the long term.
The 15 per cent restriction prohibits shareholders from joining together to either ensure that directors will follow the will of the shareholders or to remove certain directors who are not acting in the best interests of the shareholders of that company. For example if a significant number of CN employees decided to buy into the company and the total number of shares held by various employees totalled more than 15 per cent, at any time they all voted the same way it could be ruled by the directors as collusion and their votes would not count. This serves to entrench management which hardly can be considered good long term policy.
This also inhibits some company which wishes to bring a new management style to what may be a very tired and inefficient company from buying in. If this company is able to buy a sufficient number of shares to ensure that its new management policies can be utilized and brought forward it would hope not only to get a return on its investment in terms of the share value but also appreciation of the capital value of the company itself through the innovative approach that it may be able to bring into the company and through ensuring that this comes to fruition.
There are those who will argue that some other companies have similar restrictions and therefore this one is okay. I would answer that by pointing out that over time many mistakes are made. For example we used to have autocratic Conservative rulers in Ottawa. Voters, the shareholders of Canada, partially corrected that mistake. Now we have autocratic Liberal rulers who are a transitional mistake that we must put up with until the next election. Only then will we have government representatives who write legislation based on the people's needs rather than political needs.
As in the case of the other two restrictions, I tried to find a reasonable compromise by amending this section with a five year sunset clause. Once again those words were not in the Liberal vocabulary.
The next section deals with Canadian ownership. Bill C-89 does not provide any restriction to foreign ownership, nor in my opinion should it. Financial experts have stated that it would likely take an international share offering to find enough investors for the CN shares. If that is the case, so be it.
What if there are enough investors in Canada who want to be involved in the ownership of a sector of Canadian heritage that it could in fact be sold here? Alternatively, what if there are a number of Canadians who wish to buy some portion of the shares but are scooped by foreign purchasers who are quicker off the mark when the share sales begin? Do we not have some obligation to Canadians?
I proposed a very simple solution which would have seen the shares available to Canadians and Canadian corporations only for the first 90 days. In terms of international sales all this would have done is delay the sales to the rest of the world by 90 days. This seemed to be a very reasonable approach to protect the rights of the people we represent without unduly restricting foreign sales. Of course I am again forgetting that the concept of representation is just as foreign to the Liberals as the words reasonable and compromise.
The next problem in the legislation that I tried to deal with is the period of continuation of the rail line to Atlantic Canada. I proposed an amendment that would require CN not to sell or abandon the rail line between Montreal and Halifax for a period of 10 years.
The Halifax Port Corporation testified before the standing committee pointing out that the new CN Sarnia tunnel gives Atlantic Canada excellent access to the American midwest. As such, it believes that by investing in upgraded port facilities it will secure handling of new high capacity, deep draft freighters
and thus the economic future of the marine industry in Atlantic Canada.
The same transport committee that rejected my Atlantic amendment recently tabled a marine study which recommends that ports such as Halifax should be commercialized and must obtain their financing on the open market without government guarantees. I happen to agree with this but once again the word reasonable comes into play.
For many years the government has interfered with the marketplace through government ownership, subsidies and regulations. It is obvious that the current government has looked at Reform policies and the popularity that those policies have generated. While anxious to try to adopt some of our ideas and policies, the Liberals always try to change things enough so they can call the ideas their own and in doing so lose much of the common sense that our original policies contained. The Atlantic Canada situation is a classic example.
If the Halifax Port Corporation goes to the private sector for financing without government backing, the private sector is going to want some assurance that the all important rail link to central Canada and the American midwest will remain for at least long enough to ensure a return on investment.
The purpose of the amendment is not to protect the rail line forever but to ensure its operation for a transitional period of 10 years. This should give Atlantic Canada the opportunity to develop its marine operations to a highly viable degree after which normal private sector determinations of future CN operations will rule. If nothing is done, Atlantic Canada will risk losing new freighter business to the American east coast ports and the cycle of Atlantic Canada's economic dependence on Ottawa will continue. Perhaps that is the government's real strategy.
I believe that this amendment is in keeping with my position on the other restrictions in that I can live with the other restrictions as long as they have a time limitation. My Atlantic Canada amendment did have that time limitation.
The government does not seem to mind restrictions dealing with shares, language and headquarters locations, so why this sudden rejection of one that will promote economic independence in Atlantic Canada? Perhaps consistency is yet another word that is not in the Liberal vocabulary.
I raised at committee another point of concern by way of an amendment. I tried to ensure that the sale of CN shares would not be prone to problems from insider trading. The argument from the Liberal side was that this was a wholly unnecessary amendment because the securities act covers insider trading. However, it only covers insider trading once the shares have been transferred to the stock exchange. If the government chose to sell any of those shares in advance of transferring all the shares to the securities commission, this would not be covered by the provincial regulations.
We do have an undertaking from the government that it does in fact intend to transfer 100 per cent of the shares. Thus they will be covered by the provincial securities regulations. We will certainly monitor that closely and see that the government lives up to its word on this.
The biggest concern I have about Bill C-89 is the minister's unlimited power to reduce or even eliminate CN's debt. CN currently owes $2.5 billion. Financial and industry experts have testified that in order to be able to sell the shares of CN they must have an investment grade bond rating of BBB. To ensure this, the debt will have to be reduced to about $1.5 billion.
I introduced an amendment in committee to restrict the amount of taxpayers' money that the minister could use for debt reduction to only the amount necessary to reduce the debt to $1.5 billion after first reducing it by all available CN funds on hand and excessive cash flow requirements along with the proceeds of sale of all non-rail real estate assets. The Liberals rejected this as too restrictive in that the exact figure to provide a BBB rating is not known for sure. Unlike the Liberals, the words reasonable and compromise are in my vocabulary.
I changed and reintroduced my committee amendment at report stage. This time instead of using the dollar amount of $1.5 billion that the Liberals had objected to, I restricted debt reduction to the amount necessary to produce an investment grade bond rating of BBB after following the other reduction steps in the original amendment. Even though this amendment followed the very line of logic offered by the Liberals, they turned it down. It seems that the Liberals are still enamoured with the concept of a blank cheque.
Bill C-89 is the first time I have been involved in the new process of sending a bill directly to committee after first reading. The rationale for this according to the Liberal government was that if a bill was dealt with in committee before real debate in the House, it would be much more amenable to amendments.
This has clearly not been the case. The amendments I proposed in committee were reasonable and had the support of many of the interveners. One of my amendments dealing with the preservation of the Atlantic Canada port viability even received the support of one of the Atlantic Canada Liberal MPs but was defeated in a tie breaking vote by the committee Chair.
One of the arguments I found really interesting was brought forward by the hon. Parliamentary Secretary to the Minister of Transport on this part of the Atlantic amendment that I offered. It was the idea that what was I doing promoting a restriction on
private enterprise, my being one of these infamous free enterprise Reformers. As I stated earlier, I do not see this as a long term problem. It is a transitional thing from where the government has total manipulation of the marketplace through intervention, through government ownership, through subsidies, through special regulations.
I thought this was a very reasonable thing to bring forward. It was asked for by Atlantic Canada. It had the support certainly of the Atlantic members of Parliament I would think even on the Liberal side. It is extremely unfortunate that in raising this in committee I was not able to bring it up at report stage. It would have been very interesting to see the compromise struck with the Atlantic members of Parliament between serving their region or following the dictates of the Prime Minister.
It seems that the only reason for moving to committee after first reading, which is the new procedure that is now often being used and pushed, is to fast track Liberal legislation by eliminating much of the public debate. This is just another example of the current system of autocratic rule. It certainly does not seem to indicate that the new procedure really works the way it was meant to work.
This now leaves me to consider whether or not to support the overall intent of the legislation to privatize CN Rail, something I have spoken in favour of since before the last election.
The open ended restrictions dealing with share sales, the location of headquarters and language requirements are not insurmountable problems. After all, we are only two years away from the next election after which I am sure those problems can speedily be cleared up. I can adequately deal with the Atlantic port problem at that time also because we do not expect the Liberals to be in a position to block that any longer.
This then only leaves the problem of debt reduction. In an attempt to resolve this, I wrote to the Minister of Transport through the transport committee. What actually happened is that the minister appeared but he was only available for an hour and a half. When I asked him a 30-second question I got a five-minute answer which, very common to question period, did not answer the question at all.
I asked the minister if he would respond to written questions submitted to the committee while it was still sitting. He indicated that he would. I set out a list of 12 questions which I submitted through the committee and I received the answers while the bill was still under committee study. Therefore, those questions and the subsequent answers have become part of the record of the committee study on Bill C-89.
The response which I received from the minister indicates that he intends to pay off no more debt than is necessary to produce an investment grade bond rating of BBB. I do not know why the minister is prepared to commit to this on paper but not in legislation. I would have to guess that this is the Liberals' method of accepting reasonable measures from Reform while trying to hide what they are doing from the public.
On the basis of the minister's written, on record commitment I am prepared to support Bill C-89.
I would like to quote an excerpt from a letter. It reads:
Without a doubt, Canada requires a first-rate transportation system that is able to service every region. The federal government must play a role in maintaining and developing that network, yet it remains to be seen whether the damage wrought by the Conservative's policies of massive deregulation of the transportation sector can be completely undone. Their continued tolerance of rail line abandonments and consideration of proposals for the privatization of CN Rail have done nothing to clean up this mess.
How these pre-election statements do keep coming back to embarrass their authors. The author of that letter is the current Prime Minister. He wrote it while he was Leader of the Opposition. It was written to the hon. member for Moncton only days before the last federal election.
Looking at some of the items which were in the letter, the Prime Minister stated that Canada has to have a first rate transportation system, able to serve every region of Canada. If that was his intent only days before the election, why when he walked across the floor did he suddenly decide that we did not need to ensure the transitional preservation of the CN Rail line to Atlantic Canada?
He also talked about the damage of the Conservative policies of massive deregulation. This is particularly interesting on the very day that we are having the introduction of a bill which will see massive deregulation of the transportation sector. He talked about the tolerance of rail line abandonments when the bill deals with improving, enhancing, speeding up and simplifying rail line abandonment.
It seems that the more reasonable position taken by the Reform Party finally got through to the Liberals. We have been on record since before the last election that privatization is not only a good idea, it is essential. More recently I testified before the all Liberal task force on CN Rail, reiterating that CN must be privatized. I am glad they are finally listening.
I hope that if the Liberals intend to use more Reform policies in the future that they come to us first so we can help them get it right the first time. Bill C-89, for all its flaws, is still a big change from the Liberal position at the beginning of this term of Parliament and I am pleased that we were able to show them the way.