Mr. Speaker, I am pleased to have the opportunity today to speak in support of Bill C-89, an act to commercialize Canadian National at the third and final stage.
This undertaking is an important element in ensuring the continued success of the Canadian transportation system. The geographic nature of the country means the efficient transportation of goods is intrinsic to our producers and manufacturers' being competitive in the global marketplace.
Specifically, our exporters who use rail transportation to get their goods to market cannot compete on the global scale unless railways are cost efficient and effective in delivering their goods.
Commercialization of CN is one of the government's efforts to ensure a competitive and viable rail system in Canada.
We are also moving to reform the regulatory framework governing transportation to ensure it helps foster competition and serve shippers well, which is what the Minister of Transport did today. By putting CN on a level playing field and removing the often costly public policy demands it has faced as a crown corporation, the government is working to ensure we will have a healthy national railway to serve Canadians throughout the country into the future.
The bill before us aims to allow the government to sell all of its equity in Canadian National as a public share offering. In order to do so the government had to make sure enough capital would be available to absorb this issue, expected to be the largest initial public offering in Canadian history.
Recognizing the Canadian equity market could not absorb all the shares on its own, the government sought to structure the bill to allow for the maximum number of Canadians to take part as well as foreign investor participation. To this end we have not limited foreign investor share purchases any more than those of domestic investors. However, in trying to maximize the interest in this share issue we also recognize the desire to ensure CN will not be controlled by a single individual, whether Canadian or otherwise.
Therefore in order to ensure a broad distribution of these shares a limitation has been placed on the shares which any individual or associated group of individuals may own at a 15 per cent level. This level of restriction is both low enough to ensure no hostile takeover is possible and high enough to provide investors with some influence on management actions and decisions should they desire.
The government felt it was important to include this restriction. However, let me assure the House that recognizing the negative effect which restrictions could have on value, we were very careful not to include any limitations which would prevent us from maximizing the return to the taxpayers of Canada in this share sale.
The obligation for CN to retain its head offices in Montreal and to operate in both official languages will not affect the value. We could not include any sort of operating restrictions on CN's going forward because any sort of requirement in this legislation for CN to maintain a specific operation would have dampened investor interest in these shares given the possible effect on the railway's revenues.
It can be tempting for some to ask CN to maintain certain of its operations while it is still a crown corporation. However, CN can no longer be used as a tool of public policy if it is to serve Canadian shippers well. The government's objectives must be met through transparent and direct means, not through entities such as railways.
In committee Bloc members had originally indicated support and exemption from the bill for the Quebec bridge. The government has indicated in the past this is a perfect example of the government and CN's being committed to the maintenance of that bridge which is part of an important transportation corridor for Quebec, Quebec City and the area. Obviously it needs to have public participation by way of the provinces.
CN has already committed $1.5 million to the maintenance of that bridge, key to its rail network. Seventy-five per cent of the traffic on that Quebec bridge is vehicular traffic, which is the responsibility of the provincial government. The president of CN has invited the provincial government to participate more fully in a equitable sharing of those expenses. Hopefully Bloc Quebecois members will use their influence with the provincial government to ensure it pays its part in maintaining that historic bridge which serves Quebec City and its population and which is also a monument to what we have built in Canada together.
CN has already sold its exploration division, the proceeds of which will be applied to debt reduction. It is important that CN be privatized in an attractive way to investors. It has extensive real estate holdings and other non-rail assets, some of which have considerable value.
However, the government has been advised that investors will be looking for pure rail play and will not pay for CN's non-rail assets. Accordingly, these assets which have considerable value will be transferred to the government for subsequent sale.
Some of CN's property holdings are marketable in the near term and will be sold to reduce the debt. The CN commercialization act provides the Minister of Transport with the authority to transfer selected properties from CN to the government prior to the sale offering. CN will receive credit at fair market value for these properties.
One of the difficult aspects of reducing CN's debt will be to achieve a balance between what must be done to ensure the shares of CN are marketable, what CN must have at a minimum to start off on a financially viable footing and what impacts there may be on other players in the industry, notably CP.
The railways are an important part of the transportation system in Canada. Commercializing CN using the guidelines of Bill C-89 will put CN on a level playing field with its competitors. In conjunction with regulatory reform the government has introduced today, we will ensure a viable rail system up to the challenge of helping Canadian shippers compete in global markets of the future.
The government supports the bill and we encourage members on the other side to do likewise because it is an important moment in Canadian history, allowing one of our crown corporations to become a full player in the private sector and give the country what it needs, efficient, affordable and reliable rail service.