House of Commons Hansard #88 of the 35th Parliament, 2nd Session. (The original version is on Parliament's site.) The word of the day was mmt.


Question Passed As Order For ReturnRoutine Proceedings

10:20 a.m.


Paul Zed Liberal Fundy Royal, NB

Mr. Speaker, I ask that the remaining questions be allowed to stand.

Question Passed As Order For ReturnRoutine Proceedings

10:20 a.m.

The Speaker

Is that agreed?

Question Passed As Order For ReturnRoutine Proceedings

10:20 a.m.

Some hon. members


On the Order: Government Orders:

October 21, 1996-Leader of the Government in the House of Commons and Solicitor General of Canada-Second reading and reference to the Standing Committee on Procedure and House Affairs of Bill C-63, an act to amend the Canada Elections Act and the Referendum Act.

Canada Elections ActGovernment Orders

10:20 a.m.

Windsor West Ontario


Herb Gray LiberalLeader of the Government in the House of Commons and Solicitor General of Canada

Mr. Speaker, I move:

That Bill C-63, an act to amend the Canada Elections Act and the Referendum Act, be forthwith referred to the Standing Committee on Procedure and House Affairs.

I want to begin by speaking briefly about the objectives of the bill. This bill would create a permanent register of electors and would set 36 days as the minimum period for a federal election campaign. The bill achieves this by a vast series of amendments to the Canada Elections Act.

Following passage of the legislation, one last door to door enumeration would take place outside of a federal electoral event. This last enumeration would likely be conducted in the spring of 1997. The enumeration would serve as the basis for the preliminary list of electors to be distributed within five days following the issuing of the writs for the next federal general election. The enumeration would also serve as the basis for a permanent register of electors which would be fully operational for other subsequent electoral events. The campaign for the next general election and subsequent elections therefore would last a minimum of 36 days rather than the present 47 days, of course, if the bill becomes law in a timely fashion.

The permanent register of electors, once created, would be updated with information from existing federal and provincial databases; names, addresses and birth dates from income tax returns filed with Revenue Canada; lists of new Canadian citizens compiled by Citizenship and Immigration Canada; and data from provincial registrars of vital statistics and provincial registrars of drivers and vehicle licences. The permanent register would also be augmented by proven provincial electoral lists.

I want to stress that personal information taken from federal data sources to update the register would be used only with the active informed consent of the individuals involved. I understand that the federal privacy commissioner had been fully consulted before the preparation of this legislation. I understand he has expressed himself as being satisfied with the steps that have been taken to meet concerns he had earlier expressed on issues of privacy.

This bill stems from the report of the Royal Commission on Electoral Reform and Party Financing, the Lortie Commission, and from the recommendations made by the Chief Electoral Officer of Canada.

I am very happy with the extensive consultations held with the three recognized political parties and the other parties in the House of Commons before this bill was drafted. I want to thank all the members of the Standing Committee on Procedure and House Affairs as well as Mr. Kingsley, the Chief Electoral Officer, and his staff for their contribution and efforts in carrying out this project.

The permanent register, which would eliminate door to door enumeration, together with a shortened election period would save the federal government about $30 million for each federal general election. Actually, the saving is not for the government but ultimately for each and every Canadian as taxpayers. Sharing the register with provinces, municipalities and some school boards for their elections would generate additional savings for Canadians as provincial and municipal taxpayers. I should add that the shortened election period would generate about $8 million of the $30 million savings to the federal government and federal taxpayers for each federal general election.

To conclude, a few words about why I believe this bill should go to committee before second reading. While the objectives of the bill are simple, achieving them requires a large number of complex amendments to our existing election law. This is the kind of measure for which the new approach of studying a bill in committee before second reading is, in my view, ideal.

If the amendments that Bill C-63 proposes require adjustment or fine tuning, if there are further amendments to help achieve the purposes of the bill and its objectives more effectively, then it is easier for the government to consider positively and in fact accept amendments before the principle of the bill is voted on at second reading in the House. I want to say that I am certainly open to positive consideration of further amendments that would help the system proposed by the bill to work better in the interests of all Canadians.

It is also proposed that the bill go to the procedure committee of the House of Commons where there are a number of members of various parties who are already familiar with the issues and concepts involved with this bill. Therefore, I commend to the House not only the bill itself, but this motion that it be referred to the procedure committee for detailed study before second reading.

Canada Elections ActGovernment Orders

10:30 a.m.


François Langlois Bloc Bellechasse, QC

Mr. Speaker, it is customary in this House not to make reference to the absence of other hon. members, but we can talk about our own. I was not in the House yesterday, but I saw on television that the government House leader and member for Windsor West was back in the House. I wish to join my hon. colleagues and yourself, Mr. Speaker, to say, as you did yesterday, how much he was missed in this House and how happy I am to see him back in good health.

Regarding Bill C-63, on the basic principle of having a permanent electoral list, the official opposition cannot have too many reservations. It can therefore be said that we support the bill in principle.

That said, let us now look at the timing of this legislation. As it enters the last year of its mandate, the government is now proposing to change the rules of the game.

The hon. government House leader referred earlier to discussions among the parties. A very broad consensus will be required, on the government side as well as on the side of the official opposition and the Reform Party, for any changes to be made before the next election, given how close we are to an election. That is why I salute and greatly welcome the government House leader's decision to refer immediately to the Standing Committee on Procedure and House Affairs the matter of establishing a permanent electoral list.

But I do have some concerns already, at this stage. Mr. Kingsley, no doubt and other people who have been involved in establishing permanent electoral lists provincially in conjunction with other witnesses and experts will have to shed light on certain problems.

The government House leader mentioned earlier that a list could be established from information collected before an election, therefore making lists available within five days after an election writ has been issued. I would just like to put on record what the chief electoral officer himself, Mr. Kingsley, told the Standing Committee on Procedure and House Affairs at our April 30 meeting.

The chief electoral officer said the following in reference to the first scenario, namely the one mentioned by the solicitor general, and I quote:

The legislative changes to bring about the first scenario are elimination of enumeration within the election calendar and provisions to allow us to build the register outside the electoral period; reduction of the calendar to a minimum of 36 days from the current 47; authority to the chief electoral officer to use lists of electors provided by the provinces and territories; collection of additional information-as I mentioned earlier, date of birth and phone number-from electors; and implementation of a streamlined revision process. Those changes would be required by the end of June 1996.

This was several months ago and the provisions have yet to be passed. It seems somewhat illusory at this point to consider establishing a permanent electoral list for the next election.

Look at what happened in Quebec. The office of Quebec's chief electoral officer, Pierre-F. Côté, has been working for at least 18 months to establish a permanent electoral list, which is still not in effect.

First, statutory authority was granted by Quebec's National Assembly to provide legislative authority to establish a permanent electoral list for Quebec.

And then what happened in Quebec? Last year, when the referendum was held, and even before that, in September if I am not mistaken, Quebec's chief electoral officer held a census. When the referendum writ was made out, some time was spent updating this electoral list, which was used for the referendum.

Of course an important data bank could be set up at the federal level, which would probably help us to act faster. However, the real permanent list would be the one that would help us follow the voters and keep all the needed information thanks to computers, without invading the voters' privacy. We could follow the voters throughout Canada, but that is still not an option in Quebec, even after 18 months of work. People are still working on that project. The Standing Committee on Procedure and House Affairs will have to consider these issues.

I also wonder about something else. On October 3, in the French CBC news program Le Téléjournal , at 11 p.m., I happened to hear the government House leader tell Geneviève Rossier, a CBC reporter, that a permanent list will not be ready for the next election and then Mr. Kingsley, the Chief Electoral Officer, gave a somewhat different version of the facts, to say the least. This will have to be clarified before the Standing Committee on Procedure and House Affairs. Mr. Kingsley was quoted as saying that he had convinced the government to reduce the campaign from 47 to 36 days.

Who convinced whom? These questions will be asked at the appropriate time. But the October 3 news report implied that the government was far from being convinced that a permanent electoral list could be implemented in time for the next election. The government should have acted before now, and we could have supported the initiative, which does not mean that we will not support the study the government wants to embark upon. Let us carry out this study, and if we cannot implement the recommendations in time for the next election, we will be able to do so for the following one.

Given the political situation in Canada, I do not think that the government is heading for a five-year mandate and will remain in office until autumn 1998. Logically, normally, according to our

tradition, this should be an election year. The list is expected to be made in spring. Of course, no definite dates are given. An enumeration could very well be initiated by the returning officer outside of a campaign period and then writs could be made out at some point. What would happen then? Would we go back to the old legislation? Would we go back to a 47 day electoral period? Would we proceed with a new enumeration, a new revision, new training for the enumeration and revision officers?

If that were to be cast in stone, with a 36 day period, the danger is that, under the existing law, we would have the preliminary list of electors not five days after the writs are issued, but ten days before election day. That is the first danger. It would be rather strange to have the preliminary list of electors ten days before election day.

What would be the adverse effects of that? The amount each political party is authorized to spend for the election is based on the preliminary list of electors. Therefore, we would know only ten days before election day what budget is allocated to each of our ridings. It is difficult to plan our election expenses if we do not know what our budget is until the end of the campaign.

Even though everybody agrees that the 47 day period is too long, if it is not compatible with a computerized list available at the beginning of the electoral period, we will have to make sure, at the hearings of the Standing Committee on Procedure and House Affairs, that it is not reduced to 36 days because we would then be forced to run an election campaign and a door-to-door revision campaign at the same time. For rural Mps like me, this would mean a revision of our 60 or so municipalities, street by street, concession by concession, to see if electors have been forgotten.

These are some of the points I wanted to raise with regard to the dangers. Of course, on the substance of the bill, it is not appropriate to take a stand at this stage since, according to the new Standing Orders of this House, what we are having now is a preliminary debate to clarify the issue and to see where we are headed.

There is another question that could be raised in committee and that the minister forgot to mention when he introduced the bill. I do not know if it is because of a difference in opinion between the government House leader and the Minister of Justice, but about ten days ago, the Minister of Justice told us that he would not contest an Alberta Court of Appeal decision authorizing third parties, including interest groups, corporations and unions, to spend as much money as they want to support one particular political option.

When the Minister of Justice said that he would not appeal to the Supreme Court, we might have thought that he would introduce a bill to control expenses by third parties. Since this is not the case, how can we not feel that the measure is directed at us somewhat?

Since the issue will not be submitted to the Supreme Court or to this House, it will have to be studied in committee. The question must be dealt with. We must know what control measures and limits the political parties may exercise during an election campaign and also the limits of third parties' participation. I can still recall the convincing arguments put forth by the Minister of Finances in support of the limitation of expenses of third parties.

These and other questions will have to be asked during the debate and they are the main themes I wanted to touch upon this morning after the speech made by the government House leader.

Canada Elections ActGovernment Orders

October 22nd, 1996 / 10:40 a.m.


Stephen Harper Reform Calgary West, AB

Mr. Speaker, I rise to speak to Bill C-63, an act to amend the Canada Elections Act and the Referendum Act. On a personal note I would like to convey my own best wishes to the solicitor general. We are all glad to see him back in the saddle.

The bill provides for the establishment and updating of a computerized register of electors. It also reduces the electoral period to a minimum of 36 days from 47 days. I will discuss the two main sections of the bill beginning with the permanent registry of electors.

To establish this list it would still be necessary to do one final enumeration after which a permanent list would be created. The list would be updated by consultation with other governmental bodies and by using other records including provincial drivers' licences and records from Revenue Canada.

The second main part of this bill would reduce the electoral period from 47 days to 36 days. In general, reducing the electoral period will mean cost savings. The Reform Party is open to measures to ease the burden on Canadian taxpayers.

In general, the Reform Party is certainly not opposed to the philosophical direction of either change proposed in Bill C-63. In terms of the shorter period, personally I have favoured such a move for a long time. The first time I participated in a federal election the campaign was 56 days. It has been shortened over the years, yet it has still seemed lengthy to me as a participant.

This is something we want to examine in terms of the specifics. I gather that officials of my party including the House leader have indicated that we favour this change, but we would want to look more carefully at the mechanics to make sure 36 days is the correct period of time.

Concerning the permanent register, this is an area where we for some time favoured improvements that would see cost savings, although I will raise a number of possible concerns that the committee should look at.

The Reform Party has also called for other changes to the electoral system including measures that are not found in this bill. My colleagues will address some of these measures.

Reform also supports measures that represent real cost savings to Canadian taxpayers. Although we support measures to reduce the cost of elections for Canadian taxpayers and to streamline the process, we have concerns, some of which I will briefly outline. In outlining these concerns we are happy that the solicitor general and government House leader has said that he is open to amendments. This bill may require some technical amendments in a number of areas.

The first and main concern is the privacy issue. The existence of a permanent voter's list leads to these concerns since the information is to be shared by different levels of government and different governmental bodies. There is a risk that privacy can be compromised. The more information is transferred and shared, the greater the risk of security of the information.

The government assures us that it will ensure the privacy rights of Canadians are respected. However, we all know that no system is foolproof, especially a brand new one.

The existence of a permanent voter's list raises concerns about exactly who could get the list through more advanced technology. The government assures us that it is impossible for the list to circulate but we know mistakes can happen.

The government also assures us the consent of all voters will be sought in terms of the use of information and its release to different agencies. We sincerely hope this is the case but we are concerned first and foremost with ensuring that this bill does not compromise the privacy rights of Canadians.

Let me mention one specific issue in this regard. It appears in this legislation that a voter's list will continue to identify the gender of voters. It has always been a mystery to me why this is necessary. Concerns have been raised with us and we will raise them in the committee about why it is necessary, for example, to identify on a voter's list a single female living alone. This raises concerns in the minds of certain individuals and I think it is one that the government should address.

The second concern is proof of citizenship. It has been often raised in the past about the process for verification of the genuineness of citizenship and the reliability of electors' lists as they apply to new voters and new Canadians. This is a problem we have had in the past. Hopefully this new process will address that. However, we will want to study more carefully what the proposals are in Bill C-63.

The third concern is getting on and off the list. To me this is another fascinating area, in particular as it applies once again to new Canadians. One oddity of this legislation is that while old Canadians are automatically on the list unless they request to be taken off, new citizens or new Canadians must specifically request to be put on the list in the first place. Should this not be a right and a responsibility that applies to all Canadian citizens equally? Why should the regulations for voting depend whether or not you are a new citizen or have previously been a citizen?

The third concern is technology. Will we be ready to begin this after the next election? Will all the systems and technology support be up and running? How reliable are the systems being set up? We all welcome the use of technology to save money and streamline the process but we must admit the possibility for mistakes. The last thing we would ever want to see are mistakes in a federal election or one that would involve having to start from scratch with another enumeration.

Let me echo in that particular concern the comments by my hon. friend from the Bloc Quebecois. It is a bit of a mystery to us why we waited until this late stage to introduce some of these changes so that they cannot be possibly be implemented for the next election. We have waited so long and now are faced with a situation where we are going to possibly have to rush the study of this legislation.

There are other technical concerns that I could raise, for instance, people who do not have drivers' licences, in particular young people, students who also do not file tax returns. There may be technical issues we will have to look at there.

Let me mention briefly the issue of cost. As I said, we welcome the fact that we will be able to save in the future roughly $30 million per election with a permanent voter's list. Furthermore we are prepared to share this technology with provincial and municipal governments and school boards. In theory they all could benefit from this list.

That raises additional questions about the sharing of information. I point out that only three provinces, Alberta, Ontario and New Brunswick, have said categorically that they are interested in this. From a federal cost standpoint we should also consider whether we should not share some cost benefit here at the federal level by sharing this list with provincial governments. If all of the costs have been incurred at the federal level it seems to us that there should be some provision for the federal government to gain something from the savings that will be achieved at the provincial level if there is co-operation.

These are the various concerns that I would like to raise. I am sure there will be others. They are mainly technical in detail and nature. I suspect they are all resolvable and all can be addressed. We look forward to studying this bill in committee.

Canada Elections ActGovernment Orders

10:50 a.m.


Chuck Strahl Reform Fraser Valley East, BC

Mr. Speaker, I have a few comments to make about Bill C-63, an act to amend the Canada Elections Act and the Referendum Act.

As has been mentioned by my colleague, we are anxious to study the bill in committee, to hear witnesses and the explanations that the government and experts have on how this can help the electoral system. Obviously Canadians are receptive to some of the changes that are being proposed, at least in theory, if some of the obstacles can be overcome.

I suspect there will be much interest in the idea of a permanent voter's list. The government believes it will perhaps save $30 or $40 million a year. Canadians would like us to look at that seriously for the cost savings alone.

Another aspect is the shorter period of time. The argument goes that 47 days were necessary in the days of train travel and when it was difficult to get around to communicate in the country. Certainly the shorter electoral period is worthy of consideration. I am sure that is why the chief electoral officer has brought this forward.

As members know, a permanent voter's list will eliminate 100,000 jobs in a sense. During the enumeration process 100,000 enumerators travel the country. Enumerating is not a permanent job, but there is an understanding that those positions, while they may be eliminated in a sense, I will not be sorry to see them go.

While it is always nice to have somebody knocking on your door for the enumeration, it has been used by MPs who submit lists of people for that position. I will not be sorry to see that go. I would just as soon have it outside the political arm of all parties. To get rid of it would not be a bad thing.

There is the question of the length of time someone can advertise during the election period. Will there be enough time to arrange for advertising when it comes down to taking the blackout period from there and so on, in a 36-day campaign? It will have to happen very quickly. Again, it is not an insurmountable matter. I would think that all political parties will be willing to look at the concept of a shorter period of time, meaning fewer expenses and less advertising.

I do not think the Canadian people would get their knickers in a knot if advertising was cut back substantially. That is worthy of consideration.

There is the concern about privacy. I have spoken to the electoral officer about this. He has assured me that this idea of getting access to Revenue Canada for the names for the voter's list, access to those who have drivers' licences and so on will be safe and secure and will not lead to any loss of privacy.

Nowadays the privacy aspect is becoming more and more important. As the privacy commissioner said, right now Canadians find themselves almost inundated or overwhelmed by technological change and the fact that an address, a phone number or even a tax return given to one department is not as sacrosanct as it once was.

That is obviously something we need to make sure is kept private for the sake of those voters who might otherwise not give their names willingly to Elections Canada people. The Privacy Act is another issue, certainly something that Canadians have a lot of concerns about.

I would like to spend my last few minutes mentioning that, although this bill is entitled an act to amend the Canada Elections Act and the Referendum Act, it is almost a misnomer. Referendums are so seldom held in Canada that it is almost not part of the Canadian political scene. It is something that the Reform Party has proposed as one of the ways to democratize this institution and involve Canadians in the political process.

Reform has proposed electoral changes over the years that could be discussed at some time and I hope taken seriously by the House and actually adopted as policy. Some changes involve parliamentary reform. Members have heard me speak about changing the MPs oath of office so that members swear allegiance not only to the Queen but also to constituents. In other words, it would be a shift in allegiance to the people that actually elect us.

Reform proposes parliamentary reform to support the restricting and limiting of the number of order in council appointments that a party can make. We spoke on a bill yesterday that reduced the number by 200 positions. However, over 2,200 positions still are filled by order in council appointments. It is a huge opportunity for a governing party to launder its political friends through the system and get a pay back.

One of the fundamental changes that Reform has proposed and continues to propose would be good for democracy is the whole idea of referendum initiative and recall. No doubt members have seen on the news our Fresh Start campaign literature. It is not really a fresh start for Reform. This has been a longstanding demand of many people who are looking for changes in the system. The Referendum Act we are discussing today should become a legitimate tool of the Canadian people to democratize the Canadian system.

The Reform Party supports the mechanism of binding referendums on the Government of Canada by a simple majority vote of the electorate, including a simple majority and at least two-thirds

of the provinces. Canadians could actually pass laws themselves at election time where they have an opportunity to cast their ballot first for the person they are going to elect and second on the big issues of the day.

The Reform Party supports the idea of citizen's initiatives by way of referendums. If 3 per cent of the electorate were to present a petition to the chief electoral officer and it was duly recognized, authorized and went through due process, that proposal would then be put before the people in a referendum. The citizens could seize the day, seize the issue and force it through, not necessarily to win, of course, but to force it on to a ballot so they too could have a direct say in issues they consider very important.

One of the issues that comes up periodically is the idea of a referendum on capital punishment. Others involve the expansion of the free trade agreement and moral issues. People say they would like to have a say in these policies. They do not want any political party to have the final say. They have to live under the law and they would like the final say.

The Reform Party, as part of their guarantee of good government with changes under the system, is the right to have recall for members of Parliament. When MPs have violated their oath of office and have contravened the very things they swore they would uphold, citizens in that constituency should have the right, if they go to a certain amount of work, to have that member come back and stand for re-election. The way it stands now, short of murder or a serious criminal offence, there is no way a member of Parliament can lose his or her job.

We have seen all kinds of boondoggles over the years. We have seen ex-MPs being charged with accepting graft or some other odious crime.

A lot of that was known when they were office holders but there was no way for the constituents to get at that person and say: "You are not doing your job. Worst yet, you have broken your oath of office. I demand that you come back and answer to the people". If they had that opportunity, which they would have under a Reform government, they could ride herd on the members of Parliament. Members of Parliament would not have four to five years to run their own show, do their own thing and answer to no one. That would obviously be a big advantage.

In conclusion, as I am almost out of time, other proposals that we have brought forward which are not part of this bill but are Reform Party policy include support for holding elections every four years at a predetermined time of the year. Another advantage of planning for reducing expenses and making Canadians buy into the electoral process is a specific length of time, not exceeding six months, by which time byelections should be held for any vacant Commons seat. The whole issue of the funding of political parties and how they are funded by corporations, special interest groups and so on needs to be addressed as well and it is not in this bill.

While the bill is worthy of study, and we are happy to do that in committee, there is much more that could be done, should be done, must be done and will be done under a Reform government.

Canada Elections ActGovernment Orders

11 a.m.


Jim Silye Reform Calgary Centre, AB

Mr. Speaker, I rise today to make a few comments on Bill C-63 which is intended to develop a central electronic registry for voting purposes.

In reviewing this legislation and in being in a briefing yesterday, there are a lot of things about this bill that I would like to point out, touch on and leave a few comments with the government on this issue.

The purpose of a central registry, the overall outline and concept of it make a lot of sense. It can be used by federal, provincial and municipal governments for election purposes and also school boards. It would be a sharing or pooling of information. This does have some economic benefits and some convenience to it as well.

It requires the consent of electors. In other words, it is voluntary. If an individual voter does not wish to have his or her name in the registry they do not have to. It does not deny the individual the right to vote. The current system stays in place where if they wish to show up on voting day with the proper identification at the polling booth they will be allowed to register their vote.

Another benefit I see in this bill is the savings, which has been pointed out by a lot of people. In current dollars this is estimated to be $138 million over the next 20 years with an election every four years. However, even if we discount the present value it is still over a $100 million savings. It is definitely a plus in that category. It will, however, cost $41 million in the spring of 1997 to conduct one more door to door enumeration.

It is also a convenience because the candidates will get their voters list sooner and will be able establish their budgets and spending limits based on the size of their constituency. They will also be able to get rolling 31 days before polling day versus the current 25 days before polling day. This would give them six days more to decide how and where to spend the money in order to get themselves elected. It also allows four extra days for the revision of the electoral list for errors, mistakes and moves, which will also help with getting out the vote.

Another feature, which has been mentioned by other members, is that the voting period gets reduced from 47 days to 36 days. This is an interesting concept because it may cause concern for a lot of people. A lot of people who are interested in the political process believe that time is needed to explain issues. Let us look at what former Prime Minister Kim Campbell said during the last election campaign when she claimed that there was not enough time to discuss social policy during the election campaign and she had 47

days to do it. Therefore if 47 days is not enough time to discuss the major issue of social policy will 36 days be enough? We are reducing it by 11 days. That is an interesting concept and one that I think the Standing Committee on Procedure and House Affairs will have to review.

It would seem to me, however, as an individual who has participated in one federal campaign that as we go along in the House issues are always percolating and being brought to the forefront. The basic platforms of parties become obvious and the party issues become relatively well known. I think most Canadian voters are aware of the issues.

When it comes time when they are ready to send representatives to Ottawa and they elect a prime minister who becomes a dictator once he is in office under the current system, they at least know what the hot issues are. I would think that five weeks would be enough time for discussion and to know whether one party favours a tax cut or whether another party wants to increase spending, or a bigger government.

I think the debate on the period we have to campaign will be sufficient and the issue will not be that complicated if arguments are positioned in a proper fashion.

Another feature of the bill is invasion of privacy. To protect the privacy factor, the privacy commissioner has been consulted. This is a very serious matter. When information is given to Revenue Canada, to federal and provincial governments about the personal lives and personal status of voters, that should remain between the people and that agency or government. Cross sharing should require permission. When permission is given, that is fine, but consent must be given.

The right to opt out of the central registry is included in the bill and the right to obtain that information for the registry is also in the bill. These are important, comfort factors that should be there.

The legislation which will be passed on this issue will clearly state that the central electronic registry is simply for the purpose of elections, nothing else, and should not appear anywhere else. If an advertising groups gets hold of it or if people are harassed based on the information, then they can simply opt out. It would be their right to take their names off that central registry and it does not affect their right to vote. I think that is a good balance.

Also the Chief Electoral Officer, Mr. Kingsley, once the bill is passed, may enter into extensive information lectures to educate and inform the Canadian public about what this really means.

This has the somewhat conditional but more or less major support of all members of all parties in the standing committee. The Chief Electoral Officer has been communicating with authorities at the provincial and territorial levels and they show interest as well.

This will save a lot of money and it makes a lot of sense. I thought the voters may be interested in hearing some of the dynamics of change in this country: 20 per cent of the electoral information changes every year; 3.2 million people move every year. That means they live in a different electoral boundary. Through this central registry, provincial governments, Revenue Canada, municipal governments, drivers licences, and updating the information will help to keep track of those moves and the information will be at their fingertips at election time.

There are about 200,000 new 18-year olds who are qualified to vote every four or five years. Once gain, through Revenue Canada and drivers licences, this central registry can be updated and maintained.

There are roughly about 180,000 to 200,000 new citizens which of course would be tracked through citizenship and immigration. Unfortunately deaths occur; 195,000 people pass away yearly. These can be obtained through provincial vital statistics and, once again, the central registry stays somewhat current.

The central registry also would eliminate the cumbersome, expensive, door to door enumeration prior to elections. Enumerators come to our door for federal elections and they come to our door for provincial elections. I am not sure if they come to our door for municipal elections.

There will be one last enumeration prior to the next election because we have increased the size of the House of Commons from 295 to 301, so there will be 301 electoral boundaries. That is a shame in a sense. The Liberal government is once again preaching restraint. It is giving us lectures on how to reduce the deficit, but it is not attacking the real problem, which is the debt. Yet it wants to have bigger government. It is adding six more members of Parliament to the House. There will be six more backbenchers who will sit over there, or there will be six more opposition members who will sit over here, while the freely elected dictator will do what he wants. He runs the country the way he wants to with his small cabinet.

Bigger government means a higher cost. A higher cost means higher taxes. That is why the government does not favour a tax cut. That is why the government cannot afford to give a tax cut. Reformers say that if we reduced the House of Commons to 250 members and did the door to door enumeration based on 250

electoral boundaries we would be better off. There would be a lower cost. With a lower cost we could reduce taxes. The cost of running government would be lower and we could lower taxes.

Our role in opposition is to question the wisdom of government expansion and other pieces of legislation which it brings in which recommend changes in order to improve efficiency and effectiveness to save money. Yes, it will save $100 million over 20 years, at a discounted value. However, each additional member of Parliament will cost Canadians $600,000 to $800,000. The government will be adding millions and millions of dollars to the cost. It is unfortunate that the government cannot be consistent in everything it does.

Canada Elections ActGovernment Orders

11:10 a.m.

The Acting Speaker (Mr. Kilger)

Is the House ready for the question?

Canada Elections ActGovernment Orders

11:10 a.m.

Some hon. members


Canada Elections ActGovernment Orders

11:10 a.m.

The Acting Speaker (Mr. Kilger)

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

Canada Elections ActGovernment Orders

11:10 a.m.

Some hon. members


(Motion agreed to, bill referred to a committee)

Bankruptcy And Insolvency ActGovernment Orders

11:10 a.m.

Scarborough East Ontario


Doug Peters Liberalfor Minister of Industry

moved that Bill C-5, an act to amend the Bankruptcy and Insolvency Act, the Companies' Creditors Arrangement Act and the Income Tax Act, be read the third time and passed.

Bankruptcy And Insolvency ActGovernment Orders

11:10 a.m.

Saskatoon—Dundurn Saskatchewan


Morris Bodnar LiberalParliamentary Secretary to Minister of Industry

Mr. Speaker, I am pleased to rise today to begin third reading of Bill C-5.

Hon. members will recall that the bill amends an act which was last changed in 1992. Before that, however, it had taken 40 years before legislators were able to bring bankruptcy laws in Canada up to date. That is because the laws are complex and there are many competing interests that must be taken into account.

When we debated this legislation on second reading we outlined some of the various interests that had to be considered: lenders and borrowers, businesses and consumers, insolvency practitioners and Canadian workers whose jobs may depend on effective reorganization provisions. These are just a few of the groups affected by bankruptcy law.

I remind the House that we were able to produce a piece of legislation acknowledging the needs of these competing interests because of the input we received from the Bankruptcy and Insolvency Advisory Committee.

This legislation was introduced last November during the last session as Bill C-109. In the months that have passed since then, insolvency practitioners and stakeholders have had a good opportunity to study the bill carefully and recommend ways to improve it.

One indication of the quality of their advice is that the legislation has now come back from the Standing Committee on Industry ready for third reading essentially intact. There have been many amendments designed to tighten up the legislation and clarify its intent, but in its fundamentals the bill is essentially unchanged.

The committee heard many witnesses who represented many different points of view. They provided advice on how to improve the bill, but they also agreed on the broad principles that Bill C-5 represents. The witnesses agreed that the intent of the clauses contained in the legislation was excellent, but they were able to suggest slight changes to the wording to clarify the purpose of the bill. That being said, I would be the first to acknowledge that the bill before us is a much improved version of the bill sent to committee for study.

I commend the work of the committee, chaired by the hon. member for Winnipeg North. Bankruptcy legislation is never easy. Members of the committee had to work hard to formulate the agreements and the compromises represented in the amendments before us. However, it is a tribute to the ability of all members, especially the chairman, to build consensus that the legislation has come before us in this improved form.

In that regard I would especially like to single out the contributions of the member for New Westminster-Burnaby. I think his colleagues on the committee would join me in acknowledging the role he has played in ensuring this legislation fairly addresses the issue of sexual assault judgments.

As a result, clause 105 has been changed. Awards of damages for assault are non-dischargeable in this legislation. Under the amendment proposed by the hon. member, this provision is expanded to clarify that it covers awards for intentionally inflicted bodily harm or sexual assault or wrongful death resulting from either of them.

Another important amendment concerns clause 15 respecting trustee personal liability for environmental damage. The super priority given to claims for costs of cleaning up environmental damages will be limited to crown claims. The intent of the legislation is clearer now. It will ensure that only ministries of the environment and not, for example, third parties will claim super priority for environmental clean-up costs.

Clause 42, affecting lease disclaimers, has been amended. The bill before us gives a disclaiming tenant more options in framing

his organizational proposal. He can now offer compensation based on the landlord's actual losses in all instances. This simplifies the laws considerably.

Clause 60, which involves the procedures for determining the surplus income of an undischarged bankrupt payable to his creditors, has been clarified.

Clause 87 deals with spousal support claims. It has been amended so that spousal claims provable in bankruptcy are as specified in section 178, and that they must be pursuant to orders or agreements made while the spouses were living separate and apart.

Clause 103 has been amended to clarify the responsibility on consumers to opt for reorganization rather than bankruptcy. By simply choosing bankruptcy instead of making a consumer proposal, the consumer should not be penalized when it comes time to decide whether to grant a conditional discharge. This legislation makes it clear that the option must be between bankruptcy and a viable consumer proposal.

Several provisions of clause 118 have been clarified, including the definitions of "securities firm" and "security". The provision that specifies the type of suspension of a firm authorizing a securities commission, securities exchange or customer compensation body to petition the firm into bankruptcy has also been clarified. As well, the provisions have been made more clear on which assets are to be included in the customer pool fund and on how these assets are to be distributed.

I emphasize that the amendments made by the committee do not undermine the fundamental principles of this legislation. For example, the provisions involving directors' liability remain fundamentally intact. It provides a due diligence defence for directors against civil liability. It also gives a provision whereby actions against directors may be stayed during reorganizations. Further, it provides that directors would be allowed to propose liability relief as an integral part of the reorganization plan submitted to creditors, and creditors, not governments, not the law, will accept or refuse to provide relief to directors.

Why are these provisions important? Because the thrust of the government's objectives in this framework law is to move away from liquidation in favour of preserving businesses and jobs. These provisions offer protection to board members so that they are encouraged not to leave the sinking ship. We want them to stay on to make the bold decisions to help reorganize the business.

Other elements of the legislation relate to the insolvency of farmers and fishermen. At present section 48 of the BIA provides that an individual who is solely engaged in farming or fishing cannot be petitioned into bankruptcy. Recent case law has interpreted "solely engaged in farming" quite strictly. Any revenue which is not generated by the farm will expose a farmer to petitioning.

As members of this House are well aware, to avoid insolvency most farmers and fishermen will turn to other means of employment in the off season. This is a responsible action on their part. The amendment in Bill C-5 restores the situation intended in the original legislation to protect farmers and fishermen from being petitioned into bankruptcy during the off season. Both the Minister of Agriculture and Agri-Food and the Minister of Fisheries and Oceans supported this proposed amendment.

Bill C-5 also addresses consumer bankruptcy. It provides an opportunity for debtor consumers to be rehabilitated quickly and to act responsibly. I believe the vast majority of consumers who run into major financial difficulties want to fulfil their obligations. I am sure we all know of stories where someone has run up their debts and regard bankruptcy as an easy way to discharge their responsibility, easier that is than taking the rough measures necessary to pay back creditors over time.

The legislation before us puts more pressure on debtors to rehabilitate. It encourages consumer debtors to act more responsibly by repaying at least a portion of their debts where they can.

The fundamental objectives of Bill C-5 remain. We have reformed both corporate and consumer bankruptcy law in Canada. Thanks to the work of the industry committee, the bill has been strengthened by several technical amendments. This is good legislation and it deserves the support of this House. I urge all members to vote for it.

Bankruptcy And Insolvency ActGovernment Orders

11:20 a.m.


Ghislain Lebel Bloc Chambly, QC

Mr. Speaker, I am pleased to speak, and, through you of course, to tell my colleagues across the way, particularly the member from Saskatoon, for whom I have great respect and with whom I had the honour to sit on the industry sub-committee examining Bill C-5, the bill before us today, that I do not entirely share his optimism.

I must admit that while Bill C-5 meets certain requirements and restores certain situations, it is far from satisfying everyone. It is from this sort of bill that the party in power has the habit of hauling out vague and imprecise notions, not clearly spelled out in the text, when and where it suits them. The result is that we foist our problems off on the courts and tribunals and expect them to establish the jurisprudence.

But the primary role of a legislator is to try, in good faith of course, to produce legislation that can be interpreted in and of itself. Furthermore, it is stated early on in the Interpretation Act passed by this Parliament a number of years ago that every enactment shall be given such interpretation as best ensures the attainment of its objects.

This is described as being sui generis . Legislation must be interpreted with reference to its own contents. When a text is unintentionally ambiguous, and no one here, particularly no one in

this House, is above error or oversight, then the courts have a role to play.

When general principles are invoked, when we ask the party in power what happens in a particular case, and we are told that the courts will decide, the courts will rule, that is just adding to the backlog in the courts.

I would point out one, or a few, examples the member has just mentioned when, in reference to farmers and fishermen whose earnings come primarily from their agricultural or fishing activity, he said that they could not be declared bankrupt. That is what the bill says. However, if in the winter, for example, farmers, and I know some in my riding who do this, have large equipment and take contracts to remove snow from shopping centres, they therefore have an activity allowing them to keep operating, so to speak, and to get through the winter without doing too badly economically. Since they are then earning income from an activity other than farming, could they be declared bankrupt?

The member from Saskatoon tells us they cannot, or maybe, if the courts hold that the activity is not strictly related to farming. Or at least that is what I understood. But the fact remains that it is still the court that will decide. When new legislation is drafted, there is an attempt to include prior trends in jurisprudence, not to produce a legislative text that is often unclear and makes a further ruling necessary.

That is what I object to generally in this bill, some of whose principles, however, I find acceptable. An effort could have been made, in committee, if members of the party in power on the committee had had the latitude to accept the obvious. Not at all. To change even a comma, committee members know they have to refer to the minister who tabled the bill. Even in the case of a particularly obvious mistake, if they happen to be members of the party in power and sit on a committee where that party has the majority, they first have to refer to the minister and tell him: "Now, the members of the opposition want to change this comma. They may be right. We think they are right". They do not say yes. They cannot do that on their own. That is what is so frustrating in committee. We saw this many times during consideration of Bill C-5 by the industry subcommittee.

A number of stakeholders appeared before the committee at that time. We could name the whole range of socio-economic and social stakeholders, on the right as well as on the left. Everyone came to defend their particular points of law. And most people were struck by the ambiguous treatment in Bill C-5 of the nature of duties of a bankruptcy trustee.

Many people told us that more often than not, the trustee had a conflict of interest. I may add that these were people with a certain reputation, university professors from the University of Toronto, for instance, and people from across Canada. Even bankruptcy and insolvency experts came and told us the bill was in many cases sending contradictory signals, thus putting a trustee appointed to oversee a bankruptcy in a very awkward position. Quite often, his duties were not clear-cut.

The first Bankruptcy Act-as it was called at the time-which was passed in 1949, started by providing that the trustee represented the creditors. His role was clear. His role was defined. There was no problem: he represented all creditors.

In 1992, with the tabling of this new bill on bankruptcy and insolvency, which became the Bankruptcy and Insolvency Act, the trustee's role became a little more ambiguous. The trustee represented in certain cases the mass of creditors and acted on the advice of the inspectors, but he also had to consider certain dispositions that might benefit the trustee himself or his family. It is not immoral, and it is not unthinkable, that the trustee could, and I think it was good legislation, represent both the creditors and the bankrupt.

However, it would have been even better if the legislation had contained a provision saying that the trustee was a public officer, like a notary in Quebec or like a surveyor-they have those in other provinces too. When a surveyor surveys a property, he does not work for the benefit of the person who is paying him but to establish the truth, the real state of affairs. He draws lines where they should be drawn, even if he would rather not, even if he would rather help his client. Under the legislation that regulates his profession, in Quebec and elsewhere, he is obliged to be neutral. Therefore, he assumes impartiality.

In Quebec, notaries conclude transactions. They represent neither party and I know something about this, since it happens to be my profession. He does not represent either of the parties involved. His duty to be neutral is part of his code of ethics. The trustee is careful about that, and if a notary-this does not happen often, thank goodness-fails to be impartial, the order would intervene and make him realize he should not benefit either contracting party, but maintain a strictly neutral position.

That is what I would have liked to see in Bill C-5. Of course, that required the minister's permission. I am not even sure if committee members went to see the minister, but I will not question their good faith. Let us assume they went to see him, but nothing happened and clause 13 or 14, I think, was left unchanged.

Other provisions in this bill could have been amended. A case in point in clause 13.4. The CNTU opened our eyes in this regard when it presented its brief. Clause 13.4 in this bill reads as follows:

(1) No trustee shall, while acting as the trustee of an estate, act for or assist a secured creditor of the estate to assert any claim against the estate or to realize or otherwise deal with the security that the secured creditor holds-

And here is the hitch:

-unless the trustee has obtained a written opinion of a solicitor who does not act for the secured creditor that the security is valid and enforceable as against the estate.

The CNTU told us, either one is neutral or one is not. You can see the kind of message that is being conveyed to the trustee. We made representations when we asked questions, when we discussed among ourselves. We said: "Why not accept reality?" If a secured creditor in a bankruptcy case feels wronged, he can appeal to regular law courts, to the civil courts in his province or, in case of fraud, file a complaint under criminal law.

But why should the trustee be given the message that, yes he is neutral, but not exactly, if he has obtained a legal opinion? We saw what happened in the case of Mr. Sirois, who prepared the 1992 act. He went totally bankrupt, and we then realized that the very father of the bill that became law was not beyond reproach. It was easy at the time to take him to task, at least for his vested interests.

This should be avoided, we told the party in power. They then do everything that follows from this. As the hon. member for Saskatoon clearly explained, the bankruptcy act makes it possible for someone to get a fresh start after a financial misadventure or misfortune, the kind of thing that can happen in life. But in doing this, we sometimes fail to realize that we are penalizing ourselves in another respect.

Let us take for example clause 14.7, I think, which provides that the money needed to remedy any environmental damage to the land must come from the bankrupt individual's general assets. I asked that specific question of experts and professors from a Toronto university who testified before the committee, and nowhere in this clause is it said that the trustee acting in a bankruptcy case who faces decontamination expenses must recover the money from the proceeds of the sale or resale of the contaminated building. Nowhere in this bill is it specified that the money must come from there. It can come from other sources. The trustee may liquidate assets, sell the car, the house, anything, and use this money to decontaminate the land.

A priority may be applied to the real property in question, and this is a fact, as provided for in section 14.7, which takes precedence over any existing rank of hypothec under civil or provincial law and the trustee may assert his decontamination claim that way. This is allowed, there is a statutory warranty on that. But the money does not have to come from there; it can come from elsewhere.

So, it would not be unthinkable, especially on the basis of clause 13.4 regarding the secured creditor, which I referred to earlier, since the trustee's decontamination claim will take precedence over that of the secured creditor, that, if they are on good terms and do not hate each other too much, the trustee may be tempted to say: "Very well, I will have the land and surrounding property decontaminated, but the funds required will be taken from the body of realized claims. I will pay for decontamination out of there". The secured creditor is happy. Because of his rank of hypothec, he gets his decontaminated property back, free from everything, and realizes the security. He can resell it, recouping his equity, his mortgage. Of course, good faith must always be presumed, and you can vouch, Mr. Speaker, for that fact that everyone here is acting in good faith.

But this can nevertheless invite criticism, raise suspicion, lead to questions. One wonders why the wording is not clearer, and why the trustee is not required to recoup his decontamination costs on the property in question first. I am trying to understand why. Sometimes, what appears to be a good turn can have unforeseen negative effects.

Take section 14.7 for example and this creditor that has a mortgage on a property, or is not yet a creditor. Let us say I want to start up a business, or young people want to start a business on the premises of which chemicals, not necessarily highly toxic chemicals, will be processed. There will be a potential environmental impact involved.

We would go to our bank manager and ask him to lend us money so that we can buy the property on which we want to build our pork manure treatment plant or whatever. The creditors will say they do not want to have anything to do with that because dangerous substances are involved. They will argue that, should our business fail and the property have to be resold for them to realize their mortgage security, they will first have to have it decontaminated and that could cost a pretty penny. Hence their unwillingness to lend money.

The idea was to recover for decontamination, but-and this is not from me but from various financial interests who came and told the committee-lenders will be much more cautious when lending money to businesses that could handle toxic materials. It is believed that it will now be almost impossible to finance a gas station. No one will want to lend money to a gas station, unless the major companies-and this is surely what will happen, since they provide the raw materials such as gas, oil, etc.-are prepared to finance their franchisees.

The mechanic interested in opening up an independent service station will have a hard time getting financing. A good intention may end up having perverse effects. We have to seriously think about this. A number of stakeholders came before the committee and said: "This clause 14.7 scares us". Several asked that it be

removed or at least that some guidelines be provided, because it does not affect only the contaminated land, but also the adjacent lots and those connected to the operation.

The lots connected to the operation are not necessarily the ones immediately adjacent to it. It could be a lot located further away. It could even be a lot located in another community. It could be the site of the head office. This becomes dangerous. It is dangerous for the person who lent money for the head office lot, and for the one who lent money for the lot where the economic and business operations of the company take place.

There is another thing which really bothers me as a Quebecer and which I find very hard to accept. I tried to stress it in committee. I was told this is not an amendment to the bill that was introduced. I did not agree, but I did not argue more than necessary, because they formed the majority. However, I want to raise the issue here.

In committee, we realized that, to a large extent, the assets that can be seized and those that cannot depend on provincial legislatures, because they determine what assets can be seized or not. For example, we know that in Ontario homesteads are unseizable. From what I understand, because I am not very familiar with the Ontario land register, a homestead is a farm that has been owned by a family for generations. It is unseizable and its value can be very high. In Ontario, someone who becomes bankrupt can have his or her homestead worth half a million or a million dollars exempt from seizure.

In other provinces, the value of the property liable to seizure is pretty high. In some provinces, it is much lower. For example, in the Quebec Code of Civil Procedure, in the former section 553 I think, the value of the property not liable to seizure was set at around $2,000. In order to respect the provincial areas of jurisdiction, the bankruptcy act had always gone by these classes of property exempt from seizure.

This is why section 49 of the former act and sections 93(1) and (2) of the new act, provided and still provide that any settlement in consideration of a marriage-and when we talk about marriage, we are talking about a provincial area of jurisdiction-published and made before the marriage, because it often takes the form of a donation between spouses at the time of the marriage, is not void and cannot be revised. This is still the case.

Except that paragraph 177( a ) of the current act that is being amended by clause 104 of the bill stipulates that, in the case of a bankrupt who has abided by section 93, an order of discharge will be refused. Pursuant to paragraph 177( a ), an order of discharge can be refused and conditions can be set.

I do not understand. How can someone act legally pursuant to section 93 and be treated as if he or she broke the law under section 177( a )? We are directly infringing upon provincial areas of jurisdiction: civil law, marriage, marriage contracts. People are told: ``You have abided by the provincial legislation, we know it, so there was no fraud. However, as far as we are concerned, if you want to be discharged, we will set more expensive conditions than if you had not respected the provincial legislation and if you had not benefitted from the legislation in force in your province''.

This is sheer nonsense. This is just one example. The hon. member for Saskatoon-Dundurn, to whom I have mentioned this problem in committee, did not answer me directly-he was sitting with me on the committee-but the chairman told me than repealing section 177( a ) made no sense and did not come under the purview of our committee, but I still have my doubts about that.

I would also have liked to put forward other amendments in committee. When I think about Bill C-5, I would have liked to see, after subsection 90(1), a new subsection 90(2) that would have amended paragraph 136(1)( d ) of the existing act to raise the value of non-seizable assets from $2,000 to $3,653. And I will explain why, because this figure has not just come out of the blue.

In 1949, 47 years ago, when the first Bankruptcy Act was introduced, the value of non-seizable assets was $500. With inflation, what was worth $500 in 1949 is now worth $3,653. I am not talking about improving the fate of the bankrupt, but if we want to give the bankrupt the same level of protection, the value of non-seizable assets in section 136 should be raised from $2,000 to $3,653, an amendment that was moved in committee but was defeated. Do not ask me why, I have no idea. But this refusal was certainly not dictated by common sense. That much I know.

We saw that all amendments to the bill that made sense were systematically refused when they came from an opposition member sitting on the committee. It is unfortunate because, right now, the Bankruptcy Act is a source of problems, questions and bitterness for creditors as well as for bankrupts.

Often, following their generally recognized principles, the Liberals put forward ideas that are sometimes eccentric, include them in a bill and say: "We have fulfilled our red book promise and now we will let the courts decide". I think the Liberals are blatantly misusing their parliamentary majority, as they have always done. When, as legal practitioners or as experts in this field, we proposed amendments to correct certain contradictions such as those in sections 93 and 177, we were told that it is not within the committee's mandate. My colleagues who sit on other committees tell me that it is almost always the same.

The government wants to hold the opposition in check no matter if it is right or wrong. It will stick to its bill and will not budge, except for obvious punctuation mistakes, or should I say without being disrespectful to the House, for trifling matters.

In my view, they have missed a great opportunity to do something productive about bankruptcy and insolvency. They could have tried to make people a bit happier.

There is poverty in Montreal. It is said that Montreal is the poorest region in Canada, that it has the highest rate of poverty right now. It is also the city with the greatest numbers of homeless people, a happy bunch according to the Prime Minister, who would prefer to be on the move and sleeping outdoors, often in a puddle, that in an institution being treated for schizophrenia or other similar ailments. The Prime Minister told us that he has spoken to them and that they are perfectly happy. But there are also people who are not homeless, who honour their obligations, in so far as their incomes permit, but it is becoming increasingly difficult to do so because they are unemployed, not something the government has knocked itself out finding a solution to so far.

As well, some people are casualties of the economy. I have had visits from people in their fifties, in charge of human resources in a very large company that merged. From $100,000 a year, they have found themselves on welfare, after selling their homes and spending the proceeds. This is happening now to a great many people, people who used to live with dignity and earned a good living.

You have all undoubtedly seen the American movie about the electrician with a wife and two children who loses his job. Finding himself unemployed, he puts off paying his fire insurance. And since misery always plagues the poor, his home burns down. He moves to another city in search of work, and finds a part time job, a few hours a week, which does not even cover his move. To make a long story short, we see him at the end of the movie reduced to living with his wife and two children in the basement of an uninhabited and condemned building, in with rats and mouldering boxes, stuck with no hope for the future. The movie ends with the reminder that in the United States there are three million Americans living in similar situations, situations we are now beginning to see in Canada.

I know people who were once proud, who used to have good jobs. Times got tough and they found themselves on welfare, which is shrinking with decreasing transfer payments, which means they will be even more destitute. The homeless will not just be happy schizophrenics, as the Prime Minister was saying, but people who have gone from a life of dignity to one of extreme poverty. We will see more and more of this in Canada.

This government has no compassion for the dignity of these people. Right now, $2,000 will buy, for a family with four children, not much more than sheets, beds, pillowcases, and certainly not a large refrigerator and a small, two-burner, 110 amp hotplate. That is about as far as it will stretch.

I find it hard to believe that people are using bankruptcy to their benefit. There is a tendency to blame them, to view them in a critical light, but in reality do they have a choice? They have only one life to live, as do we all, and they realize that, unless they take a risk, unless they go out on a limb, they will have spent their lives in poverty and misery.

This is what the bill could have tried to address, but once again, they have failed. It is for this reason that my party and I will be voting against this bill.

Bankruptcy And Insolvency ActGovernment Orders

11:55 a.m.


Myron Thompson Reform Wild Rose, AB

Mr. Speaker, I am pleased to comment on Bill C-5, an act to amend the Bankruptcy and Insolvency Act, the Companies' Creditors Arrangement Act and the Income Tax Act.

Many provisions in Bill C-5 are commendable but this legislation could have been greatly improved if more Reform amendments had been accepted by the Standing Committee on Industry. Before I discuss the positive provisions of Bill C-5, however, and how Reform is willing to help to improve the bill, I will comment on the general state of bankruptcy in Canada.

Bankruptcy is a very serious problem in our country. Consumer bankruptcies have soared in the past 10 years from approximately 20,000 in 1986 to a new record of over 60,000 in 1995. Sadly, analysts estimate that Canada is heading for another record level of bankruptcies in 1996 as there have been 46,827 consumer and business failures so far this year across the country. That is up from 37,937 in the same period in 1995. I repeat that bankruptcy is a very serious problem across Canada.

Why are consumers and businesses failing financially? The answer can be found in a recent report by Industry Canada. It states:

Bankruptcies are a critical indicator of the country's economic health and at the same time the key indicator of the economic difficulty facing individuals.

The government study goes on to point out that high unemployment is the main reason for bankruptcy rates. When people have jobs they can pay their debts. When they do not have jobs they cannot pay their debts. It is that simple. Therefore, the way to help people stay solvent is to give them jobs. I know that members opposite understand this very simple equation. I also know that members opposite probably do not want to see Canadians go bankrupt. Why are members opposite not doing something to help create jobs in the country?

On October 15 the Prime Minister said: "Canadians don't need to read my lips, they can read our record". Let us read that record today. There are 1.4 million people presently unemployed; two million to three million people are underemployed; four million workers are worried about losing their jobs and it is the longest stretch of unemployment above 9 per cent since the great depression. It has been like that for a long, long time and it has not been addressed by the government.

The Liberals would have us believe they have a plan to create jobs but we have not seen one. The finance minister's message to Canadians is that low interest rates are the best medicine for the economy. Despite the lowest interest rates in years, unemployment increased last month from 9.4 per cent to 9.9 per cent. It is quite clear you cannot push the economy up a hill with interest rates. There must be income growth and job growth.

On top of giving Canadians high unemployment, the Liberals have dished out more pain through social program cuts. They have cut transfer payments by 40 per cent. They have cut health care payments by $3 billion. They have cut benefits to seniors. They are dismantling social programs to pay the interest on the $600 billion federal debt. All Canadians receive from the Liberals is pain and pain and more pain, not jobs, jobs and more jobs.

To create jobs and reduce bankruptcy rates the government must reduce taxes. A reduction in taxes means more money in the pockets of consumers, small business people and investors. Consumers that spend more money will create the permanent well paying jobs that Canadians needs. What consumers need is a tax cut, not another interest rate cut.

As far as I know there are no provisions in Bill C-5 that would directly create jobs in this country. There are, however, some commendable aspects of this legislation which I will discuss next.

First, in the Bankruptcy and Insolvency Act spouses are not considered creditors for the purpose of proving claims for spousal and child support in bankruptcy proceedings. Bill C-5 would amend the act so that claims for spousal and child support accrued in the year before the bankruptcy took place would be claims provable in bankruptcy proceedings.

This means that a person who is receiving support payments from a bankrupt individual who is in arrears in his or her payments will be treated as a preferred creditor in bankruptcy proceedings. Ranking spousal and child support claims as preferred claims is a positive amendment to the Bankruptcy and Insolvency Act.

Second, clause 93 of Bill C-5 amends paragraph 157.1(1)(b) to extend the range of persons for whom the trustee may arrange counselling. Counselling may now be arranged for those persons who are financially associated with the bankrupt person. This means that not only can the bankrupt person be given professional help so that he or she does not become bankrupt again, but others such as common law spouses can also receive counselling.

Third, paragraph 105.2 of Bill C-5 makes student loan debts non-dischargeable where the bankrupt has ceased being a full time or part time student or within two years of ending their studies. This clause means that people can no longer graduate, declare bankruptcy and then walk away from their student loans. Bill C-5 would close a major loophole in the BIA which costs the federal government $60 million a year.

Some people argue this amendment is unfair because most students declare bankruptcy out of need rather than for convenience. They also assert that students must have the right to be discharged from all of their debts when they declare bankruptcy. Both of these arguments may have some substance but we all have an obligation to pay our debts.

Moreover, Bill C-5 recognizes that students may experience genuine economic hardship and it allows a student loan debt to be discharged after two years where the bankrupt has acted in good faith and is experiencing financial difficulty. This is a fair and equitable position.

I have just discussed three positive provisions of Bill C-5. There are more but the most laudable sections of Bill C-5 are those that were amended by my hon. colleague from New Westminster-Burnaby, clauses 1 and 105.

The amendments made to these clauses by my hon. colleague provide greater protection to the victims of crime. Under the Bankruptcy and Insolvency Act, criminal offenders could be released from having to pay damages arising from assault which have been awarded in a civil suit when they declare bankruptcy.

With my colleague's amendments to Bill C-5 an order of discharge does not release the bankrupt from any award of damages by a court in civil proceedings in respect of bodily harm intentionally inflicted or sexual assault or wrongful death resulting therefrom. With these amendments victims of crime now have greater protection.

I have outlined many of the commendable provisions of Bill C-5. Overall it is a good piece of legislation but, as I have mentioned, it could have been even better if the Standing Committee on Industry would have accepted all of the Reform amendments.

For example, Reform proposed that Bill C-5, in clause 6, be amended by replacing the word "may" on line 12 with the word "shall". In this instance the Superintendent of Bankruptcy has too much discretionary power. It is only fair that when applicants for trustee licences meet the superintendent's criteria they should be

issued the licence. It should not be up to the superintendent's discretion.

An argument against our amendment came from the hon. parliamentary secretary. He said that the inclusion of such words as "shall" creates nothing but an increase in the size of the bureaucracy necessary to administer the act. I do not know how this can be possible. It seems to me that our amendment would decrease bureaucratic activity.

Exchanging words such as "may" with "shall" reduces the amount of consideration the superintendent must give a trustee application. For example, if an applicant meets the criteria set out by the superintendent a licence is issued. The superintendent does not have to think about whether the licence should be issued after an applicant meets the criteria. Bureaucracy is reduced, not increased.

The Superintendent of Bankruptcy also opposed our amendment. He said: "Mr. Chairman, the issuance of a licence requires an individual assessment or evaluation of the character, the competence and qualifications of the individual. The other thing that may not always set out criteria are grounds of public interest, which may not all be spelled out specifically. All the criteria require a level of appreciation, a level of discretion in the decision of issuing the licence. Some of the criteria may, by itself, require the use of some discretion".

By the superintendent's response we can see that the word "may" actually allows a certain element of capriciousness to enter into the issuing of trustee licences. This should not be the case. There should be no avenues for acts of favouritism in any legislation.

The superintendent should follow a specific and objective set of criteria in issuing licences. If an applicant meets the criteria the licence must be issued. There should be no discretionary power given to the superintendent.

I have been hearing lately that the granting of discretionary power is becoming a favourite activity of the government. For example, a few weeks ago a lawyer who works closely with federal government legislation told me that he has seen the government use the word "may" to replace the word "shall", which we just talked about, and the phrase "in the opinion of the minister" more often than ever before. Why is this the case? Why is the government placing more discretionary power than ever before in the hands of the minister and government appointees?

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12:05 p.m.

An hon. member

Partisan politics.

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12:05 p.m.


Myron Thompson Reform Wild Rose, AB

Partisan politics, my friend says. I certainly agree.

As I pointed out earlier, too much discretionary power in the hands of one person leads to abuse. When the phrase "in the opinion of the minister" is used in legislation, ministers can make any kind of decision they want. There are no guidelines. There are no written rules to follow.

Using these kinds of words in legislation takes away the certainty that all Canadians will be treated fairly and equally. Therefore I urge the government to stop using language in legislation which increases the amount of discretionary power which is placed in the hands of cabinet ministers and government officials. That much power in the hands of one individual is not necessary; in fact, it can be very harmful.

A second proposed Reform amendment rejected by the government was changing lines 31 to 41 on page 8 of the bill. Our amendment would have greatly improved Bill C-5. It would have allowed creditors to be treated more fairly during the trustee investigation process.

For example, the way Bill C-5 is presently worded, requirement to pay restitution is only an option that the superintendent may chose to apply when the trustee has defrauded an estate. In our opinion, it is only fair that a trustee be required to pay restitution in all cases where necessary. If a trustee has defrauded an estate in any way the superintendent must order the trustee to pay restitution to the creditor. Our amendment would have given the superintendent no discretionary power in this situation. Reform would have secured greater fairness for the creditor.

In closing, I want to reiterate that bankruptcy is a major problem in Canada. The way to help those who are bankrupt and in fact all Canadians is to balance the budget and then reduce taxes. Giving people back the money that they earned will increase spending which in turn will create jobs. Canadians with jobs can pay their bills and pay off their loans.

Bill C-5 has many positive provisions, the most important sections being the ones amended by my hon. colleague from New Westminster-Burnaby.

Also, Bill C-5 could have been a greatly improved piece of legislation. Reform offered several amendments that would have made the Bankruptcy and Insolvency Act a fairer and more just piece of legislation, but our suggestions were rejected.

Nevertheless, Reform will still support the passing of Bill C-5 through the House. We will also continue to make further recommendations to improve the Bankruptcy and Insolvency Act. When it comes up for review at a later time we will be there.

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12:10 p.m.

The Acting Speaker (Mr. Kilger)

We will now move to the next stage of debate where members' interventions will be limited to a maximum of 20 minutes subject to 10 minutes questions or comments.

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12:10 p.m.


Alex Shepherd Liberal Durham, ON

Mr. Speaker, it gives me great pleasure to enter the debate on Bill C-5, an amendment to the Bankruptcy and Insolvency Act and the Companies' Creditors Arrangement Act.

Let me begin by saying that changing both these acts is an ongoing process. The minister, along with his officials, consulted very extensively on the insolvency business in Canada over a long period of time. All those consultations with stakeholders have come together and basically formulated this act. I believe it was an amendment by the member for Prince George-Bulkley Valley which was accepted by the committee.

I sit on that committee and there were almost 100 amendments made to this piece of legislation. It is something that the government initiated, industry has been involved in and something that all parties have participated in.

I would like to discuss some specific aspects of the bill but also a general concept of bankruptcies. The previous speaker mentioned rising consumer bankruptcies and he could not be more correct. I have a statement here showing that in January total business and personal bankruptcies were 7,320 compared to only 5,000 for the previous year. In February the total bankruptcies were 7,947 compared to only 5,900 for the previous year. In March the total was 7,775 compared to 7,100. We can see that there is no question that there is a trend line and it is upwards. A huge portion of this is consumer bankruptcies.

I also listen to the Reform Party from time to time talking about tax cuts and how it would stimulate demand. I would like to point out why I do not believe tax cuts would do that. The bottom line is that consumers are living in a sea of debt. As governments back in the 1980s and earlier did not match their spending with their income, neither have individuals.

It causes me great pain when I talk to some of the people in my riding who have mortgages on their houses and consumer debts well in excess of their ability to pay for them. Often those mortgages are well in excess of the value of the properties. There are many people who are caught up in a debt spiral. They are two income families and hardly ever see their kids. Some people work shifts and hardly ever see each other. They are caught in that debt spiral and are not breaking out of it.

As a government we should be concerned about how that happened and what it means to the future. It will have a big impact on our policy directions here in Ottawa.

Another indication of this problem is the rise in the percentage of disposable income which is allocated to fixed debt payments. By disposable income I mean the amount of the take home cheque after taxes have been deducted. The percentage of that income which is now allocated to fixed debts in Canada has risen dramatically.

In 1980 the figure was 71 per cent, in 1981, 65 per cent. By 1989 it was up to 74 per cent; in 1990, 80 per cent; in 1992, 85 per cent; 1993, 88 per cent; 1995, 93 per cent; and in the second quarter of 1996, 94.3 per cent. This is a clear indication that there is a problem. There is rising personal debt and people are caught on a treadmill trying to get out of this.

It shows up in many other areas of our economy. I saw an article in the newspaper today about consumer retail sales for this Christmas. A survey done by Arthur Andersen basically shows a lack of optimism. Retailers do not believe they are going to have a very good Christmas this year. That is part and parcel of the same problem.

For registered retirement savings plans, while last year was a good one in quantum, in fact the percentage of people who had available funds relative to their income to contribute to RRSPs went down. In other words people are saying that they do not have any money.

Bad debt losses in Canada relative to consumer debt are rising. Some people do not think that is alarming, but in Canada that represents 1 per cent. In other words 1 per cent of total consumer credit card debts outstanding every year are delinquent.

Some people like to look at the United States to see certain future trends. In the United States consumer debt delinquencies are now up to 5.7 per cent. It has become a whole business on how to deal with debt in that country. It should also be noted that the banks are getting out of the debt business directly. They have actually been able to factor out their consumer card business. In other words, they create the debt and then they factor it out to other companies to collect it.

Industries are popping up in the United States finding different and intrinsic ways of getting people into debt. There are credit card companies that deal almost exclusively with the poor, people who are high credit risks. Do we do that in Canada?

I am amazed when our young people show up at university or community colleges and one of the first things put into their hands is a consumer kit. This so-called consumer kit is a composite of 5 or 10 credit cards, one from a bank and others usually from a number of retail stores and gasoline companies. These people have very low earning power.

I am not saying that university students are incompetent or unable to deal with their debt and deficit problems. However, it is clear when we talk to credit counsellors that it is a rising problem in this town. They tell us that the percentage of university students coming through their doors for their counselling services is rising.

What are our institutions doing to be responsible for creating this problem? General Motors is a big feature in my riding. I am hoping very much that they will get back to work pretty soon. It has a tremendous impact on business in Durham.

Be that as it may, another interesting observation from General Motors in its marketing procedures is that its market in Canada is shrinking, as car markets generally in Canada are shrinking. Not only are they shrinking but the type of cars Canadian consumers are buying is significantly different from what they were buying even 10 years ago. They are smaller dollar purchase items, even compared to their American cousins to the south.

We are seeing a tendency where people have less liquidity, less ability to consume. I suspect if there are tax cuts, and the province of Ontario has already done that, I do not see any change in consumer demand. The bottom line is those people will take the money, and justifiably so, and pay it against the debts they already have.

I should bring to the fore the recent report of the Office of the Superintendent of Financial Institutions. This gentleman's job is to supervise financial institutions. His report is very interesting. In it he states that levels of household debt reached an all time high in 1995-96 but they have not appeared to have plateaued. Both consumer and business bankruptcies increased in 1995. Mortgage and credit cards at real levels, though low in his estimation, began to climb. Despite improving profitability and capital levels, and he is talking about financial institutions, the risk profiles of some financial institutions increased as they expanded beyond their core activities into new lines of business.

I suggest that those new lines of business are consumer credit and also paper currency transactions, derivative markets and so forth. I will get to that later in my dissertation.

Some of the macroeconomics belie the real problem that lies beneath these statistics. We have an intergenerational problem. Almost 33 per cent of our population is now considered to be baby boomers. I suggest that the baby boomers in some small way are consumed out. They may well have had their two cars in their driveway. They already have a television, a VCR and all the good stuff that goes with the good life. The bottom line is they do not really need a lot more. They may even have their houses paid off.

There is another group whom I would consider above middle income, maybe around 35 years old who are basically on the debt treadmill. Also the younger generation coming behind that group seems to be copying the same basic tendency.

This bill talks about Canada student loans. The Government of Canada has over $1 billion in defaulted student loans. Undoubtedly some abuse is taking place where people declare bankruptcy so they can wipe off their loans before they start to work. This bill deals with that problem. It requires a two year stay prior to those people declaring bankruptcy. If within that two year period they have a job and so forth, they are able to pay off the debt and well they should.

The issue is somewhat larger than the bill actually deals with. That is, why is it that these young people are being persuaded into debt which they basically cannot sustain? It is not just student loans. It is also the consumer credit card. What is wrong with consumer credit cards? Absolutely nothing. If you want to give your daughter a credit card so she can come home on the weekends from university and she just uses it for that, you pay it off, fine, it is a convenience.

Most people see us moving toward a cashless society with more convenience in business transactions. I applaud that. I do not think I have actually stood in front of a teller in about a year and a half. Some people still like standing in line and talking to people in their communities and I understand that issue as well. For a lot of people it is a convenience and financial institutions are addressing some of that demand, but along with that, we are developing a second scenario.

People are being constantly pushed more and more into living beyond their means, quite frankly. They are told that they can do this, that all they have to do is have a credit card. The question is, do lending institutions check for total credit exposure? What do I mean by that?

That credit card chit I talked about probably gave the individual up to $800 worth of credit. It does not take a lot of intuitiveness to see that if you pay your $20 a month, you can probably jump that up and keep on jumping it up. Worse than that, within the credit industry there does not seem to be a system of cross-checks in this country. In other words, it is possible for that student to get $10,000, $15,000 or $20,000, way beyond their ability to pay without a lot of checks going on within the financial institution structure itself.

What do the banks do in a situation like that? They say: "Well that is too bad. I guess that is one we lost on. We will just charge that to the good customers". It is incredible to watch the deviation in interest rates between the prime bank lending rate and credit cards.

Industry Canada put out a statement for the month of September. The spread between the Bank of Canada credit card rate, currently 4.25 per cent, and the sample VISA card tracked by Industry Canada has continued to increase on average since 1994. We all know that interest rates have been declining. It is currently 13.25 percentage points compared to its average of 8.9 per cent, the difference between the prime bank lending rate and what people are being charged on their credit cards. The spreads between the bank rate and standard rates presently range between 11.65 and 14.65

points while the spread between the bank rate and the retail card rate is 24.55 per cent.

What am I saying? Basically, interest rates are going down and the actual credit card costs are going up. How do banks explain that to the public? They explain it by saying they have rising consumer bankruptcies. It is a self-fulfilling prophesy. They advanced more money. They did not really spend a lot of time on how they advanced it because they wanted to get that interest rate up there to pump the bottom line showing an increased profitability. At the same time, when they take a hit on it, they apply it to everybody and charge them more interest.

It is a great system, but it is not in the best interests of the consuming public. I do not think it is in the best interests of public policy.

Some of the European countries deal with this. In some of the European countries, if there is a credit card default and it can be proved that they did not check with other institutions to see the total quantum of debt, they cannot collect it. In other words, we should be taking those debts off the bottom line of those banks, not allowing them to charge them within the interest rate structure where everybody pays for them. That would do a lot to reduce the number of bankruptcies in Canada.

We want financial institutions to take responsibility for the lending that they make. It is not good enough just to take a shotgun approach to the industry and say: "Who cares about any of those who fall by the wayside? We are going to get the other guys to pay for them and we will still make lots of money". This is what is wrong with the banking industry in Canada.

One of my major interests here is small and medium size businesses. We all know that small and medium size businesses have complained constantly about their ability to access credit. Someone who has a good idea goes to the bank. The bank says it is not interested because that person is a small business operator. This has improved marginally but not very significantly.

I note that the banks are coming before us again with their quarterly statistical report. There has not been in quantum much change in the total amounts of money advanced to small and medium size business.

More remarkable, a study which the banks themselves had done trying to show how effectively they were dealing with small and medium size businesses identified that 44 per cent of all small business operators look on consumer credit card debt as a source of financing for their businesses. That is profound. In other words, people who cannot get normal bank loans to run their business are having to run it up on consumer card debt.

This happened in my office recently. A gentleman came in with a good idea for fixing computers. He had no debts, his house was paid for and he had assets. He had gone to the bank to borrow $20,000 and the bank manager told him he was not interested. I told him to go back to that bank and tell the manager he wanted $20,000 on his credit card. He got the $20,000.

The banks are changing their whole attitude toward small business lending. They are going to make them all on credit cards. They are saying that anybody with $50,000 or under will have a credit card system. The bank will not check the financial statements every year because they really cannot be bothered. What the banks are not telling the borrower is he or she will pay a minimum of prime plus 3 per cent on loans.

The point I am trying to make is that banks are a major part of the bankruptcy problem and they are a major part of the problem of creating jobs. The banks, banking institutions and other financial institutions have gone into the business of paper transactions. The major growth in the financial sector is in derivatives. These are all paper transactions that occur on Bay Street or somewhere in Paris or New York. This does not mean much to the average person who has a good idea, who wants to develop a product that consumers can use and will employ more people.

We need a different attitude toward how we lend. We have to lend responsibly but also have to lend on the brainpower of Canadians.

A number of major changes have been made to the bankruptcy act which are important. We have underpinned the concept of remediation rather than forcing people into bankruptcy. I am apologetic to some of my colleagues in the bankruptcy industry that promotes bankruptcy. It is a big business now. You can hear the jingles on the radio: "Come down here, we will solve all your credit problems". We have to stop that. We have to move toward greater accountability, financial responsibility by our financial institutions toward small and medium sized businesses and the young people who are in debt way beyond their means.

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12:30 p.m.


Paul Forseth Reform New Westminster—Burnaby, BC

Mr. Speaker, it is a pleasure to speak on Bill C-5.

I want to highlight one section of the bill that the victims of crime should note. It should be noted by victims of incest or abusive relationships in a marriage, by someone who has been involved in an unpleasant employment situation or a victim in a residential school. Anyone who is a victim of an assault is specifically included from a Criminal Code offence. All of these can be included in the changes.

Sometimes the Liberals can be reasonable and amenable to opposition proposals to improve government initiatives. The government accepted my changes to this bill and everyone will be better off.

Prior to the last election I served as a probation officer and a family court counsellor in the provincial attorney general's ministry in British Columbia. I spent each day working with the Criminal Code. I have learned firsthand the code's weaknesses and its strengths. I discovered loopholes that aided many to walk free when they should have been put behind bars. Far too often I saw justice not being served. The criminals were benefiting, the victims were suffering and there was nothing that they could do.

When constituents in New Westminister-Burnaby elected me as their representative in 1993 I made a commitment to take a firm stand on behalf of victim. Whether it be changes to the Canadian Criminal Code or to some other statute I promised that something would be done to protect the public from further harm and suffering.

In May 1995 I had the distinct pleasure to introduce private member's Bill C-323, an act to amend the Bankruptcy and Insolvency Act (order of discharge). Subsequently the government incorporated my private member's bill into this legislation.

When a person commits an assault or battery, a victim can claim damages through a civil law suit. However, under the old Bankruptcy and Insolvency Act if the offender claimed bankruptcy, the damages owed were cleared causing the victim to once again suffer inconvenience and hardship.

Subsection 178(1) of the bankruptcy act lists various things from which an order of discharge does not release a bankrupt person. It takes into account alimony, maintenance and support of a spouse or child, debt arising from a fraud, embezzlement or any fine, penalty or restitution order imposed by a court in respect of an offence.

Therefore, according to the way the old act read, a bankrupt person could not be relieved of paying a traffic fine yet that person could be relieved of paying damages for something like sexual assault.

I read an article in the Vancouver Province about a woman who was awarded about $200,000 in damages for sexual abuse by her stepfather. After a civil trial her stepfather was ordered to make payments of $500 a month. According to the article he made one full payment of $500, four payments of $100, then he filed for bankruptcy.

Tammy Carr of White Rock, B.C. sued her stepfather for sexually assaulting her for six years and was awarded about $42,000 in damages. Her stepfather, David Graham filed for bankruptcy six months after the judgment.

Cynthia Shefford of Alexis Creek, B.C. was awarded some $357,000 by a Supreme Court jury for the sexual abuse committed by her father Leonard Klassen. The father was ordered to pay his daughter $500 a month for 12 years. Three months after the trial, Klassen filed for bankruptcy.

The amount of Shefford's award at that time was the largest award in the country. What good is it to have such a record amount if not a penny is received by the one who needs it most, the victim?

My amendment is a fundamental change to the act. It is not just a small change. Not only does it strengthen the statute in legal terms, but it fundamentally strengthens the public's view of the operation of the criminal justice system.

Family violence is mitigated against by this bill. The weak and the dependent have made a further gain in recognition in law by the improved bankruptcy provisions. Victims of violence, whoever they may be, have a measure of increased protection from my refinements to the bill.

It especially relates to women's issues about which I am particularly concerned. In the past as a community service professional in helping these victims I have been in the sad position of having few resources for healing or overcoming traumas. Often medical plan resources were limited, especially for psychological services or fees for support groups in peer counselling. I desperately made many phone calls in an effort to find resources for the people with whom I was dealing.

Now at least the door is being opened to the possibility that the perpetrator will have to give the resources to assist in the healing of the victim. It more appropriately places the financial responsibility where it belongs. If a civil court after a trial makes an award for assault, the perpetrator cannot now escape through bankruptcy because of the new clause in Bill C-5.

The section in question, 105.(1), begins on page 62 and states:

Subsection 178(1) of the Act is amended by adding the following after paragraph (a):

(a.1) any award of damages by a court in civil proceedings in respect of

(i) bodily harm intentionally inflicted, or sexual assault, or

(ii) wrongful death resulting therefrom;

It is a short phrase but I anticipate it will mean an awful lot to the residents of my constituency and the victims of crime across the country.

I extend my compliments specifically to the minister's staff for their professionalism. This technical bill has 99 pages and we will eventually see how it will operate in the real world. I will

especially be watching how a number of civil trials, which are now on hold, will move forward as a result of the passage of this bill.

I thank the minister and lawyer David O. Marley of Burnaby, British Columbia.

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12:40 p.m.

Dartmouth Nova Scotia


Ron MacDonald LiberalParliamentary Secretary to Minister for International Trade

Mr. Speaker, it is a pleasure to rise in debate on this bill. I listened to the comments of the member opposite, who has done a significant amount of work trying to ensure that the bill is amended in a way that meets the needs of those who find themselves in financial difficulty, be they individuals or corporations, as well as outlining the clear responsibilities which those individuals or corporations that are debtors must assume in a system that is fair and reasonable.

It is a bit of déja vu for me because back in 1992 I was the consumer and corporate affairs critic when Bill C-22 was before the House. At that time the then minister of consumer and corporate affairs, Mr. Blais, did something very innovative. He knew that this was very complex legislation and that many attempts had been made since the late 1940s to amend it. Each and every time, because of the various interest groups, every valiant effort to amend the act was met with failure and had to be withdrawn.

There were instances in the past when this legislation was introduced in the Senate to try to take it away from the public's attention. Even over in that place some of the special interest groups rose up and each and every attempt hit the shoals and the act was not amended.

One of the few good things the Conservative government did in the last Parliament was to allow very open and vigorous debate in committee to try to get a bill that addressed all of the various concerns. It did that in a wholesome way which allowed the full input of members of Parliament. Since I gave that government credit back in 1992 I will do it again today in the House and, by extension, to the former minister, Mr. Blais, who is now practising law in Quebec City. He did the right thing. It showed that Parliament can work when committees are allowed to have real input on technical bills which can have a very real effect on the lives of Canadians.

I was pleased to hear from my Reform colleague that a private member's bill which he put forward in this place has been incorporated into this bill. It is very healthy for democracy when we allow members, no matter what their political stripe, to input to the fullness of their capability as legislation goes through this place.

I will make another pitch for more bills of this kind, hopefully from the government side, to be referred to committee after first reading, before they are approved in principle, or if they go after second reading to ensure that we allow the huge wealth of knowledge and ability that we have in this place, regardless of the political stripe, to be used to come up with better legislation for Canadians.

I am very pleased to see that there have been a number of amendments. When we worked on this legislation back in 1992 it took us well over a year to get it done. It was a very complex piece of work. We paid attention to detail. There were various opinions as to what we should be doing. The Speaker knows well because at that time he was the associate critic for consumer and corporate affairs. He knows the hours of debate and the work that went into that bill.

However, a number of pieces were left unfinished. Sometimes we have to go with a cake that is three-quarters baked rather than leaving the cake in the oven. That is what we did the last time.

We set a process in place whereby the bill had to be reviewed by a parliamentary committee, which is what is happening here. We also made sure that there would be an advisory committee put in place to go over the technical aspects of the bill, as well as some of the practical applications of what we had done when we amended the act with Bill C-22.

Back then I had a number of concerns. Some of them have been addressed. The fine tuning absolutely had to be done. I am pleased to see that the work has proceeded. We were worried about the last bill about having two competing pieces of legislation as a remedy for companies that got into financial difficulty. The CCAA, which has been in place for years, was used many times almost as a chapter 11 in Canada. Because of what we did in Bill C-22, with the reorganization provisions that we put in place, we had sort of a Canadian version of a chapter 11 which encouraged reorganization instead of liquidation.

It encouraged companies and individuals who got into difficulty financially, instead of having the banks which always had the priority to pull the rug out from underneath, to put some structures in place. It took the gun away from the head of the business or the individual and facilitated some discussion and dialogue to try to get over the debt problem.

Rather than laying waste to Canadian companies and individuals because of debt problems, we wanted to see if there was some way the debts could be rehabilitated and put over a longer period of time. In this way, Canadians could maintain their dignity. It is not a dignified thing for many Canadians to be forced into personal bankruptcy. Indeed, we need to assist companies that find themselves in some financial difficulty so they do not go belly up, as we say back home, and that the employees are found without a job and on the government dole.

A number of those changes that were put in the last bill have been built upon. I understand the CCAA is in this bill. We sort of anticipated that perhaps during the review there may not be a

necessity to keep the CCAA. I am pleased to see that it is there after careful review by the committee of industry. However, it is only to be used with firms whose sales are in excess of $10 million. I think that is a good starting point.

I am very pleased to see that there are some amendments in this piece of legislation dealing with environmental costs, remediation and rehabilitation of environmental sites. We spent a considerable amount of time on this in 1992 and there was generally no consensus at the end of the day on how we proceeded with it. We were concerned because we did not want companies to be able to walk away because of environmental liabilities and leave effectively the crown or the trustee or the municipality with the burden.

I am very pleased to see that basically there is a type of super priority given to environmental clean-up of these orphaned sites.

I am also pleased to see that there have been some changes in this legislation dealing with potential actions against directors and officers of companies during periods of reorganization. Clearly we have to understand that when companies get into financial difficulty we are perpetrating an even greater challenge to the company if the directors feel that they are going to be challenged during a period of reorganization because then they will leave. Therefore the very people needed to hang in to make sure that the reorganization proposal is implemented are the people who are forced out because they are concerned about potential liabilities through the legal system. I commend the committee for the work it has done in bringing these challenges in.

I can remember when this happened a few years ago. Canadian airlines was in financial difficulty and because of potential directors liability we saw some of the directors jumping ship from that airline. That clearly is not in the best interest of the rehabilitation of companies such as that. Therefore I was very pleased to see that those amendments came forward.

On farmers and fishermen we argued heavily back in 1992 that there had to be some changes in the old bankruptcy legislation to recognize that agricultural and fishery products were different than other commodities. What we did in the last bill was pretty innovative and kind of risky. The banks did not like it at the time but accepted it after we did it. We put in provisions for revindication which was key to stopping the destruction that happens many times and splashes all over the place from bankruptcy or insolvency proceedings.

At that point in time we made it very clear that if the supplier of goods, which supplied goods to a company, went bankrupt within a 30 day period of receipt of the goods and the goods were not paid for, we wanted to make very sure the banks or whoever was financing did not then run in and cause a secondary problem by seizing and liquidating the goods to put against the loans that the company had to do its operations.

What was happening in many cases is that the small business would be under the financial hammer and the crunch would be on. The banker would call and say: "You are $20,000 over your credit line. What we really have to do is apply for a higher credit line for you but you are overdue and you will have to pay down your credit line". The small businessman or woman may then be compelled to take additional stock on their own credit line back from their suppliers, sell it at a discount to try to get that liquid, to get the cash, give it to the bank. The bank would get it paid down and then say: "Sorry, our head office has looked at this and we are going to have to foreclose". That did not happen just once or twice. That was a pattern we heard from businesses, trustees in bankruptcies and accountants in our hearings.

We said that from now on the banks are not going to be able to seize. If the goods are sold within 30 days then they have the right to take them back before anybody realizes the liquidity of the assets.

However, there was a problem with farmers and fishermen because the act as it was proposed in 1992 said that they had to be able to identify their goods. What happens to a fisherman who just picked up some halibut and dropped it off to the fish dealer, along with the halibut of 30 other fishermen? Unless he can identify his particular fish, barley, oats or wheat, if one happened to be a farmer, he could not get them back.

At the 11th hour in 1992 there was agreement that this had to be done differently and changes were made. I am very pleased to see that the committee has gone further and made other changes. As the act stood after 1992, it still did not recognize the changes with respect to encouraging rehabilitation. But this bill does. It recognizes that if farmers and fishermen opt for seasonal work, which is what we are trying to encourage them to do so they can increase their income, that in and of itself would not be a reason for somebody to petition them into bankruptcy during a reorganization. In other words, the fact that they worked and made additional income to apply against their debt through reoganization is very positive.

I would like to reference a couple more things. There have been some very positive amendments to the bill. There are responsibilities that the debtor must assume and they have been outlined and highlighted in some of the amendments.

I am very pleased to see that individuals will not be able to avail themselves of provisions of the legislation in order to skirt their court ordered responsibilities with respect to support payments or restitution to victims of crime. I applaud the member for putting those proposals forward. Constantly in this place we have to review

legislation because many times it is used in a way for which it was not intended when it was debated here or examined by committee.

Clearly the amendments from 1992 never anticipated that somebody who had a court ordered restitution to a victim of crime or was ordered to pay support payments would be able to make application to effectively have them wiped out even though because of their earning potential they still had the ability to pay.

I applaud the member opposite for keeping up the fight on that. He has truly made this a better piece of legislation because of his actions. I am encouraged that every one of the amendments continues to work toward the goal of reorganization versus liquidation of assets.

However, I am slightly discouraged about the role of the crown. In 1992 we argued at length about the role of the crown when dealing with a crown debt. A crown debt is effectively treated as a super priority. In 1992, I remember specifically grilling officials from the Department of National Revenue and the Department of Industry and the members of the Superintendent of Bankruptcies' office about the role of, let us say, Revenue Canada. If a company or an individual decides to apply under the reorganization provisions to try to order their debt in such a way to have it reduced and then pay off when they can to keep from going bankrupt, I was worried that the crown because it had super priority would sit back, twiddle its thumbs and after the exhaustive and difficult process say "that is all well and good, but I want 100 per cent of my debt paid back". I wanted the crown to be treated the same way as others in the same class of secured creditor.

At the time we were told not to worry, that the minister had indicated to department of revenue officials that they were to work in these cases of reorganization and that they should be silent unless the proposals under reorganization treated them in a harsher fashion than other secured creditors.

I am dismayed that over the last four years I have had to deal with at least three cases where the crown through Revenue Canada has simply not done that.

We have a case that I am currently pursuing through the regional director of an individual who went under a reorganization three years ago under the provisions of this act. He had a debt owed to Revenue Canada but he had a lot of other debts as well. All the creditors got together and said it is better if we reduce this individual's debt and we have an orderly payment of the agreed upon debt afterwards to allow the individual to go on plying a living, making some money and rehabilitate his debtor situation.

They did that. Everybody agreed. Three years later after he sold his house, he sold all of his properties, he liquidated all of his retirement annuities and all that type of thing, he felt good about himself. He was able to pay off 60 per cent of his debt. After he has gone through three years literally of hell to pay off these debts because of the reorganization provision, he could claim that he had never had to go bankrupt, that he did what he thought he should do and that he had the financial capability of doing it. Three years later a notice comes from Revenue Canada which says: "Please be informed that you owe Revenue Canada X number of dollars plus interest over the last three years".

Somebody might ask did he pay Revenue Canada. Yes, he did. Under the terms of the reorganization provision he paid it the same as other secured creditors. I think it was 60 per cent of the debt. Revenue Canada lay in the bushes, as it were, for three years until his reorganization was completed and was discharged and then sent him a bill for the balance with interest accrued, effectively forcing this individual who had gone through the very good provisions of Bill C-22, had gone through the very positive provisions of rehabilitating his debt of now having to face a bankruptcy proceeding.

It is not the first case. It is the fourth case. Over the last number of years each time I heard of one of these cases I would call the Superintendent of Bankruptcies who agreed there was potentially a problem. It was kind of regional in nature because a lot of it was to do with the head of collections in each of the regions with Revenue Canada.

I am dismayed that this aspect of crown priority has not been fully addressed. However, I encourage members with constituents having similar problems to raise those at the appropriate level and at the political level with the Minister of Industry, who is responsible for the administration of this act, as well as with the Minister of National Revenue, where it seems in my experience at least the problem still lies in various regions of the country.

The last thing I want to say on this bill is that there is still a piece of unfinished business. Back in 1992 in order to get this bill completed I and Mr. Rodriguez, the former member for Nickel Belt who was the NDP critic, knew this file well. He had a couple of private member's bills dealing with wage earner protection: what happens when a company goes belly up which has a lot of employees, and what happens to the wages owed and the benefits owed to those employees? Under the old act there was a major problem. There was a very low limit that had not been updated in about 20 years. The new bill, Bill C-22 in 1992, made some movement in the right direction.

However, there was still a major problem that in many cases the wage earners, the people who by the sweat of their brow or the grey matter in the brain, through their inputs to the business were a key component of the business, were not treated in as fair a fashion as

the banks or the suppliers of goods or other services. The labour component was never treated fairly.

We came up with a number of proposals, none of which was acceptable to the government of the day, but at the end of the day we had made an agreement with Mr. Blais, the minister at the time, that we would look at various options for wage earner protection. Indeed, part of the agreement was to set up some type of all-party committee to look at the best ways to deal with in many cases a very major loss of wages to individuals who work in corporations that go bankrupt. They are always left at the bottom of the heap and that is unfair. That has not happened today. The agreement was not something that officially was done on the floor of the House.

However, I will jog all of my colleagues' memories who were on the committee in the last Parliament that indeed that was the commitment. As a result of that commitment we amended the entire section dealing with wage earner protection out of Bill C-22. That was a key operative component of that bill and we amended the whole thing at report stage because we were going to put a process in place to examine it.

I encourage members who have an interest in the industry committee to look at a few of those shortfalls, to take credit for the good work that has been done and further modernizing this very important piece of legislation.

Continue to ask the questions that must be asked over the next few years as to whether the wage earner protection clause are sufficient, whether further work has to be done and whether somebody has to keep a closer eye on the role of the crown and crown agents in discussions leading up to reorganization, whether they are living up to the spirit of the debate and the legislation of 1992 and 1996.

In conclusion, I appreciate having had the time to relive some history. Members are very familiar with most of what I said. I also commend the current members of the industry committee for doing a bang up job.

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The Acting Speaker (Mr. Kilger)

Is the House ready for the question?

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Some hon. members


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The Acting Speaker (Mr. Kilger)

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