Debates of May 27th, 1996

Income Tax Budget Amendment Act

[The Acting Speaker (Mr. Kilger)]

The government whip has made us aware that the vote will take place at 6.30 p.m.

Standards Council Of Canada Act

[Lloyd Axworthy, Liberal, for Minister of Industry]

moved that Bill C-4, an act to amend the Standards Council of Canada Act, be read the second time and referred to a committee.

[Morris Bodnar, Liberal, Parliamentary Secretary to Minister of Industry]

Mr. Speaker, when I was asked to participate in this debate about Bill C-4, an act to amend the Standards Council of Canada Act, I had to ask what stake my constituents would have in this legislation and its implementation.

This got me thinking about the role of standards in society and how they touch the day to day lives of Canadians. Clearly these legislative changes are meaningful to Canadian businesses and business because standards have an impact on business practices and Canada's capacity to compete in the international marketplace.

Standards also matter to Canadians because they contribute to consumer safety and health and to the utility of everyday products, be they industrial, domestic or recreational. Therefore today I direct my comments to the people side of the standards story.

In Canada standards setting is based largely on voluntary consultation and consensus among a wide group of public and private sector stakeholders. Individual citizens and volunteers from industry and special interest groups routinely sit on panels and committees that develop national standards. A variety of standards development organizations accredited by the Standards Council of

Canada, the SCC, bring these groupings of people together to set standards affecting every sector in our society.

The SCC oversees the five key standards development organizations active in Canada and estimates that a further 14,000 people are involved in some capacity with establishing and maintaining standards in Canada. Together these experts and concerned consumers establish standards for everything from health care products to emergency planning.

Their deliberations and decisions set guidelines and standards for environmental management practices, the manufacturing and marketing of consumer products and electrical devices, occupational health and safety, building codes and quality assurance procedures. Standards which flow from a voluntary consensus based system like the one we have nurtured in Canada have the capacity to track the dramatic changes introduced by technological innovation.

This consultative approach also takes place at the international level, and often standards developed here in Canada lead the way and become universally accepted.

The federal government embarked on an extensive consultative exercise to examine standards and their growing importance for Canadian consumers and business. That consultation revealed significant interest in standards in Canada and support for an enhanced role for the SCC. Most stakeholders favoured a broader SCC mandate to include economic and environmental management issues while maintaining the core mandate which already included consumer protection. People told the SCC they were looking for leadership, effective management, accessibility and constructive Canadian action on the international stage. The bill we have before us today reflects those public wishes.

The bill also builds on our national record of achievement in creating responsive, consumer driven standards. Without the work of standards development organizations in Canada and their many volunteers and technical committees we would not be so sure about the safety of the light switches in our homes, that propane tank under the barbeque and our child's bright yellow bicycle helmet.

The Canadian Standards Association, the CSA, one of the agencies accredited by the SCC to develop Canadian standards, is possibly the standard organization Canadians are most aware of, although several other key standards development organizations are also at work in Canada.

For over 75 years in Canada the CSA has ensured that a plethora of electrical devices, chemical products and manufacturing processes meet stringent national safety codes. Of the nearly 1,500 standards the CSA has on its books, about one third have been incorporated into government regulation, and that trend continues.

On the high tech side Canada is playing a leadership role in co-ordinating the vast network of computer systems that span the world. As Canada builds its own information highway, committees are at work to match our infrastructure with others in the world. One initiative called open systems interconnection, OSI, involves the creation and standardization of the unique electronic addresses required by information highway users to send and receive information. Here good standards equal good human dialogue, not to mention technical innovation.

Let us talk about the air we breathe and the water we drink. Canada provides the secretariat for an international technical committee for environmental management which offers management systems for corporations that have an impact on the environment. As we speak, the committee is at work setting standards for environmental waste management, environmental audit practices, labelling and product design and safety. The aim is to encourage compliance around the world, making it easier for companies to plan for and monitor their environmental impacts.

On the horizon lie many more opportunities for Canadians to be involved in domestic and international standards activities. Growing emphasis is being placed on establishing standards for management systems, including quality and the environment. Canadians from all walks of life continue to participate on standards writing committees or consumer advisory panels.

Though seemingly complex and bureaucratic, standards setting mechanisms do affect our lives, and our powerful international alliances have the potential to deliver significant and long lasting benefits to the people of the world.

I also think these amendments, because they are based on so much consultation, set the stage for a standard setting system that engages and listens to Canadians. For that reason I think Canadians will support the emphasis the government is placing on standards.

[Philip Mayfield, Reform, Cariboo—Chilcotin, BC]

Mr. Speaker, it is a pleasure for me this afternoon to speak on Bill C-4, an act to amend the Standards Council of Canada Act.

What are standards? Standards are measures of dimension, of quality, of exactness, serving as examples or principles to which others conform or should conform or by which the accuracy or quality of others is judged.

Many Canadian and international organizations strive to attain and maintain a certain level of standardization in fields relating to construction, manufacture, production, quality performance, and safety of buildings, structures, manufactured articles, products and other goods not expressly provided by law.

For example, electric plug manufacturers want their products to work safely and efficiently. Therefore they build their electrical plugs to fit into standardized wall sockets. These plugs must also conduct a standardized level of electricity and allow household appliances to work without sparking a fire.

As members can understand from this example, we need standards in the smallest details of our lives. Standards are critical in protecting the safety of Canadians and in ensuring their economic prosperity and the well-being of their children both now and in the future.

For instance, how do Canadians know that their children's bicycle helmets will protect them when they fall or collide? How do Canadians know that the windows in their houses will keep the heat in while keeping out the cold of the winter? How do Canadians know that their TV reception will not go fuzzy when they turn on their home computers? The answer is standards.

Standards are crucial in protecting Canadian people and in ensuring that goods and services will reach a level of quality on which Canadians can depend.

In addition, increasing global trade forces Canadian companies to agree on international standards. Canadian manufacturers know that their products must meet the requirements of various countries around the world or they will not be able to export and trade abroad.

Canada's trade agreements, NAFTA, GATT and the internal trade agreement, prohibit the use of standards as trade barriers. However, international co-operation relating to standards is crucial to Canada's economic growth.

The bill before us today deals with the Standards Council of Canada. The mandate of this crown corporation is to promote standardization with the hope "of advancing the national economy, benefiting the public, protecting consumers and facilitating trade and furthering international co-operation". These all relate to standards.

What are the main elements of Bill C-4? First, it expands the current mandate of the Standards Council to all areas where standardization is not already provided for by law.

Second, Bill C-4 involves more Canadian volunteers in standards activities and promotes communication between governments and the private sector.

Third, Bill C-4 reduces the number of council members from 57 to 15 and adds qualifications for private sector representatives.

Fourth, Bill C-4 changes in the English version the titles of the president and vice-president to chairperson and vice-chairperson respectively.

Fifth, Bill C-4 specifies the duties of the chairperson.

Sixth, Bill C-4 establishes the provincial-territorial advisory committee and the standards development organizations advisory committee.

Finally, Bill C-4 specifies that meetings of the council and its committees may be held through electronic means.

These are amendments to the Standards Council of Canada Act that the Reform Party of Canada can support. I will only comment on a few elements of this bill.

The Standards Council of Canada membership would be reduced from 57 to 15. This is an important change. The council would be able to meet more often with fewer people. Presently the council only meets twice a year for a day each time. This is hardly enough time to co-ordinate, develop and administer efficient and effective standards, especially in today's electronic world with so many rapid changes occurring.

Telecommunications and computers are advancing so rapidly that it is difficult to develop standards quickly enough to keep up with these changes. It is common sense that a smaller membership, meeting more frequently, would be an improved means of dealing with the complexities of standards implementation in this fast changing world.

Using modern technology to hold electronic council meetings is also a bold step for a crown corporation to take to operate more effectively. These kinds of meetings can build efficiencies and save tax dollars. We encourage the council to continue to experiment with ideas of this kind.

The Standards Council of Canada membership would also change under Bill C-4. The number of public servant members on the council would decrease from six to one. This is a change that would hopefully make the Standards Council of Canada more representative of the Canadian people and the Canadian industry that depend on these standards.

Too often in the past government decisions have been made by an elitist and insensitive group of public servants in Ottawa who have no direct contact with the desires and needs of the Canadian people who are trying to make the economy work. This requires change, but it needs to change not only with the Standards Council of Canada but with all of government.

Public policy needs to be designed and implemented by the applicable level of government closest to the Canadians affected. Canadians must have a direct say in what government plans and what government brings into effect. When this happens, the government can in the words of Pericles be called "a democracy because power is in the hands not of the few but of the many".

I am not suggesting a new idea. The private sector membership of the council would also change under Bill C-4. To make the council more open, accessible and accountable, members would be representative of a broad spectrum of interests and would have the experience necessary to assist the council in fulfilling its mandate. This change would hopefully allow those most affected by the council's resolutions to have a direct say in this decision making.

I will comment on the Standards Council of Canada's financial situation. Its operating expenses this year were estimated at $9,847,000. Its revenues were estimated at $4,663,000, but its budget for 1996-97 is estimated at $5,184,000. That is quite a saving. I congratulate the council.

We commend the Standards Council of Canada for its efforts to reach full cost recovery, but it has not gone far enough. It needs to take further steps by being even more innovative in covering all of its operating costs. In doing this the Standards Council of Canada would be setting an example for all of government.

Therefore we challenge the government and we challenge all crown corporations to follow the standards council's lead. We challenge them to examine their operating budgets, to find areas where they can offer programs more efficiently and to find where costs can be fully recovered. More important, we challenge them to find ways to become more accessible and more accountable to the people they serve. They will be doing what is right for Canada and what is fair and necessary for all Canadians.

[The Acting Speaker (Mrs. Ringuette-Maltais)]

Is the House ready for the question?

[Some hon. members]

Question.

[The Acting Speaker (Mrs. Ringuette-Maltais)]

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

[Some hon. members]

Agreed.

[The Acting Speaker (Mrs. Ringuette-Maltais)]

I declare the motion carried. Consequently the bill is referred to the Standing Committee on Industry.

(Motion agreed to, bill read the second time and referred to a committee.)

Bankruptcy And Insolvency Act

[John Manley, Liberal, 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 second time and referred to a committee.

[Morris Bodnar, Liberal, Parliamentary Secretary to Minister of Industry]

Madam Speaker, I am pleased to begin second reading of Bill C-5.

This legislation is a key part of the framework laws that provide the foundation for our economy. Marketplace framework laws provide the cornerstone of good government. They help government play a less intrusive role in the economy by establishing the rules that level the playing field for all concerned.

Modern, up to date framework laws protect consumers, small businesses and others against the abuses of economic power. They provide rights and impose obligations on marketplace participants, thereby providing certainty and reducing transaction costs. Framework laws are therefore essential for creating a climate for business that fosters jobs, innovation and growth. They help create the proper economic environment in which firms and consumers make their decisions.

The particular framework laws in the legislation before us involve bankruptcy and insolvency, an issue that few Canadians want to contemplate. However, when Canadian businesses or consumers find that they have need of insolvency protection, they want to be assured that Canada's laws help them make the necessary decisions to get their lives or their businesses back on track again.

Canada needs bankruptcy laws that encourage rather than deter risk taking and entrepreneurship. This is achieved by enacting bankruptcy laws that provide certainty and fairness to both debtors and creditors. The health of the Canadian marketplace depends on this balance. Lenders and borrowers need the assurance that their transactions are backed by framework laws that will treat all parties fairly and that will allow innovative solutions.

At stake are jobs that rely on a company's ability to carry on paying its debts. Good bankruptcy laws give firms and individuals in financial trouble greater opportunity to get back on their feet by reorganizing their affairs and allowing them to capitalize on emerging opportunities. We must also be mindful of the health of businesses that rely on the ability of its customers to pay. At stake are the interest rates and conditions of borrowing at institutions. They must always consider the risk of not getting their loans repaid and set the price of their loans accordingly.

In sum, this proposed legislation is dealing with the whole moral and ethical climate of the marketplace. Canadians want to be assured that no one is slipping away from financial obligations by

using bankruptcy as an easy way out. Canadians want assurances that the piper will be paid.

Over the years bankruptcy laws have been very difficult to reform and modernize. It proved to be difficult because so many different and often diverging interests must be taken into account in bankruptcy legislation. Consider for a moment the different points of view.

Consumers abhor bankruptcy. They want bankruptcy laws that offer a real and honourable alternative to bankruptcy and asset liquidation. Canadian consumers want to be responsible and honour their financial obligations but when there is no viable alternative, consumers do not want to be harassed or stigmatized. They want to turn the page quickly and be given another chance to start afresh.

Then there is the business community. Business women and men need insolvency laws that encourage rather than discourage them to be bold, innovative and to take risks, knowing that there will be a fair process to negotiate with creditors and reorganize their finances if their financial situation deteriorates to a state of insolvency. Corporate directors need incentives, not disincentives, to make the bold decisions that will save a business in financial difficulty.

What about lenders? No business, and for that matter very few consumers, could go on and contribute to the health of the economy without financing being available, and on reasonable terms. Without bankruptcy laws that recognize the market realities of security lending that treat different classes of creditors fairly and equitably, Canadian businesses and consumers would be at a competitive disadvantage compared to competitors in other countries.

Then there are the insolvency practitioners such as trustees and receivers. They need adequate protection against personal liability for claims that would otherwise lie against the debtor or estate. Without adequate protection against personal liability, trustees and receivers would either not deal with sensitive estates or would systemically opt for liquidation when they would have opted for trying to salvage the business and preserve the jobs that depend on it.

Then there are federal and provincial treasuries that are legitimate creditors. Where should they rank among other creditors? What priority, if any, should the crown legislatively grant itself?

There are many different and divergent interests. In the event of an insolvency, when it comes time to divide the assets of a company, like dividing a pie, each of these interests wants a piece of that pie which unfortunately is not large enough to cover all liabilities.

Where is the balance? What is fair and equitable? Is what is fair for one class of creditor fair for another class of creditor, fair for the business debtor and its employees, suppliers and shareholders? These are the questions that insolvency laws grapple with.

At the same time, if the reorganization features of bankruptcy laws are effective, the insolvent company can be given breathing space to get its affairs back in order. It is as though the baker were to say to his creditors "back off for a bit, then you will all get your piece of the pie and there will be more pies to come in the future".

With so many conflicting interests is it any wonder that over the past decades bankruptcy and insolvency reform has been among the most difficult legislation to pass in the House?

The legislation includes more than 70 amendments which respond to the needs of the many and varied constituents it exists to serve, including the business community and consumer groups. The amendments cover a wide range of bankruptcy issues from consumer issues to commercial issues, to priorities and privileges and to amendments to the Companies' Creditors Arrangement Act.

I feel we are on solid ground with Bill C-5. I am confident the House will pass the legislation. I am confident for three reasons, first because of the wide range of input and advice that we have received from the whole spectrum of stakeholders.

In 1993, following passage of the Bankruptcy and Insolvency Act, Industry Canada set up the Bankruptcy and Insolvency Advisory Committee to review insolvency legislation, to identify priority issues and to formulate possible solutions to them. More than 100 private sector insolvency experts have participated in this process. They represented consumers, business, lenders, insolvency practitioners and governments. Their voluntary effort speaks well of the importance of the legislation as well as the desire of the private sector to participate in the process leading to legislative reform.

I was very impressed by the calibre of the advice the committee provided. The vast majority of the amendments before the House directly respond to the specific recommendations made by the committee.

I emphasize this legislation reflects the government's resolve to respond to the needs of our clients, those who need and use the legislation. Framework legislation must respond to the real needs of the marketplace by taking into consideration real situations.

By themselves governments do not have the expertise to anticipate the impact their regulations may have in the marketplace. However, by working as a facilitator to bring together the various interests and stakeholders, governments can play an effective role in helping to build modern, workable framework laws and policies. I am confident the House will recognize the quality of the advice

we have received and see it reflected in the wisdom of the amendments before us.

The second reason I am very confident in the legislation before us is the exceptional co-operation and support received from cabinet colleagues. The amendments before us touch on a variety of issues and interests. The ministers responsible for those interests have provided their support and encouragement for this legislation.

For example, the Minister of Human Resources Development not only supports but has also been instrumental in crafting the measures to make student loan debts non-dischargeable for a period of 24 months after termination of studies.

Students who have received financial assistance from taxpayers owe it to society and to future generations of students to reimburse the loans they have received.

At the same time, however, governments and bankruptcy laws have to recognize that some students may find themselves in a hardship situation. This is reflected in the legislation by limiting the period during which student loan debt would be non-dischargeable.

The Minister of Justice and the Secretary of State for the Status of Women are both quite enthusiastic about the measures to prevent those who have been fined for sexual and other physical assault from declaring bankruptcy as a means of avoiding their obligations.

Under this legislation judgments for wilful damages will not be released by a discharge. My colleagues have also supported the measures in this legislation that would see spousal and child support payments become provable priority claims.

The Minister of the Environment has offered me great advice and collaboration in coming to grips with the important issue of environmental liability for insolvency practitioners as well as the no less important issue of the priority for environmental clean-up claims.

I am proud to report the provisions proposed in this legislation will not only assist business reorganizations but will for the first time in Canadian history formally and legally recognize the priority of a clean environment.

The third reason I am confident the legislation before us will obtain the support of Parliament is that Bill C-5 is part of work in progress. It is neither the beginning of the process of reforming Canada's bankruptcy laws nor the end.

Some members will recall the spirit with which the changes to the BIA were greeted three years ago. It was regarded as a necessary first step in the reform of the framework laws. Some members wanted to go further but one of the compromises made back then was to commit the government to bringing bankruptcy law forward for a parliamentary review three years after royal assent.

The three-year review of the BIA was instrumental in obtaining stakeholder and parliamentary approval of the 1992 amendments. It provided some assurance to those whose concerns were not addressed in 1992 that their issues would be dealt with in phase two of the amendment process.

They were assured further modernization of the statute would be considered by Parliament. The time for that review has arrived. Members on both sides of the House will welcome the opportunity to address many of the issues that were left unresolved on the Bankruptcy and Insolvency Act was passed in 1992.

The legislation before us is very much intended to assist Parliament in a statutory three-year review. This legislation fine tunes and where warranted rectifies the reforms introduced in 1992.

It applies the spirit of the 1992 legislation and emphasizes giving time for reorganization of business and rehabilitation of consumers. From 1993 to 1995 over 48 per cent of the reorganizations started under the Bankruptcy and Insolvency Act are still alive. They are now under way with creditors and the court's approval.

The reorganization provisions have created a framework to facilitate discussion and negotiation between creditors and debtors. The clear benefit is that the framework has created an environment in which possibilities that would have been lost can be explored in a transparent manner.

In other respects this legislation adds new items to the bankruptcy reform agenda such as international insolvency and reform of the Company's Creditors Arrangement Act.

In 1992 the passage of bankruptcy reform legislation represented something of a breakthrough. Much had changed since the last reform legislation had been passed some 40 years before. The legislation before us represents very much a consolidation of some of the reforms passed three years ago.

The 1992 legislation addressed the heart of bankruptcy practices by reforming the rules surrounding reorganizations. The legislation before us takes these rules further by addressing many crucial issues that arise in bankruptcy, issues such as environmental liability and director liabilities, issues such as the treatment of off farm income and consumer rehabilitation.

Some of my colleagues will address these areas in more detail. In summary I emphasize the three strategic thrusts the legislation before us provides.

First, Canadian bankruptcy law will continue to provide a framework in which it is preferable for consumers or businesses to reorganize their affairs rather than declare bankruptcy.

Second, the legislation emphasizes the importance of measures to promote consumer rehabilitation. We want to create an environment in which consumers can act as responsible citizens.

Third, the legislation is aimed at promoting fairness to both creditors and debtors.

The legislation helps minimize the social and economic costs that result from insolvencies. It provides framework laws that will help business debtors who want to become competitive once more and consumers who want to act responsibly.

I hope all members will join me in voting in favour of the bill at second reading.

[Werner Schmidt, Reform, Okanagan Centre, BC]

Madam Speaker, I have read with considerable interest the provisions of Bill C-5, an act to amend the Bankruptcy and Insolvency Act. While there are a number of elements in the bill we can support, there are a couple of things I want to address this afternoon which we cannot support.

To review briefly, the bill does provide some rather interesting remedies for some difficulties in the business of bankruptcy and insolvency. For example, it comes to grips with procedures in consumer bankruptcies and proposals. It deals with landlord compensation where leases are disclaimed in reorganizations. The liability of directors and stays of action against directors during reorganizations are dealt with. There is protection for trustees and receivers against personal liability for pre-appointment environmental damage and other claims. Worker's Compensation Board claims are dealt with, dischargeability of student loans and so on.

A number of these are rather significant. I will address a couple of these which are particularly worthwhile noting. First is the matter dealing with student loans. Students are responsible for their loans two years after they declare bankruptcy. That is significant because at the present time there is apparently an opportunity for students to escape paying their loan simply by declaring personal bankruptcy. This provision alone should save the federal government approximately $60 million.

Another has to do with divorced spouses. The provision in the original draft of this bill was not acceptable, but the minister has agreed to accept one of our amendments. Therefore this area will be covered very well. It deals with divorced and separate spouses who will receive priority ranking among creditors for settlement of claims. Spouses are not now considered creditors under the bankruptcy laws. I think that new provision is a particularly good one and ought to be endorsed.

The business of company director liability is also addressed and directors are permitted to defend themselves against negligence if they can prove they acted with due diligence. They would also get a stay of proceedings against them during reorganization proceedings. This provides a certain element of protection missing in the previous legislation.

In the matter of environmental clean-ups, the act becomes clear as well. It says environmental clean-ups will get top priority over the claims of creditors. Bankruptcy trustees and receivers will have to report environmental hazards they notice after a company becomes bankrupt.

Finally, in securities firms a process is laid out for bankrupt securities firms, particularly with regard to securities and debts held in the name of their clients. This is particularly significant because there have been clients who have been left high and dry by a security firm that went bankrupt and the money which was held by the company in trust was lost.

I would now like to look at another area which has to do with bankruptcies more generally. While this bill begins to come to grips with the ways in which bankruptcies are dealt with, it does not come to grips with the causes of bankruptcy. This gives me the opportunity this afternoon to suggest that there is a far too high an incidence of bankruptcies in Canada.

Consumer bankruptcies have soared in the last 10 years from approximately 20,000 in 1986 to over 60,000 in 1995. This is a threefold increase. Consumer bankruptcies are a sign of the lack of jobs that exist and the failure of the government to adequately address the problem. As a result, this bill cannot address the issue that is really at the heart of what is causing bankruptcies in Canada.

The federal debt now stands at between $580 billion and $585 billion. It is becoming very close to the $600 billion figure. It is all very nice for the Minister of Finance to talk about the wonderful way in which the deficit is being reduced each year, that the deficit this year will be a little less than last year and that it looks like eventually the government will get to the point where the deficit is reduced. However, he has not promised that he will eliminate the deficit.

Every Canadian knows that with each deficit the debt gets bigger. It does not help to say that the deficit is going down if the debt keeps on growing and the interest that has to be paid on the debt becomes greater. That is not the only one of the causes for bankruptcies. The taxes that are paid by taxpayers to pay the interest is constantly increasing and it is therefore more difficult for businesses to operate successfully.

When will the government recognize that as the debt increases, the predatory action of the interest on social programs and on businesses also increases. This bill, while it is a beautiful bill, does not go far enough. The reason we have the bill is because there are

too many bankruptcies. The time has come for us to realize that Canada must get its financial house in order so that it does not go bankrupt and become subject to something like the bankruptcy act in terms of the international monetary situation. I hope it never comes to that. Certainly it does not have to. I would encourage all of us to take the steps necessary to ensure that does not happen.

I draw the attention of the House to three areas where the bill is lacking. These are omissions. The first area deals with the lack of certain requirements of the Superintendent of Bankruptcies to report to the minister. The second area is the omission to provide for unpaid supplier accounts. The final area is the omission of payment of wages to workers whose employment is terminated because a firm went bankrupt.

I want to draw attention to the omission of certain requirements with regard to the superintendent to report to the minister. The role of the superintendent is described in section 5 of the act. It is very interesting what this bill does. I want to put this in the context of a certain management theory which is rather significant. I want to focus it from four perspectives: responsibility, accountability, delegation and power.

Responsibility is the clarity of tasks and lines of authority and communication so that everybody knows which responsibility and which outcome they are responsible for.

Accountability is who checks the work done, where does the final word come from and where does the buck stop. These areas have to be clearly identified.

Delegation is the assignment of tasks to others because no one person can do everything. We must ensure that the delegation is such that the whole operation works.

Finally, there is the matter of power; to effect the discipline necessary to enforce by placing sanctions or the issuance of a reward to those who should be rewarded for the work that they have done.

The principle that I wish to enunciate is that the elected persons are responsible to those who elected them. It is the absolute number one requirement. What has this got to do with the bill? I suggest that in order to accomplish the governing of a nation, a province, a municipality or the administration of a complex organization engaged in business or commercial activities, there are certain management principles which must be observed in order to assure that the goals, purposes and the mission of the organization can be accomplished.

The principles are the division of tasks to be formed into manageable components and to make sure that these tasks are carried out to the satisfaction of those in charge. How does this come into focus for Bill C-5?

Generally speaking, the bill does a reasonable job in meeting the requirements that would normally be associated with the implementation of these principles. However, it falls short in several areas. Two of them are accountability and responsibility.

As in several other pieces of legislation which have been presented to the 35th Parliament, this bill contains the provision of giving to the bureaucracy powers and the assignment of authority and responsibility without recognizing the role and the responsibility of Parliament and the elected representatives whose primary responsibility is to the people who have elected them to manage the affairs of this country in their best interest and to the advantage of all Canadians.

In Bill C-46, for example, which amended the Corporations Act, the minister was given in the initial presentation of the bill powers to determine the winners and losers by determining programs and special assistance in whatever industries, particular industries or commercial establishments, organizations or persons who are members of a particular category of persons defined by cabinet order. The minister changed that later and that is to his credit.

Bill C-99, which amended the Small Business Loans Act, contained provisions that the amount of liability of the government would be decided by cabinet, not Parliament. Again, it was an abrogation of the responsibility of Parliament and the members' responsibility to look after the best interests of the people who elected them.

Bill C-5 does not rectify that situation. Powers have been delegated to a bureaucrat, in this case the Superintendent of Bankruptcy. They should be in my opinion those of the minister.

What are some of these responsibilities? I will read from clause 5 of the bill we are considering:

5.(1) The Governor in Council shall appoint a Superintendent of Bankruptcy to hold office during pleasure who shall be paid such salary-

(2) The Superintendent shall supervise the administration of all the estates to which this Act applies

(3) The Superintendent shall, without limiting the authority conferred by subsection (2),

(a) receive applications for licences and renewals thereof to act as trustees under this Act, and, as authorized by the Minister, issue licences and renewals thereof to those persons whose applications have been approved;

(b) keep a record of all licences granted and of the renewals thereof as they are issued;

(c) where not otherwise provided for, require the deposit of one or more continuing guaranty bonds as security for the due accounting of all property

received by trustees and for the due and faithful performance by them of their duties in the administration of a estates to which they are appointed, in such amount as the Superintendent may determine, which amount may be increased or decreased as he may deem expedient, and the security shall be in a form satisfactory to the Superintendent and may be enforced by the Superintendent for the benefit of the creditors;

(d) keep such records as he may deem advisable of proceedings under this Act;

(e) from time to time make or cause to be made such inspection or investigation of estates as he may deem expedient and for the purpose of the inspection or investigation the Superintendent or any person appointed by him for the purpose shall have access to and the right to examine all books, records, documents and papers pertaining or relating to any estate;

(f) receive and keep a record of all complaints from any creditor or other person interested in any estate and make such specific investigations with regard to such complaints as the Superintendent may determine; and

(g) examine trustees' accounts of receipts and disbursements and final statements.

(4) The Superintendent may intervene in any matter or proceeding in court as he may deem expedient as though he were a party thereto.

It is a good set of duties but members will notice the number of times it says the superintendent "may". He may do this, he may do that and he may do something else.

Let me quote from another clause:

6.(1) The Superintendent may engage such accountants or other persons as he may deem advisable to conduct any inspection or investigation or to take any other necessary action outside the Office of the Superintendent, and the costs and expenses thereof shall, when certified by the Superintendent, be payable out of the appropriation for the Office of the Superintendent.

It continues down through the rest of that clause. Now comes the big, heavy duty clause, clause 7 of the bill which reads as follows:

1. When any investigation has been made by the Superintendent or any one on his behalf; and it appears that a licensee-

That is a person or group of persons or a company that is authorized to manage an estate.

-under this act has not performed his duties properly or has been guilty of any improper conduct or has not fully complied with the law with regard to the proper administration of any estate, the Superintendent may make a report to the Minister together with such recommendations to the Minister as the Superintendent may deem advisable.

Notice that there could be an unlawful conduct, or an omission, or not having done something, an omission of some kind. The superintendent is not obligated to report. He may report to the minister. He may make a report to the minister together with such recommendations as the superintendent may deem advisable.

Huge estates could be at stake here. Big companies could be forced to reorganize their financial structures. Huge corporations could be forced to reorganize their international operations or indeed their national operations, affecting literally thousands of people's jobs. Perhaps the welfare of many other businesses depend on this larger organization to function.

If the trustee acts in a manner that is unlawful it is not a requirement of the Superintendent of Bankruptcy to cause that licensee to have his or her licence withdrawn or even a report to be made to the minister. Yet it is the minister who is responsible to look after the welfare of the people of Canada and was elected by those people to represent their interests.

The bill does not address this issue at all. It is silent on this matter. The difficulty is not in the range of responsibilities listed here, nor is it that the superintendent should not have substantial powers to enforce the fair and just administration of the estate of a person or corporation that is insolvent or bankrupt.

The difficulty is that the superintendent is not held to account to any elected official in the event of a licensee who "has not performed his duties properly or has been guilty of an improper conduct or has not fully complied with the law with regard to the proper administration of any estate". That is a serious and a very significant provision in current legislation and this bill does not address it at all.

The difficulty is that the application of the powers to assure fairness and veracity of trustee's reports is not subject to review by law. And it should be. Nor does it appear to be a requirement of the superintendent to make available trustee reports in the event that a civil litigation be launched and in that litigation perhaps charges of unfairness, perhaps bias or maybe even in some cases collusion by creditors against a particular bankruptcy. It is not a requirement of law that if such should be the case, the superintendent is required to present that kind of a report to the courts, and I think it ought to be.

The reason why this is so important is that information contained in bankruptcy reports can be crucial in the examination of the reasons for the bankruptcy or the reorganization requirement of a particular enterprise. Therefore it would appear imperative that amendments be introduced that would replace "may" with "shall". This would effect a shift in power from that of the superintendent to the minister.

The minister should have the final responsibility on matters such as the receiving of reports about the neglect of performance of

duties of licensees who are administering bankrupt estates instead of giving the superintendent absolute discretion in such matters.

The problem is exacerbated because it is the minister who issues and revokes licences. The minister does that but he does it on the advice of the superintendent. With those kinds of powers and with that kind of advice it is obvious what the minister will do. Such broad power is enough to determine the financial and economic success, or at least the viability, of a bankruptcy trustee.

In other words, a bankruptcy trustee may make a livelihood of administering bankrupt estates. If there are 60,000 of them in one year there is a lot of work to do. If the licence should be revoked the very welfare of that trustee could be at stake. If the superintendent of bankruptcies is the one who has that power, we can see how easy it would be for all kinds of things to go kind of funny in the background.

It also makes it possible for certain trustees to have a virtual monopoly on a set of estates or in doing work for a department. Determining the success or failure of a litigation, contesting the administration of the bankrupt estate, the causes which result in a bankruptcy, the fairness of assessing the claims properly and the priority of creditors are all related to the work of the trustee who is in charge of a particular bankruptcy.

Power to abuse is what we have here. There is power to abuse the system and that power needs to have checks and balances. I suggest those checks and balances rest with the minister and with cabinet, not with bureaucrats. Hence I suggest the minister consider the addition of the appropriate amendments to the Bankruptcy and Insolvency Act to remedy these shortcomings.

In matters of this kind there is always the possibility of being tempted to exercise power in a biased or discriminatory manner because of the money involved, thousands of dollars, hundreds of thousands or millions of dollars in some cases.

While there are strong provisions in the bankruptcy act to discourage this biased practice, such provisions are difficult to enforce if other provisions of the act permit certain matters to go unreported to those in positions to do something about them.

There are two other areas of the bill which suffer from inadequacy or from omission. There is the matter of unpaid supplier provisions. Suppliers of goods are frequently in situations in which a debtor has ordered a considerable amount of inventory before being placed into bankruptcy or receivership. The supplier is then left with an unsecured claim for the price of goods while their value benefits the secured creditors who have charges on the business' inventory.

This practice of stacking up an inventory for the benefit of secured creditors is detrimental to the interests of the supplier. There are provisions under the current act to give suppliers the right to repossess merchandise delivered to a purchaser who becomes bankrupt or who goes into receivership.

Nevertheless, these provisions have received criticism from the financial community in which they say the availability of credit would be reduced because lenders would no longer be able to count on inventory as security for their loans. The matter is not dealt with here and probably at some future time it will be. It has been presented to the minister on more than one occasion. In each instance he has decided not to do anything about it.

The third omission is the bill does not provide for the payment of unpaid wages to workers whose employment was terminated as a result of a bankruptcy, receivership or liquidation of their employer. The matter was to have been the subject of a study by a special joint committee of the House of Commons and the Senate. That committee was to report in June 1993. That committee was never established.

Instead, the wage claim payment program of the Bankruptcy and Insolvency Act maintained a preferred creditor status for unpaid wages, for unpaid wage claims, and increased the amounts that could be claimed.

In the interests of the employees who are terminated as a result of bankruptcy the matter should be revisited to determine whether a fairer and more equitable provision for the affected employees can be achieved.

There are a number of provisions in the bill which we can support and there are a number of shortcomings which have been addressed. While in general we will support the bill, I believe the minister would be well advised to recognize there is a lot of work left to be done to deal with those issues which must be addressed.

I underscore again that the real reason bankruptcy is so rampant in the country today has to do with the financial situation, in particular the fiscal situation, in which the country finds itself.

I encourage the Minister of Industry, who is leading this bill, and the Minister of Finance together with the Prime Minister to put all their efforts into one thrust to eliminate the deficit and begin to control the debt so that our interest payments do not continue to rise and we can once again have a fair and level playing field in which private industry, private enterprise, can build a country where all of us will have the economic freedom to spend our money the way we want to, with a minimum of government interference, and be successful in our endeavours so we will not have to deal with bankruptcy.

[The Acting Speaker (Mrs. Ringuette-Maltais)]

Is the House ready for the question?

[Some hon. members]

Question.

[The Acting Speaker (Mrs. Ringuette-Maltais)]

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

[Some hon. members]

Agreed.

[Some hon. members]

No.

[The Acting Speaker (Mrs. Ringuette-Maltais)]

All those in favour of the motion will please say yea.

[Some hon. members]

Yea.

[The Acting Speaker (Mrs. Ringuette-Maltais)]

All those opposed will please say nay.

[Some hon. members]

Nay.

[The Acting Speaker (Mrs. Ringuette-Maltais)]

In my opinion the yeas have it.

And more than five members having risen:

[The Acting Speaker (Mrs. Ringuette-Maltais)]

A recorded division on the proposed motion stands deferred until 6.30 p.m.

[Don Boudria, Liberal, Glengarry—Prescott—Russell, ON]

Madam Speaker, if you were to seek it, I believe the House would give unanimous consent to suspend until 6.30 p.m., when we will take the deferred divisions.

[The Acting Speaker (Mrs. Ringuette-Maltais)]

Is there unanimous consent to suspend the sitting until 6.30 p.m.?