Debates of June 5th, 1998

Access To Information

[Derrek Konrad, Reform, Prince Albert, SK]

Mr. Speaker, in his final report the access to information commissioner slammed the government's system-wide chronic problem of non-compliance with the act.

To underscore the problem he included this quote in his report to characterize the government's attitude: “Never write if you can speak; never speak if you can nod; never nod if you can wink”.

When will the government stop winking at the law and start complying with access to information requests?

[Herb Gray, Liberal, Deputy Prime Minister]

Mr. Speaker, the report in question also praised the Privy Council Office for eliminating the delay in handling access to information requests.

I point out that Canada is still one of only fifteen countries in the world to have access to information legislation. We are taking the lead; we are not lagging behind.

We are certainly willing to review the act to see what improvements can be made. We are taking the access commissioner's report seriously, but we have to look at the good things he says as well as the other parts of the report.

Sudan

[Monique Guay, Bloc, Laurentides, QC]

Mr. Speaker, my question is for the Deputy Prime Minister.

Sudan is currently experiencing a terrible famine. CIDA, whose priority is to attend to people's basic needs, is not yet involved in Sudan.

Can the minister tell us why, between 1993 and 1997, CIDA cut one-third of its official development assistance funding to the 48 poorest countries in the world and what his government intends to do to help Sudan?

[Don Boudria, Liberal, Leader of the Government in the House of Commons]

Mr. Speaker, the federal government was indeed forced, at one time, to cut the Canadian International Cooperation Agency's budgets, but the hon. member opposite is no doubt aware of the fact that, in the last budget tabled by the Minister of Finance, these cuts were cancelled.

Of course, when the country's finances will permit it, this government clearly intends to do all it can to provide assistance to those in need around the world, including the Sudanese.

Employment

[Louise Hardy, NDP, Yukon, YT]

Mr. Speaker, since the closure of the Anvil Range mine in Faro, Yukon the unemployment rate has risen to over 17%. There is a Faro mine reclamation trust fund set up and this fund was meant for clean up.

Will the minister replace the tough luck, too bad message that has been sent to the Yukon and use the money to help support jobs for the town of Faro, the First Nations of Ross River and in fact for people of the Yukon territory?

[Gerry Byrne, Liberal, Parliamentary Secretary to Minister of Natural Resources]

Mr. Speaker, the decision to close mines based on the availability of natural resources is always a very difficult one which faces many communities throughout Canada.

However, in this situation the local people themselves are working together for solutions. I would like to work with the hon. member and, quite frankly, I would take the opportunity right after question period to sit down with her to review the issue and get more details.

Report Of The Auditor General

[The Deputy Speaker]

I have the honour to lay upon the table the report of the Auditor General of Canada on the requirement to report specified foreign property under section 233.3 of the Income Tax Act.

Pursuant to Standing Order 108(3)(e), this document is deemed to have been permanently referred to the Standing Committee on Public Accounts.

Government Response To Petitions

[Peter Adams, Liberal, Parliamentary Secretary to Leader of the Government in the House of Commons]

Mr. Speaker, pursuant to Standing Order 36(8), I have the honour to table, in both official languages, the government's response to no less than 40 petitions.

Questions On The Order Paper

[Peter Adams, Liberal, Parliamentary Secretary to Leader of the Government in the House of Commons]

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

[Peter MacKay, Progressive Conservative, Pictou—Antigonish—Guysborough, NS]

Mr. Speaker, for eight months Question No. 21 has been languishing on the Order Paper. It takes nine months from conception to delivery.

When will the government give birth to the answer to Question No. 21?

[Peter Adams, Liberal, Peterborough, ON]

Mr. Speaker, I know the member has been concerned regarding Question No. 21.

As he may have noticed, I presented the responses to no less than 40 petitions today and we have over 1,000 petitions to deal with. We have completed well over 80% of the responses to petitions. We are at 70% or 75% in other responses.

The problem with Question No. 21, as he knows, is that it involves inquiries to be made in every department of the government. I want to assure him that we are very close to the end of this particular marathon.

[The Deputy Speaker]

Shall the questions stand?

[Some hon. members]

Agreed.

The House resumed consideration of the motion that Bill S-3, an act to amend the Pension Benefits Standards Act, 1985 and the Office of the Superintendent of Financial Institutions Act, be read the third time and passed.

Pension Benefits Standards Act, 1985

[Jim Peterson, Liberal, Secretary of State (International Financial Institutions)]

Mr. Speaker, I very much appreciate the opportunity to speak to Bill S-3 today at third reading.

This bill is a well considered and concrete example of how we are dealing federally with our regulated private pension plans. We are updating the Pension Benefits Standards Act, 1985, or the PBSA as it is often called.

These reforms are long overdue. This legislation governs the private pensions plans in the sectors that are subject to federal jurisdiction, including banking, interprovincial transportation and telecommunications. These plans are administered by the Office of the Superintendent of Financial Institutions, or OSFI.

Of Canada's 16,000 pension plans about 1,100 are covered by the PBSA. They represent approximately $45 billion or 10% of the entire asset value of all private pension plans in Canada.

With the number of seniors in Canada growing so rapidly I assure the House that sound, secure pensions are and continue to be a priority of this government. Our colleagues know that over the past two years we have embarked on a dramatic reform of the public component of our national pension system, including changes long overdue in the Canada pension plan. If we had not made these changes, in 20 years there would have been real problems and we would not have the type of secure retirement that Canadians deserve.

The PBSA has not been materially revised since it came into force in 1987. This is in contrast to the financial institutions legislation where the supervisory and credential systems were significantly strengthened, first in 1992, then in 1995 and again in 1997. There is no question that the PBSA needs to be updated.

While most federally regulated pension plans are fully funded, some pension plans have come under financial pressure as a result of demographic and economic factors. These include an aging workforce. They can also come about from corporate downsizing. Those are two factors which make pension funding relatively more expensive for employers.

In this environment there have been solvency concerns regarding some plans, while others have wound up without sufficient assets to pay all of the benefits that were promised. In these situations the employer, whether a single employer or an industry group, experienced economic difficulties.

Many pension plans made substantial improvements to pension benefits in the 1980s with the expectation that employers would always be able to fund them. This also added to the challenges. In some cases insufficient contributions were made to fund these improvements. As these problems emerged it became clear that the current credential and supervisory framework is not always equipped to deal with problem plans. The range of powers and regulatory components needed were just not there. Bill S-3 is our effort to meet these challenges. Under this legislation the federal government and the superintendent of OSFI will have the necessary powers and tools to work with plans that are experiencing problems.

The measures in Bill S-3 flow from a series of basic principles outlined in our July 1996 white paper. These principles are that private pension plans be supervised for the benefit of members, retirees and other beneficiaries, that the pension regulatory and supervisory framework should contain the incentives and safeguards necessary to reduce the possibility that pension promises might not be met, and to provide for early intervention and resolution of pension plans that are experiencing difficulty.

Outside supervision cannot and will not be expected to guarantee that pension promises will always be met, nor can it be a substitute for good governance of plans by administrators. After all, these plans are governed by the trustees who are appointed by the workers and by the companies themselves. Regulation and supervision must be cost effective. Regulatory framework for pension plans should not impose undue costs on existing plans or unduly inhibit the creation of new plans.

Members of private pension plans should receive adequate and timely information from the administrator concerning the precise financial condition of the plan that person is under. There must be appropriate accountability and transparency in the supervisory process itself.

The measures in this bill are as a result of a very broad consultation process. In drafting this legislation the comments received on the initial proposals that were contained in the white paper were considered and the appropriate amendments were made. Provincial ministers responsible for the supervision of provincial pension plans were also invited to comment and there was ongoing consultation among pension supervisors to the CAPSA.

I should mention, too, that other proposals in the white paper which have not been addressed in this legislation will be introduced later through regulation. Areas such as additional disclosure requirements and funding rules are already dealt with through regulations and this approach will continue.

In other cases, such as planned governance and investments, the government believes that it is more appropriate to develop best practices. We recognize that the size and other attributes of individual pension plans will affect government structures, government practices and investment strategies.

Considerable additional consultation will take place prior to the implementation of these regulations and guidelines.

At this time, on behalf of the government, I would like to thank the Senate, the many industry participants and other stakeholders who provided such constructive and insightful co-operation and advice in bringing this legislation forward and in working with us in such a constructive way to deal with the precise problems that we faced to fashion legislation which is more responsive to the concerns that all of us have, which is to maintain secure and dignified retirements for our pensioners.

I have highlighted the important issues dealt with in this legislation. All of us believe that the stability of Canada's private pension regime will be enhanced for the benefit of its plan members. We are confident of that. I certainly encourage all colleagues in this House to give speedy passage to this bill and I thank them for the co-operative approaches which they have taken in working with us, with pensioners and with the regulators to provide better legislation for Canada's pension community.

[Ken Epp, Reform, Elk Island, AB]

Mr. Speaker, I am pleased to have the privilege to stand in the House of Commons, Canada's highest court, we hope. We hope that it would take precedence over the Supreme Court of Canada.

We also have a responsibility in standing here. Today I represent not only the people of Canada, not only the people of my riding, but also I represent, hopefully, the interests of pensioners or potential pensioners in private plans around the country.

I would like to give a statement that will put you at ease, Mr. Speaker. That is, I am not going to use more than about 30 seconds to talk about the Senate today.

People out in the real world who are listening to this debate are probably not too aware of the fact that bills which initiate in the House of Commons begin with the letter C . This one happens to begin with the letter S , which means it started in the Senate. Of course we have reasons to believe that there are some untoward government motivations to quickly pass it in the Senate and then bring it here.

We believe very strongly in the Reform Party that that is backwards. Bills of this importance should definitely be initiated by the elected members of our parliamentary system and not by those who are appointed by political patronage connections.

This bill is called S-3. That means it started in the Senate. With that comment about the Senate, I am going to get on to some of the things which are particularly interesting to us.

I want to draw your attention, Mr. Speaker, and the attention of all of the Liberals who are pushing this legislation through and certainly the attention of Canadians to a very important aspect of Bill S-3.

The parliamentary secretary has already outlined some of the reasons for this bill. I have to admit there are many things in this bill we think are commendable and should be proceeded with. However, there are also some extremely odious components. As a member of the official opposition it is my duty and responsibility to draw those to everyone's attention.

Section 9.(2) in the Pension Benefits Standards Act, 1985 is fraught with a bit of a problem. It states that if an actuarial report filed under this section indicates that there is a surplus in a private pension fund, in other words if there is more money in the fund than what is needed to meet the obligations under a fixed benefit plan, that surplus may be refunded to the employer.

Section 9.(2) gives some conditions as to when, where and under what conditions the employer can get the money back. One of them is that the superintendent must consent to the refund. I will come back to this in a few seconds.

It also states that an employer has a claim to the surplus or part of it after being notified of the employer's proposal for a refund of that surplus or part of it if at least two-thirds of the persons in the different categories consent to it. If only 50% consent to it then the superintendent will appoint an arbitrator and will judge the matter.

Does that not raise a red flag? I know Liberals love red. There is a member across right now dressed in red and I think it looks great. We are familiar with the infamous red book. So red and Liberal sort of go together. In this case, however, I hope they see red. Red is also a warning. In traffic it means we need to stop. It is a warning for danger. Whenever there is extreme danger the colour red is used.

This is what I want to talk about. It so happens that section 9.(2) could directly impact on the personal holdings of the Minister of Finance. For at least a decade there has been a controversy about actuarial surpluses in private employer-employee pension plans, a situation that rarely occurred before the mid-1980s. Is the employer entitled to a surplus or are the workers?

This issue was brought to a head in 1986 when Conrad Black's Dominion stores took $63 million from three employee pension plans and were subsequently forced by Ontario's supreme court to return the funds. At that time a moratorium was put on all surpluses regulated by the province of Ontario and although this has been relaxed somewhat, provincial rules for the division of surpluses are still very stringent.

There are a number of questions that need to be answered about the minister's involvement in this legislation before the Reform Party can approve it and certainly before the Liberals should be passing this.

The Minister of Finance acquired Canada Steamship Lines in 1981. The Pension Fund Society of Canada Steamship Lines based on Montreal has had one of these defined benefit pension plans for its employees since 1940. The last actuarial evaluation of the plan on which we have information was done in December 1995 by A. Foster Higgins & Co. However, according to the Pension Fund Society's newsletters we know that the plan's assets have enjoyed spectacular growth in recent years, for example 21% in 1995, 20% in 1996 and 17% in 1997.

The society's obligation to the beneficiaries was $84 million in 1997. However, net assets in the plan were $252 million and the total surplus was valued $142 million in that year.

Under the present rules of the superintendent of financial institutions the employer, in this case the minister, is eligible to claim $118 million in surplus from this pension fund. He would probably not get all of it because he would have to strike a deal to give a part of it to pensioners in order to persuade at least 50% of them to agree to give him the surplus.

No contributions have been made to the plan by the employer since December 31, 1984 and by employees since December 31, 1991. There were 823 beneficiaries in 1996, after 25 had passed away in that year, which included 127 active employees.

The plan is committed to indexing benefits to 80% of inflation. Beneficiaries received an increase of 2% in 1996, representing 90% of inflation.

It is very timely for the Minister of Finance that the act be passed now. It was first introduced by the Minister of Industry in the House in March, 1997, then in the Senate by Senator Alisdair Graham last fall with a few minor changes. Under the bill if two-thirds of beneficiaries vote to release the surplus funds the employer can have them provided also that the superintendent of financial institutions agrees. If less than two-thirds but more than half agree, the matter must go to binding arbitration. The arbitrator is chosen by the superintendent if the parties cannot agree on a choice.

This information begs a number of important questions. The official opposition must receive adequate answers to them before approving this legislation.

Is the minister in a general conflict of interest when a bill from which he might benefit so significantly is passed under his general authority, a bill that receives all necessary support and impetus from his office? We have searched for an answer to this important question for some time. We spoke to ethics counsellor Howard Wilson January 30 about the minister's involvement with this legislation and he answered that the Canada Steamship Line's pension fund is incorporated under the Pension Fund Societies Act under the auspices of the Department of Industry and will not therefore be directly affected by the Pension Benefit Standards Act.

The ethics counsellor confirmed to us that the surplus in CSL's plan is about $140 million. However, we have obtained the 1996 financial statements for Canada Steamship Lines Pension Fund Society and a number of newsletters from the society. The newsletters comment often on the passage of the Pension Benefits Standards Act, 1985 as if it will be directly relevant to the surplus in their plan. The financial statements from 1996 actually state that the plan is registered under the Pension Benefits Standards Act, 1985 and the registration number is 55006.

We have also consulted with the Department of Industry and it has found a registration for the pension fund under the Pension Fund Societies Act. It is registered under both, while the ethics counsellor is under the impression that it is registered under one act only.

We would like an answer to our second question. Is Mr. Martin's pension plan still registered under the—

[The Deputy Speaker]

The hon. member knows he cannot refer to members of this House by name. I know he would not want to make that mistake.

[Ken Epp, Reform, Elk Island, AB]

I know that, Mr. Speaker. I apologize. The notes have his name and I guess I was not paying close attention to what I was reading.

Is the pension plan still registered under the Pension Benefits Standards Act, 1985? If it is, it means that the Canada Steamship Lines pension fund will be directly affected by this legislation. Does this put the minister in conflict of interest? That is a very important question that needs an answer.

The third question the Reform Party would like to have answered is a more important one. Why did the ethics counsellor have incorrect information about the registration of this pension fund. Who told him that the pension fund was not registered under the Pension Benefits Standards Act, 1985 currently before this House but only under the Pension Fund Societies Act? How did the misinformation come to him? Did it make its way from the minister's office? Was it an honest mistake or does it represent an attempt to mislead the ethics counsellor into thinking that the minister would not be directly affected by the act now before this House and cause the ethics counsellor to defend the minister when perhaps he should be warning him? We have made an access to information request to Mr. Wilson's office on this issue but we were refused any information he has on his file. We appealed this decision to the information commissioner but we think it is strange that all information would be denied us in a way directly contrary to the spirit of the conflict of interest and post-employment code for public office holders approved by the Liberal government in June 1994.

Allow me to read clause 3.2 of the code: “Public office holders have an obligation to perform their official duties and arrange their private affairs in a manner that will bear the closest public scrutiny, an obligation that is not fully discharged by simply acting within the law”.

It appears that the ethics counsellor does not want the public to have any insight into this matter, much less the closest public scrutiny the code requires.

We regard this as a serious issue and we encourage the ethics counsellor to lay before the public the documents that will bear the level of public scrutiny required in the code.

Continuing with what the ethics counsellor told us, he then said that the minister has doubly distanced himself from the passage of the bill because he left all ministerial work concerning the bill to the Secretary of State for International Financial Institutions. Combined with the suggestion that the bill would not impact the CSL Pension Fund Society, this was a kind of double indemnity against conflict of interest in the ethics counsellor's eyes.

However, I would remind the House that the Secretary of State for International Financial Institutions is not an independent minister. The present secretary of state was appointed by cabinet proclamation pursuant to section 11 of the Ministries and Ministers of State Act which was first passed by the Trudeau government in 1970. Section 11 of that act tells us that the duty of the minister is to assist any minister or ministers as having responsibility for any department and states that the secretary of state will make use of the services and facilities of the department.

A copy of the proclamation notice from the June 25, 1997 Gazette states that the present secretary of state was appointed pursuant to section 11 and it details the duties to assist the Minister of Finance in carrying out his responsibilities.

The secretary of state clearly takes his direction from the Minister of Finance and his job is to follow his orders. This looks like a suspiciously close relationship and it gives rise to the follow question. Since the minister's pension fund will be directly affected by this act and since the minister guiding it through the legislative process cannot rightly be called independent, is the Minister of Finance therefore in a conflict of interest?

We are suspicious about the secretary of state's independence for a particular reason. As I stated earlier, the Minister of Industry first introduced this bill into the House a year ago. This gives rise to yet another question. Presumably the Minister of Industry first introduced Bill S-3 because he bears responsibility for the Pension Fund Societies Act, an act that is separate from the Pension Benefits Standards Act, 1985. Why did the Minister of Industry then not reintroduce this act in this parliament? Why was it transferred from the Minister of Industry to the secretary of state, a junior minister under the direct control and supervision of the Minister of Finance?

We become even more suspicious when we note that in section 9 of the act now in question the rules for granting a surplus to an employer are considerably relaxed. There is no division formula in the present act. There is no vote required in the present regulations. We are not opposed to entrenching a formula in legislation, but in practice in the pension fund industry most companies hold a vote and receive the agreement of up to 100% of pensioners.

There are some examples. Last July active and retired employees of Jenisys Engineered Products voted 95% to divide a surplus. In December 1997 Unisys employees voted 99% in favour of a division of a pension fund surplus.

Since July 1990 regulation 10 of the Ontario pension benefits act has stipulated that for ongoing plans a plan sponsor must obtain 100% agreement of all members. Later that was changed to 90%, which is the current requirement.

Ontario's legislation may be restrictive but the idea that there would be a vote requiring the approval of just two-thirds of employees, and if between one-half and two-thirds of employees voted for the change it would go to an arbitrator who would make a final decision is an innovation in the industry. Only the provinces of B.C. and Quebec allow for mandatory arbitration.

This act will make the surplus much more accessible to the minister. The present role of the superintendent under the Pension Benefits Standards Act is to ensure the funded status of the plan that it remain solvent if any surplus is given. His role is not to hand out surpluses to employers or employees; the courts decide who gets any surplus.

The amendments to the Pension Benefits Standards Act in Bill S-3 actually broaden the role of the superintendent in that he must appoint an arbitrator if 50% of employees agree, a role he did not have before. The superintendent's office tells us that in the situation of an ongoing pension plan, like the minister's, it is very unlikely that the employer would get anything under the present act. The employer might try to approach employees for their agreement, but even if there is a vote the superintendent will still require that the courts give their blessing to any distribution.

If a plan is terminating, that is winding up, the superintendent makes a strictly legal decision based on the plan documents. If the plan itself is silent on who gets the surplus, it again ends up in the courts. In the minister's case where his company's plan is ongoing, the case would normally have gone to the courts. This act removes the issue from the courts and politicizes it to the point where only half the employees have to agree before the matter goes to an arbitrator. And get this: the arbitrator is appointed by the superintendent who in turn is appointed by the Minister of Finance.

This bill is so different from the norm that it begs two further obvious questions. The present superintendent, John Palmer, was himself appointed by the minister in September 1994. He presumably hopes to be reappointed when the superintendent's seven year term expires in 2001. The superintendent is therefore dependent on the minister, but the minister in turn depends on the superintendent to appoint an arbitrator to get the surplus. Is this not in itself a conflict of interest?

The seventh question is, at any point during which the legislation was being developed, did the minister have input into the make-up of the new surplus division formula? Could he have brought his considerable authority to bear with the intent of relaxing the legislative requirements necessary for an employer to have access to his own pension fund assets?

Our next concern is that the Superintendent of Financial Institutions regulates about 1,100 private pension plans. The Minister of Finance will argue that he is just one employer among many and that he will be treated like every other employer by this legislation. We would respond by quoting from the 1996 annual report of the superintendent released in March, in the section entitled “Surplus Refunds”:

In general, surplus must exceed the greater of 25% of the liabilities of the plan or 2 times the contribution of the employer to the normal cost of the plan, in order to qualify for a refund. Very few plans in surplus have levels of surplus above these thresholds.

If there were many other pensions plans governed by the Superintendent of Financial Institutions which are in the same surplus situation, this particular circumstance might not be so important. But should this act pass, the Canadian Steamship Lines Pension Fund Society has a surplus that could be made available to the minister of approximately $50 million. To me, this is not small change and it would accrue to an individual rather than a corporation.

An eighth question, part of which we asked through access to information, is how many other plans are regulated by the Superintendent of Financial Institutions with surpluses available to the employer in the neighbourhood of $50 million? If there are such companies, is the employer an individual such as the minister or a corporation in which no one has individual benefits? Is the minister claiming to treat himself as any other employer when he really belongs in a category all by himself? Will he receive a personal benefit from this legislation greater by far than almost all other employers in Canada?

This question was answered in part by an access to information request of April 1 which detailed for us all actuarial surpluses over $10 million that the Superintendent of Financial Institutions oversees.

Just 44 of the 1,100 plans that the superintendent oversees have surpluses over $10 million and only five of them have surpluses larger than $110 million. This means that the minister's pension fund surplus is one of the top five in the country.

This act will provide a benefit for him that only four other companies in the nation can beat. Those companies may not be individuals but corporations. We cannot know for sure, but in all likelihood the minister is the individual in Canada who will benefit the most from the passage of this legislation.

For all intents and purposes the minister is really in a unique situation rather than just one more employer among many.

Finally, we would like to receive the minister's personal assurance that he has kept out of the issue. We note that the president of the pension fund society of Canada Steamship Lines is Mr. Gordon Black, long time employee of CSL. Mr. Black is also listed on the board of directors of Canada Steamship Lines.

So that we might be assured that the minister is not consulting improperly with the president of the pension fund society who will look after the interests of the company in the surplus distribution process, we would like the minister to answer this question: has the minister spoken to or met with Mr. Black for any reason since January 1, 1997, just before the legislation was first tabled? If so, when? What was the subject of the meeting or meetings?

It is the job of the official opposition to conduct careful inquiries into these matters in order to ensure that no minister abuses a position of trust by passing legislation that would augment his or her private fortune.

We are not accusing the minister of wrongdoing. We are simply doing our job by asking questions. We are asking for full and complete disclosure on the part of the ethics counsellor and the minister himself so that the people of Canada can be fully satisfied as to the integrity of the Government of Canada.

This government ran on a platform of openness and accountability. Yet we have had such bizarre situations that the code of conduct for ministers has been kept secret from us. The prime minister alludes to it but never ever has presented a copy of it.

Here we have now a situation where there is a lot of question as to the propriety of this government actually passing this legislation.

At the beginning of my speech I said that the Liberals are associated with the colour red. I have raised a bunch of questions. They are red flag questions and they are questions that demand answers. These are questions that must be answered before this government proceeds to ram this legislation through, having all its members stand up in concert at the pull of their strings to vote in favour of this.

I urge the Liberal members who want to build or create for the first time this reputation of integrity that is so important for the Canadian people. They want to trust their government. I urge them to vote against this legislation. Why not let this be the first bill that this government actually loses? It comes from the Senate. There is no implication of anything like confidence in the government or anything on this. Let us defeat this one because of these unanswered questions.

[Bev Desjarlais, NDP, Churchill, MB]

Mr. Speaker, I will take a little time to go over the bill since we have not had the opportunity to discuss it fully as a result of the process that has been taken.

Bill S-3 was passed by the Senate on November 20, 1997. The legislation governs private pension plans set up for employees working in businesses under federal jurisdiction, including banking and interprovincial transportation and telecommunications. The pensions of parliamentarians and those of federal public servants are not covered by this legislation.

What is Bill S-3 intended to do? It would introduce to the Pension Benefits Standards Act the same philosophy that governs the changes to the legislation governing federally chartered financial institutions in Canada.

The overall intention of the bill is to set clear ground rules for housekeeping, to codify the rules on how to handle the controversial issue of the treatment of surplus assets in a pension plan, to restore better balance between the employer and those who benefit from the plan, to enhance the ability of the minister to enter into agreements with provinces to apply and enforce the provinces' pension legislation. There is a mandate for the administrator of the fund to invest the assets of the fund in a manner that a reasonable and prudent person would apply in respect of a portfolio.

Why are we opposed to this? All of these are good intentions and the roads to hell are paved with good intentions.

There are three major reasons we oppose Bill S-3. It entrenches regulations which unnecessarily bypass parliament. S-3 promotes an obsession with surplus withdrawal rather than a focus on ways to improve the existing pension system. S-3 emanates from the Senate and is part of a sloppy process that abandons the role of parliament.

First, the regulations which unnecessarily bypass parliament. Section 10.1(2)(b) of Bill S-3 allows for the imposition of rigid arbitrary rules without consultation, truly a Henry VIII clause. There is no evidence that such arbitrary carte blanche is needed. The provision confers tremendous powers to unaccountable bureaucrats.

Section 10.1(2)(b) stipulates that there shall be no improvements in pension plans if the solvency ratio of the plan falls below a specified level. The solvency ratio is defined by regulations. We have a major problem with this concept.

According to the testimony of an Office of the Superintendent of Financial Institutions official before the Senate banking committee, the prescribed level would initially be set at 105%. This would have had a very serious impact on the take home pay of plan members and on the ability of trustees to improve benefits.

It is our understanding that following a discussion with the Canadian Labour Congress and the Office of the Superintendent of Financial Institutions, the OSFI now intends to use a less stringent ratio. Section 10.1(2)(b) allows OSFI to do this through order in council without having to go back to parliament. There is no guarantee that an unaccountable bureaucrat at some point will not impose a harmful solvency ratio at some time in the future.

What happens if a stringent solvency ratio is imposed? A too stringent solvency test such as the 105% ratio threatens to stop the development of any new benefit programs in a pension plan and even discourages improvements to existing defined benefit plans. It will be virtually impossible for some private plans to become more attractive because this may cause short term fluctuations in their solvency ratio. If similar rules were to apply to the purchase of homes, very few consumers could purchase a home unless they could use existing liquid assets to fully purchase the home or fully pay for any home improvements.

If these rules had been in place 30 years ago, it is hardly exaggerating to say that we would have had no defined plan in Canada. Every time an employer based plan improved benefits, it had to incur a temporary solvency deficiency, which was paid up later.

At a time when the federal government is encouraging privately funded fully defined benefit plans, a 105% solvency ratio will also discourage employers to set up new plans. The Canadian Institute of Actuaries concurs. We are also concerned that the solvency test becomes in principle a model for pension legislation, which the provinces will adopt.

Why a shotgun approach when the OSFI has ample powers to place restrictions on poorly funded plans or on plans deemed at risk?

OSFI may be looking for the easy way out; a lot of arbitrary authority but not enough staff for a fine tuned regulation. Hence, it is much easier for the OSFI to end its examination function and strap all defined private pension plans into a solvency ratio straitjacket, even if it freezes initiative and may end up killing certain plans. At the very least, it shows a lack of understanding of the historical modus operandi of private pension plans.

We are uncertain as to which problem this government is trying to resolve.

There is no solvency crisis in the private pension system. Since the Pension Benefits Standards Act came into force in 1987, 392 plans terminated. The assets were wound up and distributed. Of these only nine terminated in less than fully funded status. In most of the nine the loss of benefits to the members was minimal and the plans had very small membership. In one plan only the members received less than 95% of the pension benefits credit. In that case the members received approximately 80%. The source for that figure is the Public Benefits Standards Act annual report.

It is inappropriate to undermine the ability of all plans to enhance pension benefits and become more attractive because of the exaggerated importance given by the OSFI to short term market fluctuations. It is the view that prescribing any solvency ratio test for plan investment is probably not the right approach to making sure plans do not terminate in an underfunded situation.

Bill S-3 already gives OSFI wide reaching powers to force poorly funded plans to take whatever action is necessary to bring assets and liabilities in line. There is no need for a Henry VIII clause that removes parliament from the equation.

The current five year funding solvency constraint in the PBSA is already sufficient to limit a situation in which contributions and plan assets could fall short of termination liabilities. The five year funding framework also provides ample guarantee that termination liabilities are funded over a short period. OSFI is taking a major policy position without any broad discussion. Even the U.S. has much more relaxed rules.

The government should instead make the plan sponsor liable for all the unfunded liabilities should the plan be terminated. In the province of Ontario, for instance, an employer that terminates a plan has to make up for the unfunded liability and not just be on schedule with amortization payments as is currently the case at the federal level.

This creates a self-regulatory incentive for the employer to follow the prudent per cent approach in making improvements to the plan. The system works well. Why not pursue this avenue at the federal level?

The Canadian Labour Congress has said that it may be more important for OSFI to take action against individuals who have acted imprudently than to try to create a general rule governing plan improvements.

An obsession with the surplus withdrawals rather than a focus on ways to improve the existing pension system is our second concern. Bill S-3 proposes a mechanism for employees and employers to take the surplus out of a private pension plan rather than offer incentives to improve pension plans.

The Liberal assault on the Canada pension plan, old age security and its gutting of universality on the backs of the working poor are followed by this assault on the middle class, the main beneficiary of the private pension system. This lack of legislated incentive to make things better is a hallmark of a mediocre management vision of the public interest. It condemns an increasing number of workers and retirees to poverty.

Bill S-3 should impose an outright ban on the removal of surpluses from ongoing plans and require the consent of plan members to remove surpluses in plans being wound up. It is especially annoying to see the feeble position of the government on the surplus issue when it is proposing nothing in regard to inflation protection.

There is today an urgent need for public policy to strengthen our public and private retirement systems. While CN and VIA Rail retirees have seen their pensions lose value because of poor inflation protection, the CN and VIA Rail pension plans are approaching a surplus or are in a surplus position. Rather than focusing on surplus refund, would it not be better instead to focus on ways to enhance the CN and VIA Rail pension plans?

The government has failed to move away from its obsession with short term bureaucratic efficiency. It should endeavour to work with employers and provinces to improve pension plans rather than focus on ways to take the money out.

Bill S-3 emanates from the Senate and is part of a sloppy process which undermines the role of parliament.

It is worth taking some time to talk seriously about the one sided and dysfunctional legislative process that bills like Bill S-3 are symptomatic of. We saw it earlier this morning and we are seeing it again.

Canadians want to believe in the House of Commons. They want to believe that what goes on here is a process steeped in trust, openness and mutual respect. They want a process that allows all voices to be heard, a process that is respectful of not only the will of the majority but the rights of the minority, and a process that is conducted in good faith, recognizing that there are people whose voices are too often excluded from the most critical legislative stages.

I could not help but listen to the minister speak on this matter and indicate that he had heard from the Senate and from industry. Nowhere did he mention that the House of Commons had a chance to be heard from. Nowhere did he mention that Canadians as individuals had a chance to be heard from.

The problem is that the government has made us all so captive to the process that there is no quarter for those indispensable principles of democracy. We give up on democracy to deal with mountains of legislation. While the government is sure to say it is a legitimate function of the Senate to deal with such a bill, I would hasten to say that there is no legitimacy in having an unelected body drafting bills that would affect the pensions of thousands of workers.

The government has no legislative vision. It is so obsessed with pushing forward bill after bill that it loses sight of the delicate interrelations that exist between one program and the next. We saw this with the changes to CPP.

The New Democratic Party kept calling on the government to table the changes to old age security as well. We can hardly change one without knowing what is going to happen to the other. Yet the government failed to act. Five months later while seniors fret about their security the government is still tinkering with the old age security.

There is a lack of consultation. Instead of inviting Canadians to share their voices with us the government marginalizes people by consulting with polling firms rather than with Canadians. Bill S-3 may have gone to the Senate banking committee but I would be overly charitable if I were to call that consultation.

Only two groups appeared before the committee. More shocking than that, the government wants us to accept fundamental changes to these pensions in the absence of broad based consultation. Even though this bill affects only 10% of total pensions in Canada it introduces to the private sector a paradigm that may threaten other plans including those run by the provinces. Would a government that believed in consultation not have sought out the voices of the people?

Members on the opposite side of the House are very comfortable with their slim majority. Canadians see them forcing through legislation. They see them stopping legitimate debate in the House and making major policy statements for the cameras rather than for their colleagues. This sort of arrogance and disrespect for parliament is a symptom for bad legislation such as Bill S-3.

In conclusion, I was honoured to stand today on behalf of the member for Qu'Appelle who is our critic and who is in Sault Ste. Marie listening to what Canadians have to say about bank mergers. The government has refused to allow parliament to do its job and called for an all party parliamentary committee to review the merger. On behalf of that member I present his words.

[Mark Muise, Progressive Conservative, West Nova, NS]

Mr. Speaker, Bill S-3 proposes to update the Pension Benefits Standards Act, a law through which the federal government supervises private pension plans.

Canada's system of retirement income has three pillars. The first pillar is the basic old age security paid to all seniors together with the various supplements paid to low income seniors. The old age security benefit has come under considerable scrutiny lately as Canadians await the finance minister's overhaul of the program.

As recently as last month the finance minister attempted to push through reforms to the program in Bill C-36. Bill C-36 proposed changes to the guaranteed income supplement that 1.5 million low income seniors receive. The changes increased the clawback on benefits to seniors who work part time for extra money. The PC Party proposed amendments at report stage of that bill to protect seniors who would see more of the supplement taken away from them.

The bill also proposed to change how the supplement was calculated thereby costing each senior a further cut of approximately $6 a year. PC Party amendments to protect seniors from these cuts were defeated by the Liberal government. However the finance minister has now agreed to propose further legislation to rescind these changes.

In a press release of May 25 the minister admitted that these changes had unforeseen adverse effects on seniors benefits. If it had not been for our party which brought the government's attention to these cuts, the proposed changes would have passed.

Retirement savings experts are already telling middle income Canadians over the age of 50 to be wary of savings in RRSPs because what they save now will most likely be eaten up in higher taxes later. This creates a directive disincentive for Canadians to do what is right and to save for their own future and their retirement.

The second pillar consists of employment based Canada and Quebec pension plans. Under the government's reform to this pillar Canadians will have to pay more to get less.

The third pillar includes retirement savings such as RRSPs and employer pension plans. The government has moved to restrict access to RRSPs by freezing contribution limits and forcing seniors to mature their RRSPs two years earlier. The legislation deals with other parts of the third pillar such as employer pension plans. Most employer pension plans are governed by provincial law, but 500,000 Canadians belong to the 1,000 plans that fall under federal law.

Ten years ago the Progressive Conservative government overhauled the Pension Benefits Standards Act, the law which governs those plans. Significant changes were made to the minimum standards that plans must meet in areas ranging from survivor benefits to information disclosure. The bill before us updates that act.

The goals of the bill are to improve the way that the plans are governed, to improve Ottawa's ability to step in when plan administrators do not appear to be following sound financial practices to set up rules for the withdrawal of pension surpluses. It will also allow Ottawa to enter into supervisory agreements with provincial regulators through the Canadian Association of Pension Supervisory Authorities.

Unlike other recent changes to our system of retirement savings the only parts of the bill to generate even minor controversy are the provisions that pertain to the withdrawal of pension surpluses. Pension fund managers are concerned that the surplus and the wind-up provisions in the bill are weighed heavily against employers. However the bill is not particularly controversial. There has some controversy over the introduction of some government bills in the Senate, a practice which has fallen into disuse in recent years.

Without getting into debate on Senate reform, if bills are to be introduced in the Senate, Bill S-3 is especially the kind of bill on which the Senate can do solid work before sending it on to the House of Commons. This is particularly the case given the combination of the technical nature of the bill, the expertise of those on the Senate Committee on Banking, Trade and Commerce in area of corporate governance and the non-partisan spirit of co-operation with which members of this committee approach such legislation.

To not optimize the collective skills, wisdom and experience of these senators is an affront to Canadian taxpayers. We have a Senate and the senators on this committee have demonstrated prowess, ability and expertise in these areas.

I remind my colleagues that to not optimize this expertise would be denying Canadian taxpayers another level of deliberation on this type of important legislation. It is an approach that we could use here from time to time when we look at legislation, especially legislation affecting areas of corporate governance where there is a significant amount of institutional knowledge in the Senate.

The Senate banking committee has made six substantive amendments as a result of the testimony it heard from officials and from outside witnesses. The Senate amendments further clarify the rules to be followed when an employer wants to withdraw from the pension surplus. It struck a provision that would have given the Superintendent of Financial Institutions the ability to decide if a particular allocation of a surplus was fair as the issue of fairness should be left to employees and employers to be settled, not public servants.

It also improved the process for allocating a surplus in cases where a company goes bankrupt or winds down. It is very important that we protect individuals when a company is faced with the types of dramatic downsizing and corporate readjustments that have occurred over the past several years. The legislation will help improve that process.

Those amendments were developed by opposition and government members in the Senate working in the spirit of co-operation with the officials. A spirit of co-operation might be something we should try to duplicate in the House periodically when we are working on legislation as important as this.

At the end of this process financial officials conceded that the bill had been improved by the contribution of the Senate.

The PC party prides itself on working constructively to improve legislation that enters this House and the Senate which is why we proposed the amendments we did to this bill and Bill C-36.

I urge all parties to study bills affecting Canadian seniors with the same scrutiny in order to improve legislation and to protect our seniors.

[Peter Adams, Liberal, Parliamentary Secretary to Leader of the Government in the House of Commons]

Mr. Speaker, I rise on a point of order. There have been consultations among the parties. The critic for the Bloc is unable to be with us today. He or she will be able to speak when the debate resumes, along with anyone else.

I think you will find agreement to adjourn this debate and that the House see the clock as 1.30 p.m. and proceed to Private Members' Business.

[The Deputy Speaker]

Is that agreed?

[Some hon. members]

Agreed.

[The Deputy Speaker]

The House will now proceed to the consideration of Private Members' Business as listed on today's order paper.

Port-Cartier Penitentiary

[Ghislain Fournier, Bloc, Manicouagan, QC]

moved:

That, in the opinion of this House, the government should institute a public inquiry on the administration of the maximum-security penitentiary at Port-Cartier.

Mr. Speaker, I speak to you today on a matter that has, unfortunately, taken a long time to reach the attention of this House.

Six months ago, I moved a motion calling for a public inquiry into events that were occurring at the Port-Cartier detention centre, which is a maximum security facility and therefore under the jurisdiction of this government.

Six months have passed since then, and the motion has just resurfaced today. This motion calling for a public inquiry is, in my opinion, self-evident.

The public inquiry called for would cast light on the past events, which forced the guards to work under intense stress for some days. I have met with mamagement, the unions and the workers in the detention centre on two occasions since the incidents, and they have told me directly that everything possible would be done to try to find solutions to the problem experienced. Today, all committees that were struck have presented reports and, fortunately, the tension appears to have dissipated somewhat.

It is, however, most fortunate that management decided to take the bull by the horns. Judging by the length of time it took for my request to be responded too, it is a good thing no lives were at risk. If that had been the case, I trust that the government would have reacted more promptly. This long delay between the events and the consideration of this motion makes me wonder, however.

When the motion was moved the Port-Cartier penitentiary, a maximum security institution, was facing a crisis. The guards, men and women, had worked long periods in a highly charged atmosphere. They and all the personnel in the institution know necessarily that everyone aware of it when the inmates are up to something.

This very tense situation could have ended in violence. The inmates threatened the corrections officers and their families as well. The corrections officers know when they start working in these institutions that they can expect rough talk from the inmates at times.

Nevertheless, patience has its limits, and when insults and threats are directed at those dear to us it really hurts. A number of corrections officers at the time were obliged to take days off to distance themselves from the unhealthy atmosphere in the institution.

I am not sure any member of this House would agree to work in such circumstances and be treated the way guards often are in detention centres. There are always ups and downs in these institutions. The situation varies from one to another, depending on the type of inmate.

When I made the motion in September, calling for a public inquiry into the events at the Port-Cartier detention centre, the situation was critical. There had been threats to the life of certain guards, and some inmates had been violent.

It took six months for the matter to be brought before the House. Six months in which, fortunately, the situation improved, it appears. Six months in which the management of the institution worked with all departments, including the union and workers to find solutions.

But do we have to wait for the situation to arise again before we intervene? Could we not take appropriate measures now to make sure that all security guards, regardless of where they work, can do their work safely without putting their health or even their life in danger?

There are workers in these institutions who have nervous breakdowns, anxiety attacks and all kinds of physical problems related to stress. Guards know all these problems. It is quite understandable. Corrections officers in maximum security institutions, like the one in Port-Cartier for example, have to deal everyday with hardened criminals who are serving a life sentence in most cases.

The inmate population in institutions like the Port-Cartier and Donnacona penitentiaries, for example, is very similar. However, Port-Cartier will also receive inmates facing serious accusations or those who need protection from other inmates.

Let us not kid ourselves, these are tough guys who fear nothing, especially not a guard who is asking them to go back to their cell because it is late. These inmates are dangerous and violent when they are alone. Imagine having to face them as a group.

Violence does not stop when the door of the cell is closed. It often goes on inside in many different forms. That is exactly why penitentiaries have the infamous hole, which is feared by all inmates, the place where an inmate will be kept alone for a certain period of time, where he will have to eat and sleep alone with very few opportunities to get out.

An inmate is not sent to the hole because he decided to give flowers to his cellmate. The hole is used for rebels or for those who need to be protected against violence from other inmates.

Violence in penitentiaries is a reality, and immediate action must be taken when a difficult situation is reported. We must not wait for guards to lose their lives before we react. Otherwise, why would we put criminals behind bars if guards are to become the victims of their violence? If guards are killed on duty, I think it means that there is surely something wrong with the system.

In any event, I think the judicial system as a whole needs to be scrutinized, reviewed and adjusted where appropriate. Many inmates who are behind bars in 1998 have done time before. They served a first sentence and were released on good behaviour two thirds of the way through their sentence. In many cases, former inmates quickly fell back into their old criminal habits and offended again.

If an individual of any age mercilessly takes away someone else's freedom or life, or significantly reduces their quality of life, and if the justice system finds him guilty beyond any reasonable doubt, it should also deny him all privileges, at least the freedom he has taken away from innocent victims.

I fully understand that one is innocent until proven guilty. I agree this is a very important concept. However, I am not clear about how specific the evidence to the contrary must be. Must one have witnessed the crime in order to be able to give proof or will rational analysis be sufficient?

When the spouse of a woman whose child was found dead is acquitted and, to boot, part of the deposition is dismissed, I have grave concerns. Does it have to be one or the other? In granting parole to an individual who has taken the life of a child, is any consideration whatsoever given for instance to the full impact of his action?

If, at the time of sentencing, the judge decided he should serve 25 years, why then does he serve only about half his sentence? Why should an inmate be released earlier than his sentence calls for, when his victims may have to live with the consequences of his violent actions for the rest of their lives?

When it is not the victims themselves who have to live with the memory, it is their relatives and friends who must live every day without the presence of a loved one. While their lives will forever be changed, the murderer may be set free after 10 or 12 years.

I find it absurd and I have not yet talked about how the trial is conducted. When it takes a whole year to produce a report, it is only normal to forget some elements and to end up producing a document that is not as clear as if it would have been, had it been written in the days following the events.

Similarly, when a case takes months before going to trial, because it keeps being postponed or adjourned, the same thing occurs. In some cases, it took years before some people finally got their day in court. All the while, the victim and his or her close ones were constantly reliving the tragedy.

Finally, the trial takes place and a verdict is rendered. Imagine the pain of the members of a family following an acquittal, or even when a jail sentence is imposed, since they know full well that the offender will not serve out his full sentence.

Is it the whole judicial system that needs to be reviewed? One thing is certain: we must review the rules governing parole for serious offenders who, once released, committed the same crimes again. While it is true that, in many cases, time spent behind bars is beneficial and can be a form of therapy, it is not the case for every inmate.

Going back to the motion before us, the atmosphere that prevails in certain penal institutions is so bad that an inmate cannot be rehabilitated. If verbal, psychological and even physical violence is as prevalent inside the institution as it is outside, how can we expect to rehabilitate these people?

If it is the case, we must do so before other innocent victims fall prey to a criminal.