Debates of Oct. 28th, 1999

Supply

[Pierre Brien, Bloc, Témiscamingue, QC]

Madam Speaker, the answer to that is quite simple: it is to favour its friends. There is no other reason. The government is far more sensitive to political affinities than to regional economic development, particularly in Quebec.

I am happy my colleague raised this issue. In the past, this section was used to prevent Quebec portfolios from acquiring too many shares. In Quebec, we have a number of development tools such as the General Investment Corporation, the Caisse de dépôt et placement, the Fonds de solidarité, major players that can become significant shareholders in various projects. The federal government did not like the 10% rule in some cases. Sometimes it suited the government, sometimes it did not, but we will have to see the consequences this will have in the future.

How will it be possible now to justify this in the other sectors still subject to this rule? If the government wanted a debate on whether the 10% rule is important or not, we could have had that debate outside the context of the Onex, Air Canada and Canadian transaction.

But the government now wants to change the rules in mid-game, in a specific case, to favour one player in particular. This is totally unacceptable. That is why the House must support the motion to reaffirm that the rules will not be changed.

[Steve Mahoney, Liberal, Mississauga West, ON]

Madam Speaker, I will be delighted to share my time with my hon. colleague and good friend from Mississauga Centre.

I was interested to hear the debate, particularly from the Bloc members when they talked about the various issues surrounding the 10%. What I have not heard them talk about, and I am a little puzzled by this, is the real motivation behind them putting this issue before the House.

Before I talk about that I want to thank them for bringing this forward. Frankly, I think it is a good opportunity for many of us. I have many, many employees of Air Canada and some of Canadian Airlines living in my riding who have been calling me. This gives me an opportunity to put my views on the record and discuss the issue here in parliament.

Members opposite say that there is no debate. What are we doing today? Everyone is being given an opportunity to express their views. In fact, what the Bloc has done is exactly what the Minister of Transport asked parliamentarians to do; to give their views to him, to give our best advice to him, and obviously to reflect the feelings and opinions of our constituents so that he indeed can deal with a number of the issues involving this potential merger.

The minister has not changed the rules. For members opposite to say so is nothing more than misleading. Maybe it is intentional, perhaps to get around the real underlying issue.

I suggest that the problem the Bloc has, which I think I understand, is that the head office of Air Canada is in the great city of Montreal. We all know that in recent history there have been dozens of major corporations move out of the city of Montreal, which I think is a tragedy. Why have they done so? They have done so because of policies put in place by the current provincial government, and other provincial governments before it, led by separatists. They have done so because of the separatist policies of the Bloc. They cannot do business with the uncertainty that exists in the province of Quebec. I think that is a shame.

In fact, one member opposite made a remark that Bloc members are working hard at committee and that they participate in debate in the House. Let me tell the House that he is right. I have been quite impressed with the number of members of the Bloc who have come to the citizenship and immigration committee and to the public accounts committee to make good quality contributions to the committee and to the democratic process. It is because they do not discuss the issue of separation. The one flame that continues to burn in the heart of that party is to separate the province of Quebec from the rest of Canada. We know that.

If we could leave that issue aside and take it out of the body politic of the Bloc, we would find some very decent, hard-working men and women who can contribute to this place. However, as long as that is there, I submit that it clouds virtually every issue which they address. It also leads to hidden agendas, which is, frankly, what we are seeing here today.

Having said that, I believe the Bloc has done us a favour in at least bringing it forward. The Bloc members know the government is not going to support them but that does not matter. What matters is that as parliamentarians we have the opportunity to stand here and to tell our constituents exactly what is going on. If we simply want to read the newspapers, as the hon. member earlier did, we can get any kind of distorted view we wish to and we can put it forward as having some sort of credibility.

If the minister had changed the rule unilaterally without discussion in this place, I too would be upset. That is not what he has done. I sat at the committee meeting. I am not a member of the transport committee but I wanted to hear firsthand what the minister's plan was. He said that he wanted our views, that he wanted some consultation, that he wanted to hear from members of all parties in the House of Commons. Imagine opposition members complaining about that. It is really quite remarkable. They must get up in the morning and ask “What has the government done that we can twist and turn around so we can oppose it?”

I want to give some credit to a couple of members and they might go into apoplectic shock. I heard speeches earlier today from two members of the Reform Party, the member for Esquimalt—Juan de Fuca and the member for Souris—Moose Mountain. Both gentlemen gave thoughtful, reasoned, intelligent remarks, something I am not used to hearing from the Reform Party. I was quite amazed. I will give credit where credit is due.

However, the comments do not seem to match other comments made by the leader of the Reform Party at a fundraiser in Calgary. Let me share those with the House because they are somewhat confusing and somewhat contradictory to the remarks made by the two members I just referred to.

The leader of the Reform Party said: “We want to wait until all the final offers are on the table. Our aim is to get the best deal for the air travelling public”. I would have thought the Minister of Transport had said that. I would not have thought the Leader of the Opposition actually came up with something that seems to be a rational policy. He said: “Whichever deal is accepted we want a free enterprise market to deal with this. That could involve the government encouraging greater foreign and regional competition”. What does he mean?

I would suggest that he wants the skies of Canada to be opened up to the extent that foreign airlines, be it American, be it United, be it whatever, can come into Canada and transport passengers between Winnipeg and Toronto, between Montreal and Vancouver, while ignoring all of the very difficult routes. They would simply cherry pick the best routes so those foreign carriers can make a profit on the best, easiest, most economical and efficient routes in Canada. They would be sucking the lifeblood out of whatever airline becomes the dominant Canadian airline. Let me stress clearly that is what is going to happen in my view.

Whether the shareholders vote to accept either the Onex deal that is on the table now or some other deal that is put forward, and I guess it has to happen soon, or whether they decide to accept the offer put on the table for Air Canada, there are pros and cons to both sides of those issues. But in my view there will only be one major airline by this time next year. It will be running the major routes in this country.

Are we going to do what the Leader of the Opposition has suggested and allow foreign airlines to come in and destroy that company? That could happen.

The minister has stood in his place and has said he will not change the foreign content issue. Foreign ownership of Air Canada will not increase beyond 25%. He has said that.

I could not believe it so I had to verify it in Hansard but I heard the Reform Party critic ask the minister why he would not even consider allowing foreign ownership content to increase to 49%.

Just as there is a hidden agenda by the Bloc, members of the Reform Party seem to be driven and motivated by a need to Americanize this country. They do it all the time. They stand and say “Do it the way they do it in the United States. They do it better”. They confuse issues.

The minister is consulting. He wants to hear the views of all parliamentarians and all Canadians. I have great confidence that he will make the right decision.

[René Canuel, Bloc, Matapédia—Matane, QC]

Madam Speaker, I listened to my colleague and associate. He said that we had introduced this motion on an opposition day today because we want sovereignty. I would have liked him to be a little more logical. I would have liked the House to stick to the issue at hand, because it smells to high heaven.

One of their own, Marc Lalonde, said “Look, I do not think we should go that route”. And now my colleague says “The minister is carrying out consultations, but calm down, that does not mean he will change the regulations”.

Will he be able to assure me sometime in the future that the minister will not make any changes? He will not be able to give me any assurances. He will skate around the issue. He will say anything.

I said that this is dangerous. Can we have the assurance that security will be enhanced and that the air rates will not go up? Of course not. They say almost anything. When we ask questions, they do not even answer. Such behaviour in the House of Commons goes against the spirit of democract. And flouting democracy in the House of Commons, that is serious business. What was said earlier about the Bloc was an insult to the constituents not only of Matapédia—Matane but of each and every riding. There are 44 of us here. It was an insult to all the people of Quebec.

I ask my colleague opposite to apologize, because my constituents will just not take it. I ask him if he can assure us that the 10% rule will not be changed. Can he confirm that security will be enhanced, that the rates will at least remain the same and that in remote areas the level of service will be maintained?

[Steve Mahoney, Liberal, Mississauga West, ON]

Madam Speaker, constituents in my riding find it insulting every time a Bloc member talks about taking a major part of the country out of confederation. I do not apologize for a single thing I said in this or any other speech in regard to that.

Let me answer the question. The member talks about servicing small communities. I can tell him that my province of Ontario has many small communities as he would well know, as does the province of Quebec. I can tell him that the government is concerned that those communities continue to be serviced by air.

The airline industry is part of nation building. We cannot leave the people of Nunavut without that kind of service. We cannot leave northern Quebec and remote regions in Labrador or western Canada without some kind of access to affordable quality service. The minister has laid that out in his program which he presented to the committee. Pricing is absolutely a concern. Service to small communities is a concern. Jobs are a concern, not only for Air Canada employees, but for Canadian employees.

I believe that through debate in parliament, through discussion in committee, through submissions that will be made by many people who will be appearing before the transport committee, all of those issues need to be addressed. I agree with the member that they are extremely important. The government is committed to that.

Above all, the government is committed to ensuring that we continue to have one of the finest, safest airline industries in the world, which we do. We have terrific people who work in them and we have two quality airlines. We just have one that is in serious financial trouble and that issue must be addressed.

[Carolyn Parrish, Liberal, Parliamentary Secretary to Minister of Public Works and Government Services]

Madam Speaker, it is my pleasure to share my time with my colleague the member for Mississauga West.

I rise to speak against the motion raised by the Bloc today. In his policy framework for airline restructuring in Canada, the Minister of Transport indicated on October 26 that the government was prepared to consider increasing the 10% limit to a new level to be decided following input from parliamentarians, only if such a measure contributes to a healthy Canadian airline industry.

The importance of a healthy airline industry in Canada cannot be overstated. Canada's airlines provide employment to thousands of skilled workers and are important contributors to our economy. In a country as large as Canada, they help support the very fabric of our society by connecting communities separated by hundreds, sometimes thousands, of kilometres.

As international trade and travel increase, our airlines provide Canada with critical links to the rest of the world. Canada needs a healthy airline industry to continue to enjoy these benefits and to create even greater benefits.

As my hon. colleagues are aware, the government has been very closely monitoring developments in the industry. It has assessed the implications of a major restructuring in order to form its policy framework.

The Government of Canada is committed to protecting the public interest in issues such as pricing, service to small communities and the rights and concerns of airline employees. I and my caucus colleagues have been made intimately, sometimes forcefully, aware of the concerns of the employees of both Canadian Airlines and Air Canada.

As the member of parliament for Mississauga Centre, I represent a riding that is home to hundreds, sometimes it feels like thousands, of airline employees. It is the employees of both airlines as well as the Canadian traveller that I remain most concerned about.

Travellers are justifiably concerned about airfares. Competition encourages lower airfares and increases the affordability of air travel. Currently almost 90% of air travel within Canada is on discounted fares. Seat sales allow families in Vancouver to visit relatives in Montreal. They allow small business people on restricted budgets to travel more easily. They encourage tourism.

It is reasonable to be concerned that a major restructuring of the Canadian airline industry could lead to higher airfares for all consumers. The government is very much aware of these concerns and the importance of affordable air travel to all Canadians.

As stated in the policy framework for airline restructuring in Canada, clearly the best way to promote affordable air travel is to have an air industry that remains healthy as well as competitive. It is competition rather than government intervention that will be most effective in moderating airfares in the long run. However, we must consider that competition may not exert sufficient control on prices in all circumstances. It is for this reason that competition concerns have been addressed at such length by our government.

The government already has tools at its disposal to address pricing concerns, including section 66 of the Canada Transportation Act which allows the Canadian Transportation Agency to act on complaints regarding basic fares on monopoly routes. As the Minister of Transport has stated, the government will go further and assess whether these provisions should be broadened to address market dominance.

As well, the government will require commitments on pricing from the dominant carrier during any restructuring process. The government will consider adding relevant conditions to its approval of any restructuring. The government will not tolerate any price gouging of Canadian consumers.

The importance of air travel to small communities is also a very serious concern. Our airlines help support the fabric of our nation by providing crucial air service to hundreds of domestic destinations, many of them accessible only by air.

Small communities rely on air services often more than large communities. Airlines provide links to larger markets, help attract investments and provide an indispensable lifeline to the rest of Canada.

As my hon. colleagues can appreciate, a major restructuring of the airline industry could lead to a rationalization of some air services. In this regard the public, consumer representatives and northern residents have expressed their concern that air services to smaller communities could decrease or even disappear. As set out in the government's policy framework, the key to addressing this issue is to ensure that barriers to entry and to growth in the market of small regional airlines are reduced to the greatest extent possible and that there are protections from possible predatory behaviour on the part of a dominant carrier.

History has demonstrated that where there is a demand there will be entrepreneurs willing to provide service, even in small markets. There must be an environment that will allow competition to exist. With this in mind our government has indicated that it will work to ensure that the necessary conditions for attracting competition are in place.

I would like my hon. colleagues to note that the Canada Transportation Act already requires the last and second last carrier serving any community to give notice of their intention to stop service so that there will be adequate lead time for any other carrier to prepare to offer replacement service. These sections will be reviewed to determine if they remain adequate.

In addition, the government has stated that it will require commitments on service to small communities from the dominant carrier during the restructuring process and will consider adding more conditions before restructuring is approved.

Lastly, I would like to address concerns regarding employment. The Canadian airline industry employs thousands of skilled workers directly and indirectly. These employees have worked diligently. Many of them have made significant sacrifices to ensure the success of their companies. They have endured economic downturns and have witnessed corporate downsizing. They have agreed to pay freezes and to pay cuts. They are important contributors to the Canadian economy. I believe they merit the consideration of our government in any airline restructuring.

The government has already consulted various groups on the issue. Labour leaders have expressed the concern that employment levels may be substantially affected by a restructuring of the airline industry. They want to ensure that job impacts and dislocations are minimized and that any employment adjustments are handled exclusively through normal retirement, attrition and voluntary separation packages.

Airline employees are very concerned that airline consolidation will cost them their jobs. They fear forced relocation and layoffs. It is for this reason that the government will insist that employees be treated fairly and will require commitments from a dominant carrier to this effect. The government will encourage labour management discussions with a view to reaching an agreement which is satisfactory to all.

The government believes that Canadian consumers want and deserve the benefits of competition, that small communities require air service and that airline employees deserve to be treated fairly. At the same time the government believes that these objectives are consistent with a healthy, Canadian controlled airline industry.

If my hon. colleagues believe that these are laudable goals, then they should agree that we must be prepared to take the necessary steps to manage a major restructuring of the Canadian airline industry. I call on my hon. colleagues to support the government initiatives presented by the Minister of Transport on October 26, including a provision for the government to consider increasing the 10% limit on individual ownership of Air Canada's voting shares.

The Minister of Transport has been very clear on his willingness to consider a legislative change right from the beginning. One has to look no further than the minister's news release of August 13, 1999, in which he said:

The Government of Canada will also consider what further action might be required, including the possibility of introducing legislation to facilitate the implementation of an acceptable proposal and making any necessary changes to the policy and regulatory framework governing airlines.

Clearly the government has stated its openness to legislative change from the day the use of section 47 was announced, which was August 13.

This issue will only be decided following input from parliamentarians and then only if such a measure contributes to achieving a healthy, Canadian controlled airline industry.

I will repeat this for the sake of all here. The government has stated that a change to the 10% limit will only be considered if it will contribute to achieving a healthy, Canadian controlled airline industry.

To make a decision prior to proper consultation, as is effectively proposed by the hon. member's motion, would not only deprive the government of the benefits of the advice of the parliamentary standing committees, it would also be unfair to the proponents of the private sector proposals that are seen to be addressed by shareholders.

For this reason, I oppose the motion. I also appreciate, as my colleague did, the opportunity to state my position in the House. Perhaps it will relieve me of the millions of phone calls I have been getting.

[Deepak Obhrai, Reform, Calgary East, AB]

Madam Speaker, I listened with great interest to the debate today. I heard the minister's speech and my colleague's speech.

She talked about having an open debate, which is right. She talked about certain issues like regional communities being serviced, employees and the excellent airlines that we have. I agree with her. There is no question that we have great airlines. She made a good point. We do not oppose that; we agree with it.

However, we do have differences. We know there is a definite need to restructure the airline industry in Canada and that we are facing the prospect of one airline. If the ownership rule was raised, as the Competition Bureau chief said, we do not see any danger in that. We see that as meaning that jobs will be protected, the excellent service will continue and the skills in the aviation industry will remain in this country. We do not see a danger. As a matter of fact, we see our two airlines growing, providing Canadians with more opportunity for jobs.

Why are we becoming restrictive? The Minister of Transport would like to raise it to 25%. What is the problem in restricting this to 49% to improve competition? We would have a healthy aviation industry in this country.

[Carolyn Parrish, Liberal, Mississauga Centre, ON]

Madam Speaker, I am very pleased to respond to my friend from Calgary East. I too read the recommendations and found that what was lacking was practicality. The Competition Bureau suggested that we could bring in all kinds of new airlines. It did not really matter who owned them, we could raise the ownership portions to astronomical heights.

What has to be understood, which the minister understands, is that this country was originally connected by railroads. Now its lifeblood is being pumped through the airlines. The heart of the country and its regions are being fed through the airlines.

It would be a gross miscarriage of justice if we lost some control over Canadian ownership and some control over the direction this new mega airline will go in. It would be a very sad situation if we, as parliamentarians, stood back and let the market forces take over. We have to understand that some of us really believe this will keep the country together. It is important to control it to a certain extent and to monitor it so that it is the best airline it can be and one which will continue to make Canada proud.

[Gérard Asselin, Bloc, Charlevoix, QC]

Madam Speaker, recently I met with representatives of Air Canada, its subsidiary Air Alliance and Canadian International Airlines.

The problem facing the managers of these two companies is that their service is expensive in the regions because they do not have enough passengers. If so, it is also because prices are high.

I would ask my colleague if she would support, in the restructuring of airline services in Canada, having a carrier for international flights and an interprovincial carrier and having unrestricted competition to serve the regions. Local carriers would serve them and feed into the hubs for interprovincial and international flights.

I think we would then have more and better service regionally.

[Carolyn Parrish, Liberal, Mississauga Centre, ON]

Madam Speaker, I hope I am not misinterpreting the member for Charlevoix. My impression is that he is willing to relegate Canadian Airlines to be the little local server, which would provide a lot of nasty competition to very successful small airlines which are out there right now, and that he is willing to allow Air Canada to continue to be the international carrier.

My perception of what has been going on between Air Canada and Canadian Airlines for a long time is that it is like the big brother and the little brother fighting each other, but they are not prepared to take on the bully from across the road. I think our real competition lies offshore and that international airlines from other countries are taking a lot of the lifeblood out of this country.

No, I do not agree with the member's position.

[Wendy Lill, NDP, Dartmouth, NS]

Madam Speaker, I am happy to be splitting my time with the member for Regina—Qu'Appelle.

I am pleased to speak to the question surrounding the airline industry. It concerns many people in my riding of Dartmouth and they are looking to Ottawa for leadership on this issue.

It is also a symbolic issue for Nova Scotia and Canada, a debate which shows how the Liberal Party has moved from being a proactive force in Canadian politics to being a caretaker government which equates the corporate good with the public good. It clearly shows how out of touch members opposite have become with the reality of most Canadians.

My constituents have approached me on the issue of the travel industry. It is an industry which employs many people in Dartmouth. They fear for their jobs. We have heard about the more than 25,000 direct jobs involved in Air Canada and Canadian Airlines, but I have also heard from people who make a living selling seat sales. They worry that they will have no jobs when there are no regional carriers, no national competition and no more seat sales.

A retired Air Canada worker was in my office yesterday. He is concerned about the future of his pension. He is not a direct employee, but he is scared because this process may threaten his income. Many direct employees, be they pilots, mechanics or flight attendants, have told me or my staff that they will be forced to move to keep their jobs due to the restructuring. These people are being brave, but they are worried. Consumers in Dartmouth are also worried.

Atlantic Canada has a sad history of watching our young people go down the road. I do not think I am exaggerating when I say that most families in my riding have a close family member in central or western Canada. I also know that many people have moved to Dartmouth from Cape Breton, rural Newfoundland or from the Acadie to find work. Most of these peoples' families are still down home. A major force which helps to connect these families are airplanes.

Due to the former Conservative policies there is no real train service left for most people in the maritimes. The Trans-Canada highway system has been abandoned by the government and motorists now face tolls throughout my region, so that option is becoming less and less a factor as well.

What I hear people talking about over their coffee in the shop next door to my constituency office is the next seat sale to Calgary, Sydney or Gander. I am also amazed by the anger people express over the fact that it seems to cost more to fly from Halifax to St. John's than it does to fly from Toronto to London, England.

People do not talk about the relative merits of the Onex or Air Canada offers. They are not concerned about the share price. They want to be able to see their kids. They want to know they can fly to see their parents and be by their side in an emergency.

These anxieties should have been addressed by the government. It had the opportunity. The government started the ball rolling by invoking section 47 in the summertime, but there were no assurances from the minister for Dartmouth consumers. A throne speech was delivered, but again silence on this issue. There was nothing for maritimers.

The minister did say at one point that this was a matter for the private sector, a position I believe he still stands by. He has mumbled vague words about price protection, but nothing specific. This week the minister has given assurances that the company will be accommodated and that the 10% ownership rule could be changed, but no such specifics to protect consumers.

The minister will do nothing to protect consumers because he is part of a party and a government which does not believe there is a role for government in the marketplace to protect consumers. He is protecting the choices of shareholders, not stakeholders and not the public.

It is sad that we have come to this. Canada was not built this way and Canadians have never wanted it to be this way.

Halifax harbour has had a proud and vital part in the development of my country and our community.

We should always remember that its piers, its rail links and equipment did not arrive with this pretty setting. It was largely built by public money. In large part, Canada was created based on promises of a public investment in a cross-Canada rail link.

Our airline industry was also built by public money. These investments were visionary in their recognition that accessible transportation links in Canada are not a frill but a necessity.

The policy allowed for the concept of the Canadian government acting for the public good. This tradition was gutted by the Conservative government in the last decade and it has been continued by the current Liberal regime.

It is sad that the Liberal government has lost that vision of the public good. It seems that at every turn on questions of trade, culture, the environment, health protection and transportation, the government feels that the corporate good outweighs the public good. The government has said that after shareholders have finished carving up the current air carriers it will bring in a law to allow the carve up. For the rest of us, the government has said “trust us”.

I still remember the Liberals saying “trust us” for a national child care program, and the Liberals committing themselves to scrap the GST. I cannot trust them in any good conscience but I can call on them to remember the concept of public good in transport policy and do the following before bringing in any new law: Protect the maximum number of jobs and ensure that any job loss be offset through attrition and incentive packages; put in place a regulatory framework to guarantee fair prices and equal service to the consumer; explore all policy instruments at its disposal, which might include an equity partnership, to ensure that the public good is protected in a restructured airline industry; have all affected stakeholders participate in any eventual decision about the future of our air transport industry prior to it being taken; and, keep foreign investors in a small minority interest and do not allow them to obtain a controlling position in the affairs of Canada's national airlines.

This is our national tradition. That is what I believe constituents want to see.

[Gérard Asselin, Bloc, Charlevoix, QC]

Madam Speaker, I >have a little more time than before to put my question.

As I was saying, after meeting with Canadian and Intercanadian, the numbers are not there because it is expensive and it is expensive because the numbers are not there, in short, it is a case of which came first, the chicken or the egg. Or it is the case of Maple Leaf sausages, the more we eat, the more we like it, and the more we like it, the more we eat. We live with that.

I would like to put my question by citing an example. There are two sorts of travelers. There are those obliged to travel and those travelling on holiday.

The first type of traveller may be a business person who must get from point A to point B, for example from Baie-Comeau to Montreal. That person must be in both places on the same day, then come back the next morning to be at work. Another example is a person who leaves Baie-Comeau for treatment in Quebec City or in Montreal, and who comes back the same day or the next day. The return trip between Baie-Comeau and Montreal for such a traveller not leaving the country costs $900.

If a person travels from Baie-Comeau to Montreal on his or her way to Paris or Florida, or anywhere outside the country, for a holiday, it will cost that person $285. Where is the problem? The problem is that people in the regions pay for the air miles that frequent flyers collect. Some airlines give air miles and access to the V.I.P. lounge, but the person who must travel on business, or for treatment, helps pay these promotions from major airlines.

That should be abolished. I said earlier that we should help the regional carriers that bring passengers to hubs and to interprovincial or international carriers, so as to have lower airfares.

After talking to people from the chamber of commerce—and all chambers of commerce make representations at that level—one realizes that they are penalized, in terms of the airfare, because they leave from a region to go to a major centre. They are told that this is because the aircraft is half empty, or half full if one is an optimist. But the problem is that it is not profitable.

Why? Because it is costly. Let us eliminate the gadgets and the promotional items and let us provide competitive prices for the regions. In order to do that, the Minister of Transport must promote regional development in the context of the air transportation industry. I would like to hear the hon. member's comments on this.

[Wendy Lill, NDP, Dartmouth, NS]

Madam Speaker, I agree with the hon. member that there certainly is a need for an investigation of the fee structure in terms of transportation across the country.

I know members of the House find themselves having to make ridiculous detours through Toronto to reach another location, perhaps in the maritimes. Sometimes when flying from Calgary, one has to go through a place like Winnipeg to get to somewhere in the north. There are a lot examples of erratic and irrational detouring going on. I believe all of that has to be taken into account in terms of it being a system that will meet the needs of Canadians.

[Peter Mancini, NDP, Sydney—Victoria, NS]

Madam Speaker, I listened with interest to the last question from the hon. member for Charlevoix. We, too, in Cape Breton understand how difficult that is. The cost of flying from Cape Breton to Halifax, a 40-minute plane ride, sometimes exceeds $700 or $800. It is cheaper to go from Halifax to Europe and back again, or at least one way, than it is to get from Cape Breton. With the decline in hospital services and so many other services that rural communities face, this is becoming an increasing burden on people in rural communities.

[Wendy Lill, NDP, Dartmouth, NS]

Madam Speaker, I agree with the hon. member from Sydney—Victoria.

[Lorne Nystrom, NDP, Qu'Appelle, SK]

Madam Speaker, the surprises never cease. I also want to say a few words in the debate.

I support the motion proposed by the Bloc Quebecois this afternoon on the future of Air Canada and Canadian Airlines in our country, Canada.

As I said, I really am in support of the motion put forward by the Bloc Quebecois today. I am surprised that some of my Liberal friends are not supporting it as well.

I remember, for example, my hon. friend from Prince Edward Island, when he used to be a progressive left-wing Liberal, would get up and make all kinds of speeches about Canadian nationalism and how we had to look after our own country and stand up for Canada. I remember that before he became power hungry and ran as a Liberal in Prince Edward Island. I wonder where those speeches are now.

All the Bloc Quebecois is doing today is moving a motion that respects existing Canadian law. I am sure you are surprised by this, Madam Speaker, but the Liberal Party is going to vote against it. What the Bloc is saying today is that we should respect the current law that says that no single entity, including someone as wealthy as the member from Prince Edward Island, can buy more than 10% of Air Canada. That is the law and that is what the Bloc is saying today.

What does the Liberal Party say? It says “No, we are not going to support that”.

[An hon. member]

You haven't been listening.

[Lorne Nystrom, NDP, Qu'Appelle, SK]

If I have not been listening, I will be very interested in watching the member stand in his place here later on today and vote in favour of the motion put before the House. We will then see who is going to be listening, myself or the hon. member from P.E.I.

When Air Canada was privatized, parliament in its wisdom, and I think it made the wrong decision to privatize in the first place, decided that no entity could own more than 10% of Air Canada and that a maximum of 25% of it could be owned by foreigners. We were paralleling the Bank Act in many ways where nobody could own more than 10% of a bank and no more than 25% of a bank could be owned by non-Canadian entities, institutions, pension funds, et cetera. That is what happened.

Now the Liberal Party is considering increasing the 10% rule. I wonder why. It think it is doing that because the Minister of Transport is favouring the proposition put forward by Mr. Gerald Schwartz who is the president of Onex.

It is interesting to talk about Mr. Schwartz. Mr. Schwartz is one of the most effective fundraisers in the Liberal Party anywhere in the country, contributing and raising hundreds of thousands of dollars for the Liberal Party and for candidates in that party, in particular in the province of Ontario. I think this is part of what the debate is about. If it was not about that why would the government want to change the 10% rule? Why does the government not say to Mr. Schwartz or anyone else, “If you want to make a proposal, do it in the context of existing law”.

As my friend in the Reform Party says, it is like changing the rules in the middle of a game. That is what the Liberal Party wants to do. I am surprised at the hole that the Minister of Transport and the Prime Minister have on the backbenches. Some of these people will not rise in their place and say, “All this motion is doing is supporting the existing law in the country”. Why will they not get up and do that? It is because there is another agenda.

The minister from Toronto is favouring his buddy, Gerald Schwartz from Toronto, who is a big fundraiser for the Liberal Party of Canada. That is the kind of politics that we have here today. It says an awful lot about the need for more free votes in the House of Commons where a member can get up and voice his or her concern without fear of losing a job as a parliamentary secretary or chairmanship of a committee.

I have spoken to many members of the Liberal Party in the House who are dead set against what Gerald Schwartz is trying to do, who are not at all happy with the minister from Toronto and who are unhappy that the minister is talking about changing the rules to favour one airline over the other. Where are those people today? They are not going to get up and speak in support of the motion that is before the House.

This is a very important issue. I come from Saskatchewan. I come from a smaller market where we do not have many flights. We have very few flights by Canadian Airlines. We have a few more by Air Canada. We have very few flights in all. It is a captive market. The prices are very expensive in a small market like Regina or Saskatoon, Saskatchewan. People are very concerned about the future of the airline industry.

If the 10% rule goes through, how high does it have to go before in effect we lose control of an airline industry in the country to big financial institutions or big American airlines in the United States? I want members to think about that.

Even the Conservative Party of Brian Mulroney, when it privatized Air Canada, brought in the 10% rule for a purpose. It was to make sure the airline remained in Canadian hands. That was the Conservative Party.

Here we have a Liberal Party that is now more conservative than the Conservatives and more conservative than Brian Mulroney. It is a shame.

I can see members across the way nodding their heads in agreement that it is a real shame. If this rule goes through, we are going to lose the airline industry and people know that. It is only a matter of time before the big airlines buy out the Canadian airline industry, buy out Air Canada and Canadian Airlines. Big institutions in the United States will invest money and buy out these Canadian airlines.

That is the issue today. If we had a true parliamentary democracy in the country, the vote this afternoon on this motion would, I think, be overwhelming in terms of support for the motion put forward by the Bloc Quebecois. That is why we need change in terms of how the House governs itself.

Before my time expires, I have a couple of other things to say. One thing the government should consider is the federal government itself taking an equity position in a new national airline. I would suggest about 15%. I think 15% would give the people of the country, through the federal government, enough control to make sure that the industry stays in Canadian hands, that we have jobs here for Canadians, that rural communities and smaller communities will to be served, that the price which passengers pay when they fly on an airline will be reasonable regardless of the size of the Canadian market. I think that is one thing that can be done.

I believe that sooner or later, probably sooner than later, we are going to end up with one national airline. We do not have the market to support two big national airlines. I do not think any other country in the world, except the United States and perhaps Australia, has more than one national airline. Of course Australians have to fly almost always when they leave their country. I do not think we have the market to have two big national, successful, economic airlines in this country.

If we are going to have one airline, the government should seriously look at the possibility of an equity stake in that airline. The public should have some input and some clout. The public should have a couple of people on the board of directors of the airline and have some say over the direction in which that airline will go.

Those are some of the important issues we have to be debating today. I end by saying once again that we support the motion put forward by the Bloc. I think that the 10% rule will have to stay. If it goes, we are in danger of losing not only Air Canada, but Canadian as well within a few short years into the hands of investors from the United States.

[Wayne Easter, Liberal, Malpeque, PE]

Madam Speaker, it was an interesting speech by the member for Regina—Qu'Appelle. There were a lot of words but not much substance.

Let me be clear. I too am in favour of the 10% rule, but I do not not want to see the government tie its hands so that we do not have some flexibility.

One remark the hon. member made which did make some sense is that people are concerned about the future of the airline industry in this country. That is true. The government is concerned. The minister is concerned. That is why the minister outlined the five principles. That is why the minister dealt with the Competition Act in order to try to solve this problem in a very managed way.

The member took one personal shot at me which I should mention and that is that I am a little bit left. Yes, and I am proud of it. The difference between my party and that party over there is that we are willing to look at some flexibility for the good of the country. We do not bury our heads in the sand as does the New Democratic Party which does not look at all the options.

What is the member's view on the five principles that the minister has outlined?

[Lorne Nystrom, NDP, Qu'Appelle, SK]

Madam Speaker, I learned a long time ago that there is a difference when a Liberal talks about principles and when a Liberal puts something into action and into effect. Sometimes there is a long distance between the two.

I remember my grandfather telling me many years ago about the Liberal Party promising medicare in the campaign of 1919. I did not see medicare in this country until about 1965 after it was brought in by a CCF government in the province of Saskatchewan. There is a long distance between the principles of the Liberal Party and the action of the Liberal Party.

I remember very well the Liberal Party campaigning in this House against the GST. Does anyone else remember that? I was here. I saw the Liberals filibuster on the GST in the House of Commons. They spoke in committee hour after hour, “If we are elected to government in this country, we will abolish the GST. We will get rid of the GST”. About the only one who stood by her word was the Minister of Canadian Heritage who resigned her seat and ran in a byelection because of her commitment on the GST. I remember those debates.

I remember my friend from Prince Edward Island when he was the national president of the farmers union based in Saskatoon. I remember going out to his retirement and cheering him on as a good progressive left-wing thinker. Part of the reason was that he campaigned against the free trade deal. He was campaigning against NAFTA.

His Liberal Party was campaigning against NAFTA and the free trade deal. The Liberals were sitting in these benches calling Brian Mulroney a sell-out. They were elected and what happened? We are still part of the FTA. We are still part of NAFTA. There have been no changes, no amendments, nothing. We are now talking about selling our water. We are now part of the WTO. That former Canadian nationalist, Sergio Marchi,—I can use his name now as he is at the WTO—was campaigning against those deals. What is he doing now? He wants to expand them more and more.

That is the Liberal Party. Madam Speaker, I am sure if you were not in the chair you would get up and agree with me, because that is the history of the Liberal Party. Liberals say one thing and they do something else.

When members of the Liberal Party campaign in the opposition, they campaign for the left and they sound like New Democrats. When they are in government they sound like Conservatives, except for the last few years when they have sounded like Reformers. The Reform Party has set the agenda for them.

[Gérard Asselin, Bloc, Charlevoix, QC]

Madam Speaker, we are of course pleased to have the support of the NDP, the Conservatives and the Reform Party. The Bloc Quebecois will back them one hundred percent.

There must be a few Liberal MPs who support this motion, such as the hon. members from Lac—Saint-Louis, Vaudreuil—Soulanges and Thunder Bay, and I trust Mr. Lalonde will stir up some Quebec members.

The primary intent of the Bloc Quebecois' motion was to inform the public on issues relating to the future of air transportation, as well as to ensure that this situation was treated fairly and in the same way as the Caisse de dépôt et de placement du Québec when it was told that one could not invest more than 10% in the CN. The maximum for Petro-Canada and the banks is also 10%. Why should it be different for Onex? What complicity is going on between the Minister of Transport and One x?

[Lorne Nystrom, NDP, Qu'Appelle, SK]

Madam Speaker, this is not a very difficult question and the answer is that Onex president is Gerry Schwartz, and that he gives a lot of money to the Liberal Party.

This is why the member from Prince Edward Island does not dare stand up in this House and vote in favour of the Bloc Quebecois' motion. Mr. Schwartz contributed to the election funds of several Liberal candidates in the Toronto area during the last election campaign. This is one of the reasons why the Liberal Party will not support the motion.

[Roy Cullen, Liberal, Parliamentary Secretary to Minister of Finance]

Madam Speaker, I am pleased to enter the debate on the restructuring of Canada's airline industry, not necessarily to speak to the Bloc's motion. Usually when the Bloc brings something to the House it is a sort of myopic view of public policy. Here coincidentally, Air Canada's head office is in Montreal, Quebec and Air Canada does not want to see any change to the 10% rule. Therefore the Bloc has come in here supporting no change to the 10% rule.

I would like to speak on the key issues here, which are the amount of Canadian ownership and control in any industry in Canada and the question of competition and service.

The 10% rule should be put in context. When Air Canada was privatized however many years ago that was, the policy intent was to ensure that the shareholdings were broadly held across Canada. The government brought in a 10% rule to ensure the shares were widely held.

The question now before the government is whether the 10% rule should be relaxed. It makes eminent good sense to have a look at that. That is all our government has said, that we should not rule out any options, that we should have a look at the 10% rule.

The 10% rule does not apply to Canadian Airlines. What is the magic of this 10% ownership rule? It has to do with how widely the shares are held. It has nothing to do with foreign ownership.

To argue, actually to cheat, to say that we should not bring any policies forward that do not comply with legislation, the next time Air Canada or any interest group phones me and says that we need to change these policies or legislation, I will tell them that I am sorry because the legislation is here and that is what we are working on, so we will not consider any proposals. That is what I would do.

Our role is to legislate. We have a proposal in front of us which someone has asked us to look at. We must debate it. It is a good debate. Our government has said that parliamentarians are going to debate it.

I will certainly be voting against the Bloc motion. In a public policy sense it does not make any sense. Why would we close down that door at this point in time?

I would like to address the other hypocrisy I have seen in this debate. On the one hand the Reform Party says let the market decide, that the market should control these things, that it should determine what the best mix of air service and air structure is in Canada. Then the minute the government lays down some public policy principles, the Reform Party says that the government is interfering. The minute the government says that we should really look at the 10% rule, the Reform Party says we are creating favouritism. In fact we are creating favouritism the other way if we do not open that door because Canadian Airlines is not governed by the same 10% rule, not at all. We need to get serious in this debate.

In terms of the government's role, we came out with a set of five principles. To my mind that was what we needed to do, had to do and it is what we did. We said that rather than nickel and dime every single proposal or alternative that is out there, we are going to set a framework. The government has embellished that somewhat since the first five principles were set out. No matter what proposal we look at, the government should weigh it against these five public policy objectives. That is what our government did.

I would like to reiterate those five policy principles. The government said that no matter what proposal comes forward, and by the way, we do not have any firm proposal right now because nothing has been approved by any shareholders. Once a proposal is approved, we will evaluate that proposal against these criteria: Do we have Canadian control and ownership? Will we have good competition and service to consumers? Will we have good pricing in Canada? Will we be able to serve small communities? What about the rights of employees? Will they be protected as best as they can?

Of course safety underlines everything. That is the mission of Transport Canada. That is its number one objective. Safety is a concern in the context of any proposal that would come forward.

Our government laid out the five principles. In fact, when the government relaxed section 47 of the Competition Act, I thought, naively perhaps, that maybe the airlines would start talking to each other.

In fact, the government's policy purpose may have been to have Canadian and Air Canada talk to each other to try to rationalize some of this excess capacity out of the system. It is no secret. People in Canada recognize that when there are two flights at the same time from Toronto to Calgary, one Canadian and one Air Canada, at 7 p.m., 8 p.m., 9 p.m, and 10 a.m. It is called wing tip to wing tip flying on the same routes. We cannot have the luxury of that kind of excess capacity.

Some pilots will say that the planes are sort of full. Probably they are, but at what price? We know the way the pricing is done these days. There are about 60 different prices. About 80% of the people sitting in that plane are covering the variable costs maybe, but that is about it. Airlines cannot survive that way, Canadian or Air Canada.

We know Canadian Airlines is in deeper trouble, but Air Canada really has not performed that well over the last 10 years either. We have excess capacity and we have to deal with it. We cannot hide. We cannot run. We have to deal with it.

Canadian ownership is an issue that is important to all Canadians. Frankly, I do not think we should compromise on the 25% rule at all.

In terms of the proposals we have in front of us, at least in terms of propositions, the question becomes how do they stand against that test? There has been a lot of misinformation about that in my view.

The Onex proposal is really proposing that American Airlines would have about 15% of Canadian. In fact, its shareholding goes down. In terms of its equity participation I think it is one member of the board of directors, or two out of thirteen, something in that order. We know that is not effective control.

The Canadian Transportation Agency will rigorously look at any proposal that comes forward. It will deal with the question, is it effective Canadian control?

The ringer, the hook, is in all the side agreements. There are side agreements with American Airlines and Canadian. We know about the reservation systems, maintenance.

The Canadian Transportation Agency will look at any proposals. It will study them and come back to the government and say that it has looked at them in some detail. The agency will say that it has looked at every single agreement that Canadian Airlines has with American Airlines and that from a policy perspective it is either effectively controlled in Canada or it is not. However, it is a valid public debate to have notwithstanding that we do not have all those facts in front of us.

Another aspect is the Competition Bureau. Its criteria is what does it do to competition. It does not have to worry about effective control or Canadian control. It just has to answer the question what is in the best interest of competition.

That is a very valid question but the bureau does not have to worry. If we look at cabotage, it means that we would open up our doors and allow foreign airlines to come in, pick up passengers in Toronto and take them to Calgary. It could be American Airlines, United or whatever. The bottom line in my view is that with the economies of scale of some of the huge American airlines our airline or airlines would be hard pressed to compete.

Why would we allow cabotage in Canada without getting the reverse, for example, in the United States? That would be folly. I do not think the Americans are prepared to allow cabotage in the United States. That to me is not an option.

The Competition Bureau clearly has a role to play. We are essentially looking at a one airline policy in Canada. Anyone who thinks that we cannot do anything about that is not really thinking through the facts. As a government we have a lot of options.

We could look at reregulating the industry. It is not an option that I would support, but we could do that in some limited way. I am very concerned about service to remote areas of Canada and some areas that might be marginal.

However, if we give an airline a chance to rationalize some of that capacity, instead of 12 flights a day into certain centres by Air Canada and 12 by Canadian Airlines almost at the same time maybe we would end up with 8 in those centres but we would have service to other areas on a much more frequent basis.

How do we structure that? We cannot structure it on the basis of hope. We have to put some policy meat on those bones. Our government through debates and discussions with all parliamentarians should consider that.

I do not like either of the deals that have been proposed the way they stand right now. I understand that Onex has come back with something today. It is trying to limit the perception of American Airlines effective control, but until we see all the side deals I do not know if we can really deal with that.

I am glad these companies are at least thinking of how they can try to meet the public policy objectives of the government. I looked at the Air Canada proposal. In my mind I saw one proposal that was a heavy, dominant American Airlines proposal and another one with Lufthansa and United. It was sort of like pick our poison. We have some work to do.

I would have liked to have seen one airline do the major financing in Canada. I am not convinced that it cannot be done. Why can it not be financed in Canada?

I am not sure that the Air Canada proposal deals effectively with excess capacity. They are going to run Air Canada. They are going to run Canadian Airlines as a separate entity. They are going to throw in a computer discount airline into Hamilton. What does that do to our capacity? By the same token, unless the new Onex deal has some interesting propositions with respect to American Airlines effective control I think that proposal is problematic.

I remember being at the transport committee one day when we were looking at the competitiveness of the air transportation sector. I asked a pilot group or some group about code sharing on domestic routes. All the airlines do code sharing internationally. Instead of having both a Canadian Airlines and an Air Canada flight leaving Toronto at 7 p.m. to go to Calgary, why would they not code share that?

Naively I thought when the government relaxed section 47 that the airlines would talk. All they have done is gone off their own separate ways and now we are into mergers. Maybe a merger is the only solution. The airlines say it is.

I was hoping that while they had this opportunity they could actually talk about rationalizing some of the excess capacity. On the notion of cherry-picking routes, Air Canada proposed to Canadian Airlines that it would take its international routes. That is where Canadian Airlines makes its money. Is that really working toward a solution?

The airlines have to get serious about dealing with this issue. I would like to see a little more creativity and imagination because at the end of the day we will have some very tough policy questions in the House. I am not sure that we are getting much closer. I really hope that we can.

Air Canada pilots have been to see me in my riding of Etobicoke North, which is very close to the airport. The seniority issues are very serious for Air Canada pilots. Whatever happens I would like to see the airlines, if merger has to be the solution, deal with it in a very complete and concrete way.

If merger is the only answer there are some exciting possibilities. For too long in Canada we had Canadian Airlines and Air Canada beating each other up, sometimes deliberately, while at the same time the international carriers were coming in and picking up our business.

If we end up with one airline with some rules and benchmarks in terms of competition and service, it will be our job as legislators to put that into play. I think the prospects are incredible exciting. We can then take on the world with whatever airline comes out of this and actually create a very profitable airline that serves all Canadians very well. We are not there yet and still have some more work to do.

There is the question of providing a regulatory framework. We have Canadian Airlines and Air Canada with regional carriers. Some of the regional carriers like Air Nova, Air Ontario and Canadian Regional are owned by the major airlines. Somehow there has to be some rationalization of that capacity. I am not quite sure how that will work without ending up with a monopoly situation.

I look back to an experience in Toronto of a few years ago when we had a neat little airline called City Express. It was flying out of Toronto Island, Montreal and Ottawa. Some entrepreneurs put together the airline using Dash 8s. It was a great service. It was going very well. Suddenly Air Ontario came in with deep pockets and priced City Express out.

I am concerned about that. How do we make sure that if we have a monopoly type situation there will be competition. I am hopeful we can reach some sensible conclusions around that. We talk about the rhetoric of a two airline policy but in Canada we have about a six airline policy. There was a time when it was Air Canada and Canadian Airlines, but now we have some very serious players in the market; Air Transat, Canada 3000 and the WestJet.

As long as we can create an environment that is friendly to them and if we end up with one airline, perhaps that will be part of the solution on competition. We really have to apply our minds. The airline industry has to be much more creative. I do not want to pick on Air Canada, but frankly I am not that keen on the Onex bid either.

To line up Lufthansa and United and flow the money through to the shareholders, throw something into Hamilton and not deal with the capacity issue, would not be highly constructive. I am not sure that what is on their minds is picking up the pieces of Canadian Airlines.

I know we have talked about it but I will put it on the floor here. I do not think Canadians have a big appetite for that. The Government of Canada assigns the international routes. The other day I asked someone from Air Canada whether Air Canada presumes the international routes, if Canadian Airlines flounders, would be allocated without any question to the new Air Canada. It seems to me that our government would have options. I do not know. I am not privy to those considerations of the government. We could take Air Canada's international routes and give them to Air Transat or Canada 3000. Why are we obliged to give them to any surviving airline? We have options.

I hope that all the players in the industry would stop playing games, apply their minds, be creative and try to come forward with propositions that meet our public policy objectives and the concerns and needs of all Canadians. As legislatures let us get down to the business of setting the policy framework that will make this happen in a way that is acceptable to the Government of Canada and to all Canadians.

[Deepak Obhrai, Reform, Calgary East, AB]

Mr. Speaker, I listened to my colleague's address. He raised all the problems that exist in the airline industry and put all the issues on the table. However, he did not say what should be done. He is leaving that to the airlines to sort out. He touched on some very good points, the biggest being competition. He talked about a regional airline that priced the other one out of business.

My question to my colleague is about increasing the foreign level as the Competition Bureau has indicated. Most people point out that it would go to the so-called new airline. I am looking at it another way. I am looking at airlines like WestJet that has done a tremendous job for services in the west. These companies are growing bigger and are taking over and providing that competition for Canadians—

[The Speaker]

I do not know if there was a question there, but the hon. member can address himself to the statement.

[Roy Cullen, Liberal, Etobicoke North, ON]

Mr. Speaker, the member opposite is a member of the Reform Party. Is it not your philosophy to let the market decide? Suddenly the government has to decide what—