Madam Speaker, it is a pleasure to speak today on this very important issue. The future of the Canadian airlines industry is at stake and it is very important that we take this issue very seriously in the debate tonight.
The debate is about the 10% rule and that being the maximum that any one group can own of Air Canada. I am not defending the 10% rule. The issue before us should not be debated in the last stages of a negotiation period or in the last stages of a period during which the Competition Bureau has been suspended for at least one of the proposed mergers.
The 10% rule has inherently some flaws. It can help protect mediocre or even bad management. It can reduce shareholders equity and the competitiveness of a company. Potentially, there are even issues whereby the 10% rule could be seen as in violation of NAFTA seeing as the 10% rule was utilized in 1988 and apparently, if one reads the fine print, because of the fact that the privatization occurred before 1994 when NAFTA came into effect, this 10% rule may not be actually tenable under NAFTA. There are some real issues about the 10% rule.
The question is why are we not discussing the 10% rule and some of these other issues, including the cabotage issue, as part of the discussion of a general restructuring of the Canadian airline structure when we are not in the middle of a crisis? The difficulty here is that we always seem to get to a crisis position before we actually deal with some of the structural issues facing Canadians and the Canadian economy.
It is inappropriate to be trial ballooning significant changes in the nature or the structure of the Canadian airlines at such a difficult and heated time. We should have done this long before. I would argue that the suspension of the Competition Bureau's activities on the Onyx proposal should be considered an admission of failure by the government to lead and to actually provide some visionary restructuring to the Canadian airlines industry a lot sooner.
The fact that the Canadian airlines industry is having difficulty is nothing new. We have known this for a long time. In fact this government, which has been in power since 1993, has been aware of the challenges facing the Canadian airlines industry.
The consumers should not be asked to pay the price for the government's dilly-dallying, dithering and failure to address the major issues in a holistic, forward-thinking and visionary manner.
The minister stated in one of the papers I read this morning that he may be amenable to allowing foreigners to set up shop in Canada to provide Canadian based airline units with foreign-owned routes and servicing within Canada. Again, that is another issue that should be discussed when we are not in the heat of an airline crisis and in the heart of negotiations on at least two fronts now with two proposals.
We should have been discussing the 10% rule, the notion of cabotage and all these types of issues during a period of time when we were less rushed and when we were in less of a crisis environment.
Instead of this crisis management, knee-jerk reaction that the government is taking now, we could have actually provided a framework to the airline industry to allow restructuring to occur as opposed to having the airline industry and entities within the airlines industry, in this case Canadian and Air Canada, actually having to come up with proposals. The government is effectively cutting the suit to fit the cloth on this one. It is not really providing the structural framework that one expects from governments for the private sector to respond in a more long term and meaningful way.
The government's approach to the airlines is very similar to the government's approach on the bank merger issue. Members will remember that about a year ago we were very heavily ensconced in the debate on the bank mergers issue? The government had ignored, from 1993 forward, some of the structural reforms necessary in the financial services sector until, at one point or another, there were private sector proposals that forced the government to make a decision on those specific proposals. In this case and currently, we are focused in Canada not on the holistic nature of reforming and restructuring the Canadian airlines, we are focused on two specific mergers.
In the bank merger situation, the whole focus of Canadians, which should have been on restructuring the Canadian financial services sector to provide an industry that was more capable of competing globally and at the same time meeting the needs of Canadians, was suddenly focused on two specific merger proposals. Unfortunately, this is not, in my opinion, the right approach to develop public policy in the long term interests of the competitiveness of Canadian industry and in the long term interests of protecting Canadian consumers.
Since the government's merger decision in the financial services sector, we have seen some of the ramifications or repercussions of that decision. We have heard the Bank of Montreal announce layoffs of 1,400 workers in direct response to the merger decision. We have heard the Bank of Montreal announce that 100 branches will close. Members should keep in mind that one of the conditions that the banks had agreed to if the mergers were allowed was to maintain branch operations, to service all the rural communities currently being serviced and to maintain current levels of employment.
The finance minister, dealing with a crisis within his own leadership aspirations and trying to shore up support among the backbenchers, allowed for a Liberal caucus revolt. The Liberal caucus witch hunt on banks occurred. What we saw was an uprising within the Liberal backbenchers that effectively prevented a focus on public policy that would have been in the long term interests of the Canadian industry or in the long term interests of Canadian customers.
It is also important to realize that there has been a $7.2 billion loss in bank shareholder capital in Canada since that decision. During the same period in the U.S. there has been a 7.4% increase in shareholder value with U.S. banks. This is very important given that 7.5 million Canadians are bank shareholders, directly or indirectly.
We have seen 1,400 jobs lost just with one of the banks involved since then because of the merger decision. The Dominion Bond Rating Service has downgraded Canadian banks, directly attributing its decision to do that to the Minister of Finance's decision. There has been a loss of market capital and a compromising of the ability of Canadians to save and invest for their future, in many cases for their retirement, all because of that decision.
My concern is here we are again focused on specific merger proposals and not dealing with the issues in a long term revisionary way. It is in stark contrast to the previous Conservative government's vision and courage to tackle the real issues not just facing Canadians today or tomorrow, but facing Canadians in the next century.
This government would not have had the courage to pursue a free trade agreement. This government would not have had the courage or vision to implement a significant tax reform and some tax policies that were not popular but proved to be the right policies in the long term. I do not believe this government would have had the foresight and vision and courage to implement some of the deregulation policies in financial services, transportation and energy.
Instead, here we are again in the heat of merger discussions coming up with policies to try to deal with specific mergers proposed by the private sector, having failed to provide a long term approach before a crisis situation. The government's approach to this issue and most issues it faces is one of crisis management. It is a knee-jerk reaction. It is analogous to someone installing a sprinkler system while the house is on fire. It is simply no way to run a railway as one saying goes. It is no way to run an airline either, but it is also no way to run a government.