Madam Speaker, the discussion has been exciting and debate during the day has been very interesting.
I will continue to deal with some of the issues that have been presented. I realize that some of the concepts I will present will be repetitive but we all know that if we repeat things often enough it leads to an effective learning experience.
I commend the Minister of Transport for his presentation on this subject before the House and the Senate standing committees on Tuesday and the policy framework document he tabled. He has shed a great deal of light on a topic that has been of consuming interest to members of the House and to Canadians for several months.
The government position is now known. Private sector parties will now be able to act with full knowledge of the government's policy framework and the process announced by the minister that will be used to approve and condition any proposal to restructure the airline industry.
I would particularly like to address two important issues raised last Tuesday by the minister. Those have been the central theme for much of today's debate. The first was the limit on ownership of Air Canada's voting shares established in the Air Canada Public Participation Act at 10%. The second was the limitation on foreign ownership of any Canadian air carrier and the requirement for Canadian control that are established in the Canada Transportation Act.
Those two issues are often confused. They sound so similar but they address different concepts. Both issues are very relevant to airline restructuring and both were addressed by the Minister of Transport in his policy framework and his statements.
I hope that by addressing them together I will not only be able to illuminate two quite technical issues, but also to clear up any confusion that may exist between them in the minds of some members of the House. Some members are quite confused.
The 25% limit on voting shares held by foreign investors applies to all Canadian carriers, including Air Canada. It is an aggregate figure such that it places an upper limit on the ability of non-Canadians acting separately or in concert with others to influence the result of any shareholder vote. This quantitative limit is accompanied in the Canada Transportation Act by a qualitative test of control in fact by Canadians.
Responsibility for applying the ownership limit and the control test lies with the Canadian Transportation Agency, a quasi-judicial body that operates at arm's length from the government and the Minister of Transport. Those are very important points.
The other feature to note is that both the 25% test and the requirement for control in fact are ongoing obligations that are assessed before the airline is originally licensed to operate as a Canadian air carrier. That can be reassessed at any time based on developments with the airline that affect its ownership and governance, or on any other new information that may come to the agency's attention at any future time, or on the basis of complaint.
The purpose of these two tests, which together I will refer to as the Canadian ownership and control rules, is straightforward. The purpose is to ensure that all Canadian air carriers are owned and controlled by Canadians, that is, that this industry which is so key to all Canadians remains Canadian in the full sense of the term.
Moving now to a consideration of the 10% rule, this rule applies to Air Canada only as it appears in the Air Canada Public Participation Act, not the Canada Transportation Act or any other federal act of general application. No other airline in Canada is subject to such a rule, although this has not always been the case. Until 18 months ago, Canadian Airlines was subject to a similar restriction left over from the time it was owned by the province of Alberta. The provision was rescinded by the Alberta government in 1997.
The 10% rule is not aimed at non-Canadians per se. It applies to all shareholders, both Canadian and non-Canadian. This rule applies to any individuals as well as to individuals acting together, such that shareholders are expressly forbidden from entering into any agreement that would allow any person, together with the associates of that person, to own or control directly or indirectly voting shares which represent more than 10% of the votes that may be cast to elect members of the board of directors of Air Canada.
The 10% rule was included in the Air Canada Public Participation Act when it was passed in 1988 in order to ensure that Air Canada remained widely held. As I understand it, the idea was that Air Canada was already widely held in that it was a crown corporation owned in equal measure by all Canadians. So when the airline was privatized, parliament was loath to contemplate that this national carrier might some day be owned and controlled by any individual or group, even recognizing that they would be Canadians as provided for by the Canadian ownership and control rules. It appears that this idea was sufficiently persuasive on its face that it received little debate among Canadians in the media or in parliament at that time and became part of the legislation that governs Air Canada to this very day.
The point to be clear on is that the 10% limit is not, and I repeat not—