Debates of Oct. 28th, 1999

Supply

[Bill Casey, Progressive Conservative, Cumberland—Colchester, NS]

Mr. Speaker, on the contrary, the Competition Bureau was sidelined from its legislative responsibilities by section 47. That is what it is all about.

Then the minister asked the Competition Bureau, in a strange way, to address a very narrow parameter of proposals. The minister did not say “Competition Bureau, go find the best proposal for restructuring the industry that addresses competition for consumers and the industry”. He did not do that. He said “Just look at this one little narrow idea that I have. I have a great idea, just look at it”. It is effectively sidelined.

In fact, we just had testimony from another airline this morning. When I asked the president of the airline why section 47 was invoked, he said “It was to circumvent the airline merger review process”, contrary to what the minister just said.

[Bev Desjarlais, NDP, Churchill, MB]

Mr. Speaker, I would like to verify something with my hon. colleague for Cumberland—Colchester. Is it not true that right now the only real assurance that the government may not be able to increase foreign ownership to 49% of Air Canada is as long as this 10% rule is in place?

If this 10% rule should be thrown out the window, so to speak, then the government would have the opportunity under regulatory powers to increase foreign ownership and in essence turn over an additional percentage of Air Canada—our national airline, or at least it once was, which had a huge amount of taxpayers' dollars in it—to another company outside Canada.

[Bill Casey, Progressive Conservative, Cumberland—Colchester, NS]

Mr. Speaker, I thank the hon. member for her question. The problem is, if we change the 10% rule, under the NAFTA agreement there is a very specific exemption to the regulations and it lists specifically the 10% rule for the Air Canada Public Participation Act. If we change that rule it changes the whole agreement. We cannot just say that we will take this out of the agreement and this out of the agreement; we would have to renegotiate the whole deal. That could also change the percentage of foreign content which the hon. member has brought up.

If we break the agreement open, which this will do, then we break the whole agreement open and it is subject to complete negotiation again, and it is impossible to predict what effect that will have.

[David Collenette, Liberal, Don Valley East, ON]

Mr. Speaker, the hon. member heard Mr. von Finckenstein yesterday at committee. I would like to ask my hon. friend if he thought the Commissioner of Competition gave an impression of a man who had been sidelined, of heading an agency that had no effect and no real power. The fact is that no proposal has come forward in the 90 day process which therefore would have bypassed the bureau.

What I announced the other day was the fact that the bureau will indeed examine any proposal that comes forward and have its full rights under merger review.

[Bill Casey, Progressive Conservative, Cumberland—Colchester, NS]

Mr. Speaker, absolutely, Mr. von Finckenstein made a very impressive presentation and his report was excellent. However, on the first page of his presentation there was a letter from him to the minister. I do not have the letter here with me, but it said something like “Further to your instructions, I am making all my studies or my presentations on the assumption that there will be one dominant carrier”. If that is not a restriction, there never was one.

The minister, in his instructions, said “Do your report based on my criteria, to address my proposal that I like the best”. At best, the Competition Bureau was handcuffed and prevented from doing an open study.

[Jocelyne Girard-Bujold, Bloc, Jonquière, QC]

Mr. Speaker, I am pleased today to take part in the Bloc Quebecois opposition day devoted to the airline industry.

The reason my party has had to devote one of these opposition days to this topic is that the government has refused to hold its own debate. In the case before us, the government seems to want to keep its actions hidden, withholding information from parliamentarians and not allowing all stakeholders in the airline industry to be heard.

On August 13, the federal government announced its decision to suspend section 47 of the Canada Transportation Act, a section having to do with the Competition Act, supposedly to make it easier to restructure the airline industry. At the time, the Minister of Transport said he wanted to allow the two Canadian companies to reach a mutually advantageous agreement. But a few days later, on August 24, 1999, Onex, in partnership with American Airlines, made a public offer to buy Air Canada and Canadian International and merge them. This is the real reason that the Liberal government decided to suspend the competition rules.

In addition, the government turned down a request from the Bloc Quebecois and other opposition parties to hold an emergency meeting of the Standing Committee on Transport in order to study the matter. The Liberal government also prorogued the session, delaying the resumption of parliament and thus sparing the government from having to answer questions on this subject that it would find very embarrassing.

That is why the Bloc Quebecois is today taking—

[Michel Guimond, Bloc, Beauport—Montmorency—Orléans, QC]

Mr. Speaker, I rise on a point of order.

I wish to point out that something might not have been made perfectly clear this morning during our party leader's first speech. Throughout the day, Bloc Quebecois speakers will be dividing their time into ten minute periods. I am sorry for interrupting the member for Jonquière.

[The Deputy Speaker]

I know that members are always sorry to have to interrupt a colleague. I thank the hon. member for pointing this out to me.

[Jocelyne Girard-Bujold, Bloc, Jonquière, QC]

Mr. Speaker, I was saying that, today, the Bloc Quebecois is using one of its opposition days to speak of this. Why? Because the Bloc Quebecois is concerned first and foremost about public interest and the interests of Quebec in this matter, unlike the federal government, which appears concerned only about the electoral interests of its friends.

Any restructuring, including a possible merger, should comply with current legislation. Recourse to section 47 and to various other considerations poses a great threat to the continuation of healthy competition in this industry.

The Bloc Quebecois considers that competition is vital, because air transportation is an essential public service, especially in remote areas. There is no guarantee that control of air transportation in Canada will not fall into foreign hands. Finally, the Bloc Quebecois feels that American Airlines has a real veto on any proposal to restructure the airline industry in Canada, which runs contrary to the spirit of the Transport Act.

We also oppose it because there are thousands of strategic jobs, including many in Quebec, that are at risk in this matter. The Bloc Quebecois refuses to consider the loss of thousands of jobs a matter of fate and proposes that other scenarios be considered. The role of a responsible government is to take all these elements into account in order to serve the general interest.

The offer to purchase contravenes the Air Canada Act, which prohibits a single shareholder or a group of shareholders from owning more than 10% of the voting shares of the company. If the Onex/American Airlines group is making such an offer it means that either they are ignoring Canadian legislation or their friends in the government have allowed them to change the law to their satisfaction.

My interest in the air transportation issue arises from my awareness as the member for Jonquière of the importance of these changes for remote communities. While the merger of international routes could give us a sound national carrier, the merger of regional subsidiaries might eliminate competition in local markets, with the consequences this can have on prices and the quality of service.

The airline industry has a responsibility to serve communities across Canada. This merger would include regional subsidiaries, and the new entity would control 84% of the domestic market. Would this be good for remote areas and how would competition be affected? Even the strongest advocates of capitalism will say that a monopoly will almost certainly lead to higher prices, deficient services and a slow degeneration of the industry.

I would not want my region of Saguenay—Lac-Saint-Jean to lose out on this merger.

Yet it is these same company owners who want to change the rules who are asking the government to suspend the application of the Competition Act and who want to change the rules regarding ownership.

In closing, I support my colleague, the member for Charlesbourg, and I remind the House that the Bloc Quebecois has asked the federal government on several occasions to pass legislation on political party financing similar to that which exists in Quebec. Until such a law is enacted, the federal government will continue to protect the interests of those who contribute to the election fund to the detriment of the general public, as seems to be the case in the area of air transport.

[Val Meredith, Reform, South Surrey—White Rock—Langley, BC]

Mr. Speaker, I find it interesting that the member for Jonquière would make a comment like competition is essential. The very nature of the motion that the Bloc has put before the House today would restrict competition and would remove competition from the proposals of a merger. The member suggests that competition is essential, when her party has brought forward a motion which would prevent competition. I ask her, why the discrepancy?

[Jocelyne Girard-Bujold, Bloc, Jonquière, QC]

Mr. Speaker, I do not know whether the hon. member has understood that I was defending the position of the isolated regions. As hon. members may be aware, in distant regions such as mine we would be penalized if there were only one carrier. Healthy competition is important to my region. At present, even with two companies competing, we have to pay very dearly for our air travel.

Just getting to Montreal costs an extraordinary amount. A person can get from Bagotville to Florida cheaper than to Montreal. I believe that we would be penalized if there were only one company. I was referring to this very specific aspect. This does not mean I am not behind the Bloc Quebecois motion, but I am simply giving the point of view of a distant region. That is why it is important to have a debate, but there has not been one because the government was opposed to any true debate on this issue.

There is no debate at this time, and there are even government members who oppose this proposal by their own government who are not here to speak on this issue; they are not speaking out. On the other hand, we, in the Bloc Quebecois, are allowed to say what we think and to speak on behalf of our respective constituents.

[Gilles-A. Perron, Bloc, Saint-Eustache—Sainte-Thérèse, QC]

Mr. Speaker, it is a pleasure to speak this morning on an issue that seems to be dragging on, since we have been hearing about Air Canada and Onex for months now.

Of course, during the summer, we were able to follow the reactions of both Air Canada and Onex in the papers and in the news, if we followed current events. Through it all, the government said nothing, did not take part in the debate, except briefly during the month of August, when the transport and industry ministers, with almost unhealthy complicity, quietly let it be known that the competition rules were being suspended.

The suspension of the competition rules had the desired effect, helping the government's friends from Onex to submit a proposal with the complicity of American Air Lines, in order to get their hands on Canadian International Airlines.

What did the Bloc do during the summer? My friend, our critic for transport, the hon. member for Beauport—Montmorency—Côte-de-Beaupré—Île-d'Orléans, asked on a daily basis that the Standing Committee on Transport be convened to listen, comment and collect information that would be useful to the Minister of Transport. In my view, that is what a committee is supposed to do: give legal advice to the appropriate minister.

However, the government refused to discuss the issue; it even boycotted meetings. Finally, the Bloc Quebecois and all opposition parties on this side of the House demanded that an ad hoc committee hold meetings. This committee was boycotted by the members opposite and dismissed as illegal.

But we went ahead and sat—during the summer, during our supposed holidays—here in Ottawa so that we could hear what groups such as the Airline Pilots Association and Air Canada's machinists association and many others thought of Onex's bid to buy Air Canada.

Finally, a few days ago, the Minister of Transport simply told us that that was that, that everyone would have to decide, that it might well be necessary to change the 10% rule.

But this is unacceptable. This morning, the leader of my party, the member for Laurier—Sainte-Marie, gave a good summary of the history of the 10% rule, and we in the Bloc Quebecois think that this rule should not be changed. In fact, that is the reason for our motion this morning.

Why does this 10% rule apply to Petro Canada? Last year, in all the discussions about the bank mergers, why was the existing 10% ownership rule enforced? Why, this morning, does the government want to scrap it in the case of the airline industry? That is what we are wondering. This proposal strikes us as a bit strange.

Would its purpose be to help a friend, the president of Onex, who is part of the inner Liberal circle? It is a question one is entitled to ask.

There is something else I find really strange. In my view, this issue of Air Canada and Onex is a major one, with particular consequences for those living around airports. This morning, I have some serious questions. What about the members for Laval West, Notre-Dame-de-Grâce, Verdun—Saint-Henri, Pierrefonds—Dollard? What about the Secretary of State for Amateur Sport and the member for Anjou—Rivière-des-Prairies? Are they unable to speak? We have not heard from them.

I admire the courage displayed by the hon. member for Lac-Saint-Louis, who sits on the other side. At the risk of being reprimanded by his caucus, he dared to tell Le Devoir , on October 14, that the 10% limit is appropriate and must absolutely be maintained. I admire him for his courage.

And then there is the hon. member for Vaudreuil who was perhaps a little less courageous when he said “Maybe yes, maybe no”. At least he expressed a preference, even though he was trying hard not to make waves. Again, I admire the hon. member for Lac-Saint-Louis. He is not here just now, but that does not matter, I admire him nevertheless.

I also ask myself other questions. Why would someone like Marc Lalonde, a former Liberal minister who must surely be respected by the Liberals, want the 10% limit maintained? Mr. Speaker, I wonder if you and Mr. Lalonde sat in the House at the same time. I believe so, and I am sure you respected him at the time. On October 26, 1999, Marc Lalonde stated many reasons why the 10% limit should be maintained.

I agree with those who say that there are problems with Canada's air transportation system. We definitely have to ask ourselves certain questions. Is there room in Canada for two international carriers, namely Canadian Airlines and Air Canada? We definitely have to ask ourselves certain questions. But the issue cannot be solved in 90 days or in 90 minutes. A thorough review is in order. I certainly agree with most members here, including my friends across the way, that we must not let Canadian international air transport fall under the control of foreign companies.

Control over Canadian international air transport must remain with Canadians. Regional air transport also must be restructured, as the hon. member for Jonquière said. Coming from Abitibi, it makes no sense to me that people in Rouyn-Noranda should pay more to fly from Rouyn-Noranda to Montreal than to fly from Montreal to Paris. It is crazy and ridiculous that a 55-minute flight from Rouyn-Noranda to Montreal should cost more than a 6-hour Montreal-Paris flight. It makes no sense, and we must review all that. Competition must be reconsidered.

When the Reform member talks about competition, I agree with her that we must bring in sound competition in regional transports. It is indeed desirable and urgently needed. The lack of competition hinders regional development. It is much more expensive for business people from Rouyn-Noranda, Jonquière or any other region to travel on business to Montreal and back than to Paris. What nonsense!

That adds to production costs and results in products made in Rouyn-Noranda or in Jonquière costing more and being less competitive than those in the Montreal or Toronto area. The 10% rule must not be abolished.

Of course, I will support the Bloc motion. A major restructuring of regional air transportation in Canada is absolutely needed.

[Ted McWhinney, Liberal, Vancouver Quadra, BC]

Mr. Speaker, I will be sharing my time with my colleague the hon. member for Scarborough East.

Allow me in opening my remarks to refer to some prior experience in this area. I was the director of the Air Law Institute at McGill University for a number of years, and incidentally, adviser to the premier of Quebec on air law matters at that stage. One of the recommendations was against the construction of the Mirabel airport, the second airport. I think it was correct on constitutional grounds and also on air law grounds, although the advice was not taken.

We can move on to other matters where expertise also comes into account. This is not the first time the airlines have been before this parliament. In the previous mandate of this government the issue arose, as may be remembered, of aggressive litigation between the two airlines, the result of which might have been to drive one of them out of existence. This matter was settled by the intervention of the then minister of transport and in consideration of the use, if need be, of his powers which are limited but within those limits have a considerable range.

What was essentially done was to use the federal power under international law through our membership in the International Civil Aviation Organization and our participation in the Chicago convention to grant or withhold approval of international air routes. A very felicitous solution was reached in this earlier problem in 1994 between the two airlines by opening international air routes to one as a condition of dropping the litigation. I think it was an excellent example of executive power being used imaginatively and producing a consensual solution.

However at that time I did make some points clear, as policy imperatives, certainly for me as a British Columbian but also I think for all Canadians, that we have an interest in maintaining the extraordinary investment we have in highly skilled jobs in the airline industry. In British Columbia and Alberta there are 17,000 highly skilled technical jobs with one airline alone. We want those jobs maintained throughout Canada. Therefore any approach to solutions here must bear that in mind.

We also want maintenance of reasonable air access to distant areas of our large country that might not otherwise be commercially viable in a strict market economy.

We also want reasonable prices. If competition will produce that, well and good. If it will not, obviously there has to be a degree of government regulation of prices. But the opportunity and the facility is there. And we do want safe air travel.

These were imperatives that the transport minister understood, that he conveyed to both airlines and in the solution in 1994 they were realized.

I have looked with sympathy and interest to the motion by the opposition Bloc Quebecois, as I say, granted the predisposition to examine every motion from the other side. But I do believe it does not really face the realities of the new world community of our times, the world revolution of our times which affects international commerce, international trade and international air transportation.

Most of the rules of the game that we have now are posited on an economic trade situation that no longer exists today. We do accept the maxim that small is beautiful, but in the world of international air transportation even large national airlines in middle powers no longer have the weight or the size to compete effectively in the international market without considerable assistance from the government.

This is why I welcome the intervention by the Minister of Transport. There is here no legislation. There is an opening of a debate. It is clear that we are on the edge of the necessity of examining a fundamental restructuring of the airline industry to meet the new realities of international air transportation and the cutthroat competition that exists for much larger companies outside with much heavier government investment and support.

It is on this basis that we have joined this debate. I would suggest, though, that our national rules of competition are devoted to, directed and inspired by national problems. They do not, without some further examination, meet the new realities of international air transportation.

The minister's powers are limited in the range of matters he can touch but he does have discretion, so that the issue of relaxing the national Competition Act, which was designed to meet national conditions, to meet new international conditions is one worthy of respect and consideration by the House. We need suggestions on how we would use that discretion. I invite that from the opposition.

We must recognize that the international rules, even the tidy rules of the Chicago convention, those implemented by the International Civil Aviation Organization, also need re-examination.

We have entered into an national debate. I have had visits from delegations, from Air Canada pilots, Canadian Airlines pilots, representative employees of the companies and others. I am gathering my own opinion on what needs to be done in the restructuring of the air industry. I believe, and I say this with all respect to my colleagues in the Bloc Quebecois, the motion reflects the past. It fetters and confines a necessary element of national policy making which needs to be directed toward the entirely new and revolutionary conditions in international air transportation.

It is on that basis that I would not recommend to the Bloc pursuing the particular motion, an unnecessary restriction which hinders the debate that we now need on restructuring the airline.

I return again to those imperatives. Any solution that the House may reach must maintain the investment we have in the highly skilled jobs in both airlines. It must maintain air access even to uneconomic areas of the country in strict national airline terms. It must maintain reasonable prices with competition if that is the case: two international airlines and one national or one international airline and two national ones. The modalities of development are considerable, but the goals and the imperatives remain, and I believe it is within our ability to work them out.

[Gilles-A. Perron, Bloc, Saint-Eustache—Sainte-Thérèse, QC]

Mr. Speaker, I would like to ask a question of my colleague from Vancouver Quadra. He says that the Bloc Quebecois motion is out of date.

Does his vision of the future include no possibility for Canadians to control their own international air carrier?

In other words, could some company like American Airlines be the one giving the orders on international aviation in Canada? Is that his vision of the future?

[Ted McWhinney, Liberal, Vancouver Quadra, BC]

Mr. Speaker, my problem is simply that we are on the eve of a great national debate and we need contributions from all sides but not to limit the modalities of our choice by focusing on a section that relates to company law which needs frankly readjustment review, in the context of the new rules of international competition.

The reality is that it is very difficult even for one Canadian airline to compete and survive in the international market acting by itself. It will need considerable government help. It will need positive intervention using international law and national law rules accordingly.

[John McKay, Liberal, Scarborough East, ON]

Mr. Speaker, I rise to speak to the motion before the House which calls on the existing 10% individual share ownership rule to be restored and retained. The motion reads as follows:

That this House reaffirms its desire to maintain the provisions of section 6.1(a) of the Air Canada Public Participation Act limiting ownership of the capital stock by any person or group to 10% of the voting shares.

I might mention at the outset that my constituents are greatly interested in this matter. I represent a riding in the GTA which contributes directly or indirectly greatly to the health of our airline industry. We find ourselves inundated with various viewpoints on this issue and the restructuring of the industry that is going ahead. This is of local importance to my riding and my constituents, but it is also of national importance.

On Tuesday the Minister of Transport issued a document entitled A Policy Framework for Airline Restructuring in Canada . In that document the minister announced that the government was willing to consider changing the existing 10% limit in the Air Canada Public Participation Act, if such a measure contributes to achieving a healthy Canadian controlled airline industry. That is a rather important caveat.

To determine what role reviewing the ownership restrictions on Air Canada might imply in achieving a healthy Canadian controlled airline industry, I wish to speak to the cost of this rule, particularly the cost of this rule in the marketplace.

What market distortions result from the existence of this rule? I would submit there are market distortions and the market has reacted in a variety of ways. The running of any airline is a very expensive exercise. The question always has to be in a public policy context: Are the costs of imposing certain desirable public policy goals worth the actual cost in the marketplace? The questions to my mind are: Are these restrictive provisions in place? How do they distort the cost of money? Do they achieve a proper public policy goal?

If Air Canada cannot go to the TSE on a free and open basis like other industries because of this rule then there is a cost and in some measure or another the market reacts to that cost. The question to my mind is an open question. I am glad the minister raised the issue of whether this cost is worth while.

What is the effect? The market is already mutated to some extent. Consumers directly or indirectly pay for that mutation. I draw attention to the Air Canada proposal that is on the table. That proposal raises $930 million. Interestingly enough, at the end of the day those who are actually putting in $930 million only end up with 7% of the shares. That in purely market terms is a bit of a bizarre anomaly because the market has in some respects mutated.

We must recognize that the value of an airline is not in and of itself the infrastructure of the airline. Rather it is in other things. For instance, UAL and Lufthansa have agreed to acquire a new series of perpetual convertible preferred shares in the amount of $230 million. The shares will only pay dividends if and when they are declared on the common shares. It then goes on in greater detail. I would submit that is a distortion of the market. In addition, UAL and Lufthansa will provide a 10 year credit guarantee facility to Air Canada of approximately $310 million. How much that costs I do not know.

CIBC will provide a $200 million upfront payment to Air Canada to deepen and extend its agreement. Air Canada will provide to CIBC approximately 4.4 million warrants exercisable for class A non-voting commons shares at $24 to $28 per share over five years.

None of us in this room are securities lawyers. It would probably take a great deal of effort to explain to us exactly what that means. Although the simple issue is that this is a reflection of the distortion in the marketplace, this is in itself a reflection that money has to be raised in the airline industry other than in a straightforward fashion. When money is raised in a marketplace in other than a straightforward fashion some kind of premium is paid.

The question to my mind still is whether the 10% rule the Bloc is so desirous of retaining actually distorts the marketplace and ratchets up the cost of money.

The first market distortion we see in this proposal is that the value is everywhere but in the infrastructure of the airline. The value is in the Visa card. The value is in some shares that UAL and Lufthansa want to hold, which are not voting shares.

The second distortion plays out each and every day, every time a Canadian gets on an airplane. Consumers in one way or another pay the cost because Air Canada or Canadian Airlines or any other entity does not get the cheapest possible money because the market has been distorted.

The third perverse consequence of that an airline, whatever airline, that is hobbled by unreasonable share restrictions and contradictory public policy decisions will inevitably fail or will inevitably be a weak partner. If we have learned anything in this debate, it is that whatever the future is for whatever dominant airline that comes into play it is extremely important that partner be a strong partner in the alliance. If it is not a strong partner in the alliance, it will be inevitably controlled by entities that will frustrate our public policy goals.

I congratulate the minister for putting the 10% rule on the table. It did not descend from Mount Sinai. It is not sacred. It is not the Ten Commandments. It shows a great deal of political courage on his part to put what has been an effective mechanism to achieve certain public policy goals on the table in order that they can be discussed.

If the minister asks me what is the value of this rule, my response would be that he should tell me what is the cost of the 10% rule to the airlines and therefore to their consumers. If there are other ways to achieve the same goal, either de facto control or de jure control or effective control, and we have a variety of tests for those things, then let us achieve it that way. Let us not ruin the marketplace by putting in artificial unsustainable rules.

Another reality is that whatever dominant airline emerges it will be part of an alliance. If this “new company” is hobbled by some useless public policy initiative, it will inevitably lead to difficulties with that airline. Then we will be back to this debate again and we will be back to trying to figure out how to bail out the new airline one way or another.

If this rule does not stand that litmus test, then my view is, let the rule go.

The 10% rule in essence is a share restriction, and a share restriction distorts the market. When market distortion occurs it costs money. The cost goes not only to the shareholders of the airline, it also goes to the consuming public. If that cannot be justified, then the rule should not stand.

On the basis of that I suggest that the motion should fail and that hon. members should not support the motion. In fact, the minister's positioning on this is correct, it is an area which needs to be discussed. If we can achieve public policy goals by other means, then I would be open to that idea.

[Antoine Dubé, Bloc, Lévis, QC]

Mr. Speaker, I am most enthusiastic about taking part in this debate, which is an extremely important one, in my opinion.

All debates are important, in my opinion, but this one is of vital importance for those who work in the airline industry, and for the consumers, those who fly. It is vital as well for economic and regional development, for all these aspects are interrelated.

Since the first speech by the leader of the Bloc Quebecois, I have listened carefully to everything the representatives of the other parties have had to say. I am delighted that the Progressive Conservative Party and the NDP have declared their intention of backing the motion by the member for Beauport—Montmorency—Côte-de-Beaupré—Île-d'Orléans. This pleases me a great deal.

However, representatives of the other parties—the Liberals of course, and the Reformers—have said they were opposed. As far as Reform is concerned, one could doubt their consistency, as it seems to vary depending on the subject, but in this case their point of view is clear.

The Reform member who has just spoken referred to the interests of the west. She did not seem to be upset by the fact that the Americans want to get their hands on more shares in the airlines.

The Bloc Quebecois' position is consistent with earlier government decisions in certain areas. In the case of the banks, or other sectors of the economy, the 10% rule was enforced. The exception was CN, where the government allowed up to 15%. The Bloc Quebecois was not in agreement.

We have therefore always been consistent. If the rule is 10%, we are not going to change it to suit the circumstances. We therefore have to wonder why the Minister of Transport said, before Air Canada shareholders have cast their votes at the November 8 meeting, “Things are changing, and we must too”.

Why change at this particular time, when we know that not a session goes by—at least, not since I have been in parliament— that the situation in the airline industry is not discussed in one way or another?

There have been questions from all the opposition parties. The government had things to say as well. Everyone was concerned about the future of Air Canada and of Canadian International Airlines. So why, at this particular time, is the government, while claiming not to want to intervene, suggesting that, before shareholders make their fateful decision on November 8, it would now be prepared to change the 10% rule?

And the suggestion was not made by just anybody. Not by an official, a backbencher or a parliamentary secretary, but by the Minister of Transport himself. So, he is speaking on behalf of Cabinet. So, they have discussed the matter.

When we look at the series of events that have occurred since August 13, we can see that, in the end, we are in a context in which the government has decided to make a choice. It has waited for just the right moment. Why? Because Onex is involved. It knew that Onex was prepared to act. The government, according to us—at least that is what I think—the government is changing its tune, and now it would like to help Onex with its project. Since it does not want to do so overtly, it is doing so covertly.

Doing covertly what one cannot do overtly is not being transparent. It is acting. It is a scenario that would do for a great film. It is a strategy that does not fool the members of the Bloc Quebecois or the media, and commentators who are following the story closely.

It is part of a well formulated plan. The way things are going, since the parties on both sides are following this debate even more closely than the average citizen, it is clear that they know how to decode the messages sent them by the government. This ability will significantly influence the results of the general meeting of Air Canada shareholders. At least, it can change it a lot.

So, while the government did not intervene in any way, the Air Canada shareholders will have only one option on November 8: accept or reject Air Canada's offer, since it is the only one that goes by the rules.

There is however one principle at stake, the one according to which we must act in the best interests of all Canadians and of all Quebecers. It is therefore a matter of interest. We must ask ourselves in whose best interests the Minister of Transport was acting when he made his position known on Tuesday.

I am talking about the position he indirectly took when he suggested that he was ready to consider changing the rules. What purpose would that serve? To enhance services? To protect as many jobs as possible? To promote the interests of some shareholders? To promote the interests of a handful of government buddies perhaps?

We do not know. We are asking the question. Today's debate gives us the opportunity to ask this question. The Bloc Quebecois is wondering in whose best interests the government is acting.

This is a rather simple question, at least to us in the Bloc. We have always stated, and we keep reminding people, that we are here—because we only ran candidates in Quebec—to protect the interests of Quebec. We are here first and foremost to protect the interests of our province. Air Canada and Canadian Airlines International are Canadian companies, and competition should be given free reign.

I am surprised to see that our colleagues from the Reform Party, who always saw the competition rule as a protection for consumers, now seem to be supporting the new way of thinking of the transport minister, who is announcing in advance what he intends to do to encourage certain people who have interests or shares in these companies.

The Bloc Quebecois' position is clear: we want the competition rule to be maintained. Obviously, we do not want to see any company disappear. In this era of economic liberalism, performance and the quality of goods and services are the main factors that will make or break a company, and that has to remain.

Even if we had only one major air carrier, there would still be competition because other international carriers fly to Canada, and there are regional carriers that are not affiliated with Air Canada or Canadian International Airlines. For example, starting November 1, Air Montreal will serve Quebec and Ottawa. Therefore, there are opportunities for the regions also, and one sound company that provides good services is better than two that are struggling to survive.

[Val Meredith, Reform, South Surrey—White Rock—Langley, BC]

Mr. Speaker, I find it very interesting to hear the member say that he is in favour of free market competition prevailing when the very nature of this motion would prevent any competition in the merger process.

Those members are trying to say that only one deal can be considered by the government, by anybody, by the shareholders. I do not find it competitive when we are saying there is only one person or one deal which can comply with the conditions.

I would suggest that if the member truly believes in the competitive nature of the free market he would be willing to open up the guidelines, open up the regulations to allow more than one. Perhaps there are two, three or more people who would be interested.

I would also challenge this member on his comments as to whether a company should be allowed to go into bankruptcy. In the interests of all Canadians, the restructuring of the airline industry should be handled in an organized fashion rather than in a chaotic fashion.

I find it very difficult to believe that the hon. member is speaking to and concerned about all Canadians and not just those who happen to live in the province of Quebec.

[Antoine Dubé, Bloc, Lévis, QC]

Mr. Speaker, I refer to the last part of the member's speech, where she says that it would have to be organized and that things should be done in the best possible way. I completely agree with her on that. The Bloc quebecois has attempted to set an example in this regard.

When the government refused to let the Standing Committee on Transport hear stakeholders, the Bloc Quebecois created a shadow committee to give everybody an opportunity to voice their opinions. Of course, the liberals would not have anything to do with it. However, when we talk about organization, the government decided to suspend application of the relevant section of the Act, saying that the situation should not be referred to the Canadian Competition Bureau for 90 days. We would be very happy if this issue were referred to the Competition Bureau.

At meetings of the Standing Committee on Industry, of which I am a member, the subject of the Competition Bureau often comes up, and that makes sense. So far, however, the opposite has happened. The process is not transparent, not democratic at all. It is on the Bloc Quebecois' initiative that the subject is being discussed today, that there is a public debate being held, in the public interest. We hope that the Reform Party will do the same.

When the matter was raised in caucus—

[The Acting Speaker (Mr. McClelland)]

I am sorry to interrupt, but your colleague has a question.

[Jean-Guy Chrétien, Bloc, Frontenac—Mégantic, QC]

Mr. Speaker, yesterday, during oral question period, the leader of Bloc Quebecois and the hon. member for Beauport—Montmorency— Côte-de-Beaupré—Île-d'Orléans both asked questions about an article recently printed in Le Devoir and signed by Marc Lalonde.

Marc Lalonde is a former minister who, I believe, was respected by all parties in this House. He wrote that “A promise or commitment to authorize a merger of the two carriers without knowing how the act will be amended is pernicious and dangerous”.

The Minister of Transport replied:

I respect the qualities of my former colleague, Mr. Lalonde. Yesterday, he gave his opinion in an article in the daily Le Devoir , but I must point out that Mr. Lalonde is a lawyer and that his company works for Air Canada.

Fine. But we read in the same newspaper that the hon. member for Lac-Saint-Louis is also opposed to fiddling with the 10% limit. Could the minister tell us which company the hon. member for Lac-Saint-Louis works for? I would like to hear what my colleague, the hon. member for Lévis, has to say on this score.

[Antoine Dubé, Bloc, Lévis, QC]

Mr. Speaker, I do not have the same respect as my colleague does for the former minister, but for other reasons.

This former minister, who was a heavyweight in the government of Pierre Elliott Trudeau, expressed his opinion. But the fact that the hon. member for Lac-Saint-Louis has made his position known leads me to making the following comment.

I see an hon. member from the Montreal area who is usually very vocal, but she has had nothing to say on this issue. Yet, she represents a Montreal riding very close to the airport. I invite her to come forward, just as the hon. member for Lac-Saint-Louis did.

[Gérard Asselin, Bloc, Charlevoix, QC]

Mr. Speaker, as the hon. member for Charlevoix and a member of the Standing Committee on Transport, I believe we have a lot of work to do and a huge mandate to fulfil as a result of airline mergers and the restructuring of air transportation services in Canada.

We have been going through turbulence for some time now. The Minister of Transport has tried to maintain Canadian Airlines and Air Canada. Unfortunately, in January, Canadian Airlines told the Minister of Transport it was in great financial difficulty, on the brink of bankruptcy. Of course, it will not go bankrupt as long as Canadian Airlines' suppliers do not take action.

Reporters will probably write, as they have done before, that members of the Bloc Quebecois attend their committee meetings regularly and are well prepared. They are in Ottawa to defend Quebec's interests and to improve Canada.

As long as Quebec sends tax money to Ottawa, as a member of the Bloc Quebecois, as the hon. member for Charlevoix and as deputy critic for transport, I will fulfil my responsibilities.

The Bloc Quebecois has decided today, given the urgency of this debate, to inform the public by making use of an opposition day. The Bloc Quebecois had been asking that the Standing Committee on Transport be convened since July. For various reasons, including members' holidays, the adjournment of the House, the throne speech, we were told the committee could not sit.

Oddly enough, the committee did meet, with members of the New Democratic Party, of the Reform Party, of the Bloc Quebecois and of the Conservative Party. The only people who did not show up were the Liberals. Yet, for two days, the ad hoc committee heard from witnesses who came from all over Canada to raise members' awareness about the importance of restructuring air transportation services in Canada.

Considering the seriousness of all those people, the Bloc Quebecois introduced a motion today. That motion reads as follows:

That this House reaffirms its desire to maintain the provisions of section 6.1( a ) of the Air Canada Public Participation Act limiting ownership of the capital stock of Air Canada by any person or group to 10% of the voting shares.

Of course, the Bloc Quebecois explained its position which is that the role of a responsible government is to act like a referee whose primary concern is protection of the public interest. Changing the act would favour one party over the other and that is called cheating. If the government changes the act to suit Onex or AMR, that would send the signal that private companies do not have to comply with the law but that the government has to adapt the law to suit its friends.

The 10% rule applies to Petro Canada, banks and several other public interest corporations. Changing that rule would be contrary to public interest. The 10% rule was put in place to prevent a single group from gaining control of Air Canada, one of the two national air carriers. The government wants to change the rule to allow a group to gain control of the only remaining carrier. That would be putting the future of the air carrier in the hands of only one group. By refusing to state its position, the government is feeding the uncertainty that currently exists in the airline industry.

Of course the committee has a clear mandate, witnesses to hear, hearings to hold. I hope this time the Minister of Transport is going to listen to the committee's recommendations. We know what happened when it was time to restructure the shipping industry. Every political party had an input and made recommendations to the minister. I am convinced unfortunately that he had already made up his mind on how the shipping industry was going to be restructured, even before the committee sat down to write its report.

As I said earlier in my speech, we are going through very turbulent times and Canadians are very concerned. When a plane is going through turbulence or a storm, people on board are worried and feel powerless.

Our constituents, who are watching us, who sent us here to represent them, are concerned about the future of air transportation, especially in the regions. Under the bid of Onex or AMR, the merger of Air Canada and Canadian could result in the loss of 5,000 to 10,000 jobs. According to the president of Air Canada, Air Canada's offer to merge with Canadian could mean the loss of around 2,500 jobs. If the government does nothing, Canadian will likely go under and all its workers will lose their jobs.

What we in the Bloc Quebecois want is to maintain as many jobs as possible while ensuring the highest quality of service in the airline industry.

Later this week in committee I will ask the Minister of Transport the following question “Should there be a merger, what do you think the future of air transportation in the regions will be?” As you know, air transportation is of paramount importance in the regions. And yet, over the last few years, air service in the regions has been diminishing. Quality of service is in jeopardy, and flight frequency is left up to individual carriers.

For those who have no choice, plane tickets are very expensive. In a riding like Charlevoix, on the north shore, air transportation is the fastest way to get around, because we have no rail transportation and we have only one access road. Therefore, the only way to travel fast is by plane, and carriers know it only too well.

Travellers who have no choice use a particular type of service, for professional reasons. They are, for example, business people who need to travel within a very short timeframe or people from the regions who need to go to Quebec City or to Montreal to have access to certain health care services.

The merger of Air Canada and Canadian International Airlines is of great concern to us, especially the Onex proposal, because I think there is some kind of complicity between the Department of Transport, Canadian International Airlines and the future company.

With regard to the future of regional air service, we all know that airports are already losing money. If the number of flights to regional airports is reduced, we will no longer have what we have now, that is a red and white Air Alliance plane arriving at 8.55 a.m. and a blue and white Canadian Airlines plane arriving at 9.10 a.m. Some will say that the blue and white plane was half full and the other one was half empty, depending on which company they want to support.

We know that the number of flights is what makes an airport profitable. This means that a merger would reduce the profitability of airports by at least 50%. And when I think about what happened when the Department of Transport made Nav Canada responsible for airport management in order to reduce airport deficits, if the past is any indication of what we can expect in the future, then I am extremely worried.

We all know that Nav Canada cut services at airports by reducing the number of air traffic controllers, by closing control towers, by cutting airport firefighting services, all at the expense of passenger safety.

I see that my time is up. I could have gone on for at least another 40 minutes, but I will have the opportunity to come back to this later on.

[Jean-Guy Chrétien, Bloc, Frontenac—Mégantic, QC]

Mr. Speaker, when the Onex project was made public this summer, a number of members from ridings close to the Dorval Airport, mainly from the West Island, wanted to meet with the transport minister to get some explanations.

This is surprising and I would like my colleague from the north shore to comment on what I could call the ominous silence kept be some members, like the hon. member for Vaudreuil—Soulanges, for instance, the hon. member for Pierrefonds—Dollard, and a veteran, the hon. member for Lac Saint-Louis, who was quoted recently in Le Devoir as saying that the 10% rule is fair and reasonable and should not be changed.

I am also thinking of the hon. member for Verdun—Saint-Henri, the hon. member for Beauce and the hon. member for Laval West. And what about the hon. member for Notre-Dame-de-Grâce—Lachine from whom we have not heard a peep? Are the best interests of the province of Quebec being protected by the handful of Liberal members from the West Island?

I would like my colleague from the north shore to explain to us why these members have clammed up today.

[Gérard Asselin, Bloc, Charlevoix, QC]

Mr. Speaker, this morning we learned from Canadian International Airlines that there have been discussions and an exchange of letters since January with the Minister of Transport.

Yet this week the Minister of Transport told us that he found out about it in June, that he had to intervene in June. We mentioned some ridings, but there are other Liberal MPs in Quebec.

They were, of course, present when the minister appeared before the Standing Committee on Transport, because there were some 25 to 30 cameras in the room and all the journalists were there. As soon as the cameras left the room, the number of Liberal MPs dropped by half, and a lot of chairs were left vacant.

The speeches by the members for Beauce and for Abitibi—Baie-James—Nunavik show that they are out of touch with the situation. They are just trying to please the minister, without even knowing what the consequences of the famous 10% rule will be. Why did the minister allow section 47 of the Competition Act to be amended?

If either of the two members were asked what section 47 was, he would probably not be able to say.