Debates of Oct. 28th, 1999

Supply

[The Deputy Speaker]

The House has heard the terms of the motion. Is it the pleasure of the House to adopt the motion?

[Some hon. members]

Agreed.

(Motion agreed to)

[Stéphane Bergeron, Bloc, Verchères, QC]

Mr. Speaker, on a point of order. I would like to draw it to your attention that the hon. leader of the Bloc Quebecois will share the time allowed him with his colleague from Beauport—Montmorency—Côte-de-Beaupré—Île-d'Orléans.

[Gilles Duceppe, Bloc, Laurier—Sainte-Marie, QC]

Mr. Speaker, the question we are debating at this time is a very important one: the future of air transportation in Canada. On November 8, Air Canada shareholders will be asked to vote on a purchase bid from Onex Corporation.

In order to properly understand the present situation fully, we need to go back a number of years, to seven or eight years ago. The government of the day, and the one that followed it—the current government—told us over and over again how important it was to have two national air carriers.

The Bloc Quebecois indicated on numerous occasions that the policy being pursued by the government was doomed to failure, leading possibly, potentially, to bankruptcy for one, if not both, of the companies. Yet the government continued its market intervention policy, sinking millions of dollars into it, but was still unable to get one of the two carriers, Canadian, out of the mess it was in. It was a waste of money.

The minister we have today, he who had already done enough damage at National Defence, committed the same errors of intervention. He committed the same error of not making a stand and he did not propose a solid, logical and rational framework. So money was wasted.

He promised us a business plan. We have seen what happened. Only this past August did he finally say “We need only one carrier if we are to be competitive”.

Yet all those years he intervened, blocking Air Canada's access to routes to Air Canada when the demand was there, always in the name of healthy competition, which was being maintained artificially by the investment of millions of dollars in Canadian International Airlines.

At that time we said the real danger was most definitely that American carriers would seize control of all air travel in Canada, for one company as much as for the other. The outcome has proven us right. American Airlines intervened in Canadian International, and even has a veto on major company decisions, thus proving that the true control of Canadian is indeed in the hands of American Airlines.

We had said that such a policy would be disastrous for regional transportation in small communities throughout Canada and Quebec. Once again, we have turned out to be right. Service is not, is no longer, what it was. Prices have gone up, despite this supposed competition, at an alarming rate. It costs more to fly from Montreal to the Magdalen Islands than it does to fly from Montreal to Paris. It is downright ridiculous and it is hurting regional economies.

Yet the need for just one national carrier was apparent if we looked at what other countries were doing. There are only two countries without such a policy: the United States—and everyone will agree that the economic, geographic and demographic situation, especially in the United States, is very different from ours—and Japan, which also has a very different situation. In all other countries, there is a single national carrier for international flights because there is already competition internationally.

Regional competition must be maintained, of course, perhaps by changing the charters of certain companies. I am thinking of companies such as Royal and Air Transat, which could handle regional transportation and would encourage the involvement of small companies providing entirely satisfactory regional service. I am thinking of Air Montréal, which is now offering fares from the Magdalen Islands to Montreal at half the cost of the major carriers.

But now the minister is changing his tune. He is telling us that we must follow market rules. He now worships market rules, and we have seen some divine interventions. The hand of God has taken on a Liberal form, and we have a Liberal puppet being operated by a corporation, which just happens to be contributing heavily to the Liberal Party. Here, we see the Liberal hand at work, and instead of talking about market rules, they should talk about speculators' rules, because this is what it is about.

These people do not care about the quality of transportation, about American control, about the importance and the development of regional economies. They are only interested in their stocks, they want what will bring them the highest return after the minister's divine intervention. This minister now wants to change the rules in mid-game. We were told yesterday that there are rules. A minister is responsible for rules. But this minister, through meetings with Onex attended by himself or his subordinates, is suggesting that the rules might be changed.

It is as if a referee in a hockey game were to change the size of the nets to accommodate the team he favours. We see it this morning—the editorial cartoons in the newspapers are very eloquent—this is not a minister, it is a corporation's puppet. He makes astounding leaps of logic when he tells us about what will come after the shareholders' decision—and let us not forget that the current offer made by Onex involves two corporations with more than the 10% limit, namely American Airlines with 14.99% and Onex with 31%. People will vote on that proposal even if the rules provide a 10% limit.

Then the minister asks us to think about the need to change the rules. Logic—I would say honesty—dictates that we debate the rules, we establish the rules before the game beings, so that subsequently all of the players may be on the same footing, instead of telling them “Begin the game, my friends, and if things do not go well for you, I will change the rules along the way”.

That is exactly what the minister is doing at the moment. The scenario was written ahead of time. The government had discussions with Onex; it intimated that they could go ahead and make their bid, since it would change the rules to please them. The minister can then play hero here, saying that 31% is far too much and perhaps it should be 15% or 20%.

Onex will then say that the minister has the public interest at heart, an interest that, more often than not, is confirmed at benefit suppers. The rules are being bent, so the company will accept the minister's decision.

That is hypocrisy at its finest, especially since, in 1981, if memory serves, on the rule of 10%, those opposite were opposed to the Caisse de dépôt et placement du Québec owning more than 10% of Canadian Pacific shares.

The argument raised by Pierre Elliott Trudeau was that it was unconstitutional for a provincial corporation to have more than 10% of the shares of a national corporation. The same thing is happening today, and what would have been unconstitutional for a province is apparently no longer so for a private individual.

And yet, other companies like Petro Canada and Via Rail have such rules. Last year, during the debate on the banks, this same government said “Do not touch the 10% clause, it is in the public interest”. And what about the public interest today? What is parliament's role? Is this a “cronies' republic” or are we under the control of the people's elected representatives? There is democratic icing over a layer of nepotism in this matter. That is what the minister is doing now.

This is why we are proposing the rule of 10% be maintained. We can debate it later on. And, if the rules have changed, there may be other offers, but changing the rules in mid-game is unacceptable. This is giving preference to one offer over the other, whereas one is legal and the other is not.

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

Mr. Speaker, I am very pleased to speak on this very important motion brought forward by the Bloc Quebecois, to the effect 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.

As members know and as, in my opinion, the leader of my party explained in great detail earlier, it is up to us, the parliamentarians directly elected by the people, to those who received a mandate from the citizens of Quebec and of Canada, to shed light on this issue.

Therefore, it is up to us to shed light on this issue, as the transport minister himself has deliberately kept us in the dark, especially since August 13, when he announced, with his colleague, the Minister of Industry, by his side, that he was suspending section 47 of the Transportation Act, hence keeping the Competition Bureau out of the picture.

Talk about democracy. I think it has to be pointed out that, with this decision, the federal government put the review and consumer protection roles of the Competition Bureau on hold for 90 days. Instead of that, the situation has become extremely confusing for the ordinary person because of this suspension.

Yesterday, we heard about certain memos in a question addressed to the minister in the House. We heard particularly about a memo from Onex management to the company's directors dated August 11, two days before application of section 47 was suspended. I will not read that memo, but it said basically that the company had to get a clear commitment from the government before going any further with its plans, particularly with regard to various administrative constraints.

A close look at the minister's presentation before the Standing Committee on Transportation, on Tuesday, and a close look at this memo helps us understand. I will say a few words about the minister's presentation, where he talked about encouraging competition. Basically, nobody is against good principles such as encouraging competition, nobody is against sainthood. However, people do not always behave on this earth in a way that will lead them to sainthood.

The government, through the Minister of Transport, tells us it wants to encourage competition as much as possible. “As much as possible” is pretty vague. In the end, the government may say it was not possible to do more than it did and we will just have to be satisfied with that. It also said it will take legislative and regulatory measures to this end. Then it goes on to say “The Competition Bureau will undertake a thorough examination of any proposal in terms of competition”.

Which means what? This suggests—and we will see the relevant legislation and regulations—that the government may be tempted to reduce the Competition Bureau to a mere advisory role, a simple role of offering an opinion, rather like some others, for example the ethics adviser. Everyone is familiar with the ethics adviser. When we did things up, the answer we get is “Oh yes, we have checked it out with the ethics adviser”.

By seeking extraordinary powers, the minister wants to downplay the role of the Competition Bureau, which has already proven itself in connection with certain decisions the government wanted to take. Let us not forget that the Bureau blocked Ultramar's planned acquisition of Petro Canada. It was blocked because we had a competition watchdog that said “The interests of Canadian consumers might be affected”.

This week, a most interesting letter by former minister Marc Lalonde was printed in Le Devoir . I need not tell you, Mr. Speaker, given your years of experience in this House, that Mr. Lalonde does not have the reputation of being a sovereignist, or a supporter of the Bloc Quebecois or the Parti Quebecois. Marc Lalonde is a former Liberal minister. The title he gave to his article in Le Devoir , which has a reputation as a most serious newspaper, was the following “The 10% rule: in the public interest”.

Certainly the Minister of Transport, yesterday, tried to downplay Mr. Lalonde's intervention in the debate by commenting “Yes, but he is the counsel for Air Canada”. Nonetheless, Mr. Lalonde has considerable parliamentary experience and can see very clearly that there are two bids before the Air Canada shareholders, one from Onex and the other from Air Canada.

It is extremely important to clarify at this point that the Air Canada offer complies fully with current legislation and regulations. The Air Canada offer calls for no changes to the level of foreign investment, the 25% rule, or to the 10% limit on individual ownership of Air Canada.

On the other hand, there is the Onex bid, which would require both the 25% and the 10% rules to be raised.

Under Onex's offer, which is now on the table, American Airlines' share of Air Canada would increase from 10% to 14.9%. I would like the members of this House and those listening at home to remember this figure of 14.9%. This is no coincidence, and perhaps the Liberal majority on the Standing Committee on Transport would be seriously tempted to come and call for 15%, since this has been allowed elsewhere, such as in the case of CN.

Another feature of the Onex—American Airlines proposal is that the president of Onex came right out and said that American Airlines would be putting up $750 million to buy Air Canada. The president of Onex would like us to believe that, even though it is offering $750 million, it will not be trying to exercise control and will not have a right of veto.

My question is this: Is American Airlines a philanthropic institution? Is it a charitable institution? Do those listening to us today think that a capitalist, American company is putting $750 million into saving Canadian Airlines for the sheer pleasure of it? Is that likely? I think the answer is obvious.

No one believes the minister. He is the only one who believes what he is saying. The leader of my party quite rightly mentioned Bill S-31. We will be coming back to this bill again during this opposition day.

Since time is moving along quickly, I would like to point out that we see Liberal members from Montreal's West Island, particularly the hon. member for Lac-Saint-Louis and the hon. member for Vaudreuil—Soulanges, who opposed the Onex proposal and supported Air Canada.

I would like to know why they do not come to the Standing Committee on Transport and say so. This committee is sitting right now. Today was our eleventh meeting since early last week. Why do these members not come before the committee? The simple answer is that they have been gagged.

In closing, I would like to move an amendment. I move:

That the motion be amended by adding after the word “reaffirms” the following:

“clearly”

[The Deputy Speaker]

The debate is now on the amendment.

[David Collenette, Liberal, Minister of Transport]

Mr. Speaker, I am pleased to take part in this debate on a motion moved by the hon. member for Laurier—Sainte-Marie.

This motion deals with one of the components of the policy framework on the restructuring of the airline industry in Canada, which I have tabled before the Standing Committee on Transport and the Senate Standing Committee on Transport and Communications two days ago.

The tabling of the policy framework that I made available the other day marks the beginning of the second phase of the government's effort to ensure that any eventual restructuring of the Canadian airline industry takes place in an orderly matter and with adequate means for ensuring that the public interest is met.

Since August 13, when the governor in council put in place the section 47 order, both Air Canada and Canadian Airlines, and any interested third parties, have had the freedom to develop and discuss any proposal which might lead to a conditional agreement.

Under this special process, three proposals have been advanced and two of them are currently on the table. Both these proposals present a private sector solution to the problems facing the airline industry.

The document I have tabled earlier this week lists a number of issues on which I seek the advice of my colleagues. The first issue is the one we are discussing today.

The government is asking the members of these committees to examine whether increasing the present 10% limit on Air Canada shares would contribute to a more vibrant Canadian controlled airline industry.

The motion before us today is to the effect that this 10% limit should not be changed. The government has not decided yet whether it should be changed or not. We believe the question should be a matter for debate in Parliament.

The policy framework which I made available this week situates the debate in a larger context. I think the hon. member for Laurier—Sainte-Marie has forgotten that. There is little doubt that we face a consolidation of the airline industry and the emergence of a dominant carrier, whether by means of a merger through common ownership or by other means. This has given rise to widespread concerns regarding the lessening of competition.

It is for that reason I solicited the advice of the commissioner of competition on August 30. He gave that advice this week. I would publicly like to thank him again for the consideration he has given to our proposals and to tell him, through you, Mr. Speaker, that we are guided by his report.

The vision that we have for the airline industry as we enter the 21st century is one that is safe and healthy, one that is owned and controlled by Canadians and one that serves all parts of Canada at fair prices and that is capable of competing with the biggest and best airlines in the world.

Our vision for the next century is that of a Canadian airline industry that will be safe and vibrant, owned and controlled by Canadians, serving all parts of Canada at fair prices and able to compete with the biggest and the best airlines in the world.

In articulating this vision and delivering this vision to Canadians, I want to make one point absolutely concrete here today, and that is the safety standards of the Canadians airline industry, which are admired throughout the world, will not be compromised one inch by the proposal that we have before us.

There is another very important factor in this debate. Fundamental to the identity of Canada is its linguistic duality. It is a reflection of Canada's unique culture and values that Canadians be able to rely on the national air carrier for service in either official language.

The government will ensure that the Official Languages Act continues to apply in the case of Air Canada or any future dominant carrier, and that the Act is effectively implemented.

Let me now turn to some specific elements in the policy framework.

The policy framework that I outlined clearly affirms that the government will ensure that the Canadian airline industry remains owned and controlled by Canadians. There will be no change to the legislative framework in this area. The 25% limit on foreign voting shares in any Canadian carrier will not be changed. The requirement to be controlled in fact by Canadians will not be changed.

The Canadian Transportation Agency has the statutory obligation to carry out an examination as to whether or not any proposal that comes forward does in fact meet effective Canadian control requirements.

The policy framework recognizes that Air Canada is subjected to another limit that only applies to that corporation, namely the 10% limit on Air Canada's voting shares that a single shareholder, Canadian or non-Canadian, can own.

Although this provision has ensured that this former crown corporation has been widely held, some have argued that this reduces shareholder influence.

As I said on Tuesday, the government is prepared to consider increasing the limit—and only to consider increasing it—to a new level to be decided following input from parliamentarians—after debate here, in this House and in the Senate, for example—if such a measure contributes to achieving a healthy, Canadian controlled airline industry.

We are pleased to take part in today's debate. However, we hope that the issue will be thoroughly reviewed by the committees of the House and the Senate in the weeks to come.

I would want the debate to include the question of whether preserving the 10% limit is part of the consideration of the public interest. One could argue that the best means of ensuring that the public is protected is through legislation and regulation, and not through the 10% rule.

The policy framework puts emphasis on addressing the issues which are of paramount concern to Canadians. In addition to Canadian ownership and control there are competition concerns, in particular predatory pricing, airport access, ticket pricing, continuation of service to small communities, and the rights and concerns of employees. All these matters must be taken into consideration.

Finally, I remind you that the government intends to introduce legislation very soon which will give it permanent authority over the review of any merger or acquisition affecting Air Canada or Canadian Airlines which is concluded from now on.

This formal review process, which is being put in place because of the importance of the airline industry to Canadians and to our economy, will involve the three elements of government oversight which are needed to fully capture the public interest.

The Competition Bureau will review specific proposals with regard to competition issues; the Canadian Transportation Agency will review proposals to ensure air carriers remain controlled in fact and in law by Canadians; and the government itself will ensure that transportation public policy concerns are addressed.

This process puts the final decision to approve a merger or acquisition with the governor in council on the recommendation of the Minister of Transport.

If a merger or acquisition is found to comply with the requirements to be owned and controlled by Canadians, as determined by the agency, the Minister of Transport will formulate the recommendation for approval, taking into account the extent to which the carrier has made undertakings to address the remedies negotiated with the Competition Bureau, and the conditions necessary to meet public policy objectives.

These are the cornerstones of the framework, but some work remains to be done before this framework can put into effect. That is why we have the debate in the committees. It is going on right now. It is going on in the Senate. We want to know the views of parliamentarians and we want them to reflect upon the conditions that we will extract from any new entity to protect the public interest.

Yesterday the leader of the New Democratic Party took issue with the 10% rule. We have this today with the leader of the Bloc Quebecois. I want to know why they are taking sides in a corporate debate. This government is not taking sides in a corporate debate.

We want the shareholders of public traded companies in the private sector to determine what is in their best economic interest, and then the government and parliament will determine if that agreement is in the public interest.

We will look at service to small communities. We will look at pricing. We will look at competition. We will look at Canadian control. We will look at how it affects the rights of workers, but I can assure the House that the government will protect the public interest so that all Canadians have an enviable travel system with strong air competition as we go into the 21st century.

[Gilles Duceppe, Bloc, Laurier—Sainte-Marie, QC]

Mr. Speaker, nevertheless, it is stretching credibility to be told that the minister did not interfere in this, and that the opposition parties are interfering. Let him just read this morning's papers and look at their political cartoons, he will see how things really are.

I would like to ask him whether it is not a bit illogical to allow this offer, this debate among shareholders, to take place under a certain number of rules, while telling them that they could be changed.

Is this not raising share prices at this time? What if the MPs decided the 31% in the Onex bid was way too high, and that the limit would be 15%, and what if Onex could not comply with that, does the minister not realize share prices will drop drastically as a result, and people will make a quick profit? Does he not realize that speculators will be able to gamble not once but twice, provided they get rid of their shares before such a decision is reached?

At that point, there will be a dramatic drop in share prices and some people will pay dearly as a result. Does the minister not realize that it is more logical to debate the 10% rule—as I am prepared to do—before the offers are made, not at the same time as they are being made.

I would have liked to ask the minister to give me an example of a case where such a thing has happened.

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

Mr. Speaker, the hon. member kindly referred to cartoons. We in public life are used to being the butt of criticism. I know that the hon. leader of the Bloc Quebecois has had the same experience with cartoons.

I have said for the last year that we would consider any regulatory or statutory change if it improves the health, viability and stability of the Canadian airline system. We repeated that on August 13 when my colleague, the Minister of Industry, and I brought forward the section 47 order.

It is incumbent upon us to give every flexibility for the private sector to come forward with a solution. That is what we are doing, but we are not pronouncing on that particular issue. We are saying that we will consider raising that particular limit.

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

Mr. Speaker, I want to ask the minister about the changes he is anticipating to transfer the powers from some agencies to himself in making these decisions.

Why is he not using parliament's authority for that rather than the minister's? I take exception that he is leaving parliament and parliamentary committees out of the decision making process.

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

Mr. Speaker, with great respect, my friend has it all wrong. The fact is that the Competition Bureau will be very much involved in examining any merger and in negotiating with any successful applicant in the normal way. The Canadian Transportation Agency will be doing its statutory duty in seeing whether or not any proposition meets Canadian control regulations.

There are other issues that the agency and the bureau cannot deal with. They do not have the legislative competence to deal with these issues. Only parliament can deal with them. That is why we are proposing, in the sanctioning of any new agreement with respect to a dominant carrier, to have that enshrined in legislation so that the protections the Canadian public want will be in legislation which will be debated in the House. Parliament, on this entire issue, will have the last word.

[Nelson Riis, NDP, Kamloops, BC]

Mr. Speaker, I have two very serious questions to put the minister. I appreciate his speech this morning.

One thing I have not heard in the discussions of the proposed merger is the people of Canada, through the Government of Canada, taking an equity position in a new airline to ensure decision making at the board. Is this something the minister would be open to? If not, why not?

Second, if there is a concern across the country it has to do with the jobs that will be lost. What safeguards would the minister provide us today that those jobs will be protected to the extent which is humanly possible?

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

Mr. Speaker, we have no intention of taking an equity stake in any of the airlines. The government got out of the airline business in terms of ownership some years ago, and we do not intend to go back. We intend to create the framework so that it can be a private sector solution which we will sanction through parliamentary measures and statute to ensure the public interest is maintained.

One of the key elements of that is to extract conditions in any deal that comes forward so that workers are indeed dealt with fairly and their rights are respected.

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

Mr. Speaker, it is a pleasure to shed what I would suggest is the light of day on the motion of the Bloc to reaffirm the maintenance of the 10% limit on ownership of the Air Canada Public Participation Act.

It would appear to be a straightforward motion, but there seems to be a lot of emotion and intrigue behind why the Bloc would choose today to put the motion before the House. I would like to look at some of the reasons the Bloc might have done so.

I would like to know whether the Bloc is putting the motion forward because of its strict adherence to the laws of the land. I would assume from comments given by the Parti Quebecois justice minister recently that Quebec would simply ignore the supreme court's decision on separation if it chooses. We know that separatists do not really have a lot of attachment to the laws of the land, so that cannot be it.

I wonder if it is because they truly believe it is in the best interest of the Canadian travelling public. I sincerely doubt that, because if the current situation were identical, with the exception that Air Canada was headquartered in Winnipeg, members can rest assured that the Bloc Quebecois would either be in favour of changing it or indifferent to the 10% limit.

The real reason, I would suggest, that Bloc members are so concerned with this 10% ruling is that they see its removal as a threat to Air Canada. If the elimination of the 10% rule would be acceptable, what would be next? Would it be the clause that requires the headquarters of Air Canada to remain in Montreal? Even though the Onex proposal has ensured that the new Air Canada headquarters would be in Montreal, the BQ knows that it cannot trust what a boss who is based in Toronto has to say. The BQ wants to ensure that the status quo remains with Air Canada.

It is only with Air Canada that the BQ wants the status quo to remain. The BQ makes no secret of the fact that it wants Quebec to separate from Canada, that it wants Canada's national airline to remain untouched in Montreal, but it does not want Montreal to remain in Canada.

Let us think about this. Canada may have one national airline situated in a city that does not want to remain in our country. Let us think of the chaos that would be created if the Bloc got what it wanted and Quebec no longer was part of our country. We have two national airlines today and all of a sudden we would end up with no national airline. That is the ludicrousness of this kind of argument and this kind of emotional attachment that the Bloc seems to have to the 10% rule.

I would suggest to Canadians and to the Bloc that the 10% rule should never have been there in the first place. It is not the government's role to dictate to corporate Canada and to a private-public shareholding company in Canada, a domestic company, what limit shareholders should have. It is not the government's role to put those kinds of attachments to any kind of arrangement. Nor should any other control be placed there other than foreign ownership.

The crisis today is a drop in the bucket of what the crisis tomorrow will be if the Canadian government and the Parliament of Canada do not deal with the situation of trying to maintain the status quo. The status quo will not work. We have to look at options and we have to be open to look at all options. That means the government has to remove those things that should not have been there in the first place which restrict the ability of the private sector to look at the options and to give different ways of solving the situation we find in the Canadian airline industry.

I question, as members can tell from some of my previous comments, the sincerity of the Bloc Quebecois in putting the motion on the table today and the reasons why it feels it is important to restrict the choices of the House of Commons, parliament and the government in looking at a solution to the crisis in the airline industry and to moving into the 21st century with a positive vision of what Canada and what Canadian airlines can offer the international community.

It is that kind of narrow-minded vision that the Bloc Quebecois has of Canada and its role internationally and its position with one another and how we can work together. That narrow-minded vision creates the situations we face day in and day out in the international community.

I have great concern that the Bloc has brought forward a motion of this nature now to complicate what is already a complicated situation. I hope the House will determine not to support it and to move on with the discussions over this industry's situation. I hope we will look at all options and not limit it to one simply because of a mistake that governments in the past have made in trying to control private enterprise in the country.

Certainly as a free entrepreneur, as somebody who believes in the open market, I find that any control that a government places is not good enough. I hope in future deliberations on how we we will help the industry through regulations and legislative change, that we will not move backward to a regulatory industry.

[Yvan Loubier, Bloc, Saint-Hyacinthe—Bagot, QC]

Mr. Speaker, really, we have heard our fair share of contradictions from the Reform Party.

My colleague said that the free market had to be considered and that business decisions had to be made on the basis of cost effectiveness. I would remind her that, again this morning, it is being said that, with its financial difficulties, Canadian would have a hard time making it to next spring if the situation did not change. For years now, the government has been trying, through various ploys, to help Canadian hold on, while it kept sinking every year. This is the first point I want to make on what my Reform colleague said.

The second point is as follows. Could she explain—because Reform members are not short of contradictions in their speeches—how it is that last year, in the debate on the reform of financial institutions and the banks in Canada, no Reform member on the Standing Committee on Finance opposed the retention of the rule on 10% of the stocks of a financial institution being held by one shareholder?

How is it that, in the case of the banks and financial institutions, the Reform members fought with the Bloc Quebecois to retain the rule of 10% in order to prevent Canadian financial institutions from falling into the hands of Americans, among others, and that today it does not apply to air transportation? Is she picking up the failings of the Minister of Transport and supporting Canadian at all cost?

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

Mr. Speaker, I am not trying to promote any airline. The member confuses foreign investment and 10% rules in domestic markets.

I do not agree with the 25% foreign limit. That should be open as well. There are other Canadian controls in place that would allow it. They have been used in other areas.

We cannot confuse a 10% limit in a domestic investment with a 25% limit in a foreign investment market. The member is confused.

The member says that the Canadian government has tried to support Canadian, and I will not argue that. But if he is trying to suggest that there has been a level playing field, then he is way out to lunch.

Air Canada was a government owned airline. Air Canada had the taxpayers build it tarmacs, hangars and provide it with equipment. Until 1979 Air Canada controlled 75% of the continental traffic. It was controlled by legislation for Air Canada. It had a preferred airline status until 1979 and beyond. Canadian taxpayers made it possible for it to operate in a somewhat efficient manner and it not need government help to the same degree that Canadian did.

I would argue that both of our Canadian airlines are under heavy competition with the U.S. because of high fuel taxes, high airport fees and other high costs imposed upon them by the Canadian government and the Canadian economy which the Americans do not have.

I would suggest that the member's comments which imply that Canadian is getting favoured status do not acknowledge that Air Canada has been a favoured airline for generations in this country. There never has been a level playing field.

[Bev Desjarlais, NDP, Churchill, MB]

Mr. Speaker, my hon. colleague comments on the Bloc preference for Air Canada. I do not think there is any question in this issue that once again we have drawn east-west lines within Canada. One thing I can honestly say with regard to the Bloc members is that at least they are up front about separation and about standing up for Quebec. I have a really hard time listening to Reform members who are willing to sell out Canada at every single turn.

The 10% rule was put in place to ensure broad participation in Air Canada after it was taken from being a public company and privatized. Even the U.S. would not go about doing the things which Reform suggests. The Americans would not allow total takeover of their systems. They do not allow cabotage within the U.S., but the Reform Party thinks it is totally okay in Canada and would allow the U.S. to come in.

I want Quebec to remain a part of Canada, but at least the Bloc members are up front.

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

Mr. Speaker, the Reform Party has never excluded Quebec.

I would like to suggest that the member is out of line in saying that we think the United States should come in and take over our airline industry. That has never been our comment.

Our comment is that there have been instances internationally which show that a foreign company can offer competition. The commissioner of the Competition Bureau has offered that as a suggestion he felt should be considered for competition. It was not the Reform Party. Other people have looked at this and have put those options on the table for consideration. We should be looking at all options, not looking at it from a narrow-minded singular position.

[Bev Desjarlais, NDP, Churchill, MB]

Mr. Speaker, I am pleased to rise on behalf of the New Democratic Party in support of this motion. I hope in this debate today that we can convince the Liberal government to support this motion as well.

This debate is not about which airline merger, if any, is the right thing for Canada. It is about something much more basic than that. It is about ethics in government. It is about getting the government to uphold the laws of this country. In effect this motion is asking the Liberal government to uphold the law.

We have a law in Canada called the Air Canada Public Participation Act. The law prevents any Air Canada shareholder from owning more than 10% of the company's stock. It is perfectly reasonable to expect the government to uphold the law. That is what governments are supposed to do; that is their job. Normally we would not think we would need a motion in the House of Commons just to get the government to do its job, but in this case we do.

Since this airline crisis in Canada began, the Liberal government has not done its job. The airline industry is vital to our country. In a country as large as Canada with a population spread from coast to coast to coast, a strong, healthy, affordable airline industry is a necessity. It is the government's job to make sure the airline industry serves the public interest, not the shareholders alone.

It is the government's job to stand up for Canadians, Canadian communities and Canadian jobs. The government is not doing that. Instead, the Liberals have been flying by the seat of their pants making things up as they go along. The Liberal government's slow reactions have created uncertainty and made a bad situation worse.

If Canadians should be able to count on the government for one thing, they should be able to at least count on it to uphold the law. It should be a given that everybody in Canada has to follow the same set of laws, the same set of rules, but the Liberal government has not been doing that and has not ensured that that is done.

The Liberals are talking openly about changing the laws to accommodate their friends. I wonder if it has something to do with the $74,000 which Onex gave the Liberal Party and Liberal candidates, including the Prime Minister, in the 1997 election. I wonder.

What I do know is that so far Onex has not played by the same set of rules as everyone else. The whole situation is incredible. First Onex tabled it complex takeover bid just days after the Liberal government conveniently suspended the Competition Act, removing the Competition Bureau's power to review a merger. We heard the Competition Bureau yesterday indicate that the reason this was done was that more than likely it would not have met the test of the Competition Bureau.

I do not know how Onex knew that the Liberal government was going to suspend the Competition Act. Maybe Onex consulted a psychic. More than likely Ronald Reagan's is no longer busy now, so it is taking up some Reform and getting into that type of business.

It is incredible that this company is making a takeover bid, all the while assuming that the Liberal government will change the law for it. Think about it. The Onex takeover bid is technically illegal under the Air Canada Public Participation Act but Onex has just said, “That's okay. The Liberal government will just change the law for us”. That is like saying we are going to steal something because we expect the law to change to make that legal.

I have known for a long time that the Liberal government is under the thumb of some big businesses but this is a new low even for it. I said earlier that this debate is about ethics. Obviously the Liberal government has none.

The government is supposed to be a neutral arbitrator. It is supposed to be the one to stand up for Canadians. Instead it suspended the Competition Act to pave the way for its friends and campaign contributors. Now the government says it is going to change the law to make an illegal takeover bid legal. It is completely unethical.

I do not want to sound like I am being critical of Onex. I am critical of the process the Liberal government has followed. Instead of being a neutral arbiter and putting the interests of Canadians first, the Liberal government has bent over backward to change the rules for one bid. First it suspends the Competition Act and now it is threatening the 10% ownership limit.

People are probably asking why we need the 10% ownership limit. Think for a minute about the name of the act we are talking about, the Air Canada Public Participation Act. The two key words are public participation. The whole point of the 10% ownership is to keep any one shareholder from getting a stranglehold on the company. Air Canada is supposed to be a public company.

Remember that for years Air Canada was an extremely successful crown corporation. The taxpayers of Canada paid for Air Canada. It is clear now that privatizing it was a terrible mistake, a mistake driven by the Mulroney government ideology instead of the public interest. Air Canada belonged to the people of Canada and it was thrown away.

The Liberal government is throwing away the principle of public participation. Public participation is basic democratic value. No wonder the Liberal government is trying to get rid of it. It is in the business of eroding our basic democratic values.

Raising the ownership limit above 10% will open the door for one investor to get a stranglehold on the airline. We cannot allow this to happen. We cannot allow something as important as our national airline to fall under that kind of control. We must keep the ownership of our national airline as broadly based as possible.

What is more, we must bring in a modern regulatory regime to protect the interests of Canadian communities, Canadian jobs and the travelling public. Deregulation got us into this mess and only reregulation will get us out of it.

After 10 years of deregulation we have been left with higher ticket prices, lower wages and less service to remote communities. It is unthinkable that we could allow deregulation to continue in a monopoly situation.

Yesterday I was shocked to hear the Competition Bureau indicate that one of its success stories was that of Canadian Airlines prices and the American Airlines investment. That was its success story. Here we are today, because of the situation Canadian Airlines is in, and that is because competition was all that was looked at. There are things more important than just competition.

One group the Liberal government has completely ignored in the whole mess is the airline employees. The transport minister's policy framework was vague on the issue of protecting workers. All it really says is that workers should be treated fairly.

We have seen how the government treats workers fairly in Canada. In spite of pay equity legislation we have had to spend 15 years fighting the Liberal government fighting the law on pay equity. That means nothing coming from the Liberal government which, as we have seen over the last six years, does not know the meaning of the word fair.

Workers in the airline industry do not trust the Liberal government. They deserve concrete commitments that there will be no involuntary layoffs. No worker should have to lose his or her job because the Liberal government has run our airline industry to the ground.

Time and time again the Liberal government has put the interests of friends ahead of the interests of Canadians.

I have touched on many issues in my limited time here today, but the debate comes down to one crucial question: is the Liberal government going to uphold the law or not? Is it going to do its job as the government? This is the moment of truth for the Liberal government. It is a chance for it to stand up and say “Yes, we will uphold the law. We will stand up for Canadians. We are going to stop the special treatment”. The Liberals can do that if they support the motion and commit not to raise the 10% ownership limit.

This is one of those moments when each and every Liberal MP is going to have to look in the mirror and ask themselves who they were elected to serve. For the sake of the Canadian airline industry, I hope they make the right decision and join my fellow New Democratic Party MPs in supporting the motion to keep the public in the Air Canada Public Participation Act.

[David Collenette, Liberal, Minister of Transport]

Mr. Speaker, I listened to the member for Churchill very carefully.

The issue here is not of upholding the law. It is whether parliament, in its wisdom, should change the law. What we said the other day was that we were asking parliamentarians whether we should even consider changing the law. We should put the entire debate in the proper context.

Is my hon. friend saying that all laws are immutable and should never be changed to reflect changing circumstances in society? Is she saying that we should not even consider changing the law?

I will point out that Air Canada itself was the first to put in a proposal on August 22 under the auspices of section 47 of the Canada Transportation Act. We then had another offer which is currently on the table. This shows that the process the government has followed has worked.

[Bev Desjarlais, NDP, Churchill, MB]

Mr. Speaker, I am not suggesting for a second that at any point there may not be a need to change laws.

However, I think it is totally correct to say that we abide by the laws that are there. If the laws change then those laws go into place. In this case there is no credibility in the whole process that is taking place because the law that is in place is not being recognized by one of those offers. It is the process that is the problem. It is going outside the realm of the law.

If the law should change and there is a bid that comes in to that effect, so be it, but that is not the case here. There are too many things that are inconsistent here and leave some question as to whether there has been some influence that is not in the best public interest.

[John Finlay, Liberal, Oxford, ON]

Mr. Speaker, my question is similar to the minister's in that my understanding is that we have not decided to change anything yet.

I am sure the hon. member does not want us sitting in this place simply reading old laws and saying that they will do. We will be changing the law in the Nass Valley for the Nisga'a people who have made an agreement after 20 years. If we stay with the Indian Act we will not be making that change. We will have to do that. We will have to do the same thing with the airline industry.

Is my hon. friend saying that there is not a problem with one of our national carriers?

[Bev Desjarlais, NDP, Churchill, MB]

Mr. Speaker, there is no question that there would appear to be a problem with one of the national carriers. For that reason the transport committee was studying it prior to the June recess.

As I indicated to the minister, let us be very clear, I recognize fully that at times laws will have to change. It is not acceptable to anybody that somebody will play outside the rules of the law before the law is changed. Imagine if we have not signed the Nisga'a treaty and we allow everything to happen that is in the treaty before it is passed through legislation. How on earth is there any credibility to the laws of Canada if we allow those things to take place?

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

Mr. Speaker, I am pleased to stand in support of the motion to prevent the government from changing the 10% Air Canada Public Participation Act to increase the available participation by any single entity. This is all being done in the middle of one of the most controversial issues we have going on in Canada and we should not be discussing this. This should not be thrown into the middle of the debate.

We have a great debate now about the future of our aviation industry and the process we are using is nothing short of crazy. This industry involves thousands of employees, dozens of airlines, hundreds of airports and communities. They will all be involved.

Even though this industry has evolved over 60 years, the minister established the criteria on August 13 that we have 90 days to restructure an entire industry that affects thousands of people and many communities in the country. It is absolutely ludicrous that we could even get a handle on the situation. In the middle of that, he throws in a proposal to maybe change the 10% public participation act on Air Canada.

It does not make sense. The process has been mismanaged from the beginning. It must be ratcheted down so we can get a handle on this very serious issue that affects so many people, so many communities, so many airports and so many employees.

Throughout the 90-day process, the minister has been changing the rules. First, he brought in section 47 which changed the rules completely for the first time and removed the Competition Bureau from the entire debate. He then changed the rules again and invited the bureau to come back in, only he gave it a very narrow focus, not the focus it was supposed to have and not the ability to do the job it was legislated to do which was to analyze competition in the interest of consumers and businesses. He wanted it to just analyze the one dominant airline theory. He did not give it the opportunity to look at all areas or to come up with other suggestions, he just focused on his one proposal.

We missed a tremendous number of proposals and we missed all kinds of opportunities to hear other proposals that might be more effective and more practical than the two on the table now. The whole thing has been mismanaged from the beginning.

We missed great opportunities when the minister confined the Competition Bureau to just look at his vision of the future for the aviation industry in Canada. He did not tell the Competition Bureau that he wanted it to look at all the possible permutations and combinations for restructuring the aviation industry in the interest of consumers and business. He took that legislated right away from it and instead instructed it to confine its study to only one dominant airline theory, and that is his theory. We again missed a number of opportunities there.

The Competition Bureau did an incredible report but it was confined and restricted only to the parameters allowed by the minister. If he would have opened up the parameters and allowed the Competition Bureau to consider all options, we would be looking at more options today. If at the beginning of the 90-day process the minister had announced that he was going to change the 10% public participation act, I believe we would also be looking at more proposals and other options would be on the table.

Let us go back to August 13. When the minister announced he was invoking section 47, we had 90 days to come up with an answer. On day one, if the minister had announced he was going to change the 10% public participation act, I believe there may have been other investors, other aviation companies and other proposals put on the table. However, when they looked at this they said that because of the Government of Canada law they would not put a proposal on the table.

On day 74 of 90 days, incredibly, he announced that he was going to change the 10% rule, or at least consider it. That left 16 days for a company, an investor, a group of investors or consortiums to come up with a package involving $6 billion. That was not possible in 16 days. They could not get the approval of the boards of directors. They could not even meet their legal requirements. By not announcing the 10% proposal in the beginning, he precluded a whole lot of options. By announcing it on the 16th, he left it too late for anybody to respond to it or take advantage of it except for one of the applications or proposals that was already in place.

I feel very strongly that the minister has failed to manage this process right from the very beginning.

Competition is the number one issue we hear about from consumers and people who have appeared before the committee that is reviewing the situation. The two proposals on the table now do not provide the discipline supplied by competition, the discipline for competitive air fares, air flights and schedules. Neither one of these proposals provides that competition.

We may have missed opportunities that could have supplied that competition. The Competition Bureau was restricted from analyzing that aspect of it and looking at other options that might be available. The Competition Bureau was restricted to only looking at the dominant carrier approach, which is the minister's approach.

Another serious issue is regional service. In the minister's five principles that he brought out on day 45 of the 90-day process, one of the principles he stated very clearly was that regional service must be guaranteed. The problem is that even if the airlines agree to provide regional service, some of the airports that have recently divested under the divestiture program are not viable.

We had testimony at our committee that 10 to 15 airports in Canada now are not making ends meet. They are no longer viable. We also had testimony from the Onex-American Airlines-Canadian Airlines proposal to say that revenues to those very airports that are not viable now will be reduced. How can we assure regional service if the airports cannot survive?

The problem is that there is no policy on this. There is no policy on anything. We asked the minister the other day in committee if he had a dual airline policy. There is no dual airline policy nor is there a single airline policy.

We asked about the 10% increase, although on August 13 it was not discussed or mentioned. There was no policy then. On day 74 of the 90-day process, he came up with a proposal that maybe there would be a policy on the 10% increase, but again, no policy.

At the standing committee and ad hoc committee we have had academics, flight attendants, airline representatives, travel agents and consumer groups. Every one of them complained that the cart is before the horse.

The academics say that any organized government would have an aviation policy, especially a country like Canada where aviation is so important. The government should establish policy and the private sector should make its proposals to meet those parameters.

In this case the government wants the proposals first and then it will establish policy. It is exactly backwards. In my opinion it is complete mismanagement of a transportation system that is absolutely critical to our country.

Yesterday at committee we an executive from one of the airlines. He commented that he could not believe that a G-7 country like Canada was debating a proposal that was, in effect, illegal. He made an excellent point. We are debating and considering a proposal that breaks the Air Canada Public Participation Act. We are debating this even though it is illegal. He was perplexed by that, and I can only share that confusion.

My position is that the whole process of determining the restructuring of the aviation industry in Canada is grossly mismanaged. We are in a pressure cooker. We have a 90-day window of opportunity. We are supposed to deal with thousands of employees, hundreds of airports, dozens of airlines, communities right across the country and economic development, and we have 90 days to do it. A person cannot even buy a house in 90 days.

It is not sensible to address this, but we have this incredible pressure cooker atmosphere created by a false 90-day window of opportunity which we think was inappropriately instituted.

We are voting in favour of the motion, not because we are against the 10% increase but because of the way it is being handled. It should not be injected into the debate when it is surrounded by controversy and all these peripheral effects. The issue should be addressed in the clear light of day. It should not be addressed when it is attached to so much controversy, this bid and that bid, and all the accusations that are being made.

We are supporting the motion. I compliment the Bloc for bringing it to the table. We would look at it again some time in the future without the pressure and without the undue influence.

[David Collenette, Liberal, Minister of Transport]

Mr. Speaker, I would like to ask the hon. member for Cumberland—Colchester a question.

Is there not an inherent contradiction in what he just said? He has lamented the fact that under section 47 allegedly the Competition Bureau has been sidelined, yet in the next breath he praises the very report that we asked them to produce under the auspices of section 47. That is a contradiction. The fact is that the Competition Bureau is very much alive in this process, as I have outlined.

After the 90 days the bureau will be able to examine any proposal that comes forward with its full powers. Therefore, there is no question of the Competition Bureau not being involved in this debate. It will be doing its work and it will be doing that work very well.