Mr. Speaker, I am pleased to rise today in the House to speak to Bill C-11, an act to authorize the divestiture of the assets and to dissolve the Cape Breton Development Corporation, to amend the Cape Breton Development Corporation Act and to make consequential amendments to other acts.
In short, the Reform Party intends to support the main thrust of the bill although we have some concerns and we will be introducing some amendments to address some of those concerns. However, in general terms we will support the sale of the assets of the Cape Breton Development Corporation.
We congratulate the government in finally getting around to addressing the problem that maritimers and other Canadians alike have witnessed for years and years. The Cape Breton Development Corporation was originally the baby of Prime Minister Lester B. Pearson, which gives one an idea of how far back the history of the whole matter goes.
Most people today refer to the Cape Breton Development Corporation as Devco. It was and still is a disastrous money pit for the taxpayers of Canada. As far back as 1957 it was recognized that the coal industry in Cape Breton simply would not be sufficiently viable to sustain the economy of Cape Breton on a long term basis. In 1966 the Donald report commissioned by the Government of Canada recommended the downsizing of the Cape Breton coal industry and chose 1980 as the target for production to cease.
In the same year Prime Minister Pearson and Nova Scotia Premier Robert Stanfield announced a $55 million package to phase out coal mining in Cape Breton within 15 years. It would not have been easy for the miners or their families, but postponing the agenda from what was originally planned has certainly spawned a whole new generation of miners. Some of these miners will be losing their jobs at a relatively young age and will not qualify for pensions, which has prolonged the same problems expressed during the debates in the time of Mr. Pearson.
It was recognized that without diversification the long term effects on the economy that supports these same families would get increasingly and drastically worse. The economy would become dependent on a dying industry, which could then lead to dependency on government programs and subsidies. In 1966 such forecasts were only warnings of things to come. Thirty years later Devco has realized all of the predictions and the worst elements of the early earnings.
In 1967 Devco was formed as a federal crown corporation, and contrary to the 1966 plan much expansion took place in the next 20 years. However, the expansion came at a cost to taxpayers as much of the development was subsidized by the government, a pattern that would continue for many years to come.
In 1989 there was hope that the government would finally approach Devco in a manner that encouraged the company to remain productive on its own power and relieve Canadians of the tax burden of supporting the company. The $30 million per year subsidy was to end in 1995 and after that point the company was expected to remain viable on its own.
Speaking of the development of Devco, on March 23, 1992, the Liberal member for Cape Breton—East Richmond, Mr. David Dingwall, stated that federally we conceived and implemented what was known as the Cape Breton Development Corporation to try to assist the diversification of the local economy and also in later years to try to provide alternatives to the use of coal in Cape Breton.
As the years passed it became more and more obvious that this simply would not happen. Like many other Liberal promises, this one too was little more than an empty election promise. The rhetoric seemed to have an end in sight with the 1989 announcement, yet like so many other government promises it never happened. Since 1996 a further $150 million has been provided to sustain Devco.
In the last 33 years, Devco has experienced many shutdowns, failures to meet production targets and stunning financial losses, including some serious roof cave-ins in one of the mines. In August of this year, Devco's annual report showed that it had one of its worst years on record, suffering a $299.7 million dollar loss.
Through the years, Devco has employed scores of hard-working, driven and responsible miners. It is certainly not their fault that Devco has proven to be such a disastrous example of a crown corporation. However, it is the miners and the Cape Breton community that are suffering from the abysmal lack of government action to ensure that the mine best serves those who support it and those that it supports.
In January 1999, it was announced that the government would take steps to privatize Devco, including two mines, an international pier, a railway, a coal wash plant and all surface operations. This announcement immediately raised howls of protest and despair from Cape Breton as mining is all many Cape Bretoners have ever known. Coal mining is to Cape Bretoners as oil and gas are to Albertans.
Remembering the effects of the cod moratorium in Newfoundland, Cape Bretoners are terrified that an entire industry, economy, lifestyle and culture are doomed to extinction. I sympathize with those concerns. I agree that all that is reasonable must be done to alleviate the difficulties that privatization will cause for the 1,100 miners and their families that are affected by this decision.
When one studies the long history of Devco, it becomes quite clear that Devco was primarily created for political purposes. From the beginning, the corporation was rife with political patronage and nepotism and certainly did not operate as a viable commercial venture might have done. The reality is that due to the ineffective management of Devco by the federal and provincial governments over the years, Devco is not and never will be a viable crown corporation. It is simply sucking millions of dollars in subsidies every year. Since 1967, the government has provided over $1.5 billion in subsidies. In all fairness, taxpayers cannot continue this kind of subsidization of Devco.
Bill C-11 starts the process of privatization by giving legislative authority for the sale of all, or substantially all, of Devco's assets. I am very pleased to see that there is an end in sight to the government's responsibility for Devco. The federal government should no more have been in the business of coal mining in Cape Breton than in the business of oil and gas in Alberta. These reserves of coal in Cape Breton and oil and gas in Alberta are under the exclusive jurisdiction and ownership of the provincial governments. The federal government should certainly not be interfering in those territories.
Yet what may not end is Canadian taxpayers losing out on the deal. As a crown corporation, all profits from the sale of company assets should return to public coffers. That is what should happen.
I am not convinced that that is what the government has in mind for this legislation. There are some very interesting holes in the bill that could be conveniently filled through more patronage and more Liberal back scratching.
For example, subclause 2(2) of the new bill calls for subsections 99(2) to 99(5) of the Financial Administration Act to not be applied to the disposal of Devco assets. I cannot help but wonder why it is that the FAA needs to be suspended for this sale to go through and, more important, what is going to replace those accountability controls that are provided for in the Financial Administration Act. The FAA ensures that a sale such as this happens in an open and accountable manner. If those restrictions are removed, what will control such issues as who gets the successful bid and did they pay a reasonable amount for the assets? Was the transaction made with best value for money interests? Will the money return to the public coffers?
Devco has historically been rife with patronage and nepotism. It is crucial that this last transaction be done properly, in an open, honest and accountable manner with the best interests of all Nova Scotians and all Canadians in mind, not just the Liberal interests.
Another concern I have is that currently only bidders and cabinet have access to the bidding process. No one else can get information about how much the assets are worth or, for that matter, what level of liability exists on those assets. How will we know if the final price is truly reflective of the value of the assets?
Not all of Devco's assets are no longer viable. The Donkin mine, the international pier and the railway system are all functional. After having invested millions of dollars over the past 30 years and, thanks to the government, never seeing any kind of economic return on this investment, I believe that Canadians at least deserve to know that Devco's death will not serve the same political purpose that its birth and life did.
Another concern of mine is that the government is proposing to entirely repeal section 17 of the original bill. This is the section under which the grievances have been filed and certainly around which most of the controversy exists. This section legislated that in the event of a mine shutdown or sale the government had to do everything in its power to mitigate the effects on miners and their families. Something must replace this protection for the workers and their families, but I cannot help but wonder why the government seeks to remove this clause. Is it concerned with ongoing lawsuits or does it just want to wash its hands of the entire mess regardless of the effects on Cape Breton?
Whatever the reasons, certainly it is reasonable for the unions, the miners and their families to expect the same kind of protection as long as some of the Devco empire still exists. If that protection was reasonable in the old act, it should continue to be reasonable in whatever replaces that old act until Devco and its assets no longer exist.
The Reform Party is very sensitive to the needs and fears of Devco families and certainly we do not want to cause them unnecessary hardship. However, the sale of Devco must take place if Nova Scotians are ever going to get out from under the control and dependency of the federal government.
Unfortunately there are a few complications that might make the sale difficult. For example, the accumulated liability of the company is estimated at around half a billion dollars. The majority of that liability comes from ongoing arbitration regarding workers compensation, severance payouts, as well as other workers' concerns as a result of section 17 of the old act. At least this element of the liability is known.
What is not known is what the environmental costs and liabilities may be in the future. Cleanup of the Devco site has been budgeted by Devco to cost $110 million. However, as with most things where the government is involved, the price tag will no doubt actually be much higher than that. One only has to look at the history of the Sydney Steel mills and the Sydney Tar Ponds to see the potential environmental liability could be much higher.
The successful buyer of Devco might not have to pay the liability as part of the deal and likely no one would bid on the Devco assets if that liability were to go with the assets of the company. Regardless of who buys the company, somebody will have to pay for the liability, whether it is the taxpayer or a private company. Inevitably it will be the federal government, which of course is the taxpayers of the country, that will be responsible for whatever the real liability of Devco will be.
As if past costs were not enough, the taxpayers will continue to be on the hook for many years to come. Bill C-11 addresses any future lawsuits against Devco and provides reassurances that regardless of the state of Devco the lawsuits will stand. However, instead of suing Devco, instead the government and therefore the taxpayers will pay the price. According to the bill, there is no finite end to this arrangement. Even though Devco may no longer exist, no doubt it will remain a fixture on the taxpayers chequebook for many years to come.
My sense is that Cape Bretoners and many maritimers are very concerned with what they see happening to their way of life. I do not blame them. It must be a terrible worry and a concern to see the industries and way of life that generations have come to know, appreciate and develop disappearing. I do not believe that the maritime economy and way of life needs to be put on the endangered list quite yet or that Atlantic Canadians need to depend on the largesse of the federal government in perpetuity.
The Reform Party is sympathetic to the concerns of maritimers and we believe that Atlantic Canadians are poised to take advantage of a rising economic tide. Rather than being caught in a whirlpool of discredited, backward-looking Liberal economic development policies that only pull maritimers down, Atlantic Canadians are looking toward a wave of economic and social progress based on new ideas and new politics.
This new direction represents the foundation of a new growth strategy for Atlantic Canada, a strategy that offers tax relief to the many instead of subsidies to the few. It includes new ways that are free of Liberal patronage and corruption to attract private as well as public capital to rebuild the east coast infrastructure, from ports, to airports, to short line railways, to shipyards, to highways both traditional and electronic.
It includes rebuilding the old trade routes to New England and across the Atlantic to Europe which free trade is now reopening. It includes getting the financial houses of the Atlantic provincial governments in order by throwing out patronage infected spend and tax regimes and replacing them with a government committed to controlling spending, balanced budgets, lowering taxes and paying down debt. It promotes the attractiveness of the east coast as a place in which to live and to raise families in combination with excellent education institutions as the foundation of the knowledge based industries of the 21st century.
I have been to the east coast many times and I have family there. My son lives in Nova Scotia and has for many years. My colleague, the hon. member for Okanagan—Shuswap, visited the Devco operation a number of times, went down in the mines and spent a lot of time with the unions that were involved in Devco and the shutdown. Therefore we do have some familiarity with the issues around Devco and around the economy of Cape Breton and Nova Scotia.
I have always said that if I was to choose a place to live in Canada, other than my native Alberta, it certainly would be the province of Nova Scotia. Its majestic beauty, its welcoming people and the resilient spirit of its citizens are characteristics of Atlantic Canada and certainly Nova Scotia. It is truly amazing that maritimers have managed to maintain their pride and dignity through years and years of Liberal and Conservative patronage and policies that give birth to that kind of government intervention.
The Reform Party believes that the efforts of Atlantic Canadians, not bureaucrats or politicians from the federal government, can and will revive the Atlantic economy.
This bill is a starting place to begin giving over control of the economy to Atlantic Canadians and away from the Liberal government's greedy hold on an enterprise that was never meant to be profitable. If it had been economical, Nova Scotians would have developed the project successfully. From the beginning, it was simply an exercise for the Liberals to win votes; votes won at the cost of the well-being and economic stability of an entire community. So much for responsible government.
On March 23, 1992 the Liberal member for Cape Breton—East Richmond, Mr. Dingwall, argued against the privatization of Devco. I think the following quote gives some idea of the mentality of Liberal thinking in that part of Canada. He said:
—to privatize Devco, to give it to his friends—that kind of (an) individual to come in and be the sole operator of a coal mine, to strip it down to sell off its best parts and make a million dollars or more and then walk away from it in five years, is privatization which I would never support.
Perhaps the Liberals have changed their definition of privatization since then, but in my mind it is exactly the kind of action that the Liberal member described that we are facing without stricter controls in the legislation.
I cannot support the bill as it exists now because although I agree that Devco must be privatized, it must happen responsibly with open, honest and accountable procedures. Until changes are made to the bill to ensure an accountable process, I cannot support the bill and I urge other members of the House to do the same.