Mr. Speaker, I would like to speak to the second group of motions.
Motion No. 5, in effect, would negate the point in the bill to increase the shareholder limit from 10% to 15% in the Air Canada Public Participation Act. Without doubt this was certainly one of the two pivotal issues that came to the fore during this entire restructuring, the other being the use by the government of section 47 of the Canada Transportation Act.
As members know, the superior court in Quebec made a ruling about one of the private sector proposals put forward by Onex Corp. The court said that technically it was against the law, and the inference was that it should not proceed. Onex decided not to appeal the decision and, as a result, the remaining private sector option, the Air Canada offer, which has been implemented in the last few months, was the one that came forward.
There are some issues as to whether it is a good idea to have limits on individual shareholder participation in these companies. When Canadian National and Air Canada were privatized, as well as some other crown corporations, it was felt that by having a shareholder limit of 10% or 15%, as in the case of Canadian National, this would somehow dissuade a foreign takeover. We could understand this in the case of Canadian National because 65% of the shares of Canadian National are owned by people outside Canada. Obviously there is a 25% foreign ownership limit on Air Canada, and on Canadian airlines in general. Therefore, the argument that there could, in effect, be a de facto foreign takeover is really not valid.
The limit could increase to 20% or 25% and have foreign equity and voting control, but still remain Canadian controlled. This happened with American Airlines when it injected money into Canadian Airlines some years ago. It had 33% of the equity and 25% of the voting shares. That it had to be kept at 10% to prevent a foreign takeover became a very emotional issue during the debate.
Let us not kid ourselves. This kind of rule makes it very difficult for outside groups to exercise normal business behaviour and vie for control of companies. This protects existing management. It entrenches existing management and existing directors.
Air Canada argued very strenuously that it would not want it to go above 15%, and the government reflected upon that. Both committees of the Senate and the House wanted the limit to go up to 20%, but the government took the view, given all of the turmoil created with the section 47 process, which I think was very valid because it did find private sector solutions, that Air Canada should be allowed to digest this acquisition without the fear of a third party coming along and staging a raid on the company.
Therefore, the government agreed to increase it to 15%. Air Canada is in agreement with that. I do not think it should be debated at this point in time. It will be for politicians in the future to decide whether the arguments remain valid. Certainly, for the next 18 months to two years during this restructuring process, this is something we should put aside. It was a very difficult issue to deal with, a very emotional issue to deal with and as a result I think we should vote this down.
Similarly, Motion No. 6 should be defeated because its purpose is to negate the government decision to bring the provisions of the Air Canada Public Participation Act in line with the Canada Transportation Act.
Failure to implement the proposal in Bill C-26 is to make it possible to increase the limit on foreign ownership by regulation for all of the industry except Air Canada. The motion means that it would continue to take an amendment of the act to increase Air Canada's limit on foreign ownership, an unfair burden on a national carrier.
I think this should be rejected. I would hope my friends in the New Democratic Party would understand that this is something that was agreed to with Air Canada as part of the deal. I know they have strong feelings for 10%, but I would ask them before they force a recorded division to reflect upon this because the 10% clause has been raised to 15% with the agreement of Air Canada.
I do not think it is for us as parliamentarians to disagree with a deal that has been negotiated between the Competition Bureau and Air Canada to put this matter to rest. It is not as if Air Canada is asking any one party in the House to carry its cause. In fact, I think that when the president of Air Canada came to the committee he made it quite clear that he accepted 15% and would live with it.
I believe that these two motions should be rejected. With respect to Motion No. 6, if my friends in the New Democratic Party are concerned that somehow there is a Trojan horse, I have said consistently that it is not our intention to increase the foreign ownership of the airlines beyond 25%. We already have the statutory authority to go to 49%. We do not intend to do that because we believe, Canadians believe and I know that the New Democratic Party believes that one of the cardinal issues we have to face is the growing foreign domination of our economy, and we do not want that to happen with the airlines. We are in agreement with the NDP on that point. However, as I have mentioned, if we fail to make the change in clause 17 we would not even be allowing Air Canada the benefit of having the 25% foreign ownership that others are entitled to. I think we have to treat Air Canada with some degree of fairness.
This is not a question about losing control. Neither of these amendments would do anything. They would not change the fact that the Air Canada regime will have some stability throughout this re-organization process. Certainly, with respect to the 25% issue, members of the committee, in fact members on my own side have said that it should be raised to more than 25%. I have discussed it with cabinet and we believe it should remain at 25%. We are not playing games. We will not raise it to 49% next week. I would ask my friends in the New Democratic Party, once again, to continue their great co-operation on this matter and agree to allow this particular vote to pass on division so that we do not unduly delay the bill any further.
Every day that the bill does not get dealt with gives licence to the monopoly tendencies of Air Canada to push the envelope. Notwithstanding what it may say, it is natural that when a corporation has that much authority it likes to test it in the marketplace.
We have to get this bill to the other place so that it can deal with it. Right after the break it should be in place. Then the competition commissioner can start to use the cease and desist powers, which will give absolute comfort to all those new entrants who come into the market. I want to talk about that at third reading.
I would ask my friends in the New Democratic Party to show some good sense and allow this to pass on division.