Debates of May 15th, 2000

Canada Transportation Act

[Some hon. members]

Nay.

[The Deputy Speaker]

In my opinion the nays have it.

[An hon. member]

On division.

(Motion No. 1 negatived)

[The Deputy Speaker]

The next question is on Motion No. 3. Is it the pleasure of the House to adopt the motion?

[Some hon. members]

Agreed.

[Some hon. members]

No.

[The Deputy Speaker]

All those in favour of the motion will please say yea.

[Some hon. members]

Yea.

[The Deputy Speaker]

All those opposed will please say nay.

[Some hon. members]

Nay.

[The Deputy Speaker]

In my opinion the nays have it.

[An hon. member]

On division.

(Motion No. 3 negatived)

[The Deputy Speaker]

The next question is on Motion No. 4. Is it the pleasure of the House to adopt the motion?

[Some hon. members]

Agreed.

[Some hon. members]

No.

[The Deputy Speaker]

All those in favour of the motion will please say yea.

[Some hon. members]

Yea.

[Some hon. members]

All those opposed will please say nay.

[Some hon. members]

Nay.

[The Deputy Speaker]

In my opinion the nays have it.

[An hon. member]

On division.

(Motion No. 4 negatived)

[The Deputy Speaker]

The House will now proceed with the motions in Group No. 2.

[Bev Desjarlais, NDP, Churchill, MB]

moved:

Motion No. 5

That Bill C-26, in Clause 17, be amended by replacing line 29 on page 21 with the following:

“to which are attached more than 10% of the”

Motion No. 6

That Bill C-26, in Clause 17, be amended

(a) by replacing lines 1 to 3 on page 22 with the following:

“than 25% of the votes that may ordinarily be”

(b) by replacing lines 14 to 16 on page 22 with the following:

“votes to not more than 25% of the total number of votes”

(c) by deleting lines 18 to 22 on page 22.

Mr. Speaker, Motions Nos. 5 and 6 in Group No. 2 have been up for much discussion during the whole airline merger debate. They specifically deal with the ownership of shares.

Motion No. 5 deals with the 10% ownership share in Air Canada. We all know why the 10% was initially put into the first Air Canada Public Participation Act legislation. It was to ensure the broad ownership of shares within Air Canada and to ensure that Canadians had an opportunity to be very involved and to give a chance to people throughout the nation to do that.

Motion No. 6 deals with the 25% ownership rule. I propose to keep the Air Canada share ownership limit at 10%. The new legislation changes it to 15%. I want to entrench the foreign ownership limit, currently at 25% in the legislation. As was indicated by the member from the Canadian Alliance, they do not care one way or another if foreign companies literally own everything in Canada. They make no bones about it.

Quite frankly, I do care. I care that Canadians have control over crucial elements in society; over transportation that needs to be provided to all of Canada, not just Vancouver, Toronto, Calgary, Edmonton and Halifax. We are talking about the whole country. We want to make sure that we have control over companies that benefit from the opportunity of providing a service in Canada. As a result, we believe that in a crucial industry such as our air industry there should be limits.

Right now the Minister of Transport and cabinet have the power to increase the foreign ownership cap up to 49%. The New Democratic Party is not opposed to increasing foreign investment in Canada but we think the decision should be made in consultation with parliament.

It is interesting to note that members of the Canadian Alliance are always saying that everything should come to parliament and that the government should not be doing this or that. In this particular case, because it is allowing foreign ownership to take over everything, they do not care if it comes to parliament. Let the governor in council order it up to 49%.

Entrenching the 25% limit in the legislation would require another act of parliament in the future to change it, guaranteeing that it would be voted on and that all Canadians would have a say as to whether or not they wanted to see ownership of their airline either increased to 49% or increased to 100%. At least Canadians would have a say through their members of parliament.

Bill C-26 will increase Air Canada share ownership from 10% to 15%. We propose leaving it at the 10% which was formerly in the legislation. Raising this to 15% opens the door for a non-hostile takeover attempt. Many industry stakeholders have expressed concerns about allowing Air Canada to fall under the sway of a dominant shareholder. We agree with stakeholders that the public interest is best served if Air Canada remains under the control of a broad cross-section of Canadian shareholders not a single dominant shareholder. This motion would close the door to that dominant shareholder scenario.

Further, it is of real importance to recognize that Canadian taxpayers over the years have been very supportive of Canadian Airlines and Air Canada. As a result, I do not think we should ever look at Air Canada or Canadian Airlines, or any company that has had much support from Canadian taxpayers, the same as any other, just up for sale, willy-nilly to whomever. Canadians do have a real interest in the corporation and should have a say over what happens.

[David Collenette, Liberal, Minister of Transport]

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.

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

Mr. Speaker, I am pleased to speak to the second group of motions presented by my colleague from the New Democratic Party, the hon. member for Churchill, to the Standing Committee on Transport.

What I want to do is to quickly remind the minister, and everyone else—I hope no one will think we are suffering from collective amnesia—that the Bloc Quebecois position on this 10% rule on individual share ownership was that it was a major point, in order to avoid having an individual or a group of individuals take over control of Air Canada.

If this 10% rule had been introduced when Air Canada was privatized in 1988, we were convinced, and we still are, that this rule would still be meaningful.

For the benefit of our audience, I would like to dispel any ambiguity. The Bloc Quebecois would be in favour of Air Canada taking over control of Canadian International, rather than the bid from Mr. Schwartz, representing Onex, that friend of the Liberals and Liberal bagman. It has been discovered that Mr. Schwartz had made a considerable contribution to the Liberal election fund in 1997.

I will remind all hon. members that the Bloc Quebecois was not at war with either Mr. Schwartz or Onex. The Bloc Quebecois position was clear at that time. We felt, and still do, that the Onex bid to acquire Air Canada was illegal, and this has been confirmed by a Quebec superior court decision. Although the package was wrapped up earlier at a meeting with the Minister of Transport, we believed that the Onex offer was illegal. We had nothing against Mr. Schwartz or Onex.

The Bloc Quebecois even introduced a motion on an opposition day asking the government to not increase the rule of 10%.

As I mentioned earlier in my remarks on the first group, a bill is a set of compromises. We think that the amendment proposed by my colleague in the New Democratic Party to maintain the 10% rule is reasonable. We support her proposal.

I also want to say to the government that the compromise in Bill C-26 of having 15% individual ownership is also satisfactory. If the government had followed the lead of the Liberal majority on the Standing Committee on Transport, which wanted to increase the figure to 20%, the question would be different. Twenty per cent of the individual shares of Air Canada gave effective control, whereas 15% does not and ensure sufficient protection.

As to the second motion in this second group, I inform my NDP colleague that we will be favourable. Unlike our Canadian Alliance colleagues, we opposed the fact of raising the figure for foreign participation in controlling Air Canada shares beyond 25%.

It is odd to see Quebec sovereignists like us defending Canadian sovereignty against the Americans. This is why, although the Liberal majority on the committee encouraged it to go as high as 49%, we are happy to see that the bill limited everything to 25%.

However, the minister is keeping for himself in the residual powers, the option of increasing it by order in council with the support of three ministers of the crown. We feel that 25% foreign control is enough to maintain Canadian and Quebec funds in the new Air Canada. For all these reasons, we support the two amendments moved by our NDP colleague.