House of Commons Hansard #89 of the 37th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was air.


The House resumed consideration of the motion that Bill C-31, an act to amend the Export Development Act and to make consequential amendments to other acts, be now read the second time and referred to a committee.

Export Development ActGovernment Orders

3:05 p.m.


Robert Lanctôt Bloc Châteauguay, QC

Mr. Speaker, before statements by members and oral question period, we were talking about EDC's environmental terms of reference. As I mentioned earlier, the auditor general said that environmental standards were missing from the terms of reference and that the terms themselves were not clear. I also said that this framework was vague and timid. Of course, EDC sets no objective for this environmental assessment, which is to ensure that the projects approved are respectful of the environment.

In 1999 the committee passed on to EDC the concerns that had been raised and told it that it was vital that the environmental terms of reference contain well established criteria and standards. The auditor general also said that there must be standards and criteria. All the government has done is to make it clear that it will not enforce the Canadian Environmental Assessment Act. Once again, it is being left up to the crown corporation, in other words, to its directors, to determine what those standards and criteria will be. When the government says it amended this bill, that is so much nonsense. EDC still has responsibility. As I mentioned earlier, there is a lack of transparency. The same old people will still be doing the same old things.

What the bill states, quite simply, is that we need to look at the environmental aspects. This is the only statement made, with no specification on what is important, namely to establish criteria and standards solidly based on existing legislation. It would have been so easy just to apply the Canadian Environmental Assessment Act.

The auditor general has also referred to the sloppiness in projects. Out of 25 analyzed and examined by her, 23 had their environmental impact poorly assessed, if at all. On examination, we realize that it is not because a project is being carried out in a short period that its object is viable from the environmental point of view. Why? Because right from the start the agency eliminated two-thirds of projects when providing insurance or loans, saying that there was no risk, fewer problems because they were financing the credit and wanted to be sure they would be repaid. There is, therefore, no impact study. There is no study to see what environmental standards and criteria there can be.

EDC always comes back to this test of influence. The purpose of this is to determine whether it can exercise any influence to reduce the risks posed by a project. It carries out a detailed environmental examination of a project only when it determines that risk and influence are factors. One can imagine that it is not because a project is located outside our country that it will have no impact on the environment or that we will be reimbursed. It is not because the deadline is short that there will be no impact on the environment, on the contrary. Each case should be evaluated not according to its duration but according to whether it has an environmental impact.

As for the 23 out of 25 projects poorly assessed or unassessed, I believe it is clear that the EDC's internal methods are greatly lacking. There was no method for determining whether the harmful environmental impacts could be justified.

The government missed a fine opportunity to make a more transparent bill with real environmental standards. We know very well nothing has changed. They included this reference in the bill, however the focus must be on standards and criteria to be sure they are specified. This will enable the directors to set a course of conduct that takes the environment into account.

As to the release of information, there is another important matter and that is the lack of transparency. This is so important that I will provide a few examples of projects.

There is the Antamina mine in Peru, which will level for ever more eight peaks of the highest mountain range. The inhabitants complained to the World Bank about the environmental risks posed by the mine, insufficient compensatory measures and the displacement of people.

The Profertil fertilizer complex in Argentine has been closed twice because of ammonia leaks. Residents are concerned about the dangers created by the transportation and storage of chemicals and by dumping into the ocean.

There is another example. The Bulyanhulu mine in Tanzania has evicted thousands of small operation miners, who had their own piece of land. Environmentalists are concerned about potential heavy metal and cyanide contamination. Amnesty International has reported that miners were killed in the implementation of the eviction measures.

The government talks of transparency and of the environment. We must be totally informed in the case of a project such as this before funds are granted.

The EDC works with the information at hand. It takes the information provided by the promoter and what it has itself. This is not enough. They must go much further. Environmental criteria and transparency are essential.

As for transparency, how is a funding project prepared? Before funding is granted, the projects absolutely must be examined. Studies have to be done. Each project must be studied, not according to its length, but over all, with the accent on environmental effects.

Of course, this lack of transparency and the fact that the Access to Information Act cannot be used leave us rather perplexed about the decisions that can be made.

We are not told in Quebec and Canada which projects were involved and how much money was provided.

We know that this crown corporation is self-financed. However, we do an enormous amount of work at the international level. For this reason, words alone are not enough when it comes to the criteria raised by the committee and the auditor general, which include transparency, disclosure and protection of the environment. They must translate into action. We need to be seen as a country and as a people for whom the environment is important. We must promote environmental protection.

The same can be said for human rights, an issue raised before the committee in 1999. We said how terrible it would be if we ignored them, and yet, that is what we are doing.

We need to have this assurance around the world, and state what is important before the EDC invests in expansion. We cannot, when outside of the country, close our eyes and lower our standards because we are only required to obey the host country's laws and regulations. We have our own law. We have the opportunity to raise standards, and we are not doing it.

I firmly believe that the reason the Bloc Quebecois expressed serious reservations regarding the EDC and human rights is that there is something missing. There is something missing from the bill, but there was something missing before, and it is still missing now.

Even though in its assessment of the political risks the EDC does not take into account the human rights situation, the issue should not be dealt with merely through discussions. We did that in committee and we stressed this aspect, but it is not provided in the legislation. How can we be taken seriously if we show that we do not even comply with the international agreements signed by Canada? This is not provided at a time when we have the opportunity to do so in a bill as important as this one. We help our exporters, but we forget really important things like this.

The Bloc Quebecois feels that this bill is too weak from an environmental point of view. It provides no guarantee of an effective environmental assessment and it leaves too much leeway to the EDC in the determination of the criteria to be complied with.

It is silent on disclosure. It would have been very easy to provide for the disclosure of information, but clause 12 of the bill excludes the possibility of using that provision of the Access to Information Act. I should point out that a crown corporation is not subject to the Access to Information Act. This should be noted because it has not been mentioned.

I now want to get back to clause 12. It refers to the Canadian Environmental Assessment Act. Again, that act was excluded. While it is true that a crown corporation is not subject to this legislation, this was reinforced by saying that we do not want to use it. Yet, this would have been the legislation to use. We want to implement it in Canada. Why, when we provide funding, when we give money or assurances, should we not apply our own criteria? However we are not doing it.

Moreover, the bill does not include punitive provisions should the EDC not respect its environmental framework. In this regard, Quebec imposes fines and even jail terms on officials who are found guilty of negligence in environmental matters. This is an important step by Quebec. Why not do the same, particularly when we are trying to do something at the international level, to show that Quebec and Canada care about the environment?

As I said earlier, we are watering down environmental standards by not making sure that projects comply with more than just the standards of host countries. Again, this was a perfect opportunity to show that when we want a bill like this one, we should not give priority only to trade and international issues, but also to the environment. We must stop watering down our requirements. We must use our own standards and criteria, instead of those of host countries, and we must stop yielding to the will of EDC officials.

As I mentioned, this bill also excludes any possibility of making the EDC subject to section 12 of the Canadian Environmental Assessment Act. All this undermines the EDC's credibility.

The bill could have been used to make the EDC much more credible, not just for Quebecers and Canadians, but for all those who are going to do business with a Canadian crown corporation with criteria and standards and an openmindedness, not just a blind openmindedness, not just trade or the economy.

Earlier, I heard the parliamentary secretary say here in the House that the exporters who do business with us are happy. I am happy that exporters are happy, but this is not just about exporters.

The reason this amendment to the Canadian Environmental Assessment Act was proposed is that some people were a little less happy. I am talking about the environmental groups who brought pressure to bear, who took action and who obtained figures, information and statistics. They brought to light such important factors that finally there was an opportunity to make all this applicable, with criteria, specific standards, and also, I believe, the possibility of transparency at last. The government passed it up.

The government would rather not talk about cases such as those I mentioned earlier, in Tunisia and in Argentina. There is an international impact when eight mountains, one of the great chains in the world, are being levelled through the auspices of the EDC. We are taking part in this. I find it somewhat embarrassing. There was an excellent opportunity to do something about situations such as this.

There was an excellent opportunity to use the Canadian Environmental Assessment Act. One of the features of this act is that only federal authorities are subject to environmental assessment. The federal government is therefore the promoter of whole projects or parts of projects and must therefore do an environmental assessment. Help for a project may take the form of funding, a loan guarantee, or financial aid. This is basically what the EDC does, but it does it outside the country for exporters. This bill could therefore have been amended or regulations included to specify environmental criteria or standards to be used.

When we are told that, with international standards, the EDC can say “We will have this or that standard in this or that country”, I believe this was the opportunity to do the exact opposite and say “We are not going to lower our standards”. For us, that is important.

If we, the countries of North America, do not specify what our standards are throughout the world, and what significance we wish to attach to them, it is easy to imagine what sort of image of us this projects. We are said to have a Canadian Environmental Assessment Act, that we carry out impact studies, as soon as a project comes under federal jurisdiction, yet outside the country we do not apply the same standards.

People elsewhere, who are not familiar with Canada's laws and regulations, say to themselves “They keep on talking about the importance of the environment, they go to the UN, they go everywhere. That is what they say, but they do not do it”. That is the image we are giving to the public, including the people of Quebec.

Yet with the Canadian legislation and Quebec's environmental assessment legislation and office for public hearings, we are ahead of the others. Our legislation is far stricter because we can even send heads of companies to jail for harming the environment.

We know about it therefore, we Quebecers with our legislation, and Canadians with theirs. Yet imagine what image we project outside the country.

They say anything, because they do not think the laws here are as stringent and because we do not apply them internationally.

It is clear that without such standards, given that we cannot strive to achieve the final results attainable with these projects, because the Access to Information Act cannot be used, after this amendment to the act, be sure what they do outside? How much are they giving all these exporters? This is a large corporation, which must show people outside the country who Quebecers and Canadians are.

Exporters must use the corporation to show who we are. Something more than mere financing must to be involved. Even the World Bank does impact studies when it grants a loan. Why would the EDC not follow its example? These are the questions we have. This does not drop out of the sky or from today's debate. It comes from committee and the auditor general. Requests are made.

They cannot say they did not know. What is the point of leaving it up to the directors of the EDC? I ask the question because it intrigues me.

This was a good opportunity to get things right with a crown corporation that grants loans. This crown corporation has a certain reputation, thanks to advertising, however, it should reveal exactly everything that it does. I am sure that some who are listening to us wonder what the EDC does. What is it, what does it do? Not all of our fellow citizens know exactly what the EDC does.

We do not know what it can do, because it only provides us with the information it wants us to have. Here was an opportunity to include the Access to Information Act in order to verify what is being done with this money. Here was a chance to see how we were perceived abroad, how many projects were finished, how many succeed and which ones did not succeed. Do we get back more than we put in? Surely, because in the end, there is a profit. I think the assets have reached some two billion dollars.

That is a lot of money. It would enable Quebec exporters to promote their projects. How many projects have there been from Quebec? This request was made of the EDC. They refused to provide the information. They refused to say how many projects the EDC had given. They have refused this and we cannot invoke the Access to Information Act. If we had this information, we could show people that we could find out exactly what the EDC does. We would have known what kind of projects it gets involved in and if it really respects the environment.

I was referring to the influence test. Nor is there is any guarantee that it has been abandoned.

This is something that is done by EDC officials. The impact may be minimal, average or significant. The possibility of influencing a project is assessed. They can say “Make it a little more acceptable”, but these people are not experts. They base their decisions on standards that are, again, set in other countries which often have standards and criteria less strict than ours.

Maintaining such a test of influence makes the whole process arbitrary. It is indeed very arbitrary. We could have a specific framework, but it is not the case. We have no specific criteria and standards. Because we cannot know since we do not have access to them I wonder whether the criteria are the same from one country to the next or from one project to the next. Could we even use them beyond what is allowed, by awarding contracts to people whom we know, for example, or by subjecting an exporter to criteria not as strict as others so as to favour him? We do not know.

The transparency that was supposed to be introduced just is not there. Yet, the government gave the following response to the committee's report, in June 2001:

As Canada's public export funding organization, the EDC has an obligation to conduct its activities in a manner that benefits Canada and it must fulfill Canada's international commitments.

So, we are talking about human rights and environmental rights.

The government recognizes that the information currently being disclosed by the EDC is in a very compact form, but it admits that the corporation has made a lot of progress in the communication of information.

How can the government see this? We cannot use the Access to Information Act. When we make direct requests, we are denied the information.

In its response given on June 26, 2001, the government said the following:

The government also endorses the view that the EDC should consider setting up a position of ombudsman. The ombudsman would deal with issues of accountability, fulfillment of obligations and access to information.

I read the bill. There is no mention of this. This comes from a response to the committee's report. The response was dated June 26, 2001, but this is nowhere to be found in the bill. The Export Development Corporation was chosen because it was a crown corporation and reflects Canadian environmental values in its overseas projects. I will not repeat everything I just said, but the government wants to see Canadian values reflected abroad, and is not even using the standards and criteria in the legislation we already have. It is left entirely up to the directors, and the approach taken for each project is probably different.

The government responded as follows:

It undertakes, within twelve months, to give the environmental assessment process legislative force. The options are to include a provision concerning the terms of reference in the Canadian Environmental Assessment Act, or to include regulations concerning the EDC in the act.

If it truly had a choice, all it had to do was use the Canadian Environmental Assessment Act and then, through regulatory amendments, do what had to be done. It failed to do so. There is nothing in the bill.

Then we were told:

The government agrees that environmental assessments should be made public early in the project funding approval process.

The minister kept his promise to introduce a bill within 12 months, but the bill addresses none of these other concerns.

How can we approve such a bill? If the government had had the courage, the understanding, to use the existing Canadian Environmental Assessment Act, if it had done what the committee had asked, if it had addressed the concerns of the auditor general, this bill might finally have provided us with a chance for access to information about what the EDC is doing, and more particularly it might have provided an opportunity to respect standards and criteria.

Export Development ActGovernment Orders

3:35 p.m.


Judy Wasylycia-Leis NDP Winnipeg North Centre, MB

Mr. Speaker, I am pleased to take part in this debate on Bill C-31. I would like to ask a few questions and to express, as the hon. member for the Bloc Quebecois has, opposition to this bill for certain reasons.

It is a good opportunity for us to talk about the broad issues of international trade and human rights in the context of the bill. I want to put on record the concerns of the New Democratic Party with respect to Bill C-31 and to explain why we are opposed to it. We also have some recommendations on how to improve the legislation.

As my colleague from the Bloc who just spoke indicated, Bill C-31 has missed the mark. We have an opportunity before us today to address some very significant issues with respect to the environment and human rights from an international perspective, and an opportunity to convey and carry forward our sentiments and values to the international scene. We have failed to do that in the bill.

The government failed to heed the recommendations of a number of organizations and members of parliament who have pressed hard for a strong piece of legislation in this regard. It is by all accounts a weak bill and a missed opportunity in terms of international trade.

Time and time again in the House and outside the House it has been said that we have an opportunity now before us with the bill to develop and pursue Canadian trade in a manner consistent with Canada's obligations to protect the environment and human rights. That seems to be the essence of the task at hand and the very purpose of the bill.

It is legislation that has been reviewed for three years. It was intended to address major concerns with respect to Canada's role in trade on the international scene. It was to ensure consistency with trade and our need to deal on an economic basis with other nations vis-à-vis our longstanding traditions and commitments with respect to human rights and the environment.

The bill is also partly in response to recommendations made by the auditor general in May 2001 and should be seen from the perspective of whether or not it meets the test of answering the criticisms of the auditor general made at that time.

We have heard from many speakers today about the weaknesses of the bill. I will reiterate some of those from the perspective of the New Democratic Party. Our criticisms are best summed up by a statement issued a week or so ago by a coalition of organizations that has been monitoring the legislation over a period of time and has developed considerable expertise in the area.

I am referring to the coalition of 17 non-governmental organizations that proposed some very significant suggestions around the Export Development Act and that today are expressing grave concerns about the failure of the bill to take into account those concerns and those suggestions.

On September 21 the coalition of NGOs reacted with very grave concern and disappointment that the concerns it had put forward regarding Bill C-31 were not taken into account. The coalition co-ordinator of the NGO working group, Émilie Revil, said:

We need to amend the Act to make sure the Export Development Corporation upholds Canada's commitments to protect the environment, human rights and the public right to basic information. The changes presented yesterday will have negligible impact on the daily operations of the Corporation. They leave a proven bad driver behind the wheel.

That says it all in terms of the expectations around the bill and why it falls short in terms of obligations and responsibilities. It was an opportune moment to address those very concerns. There were suggestions made about how that could have been done.

It is not too late to do just that. There are changes that could be made to the bill to address those concerns and show good faith with respect to the community that has been working so long and hard on good legislation. Canada must continue to play a leadership role when it comes to international trade and to our export development corporation. We must ensure that we are always mindful and respectful of our obligations to preserve and protect the environment and to enhance and uphold human rights.

The three areas that the NGO community recognized as shortcomings in the bill are the same as those enunciated by hon. members from the Bloc and ones that the New Democratic Party also feels strongly about.

The first concern is with respect to the environment and whether the bill actually has a meaningful mechanism in place to carry out proper environmental assessments of any projects undertaken by the Export Development Corporation. The answer by all accounts is no. The bill does the opposite of what one would expect to be a reasonable course of action in terms of ensuring an independent environmental assessment.

It proposes to keep it as an in house function of the Export Development Corporation as opposed to making it subject to a complete review under the Canadian Environmental Assessment Act. That is a fundamental point in the debate and there is no reasonable explanation of why the bill does not ensure that path is followed.

There is absolutely no question about the need for Canada and for the Export Development Corporation's environmental review framework to follow this long established tradition. This framework is not new or unique. It is a model that is used by other jurisdictions. I think specifically of the export credit institutions in the United States and Japan which follow the idea of an environmental review based on an independent environmental analysis.

The issue of how Canada pursues the path of environmental protection in terms of all activities by the EDC is critical and needs to be addressed by the government through the bill. That was one of the concerns raised by the auditor general in his report of May 2001. It behoves us to try to incorporate that constructive criticism into legislation before us today. The organizations that have spoken out about that point say this very succinctly and clearly.

The NGO coalition calls for the Export Development Corporation's environmental framework to be regulated under the Canadian Environmental Assessment Act. It calls for the mandate of the Export Development Corporation to be changed to ensure that Canada supports and develops Canadian trade in a manner consistent with our own standards and obligations pertaining to the protection of the environment.

My second point has to do with human rights. The coalition of non-government organizations has spoken loudly and clearly on this matter. Others in the House have done the same. We have done it in the Chamber as recently as this past Thursday when my leader, the member for Halifax, raised a question pertaining to a very serious situation known as the Bulyanhulu case, which has been referenced in this debate as well.

Serious allegations have been made in that case where employees of the Kahama Mining Corporation, a subsidiary of Suttion Resources which is now owned by Barrick Gold, in conjunction with the Tanzanian police, buried over 50 artisanal miners by bulldozing over the entrance to the shafts in which they worked.

There is some question around these allegations. As reported in the press there are also those who refute those allegations despite having reports from Amnesty International and other organizations that witnessed developments in this regard.

What is clear in this case is that these allegations must be investigated. There needs to be a full scale independent inquiry into Tanzania to determine what happened, why it happened and what our international obligations are as a result of these developments.

It begs the larger question of what we are doing through the legislation to ensure that human rights are respected and enhanced in all activities of international trade, specifically pursuant to the Export Development Corporation. It has been our expectation, as I assume is the case among other parliamentarians and many Canadians across the country, that the bill should first and foremost stand up in terms of our role and responsibility for the protection of human rights.

The bill does not take those concerns seriously and does not ensure that there are mechanisms entrenched in it to provide for that kind of leadership by the Canadian government to ensure that all avenues are pursued in terms of human rights violations.

The third point, which was also part of the auditor general's criticism of the Export Development Corporation, pertains to transparency and public disclosure. This has been a very important part of our deliberations in parliament of late as more and more Canadians show a concern about democratic traditions being upheld in parliament and in every legislature of the land.

It is important that we take these concerns very seriously and do whatever we can to ensure that the bill before us respects the commitment we make to the Canadian people to be prepared at all times to be fully transparent in our work and ready to disclose in a full and open way the policies, practices, and programs pertaining to the Government of Canada.

It is absolutely clear from various analyses that Bill C-31 fails to entrench the absolute maximum in terms of public disclosure. Despite calls for the Export Development Corporation to be more open in its decision-making process, Bill C-31 places no new requirements on EDC to disclose vital information to the public. In the mid-1980s the Export Development Corporation stopped releasing project related information. I acknowledge that while the corporation is currently drafting its own disclosure policy, potentially allowing for greater transparency, there are no changes proposed under Bill C-31.

Just as I have mentioned with respect to the flawed environmental review framework and just as I have mentioned with respect to the failure to address stringent mechanisms around human rights, there is no mechanism in the bill for dealing with the fundamental question of transparency and public disclosure.

There is also no reason for the government to go slow, to be hesitant in this regard. Public sentiment is with us. People want us to do everything we can on this front. They want us to ensure fair public access in terms of any kind of government program, crown corporation and legislation. It is just a basic fundamental task for us today to try to convince the government to ensure that the legislation respects that principle and to require the Export Development Corporation to disclose basic information. Surely that is not too much to expect.

Those are the three concerns we have. I repeat them once more just by way of summarizing and by way of making a plea to the government to hear these concerns and to act before this debate proceeds much further.

The first is that we have in the bill a clear mechanism for independent environmental assessment so that the workings, the activities, of our Export Development Corporation are consistent with the principles that we all share around preserving and protecting our environment.

The second, and again we make the strongest call possible, is for an enforceable human rights review framework to be included, incorporated and integrated as a part of Bill C-31.

Finally, we in the NDP call upon the government to ensure increased transparency and public disclosure policies as an integral part of Bill C-31. We feel that all these recommendations are supported by the work of the NGO community, by the work of parliamentarians and by the report of the auditor general. The evidence is there for action in those three areas. The bill could be a very important, strong, leading edge piece of legislation if we have the will to make those changes now.

As some of my colleagues said earlier, the bill tends in fact to reduce our policies to the lowest common denominator in terms of such basic issues as environmental preservation and protection and human rights protections as well. Why do we keep doing that in this day and age? Why lower our standards to the lowest common denominator? Why not instead become a world leader in these areas, set the stage and raise the bar on such basic fundamental issues as the environment, human rights and public disclosure? They are fundamental to the values of Canadians today. They are fundamental to the whole democratic process. We urge the government to consider these comments as constructive criticism with the hope that changes can be made to the bill before we go much further.

Export Development ActGovernment Orders

3:55 p.m.

Canadian Alliance

Gary Lunn Canadian Alliance Saanich—Gulf Islands, BC

Mr. Speaker, I am pleased to speak on Bill C-31, an act to amend the Export Development Act. The bill would change a few things. It would change the name of the corporation. It would enable the board to delegate its powers and duties to committees it may establish other than the executive committee. It would require some environmental reviews and an environmental process for projects. Also apparently the auditor general would have the ability to audit the design and implementation of the directive established by the board, at least once every five years.

I will examine these issues in more detail. First, in regard to the name I do not think there is anything too serious there. Basically the modification would mean that the corporation would have the same acronym in both English and French. The new name would be Export Development Canada, which I do not think is too earth shattering.

Let us move on to something more substantive, and that is the Canada Account. The Export Development Corporation assists corporations across the country to secure opportunities and orders abroad. Generally those who apply for loan assistance through Export Development Canada need to meet certain financial tests to ensure that they have the ability to repay it, if it is a loan, et cetera.

However, the Canada Account is a political account. Sometimes those applying do not quite meet the test or there are other reasons. I understand the necessity for it because I do believe there is a purpose for it, however, all decisions on the Canada Account are based purely on politics. They are cabinet decisions and are not made by industry or financial experts or at arm's length. None of this is dealt with in the bill. That is something that I think the government should look at. I understand that it is seldom used, primarily for risky ventures. To give an example, the Candu nuclear reactors were under the Canada Account.

However the account has been receiving unfavourable attention in recent years. Two years ago the Canada Account was judged to be illegal by the World Trade Organization. Nonetheless the government says the account has been amended to satisfy the WTO concerns. It has been referred to as a secret slush fund.

The Export Development Corporation makes deals to the tune of $4.5 billion worth of exports each year. It is a significant amount of money. I suggest that we could remove political decision making from the Canada Account and bring back a more accountable process. Of course that is not dealt with in the bill.

Let us move on to the next area. One of the suggested government amendments would enable the board of directors to delegate its powers and duties to committees that it may establish, other than the executive committee. Right now 13 of the 15 board members are appointed by the Minister for International Trade and the other two, the chairman and president, are appointed by the Prime Minister. This appointed board currently formulates EDC policies and practices and I find that somewhat questionable. It is an unelected board, with all 15 appointments made either by the Prime Minister or the Minister for International Trade, and it now wants to delegate its powers and duties to more appointments, to its committees. The EDC board already has incredible power and influence and it now wants to delegate that down even further, so there are some questions that need to be answered.

Patrick Lavelle, the chairman of the EDC, called for more independence for crown corporations and agencies such as the EDC, stating that the objective of naming directors should be to “get the best people, no matter where they come from”. Mr. Lavelle suggested that EDC move toward privatization, noting that there is a culture of secrecy in government bureaucracies. He stated that there is “an inherent believability in federal Crowns that information is power and increasing its release will just generate unwarranted criticism”.

That puts it in a nutshell. This is the chairman of the EDC who is calling for this. Furthermore he is recommending that Prime Minister create a cabinet post that would make one minister responsible for overseeing all crown corporations, with a parliamentary committee established to provide oversight. What it comes down to on these appointments and committees is that the government is proposing legislation to have the board of the EDC, with its 15 appointees, able to appoint other committees, as opposed to actually bringing back more power to parliament. Right now it is very politicized. I think we could do a much better job.

Again, the EDC is a $45 billion a year operation and one of the big issues is the whole issue that seems to surround the EDC: its secrecy, its transparency, its accountability. If there were ever a time that the Export Development Corporation needed to be there it is right now in the current situation where the economy is fragile at best. If there were ever a time when we needed sound, solid management there for Canadian companies and when we needed to make sure that the EDC is not based on politics and that it continues to help the Canadian economy grow, it is now.

That brings me to my next area and that is accountability. There has to be more accountability in this crown corporation, something that is evidently lacking at present. The government agrees that the EDC should “publicly demonstrate its accountability by reflecting the full range of public policy concerns and its activities and should introduce appropriate transparency measures concerning its activities”.

One suggestion that the government has come up with is to propose that the auditor general audit the design and implementation of the directive established by the board, at least once every five years. I believe that accountability has to happen a lot more often than once every five years. Such audits have to happen annually or at the very least every two years. Given the deplorable misuse of taxpayers' money by HRDC, which is still fresh in Canadians' minds, five years is a heck of a long time between audits and things can go askew. I think audits need to happen a lot more often to ensure that we do not have a repeat of that type of activity.

Furthermore, the Export Development Corporation is not covered by the Access to Information Act. That is a huge bone of contention. In the past the corporation has been accused of keeping billions of dollars in loans secret in foreign countries. In its defence, and I understand this, the EDC says it is restricted by business confidentiality but that it encourages its sponsors to release information about its projects. I understand that.

Businesses do want certain aspects of things kept confidential, but in turn these businesses are asking for public money, public assistance. I think that is where we can draw the line. If a company has business practices about which it needs to be that secretive, then maybe it should be looking at other avenues. I think when a business is using taxpayers' money it has to be completely transparent.

A recent study for the federal government found that crown corporations, including the EDC, should be subject to the Access to Information Act, since access laws encourage organizations to be “demonstrably worthy of public trust”.

The study notes that the reasons for crown corporations such as the EDC being excluded from the law are unclear and that an agency should be subject to the law if the government appoints more than half the governing body. The government appoints them all in this case. We are getting the message.

Another big part of the legislation would be to have full environmental assessments on projects to make sure they meet certain standards. The Minister for International Trade insists that:

This Bill will allow Canada to position itself at the forefront of environmental review policy for export credit agencies around the world.

If we are committed to ensuring the environment is protected while carrying out projects in Canada, should the same not hold true when entering into transactions abroad? EDC has had to defend its environmental assessment framework as recently as April 2000 when it was accused of assisting in some of the world's most environmentally damaging projects. In any event, the government's bringing forward of an assessment review is a positive aspect of the legislation.

The real issue for me is accountability and transparency. In May of this year a report of the auditor general gave a failing grade to 24 of 26 projects backed by the Export Development Corporation. To add insult to injury, Export Development Corporation decided it would not make public details of three of the projects judged to have been improperly assessed under the corporation's environmental review process.

A spokesman for the EDC explained that three clients that objected to releasing details of the projects have “good legitimate reasons”. We will never know the details of projects that received failing grades. We will not know even basic information such as the type of product, the cost or which country was involved.

I will be recommending to members of the Progressive Conservative/Democratic Representative caucus that on balance we oppose Bill C-31 because it does not address the issues of accountability and transparency, issues which should be paramount and at the forefront.

We do see a need for Export Development Canada and its projects, even more so at a time like this. However the fact that it is excluded from access to information and is delegating its powers to committees as opposed to bringing them into parliament are real concerns.

The government missed an opportunity to address these important issues. Major concerns about the crown corporation have been out there for years, but the government has chosen merely to change the name and do some tinkering. I give the government credit on environmental assessment, but the fact that it missed the boat on these issues means the bill is not something we can support at this time.

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4:10 p.m.

Canadian Alliance

Grant McNally Canadian Alliance Dewdney—Alouette, BC

Mr. Speaker, I will follow up on a comment my colleague made regarding missed opportunities. It triggered many thoughts in my mind, and probably in the minds of many of my colleagues on the opposition benches, regarding areas in which the government has not seized opportunities.

In addition to missed opportunities in other areas we are dealing with the issue surrounding the events of September 11 and the fact that the government, in particular the Prime Minister, is not speaking to the House about what his plans are. Apparently he will be talking about them at a fundraiser. He has been talking about policies on CNN rather than in the House.

Could my colleague expand on the notion of missed opportunities? It is becoming a theme not only for this piece of legislation but for the government.

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4:10 p.m.

Canadian Alliance

Gary Lunn Canadian Alliance Saanich—Gulf Islands, BC

Mr. Speaker, one of the most important premises of a missed opportunity is that we lose the opportunity. It is gone. We have seen this during the tragic events which have touched all of us in the last few weeks. We must be leaders. We must be up front and ready to make changes as we need to. That is where the missed opportunities are in Bill C-31. Its critics, even those within the crown corporation, are calling for more accountability and transparency while its proponents say they need secrecy for business practices.

I remind these people that they are asking for large sums of taxpayer dollars. Taxpayers have a right to know. . We could change the legislation. We could find a balance which protects business interests but gives taxpayers the knowledge they need to ensure accountability. We could ensure that taxpayers get value for their dollars and that their dollars are spent wisely.

The government has once again missed a huge opportunity to effect positive changes to the legislation. That is why we in the Progressive Conservative/Democratic Representative caucus will be opposing it.

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4:15 p.m.

Parkdale—High Park Ontario


Sarmite Bulte LiberalParliamentary Secretary to the Minister of Canadian Heritage

Mr. Speaker, I will be splitting my time today. I am pleased to rise to speak in support of the legislation, as will be no surprise to my colleagues on the other side.

I could not help but listen to my hon. colleagues in the PC/DR who talked about missed opportunities. It is great to be speaking to the issue today. I did not miss an opportunity to do so in the last session. In the last session I was chair of the subcommittee on international trade, trade disputes and investments. I was also an associate member of the Standing Committee on Foreign Affairs and International Trade which examined the Gowling report.

While I was not mandated to appear at those committees I thought it was important to do so. It is important for small businesses in my riding that I understand and appreciate what EDC does and the kind of value it adds.

I had an opportunity to lead two trade missions to the Baltic states during the last session of parliament. At that time if there was one criticism by small businesses it was that they wanted more involvement by the Export Development Corporation.

I support the bill because it means Canada's Export Development Corporation would continue to be able to meet the financing needs of our exporters but in a way that reflects Canadian values for corporate social responsibility.

Over the years Export Development Corporation or EDC has become a valued part of our country's success as an exporting nation. Last year EDC facilitated $45 billion in international business by Canadian companies. The corporation served the needs of 5,700 clients, well over 80% of whom were small and medium size enterprises. As a founding member of the Women Entrepreneurs of Canada I know the value of small and medium size businesses as well as businesses run and owned by women.

In total last year EDC carried out some 70,000 short term insurance transactions. These services are vital to our nation's export success. We must ensure EDC can continue to provide them. At the same time EDC's operating policies and actions must reflect the values Canadians believe in, and they must do so both at home and abroad.

EDC does business in more than 200 markets around the world. One hundred and thirty of these are in developing countries. We need to make sure Canadian values regarding issues like sustainable development and human rights are part of the decision making process for EDC supported projects in other countries. We also need to make sure the decision making process is transparent and accountable so that Canadians know this is the case.

These are the reasons Bill C-31 is important for us as legislators. Along with other policy guidance from the government, the amendments to the Export Development Act contained in the bill would help us reach two overarching policy objectives: first, that the act support Canada's exporters and the jobs and wealth they create; and, second, that it recognize that Canadian values of corporate social responsibility must be included in EDC's decision making process.

There is no shortage of examples to show that EDC is vital to our country's export success. As noted, last year the corporation provided financial support of one kind or another to 5,700 Canadian companies. Again, most of these were small or medium size enterprises.

These are the kinds of companies members on every side of the House have in their ridings. They are companies like Cameron Seafoods Ltd. of Nova Scotia, a family run business which is developing new markets abroad for its specialty seafood products. EDC has provided it with financial support such as credit guarantees that have facilitated new sales to buyers in other countries. When EDC came on board in 1998 the company's sales increased from $3 million to $5 million in one year. That is quite an increase.

Another example is Amec Earth and Environmental Ltd. of Calgary, a firm that provides geotechnical and environmental engineering services. EDC has worked with the company for several years and provided it with financial support to reduce the risk of doing business internationally. Amec now employs 1,600 people and is doing business in 30 countries.

Another good example is Klik Automation of Montreal. This small, high technology firm is part of the new imaging software community that has grown up in the Montreal region. When Klik was looking to develop a new export market last year, the company turned to EDC for insurance to guarantee payment by a new overseas customer. That deal resulted in 19 new jobs in Montreal.

There are stories like this all across Canada. Each one means increased exports for Canada and good jobs for Canadians. The government is working hard to make sure that we see more of these success stories. Bill C-31 is a key element of this work. It is not a long bill. In fact it can be read quite quickly, and I would encourage members who have not read it to do so. It is a bill that should be read and understood within the broader context of change for EDC, both domestically and internationally.

Bill C-31 is really the concluding step in a process review that started over three years ago when the government commissioned a consultant to carry out a legislative review and write a report. That was the so-called Gowlings report.

The process continued with the parliamentary committee hearings and reports to government by the House Standing Committee on Foreign Affairs and International Trade and the Senate committee on banking.

In addition, the auditor general has been involved and has made useful recommendations, especially on EDC's environmental review framework. In June of this year, the Minister for International Trade provided guidance on updating EDC's mandate in a number of key areas, including environmental review, human rights and broadening the base of participation of the private sector in financing Canadian exports.

Throughout the review, interested stakeholders have also been involved in the process, another opportunity, I would say, to participate. Although the review of the Export Development Act has not been a matter of broad public concern, a number of organizations and committed stakeholder groups, representing both business and public interest groups with specific interest in EDC, have been actively involved in the process.

Both the Minister for International Trade and EDC have found this involvement helpful. I would remind my colleagues on the other side that this is simply part of what the Liberal government is all about. In fact the Speech from the Throne talks about the importance of consultation. This is evidence of not just speaking about it but actually doing something about it.

EDC is perhaps best known for its success as an export financing institution but the corporation has also shown that it is socially responsible. Note, for example, that it was the EDC that initiated the environmental review framework and it is putting in place a new disclosure policy to improve accountability. These are significant developments.

We all want greater attention to be given to environmental and human rights issues and we all want a disclosure policy that will reassure Canadians that EDC's decision making process is transparent and accountable.

It is equally important that we have policies and operating directives that are realistic as well as workable. That is why public consultations are so important and the input of those stakeholder groups in Canadian society who are most affected by EDC is also so helpful to the government.

EDC has recently gone through a public consultation process on its disclosure policy. Just this past September, the corporation was going through a similar consultation with stakeholders to follow up on advice from the auditor general and the Minister for International Trade on strengthening and improving its environmental review framework.

Representatives from both the business community and public interest groups have been a welcome part of these consultations. They are an important part of the process to develop the specific policies and operating procedures that will meet the government's policy objectives and that are realistic and workable in practice.

In the OECD, for example, we have led the discussion in this area. Our negotiators sense a growing consensus for action by the OECD to require the export credit agencies of member countries to conduct environmental reviews of projects proposed for financial support. Canada can be a model for this new approach. It is a balanced approach that best meets Canada's needs in changing the international environment.

The legislation is the right approach for Canada. It brings the force of law to EDC's environmental review framework and it will position us well to deal with emerging trends in the international community. It is a bill that all members should support.

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4:25 p.m.

Canadian Alliance

Philip Mayfield Canadian Alliance Cariboo—Chilcotin, BC

Mr. Speaker, I thank the hon. member for her comments and her enthusiasm.

One aspect of the bill that does concern me is the board appointments. Board appointments are made in such a manner that I do not think the best talent is on those boards to do the job that this corporation should do.

As we are talking about fixing up the corporation with these amendments, it strikes me that if I were to hire my wife to work in my office there would be some comments on that. If I were to hire someone who supported me in my political campaign, there would be some eyes raised about that too. However when we look at these patronage appointments, we see those who are being looked after. It is like in the family. If a person runs in an election for the governing party and loses it is almost like he or she wins anyway.

Does the member not believe that there are highly motivated, highly talented Canadians who have made a success of their own lives, who would like to commit a part of their lives to public service and who would do a wonderful job of using their expertise in crown corporations such as this and avoid the criticism that I am offering, not only to this government, because it is a way of life and--

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4:25 p.m.

The Acting Speaker (Mr. Bélair)

The hon. Parliamentary Secretary to the Minister of Canadian Heritage.

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4:25 p.m.


Sarmite Bulte Liberal Parkdale—High Park, ON

Mr. Speaker, let me begin by saying that appointments are about finding the best person for the job. With all due respect, I truly believe that if the hon. member appointed his wife because she was the one who would do the best job, then why should she not be appointed that position.

If we look at the bill and the amendments, the bill does not really talk about appointments. It does say clearly that the corporation is to be established as export development Canada and will consist of a board of directors composed of 15 directors including a chairperson and president. That is what is in the bill.

One of the new changes in the bill, which was not in the previous bill, is the fact that the board can now establish committees. This is a new part of the act. It is not the method of appointment but that a committee can be established and it can actually exercise any powers and perform any duties delegated to it by the board.

That is the new amendment that we are proposing to this legislation. With all due respect to my hon. colleague, there really is nothing about the manner of appointment in the legislation whatsoever.

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4:25 p.m.


Robert Lanctôt Bloc Châteauguay, QC

Mr. Speaker, the dissenting report by the Bloc Quebec included the following statement:

The Bloc Quebecois, on the basis of the valuable testimony collected during the public hearing, is of the opinion that there is, however, an obvious and marked lack of transparency in the way the EDC operated. There is a severe lack of transparency.

In all of this can be seen, and the hon. member says she was on the committee, that, in examining the bill:

—it was impossible for a Bloc Quebecois member to obtain any breakdown of the Corporation's financial activities in Quebec. It therefore seemed vital to the Bloc that the EDC, in keeping with the report's recommendations, be subject to the Access to Information Act.

Why not be transparent and disclose information? Does it seem that some of it might be confidential?

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4:30 p.m.


Sarmite Bulte Liberal Parkdale—High Park, ON

Mr. Speaker, as I said earlier today, the amendments being made to the bill are being made to increase the transparency and the accountability.

We are now including an environmental framework that was not in law. It now has the full force of law. It has the auditor general proposing a review of that and auditing it. We have our own Minister for International Trade, who I applaud today, shortening the period and saying that the review should not be five years but two.

By working together we will increase the transparency for all Canadians so they will see the work that EDC does.

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4:30 p.m.


Jean Augustine Liberal Etobicoke—Lakeshore, ON

Mr. Speaker, on behalf of the constituents of Etobicoke--Lakeshore who are very much involved and interested in businesses, et cetera, where the Export Development Act would have some reference, I am pleased to join in the debate today.

As Canadians we all understand the importance of a healthy environment, not just within our bodies but for everyone on this planet.

This past spring, I hosted a roundtable on the environment, where many of my constituents expressed concern over the state of the air we breath, the pollution of our lakes and rivers and global warming. For them they want the federal government to ensure that Canadian corporations, when carrying out their activities overseas, that they act responsibly toward the environment as they would if they were here in Canada.

Bill C-31 answers that concern. The bill would complement Canada's international and domestic obligations on the environment front. The bill would allow those values that we share as Canadians and initiatives that we implement on the environment to be implemented in an international context.

Canada's leadership role in the Kyoto protocol is sending a strong signal to our international partners that the federal government is committed to protecting and preserving the environment.

We are also helping developing countries to reduce toxic by-products that are industrial and agricultural based by encouraging them to adopt best practices to ensure environmental sustainability. As Canadians we have a responsibility to do this.

My constituents understand that toxics know no border and that we must take measures to respond to environmental challenges such as climate change and air pollution.

My constituents also understand that all sectors in society, government, civil society and the private sector, must share in the responsibility for a healthy and safe environment.

As a member of the Standing Committee on Foreign Affairs and International Trade, I have had the privilege of hearing from numerous witnesses who came before the committee. They spoke about the operations of the EDC. We heard from the president, from labour, civil society, business owners and exporters.

During the hearings the message was loud and clear: consideration must be given to the environment when EDC finances projects; and, that a formal environmental review process must be established.

Let me take this opportunity to remind the House that EDC was established in 1944 with a mandate to support and develop Canada's export trade. In the year 2000, it supported an estimated $45 billion in export and foreign investments.

The scope of credit agencies financing activities, particularly in the developing world, has prompted a call for sound environmental practices, recognizing the importance of fostering trade competitiveness that is consistent with environmental conservation.

From the early 1990s, as part of its risk management process, the corporation reviewed projects for their environmental impact.

Two years ago, EDC introduced its environmental review framework to formalize and strengthen its environmental procedures. The framework was developed at a time when few export credit agencies were seeking to manage environmental risks.

I am very pleased that the EDC has followed through on the suggestions and recommendations, not only of the foreign affairs committee but also on the Gowling report studied by the foreign affairs and international trade committee with the recommendations for a legislative framework and a substantive approach following that of environmental practices in other areas, including the World Bank.

The federal government is committed to ensuring that environmental standards are observed and defends the discussion today on the bill, balancing the need for EDC to be environmentally as well as socially responsible with the need to promote Canada's participation in a competitive and international market.

Bill C-31 makes the EDC's board of directors--and we heard mention of the board of directors earlier-including two deputy ministers of the federal government responsible for the environmental review policy. This is a binding obligation.

In addition the auditor general would have an ongoing monitoring and reporting role on behalf of parliament and the Canadian public. The EDC was among the first export credit agency to introduce such a review framework, putting Canada and the EDC at the forefront of current practices in the environmental review of export projects.

The framework has to two guiding principles: first, as the witnesses we heard from stressed, that environmental reviews undertaken by financial institutions to mitigate project risk can help encourage sustainable development by promoting consideration of the environmental benefits and costs of projects in host country jurisdictions; and, second, that EDC should decline support for projects which after taking into account the implementation of mitigation measures are in its opinion likely to cause significant adverse environmental effects that cannot be justified by the anticipated positive effects of such projects.

In other words, if the end result of a project is positive but there is a negative way in which to get to the end result, under its guiding principle the EDC can say no.

This environmental review framework is a reflection of ongoing multilateral discussions at the Organization for Economic Co-operation and Development. In that forum an export credits group is working to develop internationally acceptable standards for the environmental review practices of the export credit agencies of all OECD member countries.

There is a growing number of countries with formal environmental review policies including all the G-7 nations and the majority of OECD nations. Among the best are those of the United States, the United Kingdom and France. My constituents know that EDC's environmental review framework is regarded as being at the forefront of international initiatives in this regard.

Earlier my colleague mentioned the report of the auditor general. He stated that this framework contained all the elements suitably designed to aid this process. It shows the following: how the corporation would identify environmental risks, the information it would need to assess them, the circumstances under which it would decline to support a project or to make its support conditional, and the process for monitoring and reporting to ensure that the risks are appropriately managed.

Canada is standing head to head with other nations. These practices are in wide use. Bill C-31 would strengthen our domestic values and international agreements relating to the environment. Canadians expect that corporations doing business outside our shores such as EDC will reflect our values and the environment.

I call on all my colleagues to support Bill C-31 which would work to ensure the concerns of Canadians will be echoed in both the domestic and international spheres.

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4:40 p.m.

Canadian Alliance

Werner Schmidt Canadian Alliance Kelowna, BC

Mr. Speaker, I will be splitting my time with the hon. member for Elk Island. One would think that after the member for Parkdale--High Park finished with her catalogue of good things the EDC had done over the past years that there was absolutely nothing in the world the EDC could not do to promote business. I wonder what happened to all of our financial institutions and our private enterprises that operate without EDC support.

I want to put on the record a balanced position which clearly indicates there is something else besides EDC that might work. One would think that according to the government the only corporations which really know what to do are crown corporations. That is far from the truth. There are a lot of other corporations that are doing very well. I suspect that is one of the reasons CN, which was a crown corporation, is now a private corporation.

I will speak to a number of amendments contained in Bill C-31: the environmental provision, the increase of the contingent liability ceiling from $15 billion to $32.5 billion, the empowering of the board to make contributions to pension plans, making it an offence for businesses to refer in their advertisement to EDC involvement in their enterprises, the appointment of committees and the power of the board to delegate its powers to them.

I will read into the record the clause pertaining to the environmental provisions. I am sure many people who are watching do not know exactly what is being talked about. Clause 10.1 states:

Before entering, in the exercise of its powers under subsection 10(1.1), into a transaction that is related to a project, the Corporation must determine, in accordance with the directive referred to in subsection (2),

(a) whether the project is likely to have adverse environmental effects despite the implementation of mitigation measures;

Subclause 10.1 (2) states:

The Board shall issue a directive respecting the determination referred to in subsection (1), which directive may

(a) define the words and expressions that the Board considers necessary for the application of that subsection, including the words and expressions “transaction”, “project”, “adverse environmental effects” and “mitigation measures”;

Is that not interesting? The board has the right to decide whether there will be adverse environmental effects. The next section defines an adverse environmental effect.

The bill does not in any way refer to Canada's environmental act. It is excluded specifically. Those projects are approved under the Canada account which the Minister of Finance and the Minister for International Trade need to approve. They are specifically exempted and do not apply or come under the jurisdiction of the Canadian Environmental Assessment Act. Clause 12 which amends section 24.1 states:

(1) Subsection 5(1) of the Canadian Environmental Assessment Act does not apply where the Minister or the Minister of Finance exercises a power or performs a duty or function under this Act or any regulation made under it, or exercises a power of authorization or approval with respect to the Corporation under any other Act of Parliament or any other regulation made under it.

We now need to look at the very wide reaching powers of the EDC. The corporation may acquire and dispose of any interest in any entity by any means; enter into any arrangement that has the effect of providing to any person any insurance, reinsurance, indemnity or guarantee; enter into any arrangement that has the effect of extending credit to any person or providing an undertaking to pay money to any person; take any security interest in any property; prepare, compile, publish and distribute information; provide consulting services; procure the incorporation, dissolution or amalgamation of subsidiaries; make any investment and enter into any transaction necessary or desirable for the financial management of the corporation; and there are others.

The powers are overwhelming. The auditor could be the president of the EDC and do anything he would want to do. It is like telling my friends to form a corporation, make sure to do some exporting and make sure that they get paid by the person who is buying the product they are exporting. That is what is possible here.

We have to recognize that these people will be responsible, but the law is an open book and allows them pretty well to go anywhere they want to go. That is the sort of thing that makes it possible for a patronage appointment, for example, to reflect specifically what it is the Prime Minister wants done in another country, another corporation, or whatever the case may be.

In addition, the board that runs the corporation may now appoint committees which can have any of these powers delegated to them. This is really interesting. That is the kind of bill we have before us. If it were not for the trust, faith and common sense of some of people, we would have the possibility and potential of making something corrupt.

I am happy that we as Canadians do not live like that. We trust one another. We have a sense of morality and a sense of ethics. That is what makes this kind of thing work. It is not because the legislation is so good. It is because the people are so decent.

This is why I am such a strong proponent of private enterprise in the first instance. These people are now directly responsible for their own money in their own way. They can do the things that have to be done to benefit them and get the finest results they can get.

The answer lies not in forming crown corporations and extending their powers and privileges but rather in creating an environment so that private enterprise can win and can apply these kinds of things.

I am sorry the hon. member for Parkdale--High Park is not in the House right now because I would like to ask her if it is really possible--

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4:45 p.m.

The Acting Speaker (Mr. Bélair)

The hon. member is a veteran member of the House and knows that he cannot refer to the absence of any other member.

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4:45 p.m.

Canadian Alliance

Werner Schmidt Canadian Alliance Kelowna, BC

I want to refer to the statement the hon. member made which insisted the corporation was able to do things that could not be done by private corporations. She did not say that exactly but the inference was there.

I do not believe that. Institutions such as the Royal Bank of Canada, the TD Bank, Scotiabank and other financial institutions in Canada including insurance companies are only too willing to expand business if we let them go. All of us are interested in export development. That is where the big development should take place.

Let us not forget that the Export Development Corporation does its business in two accounts: the corporate account and the Canada account. The corporate account has in it right now accumulated retained earnings for the year of well over a billion dollars.

What is this money for? How does this crown corporation, which is really owned by the government, account for its earnings? Should that not come back to the general treasury of the country? It is just lying there and there is nothing in the legislation that covers it.

I could go on for at least another 10 or 20 minutes looking at some of the provisions of the Export Development Corporation but I do want to give my hon. colleague the opportunity to speak as well.

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4:50 p.m.

Canadian Alliance

Ken Epp Canadian Alliance Elk Island, AB

Mr. Speaker, I am pleased to participate in the debate today on Bill C-31 regarding the Export Development Corporation.

I asked my assistant to go to the website to find out exactly what the mandate of the organization is and I will quote the very first sentence: “EDC is a Canadian financial institution devoted exclusively to providing trade finance services to support Canadian exporters and investors in some 200 markets, 130 of which are in developing markets”. I believe the website is relatively current. It goes on to say that last year, Canadian business concluded $45.4 billion in export and domestic sales and investments in markets using EDC trade financing services. It claims right up front that it is not only involved in exports but also has domestic sales and investments in the marketplace.

The EDC also says that 90% of its customers are smaller customers, but it does not indicate the magnitude of the business conducted with these different corporations. While 90% of its customers are presumably smaller companies, in terms of the number of them, we have no indication or any way of finding out exactly who the other 10% are. It could well be, and I suspect it is the case, that the 10% that are not smaller companies are large corporations that benefit immensely from the majority of the financial activity of the corporation.

The EDC goes on to say that it also has responsibility for social corporate activity. It logs its code of conduct and business ethics. It lists all of the things it is high on and we should commend it for that. It is a global business and says that it is therefore a global citizen and works within a global environmental context.

I find it quite incredible because the Government of Canada has expressed its concern for global environmental issues. We are no longer living in a world where what we do with our air, water and soil is limited only to ourselves because of the fact that our world has become a very small community. I commend these words, but when we look into the depths of the legislation that is before us and what is proposed therein, we find that it is somewhat inadequate in the sense that Canada's rigid environmental laws do not apply.

I will digress for a second. I think of Canada signing the Kyoto accord. One of the questions that has been asked of me, and which I actually have asked myself, is exactly how the environment is enhanced by shipping Canadian money to other countries that for whatever reason do not have as much pollution as our country.

For example, we are a northern country. We have heating demands which are just not present in Africa. A person would have a hard time making a living selling furnaces in Africa because they are not needed. No fuel is burned and hence not as much pollution is produced.

In order to solve the environmental problems of the world, should we ship our money to Africa? How is the environment enhanced by that? Would it not be better to keep the money at home in Canada and use it for research and other activities in order to clean up our environment and the way in which we produce our own energy needs?

The Export Development Corporation is not required to adhere to Canada's environmental laws. It has its own law. I can see its argument. It says that it is one that is internationally agreed to and in order to allow it to play on a level playing field, that is the rule it needs to apply.

From time to time EDC becomes involved in financing projects which would not fly in Canada because of Canadian environmental laws. That to me is an anachronism. We are willing to send money out of the country which has nothing to do with helping the environment yet, through the Export Development Corporation, we may be financing projects which do not meet even our own requirements. It is a contradictory use of Canadian taxpayers' money.

There is also something called the Canada account. My colleague from Kelowna mentioned it. The Canada account is used to support export transactions which are determined by the Minister for International Trade to be in Canada's national interest. According to its website, this is usually due to a combination of risks and it mentions what those are. Basically the executive summary of it is it would become involved if ordinary banks would not touch the matter.

Canada account transactions are negotiated, executed and administered by the EDC, just like the corporate account transactions are, but the risks under the Canada account are assumed by the Government of Canada.

We see a direct involvement of the Minister for International Trade who can say “This is a project which we will approve”. Unfortunately, there is no check and balance in the legislation to prevent the minister from using it for the purposes of propping up businesses of the minister's choice rather than perhaps what is really good for the country as a whole.

To whom is EDC accountable? It says that it operates at arm's length from government. However, the way the corporation is set up, the Government of Canada, i.e., the taxpayers of Canada, is the only shareholder of the corporation. I was elected to speak for taxpayers in Canada. That was my primary theme. Canadian taxpayers have “invested” into EDC in excess of $1 billion, yet the corporation claims that it operates at arm's length from the government and does not cost the taxpayers anything. I beg to differ.

As a matter of fact, if someone were to give me $1 billion and said that I would have to pay it back, eventually I would give back the $1 billion but boy, would I live a happy life in the intervening years. It is a little thing called interest. One billion dollars could easily produce $100 million per year in income. That would be adequate for a good weekend, would it not? We are talking a lot of money here and it is money that is lost to Canadians by virtue of the fact that it is tied up in the Export Development Corporation.

Let us not kid ourselves. Let us not say that the corporation does not cost the taxpayers anything. It obviously does since we have this huge amount of money that has been invested in it. It is taxpayers' money.

I will not deny the fact that many businesses benefit from the work of the Export Development Corporation. It enables them to promote their own business and to export to countries around the world. In that sense those taxpayers at least get something back. It obviously produces some employment and that is also good.

I would like to see legislation which would greatly enhance the accountability to the Canadian taxpayers. I am appalled when I read the details that although the auditor general has access to the accounts and makes reports and the five year special report, those audits are not readily available, even through access to information.

I regret that my time for debate is up. I hope some members will have questions for me so that we can enter into debate.

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5 p.m.

Canadian Alliance

Deepak Obhrai Canadian Alliance Calgary East, AB

Mr. Speaker, my hon. colleague raised a lot of interesting points.

I am specifically interested in the role of EDC as a crown corporation and what the member said regarding the auditor general looking at the account.

There is a question on a lot of people's minds. This is a crown corporation and should be working under the rules of how a crown corporation should work. It takes advantage of those rules but at the same time when it comes to the question of accountability and where the money has been spent, it hides behind private enterprise by saying it falls under privacy of customer information. It has its feet on both sides. It wants to work as a crown corporation but unlike other crown corporations that are accountable to parliament the Export Development Corporation is not accountable to parliament because of the Privacy Act.

Maybe the member would like to comment on that.

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5 p.m.

Canadian Alliance

Ken Epp Canadian Alliance Elk Island, AB

Mr. Speaker, one of the perplexing things about the Liberal government is that it is just not open about information. As a comparable situation, I have noticed this particularly with respect to the press conferences being held by government officials with respect to terrorism lately. When we tune into CNN, government officials in the U.S. from the president on down seem eager to give the maximum amount of information to their citizens so that they are fully apprised of what is being done. In Canada however, it is like squeezing orange juice out of a lemon. It is impossible to get any information out of the government.

I noted with interest that in testimony to the foreign affairs committee, an organization called Probe International made mention of this. It asked for the five year report from the auditor general and was told that he was not permitted by legislation to disclose it but that the inquirer should go directly to the corporation, which they did. When they asked for that information they were told that it was confidential information and was not available.

At the same time, the witness at the committee said that a letter was written to the United States Export-Import Bank requesting details of a similar, almost identical situation. Included in the response to a Canadian from an American bank which was involved in a comparable situation was information including tables, accounting, rescheduling agreements and the whole thing. The Americans seem to be more accessible or more willing to give information to its citizens and even Canadian citizens than is our own government.

I believe it is a culture. It is time for the Government of Canada to level with its citizens and give them as much information as it can rather than hide behind all of those other little rules all the time which prevents Canadians from knowing what is happening to their money.

Export Development ActGovernment Orders

5 p.m.

Canadian Alliance

Deepak Obhrai Canadian Alliance Calgary East, AB

Mr. Speaker, it is a pleasure for me to talk on the issue of the Export Development Corporation, following my two colleagues who have pointed out very well many of the issues raised in debates on the reliability and the existence of this crown corporation.

While the act talks about housekeeping duties and some of the responsibilities, especially enabling the board to have some powers and to debate some things, I would like to talk in general about the whole concept of development and the role of EDC in what it is primarily set up to do, which is to provide protection and incentives to Canadian companies to go into the world market and start development assistance programs. As my hon. colleague has rightly mentioned, EDC is very proud of saying it has spent a lot of money in the developing countries.

When EDC and CIDA were created, it was probably because these organizations were needed at the time. However, events and subsequent things that have taken place since then raises the question as to whether CIDA and EDC are effective tools in today's marketplace conditions and are they taking advantage of opening markets and the needs of developing nations?

We have very fine individuals in EDC and CIDA who have over the years gathered a lot of expertise and have at times used this expertise very effectively. We are very impressed by the hard work and dedication of these people.

However, the political interference and changes in direction have enabled both of these agencies to have broken democracies with policy advisers. At times I shake my head and wonder where they are going with their narrow agendas without looking at long term plans of action that would ensure development and export dollars are spent more wisely and are better utilized by Canadian companies and other agencies that do development assistance.

I am the international development critic for CIDA and I am stunned to see the secrecy of the policy advisers of CIDA. It is as if they have something to hide. They do have something to hide in not becoming more transparent to the Canadian public. CIDA had $1.9 billion, but I think it went to $2.1 billion. This huge department is scared to tell Canadians what it is doing.

It does the normal auditing and normal things required. However, when we go deeper into it and ask what is going on, we run into a wall. CIDA is a prime example of that and that can be translated to EDC as well. Secrecy has been one of the strongest criticisms of EDC.

This is a crown corporation that lives under crown corporation rules. It gets government assistance and guarantees. At the same time, it says that it acts like a private corporation, therefore, it cannot be accountable to parliament because of privacy for its customers. When CIDA comes into parliament to let Canadians know what it is trying to do, it merely gives the crumbs off the table. It does this in generalities and not in specifics.

That is why these questions continue to be asked, not only by the official opposition but by individuals in the public who want to know how the corporations operate. The lack of knowledge is what we are questioning. Time after time we have raised questions, and the EDC board of directors is a very prime example of patronage appointments of those individuals who have connections to the government. Some of them may have good expertise but in general they are tied to Liberal connections. This in turn curtails the ability of the fine officers who work at EDC and at CIDA to implement decisions because they are hampered by political interference.

I have had the opportunity to meet with many individuals who have worked for both CIDA and EDC. I seem to get a consistent answer which is the inability of these ground level people to make decisions that are the right ones based on their experience because of political appointee interference.

I would venture to say that EDC and CIDA are gradually becoming irrelevant under the present context their mandates are. I will explain why.

Over the years EDC and CIDA have been giving out money. Have we seen an improvement in the developing world where they are supposed to be in the theatre of operations? No, we have not. There is something seriously wrong. It is time to look at a different mandate for these corporations so they work effectively.

We could use the expertise of the people running EDC whom I have met and with whom I am impressed. We could use the expertise of the NGOs and business people to create an environment where they can work in tandem with CIDA so that we can bring in the massive private investments, which business people and Canadians would like. It would make a climate in which investment dollars would flow to these countries and allow them to develop their nations.

I am not talking about infrastructure and big projects. I was in Africa in August and I came back a little disappointed. I thought about how, in our overall capacity, we could help African countries move forward. We have the Africa initiative that is supposed to come up at the G-8. However, let me also say that many of the leaders in these countries recognize that it is their responsibility to create environments for development.

President Museveni of Uganda, when he met with the regional African countries in Kampala in August, proposed a program where they would be willing to look to insurance companies to provide insurance for businesses that would invest in these countries so that if they were taken over through nationalization or disrupted by war company investments would be safe.

That is an initiative that has come from Africa. A mandate of EDC is to provide that kind of insurance but these other countries are taking it over and are saying they will do it themselves.

It is time for EDC to rethink its strategy. It is time for CIDA to rethink its strategy. I would like these departments to have a totally different focus. I am reluctant to say that perhaps we should now have a department. I would not want it called CIDA itself, but maybe EDC should be under CIDA. Let us remove the unitarian aspect of CIDA so it can concentrate on these aspects with the NGOs, do it more effectively and create another arm on the other side that has EDC under it.

Maybe if a DFI or development finance institution was established in Canada, CIDA Inc. could create the environment or one window shopping for Canadian businesses. This would allow businesses to work in tandem with the private industry to create an organization that is focused to ensure that private investment flows into these countries to help them out, which in turn will help Canadian businesses.

It is time to look at these things because we have gone through the whole lot of them. There has been government to government aid. That has not been very effective. The IMF has given aid. That has not been very effective. People in most countries are not happy with the IMF and its conditions. We have gone through the route of CIDA Inc. We have gone through the route of giving money to the NGOs, that are doing a marvellous job. However, in view of their small organizations, they are not focused. As such, dollars that go to them go to specific projects, but not in the overall development of the nation.

The whole concept is that the NGOs have done a marvellous job. We have gone through this route and have put dollars in there. That is fine. However, now we have reached beyond this level. We need to look at another way to go and how to help. That is why I say the whole mandate of EDC should be reviewed.

EDC should come under a different department, maybe called CIDA, but it should have a different mandate. The current mandate should be removed and an other agency should be created where NGOs can be more effective. However, then we have to look at the insurance issue, which would then be privatized.

As I have said, countries recognize that and are taking responsibility for it. I also mentioned that the African leaders were talking about this.

We can then talk about the fact that small and medium sized businesses have this one window of opportunity to go out and sell their expertise effectively.

We need a massive system or idea to see how we can get this transfer of funds moving. I imagine that would be fine with their big infrastructures. Countries need big infrastructure. However, at the end of the day it comes to the point as to how to get it down to small and medium sized enterprises?

Let me talk about the Canada account, which is used to subsidize our big corporations. We saw Bombardier receive Canada account money under favourable terms. In a way it is subsidizing this huge corporation which makes all the money.

Let me also say that we are really proud of its achievements. It is very innovative and sells beautiful world class jets and light rail. However, we do have somewhat of a problem with Bombardier coming back to the government to ask for handouts or subsidized issues like the sale of jets. This makes Canadians wonder why. We see the same thing with Air Canada.

When Air Canada came along not in our wildest imaginations did Canadians think that we would ever see Air Canada stand up and ask for $3 billion to $4 billion because the Americans got the money. How does it tie its business to American business considering that it has 80% of the market and a monopoly in the country? I think that shocked many Canadians.

Let me go back to the question of EDC, the question of development assistance and the role of EDC in helping Canadian companies export their goods. If under this new system we are talking about, in which there are no taxpayer dollars involved and EDC operates under normal circumstances, which I think would bring about efficiency, it would assist Canadian businesses, which are very aggressive. I have been with them overseas. I know they are very aggressive, but they also do seem to have problems with the way the present EDC is set up and the way the present CIDA is set up. They find that the environment is changing and these huge bureaucracies still lie back and are not rising to the occasion.

We could privatize the insurance portion of EDC and let the insurance industry take it. The industry has already complained about EDC, because as a crown corporation EDC does not pay taxes. It is not a question of paying taxes; they do not pay dividends to anyone. It does not have to worry about shareholders because it is a crown corporation. To whom is it accountable? Even if it is at less than par, it is accountable to nobody. If it were privatized or looked at in a different manner, then at least it would be accountable, with openness brought to parliament, to their shareholders. EDC is now protected on both sides.

It seems to me that EDC is in one of the best situations in the business world. It is protected by not being open and it does not have to answer to shareholders because no one is asking for accountability. However, I think it is time for EDC to grow up. It is time for EDC to refocus. It is time for EDC and the government to stop thinking and stop operating in the same way that they have been for the past 30 years. When EDC had its five year review by the minister, I was at that time the critic for international trade. I looked at the review, and believe me, I could not find many things. We went through a whole report on EDC. The federal government hired Gowling consulting company to look at the complete operations of EDC. There were some very good suggestions made, but EDC is still a slow moving institution and needs to come into the 21st century.

Export Development ActGovernment Orders

October 1st, 2001 / 5:20 p.m.

Canadian Alliance

David Anderson Canadian Alliance Cypress Hills—Grasslands, SK

Mr. Speaker, given the government's history of trying to avoid accountability, given its lack of openness in disclosing what it is doing and given its history of interfering with domestic financial institutions, when we look at the structure of the EDC we see that for the most part it has independence from scrutiny. There is a lot of power given to the board. Its structure is set up so that it is not accountable to anyone and it is given a great deal of authority.

I am wondering if my hon. colleague would care to comment on whether he thinks the government, given its history, would be able to keep its fingers from manipulating this agency, from sticking them in there and trying to manoeuvre things for political purposes.

Export Development ActGovernment Orders

5:20 p.m.

Canadian Alliance

Deepak Obhrai Canadian Alliance Calgary East, AB

Mr. Speaker, there is no question about it: we know that the boards of directors of all crown corporations have been used for patronage appointments, even the refugee board, which the minister said the government was going to get rid of. The government was reluctant to get rid of it, could not get rid of it, because it helps all the Liberals who have lost elections by giving them those positions.

Yes, I agree with the member. The government has not changed much, but I wish it would, in the running of the corporations because that helps it put Liberal friends into positions and keep its flock happy at the expense of the Canadian taxpayer.

It is time to look at it. It is time to really look at EDC's mandate and to get rid of its insurance operations. I think it is becoming irrelevant, according to the latest developments that I have heard on what has been happening. EDC is not happy with its Canada Account because of course there is 100% government interference, and not much can be done about it, as we know with what happened with the Bombardier issue.

We must look at where the EDC would be most effective. I think that at the end of the day EDC would be more effective if we were to bring together all these institutions into what I would like to call the Canadian International Development Agency, but with a totally different mandate.

Export Development ActGovernment Orders

5:25 p.m.

Canadian Alliance

Grant McNally Canadian Alliance Dewdney—Alouette, BC

Mr. Speaker, I want to follow up on the wide ranging comments of my colleague and focus on two points, some of which were mentioned by the previous member, those being the issue of accountability and the issue of political interference.

First, in the area of accountability, as my colleague mentioned, when there is a perception generated over time that failed candidates are appointed to boards or friends of the government are appointed to the boards, whether they are the best people for the jobs starts to wane as the important question. The perception simply becomes that people are being appointed because of who they know on the government side. I think that is to the government's detriment. If it were able to be more transparent and not shroud the workings of the EDC and CIDA in secrecy, which my colleague referred to, I think it would do the government well.

I am wondering if my colleague might have some specific examples that he may have uncovered in his good work in this area, specifics that he knows of having to do with political interference or with political appointees to different boards that have been involved in the granting of government contracts.

Export Development ActGovernment Orders

5:25 p.m.

Canadian Alliance

Deepak Obhrai Canadian Alliance Calgary East, AB

Mr. Speaker, I would like to thank my colleague for raising a question that is a big concern for all Canadians in regard to the use of crown corporation boards and refugee boards for Liberal patronage appointments and rewards for the government's Liberal friends.

The hon. member has asked for examples. Over time we have had numerous examples of people who have been on the EDC and the BDC. My colleague will remember the gentleman involved in the golf course in Grand-Mère, Mr. Carle, who was appointed to the BDC. He is the gentleman who was involved in APEC when he was in the Prime Minister's office. He was appointed to the BDC.

There are numerous examples of how people previously connected with the government have been tied to these boards.

Now I will say that maybe they were competent, maybe they had the expertise, but it is the openness of the situation that is the issue. Why is it not done in front of a parliamentary committee so that both the government and opposition people could vote, as is done in the U.S.? Then there would be excellent confidence in many of these people because they would come in front of a committee made up not only of Liberals but of members from both sides of the House. Questions could be asked. We could grill them. Maybe they do have the qualifications to be on those boards.

Doing this would give confidence and send the message that the people who are running these institutions have gone through a rigorous search program, as is done in many independent corporations. When independent corporations hire they do so through human resource companies to find the best individual. For us the best way to do this would be through a parliamentary committee. Hopefully the government will take that suggestion.

Export Development ActGovernment Orders

5:30 p.m.

Canadian Alliance

Jason Kenney Canadian Alliance Calgary Southeast, AB

Mr. Speaker, I commend my colleague from Calgary East, my neighbouring constituency, for his remarks. His remarks reflect expert knowledge of issues related to foreign trade, export development and international development. They have helped me to have a better understanding of the issue. The hon. member spends a lot of time overseas examining Canadian aid projects and trade with foreign countries, and it is well reflected in his remarks.

Bill C-31, as we know, seeks to amend the Export Development Act and to make consequential amendments to other acts. It provides for delegation of powers to committees established by the board of EDC. It also provides for the establishment of a procedure for environmental assessment of projects supported by the crown corporation.

My colleagues in the official opposition and I have for a long time had fundamental concerns about the operation of Export Development Corporation. We start from the first premise that the private sector is a more efficient means of allocating scarce capital than government or government agencies. We agree with the need for financing and insurance to facilitate Canadian trade abroad. Foreign trade is an essential aspect of our economy and it is absolutely essential to our economic growth.

Canada is a net exporting country. We have a current account surplus of something in the neighbourhood of $27 billion a year. We export more goods and services than we import, to the tune of $27 billion.

There is an urgent need for Canada to continue its growth in exports. We have much to offer the rest of the world, not just in terms of manufactured goods produced in Canada but in terms of services and hard commodities which help feed millions of people around the world and provide much needed equipment to raise living standards in underdeveloped countries and economies.

For all these reasons it is necessary to focus on assisting Canadian companies which trade abroad. Sometimes this can be difficult. Sometimes it involves incurring political hazard. Sometimes there is a need for special kinds of insurance for our export oriented companies. Sometimes there is a need for financing to enable companies abroad to buy Canadian goods and services.

My colleagues and I believe most of these functions could be carried out more efficiently by the private sector. Maintaining a government run and taxpayer owned corporation such as EDC which provides insurance, financing and services of this nature takes away opportunities from Canadian capital markets and insurance companies.

These companies could provide the same services on a commercial basis without exposing Canadian taxpayers to risk. This would enlarge opportunities for private Canadian companies as opposed to government run crown corporations.

Inevitably crown corporations present opportunities for abuse and unaccountability. Nowhere is that more clear than with the board of Export Development Corporation. It is used frequently by the executive council, the government, the cabinet and the Prime Minister as a parking place for Liberal patronage appointees.

My colleague from Calgary East and other colleagues have mentioned the recent appointment of Bernie Boudreau. He lost a provincial election in Nova Scotia, was appointed to the cabinet through the Senate and lost a federal election. His reward for having lost two elections was to get appointed to the board of EDC. This was his principal qualification.

The same man would not have been appointed to the board of a private insurance company, private venture capital company or bank which provides the same services in the private sector. The criterion for people who govern such corporations is not the ability to lose elections for the right party. It is the demonstrable ability to manage the bottom line and create profits and dividends for shareholders. That is the sort of governance we need for the services now provided by Export Development Corporation.

I saw my friend, the hon. government House leader, a moment ago and it brought to mind the Liberal standards on patronage. They were very high indeed between 1984 and 1993. When I was a young Liberal I used to receive mailings from the current hon. government House leader. Every year between 1984 and 1993 he put out something called the black book on Tory patronage. It was an exhaustive litany of all the horrendous patronage appointments made by the then Tory government.

There was indeed an orgy of patronage during those years but it was the current government House leader who raised his voice in great indignation about it. He said if the Liberal Party ever formed a government again it would never engage in patronage, the kind of patronage we now see day after day in appointments to boards like that of EDC.

I ask my colleagues opposite, when they reflect on government control of organizations like EDC, to consider that they should perhaps be consistent with what they have said. Perhaps they should walk the talk about patronage that they offered to Canadians between 1984 and 1993. Perhaps they should consider our non-partisan constructive criticism that many of the functions of EDC could be spun off more effectively into the private sector.

As my colleague from Calgary East has said, there are two basic functions at EDC. First, there are functions managed within the corporate account such as export financing, insurance and guarantees. These are financed primarily by borrowing on domestic and international capital markets.

Second, there is the Canada account which provides government the means and authority to support export transactions that do not meet EDC's normal criteria for prudent risk management. That is another way of saying companies which finance agreements that would not normally meet commercial criteria can get money from the Canada account. These sometimes include large corporations that receive hundreds of millions of dollars from Canadian taxpayers.

Most of the services provided by EDC such as short and medium term export insurance and financing should be turned over to the private sector. The rest of EDC could become a division of DFAIT.

My colleague from Calgary East has suggested somehow linking it with certain functions carried out by CIDA, the Canadian International Development Agency. Those functions could then be accountable to parliament directly rather than through the indirect relationship of a crown corporation.

The new export division could provide occasional loan guarantees and other services beyond the scope of private companies such as long term insurance, political risk insurance and small premium insurance. It could support projects which are not commercially viable but are deemed to be in the national interest.

I accept that from time to time there are projects that need non-commercial financing and that Canada needs, for strategic reasons of national interest and not just economic reasons, to be present in the economies of countries abroad.

For that reason we in the Canadian Alliance would support, as a function of our international aid portfolio, financing of that nature. However we could do so with greater parliamentary accountability while allowing the more commercial aspects of EDC to operate in the private sector where they belong.

Until we finally see changes of this nature, changes which would increase accountability, reduce taxpayer risk and allow functions that could be in the private sector to go into the private sector, my colleagues in the official opposition and I cannot and will not support the changes to the Export Development Act because they do not deal with the fundamental problems of this crown corporation.

We are moving into a time of great fiscal and economic uncertainty. The Bank of Nova Scotia reported last Friday that the government would face a deficit of $5 billion in fiscal year 2002-03.

We are almost undoubtedly in the midst of a recession. The finance minister will accuse me and anyone who uses that word of alarmism, but it is an unavoidable fact. We had negative economic growth in the first two months of the third quarter of this year. There is almost no doubt that given the events of September 11 and its economic consequences we will see negative growth at the end of the third quarter and the beginning of the fourth quarter.

Two successive quarters of negative growth constitute a recession. Unfortunately it is not only plausible but likely that we will find ourselves in that position. That will have a negative effect on the fiscal position of the government. It means revenues will go down and so-called automatic stabilizers and social expenditures will go up.

All this puts us close to a deficit position mainly because the government is increasing its program expenditures far beyond the level of growth in the economy, inflation or population.

Why do I say this? I say it because it is time once again for parliament and the government to make hard choices. As the finance minister said three years ago, we can never again allow ourselves to go into deficit come hell or high water. I asked him last Friday if he would again make that commitment. He pointedly failed to do so.

There is a huge imperative to invest more resources into areas of national security such as the Department of National Defence, the RCMP, intelligence services such as CSIS, customs and border control, the coast guard and restoration of the ports police. These demands will undoubtedly cost several billions of dollars. Together with the oncoming recession and the enormous spending pressures the government has imposed on taxpayers through various discretionary programs, they will add up to a time in which we must be single minded and make difficult decisions.

That will mean liquidating assets such as some crown corporations. It will mean privatizing functions now performed by government agencies and crown corporations which could be carried out more efficiently in the private sector. These are some of the decisions we must make if we are to avoid a deficit. Our argument for the partial privatization of the functions of EDC is more important now than ever because we are once again staring a deficit in the face.

I recommend we go back to the drawing board on EDC, look at how its functions could be operated in the private sector, save the taxpayers a potential risk of hundreds of millions of dollars and prepare ourselves for some of the difficult choices which lie ahead in the near future.