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.