House of Commons Hansard #114 of the 37th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was wheat.

Topics

Canadian Wheat Board ActPrivate Members' Business

Noon

The Acting Speaker (Mr. Bélair)

Members have heard the request. Is there unanimous consent?

Canadian Wheat Board ActPrivate Members' Business

Noon

Some hon. members

Agreed.

Canadian Wheat Board ActPrivate Members' Business

Noon

Some hon. members

No.

Canadian Wheat Board ActPrivate Members' Business

Noon

The Acting Speaker (Mr. Bélair)

The time provided for the consideration of private members' business has now expired. As the motion has not been designated as a votable item the order is dropped from the order paper.

The House proceeded to the consideration of Bill C-38, an act to amend the Air Canada Public Participation Act, as reported (without amendment) from the committee.

Air Canada Public Participation ActGovernment Orders

12:05 p.m.

Westmount—Ville-Marie Québec

Liberal

Lucienne Robillard Liberalfor the Minister of Transport

moved that Bill C-38, an act to amend an act to amend the Air Canada Public Participation Act, be concurred in at report stage.

(Motion agreed to)

Air Canada Public Participation ActGovernment Orders

12:05 p.m.

The Acting Speaker (Mr. Bélair)

When shall the bill be read a third time? By leave, now?

Air Canada Public Participation ActGovernment Orders

12:05 p.m.

Some hon. members

Agreed.

Air Canada Public Participation ActGovernment Orders

12:05 p.m.

Westmount—Ville-Marie Québec

Liberal

Lucienne Robillard Liberalfor the Minister of Transport

moved that the bill be read the third time and passed.

Air Canada Public Participation ActGovernment Orders

12:05 p.m.

Chicoutimi—Le Fjord Québec

Liberal

André Harvey LiberalParliamentary Secretary to the Minister of Transport

Mr. Speaker, it gives me pleasure to rise and speak to Bill C-38, which is being given third reading today.

Initially, I very much want to thank the members of this House for their co-operation in ensuring passage of this short but important bill, which was debated in this chamber at the end of October and was referred to committee immediately. I want to express my gratitude to the committee members who agreed to deal with the bill so expeditiously.

Bill C-38 has but one purpose, which is to amend the Air Canada Public Participation Act to eliminate the 15% limit on ownership by any person of voting shares in Air Canada.The bill does not try to resolve all the longer term issues relating to Air Canada that were raised during debate on second reading.

The proposed legislative changes will provide our national air carrier with one of the key tools it needs as it attempts to regain its financial health, which has been severely strained by a number of events this year. Even before September 11, it had become quite apparent that Air Canada was going to have to make some significant moves to address its weakened financial situation.

The carrier’s efforts to integrate Canadian airlines; the high fuel prices; declining passenger demand; and the severe slowdown in the economy; have all had a significant impact on Air Canada.Air Canada has stated publicly that it needs new equity and it has taken, and continues to take, measures to acquire a considerable amount of non-voting equity.

However, for those investors who may have wanted to have some say in the direction of the company, there has been the legislated limit on voting shares along with the companion prohibition on association between the holders of those same voting shares. Taken together, these measures were designed to ensure that individual shareholders could not act in concert to take control of the airline and thereby nullify the concept of a widely held company.

A 10% restriction was in place until last year, when Bill C-26, the airline restructuring legislation, came into force on July 5, 2000. Bill C-26 had in it a section that amended the Air Canada Public Participation Act by raising the individual limit on the holding of voting shares to 15%. The prohibition on association was not changed.

In the lead up to Bill C-26, both the House of Commons and the Senate Standing Committees on Transport held extensive hearings to assess the views and concerns of the airline industry in Canada. In their separate reports, both committees recommended that the limit on individual voting share ownership in Air Canada be raised to 20%. The government agreed that the limit should be raised as a means of encouraging investment in Air Canada, while still preventing a single shareholder from gaining effective control.

The government’s view, at the time, was that 15% was the appropriate threshold, and it is this new limit that was ultimately accepted and entrenched in law. In coming to the decision to remove the limit, we have been told by a number of persons that any limit can act as a disincentive to an investor with serious intentions of having a say in the management of the company.

The events of September 11, 2001 have had devastating consequences for airlines around the world. Passenger traffic has fallen significantly and short and long term financial difficulties are forecast for our entire industry. Regrettably, we have already witnessed the bankruptcy of Canada 3000, our second largest air operator.

Air Canada has been forced by the effects of the terrorist attacks in the United States to re-examine its entire operation, even more profoundly than had been previously announced. It needed to adjust the services it offered to reflect demand.

It has had to reduce costs wherever possible. This has meant extremely difficult decisions had to be made by Air Canada’s management, including laying off close to 9,000 employees.

As we know, the government did not feel it could hold the carrier to its commitment of no involuntary layoffs or relocation, which had been negotiated in the context of the acquisition of Canadian Airlines. Clearly when all other major carriers were facing similar traffic and financial problems in the wake of September 11, Air Canada could not be forced to retain all its staff on the basis of that commitment.

To reduce the layoff impacts, the company has been working with Human Resources Development Canada to ensure its employees can benefit from any existing federal programs, including work sharing to reduce layoffs.

The carrier has also eliminated some routes from its network and has scaled back on the number and size of aircraft used on other routes.

Air Canada has benefited, along with every other Canadian air carrier, from the government initiatives that were instituted to help the industry cope with the severe economic fallout from September 11.

The government provided an indemnity for third party war and terrorism liabilities for essential aviation service operators in Canada. It took this action, as did other governments around the world, to ensure our carriers would be able to keep operating.

In recognition of the closure of Canada’s airspace, the government implemented a $160 million program to compensate the more than 1,300 businesses providing air transportation for passengers and cargo and offering specialty air services.

A great many Canadian carriers have already filed their claims under the compensation package and a number of carriers have already received their initial payments, including Air Canada.

Reagan National Airport’s unique geographical location has resulted in authorities in the United States imposing more stringent security requirements than at other American airports. The requirements include aircraft size specifications, dedicated crews, and trained, armed security personnel on board flights operating to and from the airport.

In order to re-establish Air Canada’s important flying rights into that airport from Toronto and Montreal, the government authorized the presence of armed RCMP officers on Air Canada flights to the U.S. capital. It also has made the necessary provisions to allow armed U.S. air marshals on U.S. flights to enter Canada without difficulty.

The decision to amend the Air Canada Public Participation Act, at this time, is designed to provide additional assistance to Air Canada in its attempts to return to financial stability.

Let me assure the House that the board of directors of Air Canada supports this change. The matter was discussed with the chair and Air Canada has stated publicly that it supports the government’s decision.

The government is confident that this measure offers the private sector greater opportunities for investing in Air Canada that could contribute to the successful restructuring of the company.

Moreover, in the committee hearings held during the first week of November, there was not one witness who voiced objection to the elimination of the 15%. It will provide new freedom to invest in Air Canada and should attract new capital for the airline.

With the enactment of this bill, Air Canada will find itself on the same footing as the rest of the air industry with respect to individual share ownership there will be no limit except for the 25% limit on non-residents which is a very different issue.

On this point, I must emphasize that Bill C-38 will not, in any way, result in a change in the government’s position on foreign ownership. This government remains committed to ensuring that Canada’s airline industry is run in Canada, for Canadians, by Canadians. Consequently, the government’s longstanding policy of a 25% limit on foreign ownership of voting shares, which applies to all carriers and not just Air Canada, remains unchanged.

This is a bill with only three sections. The first removes the 15% limit and the prohibition on association. The second renders null any other corporate documents that addressed the 15% limit. The third deals with when the changes will come into force.

The legislative changes which will be enacted as a result of this bill are in the interests of airline passengers and all of those who believe that our national air carrier, the world’s 11th largest airline, should continue to be the great carrier that it is.

I therefore encourage members to give it swift passage on third reading.

I want to thank all the members of the Standing Committee on Transport for their extremely constructive work. While this bill has its limits, it solves a major financial problem for Air Canada's future. I am convinced that all the suggestions made in committee, both by its members and by all the witnesses that appeared before it, will give us an even better perspective on the future of Canada's transport industry.

I am convinced that the huge amount of work that will have to be done in the coming year as part of the overall re-examination of everything that relates to our transportation industry will allow us to integrate several suggestions that were made before the committee during the review of this bill, which, while being very restrictive from a financial point of view, allows us to expand our perspective regarding many issues that exist within the department. It goes without saying that we are there to make corrections as problems surface.

Therefore, I am very pleased to take part in this exercise, along with all the committee members. Incidentally, in the next few days we will travel to Washington to continue to strengthen our co-operation with the Americans regarding extremely important measures to make our fellow citizens feel safer and to make changes that will be increasingly more substantial.

Again, I thank all the members of the committee and of this House for their interest in this bill, which is substantial even though it only has three clauses and which will allow Air Canada to be financially sound.

Air Canada Public Participation ActGovernment Orders

12:15 p.m.

Canadian Alliance

James Moore Canadian Alliance Port Moody—Coquitlam—Port Coquitlam, BC

Mr. Speaker, I am going to speak in favour of Bill C-38, an act to amend the Air Canada Public Participation Act, but I would like to reiterate the points I made when I last spoke to the bill on October 31.

This change is long overdue. It finally puts Air Canada on a level playing field with other Canadian carriers with respect to the sale of its shares. For the first time in Canadian history a Canadian citizen can buy, sell or trade as many Air Canada shares as he or she wants, just as if they were shares of any other private sector Canadian company.

Bill C-38 represents a marked departure from traditional thinking of Liberal governments. Air Canada was created by an act of parliament in 1937 as Trans-Canada Airlines. Ever since that time it has been the subject of much discussion in the House. For the first 40 years of the company's existence it was seen as an agent of the crown and as the federal government's principal policy instrument in the field of aviation. That changed with the passage of the original Air Canada Act in 1977. For the first time Air Canada was required to borrow in its own name and was declared to no longer be an agent of the crown. Even so, it remained a crown corporation and cabinet retained the power to appoint its directors.

Then in 1987 the Progressive Conservative government passed the National Transportation Act. This fundamentally changed the rules of the game and attempted to introduce competition rather than regulation as the primary arbiter within Canada's domestic airline industry. Within a year the Progressive Conservatives had correctly realized that in a competitive situation the government had no business owning one of the competitors, so the parliament of the day quickly passed the Air Canada Public Participation Act essentially privatizing Air Canada and turning it from a crown corporation into a regular company whose operations were subject to the Canada Business Corporations Act.

Section 6(1)(a) of the Air Canada Public Participation Act limited to 10% the number of shares that could be owned by a single shareholder. This was presumably done in the interests of ensuring that Air Canada stocks would be held broadly by as many Canadians as possible. The clause also put Air Canada on a level playing field with its principal domestic competitor, Canadian Airlines International. Let us not forget that the Air Canada Public Participation Act was first read in the House on May 19, 1988, nearly six months after the January 1, 1988 birth of Canadian Airlines International from the fusion into a single entity of all of Air Canada's pre-1980 domestic competitors: Pacific Western Airlines, Transair, Nordair, Québecair, Eastern Provincial Airways and Canadian Pacific Airlines.

In 1988 Canadian Airlines' parent company was governed by Alberta's Pacific Western Airlines Act which set a 4% limit on the number of shares any one group could control. The 10% share limit set in the original Air Canada Public Participation Act was actually a more liberal limit than the 4% set in the act governing Canadian Airlines. Then with the takeover of Canadian Airlines by Air Canada in 2000, Bill C-26 raised to 15% the number of shares that could be held in Air Canada.

Now, some 64 years after parliament first created Air Canada, we are finally discussing whether to give it some of the same rights as any other private sector company. If we were to believe the government members, Bill C-38 would put Air Canada on a level playing field. By striking down section 6(1)(a) of the Air Canada Public Participation Act, Bill C-38 ostensibly does put Air Canada on that level playing field with other carriers with respect to the way its shares can be bought, sold and traded by Canadian citizens. On that basis alone quite frankly, it should be supported. As a party that believes in free market and free choice we support that.

At the same time it must be said that Bill C-38 does little to address Air Canada's short term financial concerns that have led to thousands of layoffs at Air Canada. This is because: one, Air Canada does not obtain money when its shares are acquired by a new buyer unless Air Canada is the seller; two, no single shareholder is currently restricted by the present 15% limit, in that no current shareholder owns 15% and has publicly expressed a desire to purchase more but cannot as a result of the current restrictions; and three, if one were not inclined to buy Air Canada stock before this legislation, the fact that one can buy more of it does not work as an incentive.

In fact there are only two ways that Bill C-38 would financially benefit Air Canada. One would be if some of the debt which the Caisse de dépôt et placement holds were to be converted into shares. The caisse currently owns roughly 9% of Air Canada's stock. Converting its debt into shares would give the Caisse roughly 18%. This move, based on the $2.50 price per share at the date of the transport minister's announcement of his intention to introduce this legislation, would allow the company to convert roughly $17.789 million worth of caisse debt into 9% of Air Canada's voting shares.

The second way it could help Air Canada is if an individual or group were to take control of Air Canada with a clear plan to restructure the company.

It has been alleged that this legislation is legislation on behalf of the transport minister, urged by a whole bunch of interests as a “get Robert Milton” piece of legislation. It may very well be but time will tell. Frankly that is not any of the government's business but it puts it on a level playing field. If that leads to broader restructuring of Air Canada and new management, and looks after the broader interests of the company, the people who work there and Canadian consumers, that is a choice and decision for the board of directors of the company.

When we really look at it, the bill basically is political posturing. It lets the government claim to be addressing Air Canada's concerns while ignoring the company's pleas for bigger and bolder policy moves such as the implementation of air marshals or putting the issue of airline industry restructuring before the Standing Committee on Transport and Government Operations for immediate consideration and redeliberations.

Bill C-38 requires us to examine specifically the Air Canada Public Participation Act, and while I must report that I am in favour of striking down section 6(1)(a) of the act which this legislation does, we should not stop there. There is more to be done. We should ask ourselves a basic philosophical question. As we enter the third millennium, do we believe that the government should continue to regulate the internal affairs of a publicly traded corporation whose shares it no longer owns? Why for example should sections 6(1)(d) and (e) of the Air Canada Public Participation Act require Air Canada by law to maintain facilities and/or offices in certain cities? Surely these decisions are more properly the responsibility of the company's shareholders and board of directors.

Why for example should section 10 of the Air Canada Public Participation Act make the Official Languages Act applicable only to Air Canada while no other Canadian airline is similarly bound? If we really believe that the Official Languages Act should apply to Canada's airline industry, to place it only against Air Canada and not against other carriers, against in the sense that it is a regulation and a requirement that they meet its standards, then it hardly seems fair to hold Air Canada to a higher standard than the former Toronto based Canada 3000, Calgary based WestJet and Montreal based Air Transat.

Why should sections 6(1)(b) and (c) of the Air Canada Public Participation Act restrict foreign share ownership in Air Canada when a more equitable regime would see similar limits placed on all Canadian carriers? I believe that sections 6(1)(b) and (c) of the Air Canada Public Participation Act are wholly unnecessary. There already is a prohibition against foreigners owning more than 25% of a Canadian air carrier in the Canada Transportation Act. Section 55 of that act defines a Canadian carrier as:

--a corporation or other entity that is incorporated or formed under the laws of laws of Canada or a province, that is controlled in fact by Canadians and of which at least seventy-five per cent, or such lesser percentage as the Governor in Council may by regulation specify, of the voting interests are owned and controlled by Canadians.

Section 56.3 of the act gives the Canadian Transportation Agency the power to review all mergers and acquisitions in the airline industry and determine whether such activities would affect the airline's status as Canadian under law. Section 6(1)(a)(i) requires a carrier to be Canadian in order to have a licence to operate domestic services. Section 69 only allows two types of carriers to operate international air services: Canadian air carriers under the definitions I have just outlined; and non-Canadian carriers which have been designated by a foreign government or an agent of a foreign government to operate an air service under the terms of an agreement or arrangement between that government and the Government of Canada.

Under the Canada Transportation Act, if WestJet, formerly Canada 3000, or Air Transat were to allow foreigners to acquire more than 25% of their voting shares, they would no longer be Canadian. As such they would lose their ability to serve domestic routes within Canada and international routes between Canada and any other country, which is to say they would lose their value to any potential buyer.

Given that restrictions against foreign ownership are already present in the Canada Transportation Act, sections 6(1)(b) and (c) of the Air Canada Public Participation Act are wholly unnecessary. As well, it is important to note that if we do have a debate finally in this place, as some government members have said should happen, that the foreign share restriction on carriers, specifically Air Canada, should be raised from 25% to 49%, then it makes total sense to scrap that provision in the Air Canada Public Participation Act and leave it in the Canada Transportation Act so that when we do have that debate, the new restriction which would be lifted would apply to all carriers evenly. We would not have to amend two pieces of legislation in order to get the same thing done which would require more time of the transport committee, more bureaucracy and politicians wasting more time standing around talking about things they already agree on.

This is just simple streamlining and making things easier to do.

Even if there were no prohibition in the Canada Transportation Act on the 25% foreign shareholder limit, Air Canada's board of directors would undoubtedly take actions to ensure that control of the firm remained in Canadian hands because the convention on international civil aviation, more commonly referred to as the Chicago convention, sets out the basis of international commercial aviation.

Internationally scheduled commercial air traffic is then made possible only by bilateral agreements in which governments typically exchange air rights for the benefit of their respective carriers. Typically, on any international route, each country can designate a national carrier. Thus Air Canada and Air France fly between Montreal and Paris, Air Canada and Korean Air Lines fly between Vancouver and Seoul and Air Canada and Cubana Airlines fly between Canada and Cuba.

Only in the most exceptional cases do we find an airline flying between two cities when neither is in the airline's home country. In virtually every case where a foreign airline flies between two foreign destinations, it is only as an extension of a flight that started in the home base of the airline. Air Canada flies between Sao Paulo, Brazil, and Buenos Aires, Argentina, but only as part of a Toronto-Sao Paulo-Buenos Aires service and only with the approval of the governments of Canada, Brazil and Argentina.

Even without the safeguards in the Canadian Transportation Act, if Americans or anybody of any other nationality were to acquire a majority of Air Canada's voting stock, foreign governments might well refuse to recognize Air Canada as a Canadian company and thereby deny it the ability to continue serving routes to those countries. Thus, if United Airlines and Lufthansa were to buy 51% of Air Canada's voting stock, the British, French and Chinese governments would have the right to deny Air Canada permission to fly to London, Paris and Shanghai.

Without the ability to serve international routes, Air Canada, as an airline, would cease to have value to its investors. For this reason alone, its board of directors would never allow foreigners to own a majority of stock of Air Canada.

Anyone doubting this needs only to look at the arrangement that American Airlines had with Canadian airlines in 1999. It flew passengers from the United States to Vancouver and then from Vancouver on jets of Canadian Airlines to Asia. The reason for this was that the American Airlines had only been granted routes to Japan from the United States and needed access to Hong Kong, China, Taiwan, Thailand and the Philippines. The Asian services of Canadian Airlines were based on bilateral agreements between Canada and the Asian countries concerned. Had American Airlines taken control of Canadian Airlines, it would quite literally have killed the goose that laid the golden egg.

As I said earlier, I am in agreement with repealing section 6(1)(a) of the Air Canada Public Participation Act. For this reason I and the official opposition will be supporting Bill C-38. At the same time, having carefully examined the Air Canada Public Participation Act, I see no reason why we cannot just eliminate the entire act itself. It has at least four irrelevant clauses.

Section 4 deals with the transfer of shares to the Minister of Transport. Air Canada tells me that these shares have since been sold. Section 5 deals with continuance. Presumably this has been achieved in the 12 years since the act was passed. Section 11 deals with the continued appointment of the Air Canada directors past the privatization date. Presumably the terms of these directors have long since expired. Section 14 repeals the Air Canada Act. This clause has also been spent.

The act also discriminates against Air Canada in four specific areas.

Subsection 6(1)(a) limits share ownership of an individual or group to 15%.

Subsections 6(1)(d) and (e) make Air Canada maintain facilities and/or offices in defined cities. They make them maintain offices in Montreal, Mississauga and Winnipeg. We talk in the House all the time about getting out of the face of business, letting people sink or swim on their own merit, and getting out of the business of corporate welfare, mandating useless bureaucracy that is none of the government's business. This is a clear example of that.

I raised an amendment at the committee stage to have this part of the act struck down and it was voted down without any logic. It would be unheard of for the United States to mandate that Southwest Airlines, or United Airlines or American Airlines maintain facilities in Chicago, or Dover or Portland, Maine. The idea of telling a private sector company that it has to have a maintenance facility in a certain city is absurd. It is none of the government's business.

Specifically, subsections 6(1)(b) and (c) of the act restrict foreign share ownership in Air Canada, as I mentioned. Section 10 makes the Official Languages Act applicable only to Air Canada. As a Canadian who happens to believe in the principle of official bilingualism, who was taught in a French immersion class, whose mother taught French in this country, whose sister is a teacher of French immersion, in British Columbia no less, it seems bizarre to me that if we believe in bilingualism, if we believe that all Canadians should be able to speak equally in both of Canada's official languages, all we would have to do is put the idea of mandating official bilingualism in the air service, say that it was in the national interest and then put it under the Official Languages Act.

Why would we put the Official Languages Act and mandate it into the Air Canada Public Participation Act? It is a level of bureaucracy. It is a restriction and a burden on Air Canada that is not placed on other Canadian carriers. If we believe that people should be speaking in both official languages, if we believe in reaching out and it is an important principle for the country, then apply it to all of Canada's air carriers evenly, not just to one of them.

If the government is really intent on putting Air Canada on a level playing field with its domestic competitors, it can do this by not just removing the share limitation of section 6(1)(a) of the Air Canada Act, but by repealing the entire act itself. The legitimate policy aims which are contained in the act should apply equally to all Canadian carriers and not just Air Canada.

As written, the Air Canada Public Participation Act discriminates against Air Canada in ways that are utterly counterproductive and which retard the marketplace.

Just because Air Canada is a corporation, does not mean that the thousands of employees of Air Canada should be held to a higher standard than their colleagues at other companies. Either we believe in fairness as a nation or we believe in double standards. The official opposition believes in fairness and competition. I hope the government's opinion of the air industry will one day be the same.

Since 1937 the federal government has regulated Air Canada mercilessly. It is time to throw off the shackles. It is time to let Air Canada be held to the same high standards and only the same high standards as every other Canadian carrier. It is time to repeal the Air Canada Public Participation Act in toto and finally create the level playing field that people on both sides of the House say they want.

I will be supporting Bill C-38, as will the official opposition, but I have also introduced amendments and will continue to push for the full repeal of this legislation, so that Air Canada can be put on a level playing field with its domestic competitors for the first time in its 64 year history.

I also wish to mention something else. We are now at the third reading of Bill C-38. Many thing have gone on in Canada's air industry. Since we started debating Bill C-38, Canada 3000 has gone bankrupt and thousands of people have lost their jobs.

Since we started debating Bill C-38, 78% of Canadians have said that air marshals would make them feel safer. Since we started debating Bill C-38, 66% of Canadians have said that they worry that the airline they use will go belly up, leaving them stranded. Since we started debating Bill C-38 the U.S. congress has passed S-1447, the aviation security act, dramatically improving U.S. airline security. Since we started debating Bill C-38, a host of experts have come before the transport committee and called for the entire scrapping of the Air Canada Public Participation Act to put all air carriers on a level playing field. In all of these areas the government has turned a deaf ear.

I want to look specifically at the poll that was released by Ipsos-Reid, CTV and the Globe and Mail , six days ago. It is quite something. The press release reads:

As Air Canada begins flights to Washington, D.C. Reagan National Airport with an armed security officer known as an Air Marshal on board, an Ipsos-Reid/Globe and Mail/CTV poll released today indicates that most Canadians support the idea of Air Marshals on Canada's airlines. Eight-in-ten (78%) Canadians say that they would feel safer flying if they knew that there was an armed Air Marshal on board. In fact a majority (52%) strongly agrees with this view. The cost of providing security aboard flights should be covered by the Federal Government according to seven-in-ten (72%) of Canadians.

Two-thirds (67%) indicate that they would be more likely to fly if they knew that an armed Air Marshal was on board the flight.

When we break down the numbers, it is quite something. It went on to say:

Those in Atlantic Canada (87%) are most likely to agree that they would feel safer if they knew an Air Marshal was on board their plane. This compares to those in British Columbia (78%), Alberta (78%), Ontario (78%), Saskatchewan/Manitoba ( 77%), and Quebec (77%).

Canadians with a high school education (82%) or less than high school education (86%) are more likely than those with post-secondary education (76%) or those with a university degree ( 72%) to say they would feel safer if an Air Marshal were on a flight.

Older (81%) and middle aged (80%) Canadians are more likely than younger (74%) Canadians to say that they would feel safer on a flight with an Air Marshal.

Women (81% versus 75% of men) are more likely to agree that they would feel safer on a flight with air marshals.

According to seven-in-ten (72%) of Canadians the cost of providing security aboard flights should be covered by the Federal Government. In fact, four-in-ten (41%) strongly agree with this view.

It goes on and on. It is overwhelmingly evident that Canadians believe in this principle. When we came back to the House after the September 11 attack, I raised the issue of air marshals with the transport minister. He said it was a radical idea and he would not go in that direction because it was not a good idea. He has for years said that Canada should have a seamless security regime in our skies. Yet about a month ago he said that he would put armed air marshals on flights only to Reagan National Airport, by definition creating a seam in the security regime in this country by saying we would have air marshals on some flights but not on other flights.

Either we agree with the principle or we do not. The United States said that we could only fly into Washington's downtown Reagan National Airport, if we had air marshals on planes. The transport minister has said that because it is an important relationship he would do it. He either agrees with the principle that it is safer, he agrees with 78% of Canadians and with most parties and most members in the House that it would make air travel safer and does it, or he does not. If the transport minister does it for Reagan airport and if he is to hold to this principle of a seamless security regime in this country, I would think that he would extend the air marshal program and make everybody feel safer flying. That is what we need.

It should also be noted that since 1993, when this government came to power, seven Canadian air carriers have either declared bankruptcy, sought bankruptcy protection or have been taken over. Almost one carrier each year has been dropping like flies in the country.

Blame can be spread to a lot of places, but a lot of the blame does fall on the shoulders of the government because of legislation like the Air Canada Public Participation Act, which holds Canadian private sector companies to differing regulatory standards and therefore retards the marketplace. It does not allow carriers to compete on a pure level playing field so that the truly best will survive. It is time for the government to rethink where it is going, to end the political correctness and to stop mandating that Canadian air carriers and private sector companies have to have maintenance facilities in certain cities. Let Canadian carriers compete on their own.

We support Bill C-38, but if the government really had the chutzpah, it would show greater leadership, introduce real legislation on air marshals and airport security, scrap the Air Canada Public Participation Act and have renewed thinking with regard to Canada's air industry.

Air Canada Public Participation ActGovernment Orders

12:40 p.m.

Bloc

Mario Laframboise Bloc Argenteuil—Papineau—Mirabel, QC

Madam Speaker, I am pleased to take part in the debate on Bill C-38. As the minister's parliamentary secretary, the hon. member for Chicoutimi--Le Fjord has said, this is a simple bill, since it contains only three paragraphs. It calls for the current 15% limit for shares an Air Canada shareholder could own to no longer apply. Thus the control such a shareholder could have over the administration of Air Canada is no longer subject to a limit.

Obviously, the parliamentary secretary and hon. member for Chicoutimi--Le Fjord is trying to sell this as a cure-all, a bill which will finally enable Air Canada to escape from its economic woes.

It is a disquieting choice by the government. This is what I am going to try to point out to the people of Quebec, to the employees in the airline industry, and to the employees of Air Canada who may be listening to us.

We must look at what the Government of Canada has decided, as opposed to what other governments, the U.S. government in particular, have done. Immediately after the events of September 11, the American government announced a massive investment of $15 billion into its airlines: $5 billion in direct assistance and $10 billion in loan guarantees. This was announced within days of September 11. When the bad economic news became known, for example the bankruptcy of Swissair, Switzerland made the decision to invest 38% of shares in a company called Crossair. An announcement has already been made that public funds would be used to revive the Swiss airline industry. These are, of course, societal choices.

I will quote the hon. parliamentary secretary, the member for Chicoutimi--Le Fjord. He expressed the Canadian position very aptly in saying “Corrective steps will be taken as problems arise”.

Clearly, the government has opted for a piecemeal approach when it comes to solving problems in this sector which is of such great importance to Canadian industry. The airline sector supports an entire aerospace industry. We are talking about a number of companies that manufacture aircraft in Canada, including Bombardier, companies that manufacture motors, including Pratt & Whitney, and companies that manufacture parts. We know that Montreal is the world's second greatest centre when it comes to aerospace manufacturing. Obviously, if Canada chooses not to support its aerospace industry, as is the case now, we see results such as the Canada 3000 bankruptcy.

This is a tough blow to the airline industry, obviously, and I will speak later about the government's reaction. Canada's second largest carrier has gone bankrupt. It was decided to let it go bankrupt. Let there be no mistake on this. Quebecers and Canadians must understand the situation. The government had announced a $75 million loan guarantee for Canada 3000, but with requirements that were so demanding and difficult that it was clear from the outset that the company would not be able to fulfill them.

So the government never paid out its loan guarantee and the company declared bankruptcy. What is worse is that top management was in such a terrible state that they even decided to refuse work sharing. Three weeks ago, the directors of Canada 3000 refused a work sharing program for their employees. They already knew they were on the verge of bankruptcy.

The Government of Canada and the Minister of Transport should therefore have known that Canada 3000 was on the verge of bankruptcy. In this regard, perhaps the government wanted to appear as Canada 3000's white knight, knowing all the while—and on this Canadians and Quebecers must not be deceived, unlike the press, into thinking that the government was helping Canada 3000—, that the company was close to bankruptcy.

None of the help announced materialized. Canada 3000 was given no loan guarantees. With the conditions that were set It was clear from the start that their announcement was meaningless. Today we see the result. There are 4,800 employees now out of work and they have no guarantee they will get their jobs back. This is human capital we had in Canada in the aviation field, and the government has done nothing to help them.

Those are the facts of the matter. What is the government doing for Air Canada? The parliamentary secretary and member for Chicoutimi—Le Fjord put it clearly when he said that when the government learned the cost of insuring the aircraft would be astronomical it had to help. It helped with insurance costs.

Subsequently there were costs relating to the six day closure of airspace. It agreed to cover the costs. It was not the $160 million cited by the member for Chicoutimi—Le Fjord, this was for loan guarantees. Between $37 million and $50 million was given to the airlines to cover their losses during the closure of the airspace.

The government dealt with the situation on a day to day basis. As the parliamentary secretary mentioned, corrections were made as problems would surface.

But the problem is that the airline industry is practically bankrupt. In a speech delivered just a few weeks ago, the Minister of Transport said that Air Canada had $1 billion in cash on hand and could still borrow, sell its aircraft and use them to borrow $3 billion. But the government is making a company go bankrupt. When we decide to make a company sell its liquid assets—as with Canada 3000, which no longer had any cash and went bankrupt—we push airlines to the brink of bankruptcy.

Today, we are dealing with Bill C-38, which proposes that private shareholders be allowed to own more than 15% of the capital stock, a measure that is supposed to save the company. The harsh reality is that not one witness told us that passing this bill would generate an interest for Air Canada's stocks, for the simple reason that the government is in the process of making Air Canada get rid of its liquid assets. This is the reality. Therefore, there will be no massive buying of stocks.

The Caisse de dépôt would make a bad investment if it decided to convert these debts, as suggested by the Canadian Alliance member, into company stocks. Debts are interest loans that were given to the company. Therefore, it would be a bad investment to convert them into capital stock, since stocks are not constantly increasing in value these days. So, it would be a bad investment to convert debts, that is the loans given to the company, into shares. This is the reality. There will not be a keen interest for these stocks. It will be a long term solution for Air Canada.

When the situation becomes normal again for airlines worldwide, then Air Canada will probably have succeeded. We hope so. We hope that its fate will not be the same as that of Canada 3000. The government will probably react, because Air Canada is the largest carrier. It will, as the parliamentary secretary said, wait and see.

So, probably when Air Canada is on the brink of bankruptcy, the government will decide to make a major investment. But in the meantime, how many other companies, such as Canada 3000, will have shut down? This is the reality.

How many companies will have disposed of their liquid assets, as Air Canada is now doing at the suggestion of the Government of Canada, borrowing on everything they can, selling their airplanes and leasing instead, that is taking money for their airplanes and turning around and leasing them themselves from a leasing company in order to come up with the money to get through the crisis, which will last how long? That is what is difficult to understand. It is certainly hard for all the workers in the airline sector across Canada and for Air Canada workers to understand. The government is going at this in dribs and drabs, rather than announcing massive investments in the industry, as the Americans did.

This is what Canadians and Quebecers need to understand: in difficult times such as these, in the wake of September 11, the workers of Canada's airline sector are not to blame for the sad events which took place, but they are the ones now paying the price. They represent human capital in a highly competitive sector.

Before September 11, we were highly competitive in the airline sector, in the manufacturing of planes and parts and in the entire aerospace industry. But how will Canada be able to support companies that manufacture planes when they receive orders from American and Swiss companies because those countries have decided to help their industry?

Obviously, Canada 3000 will not be buying any more planes. How are we going to be able to sell the entire aerospace industry internationally, when Canada is not supporting the airline industry?

We are sending a very poor message to the rest of the planet, while others have decided to provide direct assistance to the industry. The Americans have decided to provide direct help; the Swiss have decided to provide direct help. These countries, or their airlines, will likely buy—or so one hopes—aircraft from Canada, a country that will not have helped its air industry while in crisis as the result of an event for which it was not responsible.

The government has a responsibility, the responsibility of passing the message that neither the aviation industry nor its workers should have to bear the brunt of September 11. Before that date, things were not as cut and dried. Obviously, the Bloc Quebecois will never agree with a policy sanctioning poor decisions by airline administrators; it is up to the shareholders to do that, through shareholder meetings. As for the rest, a clear message is necessary, not one such as we have received today about taking things one day at a time, claiming that this is what will rescue Air Canada from its problems. This is wrong. Air Canada will not be saved in the short term by this means. It will keep on losing its liquid assets.

As the minister said, once again Air Canada will be encouraged to sell its aircraft in order to amass some capital and then to lease them back. Air Canada's level of indebtedness will be increased and its shares will be increasingly less interesting. I repeat, as we speak, it would be a bad decision for the Caisse de dépôt et de placement du Québec to convert its debts or loans with a fixed interest rate to shares. Their behaviour is unpredictable, particularly their rate of dividend. They will surely not go up in value in today's conditions, when everyone is aware that there are constant losses month after month in the aviation sector.

It is easy for us to support a bill such as the one under consideration today, but it is difficult to do so without commenting on the crisis that the airline industry is experiencing. It is also difficult to believe, as the parliamentary secretary and member for Chicoutimi--Le Fjord predicts, that this is one of the most important bills in terms of Air Canada's future. The minister did not even show up to deliver the message this morning. With all due respect to the member for Chicoutimi—Le Fjord, this is not one of the most important bills for the airline industry in Canada, otherwise the minister would have come in person today to deliver the message about this bill that is apparently of such importance.

The bill is important. It will allow shareholders, who complained in the past that they could not control the board, to participate. It is therefore good that the 15% ceiling was removed and that those who want to invest for more than 15% ownership in Air Canada may now appoint directors proportionally to their share of ownership in the company.

Once again I will repeat for Quebecers, all of the witnesses who testified before the committee were unanimous in stating that the passage of this bill would not result in investors running out to buy more than 15% ownership of Air Canada tomorrow morning. The situation is very difficult. And we will be seeing more and more difficult situations.

The minister himself said so, and I repeat, Air Canada will have to divest itself of its $1 billion in cash. It will have to sell its aircraft. That represents $3 billion it could put its hands on, but that would put it in debt. It is up to the government.

In the meantime, it will affect the other companies that do not have as much cash as Air Canada. It is a fairly well managed company and it has considerable liquid assets, an advantage Canada 3000 did not enjoy, like other companies that are losing more and more money with each passing week, have less and less cash and will need help.

Here again, there are no programs. The minister is not here today to make an announcement, which could have accompanied the message sent by Bill C-38, that there would be real help for the airline industry in the form of direct aid to anyone deciding to buy part of Canada 3000.

Why not announce help and make it a condition for the new buyers of bankrupt companies, such as Canada 3000, that they provide better service to the regions?

Some restrictions should be included, to avoid the situation described by the parliamentary secretary when he said that Air Canada did a clean up by eliminating certain routes from its network.

Eliminating certain routes means that some towns located in various regions will no longer be served by Air Canada. How are we going to explain this to these communities? I can never say it enough: these towns are located in various regions. In committee, the expression used was small municipalities. These are towns that gained their status because they are located near the natural resources that make Quebec and Canada such beautiful countries. This is the reality. These towns are all entitled to the same transportation services as every other centre across our beautiful Quebec and Canada.

Of course, this is the harsh reality. Once again, we are letting the free market dictate things. Last week, Canada 3000 went bankrupt. One thing is certain: if all the investments and assistance measures announced by the parliamentary secretary and the minister since the beginning had produced such good results for the industry, Canada 3000 would not be closed today. The government must recognize that it has failed. It is obvious that it did too little too late. And the same thing will happen with the airline and aviation industries, where Canada used to be a most competitive player on the international scene.

This is the message we must send Canadians and Quebecers, and all workers in the airline and aviation industries “You are the best and that is why we are going to help you”. Sitting around and watching the Americans investing to support their industry, the Swiss using public money to support their industry and all its workers, will not encourage the rest of the world to buy the planes and parts we produce in Canada. By not supporting its airline industry, Canada is sending a terrible message to the rest of the world.

This is what the highly competitive human capital in the airline and aviation industries finds hard to accept. I repeat, the government must address this very serious issue. This is what matters today, that and the fact that Bill C-38 will allow the capitalists of this world to increase their share in Air Canada and to control the board of directors.

The message that needed to be delivered today, a message that the government failed to deliver, was that there would be support for all the human capital in the airline and aviation industries in Quebec and in Canada. What the government is doing, and I again refer to the message the parliamentary secretary delivered for his minister, is dealing with problems as they arise.

To conclude, once again, this is the approach adopted by the Government of Canada, this Liberal government, which has no respect for one of the most prosperous industries in Quebec and in Canada.

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1 p.m.

NDP

Bev Desjarlais NDP Churchill, MB

Madam Speaker, I will be splitting my time with the member for Winnipeg North Centre. I do not know if I should say I am pleased to speak again to the bill. Over the last couple of years everyone has had the opportunity to rehash what is happening in our airline industry and the obvious fact that the government's strategy for the airline industry is not working.

We stood here 18 months ago and went through numerous hours of committee discussions about the airline industry in Canada. We heard about the government's plan to stabilize the industry and make sure we maintain service to a number of small areas in Canada. As my colleague from the Bloc has indicated, Air Canada is reneging on its commitments to provide that service.

We in the New Democratic Party and a number of Canadians are starting to realize that the government's plan is not working. The plan for deregulation and privatization which was started in the late eighties is not working. Members of the House who believe it is need to give their heads a good shake. Fear of the word regulation has brought us from one crisis to the next. We felt we have had to deregulate industries or they could not make it.

For how many years must Canadians see our airline industry flounder before the government realizes the answer is not solely in privatization or deregulation? Regulation is good at times and until there is some reregulation within the airline industry we will be back here time and time again.

The bill relating to the removal of the 15% shareholder limit would not do the trick. Every witness who appeared before the committee said the bill would not do the job. They said the 15% shareholder limit would not make a difference for Air Canada but that other things need to be happening as well.

The sad part is that the government is still out there grasping at the need for more foreign ownership. It believes that will save us. The bottom line is that will not. There are those of us who know that increased foreign ownership would only mean that cream of the crop routes would be taken over by other airlines. We must go in a different direction. We will not survive and have a stable airline industry in Canada until the government recognizes this.

Something as simple as regulating domestic capacity would ensure we do not end up with little fights about competition rules. I am calling them little fights because the underdog never seems to get anything out of them. Air Canada moved in on CanJet out east and put CanJet out of the picture. They are now introducing a new airline that will compete with WestJet.

Competition is not all bad. There is no question of that. However competition for the sake of competition means we will be constantly putting airlines out of business. That is not the answer. If we regulated domestic capacity in certain areas we would make sure the airline industries could make a go of it. It would give the industry a chance to stabilize. That is what we need to see.

The parliamentary secretary spoke this morning rather than the transport minister. Perhaps that says something. Perhaps he realizes the bill is no big deal. Perhaps he knows it would have no astounding effect except for the fact that there would be an increased shareholder limit for someone.

I bring this point to the floor again. Where would Air Canada be now if it had a 40% or 50% shareholder after September 11? Would that shareholder have stuck around taking the losses? I do not think so. We would have been in an even worse position.

Under the watch of the transportation minister six airlines have folded in Canada. What is he doing? He is grasping at straws. He says we will try a little piece of this legislation and a piece of this legislation. What we really need is a transportation policy or strategy within the airline industry and other transportation industries. I will not dwell over and over on the same thing. We in the NDP will not be supporting the bill.

The most recent of the airlines, Canada 3000, is going under at a time when there is a need to provide stability and give assistance to the airlines. We in the NDP did not say to give it a blank cheque. We said that if we are to give it government dollars we should tie it to alleviating job loss and maintaining service. It is not a blank cheque. Interest free loans are not unreasonable at this time.

The government could do something to assist the airlines and alleviate job loss. What did the minister do? He almost came right out and said if the airlines did not cut jobs the government would not give them any money. If someone then came along and said they would buy it back at 50% of the value it was at before, the government loan would be off.

Once again the government has no strategy for stabilizing our airline industry, supporting airlines in Canada and making sure service is provided throughout the country. The government is making a whimsical grab at whatever might work for this period of time. It has no vision for the country.

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1:05 p.m.

NDP

Judy Wasylycia-Leis NDP Winnipeg North Centre, MB

Madam Speaker, I am pleased to participate in this debate. I begin by thanking my colleague the member for Churchill, the NDP transportation critic, for the incredible work she has done on this issue over the last number of months and years.

The crisis in this country's transportation sector and particularly the airline industry is a very serious one. It is critical in terms of the future of our economy and the very identity of our nation.

My colleague from Churchill has outlined our opposition to Bill C-38. She has indicated to us that this bill represents an inadequate band-aid approach to a very deep rooted, far reaching problem. Concerted action on the part of the government is needed, not tinkering, not playing around at the edges, but actual involvement in this crisis. It needs to initiate a clear strategy for getting our airline industry back on a solid footing.

We often talk about the ties that bind. When we look at the ties that bind, there is no more important institution than Air Canada. Over the years we have turned to Air Canada, our national railway, our post office, our pension system, our health care system, our quality education system. All those are examples of great institutions once all within the public sector that united this country and helped us build on, and not see as a negative, our diversity. Air Canada has been part of that tradition. It has been part of our approach as a nation to the difficulties we face as a people who are spread out in such a wide geographical area, who come from so many different regions with such a wide range of income levels. Air Canada is fundamental to who we are as a nation and where we will go in the future.

Today we are facing a crisis of such proportions that we may see a collapse of Air Canada. In that context, is this bill appropriate and up to the task of preserving a national airline that reaches out to provide transportation to every part of the country, to every region no matter how small, no matter how remote? The answer clearly is no. The bill does not even begin to tackle this very critical issue nor does it address the concerns of Canadians, of workers, of people who depend upon the airline industry for transportation and for their livelihoods.

I do not need to remind anyone what the collapse of Air Canada would mean for our economy. It would be disastrous. My colleague from Churchill has said that over and over again. As a result of the mismanagement by the government supplemented by the tragic events of September 11, the whole airline industry is on the verge of a collapse which would have cataclysmic consequences for our nation. As a result of this crisis, more than 9,000 jobs are at risk. This is causing hardship, distress and anxiety for the proud working men and women who have contributed so much to the industry and who have invested their working lives to ensure that air transport in the country is a viable system for Canadians.

The instability in the airline industry not only affects the thousands of men and women who work for Air Canada, but it also has had a ripple effect on all of our communities. Certainly, small independent travel agencies, particularly in my community of Winnipeg, are suffering greatly because of the instability in the industry and because of the crisis in Air Canada. Let us not forget all of the people involved in the entire transportation system who desperately turn to the government for leadership.

I want to indicate what it would mean for a community like Winnipeg if Air Canada went bankrupt and were allowed to collapse due to negligence and passive reaction by the government.

Winnipeg alone would be looking at the loss of an aircraft maintenance base with more than 800 employees which services contracts from all over the world. It would be looking at the loss of a 400 to 500 person reservations office. It would be looking at the loss of pilot flight operations and in flight operations and the loss of an entire cargo sector. There would be the loss of approximately 150 airport customer sales and service workers as well as the loss of ramp and baggage workers serving over half the Winnipeg airport. There would be the loss of an entire building of finance employees. It would also be looking at the loss of many subsidiary or spinoff services such as Air Canada Vacations. The list goes on and on. It would have a disastrous impact on every community in the country and on our need as a nation to build on the ties that bind and not accentuate our differences because of geography.

As has been said over and over again, the bill is totally inadequate to address the task at hand. What is needed desperately is for the government to say, no matter how hard it is, that it made a mistake years ago when it got into the whole business of privatization and deregulation, off-loading and outsourcing in the interests of trying to balance the budget on the backs of Canadians.

It is not too late to say that the public sector plays an important role. An institution like Air Canada within the purview of the Government of Canada is an absolutely critical part of our society and country. Let us look at finding ways to ensure an equity position in Air Canada and finding enough of a control and hold over the ownership of Air Canada to preserve jobs, to serve communities no matter how far and remote they are, and to address all of the transportation needs of Canadians.

We have heard from others in the House today, especially the Alliance members, how one should simply turn to the marketplace, to foreign investment, to the kinds of scenarios which have been tried but have failed Canadians over the last number of years. It would be worthwhile to look at the fact that changing the ownership rules is clearly not a solution to Air Canada's problem. As has been said over and over again, some foreign investment at best would bring in a short term cash infusion and would keep Air Canada in the air for a few more months. The solution we are proposing is to address the reasons Air Canada is losing money and look at the role that government ought to be playing in terms of a regulatory framework and government involvement.

Too many times we have heard from the Alliance and other members in the House how much of a burden it would be to actually think about re-regulating and deprivatizing an institution like Air Canada. Many in the Alliance Party have a hard time imagining the possibilities under a re-regulated airline system. They have a hard time understanding the benefits to all Canadians of proactive government involvement in an area as vital as transportation.

I hope we can overcome that kind of ideologically blinkered position and actually look at a proactive government role once again in this area. We owe it to Canadians who have invested in the corporation with their working lives. We owe it to every community that needs to be connected to the rest of the country in order to feel some sense of identity and belonging to this great nation. We owe it to the world to show there is another way that public institutions can play an important role in providing services to people and recognize that sometimes services for people are more important than profits for corporations.

I urge members across the way especially to think again about their role with respect to Air Canada and the airline industry. I urge them to come forward with a package of proposals that will ensure that Air Canada survives and that will look at putting our entire airline industry on a stable footing.

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1:15 p.m.

Canadian Alliance

Val Meredith Canadian Alliance South Surrey—White Rock—Langley, BC

Madam Speaker, I find it interesting that I would agree with my colleague from Churchill when she said that one of the things which is lacking is any kind of vision from the Liberal government as to where transportation and certainly airline restructuring should be going. I must say I do disagree heartily with where she would want the Liberal government to go.

The issue is why the Liberals did not implement this policy 18 months ago when we were looking at airline restructuring under Bill C-26. In early 2000 the transport committee looked at restructuring the airline industry. Bill C-26 put in a provision to raise domestic ownership from 10% to 15%. I introduced an amendment to the bill at committee in March 2000, suggesting that the government completely get rid of any kind of limitation to domestic ownership. It is interesting that the Liberals who sat around that table, most of whom are here today, voted against that amendment, yet they will support the government's removing that same issue which my amendment dealt with when the government puts it on the floor for a vote.

The big question is what is the difference of doing it now as opposed to having done it 18 months ago? The big difference is that the timing of the Liberals is really off the mark. Eighteen months ago someone may have been interested in picking up a greater degree of ownership in Air Canada. Unfortunately, today there are not too many people around who are that excited about owning airlines. The market is not in a position where there is the same kind of interest that there was 18 months ago. The Liberals really missed the boat in that 18 months ago this would have had a much more meaningful impact on the airline industry than it will have now.

When the Liberals brought in this restriction originally it was to allow for wider distribution of shares so that not any one organization or any one person could control what used to be a national airline. Although it sounded good at the time, when we were looking at Bill C-26, we heard that in essence the restriction allowed the board of managers who owned at that time, and I understand it is not much different now, around 3% of the company's shares to make decisions that were not necessarily the best decisions for the airline.

It allowed that board of management to get into predatory practices or to make decisions to run out the competition. At that time the competition was Canadian Airlines. Today it would seem to be Canada 3000 and WestJet. It allowed the board of directors to have that kind of control over the directions the airline was taking.

Rather than determining that there was a place for Air Canada and making that place in the Canadian airline industry strong and effective, it seemed that the decisions were to get rid of the competition. Well, they succeeded. Canada 3000 is the latest victim to go under. Canadian Airlines of course was bought up by Air Canada over a year ago. A week and a half ago Canada 3000 literally ceased operations.

It is a question of, is that all the bill is going to do is allow new management? I would suggest it is a very ineffective way of dealing with that. That in itself is not going to have any meaningful impact. Once again a combination of things must happen.

The Liberal government refuses to deal with an issue which it had an opportunity to address before and has an opportunity to do so now and that is foreign ownership limits. The foreign ownership limits remain at 25%. If we were to ask the minister why that is so, he would say it is because that is the American limit. Raising the foreign ownership limit to 49% and getting rid of the domestic ownership restrictions would allow a greater pool of capital to be put into Air Canada and to help it restructure. The minister, and I would assume the government behind him, is refusing to even address the issue of raising the foreign ownership limit.

When we talk about foreign ownership limits the reason we talk about 49% is because the bilateral agreements that Canada has with other countries require that part of that bilateral agreement is that a Canadian air carrier has this agreement with another country. If we were to raise the foreign ownership component to more than 49% we would have a harder time convincing people that it was actually a Canadian air carrier.

Therefore 49% still allows Canada to have an air carrier that is a Canadian air carrier but with a greater opportunity for foreign ownership component.

I suggest that now is the time to allow Air Canada the flexibility of not only domestic ownership requirements being removed but upping that foreign ownership component.

When the committee studied the bill we were told that over 75% of the debt that is held by Air Canada is foreign owned. By not upping the foreign ownership we are also removing the ability of Air Canada to restructure its debt by transferring or converting it into equity.

If we were to up the foreign ownership we would allow that foreign debt to be converted into an equity in the airline and allow Air Canada an opportunity to look at a different way of restructuring and give it more flexibility.

I would not argue to any great degree with the NDP's attitude that Air Canada is the national carrier and is the flagship of Canada. We all accept that. However for the impression to be left that Air Canada can only function if the government takes equity and more control in the airline is a fallacy. History will show that governments do not do business well. Governments have a history of messing up some very good industries that could have operated on a profitable basis and made sure that customers were served but it was through government interference and government ownership that things were messed up, in some instances to a very large degree.

I would even go so far as to say that part of Air Canada's problem is that it was a government airline and the culture it has tends to be a government type bureaucratic culture. It is at a disadvantage when it has to work in a competitive marketplace with other air carriers. It is only when Air Canada learns how to do that, that it will survive in the international community.

I would suggest that the worst thing that could possibly happen would be for the government to get back into the ownership of Air Canada. I would think that by giving Air Canada more flexibility, which would certainly be a first step but by no means the last step, the government is allowing Air Canada a bit more flexibility in how it can restructure itself and compete in the international community.

When we start talking about government subsidization and governments throwing money into companies, I can give a couple of examples from my province of British Columbia but I will only give one. The NDP government put $380 million of taxpayer money into Skeena Cellulose Inc. to keep it operating and keep people working. All that does is defers reality. It defers the time when the company realizes that it cannot stay afloat because of bad management, where it needs to restructure and it needs to become more competitive.

Skeena Cellulose closed the doors once again. There goes 380 million taxpayer dollars that the government has no ability to collect from Skeena Cellulose.

Government subsidization or government getting back into the ownership is certainly not the way to go.

Yes, there is a role for government and that is very clear in the Canada Transportation Act. Government is there to make sure the safety of air transportation is there for consumers. It is there to make sure Air Canada does not run out all the competition. The competition bureau and the competition commissioner is there but unfortunately under the act they need more teeth. They need to have a greater ability to enforce the restrictions that are put on companies such as Air Canada when it holds a monopoly.

The issue is not whether or not we support the bill. We do support removing the limit on domestic ownership. However the bill should also have provided for an increase in foreign ownership which could be done by order in council of cabinet. I would strongly urge the Liberal government to consider doing that sooner than later. It should have learned by this example that it has to be bold and step out in a strong manner when the time is right. If it does not, it does not help to step out in a timid and weak fashion years later.

The government should be bold and increase foreign ownership along with removing the domestic ownership in Air Canada. It also should look at other opportunities to allow competition in Canadian airspace.

When it studied Bill C-26, the committee looked at things like a Canada only air carrier which could be foreign owned by British Airways or another airline. However it would operate solely in Canada so it would not need any kind of bilateral agreement. It would use Canadian crews, Canadian fuel, pay Canadian taxes and produce Canadian jobs. That is something the government should be considering.

We talked about other things when we looked at air restructuring and Bill C-26. It is appropriate to bring some of those issues back on the table. The Government of Canada should be looking at other things that could provide more competition in the airline industry and give better service to air travelling consumers. There is no reason that we cannot get into that debate and look at creative new ways of providing air service to Canadians.

What we need to do is convince, cajole and push the government into seeing the big picture on how the Government of Canada can fulfill its obligations to ensure safety and environmental issues are considered and to ensure labour and competition matters are considered without getting back into really serious ownership issues or conditional type issues.

I encourage the government to look to a much broader perspective and to be a little more creative. Hopefully we will see something in the near future that shows it is going in a direction that is for the good of all Canadians.

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1:30 p.m.

Liberal

Roy Cullen Liberal Etobicoke North, ON

Madam Speaker, I did not catch all the member's speech but I did hear the part where she talked about creative solutions.

It seems to me that in restructuring Air Canada, the unions, the pilots, the ground crews, the flight attendants and all the employees may have to put some water in their wine. They may have to make some concessions to make the airline viable. I am not privy to all the airline's business but it seems to me that is a possibility.

If they have to do that, why would Air Canada not allow its employees to participate in the ownership of Air Canada? We have the precedents of USAir Inc. and Delta Airlines Inc. This would give the employees of Air Canada an opportunity to participate in the success. It might allow those employees to become even more customer focused, even more service oriented than they are today. Frankly, I think they could use some encouragement in that area as probably all of us in the House have discovered from time to time.

Would the member opposite support an employee share ownership plan that would allow the employees to own shares in Air Canada?

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1:30 p.m.

Canadian Alliance

Val Meredith Canadian Alliance South Surrey—White Rock—Langley, BC

Madam Speaker, it is a publicly traded company so the employees can buy shares in Air Canada any time they want. I think what has to happen is that Air Canada needs to be more inclusive in its decision making process. It should also have closer talks with the unions and the employees as to the reality and in what direction it would like to go. It should have more communication of that kind happening.

I have often wondered why big union funds are not being invested in these kinds of things. Why do the unions always go to the taxpayer when the unions themselves are not prepared to invest the large sums of money they have in their bank accounts to support the companies that they seem to want the Canadian taxpayers to support?

Certainly the issue with Skeena Cellulose, I do not understand why the unions did not invest in Skeena Cellulose in order to keep it operating for the employees for whom they were concerned.

Employees have to be encouraged. I know it has worked well for WestJet. The captains with WestJet help clean up the airplane after the passengers have left because they own part of the company. They know that is the kind of good service that gets customers back into the planes, which means their company, of which they feel a part, does much better.

Certainly there are companies that do it and do it well, and it has had a very positive effect on the companies and on the service they provide. There is nothing stopping the employees of Air Canada now from buying shares and getting involved in the running of their company.

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1:30 p.m.

Liberal

Peter Adams Liberal Peterborough, ON

Madam Speaker, when we are debating the future and the competitiveness of Air Canada and open competition in the airline industry, it always makes me concerned for the north and the remote parts of the country.

The province of Ontario is our most populous province. Eighteen per cent of the province is taken up with cities and farms. Eighty-two percent of the province is the rest of the province which is not empty. People are living there. In the province of Quebec, as you well know, Madam Speaker, the percentage of farms and cities is even less than that. In the western provinces it is even more so. In Nunavut 30,000 people live in 20% of Canada.

What are the member's thoughts, as we move toward more competition in Air Canada and as we think about the future of our national airline, for the people living in the remote parts of Canada who depend on airline service?

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1:35 p.m.

Canadian Alliance

Val Meredith Canadian Alliance South Surrey—White Rock—Langley, BC

Madam Speaker, I lived in the north of Canada for 15 years. I lived in a community where we thought we would have scheduled airline service but no one would take it. It was not profitable for a company to keep a service there.

If people want airline service they must use it. When an airline like Air Canada has a monopoly it tends to drive the little airlines out of business. The little airlines can offer that service in the north. I will use the example of Hawk Air in British Columbia that started out with one plane, a Dash 8. It flies from Terrace to Vancouver and I think Terrace to Prince George as well. It runs a couple of trips a day providing good service and undercutting Air Canada. Hawk Air has since bought a second airplane to service other communities.

If we allow those smaller airlines to grow they will provide the service but when there are dominant air carriers that go out of their way to undercut these smaller air carriers and drive them out of business, the smaller carriers are not allowed the opportunity to grow.

When we handle the restructuring of the airline industries in Canada, we must ensure that the Hawk Airs in Canada are given the opportunity to grow, to expand and to have control over and be able to function in their marketplace without the fear of having a big carrier come in and chase them out because they built the business, which then becomes viable for a bigger carrier which comes in and drives them out. We have seen that in the country more than enough.

The time has come for us to recognize and support smaller operators who may have half a dozen planes but who serve the north and isolated areas better than the bigger carriers will in the long run. We have to make sure they can survive.

I think the government must look at this from a bigger perspective and in a broader scope by being creative and supportive to the small business guy who is willing to serve those markets given half a chance.

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1:35 p.m.

Bloc

Robert Lanctôt Bloc Châteauguay, QC

Madam Speaker, we are dealing with Bill C-38, which we are told is an important bill. When one takes the time to read it, however, and it does not take long, it is of a rare simplicity. In fact, it is so simple, one wonders how much it is justified.

One cannot be opposed to it, knowing how affected the workers in the airline industry are. One cannot do otherwise than to say yes to such a bill. Yet, what will the repercussions of such inaction be? This bill alone will not help this industry, which is so much in need of help, particularly since September 11, 2001.

We have no choice but to look at how the private sector might invest in its capital stock to see how it will be managed. At the present time, an individual or company may own 15% of Air Canada's stock. Will removing this limit improve the situation of shareholders? Will it be the same, or worse?

Quite frankly, I do not think there will be huge numbers of investors rushing to invest in an industry like the aviation industry, especially since September 11. They are trying to convince us that this bill is of such importance that it will solve the problems. My point of view is that the problem will not be solved if there is no direct investment in the airline or aeronautical industries.

One needs only think of Pratt & Whitney in Quebec. One needs only think of all the job losses directly linked to it, not only in the aftermath of September 11, but also because of poor management by the board. Is this board going to be changed by changing the number of shareholders? Who will monitor this? For what purpose?

There will perhaps be no other choice but to rationalize. Those who are going to invest are certainly all involved in high finance and will at some point expect the company to break even and also generate a profit. How will this be done? Obviously, all a board of shareholders could require of an executive board is to rationalize. Is this what will really happen? Is this good for the men and women who work for Air Canada?

Unions are telling us that they will accept this decapping. They have no choice. The government has no other idea. It is not directly investing the money that is required. It is simply saying that it will ask the private sector if we can privatize even more and put new money into the industry. What is the government doing right now?

Madam Speaker, I forgot to inform the Chair that I will be sharing my time with the hon. member for Jonquière. I appreciate the fact that she is here.

Will this new investment with new money really take place? I am not sure, particularly since the government just told us that it would deal with this as the situation evolved.

We all saw how things went with Canada 3000. It was requested that the necessary money be invested directly, while knowing full well—at least I hope so—what the situation was with Canada 3000. A short time later, Canada 3000 went bankrupt. The government did not put money directly into that company. Yet, workers everywhere in Quebec and in Canada are losing their jobs.

What is the government waiting to protect workers' jobs? As we know, Air Canada employs a number of people in Quebec. Why not invest, why not be proactive and create a new situation? The government has several billion dollars in surpluses, but it hesitates to invest directly in our airline industry, an industry that Canada and Quebec greatly need.

During various oral question periods, we asked the government to invest directly in Quebec's regional companies to support the airline industry and these airline companies. The government flatly rejected our request, saying that it would help major carriers instead. Some help.

Canada 3000 is bankrupt and has not yet received any money. The government is talking about $160 million, but I think this is for part of the loan guarantee, for new money. The government has billions of dollars in surpluses. It must protect that airline and that industry.

These amendments must not set the stage for the cap on foreign investment to be lifted in future. I know that this is not mentioned in Bill C-38, but the role it gives the government does open the door. It sees the bill as a way to allow greater privatization.

What if shareholders are not interested? What will they do? I hope that they will not lift the 25% cap on foreign investment in Air Canada. That is a risk. I am not saying that this is the direction in which the government is heading, but merely that I hope that this is not its goal.

This money must be invested directly. There are billions of dollars in the surplus. We are told that the government is waiting for the budget before deciding where to spend them but, in the meantime, the airlines are in trouble, so much trouble that some of them are going bankrupt and others are looking for ways to cut costs. Who is going to foot the bill? Once again, Air Canada workers.

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1:40 p.m.

An hon. member

And those in the regions.

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1:40 p.m.

Bloc

Robert Lanctôt Bloc Châteauguay, QC

Yes, as my colleague indicates, those in the regions too, obviously. The response came from the government, which said “We will not put any regional money in the airline industry”.

Furthermore, the government is telling us that Air Canada manages its affairs well by cutting routes in the regions. And this is vision? I cannot believe I am hearing that.

The time has come to save an industry where jobs are well paid and all the companies that depend on it are important.

In Quebec, there is more than just Pratt & Whitney. There are a number of companies manufacturing parts and, of course, everything linked to the industry in the way of airports. All of this goes to say that the government should do more than just ask the private sector to invest in this industry.

I think the government must give this thought, examine all the options, not to allow a few to invest in this capital, but to invest directly itself by taking from the surpluses and breathing new life into the economy so that Air Canada does not end up with a monopoly.

Air Canada and regional airlines must be allowed to breathe. According to what happened recently, it seems that without new money or government investment, there is a problem.

This company has to operate and charge such a high fare in the regions that it lacks liquidity. So, if they were short of cash, just imagine how short they are now. If they are forced to use money they do not have yet, it means a cash shortfall. This is more or less what happened with Canada 3000. A cash flow problem means an industry never gets its head above water. Loan guarantees are not the only way to go.

New money is needed. That money is available. The Government of Canada has new money. They should use it as well as permit government guaranteed loans. The government should also have some strategy instead of waiting until companies go bankrupt, especially when Canadian and Quebec workers lose their jobs. This applies not only to Air Canada but to all jobs connected with this industry.

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1:45 p.m.

Bloc

Jocelyne Girard-Bujold Bloc Jonquière, QC

Madam Speaker, I am pleased to speak today to Bill C-38. Before I begin though, I would like to congratulate the member for Argenteuil--Papineau--Mirabel for the excellent work that he has done on this bill.

I listened intently to his speech this morning, and I must say that it contained all of the elements the government needs to ensure that this bill really helps the airline industry in Canada and particularly in the regions.

I am pleased to speak to Bill C-38, an act to amend the Air Canada Public Participation Act. This issue of restructuring the industry in Canada has been discussed at great length for over two years now.

In fact, in the summer of 1999, the sale of Canadian Airlines led to a power struggle between Air Canada and Onex for the purchase of this company, which was in dire financial straights. After giving his implicit support to Onex, the transport minister had to backtrack when the takeover bid was ruled illegal by the Superior Court of Quebec.

At that time, the basis for the ruling was the percentage limit of capital shares in Air Canada that could be held by a Canadian investor. Just one year ago, the Minister of Transport raised the limit from 10% to 15%. Under the current bill, the government would remove the ceiling for this figure.

It must be said that this proposal would not be without consequences. In fact, removing the 15% ceiling would pave the way for the private sector to invest even more heavily in air transportation and the industry would find itself in the hands of financial sharks with no sense of the importance of offering quality.

In my opinion, the current quality of air service offered to the regions of this country, but more specifically to Quebec, should serve as an alarm bell for the federal government. Remember now that Baie-Comeau no longer has direct air service to Quebec City. Business people who want to travel on Air Canada's regional carrier must first go to Montreal, before boarding a flight to Quebec City. How crazy is that? It is completely unacceptable.

Given the situation, business people on the north shore would do better to walk to Quebec City. It would probably be faster than taking the plane.

Such a situation also exists in Gaspé and in the lower St. Lawrence area. Regional air services have disappeared. This is a paradox in the 21st century. It seems to me that this should be an era of modernity and of easy travel. But no, people in the regions are 50 years behind the times now. If they want to travel out of their region in future, they will have to take the bus. As Michel Vastel put it a few weeks ago in an editorial in which he was taking a few pot shots at this government, “Welcome to the 21st century!”

My comments on Bill C-38 are therefore understandable. By removing the 15% limit, we could be making the present situation even worse. The only way to try to improve this potentially disastrous situation is to strongly urge the federal government to impose some very strict conditions.

The Bloc Quebecois, through the hon. member for Argenteuil--Papineau--Mirabel may therefore approve of removing the ceiling, but only if amendments are made and very strict conditions set.

This is a difficult challenge, but we are offering Liberals the chance to correct past mistakes. They can no longer be counted on the fingers of just one hand. I need only mention the dreadful quality of French in this country's airline industry. Moreover, there seem to have been a good many reprimands to the government about this by the Commissioner of Official Languages, Dr. Dyane Adam and her predecessors.

This is just one more source of government tax revenue.

I would also like to mention the federal government's unfair treatment in terms of financial assistance for the smaller airlines that operate in the regions.

This morning, my colleague mentioned to me that it was the Parliamentary Secretary to the Minister of Transport, the member for Chicoutimi—Le Fjord, who spoke on behalf of the government. He said that he was pleased that Air Canada was in the process of getting its business in order, cutting short haul flights within the regions.

I come from the Saguenay—Lac-Saint-Jean, the same region as my colleague, the member for Chicoutimi—Le Fjord. I think that we have a right to the same service we had in the past. When Air Canada received permission to purchase Canadian Airlines in 1999, it assured us that it would increase the number of flights in the regions. Air Canada did the opposite.

In our region, we pay $800 to $850 for a return flight, Bagotville-Ottawa. I could go to Europe or Florida, return, and both would cost less. We have a right to the service promised by this company in 1999. Today, the Parliamentary Secretary to the Minister of Transport says that they are in the process of putting their house in order; they are in the process of cutting flights in the regions.

The Saguenay—Lac St. Jean region does not deserve this sort of treatment from the government. I remind the House that, a few weeks ago, the Minister of Transport decided to help out the five major carriers: Air Canada, Air Transat, Sky Service, WestJet and Canada 3000, by giving them interest-free loans.

But such a policy is extraordinarily unfair. By giving financial assistance to these major carriers, the Minister of Transport has put the last nail into the coffin of small carriers. Let us not forget that the major carriers will be able to use this money to engage in unfair competition with small regional carriers, such as Air Alma, in my region of Saguenay—Lac St. Jean.

I read an article this morning in Le Soleil , in which the Minister of Transport said that the competition commissioner must be given more power. When he appeared on CTV yesterday, he talked about giving more power to the competition commissioner. But there is no need to do that because there will be no more competition, no more regional carriers.

I think that telling the people in the regions not to worry, that the government is going to give the competition commissioner more power, is just another way of misleading them.

This is an extremely important issue because jobs are at stake. Workers deserve to get back their fair share of what they are paying in, of what they are entitled to, from the government. This is completely ridiculous.

Last week, I asked the Minister of Transport a question. Since Canada 3000 had gone bankrupt, he had promised it a loan guarantee. I asked whether he could give the remaining $45 million to the regional carriers so that they could get back on their feet too.

But he did not even answer. So it is clear that this bill will not solve anything. It will make matters worse. It will not make Air Canada a better administrator. It will simply prevent the regions from obtaining the services to which they are entitled.

I think that the Bloc Quebecois will support this bill, but I hope that the government will include in it the extremely important conditions we put forward.

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1:55 p.m.

The Acting Speaker (Ms. Bakopanos)

Is the House ready for the question?

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1:55 p.m.

Some hon. members

Question.