House of Commons Hansard #49 of the 37th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was elections.


Presence In Gallery
Oral Question Period

3 p.m.

Some hon. members

Hear, hear.

Presence In Gallery
Oral Question Period

3 p.m.

The Speaker

I also wish to draw to the attention of hon. members the presence in the gallery of the Hon. Joan Marie Aylward, Minister of Finance of Newfoundland and Labrador.

Presence In Gallery
Oral Question Period

3 p.m.

Some hon. members

Hear, hear.

Business Of The House
Oral Question Period

April 26th, 2001 / 3 p.m.

Canadian Alliance

John Reynolds West Vancouver—Sunshine Coast, BC

Mr. Speaker, it being Thursday, I would like to ask the government House leader what the business of the House will be for the rest of today, tomorrow and even next week if he has it done that far.

Business Of The House
Oral Question Period

3 p.m.



Don Boudria Leader of the Government in the House of Commons

Mr. Speaker, let me begin by congratulating the opposition House leader on his appointment and to extend as well similar words of congratulation both to his seatmate, the new chief whip, and the other officials of his caucus.

This afternoon we will continue debate on the second reading of Bill C-6, the water export bill. I intend to seek adjournment of the debate after the speech from our colleague from the Bloc Quebecois on this matter.

If there is any time, we will commence the second reading of Bill C-25, the farm credit amendments bill. It would be my intention as well to adjourn the debate after the lead off speech from either the government minister or parliamentary secretary, as the case may be. We would then propose to move immediately to private members' business this afternoon.

Friday we will debate second reading of Bill C-26, the tobacco tax legislation.

On Monday we will return to Bill C-6, which will not be completed this afternoon. We will then continue with Bill C-25 for the same reason, and then, if necessary, to Bill C-26, the tobacco tax legislation, if we do not complete it tomorrow. If we have any time left, it will be spent on Bill C-10, the marine parks bill, as I previously indicated to my colleagues at the House leaders meeting earlier this week. In the afternoon we will debate Bill C-16, the charities bill. I wish to give notice pursuant to Standing Order 73(1) that the government will propose that this bill will be referred to committee before second reading. This should, in essence, take roughly the time between 3.00 p.m. and the adjournment later in the afternoon.

Tuesday shall be an allotted day. In the evening it is my intention to seek the usual co-operation to hold the second of the take note debates on the modernization of House rules. It would be pursuant to consultation with others. My intention is to see if we want to have this debate using the forum we used very successfully earlier this week, but, as I said, I intend to consult with other House leaders on that.

On Wednesday I would propose that we continue with any unfinished business from the previous days, adding thereto Bill S-16 which was introduced in the House earlier this day. Should we be ready to do so, and should time permit, I would then commence the report stage and third reading of Bill C-22, the income tax amendments bill.

Business Of The House
Oral Question Period

3:05 p.m.


Marlene Catterall Ottawa West—Nepean, ON

Mr. Speaker, I rise on a point of order. Discussions have taken place among all parties and I believe you would find consent for that if a recorded division is requested Monday, April 30 on a motion to refer Bill C-16 to committee before second reading, pursuant to Standing Order 73(1) it shall be deemed deferred until the end of government orders on Tuesday, May 1.

Discussions have also taken place among all parties and there is agreement pursuant to Standing Order 45(7) to further defer the recorded divisions requested earlier today on third reading of Bill C-9 and third reading of Bill C-3 from Monday, April 30 until the end of government orders on Tuesday, May 1.

Business Of The House
Oral Question Period

3:05 p.m.

The Speaker

Is that agreed?

Business Of The House
Oral Question Period

3:05 p.m.

Some hon. members


The House resumed consideration of the motion that Bill C-6, an act to amend the International Boundary Waters Treaty Act, be read the second time and referred to a committee.

International Boundary Waters Treaty Act
Government Orders

3:05 p.m.

Canadian Alliance

Deepak Obhrai Calgary East, AB

Mr. Speaker, it is a pleasure to rise today on behalf of the constituents of Calgary East to speak to Bill C-6, an act to amend the 80 year old International Boundary Waters Treaty Act.

When the Minister of the Environment spoke on the bill this afternoon he came out very strongly and proudly, with his thumbs pounding, stating that his government has acted decisively to address the concerns of Canadians in reference to the export of water. He proudly said that the bill would stop the export of water and fulfill the commitment made to Canadians about the export of water. He went on to say that his government was putting a tremendous amount of priority on the bill.

I was a little surprised. I would like explain to those who are listening to my speech today what the bill amounts to and what the Liberal government has not done for our water. It is still hanging out in limbo because of the inability of the government to address the issue seriously.

The government said that it put a priority on the bill. I spoke to the bill in the 36th parliament. It was the last bill that was presented to parliament. I made a speech and thereafter the bill was off the table because the government had another agenda. It did not care about that agenda. It wanted to get re-elected.

Today, because the government has no vision for the next three or four years and needs to do some housekeeping, it brings back this bill because there is nothing else on its agenda. Now it is saying that it is committed to stopping the export of water and that it is committed to this bill. What a contradictory statement and action that has taken place.

Bill C-15, as the water bill was called in the 36th parliament, came up for debate during one of the final days leading up to the election, as I mentioned. The bill was debated only for one day and then disappeared. I think that shows the importance the government places on protecting Canada's waters.

As we know, water is an issue that touches the lives of all Canadians as it is part of our Canadian heritage. Canadians are very concerned by the thought of losing control of our freshwater resources. It is a legitimate concern because a thirsty world will sooner or later turn its attention to our lost freshwater resources.

In fact, water export was never supposed to be an issue in Canada. A number of federal politicians in the early 1990s claimed that Canada had a sovereign right to manage its own water and that water would never be challenged under any international agreement. Unfortunately, this has proven to be false and the water issue is back on the table.

The Liberal government is on the record as saying that NAFTA should be amended to prohibit bulk water exports. Had the Liberals kept their promise, Canadians would not have to worry about the issue of bulk water export and we would certainly not be discussing this matter today.

Regardless of its promise, this government signed the NAFTA deal without a side agreement on water. Raw logs and unprocessed fish were exempted from NAFTA but the best arrangement Canada could get on water was the following side deal signed on December 2, 1993, by Canada, the U.S.A. and Mexico. It states:

The NAFTA creates no rights to the natural water resources of any party of the agreement.

Ultimately, this side deal is of little legal value because unless water in any form has entered into commerce and become a good or product it is not covered by the provisions of any trade agreement, including NAFTA.

Nothing in NAFTA obliges any NAFTA party to either exploit its water for commercial use or to begin exporting water in any form. Water in its natural state in lakes, reservoirs, water basins and the like is not a good or a product. It is not traded and therefore is not and never has been subject to the terms of any trade agreement.

This side agreement worked as long as Canada never allowed water to enter into commerce and become a good or a product. Let me repeat that: this side agreement worked as long as Canada never allowed water to enter into commerce and become a good or a product.

However, with the exception of international boundary waters, the vast majority of water in its natural state is owned and managed by the province. It is a provincial responsibility to manage the resource carefully, just as a province manages its forests and its oil and gas. If one of the provinces enters the business of tendering contracts to export bulk water, it must, according to chapter 11 of NAFTA, treat Canadian, American and Mexican companies in a similar fashion.

National treatment provisions give the right to all corporations of our NAFTA partners to help themselves to our water the moment any Canadian company is given an export permit. If any Canadian company is given an export permit by a province, because it is a provincial resource, then it falls under NAFTA where we have to treat the Americans and the Mexicans in the same manner. Now that we are going into FTAA agreements which will be coming up in the next five years, I hope that the government will have water exempted. Otherwise we will be facing the same difficulties.

In fact water is not exempt from NAFTA, as I said. Once water starts being shipped, either the government is powerless to stop it or, if it does, the government would have to compensate for the lost income under the investor state provisions.

The government did not have the foresight to think that some provinces might one day look into the possibility of licensing the export of water, but recent examples show us the opposite.

First, the province of Newfoundland granted an export permit to McCurdy Enterprises Ltd. to export water from Gisborne Lake. Second, in Ontario the Nova Group received a licence to extract water from Lake Superior. Finally, in British Columbia, Sun Belt, a Californian company that wanted to export water from B.C., is now demanding up to $10.5 billion in damages from the federal and B.C. governments alleging that its rights under NAFTA have been violated. Sun Belt is demanding restoration of a water export licence that the B.C. government cancelled in 1991 as well as compensation for lost business opportunities.

Although the provinces eventually pulled out of these proposals, they renewed the fears about water export and the impact of our trade agreements.

The government, having failed to protect Canadian sovereignty over water during the NAFTA negotiations, is now proposing a backup solution. Bill C-6 proposes to prohibit bulk water removal out of the boundary waters between Canada and the U.S.A., which covers only 15% of Canada's water resources. The provinces manage the remaining 85%.

That is what I meant when I said I do not understand the Minister of the Environment when he talks about stopping bulk water export. His bill would cover only 15% of Canada's water resources. That is fine. I hope he will tell Canadians that it would cover only 15%. The government should not say that the bill would address the issue about water resources.

Clearly, 85% of the water resource is held by the provinces. They control it. It is their natural resource. It is not controlled by the federal government. If any province so desires to sell water from its basins, from its lakes, then suddenly we have a federal government that is powerless. It can run to the provinces but the provinces can tell the federal government no. They can say they want to sell it.

Canadians have a right. It is theirs. Canadians demand that right. However, the government failed to remove water from NAFTA as it had promised in the election platform, because it failed to renegotiate NAFTA and get water out of NAFTA and have it exempted. It was the right only of Canadians to say yes if they wanted to export water. Now we have this jurisdictional problem with the federal government practically unable to have any teeth to stop bulk water export for 85% of our water supply.

The government is trying to have a Canada wide accord to prohibit bulk water removal. It has recognized this problem so it is trying to get a Canada wide accord to prohibit the removal of bulk water. The problem is, as I have just mentioned, that five provinces have refused to endorse the accord, leaving the country's water vulnerable to exportation.

The federal strategy was designed in the belief that all provinces would agree on a national ban. It is quite obvious, after the two day debate in Kananaskis in Alberta in November 1999, that the government has failed to achieve this goal. The parties could not come to an agreement.

It is very important to note that the bill deliberately avoids the term export. With good reason, the Liberals fear that the term export will imply that water is a commercial good. What the absence of the term export really means is that water was in fact part of the negotiations during the NAFTA talks and nothing was done. That is one thing the government should admit.

As it stands now we can say yes or no, but we have lost the right for only Canadians to say yes. What I mean by that is what I just emphasized, that is, under NAFTA if water is exported because it is not exempted that gives the opportunity to allow opening up the doors to American and Mexican companies to come and export our water. This is the real fear.

Canadians have lost the right to say yes to this precious resource. Whether they want to export or do not want to export, this should be a right that should remain with Canadians. They can decide whether they wish to export water. They can decide whether they want or do not want to export water as a natural resource, or whether under certain conditions they want to or do not want to.

There are many options we can use. Some small communities may want to do it as part of an economic reason and we can do so if it does not damage the environment. However, this right should be the right of Canadians. We have lost that right because the government failed in its election promise to remove water from NAFTA.

In 1993 while the government was busy signing away our sovereignty over water, the Canadian Alliance made a specific statement on the protection of our freshwater. The Canadian Alliance stated that exclusive and unrestricted control of water in all its forms should be maintained by and for Canadians.

Canada possess about 9% of the world's renewable resources and 20% of the world's total freshwater resources. This includes water captured in glaciers and polar ice caps. Protection of our sovereignty over this valuable resource is critical to Canadians and to our national identity.

The Canadian Alliance believes that Canadians should retain control over our water resources and supports exempting water from our international agreements, including NAFTA. An outright ban on water exports could run contrary to our NAFTA commitment because water was not exempt from that agreement. Therefore, a side agreement would have to be negotiated which would exempt water from NAFTA before a ban on water exports could even be considered.

Until an exemption is achieved, we encourage the provinces to place a moratorium on commercial water licensing so that water in bulk form never becomes a good governed by NAFTA rules. Once an exemption from NAFTA is in place, the decision to export water in bulk should rest with the provinces who own the resources. That means once the decision is given to the provinces, which are elected governments, it is up to Canadians to decide what to do with water. They can decide.

I would like to emphasize again that we are heading into an FTAA agreement. The Quebec summit chose that path and the Alliance supports it. We think that if it is handled correctly, free trade will bring prosperity. However, there are always dangers when we sign blindly, as we have found out now with this water issue. No long term thought was given to this. When it was signed, no thought was given to what would happen if the provinces said no. No thought was given to the fact that the government was signing an international agreement on one of the most important resources we have, a resource controlled by the provinces. Its strategy, which was to have a total ban by convincing the provinces to do so, has failed.

As I mentioned, the 1999 Kananaskis meeting clearly showed that the provinces were not on board with the federal government on this issue. They wanted the right to do whatever they wanted to with a natural resource that they feel is their responsibility.

In the absence of exempting water from NAFTA, the Canadian Alliance will support the bill. We will support it because it represents the only viable approach the federal government can take and the only constitutionally valid NAFTA compatible ban on bulk water export that can be achieved.

The Canadian Alliance has indicated quite clearly that it favours a ban on water export. All export of water should be done by Canadians only. Since the ban is not there, the Canadian Alliance feels that the bill would in some degree ensure that water is not taken away from the international boundaries basins, and it is a NAFTA compatible ban on bulk water exports.

However, I would like to see the government propose real answers to this issue and show some leadership in exempting water from our trade agreements.

I was hoping today that the Minister of the Environment or the Minister of Foreign Affairs, when they presented the bill and talked about the commitment of the government not to export water, would listen to Canadians. In reality they failed to say that the bill was only dealing with 15% of the issues.

I hope the government takes the initiative and try to get water exempted from other trade agreements. It would have been preferable to exempt water from NAFTA but, failing that, Bill C-6 will have to do as second best.

Canadians should realize that we no longer have sovereignty over our water. We have that threat over our heads because of our international trade agreement called NAFTA and the failure of the government to take water out of it.

Future generations would also lose sovereignty over water if something is not done to change this. That is why the government should do something. Bill C-6 or not, the bottom line is that Canada's water resources are vulnerable to exportation.

While I am a strong supporter of free trade, I believe it should not come at the expense of our sovereignty over water. Perhaps one day Canada will decide to export water if it is proven environmentally sound. If that ever happens, and I strongly stress if, the tap should belong to Canadians only.

The Canadian Alliance will be supporting Bill C-6. However I re-emphasize that the federal government should work with the provinces now to ensure that water does not become an export commodity. It should try to get water exempted from our international trade agreement.

International Boundary Waters Treaty Act
Government Orders

3:30 p.m.


Jean-Yves Roy Matapédia—Matane, QC

Madam Speaker, first I will say that the Bloc Quebecois will not support Bill C-6 as introduced, not because we are opposed to the basic principle of the bill, which is to prohibit bulk water exports to other countries as well as bulk water transfers within the country, but for a very simple reason.

Natural resource management is the provinces' responsibility. Each province is responsible for managing its own water resources, which belong to its residents.

We can talk about a lot of things with regard to Bill C-6. For example, we can talk about groundwater. We already know that the drawing of water by certain companies in some regions of Canada creates problems for agriculture with soils and wells, as well as problems for residents of the area where underground water is being drawn.

In fact, we had problems in some regions in Quebec. People complained and some companies had to stop drawing water in certain areas.

The other major element for us in Quebec is that when we are talking about boundary waters we are obviously talking about the Great Lakes and the St. Lawrence River. The St. Lawrence River flows across Quebec and its importance is well known. For the past several years, especially in certain areas such as Lake Champlain and the lakes around the St. Lawrence, water levels have dropped so dramatically that shipping may be at risk. Therefore it is extremely important for us to be able to conserve and manage as we see fit this resource which belongs to us.

There is another issue. When we talk about bulk water exports we should remember that it might involve not small quantities, but huge quantities of water. Currently there is no treaty to really protect us against bulk water exports.

A few years ago, in view of the problems that were occurring especially in the southern United States, there was already talk here in Canada about the possibility of exporting water in bulk through a pipeline carrying water from the north, namely Canada, to the United States.

This is a major point and I am not sure that as a country we would be better protected by Bill C-6. I am not sure that in the future Bill C-6 will make it impossible to export bulk water.

The vision this government should have for the future in agreement with the provinces and while staying out of their areas of jurisdiction should be to legislate a true ban supported by international treaties, which would provide us with a real protection.

The pressure to export water will increase in the future. The pressure will increase in view of the water shortage in some countries, especially the United States, our southern neighbours.

Currently the danger if water is misused or if we try to export it is that it will result in the desertification of certain areas and harm crops and agriculture in a big way. As we know, some western provinces are already experiencing problems with soil erosion and desertification.

Barely 15 or 20 years ago a Senate committee published a report on this. It dealt with desertification of soils in the western provinces, particularly due to a lack of water, a lack of rain and climate change.

Another very important element that has an impact on the quantity and quality of our water resources is the gradual disappearance of our forests. They play a role in terms of water retention, cleaning the rain so to speak, and they are essential to the health of our lakes and rivers.

There are also the dangers of shipping. In Canada we do not have any real protection with regard to shipping, including on the St. Lawrence River, and we should not pretend that we do. We could be the victims of a major disaster considering the number of ships that go up the St. Lawrence River every day and the type of products some of them carry. Once they have reached the Great Lakes these products are then delivered to major industrial centres in the United States such as Detroit and Chicago.

I would remind the House that Quebec has always been a leader in the area of water treatment. I remember that in 1978, Marcel Léger, then minister of the environment, proposed to the government of Quebec a water cleanup program in which the government invested some $12 billion over the years. We were very much ahead of our time; we were visionaries so to speak.

In the early 1980s, when I was mayor of my home town and we were looking at cleaning up our waters, we figured that it would cost us about $2.8 million. People thought we were crazy because we wanted to clean up our waters, protect our drinking water and clean the water before we would send it back into nature.

At the time we were concerned about the pollution of our municipal sources of drinking water and even private sources of drinking water in some areas. It was a serious problem and still is, as we have seen recently.

Our drinking water supply is still in danger. We still have a lot of work to do to ensure that municipalities can provide quality drinking water to all Quebecers and Canadians. Consumer confidence is not what it used to be. That is quite obvious.

Also the bottled water industry is expanding and people no longer trust their own drinking water supply systems. They would rather drink bottled water.

This is an expanding market that some businesses would like to take over. We are talking about bottled water and not bulk water removal, but still bottled water export could set a precedent that would eventually open the door to bulk water exports.

When bulk water exports are involved consideration must also be given to the effects on our ecosystems, the economy and people's lives. Water, we will all agree, is vital to life and essential for humans, for all ecosystems, for animals, for nature and for our environment. It is an essential element. It is a resource that belongs to the community, and the community therefore needs assurance that we are protecting it.

It is absolutely vital that bulk water exports be banned, as the bill states. However agreement would first have to be reached on the principle of the bill, and we in the Bloc Quebecois are not in agreement with it. Although the protection of water resources is vitally important, as it stands Bill C-6 strikes us as risky and contrary to the way jurisdictions are divided between the federal and provincial governments.

In fact it has considerable potential of encroachment onto provincial areas of jurisdiction while not providing any additional protection against major water exports.

We have just experienced the Quebec city summit where negotiations were hidden, closed to the public, and civil society was denied access. This same type of negotiation could very easily take place in future on water exports, given the future needs that are going to develop, particularly with our neighbours to the south who as we know are far bigger and far stronger economically.

I have already mentioned the risks to navigation. This is very important to me. The federal government ought to address this matter since it is its responsibility, particularly in the St. Lawrence.

As I said, we are not disaster-proof. It is entirely possible that one day or other in the St. Lawrence catastrophes will occur such as we have seen in Europe, especially in northern Spain and northern Europe.

It would really be a major catastrophe and could affect an entire population, nearly 7 million people in Quebec, living in large part on the shores of the St. Lawrence.

Water represents an inestimable resource for humans. It is commonplace, as I said earlier, to want to protect its export. We have to remember that water has great potential in export terms and the demand will increase. It is vital to prevent its export.

The federal government announced in early 2000 that it intended to intervene more directly in the matter of water export and introduced a three pronged strategy.

This strategy follows from a motion passed in the House of Commons on water protection, which was introduced on February 9, 1999.

There are three parts to the strategy: changes to the International Boundary Waters Treaty Act in order to give the federal government regulatory powers over bulk removal of boundary waters; a joint reference with the United States to the International Joint Commission to investigate the effects of consumption, diversions and removals including those for export purposes in boundary waters; and a proposal to develop, in co-operation with the provinces and territories, a Canada-wide accord on bulk water removal so as to protect Canadian water basins.

On February 10, 1999, Canada and the United States appointed the International Joint Commission. After noting a growing number of proposals to export water from the Great Lakes and other areas of the U.S. and Canada, the two countries agreed to ask the commission to study the question and make recommendations within the next year. An interim report was presented on August 18, 1999, and the commission presented its final report on February 22, 2000.

In it's interim report the International Joint Commission recommended that during the six months it would need to complete its study the federal and provincial governments and the American states not authorize any removal or large scale sale of water.

It pointed out a number of things that warrant mentioning. It indicated that there was no surplus in the Great Lakes system, that large scale removal of water could limit the resilience of the system and that information on the removal of underground water was inadequate.

This point causes problems because, as I said earlier, underground waters can have a considerable effect on the integrity and quality of ecosystems.

The report pointed out as well that we do not know what the demand will be for water in the future. Also, because of the possible climate change and other natural considerations, it is impossible to assess with any degree of certainty what the level and the flow of the Great Lakes will be in the years to come.

In its final report, released in February 2000 and entitled “Protection of the Waters of the Great Lakes”, the commission concluded that we must protect the Great Lakes, particularly in light of the cumulative uncertainties, pressures and repercussions from water removal and use, demographic and economic growth, and climate change.

The report includes the following conclusions:

The water of the Great Lakes is a critical resource. On an average annual basis less than 1% of the water in the Great Lakes system is renewable, which says a lot.

If all interests in the basin are considered, there is never a surplus of water in the Great Lakes system; every drop of water has several potential uses.

International trade law obligations, including the provisions of the Canada—United States Free Trade Agreement, NAFTA, WTO agreements and the GATT do not prevent Canada and the United States from taking measures to protect their water resources and preserve the integrity of the Great Lakes basin ecosystem.

To the extent that decision makers do not discriminate against individuals from other countries in implementing these measures, Canada and the United States cannot be forced by trade laws to jeopardize the waters of the Great Lakes ecosystem.

Let us note, however, as I mentioned earlier, that no such agreement may override international treaties. It will therefore be possible to challenge such a measure, i.e. the one we have before us, under the treaties which have been signed, and these obviously include the FTAA, NAFTA and so forth. These are overriding treaties with respect to this sort of measure to protect drinking water.

In its final report the BAPE sums up its conclusions as follows. The overall diagnosis is relatively clear. The current approach to water and aquatic ecosystem management is sector based, poorly integrated and not concerned enough with protecting the resource.

The shift must be made to integrated management practices that are more harmonized at the government level, balanced protection and enhancement objectives, and be purposely implemented at the river basin level. Furthermore, action can and must be taken now along the lines of the coming policy.

The BAPE's recommendations indicate that the Quebec government should approve the proposed policies for protecting and conserving groundwater and pass the related regulations, provided that projects involving the removal of more than 75 cubic metres of groundwater a day are subject to the environmental impact assessment and review procedure.

Recommendation No. 4 explains in particular that the Quebec government should make the Water Resources Preservation Act, which bans bulk exports of groundwater and surface water, permanent legislation. The commission is of the opinion that bulk exports need to be forbidden by law and no chances taken, with the uncertainties of international trade agreements such as NAFTA, WTO and the like.

In chapter 1.1 of the BAPE report reference is made to the federal government's position that NAFTA does not apply to water and bulk exports, which is being strongly disputed by a number of environmental groups, as the commission points out in its report.

BAPE also explains its position because, before bowing to such a request which at first blush is certainly appealing, it feels it would be best to examine NAFTA as a whole to determine what Canada has to gain and what it has to lose by renegotiating it. This goes beyond the mandate of the present commission.

In short, what BAPE wants us to understand is that it is very risky at this time to undertake a procedure such as the one the federal government is embarking on, given the fact that international agreements may take precedence over a bill such as this one.

In conclusion, as I have already said, the Bloc Quebecois will not be in favour of Bill C-6 for a number of reasons, including one major one: the bill encroaches on provincial areas of jurisdiction.

International Boundary Waters Treaty Act
Government Orders

3:50 p.m.

Scarborough—Rouge River


Derek Lee Parliamentary Secretary to Leader of the Government in the House of Commons

Madam Speaker, in accordance with discussions among parties in the House, I move:

That this debate do now adjourn.

International Boundary Waters Treaty Act
Government Orders

3:50 p.m.

The Acting Speaker (Ms. Bakopanos)

Is that agreed?

International Boundary Waters Treaty Act
Government Orders

3:50 p.m.

Some hon. members


(Motion agreed to)

Farm Credit Corporation Act
Government Orders

3:50 p.m.

Prince Edward—Hastings


Lyle Vanclief Minister of Agriculture and Agri-Food

moved that Bill C-25, an act to amend the Farm Credit Corporation Act and to make consequential amendments to other acts, be read the second time and referred to a committee.

Madam Speaker, I am pleased to begin debate today on Bill C-25, an act to amend the Farm Credit Corporation Act. I am proud to introduce the bill as it is important legislation that would position the Farm Credit Corporation to meet the needs of the agricultural industry today and well into the future.

I do not need to remind anyone in the House that agriculture is the backbone of most rural economies in Canada. Bill C-25 builds on the existing Farm Credit Corporation Act of 1993. It expands the depth and scope of services that the corporation is able to offer farm families and farm related businesses across rural Canada.

Through the legislation, the Farm Credit Corporation would help more farm families achieve their long term goals. The corporation would assist a greater number of agricultural enterprises in creating jobs and economic growth in rural Canada. It would have a new name, Farm Credit Canada-Financement agricole Canada, to better reflect its federal identity. FCC would be better positioned to contribute to the long term sustainability and prosperity of rural communities where farmers live and work.

The corporation has a long tradition of anticipating the needs of agriculture. Since 1959 FCC has worked with the industry to introduce services to meet its needs.

In the past few years FCC has introduced many new financial options that lead the way in meeting emerging requirements. It is estimated that up to 120,000 farmers would be retiring over the next decade, and that $50 billion in farm assets would change hands. There is a definite need for services that help farm families make the transition from one generation to the next, just as beginning farmers need help in getting a solid start.

That is why FCC introduced the agri-start loans in 1998. These loans recognize the marketplace realities young farm families face today. They provide flexible payment options to help young farms and young farmers grow their operations through the initial development phase. These options also assist existing farmers to pass the farm to the next generation.

Last year the corporation developed flexi-hog loans. These loans offer flexible payment options to help hog producers through the cyclical downturns in their industry. Earlier this year FCC introduced the enviro-loan. It enables producers to upgrade or expand their operations according to the latest environmental standards. FCC has its ear to the ground, listening to the needs of producers in the agricultural industry. It has its eye on the horizon, anticipating the industry's needs in the years to come.

Since 1993 the Farm Credit Corporation Act has served the agricultural industry in good stead for nearly a decade. However the marketplace has changed considerably in the past eight years. Producers are venturing into new crops and livestock production. They are entering into more long term contracts with suppliers and buyers. They are forming alliances with other farmers to increase their purchasing and selling power. Some producers are exploring new generation co-operatives. Others are expanding into value added manufacturing to diversify their revenue source.

The average agricultural operation requires a more complex range of financial and business services than could not have been foreseen when the act was last amended in 1993. FCC has played a leadership role in meeting these needs. The corporation is the only national financial institution totally dedicated to agriculture. Its slogan “Agriculture, it's all we do” is more than a marketing strategy. It is a statement of fact. The corporation's 900 employees are well recognized for their agricultural expertise and most of them come from farming backgrounds.

Through its network of 100 offices the FCC is able to reach producers throughout rural Canada. All these qualities enable the corporation to play an even greater leadership role in building the agricultural industry of the future.

I first met with the FCC senior executives two years ago to explore updating the 1993 act. I asked the corporation to consult with the agricultural and financial associations across the country on whether the act should be adjusted to meet emerging industry needs.

In the winter 2000, FCC staff met with more than 100 national and regional organizations to discuss proposed changes to the existing legislation. The majority of agricultural organizations were supportive of the proposals. They recognized the necessity of updating the act to meet the needs of their members and producers in general.

The major concern expressed by some farm groups was that the FCC keep its focus on family farms and primary production. Let me state without qualification that farming would continue to be the main focus and driving force of the corporation. This commitment is built right into the new legislation. Currently 94% of FCC's lending is directed to primary producers. To demonstrate FCC's ongoing commitment to producers, we have included an amendment to the act that requires farming operations to be the main focus of the corporation's activities.

In their meetings with financial industry groups, FCC representatives went to considerable lengths to demonstrate that the corporation is seeking expanding opportunities to partner, not compete, with the private sector and other government agencies. There is a definite need for increased financial options in rural Canada that could be effectively addressed through partnerships.

The corporation is actively seeking partnerships with other financial institutions and government agencies that combine its agricultural expertise and rural reach with their specialized services.

To date, the FCC has 27 partnerships across the country and plans to grow this number in the coming years.

Using the valuable feedback and suggestions gained from these consultations, the federal government has created amendments to ensure the continued relevancy of this act. The amendments were based on three guiding principles: the need to offer agricultural operators a greater range of options and financial and business services; the need to offer farm related businesses increased access to capital in support of primary producers; and the FCC's need for greater structural flexibility to offer more services through partnerships and to remain viable to serve producers for the long run and the long term.

I will briefly review the major amendments. The first amendment demonstrates the federal government's continued commitment to Canadian agriculture. We seek to change the name of Farm Credit Corporation to Farm Credit Canada. In French it will change from Société du crédit agricole to Financement agricole Canada. This change reflects the corporation's public mandate to serve rural Canada as a federal crown. Adding the word Canada to the corporation's name sends a clear and visible message that the federal government plays an active role in rural communities. The name change also supports the new federal identity guidelines.

Another key amendment allows the Farm Credit Corporation to offer business services to producers either directly or through partnerships. As I mentioned, the average producer needs access to a broad range of business management services to succeed. It could be business planning, succession planning or land management. Yes, these services currently exist in some parts of rural Canada, but the FCC can provide the network to make these services accessible throughout all rural Canada. Agricultural operators are running businesses just as complex as any urban based small business. They deserve the same access to services as their urban counterparts.

Let me use the Kaeding family from Churchbridge, Saskatchewan, to illustrate this. If the Kaedings are an example of an average farm family, it is easy to see why the need for more complex business and financing services has grown.

The Kaedings are FCC customers who, in the past decade, have diversified their grain operation to include a pedigree seed business. That seed business includes 50 varieties of grain crops plus specialized crops of grass and forage seed. They say they have stayed with the Farm Credit Corporation because of the corporation's flexibility in meeting their emerging financial needs. Through these new amendments, the FCC will have greater flexibility to keep pace with the changing demands of farm families like the Kaedings.

The new legislation clarifies the FCC's ability to offer lease financing to agricultural operators. While the act as it currently reads does not prevent the corporation from offering lease financing, the scope of these services needs to be more clearly defined. Leasing is a growing financing option for producers who want more flexibility to manage their cash flow. This especially applies to new producers starting out.

The new legislation will enable Farm Credit Corporation to offer equity financing to producers and farm related businesses. Many farming and farm related operations need access to equity as well as term financing. In fact, rural communities cannot develop local value added agricultural industries without venture and equity capital. The Farm Credit Corporation will not only be able to make direct equity investments in local agricultural enterprises, it will also be able to leverage this investment to attract other equity providers.

An important amendment to the act will allow the Farm Credit Corporation to provide financial services to farm related businesses that benefit agriculture. Currently the corporation can lend only to businesses that are farmer owned. If we step back for a moment to look at agriculture as a whole, we will see it is no longer divided into neat categories of suppliers, farmers and processors.

As the industry becomes more integrated, interdependencies grow. The farmer who has diversified from wheat, for example, into chickpeas might depend on a local processor to purchase his or her crop. Increasing investment and farm related businesses from fertilizer plants to food processors will greatly benefit producers directly not to mention contribute to the rural communities as well.

The future of primary production is linked to the growth of farm related businesses, both those owned by farmers and those owned by business people in rural communities. The FCC has provided lending services to farm related operations since the act was last amended in 1993. The corporation will continue to focus on small and medium sized operations that are directly linked to producers and contribute to local communities.

Amendments to the financial structure of the corporation will give it added flexibility to seek new partnerships and offer expanded services. The FCC will be able to create subsidiaries to enter partnerships offering new services arm's length from the existing portfolio.

The corporation will have access to a broader range of financial management instruments to fund services it provides to producers. These amendments help the corporation provide new services that meet emerging needs while protecting its long term ability to serve agriculture.

In the past four decades, the FCC has served producers and agriculture through all commodity cycles and through good times and bad. The corporation has shown great flexibility in working with producers to see them through market downturns and climactic disasters. When times get tough this commitment is especially evident. The FCC employees sit down with customers and work out solutions to address their particular situations.

In 1998 the FCC was there to help Quebec and Ontario producers affected by the ice storm. The corporation has worked with prairie producers through the downturn in cereal crops and oilseeds. In the past year the FCC has helped farmers in southern Alberta weather a severe drought. It has worked with potato growers in Prince Edward Island through the market upheaval caused by the potato wart, which we settled today. The FCC employees work with producers in any commodity group to develop flexible options to see them through.

For instance, the president of a British Columbia cranberry company recently sent me a letter and through me thanked the Farm Credit Corporation for its continuing support through the recent downturn in the cranberry sector. Through the proposed amendments the Farm Credit Corporation will help producers achieve long term success in decades to come.

I have just explained the reasons driving our pursuit for amendments to the Farm Credit Corporation Act. As well, I have outlined the key amendments and their benefit to Canadian producers in the agricultural industry. I would ask members of the House to support this important piece of legislation as it goes forward in the House.