Mr. Speaker, I am pleased to speak on the bill of the hon. member from the New Democratic Party regarding the Bankruptcy and Insolvency Act. Unfortunately we cannot support it.
When we in our party look at the idea that it would double the compensation from $2,000 to $5,000 for wages to employees and for increasing commissions and so on, we see that the cost in a bankruptcy to pay these commitments would far outweigh the benefits that accrue from leaving it as it is.
We have to think of situations where businesses are ill equipped or finding it difficult to pay their bills, and their creditors are hounding them. A business in that situation may ask the bank to lend it some money. If the company has 100 employees, the amount to be given for wages and commissions would multiplied by that. If the company goes bankrupt the bank would be unable to collect the loan given to help that company though its difficult times even if the bank took security. Therefore it is going to cause more businesses to go bankrupt rather than get close to bankruptcy and survive.
I would have thought that the NDP would be far more interested in protecting and preserving jobs rather than forcing businesses into bankruptcy because they cannot raise the money.
We have to recognize today that banks lend money in the anticipation of getting it back. If they do not feel they will get it back, they will not lend the money. Even if they take security, that security would then be in jeopardy in regard to accounts receivable and so on because according to this bill the money would have to be paid out.
Not only that, but banks charge interest based on what they perceive to be the risk involved. If they think it is possible to lend the money but the risk is higher they will charge more interest. Interest rates would therefore rise, which again would make the business more vulnerable.
There is nothing in the bill that suggests amending the bankruptcy act would be beneficial to the economy or in protecting jobs or providing ongoing value to Canadians.
I was involved in the debate about 10 years ago when the bankruptcy act was last rewritten. I argued for various changes to ensure that as far as possible matters involving creditors, employees and others owed money by businesses experiencing financial difficulties were wound up quickly and efficiently to ensure that the maximum amount of money was available to be distributed to creditors, which of course includes the employees.
We want to try to ensure a viable economy in these difficult times so that businesses in difficulty can, if possible, borrow money. I cannot understand why the NDP wants to put into the bankruptcy act that the first claim on the assets of the organization should be payments for arrears in wages and commissions. Can it not see that would jeopardize the potential to keep the business afloat? I cannot understand it.
I would have thought that jobs were of ultimate importance to the NDP, to us and to Canada's economy.