Mr. Speaker, it is with pleasure that I rise to speak to Bill C-203. I commend the hon. member from the New Democratic Party who presented it today.
Like so many private members' motions and bills, the bill should be votable. We should have an opportunity as private members to raise issues of importance and then to have the level of importance and focus put on them that are deserved as initiatives led by individual members of parliament. Many pieces of thoughtful legislation are not provided with that opportunity because the Liberals are not interested in significant parliamentary reform. Reform could begin by enabling private members to present legislation which is votable.
At first glance, when one looks at amending the Bankruptcy Act to protect employees, it seems very positive to ensure that in cases of bankruptcy employees end up ultimately receiving the pay owed to them. I have some concerns relative to the unintended consequences that may follow.
Banks are not always the only creditors. It is very easy to point to large financial institutions and say that they do not necessarily need the money. If it is a question between the interests of large chartered banks and that of employees, the onus should be on paying employees in such circumstances.
In most bankruptcies the banks are prominent creditors, as are a lot of other businesses. Many are small businesses in an accounts receivable or trade credit situation. I know this as someone who started my first business when I was 19 and continued to participate in small and medium size business during that period until I actually ran for parliament at the age of 29.
During that period I saw many companies with which I was doing business end up in circumstances where they were not able to pay their bills. I saw and experienced firsthand what that did to other companies. It can create a chain reaction which can result in not just one company going bankrupt. It is important to realize that it can potentially lead to threatening the existence of several companies.
There is a different dynamic between larger and smaller corporate entities. I believe the hon. member also recognizes the difference. In many cases, for instance, the owners are people who have not taken pay for extended periods of time. They have made significant sacrifices. In terms of establishing a sense of unity between goals and objectives, there is probably a greater amount of commonality of interest between employer and employees in the small business environment than in most other businesses.
I also have some concerns about how it might impact in a perverse way. I am certain the hon. member would not intend this to be the case, but it could unintentionally result in a reduction in lending money to small businesses. If this were implemented we could expect it not just in terms of banks but also in terms of trade.
If I were a small business person and I had an opportunity to sell products to another small business and part of the consideration in terms of extending credit was associated risks, it would reduce the likelihood of repayment. In a bigger corporate setting that is not as likely the case.
Perversely smaller companies would be judged in some cases more negatively from a credit risk perspective if the legislation were introduced than larger companies for which the wages would not form as large a percentage of their actual accounts payable.
For example, if we look at a restaurant, a store or a small business, the degree to which wages form the lion's share of expenses on a week to week basis is less capital intensive and more labour intensive. It might have a very negative impact on the service industry, small retailers or small restaurants.
Under the provisions of the legislation any business with a higher focus in terms of cost structure on pay or labour costs as opposed to capital expenditures would be disproportionately discriminated against in the eyes of lending institutions or other businesses extending trade credit.
Most of us in the House would agree with what the hon. member is trying to achieve: greater protection for workers in the event of bankruptcy. Clearly people employed with a firm, a store or whatever do not have the upside potential of great profits if the business succeeds and in some cases have a significant loss when a company goes broke. It would be unfair if workers did not receive pay that was owed to them for the labour they provided. It is the contract between an employer and an employee which indicates that an employee is to be paid by the hour or by project.
One model I am sure the hon. member is familiar with is the Australian model whereby various levels of government work together in a sort of employment insurance type guaranteed scheme which costs Australian taxpayers $100 million per year. Given the multibillion dollar size of the government EI surplus, that might be a rational approach to take a look at.
We would be far better off if we achieved what the hon. member is trying to achieve, better protection for employees in the case of bankruptcy. If we can avoid the negatives of potentially increasing the risks associated with lending to small business and business in general, which is certainly not something we want to see, we would be far better off. An appropriate way to proceed is by investigating some of these other alternatives.
I would argue that we are not seeing enough lending to small businesses. We have seen some improvement but not enough. Lending to small businesses is a real challenge in Atlantic Canada. It is much easier to get the money if it is not needed. It is a real catch-22 for small businesses. I would not want to do anything that would further reduce the chances of small businesses getting that money. That being the case, we can achieve the same result through different means which would spread out the risk a little further and provide greater protection for employees.
There is another point to realize. I am sure the hon. member would agree that incidents where employers have tried to create or manipulate circumstances in such a way as not to meet payments to employees are not widespread. However when it does occur it is unacceptable. If employers go out of their way to create circumstances in which employees do not get paid, it is egregious, offensive and immoral to all involved. However I believe it is a fairly rare circumstance when it occurs.
When we are developing public policy that can be very broad and sweeping in its impact we have to consider how pervasive the actual situation is that we are addressing. We have to be very cautious in this regard. I would be interested in further debating the Australian model and other best practices in other countries.