Debates of Dec. 9th, 2002

Kyoto Protocol

[Lynn Myers, Liberal, Waterloo—Wellington, ON]

Mr. Speaker, as I have noted, the RCMP works in the national capital region in a variety of roles and functions. One of the roles of course is traffic enforcement in the Gatineau Park, a National Capital Commission property.

As I indicated at the outset, the RCMP complies with appropriate legislation regarding the issuance of tickets in a manner consistent with the law. While the RCMP complies with provincial legislation in Quebec, it equally complies with applicable legislation in all other provinces across Canada.

As I have said before, I have been assured that bilingual guidance is provided on tickets issued in Quebec, and RCMP officers enforcing traffic laws within the national capital region can provide service in both of our official languages.

[Roy Cullen, Liberal, Etobicoke North, ON]

Mr. Speaker, on November 26 I asked the Minister of Finance whether or not he was planning any initiatives in the area of corporate governance. I asked this because I believe that Canada is certainly not immune from scandals like Enron and WorldCom which have occurred in the United States. Some have said the only difference is that our scandals are smaller. Of course here in Canada we have already seen the very negative effects of the collapse of companies like Bre-X, Livent and others.

I was reassured when the minister noted that he was very pleased with the cooperation that had been demonstrated to date by federal and provincial regulators and the private sector to implement an appropriate Canadian response to the issues highlighted by recent U.S. scandals. I would hope that the minister would sometime soon begin to consult with members of the House because corporate governance is a very important public policy debate that deserves the attention of elected officials as well as regulators and bureaucrats.

What we have is a crisis of confidence in the markets and the financial statements and information that underlie these markets. The directors and managers of public companies in Canada and the United States and indeed around the world are under severe pressure to show a steady improvement in the reported earnings of their companies. Failure to do so results in declines in stock values and perhaps the value of executive stock options owned by these same executives. The quantity of earnings have always been important. Now investors have concerns about the quality of reported earnings. This undermines confidence in the markets and is not conducive to attracting investment and economic growth.

In the United States, in a rush to address market confidence, the response has been swift and multifaceted. The Sarbanes-Oxley legislation was rushed in south of the border to address corporate governance issues. It seems to be encountering difficulties as regulators attempt to implement these laws. In fact, the exact opposite of the desired result may be occurring. Companies are being scared away and initial public offerings are being shelved as a result of the legislation. When people's trust in the system is undermined, they stop investing. It is as simple as that.

We need a made in Canada solution that is geared to our own needs and our own institutions. A very positive first step is the Canadian public accountability board which was established by the Canadian Institute of Chartered Accountants, the Canadian Securities Administrators and the Office of the Superintendent of Financial Institutions. This board is designed to provide a new independent public oversight for auditors of public companies.

The board will provide: one, more rigorous inspection of auditors of public companies; two, tougher auditor independence rules; and three, new quality control requirements for firms auditing public companies. This board is a very important and valuable contribution to an improvement in corporate governance in Canada, but other questions remain.

For example, should corporate managers face heightened responsibility for the accuracy of company financial statements? Should sanctions be civil, criminal, or both? Should there be a greater number of independent members on the boards of directors of public companies? Could the role of the audit committee of boards of directors be improved and enhanced? Should the chairman and CEO role for public companies be separated?

There are other broader issues, such as what is the scope of federal power in corporate governance? To what extent should corporate governance practices be legislated, regulated or made voluntary? To what extent should we differentiate the corporate governance requirements of small and large corporations? To what extent should securities regulators in Canada be offering greater protection for less sophisticated investors?

These are all very important questions. I hope that we can deal with them in the House or in committee at the earliest opportunity.

[Paul MacKlin, Liberal, Parliamentary Secretary to the Minister of Justice and Attorney General of Canada]

Mr. Speaker, I appreciate the opportunity to participate in today's debate and want to thank the hon. member for bringing this matter to the attention of the House.

As many of my hon. colleagues know, the government has made bolstering investor confidence in Canadian corporate governance regimes a priority. Public confidence in capital markets and our public companies is critical to a well functioning economy.

Canada has a strong tradition of fostering sound corporate governance. With the Toronto Stock Exchange's leadership, Canada was among the first countries to systematically study ways to improve corporate governance and implement comprehensive governance guidelines. In July, the Minister of Finance continued, and outlined five areas for action to bolster investor confidence: first, improving financial reporting; second, enhancing further the credibility of the audit processes; third, strengthening corporate governance; fourth, ensuring management accountability; and last on the list was toughening the enforcement process.

The government is pleased with the cooperation demonstrated to date by the federal and provincial regulators and the private sector to implement an appropriate Canadian response to the issues highlighted by the recent U.S. corporate scandals.

Considerable progress has been made. Let me provide some examples. As my colleague pointed out, first, the new Canadian public accountability board for public company auditors has been established to help ensure the credibility of the audit process. It will provide oversight of public company auditors and has the power to impose sanctions. The Canadian Institute of Chartered Accountants has drafted new rules for auditor independence, due to be finalized by the end of this year. The Toronto Stock Exchange has announced new measures to enhance corporate governance practices at companies listed on the TSE. Ontario and Quebec have tabled legislation that will expand the powers of their securities commissions and increase penalties for securities violations. The Department of Finance is maintaining an up to date record of recent actions on its website.

Just recently, the International Monetary Fund noted that Canada has been “commendably proactive in strengthening corporate governance and preserving investor confidence”. However, more needs to be done. Industry Canada and the Department of Finance are examining federal corporate law and financial institution statutes to assess whether changes are necessary to improve corporate governance practices in Canada.

The government is also reviewing the criminal law framework and the effectiveness of enforcement related to corporate fraud. In addition, the Senate Committee on Banking, Trade and Commerce is examining the issues surrounding the collapse of Enron and other large corporations.

I hope my remarks have helped to address the hon. member's concerns.

[Roy Cullen, Liberal, Etobicoke North, ON]

Mr. Speaker, I would like to thank the parliamentary secretary for his remarks. Certainly many of the initiatives he described are comforting and I think are very valuable.

The point I was trying to make is that I think there is a role for members in this Chamber, whether that be in committee of the whole, in the House of Commons during debate, or in committee, to study this in more detail, because I think it does affect every single Canadian. There are Canadians who have investments, either through pension plans, mutual funds or direct investments, and they want to have the confidence necessary to move forward. I think some of the initiatives that are developing are very positive.

Part of the debate, of course, is how interventionist the government should or should not be. If the right mechanisms are in place through the private sector or the various institutions within Canada and we get the desired results, then I am sure the legislators do not have to deal with it so comprehensively, but I think we need to work for results and I hope the minister will engage parliamentarians on this sooner rather than later.

[Paul MacKlin, Liberal, Northumberland, ON]

Mr. Speaker, the member has a good point and I believe that as we go forward with this study of the various statutes that need to be reviewed and as we start to see areas where we may go forward, once we have established an area where we can concentrate our efforts, then, I believe, we will go forward to the House for consideration.

What we are seeing here is a cooperative effort, from both the federal government and the provincial governments, and from the individual groups that represent various associations, accountants in particular.

I think what we are going to see develop is a coming together of ideas and the opportunity presented to us to ultimately avail ourselves of a number of potential solutions, not one solution but rather a number of solutions that will continue to support investor confidence in Canada.

[Yvon Godin, NDP, Acadie—Bathurst, NB]

Mr. Speaker, on November 25 I asked a question in the House concerning cutbacks to the number of flights in my riding of Acadie—Bathurst. Air Canada Jazz is going to reduce the number of its flights effective January 5, 2003, the one in the morning and the one in the evening in particular.

In my own experience, when I am in the House five days a week, when the House is sitting, I leave here Saturday and come back Sunday. That is the kind of service we will have in future in northeastern New Brunswick when a flight is cut, particularly the morning flight.

What is even more important is that the company itself says that one of its problems is related to the cost of taxes, Nav Canada, the harmonized tax, the security tax and the price of fuel. All this adds to the ticket price and means fewer people use the airport, which is the only airport left in northeastern New Brunswick.

The response I got from the Minister of Transport is a regrettable one. He said:

Mr. Speaker, there is no doubt that the air industry has paid for all of the improvements in the various services over the last number of years, and of course air travellers are being expected to pay for the security charges.

The charges that are now being paid are going into the government's consolidated revenue fund. It is not all going to airline security, even though the industry is suffering and on the verge of going under.

It is always the rural regions that pay the price. It is not only in Acadie—Bathurst, in northeastern New Brunswick that this is happening. They have shut down in Yarmouth and in other areas and it is expected to happen in the west and across the north.

The Government of Quebec has even started to invest and give away full-fare tickets that it purchases from Air Canada Jazz, so that the company will continue to provide service in the regions. What is the federal government doing? It is doing absolutely nothing to help.

Instead, the minister said:

—usually another carrier comes in with a similar service.

Which translates as, “Close up shop, we're not helping you”.

When Air Canada was owned by the government, the company belonged to the country. Before being privatized, it had a role to play for the benefit of all Canadians, to provide service throughout the country.

Today we are seeing where privatization has led us. The company wants to make money; it chooses the best airports. It provides a service, makes pots of money, puts it in the bank, and you, Canadians, can forget about it, we are not going to give you any service.

If we go with an independent airline, what happens with the Official Languages Act, with which Air Canada is required to comply? The independent airline will wash its hands of the Official Languages Act; it will no longer need to respect it in our country.

We need to think about all of these questions. That is why I asked the minister a question. I asked him what he intended to do in rural regions to save the flights we have, to save our airports and keep our airline.

[Lynn Myers, Liberal, Parliamentary Secretary to the Solicitor General of Canada]

Mr. Speaker, I welcome the opportunity to respond to the hon. member on this important point.

When Air Canada acquired Canadian Airlines in December 1999, there was concern that this transaction might have a negative impact on smaller airport communities within the country. To address these concerns, the Minister of Transport negotiated an agreement with Air Canada that it would continue to serve for a three year period the over 60 communities then served by Air Canada, Canadian Airlines or any one of the wholly owned affiliates.

Air Canada has honoured that commitment and only in September of this year did it give the required 120 days' notice of its intention to cease service to a few communities where low passenger traffic volumes no longer justify service after January 2003.

In Atlantic Canada there were only three points: Stephenville, Newfoundland, Yarmouth, Nova Scotia, and St-Léonard, New Brunswick.

With respect to Bathurst, I would note that it is not being dropped from the Air Canada network. Air Canada Jazz is reducing its daily service at Bathurst from three flights to two. This is strictly a cost saving move, one that reflects the seasonal decrease in passenger traffic demand, and the service can be reinstated if demand returns.

There has been much in the press recently concerning the drop in traffic on short haul routes because of the proliferation of fees, charges and taxes that passengers are asked to pay. People are choosing to drive their own cars or take the bus or train in lieu of higher cost air services.

The excise tax on fuel, the GST-HST and the air traveller's security charge are the only costs borne by passengers that are directly attributable to government. The security charge and excise tax are the responsibility of the Minister of Finance, who is currently reviewing the security charge.

With respect to NavCanada fees, NavCanada is a not for profit company that charges airlines, not passengers, for air navigation services. These services were previously provided by the government and paid for in part by the former air transportation tax on passenger tickets. Airlines have been choosing to pass along their air navigation fees to consumers in the form of a surcharge. In addition, carriers collect airport improvement fees on behalf of many airports that use these funds for capital improvements.

Let me conclude by assuring the hon. member that we are continually monitoring this issue. The government is carefully reviewing it and monitoring the situation from the perspective of both the carriers and the airports. This will be an ongoing process.

[Yvon Godin, NDP, Acadie—Bathurst, NB]

Mr. Speaker, I appreciate what the parliamentary secretary is saying, which is that the government is monitoring, but it is going to monitor so long that we will lose the planes coming to the rural regions.

Let us look at what the government is charging. For example, Air Canada's Jazz was giving the example that $95 of a $230 ticket was costs from the government. Sixty-six per cent of the cost of the ticket is charged by the government to the client or in taxes directly to the airline. If the government continues to charge the way it is, we will lose the planes. The government must look at it and not just monitor or the opportunity will go by. We need concrete action to save our air travel.

I ask the government to seriously look at it and not just monitor it but take some action, because this service is needed and we do not want to lose it.

[Lynn Myers, Liberal, Waterloo—Wellington, ON]

Mr. Speaker, the government remains committed to doing what it can in this very important area. Transport Canada, for example, remains interested in the issue of viability of small airports.

Building on viability studies undertaken on behalf of the Federation of Canadian Municipalities, provincial ministers of transport and the Atlantic government caucus task force on Air Canada and air access in Atlantic Canada, the Minister of Transport, over the next 18 months, will also undertake an analysis and consultation with the rural secretariat of the viability of regional airports with a view to understanding the impact of federal government divestitures on the communities serviced by these airports. The minister will return to cabinet to report on the findings of this analysis.

This is an ongoing concern and one which we take very seriously.

[The Deputy Speaker]

It being 8:25 p.m., pursuant to order made earlier today, the House stands adjourned until tomorrow at 10 a.m., pursuant to Standing Order 24(1).

(The House adjourned at 8:26 p.m.)