Madam Speaker, I am very pleased to rise to speak to this bill, primarily because in the 13 years that I have had the privilege of being the member for Kootenay—Columbia, I have always taken very seriously the issue of workers and people in my community who are in the labour market .
This was driven home particularly in 1993, immediately after I was elected. There was a massive bankruptcy of a very major corporation in my constituency. There were wages owed. There were very severe difficulties with pensions. I am proud to say that through the hard work of my staff and my office in Cranbrook we managed to do what was right for the workers, at least to the greatest extent possible.
I have never wavered in my commitment to the workers or to the companies and businesses in my constituency and I try to represent them as aggressively and as well as I possibly can in this chamber, but it was through that massive bankruptcy and the work we had to do on behalf of the people who had been formerly employed by the bankrupt company that I became acutely aware of some of the stories of real hardship.
It was therefore very interesting to me to be working and finding myself in a small degree of agreement with the member for Winnipeg Centre. It is very difficult for me to have any kind of very frequent connection with some of the more socialist thoughts of the NDP. NDP members have a tendency to be a bit pie in the sky; however, the member for Winnipeg Centre and I, although we have had some differences of opinion, have also found some common ground.
Certainly, the way that the NDP was proposing to handle this issue to be able to give greater protection to workers in the event of bankruptcy was not one that was possibly acceptable to my way of thinking and certainly not to my caucus or the leader of our party. So what we did was sit down together, recognizing that there was a common objective. We wanted to arrive at the same place.
We sat down. I am sure that in speeches prior to mine from members of our caucus, members have heard our very competent member of the shadow cabinet stand in his place and describe the fact that we actually formed an ad hoc committee within our caucus, under the leadership and with the direction of the leader of the Conservative Party, to try to take a look at how we could resolve this issue.
We took a look at two things on the basis of the initiative that had been brought forward by the member for Winnipeg Centre. The first was the issue of wages and the second was the issue of pensions in the event of bankruptcy. We decided that those two issues, although they appeared on the surface to be the same, were significantly different, certainly in the way in which bankruptcy could handle them.
Then, when the Minister of Labour and Housing came forward with Bill C-55, I took a very hard, independent look at the bill, along with the other members of our caucus committee, and came to the conclusion that, while the government had approached this from a different angle than we would have approached it, nonetheless there were some real grounds to be able to move forward and the nitpicking and the details could be taken care of at committee.
I note that the majority of bankruptcies occurs in sectors that employ a large number of workers who are low paid, part time, or on temporary contracts, who do not have the protection of a union. This does not mean that this bill will not be applicable to workers who are part of a union or to workers who are part of a larger corporation, but the reality is that 60% of bankruptcies occur in the retail, food and accommodation, personal services, and small manufacturing sectors. The other interesting statistic is that 70% of bankruptcies occur among businesses with fewer than 10 employees, which also tend to offer precarious conditions of employment.
The $3,000 cap ensures that the basic levels of earnings are covered. The $3,000 cap means that the amount eligible under the wage earner protection program, WEPP, would be equivalent to one month's annual industrial wage for full time workers or four weeks' maximum insurable earnings under employment insurance. The $3,000 cap is sufficient to cover virtually all wage claims due to bankruptcy because the current average claim is about $1,500 and 97% of current wage claims are under $3,000.
There will always be exceptions. I can imagine a time when, unfortunately, there may be a bankruptcy which we perhaps cannot even foresee at this particular point and someone is going to try to stuff my words back into my mouth by saying, “See, I was one of those people over $3,000”, or “See, this was a large corporation”.
Those statistics are nonetheless very meaningful statistics and we have to do legislation in the chamber that is reflective of what is going to do the most good for the most people.
I have always cautioned people, whether they are managers or whether they are people in companies that have unions or do not have unions or whatever it is; it does not make any difference. I have said that we have to be very cautious. In a bankruptcy, the reason why there is a bankruptcy is that, by definition, the liabilities exceed the assets that can be liquidated and realized against those liabilities.
In a situation where we have a company that has gone into business in good faith and has basically said that it needs a $10,000 line of credit or a $100,000 line of credit from whatever the lending institution is, the lending institution then takes a look at the covenant, the person and the assets. If the lending institution wants to protect itself against a rather large amount of money, it asks what it can do to legally attach an asset to make sure that it will be repaid. That is simply called security. The money is advanced.
This bill does not affect that money. As I have explained again and again to people who have talked to me about this issue, it is very important to understand that when we say we are going to allow wages to be taken in advance of money that could be realized from a fixed or a secured asset, we depreciate the value of that asset and therefore lower the amount of money that would be available to the company in the first place. That is a very, very important consideration.
I see my friend from the NDP shaking his head. He cannot argue with the reality. If he were a lending institution, which I am sure would be unusual for an NDP member, and he could have a $50,000 asset, he would be prepared to advance up to $30,000 on that $50,000 asset. If someone told him that wages could possibly take $10,000 or $15,000 away from that asset in the event of bankruptcy, he would have to rethink how much he would actually be prepared to advance to the company in the first place. Anything that is done to reduce the value of a security for a potential lender reduces the amount of money the lender will give to the company. There is no way around that.
Therefore, I am a little concerned about the unsecured creditors, the people who would be providing the widgets, the gaskets, the switches, the rods, the clips, the flanges, the paper or the copiers, whatever it is that is being provided to the company on an unsecured basis. For those companies, particularly if this is an ongoing business and they become concerned about the potential of the business going into bankruptcy, in regard to the availability of credit, because there can be a charge with the superpriority that is put into this legislation and the potential for there to be this charge, there is going to be some difficulty and some reticence on the part of unsecured creditors in dealing with existing businesses.
Nothing comes for free. The money has to come from somewhere and it should never come out of general revenue. This is a business venture in which people are deciding that they are going to be working for wages or working for some form of remuneration.
That said, I believe, as does my party, that there is more than sufficient merit in the bill for it to move forward at second reading. When it gets into committee, all of the details that our critics and I are concerned about can be looked at.
I think there is a sufficient spirit of cooperation in this House to see that workers are properly taken care of. We should be able to come back from committee with probably an improved bill.