Debates of April 6th, 2005

Bankruptcy and Insolvency Act

[Brian Masse, NDP, Windsor West, ON]

Mr. Speaker, it is a pleasure to speak today on Bill C-236. The member for Halifax should be commended for once again championing a cause that I think often gets lost in the wilderness, as it has with this government in particular.

This is related to fairness, equity and justice. That is what we are talking about here. We are talking about students being treated differently from other segments of society. The member for Halifax has eloquently pointed that out in her bill.

I want to read the preamble to the bill so that people understand both what we are talking about here and also the modest changes we are looking at, which are so important. The summary of the bill states:

This enactment amends the Bankruptcy and Insolvency Act to reduce, from ten to two years after a bankrupt leaves school, the period of time during which an order of discharge does not release the bankrupt from the reimbursement of his or her student loan.

The member for Halifax essentially summarizes it with the following statement, which is very good. This is what the member said in the chamber:

It is a tragic irony and it is heartbreaking. It is so important for the discrimination that now exists in our insolvency legislation to end as it relates to students. That is what we are talking about today. Others who become bankrupt, whose circumstances beyond their control have driven them into the situation of financial disaster where bankruptcy is an option, are eligible to apply for bankruptcy protection after two years. However, the government has removed that protection from the student population who have indebted themselves because of the inadequacy of the student aid programs in the country and particularly because of the withdrawal of any meaningful support from the federal government. They are in the position where they are not eligible for such bankruptcy protection for 10 years.

What we are talking about here is allowing a fairness to re-emerge that was taken away and stripped from students. It was stripped from them by this government. The government has chosen other options on where to put the money of this country, money that could have gone to education and thus avoided a bill of this nature coming forward.

I would point out that there are 18 other OECD countries that have free post-secondary education and tuition. I do not know whether Canada will eventually get there, but certainly right now we do not have to continue to throw the entire debt for education onto young people, especially in a free market system that makes it difficult for them to actually get sustainable employment to pay off that investment and also start a family, live in dignity and save for their future retirement.

Let me tell members that when I first came here in 2002, after being elected in a byelection, a reporter came to my house and interviewed me about a number of different things. The reporter asked me what I was going to do with all the money I was going to be making. I said that the first thing I would do is pay off my student loan. That is what we did over the next couple of years.

My wife and I are a typical family. We have two children and we were late in our thirties when we paid off our student debt. We delayed having a family because we wanted to feel some type of economic security. We slowly fixed up our house, but at the same time we paid incredibly high interest rates.

It is also important to note that the interest rates this government takes off the backs of students are terribly high and unacceptable. It is predatory behaviour and the government should be ashamed of it. Let us think about the fact that people can get a car loan for zero per cent and furniture loans for zero per cent while this government charges prime plus 5%. It is scandalous.

Here is what happens to those who have invested in their education, those who are trying to pay back their loans responsibly and do not want to go into bankruptcy. The previous speaker touched on a very important point, that is, as educated people they do not want to leave the victory of post-secondary education and obtaining a degree and then have to capitulate to a very humbling and troubling chapter in one's life, that of declaring bankruptcy.

Nobody wants that. Nobody wants that on their credit rating. Nobody wants to go to their family and say that they cannot pay back their loan, that they borrowed money to be successful. They do not want that. People want to be able to reasonably pay back the investment, not only for themselves but for their country and the investment it made in them, so that we can all be successful. This predatory interest rate leads to the bankruptcy issues and puts people into desperate situations. It is unacceptable.

It also hurts our economy. It is great for the banks and great for the government. They make out all right. There is no problem there. But in my hometown, for example, an auto industry town, this debt load delays purchases of new vehicles. The auto workers pay a lot of money in taxes. They put a lot of money into the United Way. They put it into sending their kids back to school. They contribute to the community.

Also, ironically, it is this government that wants to do a voluntary emission standard for the auto industry. One of the most important things we can do right now is get some of the oldest vehicles off the road and the newer ones on the road. That will lower Kyoto emissions. It will do both: create jobs and lower Kyoto emissions.

What does the government do? It hacks away at students because it can. The government continues to treat them as serfs instead of valuing what they have done and helping them contribute into a formula that means success for all of us.

It is unbelievable that a person can get a house loan at a rate that is lower than that for paying back a student loan. Where is the responsibility of the government to take action where it can, with the stroke of a pen? This is unacceptable.

I recently had a meeting at our local college. College students are funded at a level that is different from the level for university students. It was interesting, because the message from the minister of community and social services, a Liberal in Ontario, was that the colleges had better talk to the federal government because it has the surpluses and Ontario has less money. Ontario has a $23 billion deficit in terms of transfer payments. That was Ontario's solution at the time: to send it back here.

What did the federal government do in the last budget? It had almost $5 billion in corporate tax cuts. It was no problem at all to do that. The government found the money. The Prime Minister said during the last election that he would address post-secondary education and that gap. What has he done instead? A vote? No, they are Liberals, they say they are closer to the New Democrats and scared of the Conservatives, but what did he do when he got here? There was another corporate tax cut.

Another corporate tax cut, but what do students get? If a student is deceased, the government will no longer let the collection agencies go after the deceased. It will forgive the debt at that point. If a student is deceased and owes money, he or she will not have to pay back the student loan. Congratulations, I say, what a significant achievement for post-secondary education. I am sure it matches election rhetoric. Promise made and promise broken.

What we are doing to our young population is unacceptable, especially when they need more education than ever before and there is a changing market in front of them. They often have to return to school before they can even pay off the investment on their original education. They are expected to pay for that, not their companies or anybody else, when they have to go back to get those re-qualification credentials for changing standards because of downloading or other governments adding different layers of responsibility for employment through legislation. They have to pay for that.

What ends up happening is that people come out of school later. They have a higher debt load. They marry later. They have kids later. They defer buying a home until later. What will be really critical later on for the young people of today is that they will have less pensionable earnings and savings because they cannot get by as it is.

They are stopped from buying a house earlier. They are stopped from putting money into their retirement savings plans. They are less likely than ever before to find a company to be with for a good portion of their lives and thus have pensions that will be sustainable. It is a real problem. We are deferring all of that until tomorrow. We are putting it on the backs of today's youth because this government cannot make modest changes.

Moving the bill forward in the House of Commons today would deal with the more desperate cases. We could say to young people that they could start their lives over again. Nobody wants to go through the personal humiliation of admitting that they have to start over in what they want to do with their lives and they cannot pay back what has been given to them. They do not want to do that.

That is why I encourage all members of the House to support the bill, because it is the one thing we can do to give young people something to get them back on track. They can be great contributors to Canada, put their education to better use and be more productive citizens for the long haul.

[Roger Valley, Liberal, Kenora, ON]

Mr. Speaker, the Bankruptcy and Insolvency Act is one of Canada's key marketplace framework laws promoting both economic and social stability. Indeed, it is unique in its dual economic and social orientation encouraging commerce and entrepreneurship while ensuring that vulnerable individuals have a means of dealing with unmanageable debt. The statute has been crafted to reflect the balance between these orientations.

The Bankruptcy and Insolvency Act balances the risk between creditors and debtors in determining how shortfalls will be allocated and setting out the circumstances under which a fresh start is warranted. It encourages the payment of debts while allowing well-intentioned but unfortunate debtors a means of eliminating their debt loads.

It has been argued in the House that former students face crushing debt loads without the recourse to bankruptcy offered to other debtors. It is argued that individuals with student debts are unfairly hampered by the bankruptcy system, forced to live with debt levels that would otherwise qualify for bankruptcy protection.

I suggest that these arguments present only half the picture. It is true that student loans are not easily discharged under the Bankruptcy and Insolvency Act but bankruptcy is a last option, not a first option.

Before condemning the rules and changing them, we must understand the rationale for their creation. The Bankruptcy and Insolvency Act was amended in 1998 after careful consideration by Parliament to stem the increasing option of declaring bankruptcy rather than paying student loans.

In the years leading up to the amendments, losses to the Canadian student loans program due to bankruptcies were becoming unsustainable. For the fiscal year 1995-96 alone the cost of losses due to bankruptcy was more than $100 million. Losses of that magnitude threatened the viability and the continued existence of that program.

A look at the statistics suggest that bankruptcy was being treated as a first option by student loan holders. Many of the bankruptcies were filed shortly after the former student left the school and before any effort was made to repay the loans. Bill C-236 would encourage a return to this sort of behaviour.

The Bankruptcy and Insolvency Act was changed in 1998 to discourage students from taking the plunge into bankruptcy but it does not work in a vacuum. It works in tandem with the Canadian student loans program which is constantly being improved. For example, in the recent budget the government announced plans to improve the debt forgiveness provisions applicable to students who face the most serious hardships, including those who suffer permanent disabilities, while repaying their loans.

The Canada student loans program has evolved to ensure the mechanisms are in place to help individuals in financial distress, including interest free periods and debt forgiveness. Student loan debtors do not have to resort to bankruptcy. They can look to the student loans program and seek relief there.

Bankruptcy is still available for people in need. Individuals with student debt can opt to seek bankruptcy protection and have their non-student loans forgiven. This combined with the interest relief and debt forgiveness provisions of the Canada student loans program is sufficient to allow must students with debt troubles to become financially stable and capable of paying their loans.

If someone suffers from continued hardship and remains unable to pay his or her loans, the Bankruptcy and Insolvency Act allows a person to obtain a discharge on hardship grounds. To obtain such a discharge, the person must have demonstrated good faith in dealing with the loans and that the financial hardship will likely continue over the foreseeable future.

To be certain, obtaining a hardship discharge is not easy but it should not be easily obtained. Student debt holders must not be encouraged to opt for bankruptcy until the option for bankruptcy is the only possible route. They should take advantage of the protective measures offered by the student loan program and attempt to pay their debts.

This is economically responsible behaviour and it is socially responsible behaviour. It is economically responsible because it ensures that those who benefit from the loans make reasonable efforts to pay them back and socially responsible because paying one's debts back is a good thing.

Governments ensure easy access to loans in order to allow people to pursue a goal of education but we must not forget the taxpayers ultimately pay the cost of losses due to bankruptcy. Student loans are funded through tax dollars. Allowing easy access to bankruptcy and making that option more attractive than repaying loans unfairly increases the burden on the taxpayer.

Easier access to bankruptcy, as contemplated by Bill C-236, also poses a threat to future students. We have seen what easier access to bankruptcy did in the past, leading to massive losses to the student loans program and threatening its continued existence. The program is an essential one, designed to benefit Canadians today and in the future. If people are allowed to abuse the system, taking money out of it without any repayment, the system will not likely be sustainable.

Is it fair to allow former students to take the easy way out at the expense of taxpayers? No, it is not. Allowing students to pursue bankruptcy as an option only two years removed from school is an unsound prospect. It does not encourage former students to pay their debts or to use the debt repayment portion of the Canadian student loans program. It does not provide sufficient time to assess whether the individual will be able to capitalize on his or her education and earn a good living, nor does it provide time to accurately assess whether the individual will be able to pay back the money borrowed from the taxpayers.

Education is not free. It is a valuable resource and one that must be worked for and respected. Loans are provided for prospective students with the understanding that they will be repaid. The student loans program provides people with the time to start their post-study lives and build their careers before requiring them to pay the interest or repay their loans. We should encourage people to use these methods rather than opting for bankruptcy.

Change to the Bankruptcy and Insolvency Act should not happen in a vacuum. It should be handled as part of a comprehensive reform that is capable of ensuring continued balance within the statute and its relationship to other statutes. Changing this provision would throw off the balance and create disharmony between it and the Canada student loans program.

The government is currently reviewing the Bankruptcy and Insolvency Act and is preparing legislative reform options. The issue of student loans is being carefully considered and should be handled in the context of a comprehensive reform rather than a stand alone item. The government cannot support Bill C-236.

[Alexa McDonough, NDP, Halifax, NS]

Mr. Speaker, I would be happy to make closing remarks, but I was wondering, in view of the fact that there are five more minutes, if I could ask the hon. member who just spoke a couple of questions. Would that be in order?

[The Deputy Speaker]

The member could ask for unanimous consent for that but it is not in the normal order of things. Would the hon. member for Halifax like to make a motion to that effect?

[Alexa McDonough, NDP, Halifax, NS]

Mr. Speaker, I am not trying to get around the rules. I am just saying that if nobody else wants to ask the previous speaker any questions, I would like to do so and then move to wrap up if I have the consent of the House to do that.

[The Deputy Speaker]

Does the hon. member for Halifax have the unanimous consent of the House to have a question and comment period?

[Some hon. members]

Agreed.

[Some hon. members]

No.

[Alexa McDonough, NDP, Halifax, NS]

Mr. Speaker, I find it disappointing in the extreme that if no government member was prepared to enter the debate further and time was available that they would not be willing to allow some questions and comments.

The question I would have asked the member from Kenora who just presented his comments is why he insists upon viewing the problem that our students face, with crippling debt and skyrocketing tuitions, as a problem that should be characterized, as he did, as students who borrow from the taxpayer and then do not adequately honour their debts.

That absolutely sums up what is so utterly and totally bankrupt, both financially and morally, about the Liberal government's approach to post-secondary education funding, in particular to supporting students and making it possible for them to pay their tuition.

Any modern industrial society that does not understand that post-secondary education is an investment in the future is doomed to be a society that lives up to its potential, never mind being able to compete with all the other industrial nations that do invest. In fact most OECD countries have tuition free post-secondary education systems because they understand the value. They understand the difference between a loan from the taxpayers and an investment.

I want to thank all members who participated in the debate. I do not have time to review all of the comments but I want to thank my colleagues, the member for Skeena and the member for Windsor West who, I think, are the two youngest members of our caucus, but am not sure about that. They understand perhaps better than some of us who have been around a little longer how really serious this problem is for their generation and the students coming along behind. They are at that stage in their life when they are busy getting on with it and when they see others coming along behind them who find that they are crippled with debt, they understand what it means.

Students are forced to drop out of school or are not able to attend a college and university in the first place. If they do get there, the quality of their educational experience is eroded because they have to struggle with part time jobs in order to put food on the table. In this day and age, imagine what a commentary this is on how pathetic the government's commitment is to post-secondary education funding when students have to spend time organizing food banks on college and university campuses these days.

It was disappointing, after listening carefully, to hear the comments made by government members.

Before I get into that, I also appreciate the fact that both of the other opposition parties definitely understood the severity and the magnitude of the problem that faces today's post-secondary education students. I welcomed their indication that they were prepared to vote to see that this bill goes before committee.

I want to use my final moment to plead with government members to say that this is not a bill that pretends to solve all the problems. It does not propose a comprehensive solution to what has been 13 years of problems created by the government by the systematic erosion of funding and the failure, even in the most recent budget, to return post-secondary core funding to the level that it was in 1993 when the Liberals came to office.

Of course the bill would not solve all the problems. It deals with a very narrow particular problem, a problem of last resort for students who say that they do not know what else to do but to declare bankruptcy under the terrible financial circumstances they find themselves in.

They turn to that and find they are actively and aggressively discriminated against by a perverse change in the law introduced by the government in 1998 because it said that students were going bankrupt left, right and centre. Would one not think that would have been the canary in the mine syndrome to tell the government it should stop heaping the debt on students, which causes them to have to contemplate bankruptcy.

I know my time is up, but I plead with government members to send this to committee so we can improve upon it. It is not cast in stone. We have indicated that we are prepared to look at some flexibility, not to say it is absolutely two years or nothing. We can look--

[The Deputy Speaker]

The question is on the motion. Is it the pleasure of the House to adopt the motion?

[Some hon. members]

Agreed.

[Some hon. members]

No.

[The Deputy Speaker]

All those in favour of the motion will please say yea.

[Some hon. members]

Yea.

[The Deputy Speaker]

All those opposed will please say nay.

[Some hon. members]

Nay.

[The Deputy Speaker]

In my opinion the yeas have it.

And more than five members having risen:

[The Deputy Speaker]

Pursuant to Standing Order 93 the division stands deferred until Wednesday, April 13 immediately before the time provided for private members' business.

A motion to adjourn the House under Standing Order 38 deemed to have been moved.

[Russ Hiebert, Conservative, South Surrey—White Rock—Cloverdale, BC]

Mr. Speaker, I rose in the House a few weeks ago to ask the Deputy Prime Minister a serious question about border security. I asked her to explain the government's plan to deal with the problem of people running the border into Canada in their cars and even on foot.

The question itself was not critical of the government. It was not overtly partisan. It is a question that concerns MPs from all four parties, including the governing party, whose ridings lie along the U.S. border. It addressed an issue that has been frequently reported on in the newspapers for months. I posed the question with the safety and security of border guards as my paramount concern. Of course the integrity of the border is also a national security issue and, therefore, of major concern.

I should note in addition that as co-chair of the all party border caucus, my goal is to contribute to the work of the Canadian administration on border issues, not to bash the administration.

As a clear gesture of goodwill and to elicit a helpful response, I sent the Deputy Prime Minister advance notice of the question so she would have an opportunity to inform the House as to how this obvious and alarming problem would be dealt with in the coming weeks and months. I believe anyone who heard the Deputy Prime Minister's answer would say that she did not get to the heart of the matter. She was unable to explain what specifically was being done to crack down on those running the border.

In fairness, the minister was unable to provide her full reply in the House at that time. Her assistant was gracious enough to provide the balance to me, and I would like to quote the relevant portion of that response for the record. She stated: “The CBSA (Canadian Border Services Agency) takes any allegation of potential breach of security very seriously and investigates all allegations. We have also invested $125 million in federal funding to establish RCMP-led Integrated Border Enforcement Teams along the Canada-U.S. border to harmonize border security efforts of Canadian and U.S. law enforcement”.

At this point, let me be clear that the RCMP integrated border enforcement teams are a long overdue and necessary element of border security. I do not think anyone questions that. However, those teams are not operating full time at numerous border crossings right across Canada, where people are running borders in their cars. They are not operating full time at the Peace Arch crossing in my riding where people are simply walking across the border within sight of the border posts.

I do not fault the integrated enforcement teams for that. That is simply not their mandate. Who is supposed to deal with these violations? The border services guards cannot. They have no authority to apprehend anyone more than 100 feet away from their posts. They are also unarmed. Protocol requires that border services call in the RCMP to apprehend the border runners. However, even if the police can respond within minutes, the runner is often long gone.

The claim that the CBSA investigates all such allegations may be true, but what can it do about the problem? What good is an investigation if there will never be a resolution to the problem?

Again, I ask my question. We have a growing problem. What specifically is the minister planning to do about border runners? At this point, the government has four minutes to respond, and I would hope the minister will take this opportunity to share what plans there are to deal with this growing problem.

[Roy Cullen, Liberal, Parliamentary Secretary to the Minister of Public Safety and Emergency Preparedness]

Mr. Speaker, I rise to answer the question raised by the hon. member for South Surrey—White Rock—Cloverdale.

As the Deputy Prime Minister already indicated in the House, there are actually two components to the member's question. The first deals with the safety of the Canada Border Services Agency's officers on the front lines and the second is about port runners.

I want to assure members that the government is committed to the safety of our front line officers. Their safety and security are our highest priority. A positive and safe work environment protects employees and leads to enhanced security measures and service delivery. To that end we have completed risk assessments in all customs locations. The “Job Hazard Analysis - Working Alone Strategy” was commissioned in part to look at ways in which the agency could improve working conditions for its employees and improve security.

I cannot discuss the specific criteria used to determine the level of risk for each site because it would compromise the safety of employees and the security of the agency's operations. I can assure members that the agency's front line officers have all the training and the tools they need for their safety and security.

The job hazard analysis strategy is a work in progress and has been in development for some time. The agency is working on this matter with the union at the local and national levels and has shared the strategy with them through the national health and safety policy committee.

As mentioned in the recent budget, considerable funding has been allocated to matters of security. The additional funding will make it possible to provide training and protective tools and to take other steps to reduce risks for officers working alone.

In fact in budget 2005, $433 million was allocated to the Canada Border Services Agency over five years to build capacity and further enhance the safe and efficient movement of goods and people across our borders.

I should mention that over the past four years the government has spent over $9 billion on enhancing the security of Canada.

Significant investments have been made to facilitate the flow of goods and people across the Canada-U.S. border while keeping it closed to criminals and terrorists. The Canada Border Services Agency has worked closely with the United States and our law enforcement partners to ensure that the border remains secure.

We have also invested $125 million in federal funding to establish RCMP led integrated border enforcement teams along the Canada-U.S. border to harmonize border security efforts of Canadian and U.S. law enforcement.

I would like to address the second issue, that of border runners, to which the hon. member referred in his question.

Ensuring the security of our borders is the CBSA's number one priority. We share the longest undefended border in the world. The Canada Border Services Agency works closely with its counterparts in the United States to make sure that the border remains secure.

All persons wishing to enter Canada are obligated to stop and report to the CBSA. Anyone who does not is liable to a fine and/or imprisonment under the Customs Act.

Last year approximately 71 million persons were processed by the agency at land border ports of entry. The vast majority of people and businesses comply with the law and we work hard to facilitate compliance.

The agency works hard with local law enforcement. We continue to see this as a priority area.

[Russ Hiebert, Conservative, South Surrey—White Rock—Cloverdale, BC]

Mr. Speaker, I will try not to be too partisan here, but I have to express my disappointment with the response we were just given. Clearly the responder did not hear the specific questions that I asked because he repeated points that I had already made in my speech.

He commented on the fact that the border enforcement teams are operating. I just pointed out that they are there but they cannot do anything about the problem of people running the border.

What I heard is that the government is pouring a lot of money into this but there is no plan to solve the problem. That is the nub of it. There is a real problem and nothing actually is being done.

I heard the member talk about risk assessments and job evaluations, but the government is not doing anything about the problem.

He commented on the RCMP being called in to deal with the situation. I have spoken with officers on a regular basis. They are frustrated because they cannot get there in time to deal with the situation.

In a nutshell, I am disappointed with the answer. I hope that next time the member will provide more substance.

[Roy Cullen, Liberal, Etobicoke North, ON]

Mr. Speaker, I guess the member realizes that we have a border of some 8,000 kilometres between Canada and the United States. I suppose the member's solution would be to have customs officials or RCMP every few hundred yards or so. He realizes that is not feasible, possible or realistic.

However, as I mentioned, in the recent budget the Government of Canada announced an investment of $433 million over five years in additional funding to support the Canada Border Services Agency's operations. The funding will enhance the agency's capacity to manage the access of people and goods to and from Canada, and to ensure the safety and economic prosperity of all Canadians.

The health and safety of the Canada Border Services Agency officers continue to be of paramount importance to the agency and to the Government of Canada.

[The Deputy Speaker]

The motion to adjourn the House has now deemed to have been adopted. Accordingly the House stands adjourned until tomorrow at 10 a.m. pursuant to Standing Order 24(1).

(The House adjourned at 6:37 p.m.)