Debates of Sept. 29th, 2005

Wage Earner Protection Program Act

[Jeff Watson, Conservative, Essex, ON]

Madam Speaker, I appreciate the opportunity to speak to Bill C-55. It has taken two years from the time of the report to get wage earner protection legislation before this House, but Bill C-55 is not sufficient in scope. It leaves out an important component that I wish were being discussed here today. I am going to get to a question very shortly. What is left out is unfunded pension liability in situations of bankruptcy protection.

General Chemical Canada is in my riding. We can argue about whether that was a planned bankruptcy or not. I have some suspicions about that. There was a serious unfunded liability for pensions left over in this situation. Bill C-55 addresses only the wage protection that employees would get in a situation like that, but there is this other important component that is not being dealt with.

We found out in the situation with General Chemical Canada that there was no real proper monitoring of the pension fund and there is really no mechanism available to help workers who are not going to get full pension at the end of their careers. I understand that this legislation will not help the employees of General Chemical Canada because there is no retroactivity here, but we want to avoid situations like these in the future.

I have a simple question for the parliamentary secretary. Why is the unfunded pension liability protection for workers not included? Why did the government not bring it forward at this time as part of dealing not only with wage earner protection but with the other component that is important to workers in cases of bankruptcy protection? Why is the government continuing to leave workers twisting in the wind on this one?

[Jerry Pickard, Liberal, Chatham-Kent—Essex, ON]

Madam Speaker, in the case of insolvency or bankruptcy, a number of assets need to be distributed among those who have priorities and have put out money. In a bankruptcy situation, everyone must realize that those people who put up the money for that business, the financial authorities and everyone else who was willing to risk their money and support that business, we have to strike a balance between that and the debt side. If we do not strike that balance, I know, and I think every person in the country knows, that some of the pension plans could be multi-million dollar assets. If we were to put that as a super priority, would the normal financial institutions that lend the money to get the businesses in operation retract money in Canada?

Would those investors, who have to invest to make sure corporate interests go forward, be investing in Canada, which would have some very specific laws about bankruptcy, or would they invest in Michigan? Would they invest in the United States? Would they invest in Europe? Would they invest in other areas where they know they have an opportunity of getting some of that money back if a bankruptcy were called?

The difficulty we have is striking that balance. Although I would love to see a policy where every person who has a claim on a pension that may not be fully paid would get every penny of it, in a bankruptcy situation we know that cannot be possible, as well as all the creditors get all their money and the investors get their money. As a result there has to be a reasonable compromise struck.

It is important to realize that under the bill we will be pressing very hard for the corporations to pay the unfunded, unpaid pension liabilities. They will have to be put into the fund. Corporations will not be able to slide by not putting the collected money into the pension plan. However, at the same time, if we put the pensioners above the lenders who are putting in money, no moneys will be invested in Canada. That would be tragic for all jobs in Canada and everyone has to realize that.

[Ed Komarnicki, Conservative, Souris—Moose Mountain, SK]

Madam Speaker, it is easy for the government to say that it is sympathetic with the employees who have lost vast sums of money in their pensions, in fact everything they may have saved for the future is wiped out in a bankruptcy. I have to wonder why the government would not address that situation by sister or companion legislation to the worker protection. The worker protection is one segment of it and that segment was added, along with others, into the bankruptcy legislation and the legislation relating to pension protection could just as well have been added to it and dealt with so that this problem does not arise.

How is it that we can have $1 million short in the pension fund or better? How does that happen? How does that arise? Why is there no legislation? This problem is not new. It has existed for a number of years. It may require some tightening up of the pension legislation that would deal with things like ensuring that it is properly inspected and that there are proper audits on a quarterly or regular basis to ensure that it cannot be in a position where it is underfunded to such a significant degree.

I would say that a good start is to ensure that happens, to ensure when there is a collective bargaining agreement and that there are some additions to be made for the pension benefits of a fund that those are put in practice in a realistic manner so that the employees can bank on it or count on it and there is someone policing it. It would not have been so difficult for the government to have added some specific companion pension legislation that would really have protected the worker.

The bill that we see here that has included a segment of worker protection was born or came out of the NDP budget bill. When $100 million was assigned toward worker protection, it was a good start, but it was a government knee-jerk reaction and the bill was put together in haste in an attempt to fulfill that promise. In putting it together in haste to attempt to fulfill the promise, the most the Liberals think they will expend is $30 million to $50 million when they ought to have spent at least $100 million.

That amount is really an insignificant amount when we look at what the government has done to workers. It has taken $45 billion out of moneys that have been contributed by workers and by employers and placed it in general revenues. It was used for general expenses of the country when the moneys have come from workers and employers. Instead, the government has given them, as I said before, one-quarter of one-quarter of 1% of what it had taken and the Liberals said they had done something.

It is a meagre first step and I would expect that the government would review that part of the employer-employee legislation when the bill goes to committee. We are essentially supporting the bill because the workers need some protection and it is a good first step, but when the Liberals previously indicated that they must have balance and that they cannot put liabilities such as the pension liabilities ahead of other secured creditors, how is it that in this particular case they have placed the amount that they pretend to pay to the workers in a super priority status to the extent of $3,000 ahead of secured creditors?

We look at the Liberals' promise to the NDP to give them $100 million. When we break it down, at most it is $30 million to $50 million. Of that $30 million to $50 million, they stand to recover more of that through the super priority status that they have given to themselves.

I agree that the worker needs to have access to whatever money is available on a quick and immediate basis and, to that extent, I think it is feature that we have proposed. In fact in our subcommittee, the Conservative Party were first out of the gate to suggest that there should be a worker protection fund that is funded properly and is easily accessible by the worker to meet the immediate needs of the worker.

However, when we look at this particular case, the Liberals have said that the worker has the option, limited to the extent of $2,000 and $1,000 for disbursements, a total of $3,000, to claim from this fund, and then they must assign their interest in the assets to the Government of Canada, essentially, to pursue the particular assets of the business. The assets they are talking about are accounts receivable that have come by work in progress, inventory or cash on hand.

Eventually, those kinds of assets are not ones that will take years and years to follow. It will take some time but we will have an assurance of some collection where the government will get that back.

The Liberals are not really giving very much to us or to the worker but in its knee-jerk reaction it has probably harmed workers into the future and small business without intending to harm them because they have not looked at the big picture.

They say that our secured transaction in this country works on the basis that when people lend money they want security on their assets and if a business does go bankrupt or bad they can get those assets or that money back. Small businesses, medium sized businesses and large businesses, particularly those that are labour intensive, as our country is in a large measure, need start up funds to start a business. Any business that has 10, 50 or 100 employees, we can rest assured it will be producing a product or goods that will take it 90 to 120 days to get paid and it will build up receivables. However the company needs to start, it needs to have employees and it needs to pay them so it goes to a financial institution and asks for a line of credit.

What do we suppose the bank uses for security for the granting of a line of credit? It uses cash, accounts receivable and inventory, the very things that the government is attempting to take away as secured assets and really take away from small business in order to obtain financing.

It does not take a rocket scientist to figure out that if a small businessman goes into the bank to obtain an operating line of credit the first question the bank will ask him now under this legislation is how many employees he has or intends to have. If he says 10 employees at $3,000, that is $30,000 right off the bat that will come off his operating line of credit which is perhaps what a small business needs to stay in business or to start up in the first place. If a businessman has a business with 50 employees times $3,000, that is $150,000 on a cash operation taken without blinking an eye.

What the government has said it will do is take this burden that the workers have to face and place it on, as it says, the bank or secured creditors, but it is not really placing it on the bank or the secured creditors. It is placing it on small business because the banks will certainly protect themselves and will not lend the money. However the small businessman will not be able to start up or even operate a business. Anyone with 100 employees is talking about $300,000 taken out of operation. That is the very kind of dollars that are needed for a business to operate.

I think this particular solution is half-baked, knee-jerked at the expense of small business and the employers and in the end will hurt workers. Surely that is not what we want to achieve.

Our particular submission was, yes, we do need a worker protection fund. Workers do need to be protected but the fund needs to be exactly what it is. It does not need to distribute the burden on those involved in business. It needs to come from either an insurance fund, to which employers and employees contribute, or from general revenues to cover the problem. We need to police it so that the problem does not escalate or happen in the first place. However we do not want to create a bigger problem by half solving another problem, which is what I believe the government has done by the way it has proceeded with this particular measure.

It has been our party's position that we need to strongly look at arriving at a situation where employees can access and be covered for what they have lost. I think there is nothing more important than ensuring that those workers who have invested their energy, their time and who have already performed the labour get paid.

Many of the workers have families, mortgages, car payments and things that are required on an immediate basis. It is on a week to week or bi-weekly or at least monthly basis that they need to have those funds. They cannot go through the protracted legal process of a bankruptcy and wait months and months and sometimes years to get their cash. They need to have easy access.

We support in principle the fact that there needs to be a worker protection fund, that workers need to have easy access to it, but at the same time we do not support the fact that there is a partial super priority status that is placed on secured creditors and ahead of secured creditors, That will simply spell disaster and take many dollars out of our economic business.

In our labour intensive operations, there are companies operating with an operating line of credit. We know the percentage that goes bankrupt will need $30 million to $50 million a year, but the percentage of companies that go bankrupt are very small compared to the number of small businesses that operate across the country. In my community of Estevan, Saskatchewan very few will go bankrupt, but there are many companies. Each of those companies will pay the price for that $30 million or $50 million because they will be unable to get their operating lines of credit.

When we look at the cumulative effect, $300 million in 10 years is into the billions because of the vastness of the operations in Canada. Billions of dollars taken out of our economy from businesses that are able to operate is a travesty on account of a $30 million to $50 million investment. The government needs to rethink its position and the committee needs to look at this aspect very closely before the harm done far outweighs the benefit we are attempting to achieve.

[Carole Lavallée, Bloc, Saint-Bruno—Saint-Hubert, QC]

Mr. Speaker, I want to thank the hon. member from the Conservative Party for his presentation. However, I would like him to explain his take on the section of bill dealing with bankruptcy related to student debt.

As you know, the Bloc Québécois has long been committed to abolishing the period of eligibility before a former student can be discharged of his or her debt through bankruptcy. We believe there is a lot of prejudice on this matter. We believe that people think it is easy to declare bankruptcy. However, everyone knows that a judge has the final say. There are others who think that students are more likely to declare bankruptcy in order to be discharged of their student debt, but there is no study to prove it.

Furthermore, they think that changing the eligibility period from 10 years to 7, as proposed in Bill C-55, is completely arbitrary. People do not understand the reason for 7 years. Why not 6, or 3, or any other number? Why not nothing at all?

I would like my colleague from the Conservative Party to share his opinion on student debt.

[Ed Komarnicki, Conservative, Souris—Moose Mountain, SK]

Mr. Speaker, there is no doubt that we as a country are piling debt on our young people to such a degree that it becomes an impediment to many of them who want to advance. Many of them for reasons, perhaps beyond their own control, are facing bankruptcy. It is unfortunate we have brought them to that. I have a family. I know what it costs to go to school and what it takes to obtain an education.

I am well aware of the fact that there are hardship cases. I agree with my colleague that the periods of 10 years or 7 years are arbitrary. The big issue is the hardship of ensuring that is the case, but even then, why 7 years? Why not 5 years or a shorter period? I am not opposed to seeing that period of time reduced, providing the student can show a hardship case and proper parameters are set so there is no abuse of the system.

Because we have created such a vast indebtedness and because students must rely on loans to the degree they do, we have to be careful that it does not become too easy for them to go to university, get an education and then declare bankruptcy. There must be some preconditions to how that happens. I realize that 10 years, or 7 years or 5 years is a long time. I would be in favour of reducing the period, but at the same time ensuring that the case is legitimate, is compassionate and requires intervention to the degree a bankruptcy would.

[Gérard Asselin, Bloc, Manicouagan, QC]

Mr. Speaker, this morning, the Minister of Labour and Housing explained the principle of Bill C-55. It seems as though they are merely paying lip service to this bill. They say that it will be passed and that it is a step forward. Obviously, any effort to improve working conditions, job security and the state of affairs after a bankruptcy is a step forward.

When such a bill is before the House, the Bloc Québécois can assure the government of its full cooperation so that all the necessary changes can be made in committee in order to make this a viable, useful and effective bill.

There is talk of this being a step forward, but it may be the smallest of steps. What is needed is a big step or even a leap forward. Already, Parliament is decades behind when it comes to working conditions in the event of a bankruptcy. We are talking about protecting wages, pension plans and students declaring bankruptcy.

Like the NDP, the Bloc Québécois has already assured the government of its full cooperation and willingness to improve Bill C-55 in committee.

I want to ask the Conservative member the following question. Does the Conservative Party believe that this bill is satisfactory? Does it intend to introduce improvements and amendments in committee in order to ensure that this is a viable and useful bill?

[Ed Komarnicki, Conservative, Souris—Moose Mountain, SK]

Mr. Speaker, there is no question that I would go on the record and say it is a good first step. In some ways we need to learn how to walk before we can run. We are headed in the right direction. My disappointment is it does not have any sister or companion legislation to deal with unfunded pensions.

My major concern, and it will require some vast consultation in committee, is to deal with the partial super priority status. We have reports throughout saying that super priority status is a bad way to go. To say that we will go with a half a super priority status is still a bad way to go.

The fundamental principles are wrong. It needs to be changed. I will be very vigorously defending and promoting a change to that aspect. It is something that will do an injustice to workers and business. More important, it will do harm to our economy, and it does not need to that. We are able to fund it without imposing it on every businessman across the country, and there are many of them. We are talking about millions of dollars. We cannot hastily say that we will approve the bill because it has some good segments. It has some bad stuff that needs to come out and we will speaking vigorously to that.

[Werner Schmidt, Conservative, Kelowna, BC]

Mr. Speaker, it is an honour for me to enter into the debate on Bill C-55. My colleagues have been lucid on a number of aspects of the bill which are very significant, and I concur with their positions.

I will limit my remarks to one particular aspect of the bill which has to do with the inclusion of income trusts, one aspect that is covered by the Bankruptcy and Insolvency Act and the Companies' Creditors Arrangement Act. The issue has to do with an element that is relatively new. It has become very significant and is the subject of rather significant controversy in Canada today.

What are income trusts, which I think have been surreptitiously inserted into the act as just a tiny amendment? In the first act, in the BIA, it suggests that a person now be defined as including an income trust. The CCAA, which is the Companies' Creditors Arrangement Act, defines an income trust as a unit holder and the trust itself is traded on a recognized stock market and covered under the provisions of the act.

What are these instruments? They are complex and sophisticated financial entities. By the underlying asset or group of assets, most of the income these assets generate is distributed to unit holders. They are kind of the equivalent of a shareholder yet they are not. They are unit holders and they are very different.

An income trust is formed when an operating entity creates a trust instead of offering its securities directly to the public. The proceeds from the sale of the units are used to purchase the common shares and high yield debt of the operating entity. It is important for us to recognize that they buy the equity and high yield debt of the operating entity. The combination of the trust's equity and debt holdings allows the income to flow through to unit holders, usually tax free.

There are essentially three types of income trusts: business income trusts, energy trusts and REITs.

The business income trust typically acquires all or substantially all of the issued equity and debt of an operating entity. Under a common business income trust structure, the trust earns income primarily from interest payments received on the debt of the operating entity. Business income trusts are used in many sectors such as manufacturing, food distribution and power generation and distribution.

Energy trusts are quite different. They earn royalty income from resource properties through a royalty interest or earn primarily interest income through the holding of equity and debt of the operating entity.

The third class are REITs, real estate income trusts. These generally acquire income producing real property under an income through leasing the property to an operating entity or they earn primarily interest income through the holding of equity debt of an operating entity.

Business income trusts are particularly useful for mature businesses that are not seeking additional capital because it increases their ability to distribute earnings. As the popularity of income trusts increases, more and more businesses are contemplating converting all or part of their operations to income trusts. The most recent was speculation of a Canadian bank to convert part of its business into an income trust. That among other matters brought a knee-jerk reaction from the Minister of Finance. It sent a shiver through Canada's capital markets and caused a deluge of anger from seniors across the country.

There are two different issues here, but nevertheless the one instance has to do with income trusts and their recognition and the other one has to do with the tax structure and how to deal with taxes. I will not deal with the tax structure. That is for another time.

In the context of Bill C-55, we also must note that while banks are not covered by the Bankruptcy and Insolvency Act or the CCAA, the Companies' Creditors Arrangement Act, an income trust, if the bill is passed in its present form, will put a bank's income trust, if it experiences financial difficulty, under the provisions of the BIA and the CCAA. On the one hand we have the bank never covered by the BIA. On the other hand if it forms an income trust, the part that is in the income trust will be covered by the bankruptcy act.

No one knows what the implications of such an event would be at this time. To pass a law without at least some consideration of possible implications would, in my opinion, not only be shortsighted but indeed irresponsible.

Let us now remind ourselves that income trusts, business, energy or REITs, typically acquire all or substantially all of the issued equity and debt of an operating entity. Since the income trusts hold debt, let us examine this debt, in a very preliminary way admittedly because we do not have time to get into all the details.

There are at least two classes of debt. The equity that is treated as debt by the income trust is non-arm's-length, private market debt that pays a coupon determined by the operating company's management. Although this debt is covered by a debt indenture, the debt generally does not carry the covenants or protection of a public market debt. It is subordinated to other claims on the operating company and should be viewed as equity for all purposes except tax purposes.

The debt held by the income trust is distinct from third party arm's-length debt issued by the operating company. Third party creditors that lend to an operating company owned by an income trust are in the same position as creditors to a corporation. Interest payments on bank loans or fixed income debt are paid out of pre-tax income. This debt pays a market rate of interest and has the same covenants as other bank loans and public market issues. Most important, the third party debt issued by the operating company has a superior claim on the assets of the operating company. When calculating the leverage of the operating company, however, only the third party debt is considered because the debt held by the income trust is treated as equity.

It is now evident that the inclusion of income trusts under the provisions of the BIA and CCAA is not a simple matter. It has been the subject of some study for years. It is becoming increasingly important as the popularity of income trusts increases. In fact, recently one of these income trusts declared bankruptcy in Ontario although there is no provision under the existing Bankruptcy and Insolvency Act for it to do so.

As the popularity of income trusts increases, the number of structures increases the probability of business failures in this area. We do not like to talk about this very much because after all we do not like to talk about business failures and it is much better to talk about successful business enterprises.

We need to recognize that if we are going to be dealing with this we have to be very careful to prepare ourselves for this. One might ask how important this is as a sector of the Canadian economy. In 2000 the market capitalization of income trusts was about $18 billion. In 2004 it rose to $118.7 billion. There are some reports, depending on which one is looked at, it is approaching $180 billion. That is a very significant market capitalization.

We have seen that these income trusts are sophisticated financial instruments. They own equity in operating entities, debts of operating entities and may indeed incur debts as income trusts in themselves.

The amendments apply only to income trusts, the units of which are traded on a registered stock market and are subject to the rules and regulations of security commissions. Those are the ones we are dealing with. There may be other income trusts that are not registered but those are not the ones covered by this act.

Whether those rules and regulations would be adequate in the case of a financially troubled income trust to determine asset value remains to be determined, particularly in cases where an income trust might hold less than 50% interest in an operating entity. The income trust might find it difficult to get direct access to that operating entity's financial information because it does not have a controlling interest.

While I am not prepared to oppose the inclusion of income trusts in the BIA and CCAA as being proposed to us now, I need to be assured that investors and creditors will be adequately protected if this bill is passed.

[Hedy Fry, Liberal, Parliamentary Secretary to the Minister of Citizenship and Immigration]

Mr. Speaker, I am pleased to express my support for Bill C-55, which proposes a comprehensive set of reforms to Canada's insolvency system.

Bankruptcy is not a pleasant subject. No one enjoys the thought of financial hardship or the pain that goes along with it, but we must not forget that bankruptcy is a fact of life in a dynamic and evolving market economy.

Entrepreneurs need to borrow money to bring their ideas to the marketplace. Firms issue debt obligations to finance their investments and to create working capital. Consumers use credit to buy homes and goods and services that they need.

Borrowers must have a way to escape debt when it becomes insurmountable, but the rules must be fair so that creditors can assess their risk. An economy without bankruptcies would be an economy without credit markets. Entrepreneurship would be stifled, corporate expansion would be halted, and financially troubled individuals would be sentenced to live their lives under the weight of unmanageable debt.

By facilitating a fresh start, insolvency law promotes innovation and helps to push the economy on to new levels of productivity and competitiveness.

The reforms in this bill have four major elements. These elements are: one, to encourage restructuring of viable businesses; two, to improve protection for workers in bankruptcy as preferred creditors; three, to introduce an exemption for RRSPs and to lower the period of discharge for student loans to seven years, while tightening at the same time the rules for debtors with surplus income and with large income tax debt; and four, certain technical amendments to improve the administration of the insolvency system.

Before we go any further, let us look at some of the numbers. Last year over 100,000 individuals used the Bankruptcy and Insolvency Act. This accounted for over $11 billion in liabilities and resulted in $4 billion being redeployed into the economy. There were more than 50 corporate restructurings during that time period under the Companies' Creditors Arrangement Act. One of the largest was an $8 billion debt. That is right, $8 billion in liabilities in one case only.

The reforms in this bill will ensure that there is greater transparency in the process and a better ability for parties to defend their interests. Perhaps more important, it will promote fairness and efficiency in the marketplace so that more of the debt is recovered so that it can be plowed back into the system.

Today in individual cases there are now four bankruptcies for every thousand Canadians over 16 years of age. A similar growth has been observed in other countries. On the business side the growth in the number of bankruptcies has been much smaller in Canada. In fact, since our peak in the mid-1990s, the number of bankruptcies has decreased significantly. Canada used to have a business bankruptcy rate very much higher than that of the United States, but now we are actually noting that we have the same basic bankruptcy rate, which is four per thousand business establishments.

There is one other trend that is worth noting. In recent years more and more businesses and individuals are taking the opportunity to restructure their debt by something called a proposal. A proposal and restructuring in general allows a debtor to avoid bankruptcy while paying the creditor less than the full value of the debt. More than that, the creditor is receiving money it would never have received if the person had gone bankrupt. It is a better outcome for both and it is a very important part of the changes in this bill.

Since 1992 the number of restructurings has considerably increased because people are finding it is a win-win situation. A key goal of Bill C-55 is to improve that even more and to help people to restructure.

Before I go any further, I want to talk about how we got to this point. There was an extensive consultative process in 2001 and 2002 to identify issues and options to reform the Bankruptcy and Insolvency Act and the Companies' Creditors Arrangement Act. This consultation process produced the report on the operation and administration of the Bankruptcy and Insolvency Act and Companies' Creditors Arrangement Act which was tabled in Parliament in late 2002. Meanwhile in a parallel process the Office of the Superintendent of Bankruptcy appointed a personal insolvency task force to give some solutions to the problem.

In 2003 the Senate Standing Committee on Banking, Trade and Commerce conducted public hearings, reviewed more than 40 submissions and came up with a report entitled “Debtors and Creditors Sharing the Burden”. This report was published in November 2004 and contained detailed recommendations.

The consultation process was very extensive. In other words, nobody made this up. Everyone tried to find out some of the best answers. This included hearing from stakeholders from a broad spectrum of interests such as insolvency practitioners, representatives of financial institutions, the legal community, labour and business, consumer associations, students and members of the academic community. They all brought forward very flexible and creative solutions.

The bill in front of us is a culmination of all of that input. The proposals are basically four in nature. They are comprehensive, well informed and based on sound research. I believe they will ensure that Canada has a world class insolvency law that will support our dynamic economy, protect jobs, and ensure that Canada remains a good place to invest, to do business and to live.

Bill C-55 will provide better protection for workers through the creation of the wage earner protection program. There is the superpriority for wage provisions relating to collective agreements as we saw in the bill.

The novelty of this bill is it will do all of this while minimizing as much as possible any adverse effect on access to capital. We do not want to stymie access to capital. The impact on lenders has been minimized while not over-burdening taxpayers.

Most of the OECD countries have taken measures to protect employees in case of the bankruptcy of their employer. In Canada we have debated this issue for almost 25 years. Bill C-55 represents a major breakthrough and is indicative of the economic policy leadership of the government.

The bill will also make Canada more attractive to international investors by adopting the United Nations Commission on International Trade Laws model law on cross-border insolvency. Corporate insolvencies are more often stretching across borders as we well know. The adoption of the model law would make it easier for creditors to assess their risks in various jurisdictions and to avoid the necessity of duplicating proceedings in different jurisdictions. It would create a better ability for people to assess where they want to go and how they want to borrow and who wants to lend them money. The model law is being adopted by our major trading partners, including the United States and Japan, and we must follow suit.

This is an important piece of legislation. I urge all members of the House to support it.

[Louis Plamondon, Bloc, Richelieu, QC]

Mr. Speaker, I would like to ask a question of the hon. member who has just spoken. Naturally the bill is a step forward. However I would like to know if she believes that it should be retroactive.

We are enacting this bill because many workers have been wronged in recent years. There has been the phenomenon of globalization and the transfer of many economic activities to China. Would it not therefore be reasonable to amend the bill so as to make it retroactive? That is my first question.

Second, those who are often forgotten about when there is a bankruptcy are the people who are already retired. For example, in my riding there are the workers of Aciers inoxydables Atlas. The company closed down in June, but there was a shortfall of $15 million in the pension fund. That means that the income of a pensioner who had been receiving $2,000 per month for ten years suddenly fell to $1,300 per month. Someone who was receiving $1,000 now receives $600 or $700. So that is a loss of income for these people who are now 72 or 75 years old and have been drawing this income for some 15 years, that is, since they retired. So they find themselves caught short because there is a temporary deficit in the pension fund.

Of course, this is a matter of provincial jurisdiction. The case of which I am speaking is the responsibility of the Régie des rentes du Québec. However, would it not be advisable to have a federal-provincial agreement, perhaps at least a transfer of federal funds to the provinces, so that we can support or bail out these pension funds? For example, the $15 million pension fund could be divided between the federal and provincial governments, under a specific agreement. That way, workers who have toiled all their lives, for 25 or 30 years, could regain the level of pension they enjoyed for years, particularly since they are in no way responsible for this closure. I am talking about Aciers inoxydables Atlas of Tracy, the head office of which has not yet declared bankruptcy.

Those are my two questions: first, do you think the government should be thinking about pension funds, and second, should it be thinking about making this bill retroactive?

[Hedy Fry, Liberal, Vancouver Centre, BC]

Mr. Speaker, quite often the whole concept of retroactivity sometimes imbalances what in fact we are trying to do with a particular piece of legislation or a particular piece of policy. If we are looking at helping to get a win-win situation, in many instances with restructuring, if we go back in time enough, then we create a complete imbalance in the kind of funds that would be available to do that.

With regard to pension protection, it is difficult for this bill to deal with pensions on a whole because there is a better pension regulatory area for us to deal with that under the relevant pension regulatory system. However, there is some ability in this bill, if a person declaring bankruptcy has not been putting the appropriate money and has an arrears in placing money into a pension, for this to take precedent over payouts to creditors. The bill does take care of some of it, but it is not really the appropriate vehicle to deal with that kind of pension reform.

[Don Boudria, Liberal, Glengarry—Prescott—Russell, ON]

Mr. Speaker, I listened attentively to her speech. She is obviously well-versed and very knowledgeable in this subject matter, as I am sure the entire House has realized. Could she tell us who has been demanding the changes to the insolvency provisions that we now enjoy? This piece of legislation will have a major impact. Perhaps she could indicate to the House who is looking to have changes in that regard, so that all members will understand where the government is coming from with some of these proposed changes.

[Hedy Fry, Liberal, Vancouver Centre, BC]

Mr. Speaker, this whole review process was a result of wide cross-country consultations undertaken in 2001 and 2002. It also reflects input received from, as I said earlier, a broad spectrum of stakeholders, including business, financial institutions, the legal community, et cetera, people who are well-versed in the understanding of insolvency laws, as well as labour groups, students, consumer associations and, of course, academic groups. The Senate committee on banking also tabled a report in 2003. It is a combination of many years of work, listening to a broad spectrum of stakeholders, and I think it has achieved the right balance.

[Carole Lavallée, Bloc, Saint-Bruno—Saint-Hubert, QC]

Mr. Speaker, I want to thank the member for Vancouver Centre for her comments. I want to ask her a question about student loans. She did not mention this subject once. Yet, student debt is a very significant part of this bill. The government is prepared to reduce the waiting period from ten years to seven years, so that former students can discharge their student loan debts in bankruptcy.

The Bloc Québécois committed long ago to totally eliminating this waiting period. In reality, having a waiting period for student loan debts makes no sense. First of all, it is based on prejudicial belief that declaring bankruptcy is easy, that anyone can do it and that students are immature enough to decide to finance their education with loans and then say, “No problem, I will just declare bankruptcy and get out of debt”.

Very few students would even think such a thing. A judge could dismiss an application based on such nonsense. In fact, we know that, in the event of a bankruptcy, a judge must rule whether to allow or dismiss an application.

Furthermore, we are wondering why the change from ten years to seven years? Why not five years or three years, or even zero years while we are at it? I want the member on the government side to tell us what she thinks about this.

[Hedy Fry, Liberal, Vancouver Centre, BC]

Mr. Speaker, over the period of the last five to six years the government has addressed some of the issues with regard to student loans from various perspectives. One of them was obviously to look at whether students were able to pay off loans if they did not have a job after they had finished university or school. We also looked at how they would be able to be forgiven their debt or not have to pay any interest and eventually, if this kept continuing and they did not make enough money or did not have enough of an income, to have the principal of the loan actually forgiven over a period of time. We address some of those issues in this bill by bringing down that timeline to seven years.

We have been working with students with regard to student loans. We have listened to them and there is no one place where we can resolve this problem. In this particular amendment we can bring the timeline down. We did it in other areas within the budget. We will continue to address the area of student loans in many other ways, not only by assisting students to pay off their loans but by decreasing the number of students who have to borrow. We will create structures, as we have done in past budgets, to allow for students who are disadvantaged economically to be able to get grants, and for disabled students or single parents with children to have access to grants for post-doctoral studies.

There is more than one way to skin that cat. The government has been well aware of that and has been looking at all avenues to assist students.

[Robert Vincent, Bloc, Shefford, QC]

Mr. Speaker, I would like to inform you that I will be sharing my time with the hon. member for Verchères—Les Patriotes.

Bill C-55 is a step in the right direction and the Bloc Québécois supports it. An increasing number of workers can be protected and this bill sets out to do just that, but it can go even further. Allow me to explain.

The bill addresses the matter of wages, but it could also address severance pay, which is money set aside by workers under the conditions of a collective agreement for them to recover should the company they work for shut down. For example, under the usual provisions of a collective agreement an employee gets one week's wages for every year of service. Thus, the $3,000 in wages that workers could lose if the company goes bankrupt, is paid by the government. That is good. It is great. However, more should be done.

Workers are often last on the list. The companies and everyone else are put first and the workers come last. However, they are the economic drivers of the country. Although there are 100,000 industries, if there is no one to work in them, the economic market fails. These workers are important for our society.

In my opinion, severance pay should be an integral part of the bill. I heard the minister say that $30 million was not a lot of money. If not, then we could include the severance pay these workers are entitled to since they contributed to it. This is something that could be discussed in committee.

Workers are becoming the poorest in our society. Take for example the price of gas, which has increased significantly. When workers negotiate their collective agreement they usually get a wage increase of 2% or 3% and the employer already finds that to be a lot. However, a 2% increase on weekly earnings of $400 is an increase of $8 a week. To fill a tank of gas to go to work at the factory currently costs $10 or $15 more a week. The worker is, in effect, already losing ground. In other words, he is already poorer than he was before getting a raise.

This goes beyond the price of gas. We must also look at the price of oil. When it comes time to heat our homes, the price will have increased, which will further cut into our purchasing power.

The minister was saying yesterday, in the first five minutes of his speech, that this money could be put towards the mortgage, the car or consumer goods. We all know that the price of consumer goods will go up again because of the price of gas. Ultimately, the consumer is the one who will be footing the bill. It is not the industry that will suffer the consequences of rising gas prices, but the consumer. Once again, workers are the ones who end up paying.

I will paint a picture of the workers' situation, because it is important. We often talk about businesses, but workers are always caught in a vicious circle where they always have to pay.

For example, in terms of taxes, if a worker owes taxes to the government, the tax authorities will come after him. They are the first ones to try to recover their money. If the worker owes $100 or $200, the tax authorities will certainly harass him until they recover the whole amount. At the end of the year, when the worker files his income tax return, the government will definitely take what is owed to it before giving anything back to the worker. The worker always has to pay.

Let us draw a parallel with Mr. Coffin, who took $1.5 million from the government. He gave back $1 million, which means that he still owes $500,000. I do not think that the government will try to recover that money.

But when a worker owes even a small amount of money, they go after him right away. He gets one letter after another, and repeated phone calls. He is basically harassed.

We have a two-tier justice system, where workers are treated one way and wealthier people are treated differently, with the workers consistently being exploited.

With respect to bankruptcies, $3,000 is nice. But, when a company goes bankrupt, some of the workers who lose their jobs are older; they are over 55. They did not expect the company to go bankrupt; they thought they could work there until retirement, but things turned out differently. The workers are usually the last to know, of course. Employers tend to keep their financial difficulties and the prospect of bankruptcy to themselves. They do not share that kind of information with the workers. Very often, employers fail to pay their employees, and they help themselves to the employees' pension fund to continue their operations. If there is any money left, the workers might get a few dollars, but that is not likely, because the workers always come last.

We are asking that workers over 55 whose company goes bankrupt have access to the Program for older worker adjustment, or POWA. For those affected by plant closures, by reason of bankruptcy or any other reason, this program would bridge the gap until they reach the age of 65. At least, these workers would be protected. We must never forget that they are the country's economic engine. We tend to forget that. There is much talk about companies, but without workers, there are no companies.

As I said earlier, I am using parallels because what matters to me is the workers. I am committed to worker protection. The CBC is a fine example. Over the past six years, there has not been a single year when there was not some problem with collective bargaining at the CBC: there has been three lockouts and three strikes.

Those who negotiate these collective agreements never manage to reach agreement with the workers. This year, it is a matter of job security. That is what the CBC workers are fighting for. Job security is important these days. Workers need it to pay their mortgages, pay for their cars and provide for their families. It is hard to work without that security. A person gets up and goes to work every day, but never knows what day they may be told their services are no longer needed. With some degree of job security, people can live decently and make plans for the future. They cannot do that when there is no security.

Why would an employer have temporary workers rather than permanent ones? The answer to that is simple. Then it can assign its workers exactly as it pleases, any way at all. We are told that is the best way to run a company. Perhaps it is, from the company's point of view, but it is bad management as far as workers are concerned. They attach a great deal of importance to having a permanent job.

Perhaps this program should have another name, something like “protection of workers' money”. It ought to cover all the money workers stand to lose if a plant closes because of bankruptcy. That is important. These people need all that money in order to continue to live decently.

When some plants close down, their workers start off on EI, then move to welfare, and finally end up selling their homes and having nothing, although they may have worked for 30 years.

This is, therefore, a valuable and good bill. I feel that $3,000 is a step in the right direction, but I do think that the government could do more for workers who are, as I have said, the ones who drive the economy.

[Gérard Asselin, Bloc, Manicouagan, QC]

Mr. Speaker, I would like to congratulate the member for Shefford on his fine speech. He took the time to prepare well so that he could speak on behalf and in the name of working people. He concluded by saying that this is a good bill. It is good, but not excellent.

There is a stage that it must still go through, namely consideration by the parliamentary committee where the opposition parties will present amendments. We will see how much goodwill the minister has after the Bloc Québécois makes amendments to improve the situation of employees in bankruptcy cases.

It was said that this is a step forward and that the minister introduced this bill. The department that created this loosely knit Bill C-55 has dropped a few stitches. We are going to fix that and make a few amendments in committee. Then we will see how much good faith the government has. My colleague in the Liberal Party just said that they consulted widely and listened. However, this bill does not correspond exactly with what workers want in case of bankruptcy.

Wages should be protected. Some people have sacrificed weeks and even months of wages and found themselves facing bankruptcy. Their wages were completely lost. An employee's pension fund should be protected, that is to say, the part paid by the employee and the employer. This is something that they negotiated in collective agreements.

We should ensure that people have immediate access to employment insurance, with no waiting period. We should also make sure that POWA, the program for older worker adjustment, applies right away insofar as training or temporary assistance is concerned while people wait for their pension entitlement. One hundred percent of everything these people have invested over many years in the company pension fund must go in. It must be placed in a specific fund, a guaranteed fund, and paid out at 100%.

I would like to ask the member for Shefford my question. I see that 10 minutes are not enough in view of all his knowledge, research and dedication to working people. The member for Shefford could easily have given us a 40-minute presentation. But he was allowed only ten minutes. I would like him to explain the essence of the amendments he wants to make in order to fix Bill C-55 and make it a real bill for the working people of Quebec.

[Robert Vincent, Bloc, Shefford, QC]

Mr. Speaker, I thank the member for his question. I will expand on my remarks. I say that all wages and all other sums owed to workers must be protected in case of a bankruptcy for which they are not responsible. Managing the business is the employer's job, and the workers are dependent on the way that job is done. When bankruptcy comes, there is nothing they can do about it. However, they should not have to pay for it.

As I mentioned earlier, many collective agreements provide for severance pay, which is one week's pay for each year of service. Why would workers, who paid directly for that, give that money back to the employer? I do not think that this is what we are trying to achieve here. The government wants to protect workers and their money. The employer's role is to manage the business. If the business is poorly managed, workers should not have to pay because the employer did not do a good job. That is why, in committee, we should take a close look at all the financial aspects and all the money that the workers stand to lose. They should not lose any money at all.

[Stéphane Bergeron, Bloc, Verchères—Les Patriotes, QC]

Mr. Speaker, to begin with, if you would permit me, I would like to warmly thank my colleague from Shefford. I thank him for his concern in permitting me to express myself today on this bill. I also thank him for being so flexible, for at first I was supposed to speak ahead of him, but gradually we reorganized things. So very great thanks to my colleague from Shefford.

It is with some emotion that I take the floor today on Bill C-55, an Act to establish the Wage Earner Protection Program Act, to amend the Bankruptcy and Insolvency Act and the Companies' Creditors Arrangements Act and to make consequential amendments to other Acts. Not only is this bill important to me, but this is probably one of the last speeches I will give in this House. I therefore ask the indulgence of the Speaker and my colleagues should I ever digress.

We must be very aware of the fact that when there are brutal closures or bankruptcies of companies, the fate of the workers is often tragic. Their families have to suffer the consequences of this as well.

Thus far, these employees do not rank very high in priority among the creditors when the time comes to wind up a company's remaining assets. So, as was mentioned earlier, we find wages and severance allowances unpaid, and, sometimes, pensions lost or heavily mortgaged. After working all their lives for one firm, often these people find themselves without resources, without a pension fund, and often with a reduced likelihood of returning to the labour market.

It is imperative that this Parliament consider the tragic situation of these employees who are the victims of brutal corporate closures or bankruptcies. It is high time that we did so.

A number of my constituents experienced such a situation when the Aciers Atlas plant closed in Sorel-Tracy. In fact, the Aciers Atlas retired steelworkers' association contacted me to ask Parliament to pass legislation to deal with this problem. That people should be lobbying for this is nothing new. The Steelworkers have been pressuring parliamentarians for months to look into this glaring problem. This was due in large part to the worrying situation of a number of steel plants, particularly in the Hamilton region.

After that, our colleague from Winnipeg Centre introduced Bill C-281, a bill we supported 100%. We must admit we even helped our colleague prepare the bill.

Obviously, we are extremely pleased to see the government step in with Bill C-55. In this way, we are assured that the existing legal framework will be improved in order to protect workers and ensure that they are among the preferred creditors when a company is dissolved.

As was said earlier, we support the principle of Bill C-55, but it still contains a number of irritants and gaps, particularly with regard to the concept of secured creditor. The Government of Quebec should be consulted as to how this new legislation may work with the provisions of the Civil Code.

A few moments ago, my colleague from Saint-Bruno—Saint-Hubert spoke quite pertinently about the waiting period that students face before being allowed to discharge their student loans through bankruptcy. This is another area of concern with regard to Bill C-55, as is the issue of penalizing individuals receiving EI benefits, who may be taxed on the benefits they receive when a company is dissolved.

We will have to ensure that a number of amendments and improvements are made to the bill in later stages, so that it is able to truly respond to the very legitimate expectations of workers and pensioners of companies that may one day close.

As I said earlier, I am very happy to speak on this issue. It is clear just how important it is to me.

As I said, I will be leaving this place soon for another arena where I hope I will be able to continue to serve and to meet new challenges.

I would like to take the few minutes I have left to thank all my present and former colleagues in this House. It has been a great privilege and honour for me to be able to sit in this House and be surrounded by extraordinary people here to represent their constituents in Canada and in Quebec.

I would like also to say goodbye to everyone here, House staff, clerks, security personnel and so on. I have particularly fond memories of the late Major General Cloutier, with whom I worked closely during my time as chief whip for the Bloc Québécois.

I also want to acknowledge and thank the legal advisors, and in particular Diane Davidson, an extraordinary woman now working with Elections Canada. These legal experts provide such devoted services to parliamentarians. Then there are the maintenance staff, the support staff, the food services people, the mail room employees, the pages, the researchers and Library staff, in short, all personnel of the House, past and present, who make it possible for us to do as worthy and efficient a job as possible of serving our fellow citizens.

I wish to mention the efficient, competent and devoted staff of the Bloc Québécois in general, and in particular the ones who have worked with me since 1993, who have made it possible for me to do this exciting job of representing the people of Verchères and Verchères—Les-Patriotes in the House of Commons. Words are not enough to express my great appreciation for their devotion, which has made it possible for me, I hope, to do my job as effectively and appropriately as possible.

And then there are the countless volunteers who have worked in the federal riding of Verchères and later Verchères—Les-Patriotes, the ones who have made it possible for me to be here for four terms, a total of some 12 years.

I wish to pay particular tribute to my family, my wife Johanne and my daughter Audrée-Anne. Without them, I could never have fulfilled this mission for the past 12 years.

Lastly, Mr. Speaker, I would be remiss if I did not express my equally warm and heartfelt thanks to the people of the federal riding of Verchères and Verchères—Les-Patriotes, who have showed their faith in me in four elections, who invested in me and reiterated their confidence in me. There is no way I can fully express my gratitude for the touching support they have manifested in me on four occasions, starting in 1993.

I thank them for allowing me to go through the exciting adventure of representing them in the House of Commons. I hope I always lived up to their expectations.

[Pat Martin, NDP, Winnipeg Centre, MB]

Mr. Speaker, prior to asking a question about the specific bill that we are debating, let me simply say that when someone of such long tenure and long standing respect in the House of Commons chooses to leave and announces that in this place, it is almost like losing a member of one's family.

I can remember the day I first met the member for Verchères—Les Patriotes and how gracious he was to me as a newcomer in the House of Commons. I met him at the opening cocktail party to welcome newly elected members of Parliament and he at the time was the whip for the Bloc Québécois. He was gracious, friendly and welcomed me into what became that very unique relationship that we enjoy as members of Parliament. I am really quite moved by his announcement today that he will not be seeking re-election and will be leaving this place. I can speak for the members of our caucus and say that we will miss him. We will miss the dignity and the respect that he brings to this House.

In regard to the bill, I know the Bloc Québécois shares the view of the NDP that the bill does not really address the big issue of huge underfunded pension plans. I would like the member to expand on his views. Does he share with us the view that it is fundamentally wrong for a company to be able to continue operating by scooping from the company pension plan and therefore leaving a shortfall when the company does collapse?

[Stéphane Bergeron, Bloc, Verchères—Les Patriotes, QC]

Mr. Speaker, I want to thank my colleague for his kind words. Many of my colleagues expressed their good wishes as soon as I took my seat. I like to think that the hon. member represents the view of many of our colleagues in this House and I thank him for it.

That said, he raised a very important question. As previously mentioned, this bill seems like a step in the right direction, but a number of deficiencies remain, including some I pointed out a few moments ago.

I must point out that our colleague from Winnipeg Centre just touched on another major gap in this bill. As I was saying earlier, although we are in favour of this bill in principle, it is very important that we make a number of changes and improvements to it in later stages. Then we could find all the provisions we would like to have in a bill to protect workers and retirees in the event of a bankruptcy or the abrupt closure of a company.

I call on our colleagues, especially those in the government, to be open to the concerns and proposals that will be presented in committee and at report stage, so that we can bring about a bill that Canadians and Quebeckers can be really proud of.

[Don Boudria, Liberal, Glengarry—Prescott—Russell, ON]

Mr. Speaker, my question will actually be a comment. It will not concern the subject matter of Bill C-55. Instead, it will be directed, through you, at the man.

A few weeks ago, I gave a speech which, apart from the fact that it was much longer, said essentially the same thing as what our colleague told us today. I too would like to say what a pleasure it has been for me to work with him. I am speaking for myself and, as the longest serving member of our caucus in the House of Commons, on behalf of all my hon. colleagues, I am sure.

Over the years, he has filled many positions within his party, as have I in mine. We have both been officers of this House. I am sure that I speak on behalf of all parliamentarians in saying that he has always discharged his duties in a very dignified manner.

When he arrived in this House, he was among the youngest parliamentarians. As surprising as it may sound, 12 years later, he is 12 years older, and others are now younger than him. Granted, there are many more who are younger than me. Some parliamentarians were not even born when I arrived at the House of Commons in 1966. My hon. colleague opposite could probably be included among them. I understand that he was 1 year old.

This was just a comment to say that, at any rate, as far as I am concerned, he has been a good member and a good colleague. If I were to ask anything of him, it would probably be this. In his remarks, he mentioned the volunteers working within political parties. I am not being partisan. This goes for all parties, without exception. I think that volunteers are the great heroes of democracy. They work hard; during election campaigns, they head off to the headquarters with their lunch boxes as if they were going to work, to give their time, and they give a lot of it. They ask for nothing in return, besides an opportunity to participate in this exercise in democracy.

Are they not the real heroes of democracy? I respectfully submit that these are the great heroes of democracy to whom all of us, parliamentarians and other elected officials, even those who are not elected but who are less involved than these people, the citizens of this country, owe a debt of gratitude.

[Stéphane Bergeron, Bloc, Verchères—Les Patriotes, QC]

Mr. Speaker, first of all, I want to thank you because you are being very lenient about time.

Naturally, I want to thank the hon. member for Glengarry—Prescott—Russell and tell him that the feelings are mutual. It was a great pleasure to work with him when he was the Leader of the Government in the House of Commons and I was the chief whip of the Bloc Québécois. We had to work quite closely together. Generally speaking, even though there were moments of intense disagreement between our two political parties, people always approached each other in a cordial and civilized manner. This allowed us, despite our disagreements, to maintain, at least until the most recent election, some decorum in this House, a decorum the public most certainly could be proud of. Decorum has probably diminished over the past few months and with good reason.

That said, I think my colleague from Glengarry—Prescott—Russell is quite right to stress the importance of the work of volunteers. We all know certain democracies—no need to look far—where money is the driving force and large numbers of handsomely paid employees run election campaigns. In Canada and Quebec, there is a spending ceiling and rules on political party funding, and we cannot afford highly paid staff for an election campaign. What we have are people who offer their services and give their time and energy because they believe in the cause, because they believe in their political party and because they believe in the person representing their political party.

In closing, I think I could not agree more with my colleague in saying that the true heroes of democracy in Canada and Quebec are those who give freely of their time to causes they believe in.

[The Deputy Speaker]

The time for questions and comments has expired.

[Don Boudria, Liberal, Glengarry—Prescott—Russell, ON]

Mr. Speaker, I rise on a point of order. When I gave a certain speech not that many weeks ago, the House was generous enough at the time to extend questions and comments considerably. I would like to ask for the same thing to be extended now because I see another hon. member who no doubt wants to ask a question or make a comment. Without knowing what he is going to say, and with the same generosity, perhaps we could extend questions and comments by 10 minutes. I would seek that consent.