Debates of Sept. 29th, 2005

Wage Earner Protection Program

[Dave MacKenzie, Conservative, Oxford, ON]

Mr. Speaker, the member opposite has talked at length about the bill. He obviously has spent a great deal of time on it. A couple of issues are important for Canadians with respect to this bill and I think he touched on at least one of them, which is the number of people who are likely to receive benefits in the $3,000 amount and the number of students who are likely to take advantage, if that is the right term, of the shortening of the period of time for bankruptcy.

I thought I heard the member say something in the area of 10,000 to 15,000 workers per year. I would ask him to give us those numbers and what he calculates the total to be for those 10,000 to 15,000 workers a year at $3,000 each, some of which would obviously be recovered through the receiver section of the bankruptcy.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, the source of the numbers are from the speech of the labour minister of yesterday, September 28:

—we are proposing new measures, including a wage earner protection program, for the first time in our history which will provide workers with a guaranteed payment for unpaid wages up to $3,000. An estimated 10,000 to 15,000 workers...across the country in both federal and provincial jurisdictions are left with unpaid wages or reduced pensions due to employer bankruptcies in Canada.

I believe that the ministry of labour will be providing a great deal more information.

This will also be an important opportunity to get an update on the student debt situation. We have constantly looked at this. We know how important it is that young Canadians pursue post-secondary education so they have the tools they need to take on those responsibilities of adult life in the workforce. I think all members would share the value that no one in Canada should be denied a university, or college education, or an apprenticeship or whatever because of lack of money.

[Pat Martin, NDP, Winnipeg Centre, MB]

Mr. Speaker, I thank my colleague from Mississauga for a very fulsome and interesting speech. I would like to ask him the same brief question I asked of the member for Okanagan—Coquihalla recently.

In the wage earner protection program, of which the NDP is in favour, if a person has worked for less than three months at the time of the bankruptcy, the employee is not eligible for any benefits. Would the hon. member not agree with me that this is silly and not in the spirit of the bill in terms of compensating employees who are disadvantaged by a bankruptcy?

What would his reaction be to an amendment to the bill that would say that all employees owed back wages and benefits should be eligible for the wage earners protection fund?

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, I agree.

[James Bezan, Conservative, Selkirk—Interlake, MB]

Mr. Speaker, I am glad we are debating the bill today and I thank the member for Mississauga South for his interventions and representation today.

There is no doubt that wage earner protection is crucial and important. We have been debating this in the House for quite some time. Wage earners deserve to be protected in case of bankruptcy and insolvency. They need to be covered, and I am glad we are considering this under the bill.

The Conservative Party wants to see this get to committee so we can have a good debate. We should have the proper witnesses with a balance of labour and employee representation as well as witnesses from the financial industry, the chamber of commerce and the Canadian Federation of Independent Business. We will see how this all comes into play when we have those expert witnesses before the committee.

There was talk about how this might affect capital. We see in the bill so far that it does have that balance and should restrict capital investment from a majority of different sources, including lenders and investors going into our businesses. Our small business built our country. We want to ensure that continues and that our small businesses succeed, grow and prosper.

Could the member for Mississauga South, especially with his expertise in financial matters, allude to how he sees this playing out from the standpoint of security to the investment industry and how that will play out in our business community?

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, I share the member's curiosity as to how this might play out. If I am a lender and a venture capitalist, I am going to put some money in, I am going to set financing terms which meet the risks and the rewards and I am going to consider the prospect of business success or failure. That is what venture capitalists do.

However, if we change the laws that all of a sudden say we may be a first secured creditor for the bonds that are owing to us, but we are going to change the rules of the game, all of a sudden there is another class of effectively secured creditors, being the employees, I think the House would agree that from day one as long as there is a dollar of unpaid wages, a dollar of unpaid wages is a dollar of unpaid wages. I do not care how long an employee has been there. That is the right thing.

However, we have some transitional provisions. Maybe this is something the committee has to consider. I do not want to delay, but if we are talking about $30 million to $50 million, maybe a transitional provision could be put into this. Maybe there is a way to smooth this so the government may pick up the unpaid wages itself and not recover during some transitional period. At least there would be a phase-in.

However, when we change the rules of the game, somebody will win and somebody will lose. Who knows, depending on the level of business failures, it could very well be a significant loss to the secured creditors and I am not sure if that is fair either. That is the idea of balance. I am not sure how that will happen.

These are important aspects at which the committee will have to look. I am glad we are talking about this now at second reading. It will go to committee and I am sure we will hear these answers and get the numbers. Let us find out what the numbers are because we need to know. Estimates at 10,000 to 15,000 and 13¢ on the dollar, et cetera, I am not sure what that translates into in terms of a business of an average size.

However, I know it is a lot better under the Companies' Creditors Arrangement Act than it would be under the bankruptcy act. Under the bankruptcy act there is no possibility of ongoing operations to make up and continue to operate. Usually under the CCAA the amount of exposure for the creditors is limited to the amounts owing at the time they went into court protection, but they are 100% guaranteed from that day forward. Under the existing laws the CCAA is preferable. However, we have a lot of companies that there is just no solution whatsoever. The haircut that creditors have to take is just too great and no one is prepared to continue on under any circumstances.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Mr. Speaker, I will be splitting my time with the member for Windsor West.

I am very happy to bring forward discussion on Bill C-55 today, the first part of the NDP's plan to address the issue of workers' wages in the event of bankruptcies. I will come back to that in a moment.

Bill C-55 is in large part a result of the NDP's negotiation for a better balanced budget last spring where we saw for the first time in some time a federal budget that actually responded to the needs of ordinary Canadians from coast to coast to coast. Part of our agenda has been wage protection. The other part of our agenda is pension protection. I have to flag the member for Winnipeg Centre's Bill C-281 which would protect pensions in the event of bankruptcy. We need to see is both wage protection and pension protection. We are happy to see that initial addressing of the NDP's concern, which we have had for some time, in Bill C-55.

Ordinary Canadians are having a harder and harder time of it. Over the past 15 years most Canadian family incomes have eroded. Lower income Canadians, working Canadians, Canadians in the middle class have lost 5% to 10% in real terms in family income over the past 15 years. That is the unfortunate legacy of both the Conservative government and the current Liberal government. Over this 15 year period Canadians are having a harder and harder time of it. Real income has declined at the same time as we have seen overtime charges and longer and longer working weeks. It is skyrocketing up to 33%. Canadian families are working harder and harder for less and less. They are working longer and longer weeks for smaller and smaller real income.

In addition, they have had no protection in the event of bankruptcies. That is why the NDP caucus pushed very hard last spring to change the budget to eliminate the corporate income tax cuts put forward by the Liberal government and to put in place wage earner protection. We will be working equally hard to put in place pension protection.

I would like to briefly work through the four key elements of the bill, most of which we support and some of which needs to be modified. We are hoping in committee to push forward those amendments. These are the kinds of changes that will help make a difference on the main streets of the country, from coast to coast to coast. We have seen Bay Street receive a lot of attention over the last 10 or 15 years. Now it is main street's turn. As a result of pushing forward these amendments, we hope to make Bill C-55 better.

First let us talk about the key elements. I would like to address the issue of the threshold of $3,000 that would go to wage earners in the event of bankruptcy. That is an important first step in addressing workers' concerns in the event of bankruptcies. We have 10,000 bankruptcies a year in our country. We need to ensure that workers are protected. However, we believe the $3,000 threshold is not high enough to address the valid concerns that come out of bankruptcies and how workers are impacted.

We have seen a couple of elements that are very positive. For example, the change that does not allow judges to arbitrarily change collective agreements any more is an important step in recognizing collective bargaining rights. Now we finally have union and management sitting down and if there is mutual agreement to make changes through a collective bargaining process, that may take place. It is not to be imposed by an outside judge. It is not to be imposed on the workers. That is a important key improvement in Bill C-55.

We also are strongly in support of closing the loopholes that we have seen in the tax system, particularly for wealthy Canadians.

We saw with the George Radwanski affair where a wealthy civil servant started a new job at $230,000 a year and saw back taxes of $630,000 basically rubbed out with the stroke of a pen. It is a type of income tax system where ordinary Canadians are paying their taxes, ensuring that their responsibility to their community and country is kept. Yet wealthier Canadians have had the option to simply have their back taxes written off, even in the case of somebody like Mr. Radwanski who was starting a job which paid almost a quarter of a million dollars a year. It is very important that we close this loophole.

We in the NDP have been fighting the types of loopholes that exist. The member for Winnipeg Centre has been one of the strongest proponents in this regard. We need a tax system that is fair to all Canadians, where all Canadians pay their fair share. That is our collective wealth and our collective resources to deal with things like our health care system, to help support new child care programs, to help support working families. It is extremely important that we do not have these loopholes. It is extremely important that we not allow certain wealthy individuals to get off from paying taxes that they owe to the nation, to our country, to all Canadians.

We are certainly in favour of these key elements. There are other elements as I mentioned that need to be addressed in committee. As we adopt this bill in principle and send it to committee, we need to pay particular attention to these key issues, such as the threshold which I mentioned is too low, and particularly the elements affecting students.

What we are saying right now with the current bill, if there are no amendments, is that a student who undertakes student debt because of the current chaos in the post-secondary education funding in the country is chained to that debt for a 10 year period. Yet we know that inadequate funding for post-secondary education and inadequate supports for students across the country have led to the debt crisis among students. Many students have had no other option because there has not been the support in place for post-secondary education.

Our post-secondary critic, the member for Halifax, has been front and centre in this regard, pushing forward an agenda that meets the needs of students. We need to make sure that this bill does not handcuff students and does not treat them differently from how other Canadians are treated in the event of bankruptcy.

Still, it is important that certain elements of this legislation be adopted. We know full well that workers all over Canada have been suffering for the last 15 years because of policies put in place by this Liberal government and the Conservative government that came before it. Indeed, family incomes were reduced by 5 to 10%. A majority of Canadians have been hit.

It is important that we amend the Bankruptcy and Insolvency Act in order to help workers who lost their job because their company went bankrupt. This is what the NDP tried to negotiate last spring.

First, we want to deal with the issue of the money owed by these businesses to their employees. Second, with Bill C-281, we want to deal also with pensions lost because of the bankruptcy of businesses. The NDP member for Winnipeg Centre raises the issue of pensions and the CPP and the fact that we must protect the pensions of workers. This is the second aspect of the proposal that the NDP will make to this Parliament.

Consequently, we support Bill C-55, at first, in principle, so that, later on, in committee, we can improve it and ensure that it better protects the interests of all Canadians.

[Lynne Yelich, Conservative, Blackstrap, SK]

Mr. Speaker, I noticed the member spoke about student loans. Right now the current legislation says that an individual can apply for discharge 10 years after he or she ceases to be a student. Bill C-55 talks about applying a discharge after seven years and allowing a hardship discharge after five years. I noticed Bill C-281 does not cover it. I am just wondering whether the member supports the discharge clause.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Mr. Speaker, obviously we are facing a crisis in the post-secondary sector. Certainly in the last campaign as I went door to door knocking on doors throughout my riding, I came across students, or people who would like to be students, all the time who are faced with a crushing debt load and the lack of supports that exist in the post-secondary sector. This crisis has been created as a result of government inaction on post-secondary funding and the supports that should be going to students.

What I see virtually every week in my riding are people who have decided not to continue with their education because the supports are not there for them. That is why I believe the committee should be looking at the whole question of discharge, the whole question of hardship. It should be looking at it from the standpoint of the crisis that government inaction has created, which has made it more and more difficult for Canadians to get into the post-secondary system.

I do not know what direction the committee will take on this. It is fair to say, because student organizations have raised this concern, that the bill needs to go further to address the real post-secondary funding crisis and the lack of supports in this country.

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

Mr. Speaker, I would like to thank my colleague from the NDP for having made this presentation on Bill C-55.

Regarding students faced with bankruptcy, I understand as well that he is very sensitive to their debt problems. Bill C-55 proposes a major change to the rules governing this debt.

At present, the Bankruptcy and Insolvency Act provides that people who go bankrupt cannot be discharged from their student debt before ten years have passed. Bill C-55 would reduce this period from ten to seven years.

The Bloc Québécois has been trying for a very long time, and more formally in its election platform of 2004, to abolish this waiting period. It is a period based on prejudice. The first is that it is easy to go bankrupt. We know, however, that a judge must normally make a ruling and reject frivolous requests. This waiting period is also based on the belief that students are more inclined than any other social group to want to go bankrupt in order to rid themselves of their student debt and start over. Well, there are no studies that show this.

The change from ten to seven years seems rather strange to us. It is very arbitrary. Why seven years? Why not six or five years? While we are at it, why not just make former students citizens like everyone else and state that all their debts are included when they go bankrupt?

Obviously the Bloc will propose an amendment in committee. I would like to know what the NDP member thinks in this regard. Will he support the Bloc amendment?

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Mr. Speaker, I would like to thank the member for her question.

There is obviously a crisis, as I said earlier, in our postsecondary education system. More and more students have a hard time finishing their postsecondary studies, especially those from less well-off families in our society. So there is an huge problem.

I agree with much of what the member said. We must address this problem that exists in our society because of government negligence regarding the funding of our postsecondary education system and the support that students should receive.

I think that it is important for the committee to study possible amendments. It is desirable to propose amendments like the one that the hon. member just mentioned. The committee should study how to improve this bill, and at the same time, meet the concerns that have been raised on many occasions by student organizations all across the country. It is important, therefore, to have these kinds of discussions in committee.

[Brian Masse, NDP, Windsor West, ON]

Mr. Speaker, it is a pleasure to speak to a very important issue. Bill C-55 is critical. For the first time we have legislation before us that would allow workers to be put on the top of the heap as opposed to on the bottom of the heap when bankruptcy happens.

I can speak from personal experience. My brother worked for years at a plastics company here in Canada. He was a very diligent worker who went to work every single day. He made sure he made his contributions to the union, to his pension, and to the United Way. The company declared bankruptcy and went to the United States. The company not only took the workers' wages, but it also took their pensions.

It is very important to note that pensions are a deferred wage. They are a negotiated settlement among the workers, management and owners of a company. Pensions are deferred wages. They are important not only to the workers but also to our society. Pension earnings are a requirement for seniors in their lives after they have finished working. They are wages owed to them through their own planning and through arrangements made with management and the company. Those pensions belong to them. It is important to note that. This is missing from Bill C-55 and it is something our party is going to work on.

The company where my brother worked took the pension money. It also took the United Way money that the workers had contributed. It literally robbed the community of the contributions which the workers had made for the benefit of others.

The United Way in my community has had the highest donation per worker for a number of years. The money provides a full range of programs and services for people in need. I commend the executive director of our United Way, Sheila Wisdom. We have been challenged lately because many jobs have been lost in the auto industry and we have had to make sure that the United Way campaign expands into other groups and organizations.

We do not need companies leaving and taking money that workers have contributed toward their pensions. Sadly enough, Bill C-55 does not yet address this issue.

I want to continue the discussion with regard to students declaring bankruptcy. It is unconscionable that students have to wait 10 years to declare bankruptcy. We have witnessed a very significant escalation in tuition costs across the country, as well as other costs associated with going to school, such as apartment rentals, books, or other supports. Those costs have all gone up significantly and as a result, students have gone into more debt.

Young people have to be trained. People going back to college or university have to invest a lot of money in training, and they can accumulate a lot of debt as a result. With the record the students have with respect to repayment of their loans, they have earned the right to be treated better rather than being chastised at the 10 year limit. That is unacceptable.

As this crisis continues in terms of the educational system needing the necessary funds to run the programs, the training and the degree of technological improvements that are so important to compete in the world, people are increasingly being put into debt when they exit school and pursue their careers.

Some people are going to school later in life. They are not able to earn the necessary wages to pay off the debt. This also delays the start of families, which is a very important issue. Canadians are having children later in life. We need to put supports in place to avoid that. It is important that Bill C-55 address this problem.

I look forward to seeing amendments to this legislation. I am still not satisfied with the seven years. That can be improved.

I would like to note one of the other important issues related to this. It is the fact that as I started my speech this evening it is the first time ever that there is some mechanism whereby workers are at the front of the line, through the fact that they get $3,000 back in wages. That is very important. When a company goes bankrupt, for whatever reason, whether it is mismanagement or good management and the market conditions change, people lose their employment and do not have an opportunity to plan appropriately.

Three thousand dollars is a mere pittance. People cannot get by on that for very long, but at least it is something immediate that people can get. It will provide some sense of stability for them and their families as they look for employment transitions. That is important.

What I cannot understand about the legislation, though, is that the government will then try to get only $2,000 back. Why would it only go back for $2,000, not $3,000, from the company after insolvency? I do not understand that logic. I do not know why it would not, on behalf of taxpayers, try to recover the full amount. This should be looked at for sure.

The member for Winnipeg Centre has worked very hard on his private member's legislation on these matters, Bill C-281, which is much better than this bill, but this bill does have some elements of his. I want to recognize the fact that he has been able to push the debate on the matter this far and get Bill C-55 some attention because there has been a reaction. I am a member of the industry committee, where Bill C-281 has actually been sitting for a while. If we do not get to that bill right away, we will be looking at Bill C-55 as well. It at least encourages some modest improvements.

The member for Winnipeg Centre should be acknowledged for bringing this issue to the forefront far sooner than many expected. He has done similar work on the oil and gas industry with progressive legislation and also with a series of other bills. I want to acknowledge that and the pension issue, which I think definitely needs to be expanded upon.

Also important is the fact that the bill is going to take away a procedure that right now allows a judge, on a whim, to basically throw out a collective agreement between a company and a union. That is an atrocious abuse of an agreement collectively negotiated between a company and a union. The bill will require dialogue, and that was the spirit when this was originally dreamed up in the 1930s: that there would be some actual collective working together at the table before the judge would make some type of arbitrary decision in regard to anyone. This is important because the deals negotiated in terms of pensions, wages, benefits and all of those things come out of good faith negotiations.

Let me note that this is what should be happening with the CBC right now. The lockout should end. People should be back working together to make sure that they actually have a good agreement.

So that dialogue is what the judge will be doing in this new agreement. That is very important because it also, I believe, will create a healthier environment for the future.

We also want to note that it will be very important to change the legislation in regard to the $200,000 tax debt no longer being eligible for automatic discharge. It is something that could be abusive. We think this would be an important change to the legislation.

Last, I want to touch on the Radwanski example of the loophole that is finally going to be closed. It is unconscionable that an individual in our society can get hundreds of thousands of dollars of tax relief and then one day later receive a job for a quarter of a million dollars a year. That is unacceptable. This change is a very important one, because that was an absolute abuse of the people who get up and go to work every single day just to make a living.

(Bill S-31. On the Order: Government Orders)

June 22, 2005 — The Minister of Transport — Second reading, report stage and third reading of Bill S-31, An Act to authorize the construction and maintenance of a bridge over the St. Lawrence River and a bridge over the Beauharnois Canal for the purpose of completing Highway 30.

Highway 30 Completion Bridges Act

[Raymond Simard, Liberal, Parliamentary Secretary to the Minister of Internal Trade]

Mr. Speaker, there have been discussions among the parties and I think you will find unanimous consent for the following motion:

That Bill S-31, An Act to authorize the construction and maintenance of a bridge over the St. Lawrence River and a bridge over the Beauharnois Canal for the purpose of completing Highway 30, be deemed to have been read a second time, referred to a committee and reported to the House without amendment, concurred in at the report stage, read a third time and passed.

[The Deputy Speaker]

Does the hon. parliamentary secretary have the unanimous consent of the House to move the motion?

[Some hon. members]

Agreed.

[The Deputy Speaker]

Is it the pleasure of the House to adopt the motion?

[Some hon. members]

Agreed.

(Motion agreed to, bill read the second time, considered in committee, reported without amendment, concurred in, read the third time and passed)

The House resumed consideration of the motion that Bill C-55, An Act to establish the Wage Earner Protection Program Act, to amend the Bankruptcy and Insolvency Act and the Companies' Creditors Arrangement Act and to make consequential amendments to other Acts, be read the second time and referred to a committee.

Wage Earner Protection Program Act

[Lynne Yelich, Conservative, Blackstrap, SK]

Mr. Speaker, I would like to ask the member about the proposed legislation and the student loans again, about applying for discharge after seven years but allowing hardship discharge after five. I wonder if the member would support an amendment to allow application for hardship at any time.

I also want to hear the member's comments on the exemption for RRSPs. Currently RRSPs related to insurance are exempt, but most others are not. In the proposed legislation, a wider range of retirement savings and products would be exempt from seizure in bankruptcy. I am wondering if the member supports either/or.

I also would like him to comment on pensions and whether there should not be a push to tighten pension laws so that companies cannot underfund them.

[Brian Masse, NDP, Windsor West, ON]

Mr. Speaker, I think it is important to focus on the student issue in this bill. I believe we should be moving toward treating students like everyone else in terms of bankruptcy. I think it is very condescending not to. It was when the government outsourced the student financing element to the banks that this 10 year provision was created.

I know that people who go to school want to pay back what Canadians have provided for them. People who are in our school system are not thieves. They are not abusive. They are individuals who are going to better themselves. In every system we are going to have some problems and we have to seek that out, but in terms of repayment of student loans we are not having a problem to a significant degree.

I would argue that there is more benefit to treating them the same as everyone else. It would give us a stronger educational system because people would know that they would not have a life sentence. After 10 years if students cannot declare bankruptcy, they have the amount of the debt they have accumulated and the spiral of problems they have related to employment, and their life gets significantly difficult. That erodes all the benefits of the training they have undergone in university or in colleges such as the one I have mentioned, my local college, St. Clair College, a fine institution.

With regard to the issue on underfunding pensions, I think the member for Blackstrap makes an excellent point. The pension issue is one that is critical to all Canadians. In fact, I have introduced the notion of a seniors' charter of rights. Part of that is to protect pensions. Underfunding pensions is a significant problem that becomes a burden not only to the individuals but also to the country. I think that is a separate piece of legislation, but I think it is an important issue that has not had the attention it deserves. It is one that really undermines our economy because it can have significant consequences.

[John Duncan, Conservative, Vancouver Island North, BC]

Mr. Speaker, I think this has been a good day with a good set of debates on Bill C-55, which is an act to establish the wage earner protection program act and also to amend the Bankruptcy and Insolvency Act, the Companies' Creditors Arrangement Act, and to make consequential amendments to other acts.

Amazingly, we actually have a consensus from all parties in the House of Commons that we need legislation in this area. This bodes well for the fact that we have people who go to work every day and expect to be paid for their day's wages. Very often their medical and dental premiums are covered as part of that package. They will have other benefits paid for and so on.

Lo and behold, I think all of us in this place represent large enough constituencies such that over and over again we have seen instances where this does not occur. In some cases it leads not only to devastating personal circumstances, but on a very large scale it can affect whole communities where those communities are tied largely to one employer.

I certainly have that circumstance in my riding, along with the unhappy circumstance that the employer ended in insolvency. There was a restructuring, which also ended in insolvency, and we are now into another restructuring exercise which we are hopeful will conclude successfully. This community, the community of Port Alice, with its specialty cellulose mill, has been through a lot over the last couple of years and that has demonstrated the shortcomings of the status quo in terms of how workers' earnings protections are handled.

Bill C-281, the private member's bill from the NDP member for Winnipeg Centre, promoted an initiative in this place for all parties to get their act together in terms of doing something about this matter, which resulted in Bill C-55.

If one were to take a look at Bill C-55, it would be hard not to agree with the thrust of Bill C-55 and not hard to disagree with some of its details, because this is an area that is quite complex. For example, any attempt to try to change the creditor priority can have a positive effect on one party and a negative effect on another party and sometimes can be counterproductive for both parties. In order for me to explain that, I will probably have to give an example, but it does point out why we need to hold hearings on the issue. It is a complex area of law.

The bill is important to many people and consistent with the fact that I have a large union-certified membership in my riding. I have taken an active interest in these kinds of issues in my 12 years representing that area.

I joined the shadow cabinet subcommittee, which we put together as the Conservative caucus, to develop and propose a wage earner protection fund in the case of a bankruptcy. On May 3, 2005 the Conservative shadow cabinet approved a comprehensive proposal that would be funded through the Employment Insurance Act. Consistent with this report, the Conservative caucus tabled a motion in the House of Commons which reads:

That, in the opinion of the House, immediate steps be taken to amend the Employment Insurance Act to provide for the establishment of a workers' protection fund that is funded and administered under the Employment Insurance Act to protect workers wages, medical and dental premiums, and severance payments to an amount of $5,000 per employee in the event of a business bankruptcy or insolvency.

This demonstrates our direction and intent at that point. On June 3, one month later, the government tabled a bill to establish a wage earner protection program. The government's bill would create a fund which would pay laid off employees up to $3,000 per employee in lost wages. The NDP proposed a similar program, of course, in Bill C-281 that gives super priority to workers in the event of a bankruptcy.

The difficulty we would have in the example that I have quoted, which was the Port Alice cellulose mill with something like what is proposed in Bill C-281, is the fact that the level of assets would be the determinant of how much an employee would receive and this would also be almost certain to result in a long wait for the employee to receive anything.

This is why the direction that Bill C-55 takes, in that specific area of the bill, is actually better because payment would be more quickly achieved. There is no time that is more appropriate for employees to receive their paycheques than when they were expecting them or very shortly thereafter.

The assets were being run down on a monthly basis and at the end of May, the 330 or so employees at the cellulose mill would have had a payout much less than $3,000 per employee. That is another way that Bill C-55 does have some improvements over the private member's bill first enunciated as Bill C-281.

However, we need to look at this in a broad way. I think all of the parties have their hearts in the right place in terms of trying to protect the workforce from employers that have, in some cases, actually gone out of their way to hide from them the fact that they have not been paying into things like their medical and dental premiums.

There was even the case, in the situation I was talking about, where a family support garnishee program had been shorted. In other words, the payments had not been forwarded. That employee was in trouble not just from a financial standpoint in not receiving wages and benefits but owed a payment through the courts that should have been automatic.

These are some of the wrinkles that can occur. We have to avoid an incentive to drive businesses having difficulties into early insolvency in order to keep the asset base up. That occurs as well.

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

Mr. Speaker, I thank my colleague the hon. member for Vancouver Island North for this excellent speech.

However, there is one element of Bill C-55 which he did not address. This concerns students faced with bankruptcy. Bill C-55 proposes a change to the rules governing the bankruptcy of former students, since at present the Bankruptcy and Insolvency Act says that persons reduced to bankruptcy cannot be discharged from a student debt if they are still at school or if they finished their studies less than 10 years previously. Bill C-55 would bring that period down to seven years.

The Bloc Québécois has for a very long time been committed, although more formally in its 2004 election platform, to abolishing the waiting period during which students cannot be released from their debts through bankruptcy. We believe that there are prejudices that cause certain persons to believe that it is easy to declare bankruptcy, even though we know that a judge has to rule on that question, and normally a judge would dismiss any far-fetched applications. There are also prejudices which hold that students are more inclined than other social groups to try and shirk their commitments, such as student debt. Yet no study has ever proven this.

Furthermore, the change from ten years to seven is very arbitrary. This bill speaks of seven years, but it could well be five. And why not four? Why not three? While we are at it, why not zero? So the Bloc Québécois could be expected to submit an amendment in committee to abolish this waiting period before students can include their education debts in a bankruptcy.

The hon. member from the Conservative Party said that all the parties here present have their hearts in the right place in terms of wanting to defend wage earners. Former students are also wage earners. I was wondering if the party represented by the hon. member for Vancouver Island North would forget about these prejudices and support the Bloc Québécois amendment that will be submitted in committee.

[John Duncan, Conservative, Vancouver Island North, BC]

Mr. Speaker, I am not sure I fully comprehended the question.

In terms of the amendment dealing with student loan repayments, I have no difficulty with what the Bloc is presenting. I think that is an appropriate amendment. For example, we would support an amendment to apply for discharge after seven years and to allow for discharge based on hardship at any time. I think we are basically on the same wavelength. I am not sure if that is what the Bloc member was driving at or not.

[Jim Prentice, Conservative, Calgary North Centre, AB]

Mr. Speaker, it is my privilege to rise and speak today to Bill C-55, the wage earner protection program act, which is before the House. I will be speaking generally in favour of the concept underlying the legislation while taking issue with some of the specifics which form part of the government's proposal.

I would like to acknowledge the work of a number of members of the House. First, the member for Winnipeg Centre did a great deal of work in terms of putting Bill C-281 before the House. I have worked with this member very closely. We do not always agree on issues, but I do respect the philosophy with which he has brought this matter forward and the private member's bill that he brought is a precursor to Bill C-55.

I would also like to acknowledge the hard work of the member for Edmonton—Leduc who is our critic in this area. He has worked very diligently, has examined this very complex legislation, and has led the Conservative Party in its very able response to the legislation. The member for Souris—Moose Mountain, our labour critic, has also worked with him and similarly been responsible for the carriage of this legislation.

My comments follow those of the member for Vancouver Island North. It is worth pointing out that he has been a very outspoken advocate on behalf of working Canadians and the protection of working Canadians under this legislation. He served on the subcommittee of the Conservative shadow cabinet which brought this concept to the House earlier this year in May.

There is some unanimity in the House in terms of the spirit which underlies this legislation, but there are important differences between the way the Conservative Party and the government has approached this issue. I wish to draw the attention of the House to the May 3 motion which was put before the House of Commons. It read:

That, in the opinion of the House, immediate steps be taken to amend the Employment Insurance Act to provide for the establishment of a workers' protection fund that is funded and administered under the Employment Insurance Act to protect workers wages, medical and dental premiums, and severance payments to an amount of $5,000 per employee in the event of a business bankruptcy or insolvency.

Herein lies the genesis or the concept behind Bill C-55, but there are important differences between the Conservative position and that of the government which I will underscore in my comments this afternoon.

Generally speaking, I favour the wage earner protection program aspects of Bill C-55 and I will direct my comments exclusively to those provisions of the legislation. There are equally complicated provisions that deal with other aspects of the Bankruptcy Act. I will not be turning my mind to those today. The wage earner protection program features of this legislation are quite important because they provide protection for everyday working Canadians who find themselves caught up in the nightmare of a bankruptcy or an insolvency or a creditor protection scheme.

This is a matter that I have some experience with on a personal basis. In my own family, I recall being a young lawyer many, many years ago and my mother, who was an employee of a company called the Betty Shop, found her employer to be in a state of bankruptcy and insolvency. I remember how difficult it was for her when she discovered that she had absolutely no protection or priority as a wage earner. That company went bankrupt and it was my mother who was out of pocket with her wages because there was no government program to cover the company. She had absolutely no security under the Bankruptcy Act. That was 15 to 20 years ago, so I am pleased to stand here today on behalf of her and other working Canadians who find themselves in similar circumstances.

It is important that the House is drawing together to protect working Canadians, so that they do not suffer those kinds of losses in the event of a bankruptcy.

It is important that the matter proceed to committee and that the committee conduct a very diligent and searching review of the legislation that is in front of the House. Bill C-55 is quite complex and detailed in terms of the priority regime that it creates and the legislative balance that it strikes.

It is important that the committee hear from people in the legal and banking professions and the labour unions to make sure that the appropriate balance is struck with the legislation, because it is a question of balance. It is a question of striking a balance between protecting wage earners on the one hand and making sure on the other that we do not disrupt the balance which is at the heart of creditor relationships in the country. This is something I know in particular the member for Edmonton—Leduc and the member for Souris—Moose Mountain have spoken about but it requires some emphasis.

The priority scheme in the event of a bankruptcy is extremely complicated. It strikes a delicate balance between those who work in businesses and those who finance businesses. We must be very careful with this legislation that we do not disrupt that balance, because the ultimate losers will be working Canadians. It will be working Canadians at the end of the day who will suffer the consequences if it becomes more difficult to finance a business.

No one should think that by according superpriority status to one category of claims, in this case past wage earning claims, somehow it will be simply the secured creditors, the banks, who accept that loss. In fact, the way it works in the law of the business world is that the banks and other secured creditors will make darned sure that they have adequate security ahead of time. They will simply add the wage claims to the security which they seek which will make it harder for people to finance businesses. Essentially it will add to the equity that business people need before they can finance a business, because there will have to be adequate equity ahead of the other business assets to protect the banks. We have to be very careful of the balance which is struck.

There is one thing I am puzzled by. The motion that the Conservative Party put forward linked the employment wage protection, which is so important, and the Conservative Party specified an amount of $5,000 per person, not the $3,000 suggested by the government, but it linked it equally importantly to the Employment Insurance Act by ensuring that those claims would be paid from the employment insurance system. The government in a sense would guarantee wage earner claims in the event of a bankruptcy, up to the amount of $5,000 and it would be covered out of the premiums that had been paid by employers and employees to the employment insurance fund.

What the government is proposing is something that is in fact quite different from that. First, the protection is offered only up to the level of $3,000 per employee, which is much less generous than what had been proposed by the Conservative Party, much less protective of working class Canadians. Second, there is this very puzzling feature such that the money which is paid out under Bill C-55, the $3,000, can then be recovered by the government from the bankrupt estate, yet it can only be recovered in the sum of $2,000. This is very puzzling. I hope that the committee has a look at this.

I do not know why we would put forward a legislated system that compensates wage earners for $3,000, yet allows the government to pursue recompense or security protection only to the tune of $2,000. That simply makes no sense. There is no reason that the Government of Canada, if it is protecting wage earners and being subrogated in its position, should not have the position to step forward and seek full recompense for the amount of $3,000.

There are other features of the legislation which I think are sensible. One concern that we must have in looking at the legislation is whether it puts forward a government system which simply involves more government. I do not find that in the legislation.

I note there are extensive responsibilities in clause 21 which have been imposed on the bankruptcy trustee and receiver. It is their responsibility to police the system, to make sure they have identified the claim, determined the amount of wages, informed the individuals and provided the minister with the report. There is also a sunset provision relating to this aspect of the legislation. From the way it will work, I do not think it will necessarily produce more government in this country, but it will provide protection for working Canadians up to the sum of $3,000 in principal. That is something we support as Conservatives, although we would have sought legislation which provided even greater protection for Canadians.

[Keith Martin, Liberal, Parliamentary Secretary to the Minister of National Defence]

Mr. Speaker, the member's comments were well received and well researched. As he knows, the government has put forward this wage earner protection plan for the protection of workers across the country who from time to time are confronted with the horrible situation where the company they work for has gone into receivership or bankruptcy.

Our government has listened very carefully to those workers and has come up with a plan to try to address a concern that grips them at the very heart and soul of their being. The particular problem workers are confronted with, which is the loss of their pension plan, is something that affects their future security. That is why we have come up with the wage earner protection plan to address this issue.

The minister estimates that the amount that workers will receive will cost the taxpayer and the government's coffers about $50 million. We think this is money well spent. It is being spent on workers, as I said before, who are confronted by a horrific situation where their future income security and pension security is being compromised.

If the hon. member disagrees with the amount of money that the minister and our government has proposed a worker would receive, what money would he propose that a worker receive? Would he put a cap on it? How would he figure this out? What moneys would he give to a worker confronted by this problem?