Madam Speaker, I thank the hon. member for Sarnia—Lambton for introducing Bill C‑228, which seeks to protect our workers' and our seniors' pensions.
I would like to begin by describing the current situation. Right now, companies offer pension plans with specific eligibility criteria and benefits. However, when such a company goes bankrupt, the pension plans may not contain enough money to cover the cost of all the promises the company made to its employees. That has happened a number of times in this country's history. One example is Nortel, once the largest employer in the national capital in Ottawa. When that tech giant went bankrupt, the pension funds were insufficient. There was not enough money to pay the pensions promised to the company's retirees. Many employees have asked me why the company was not required to use the proceeds of the sale of its assets to make up that shortfall.
Under the legislation that was in place at the time and is still in force today, in the event of bankruptcy or insolvency, a company must sell all its assets and pay back anyone who has loaned it money and all the individuals or entities to whom it owes money. Obviously, when a company goes bankrupt, it does not have enough money to pay all its creditors, and this means that some people will lose out. Those who lose out may be the banks that have loaned money to the business or the suppliers to the business that have not been paid. In some cases, it could be the pensioners, because there is not enough money in the pension fund to pay the promised pensions.
There is no good solution, and inevitably, some people will lose out. In most cases, it is good people who lose out when there are bankruptcies. Also, when a bankruptcy occurs, pensions are in a difficult situation, because big companies typically go bankrupt when the economy is in bad shape or when stock markets are falling. It is possible that both situations may happen at the same time, depriving the pension funds of the money needed to pay out the pensions.
Businesses should obviously set aside sufficient funds to guarantee that, in the event of bankruptcy or falling stock markets, it will have enough money to fund these pensions. However, right now, businesses do not have to pay these pension liabilities before paying other creditors. That is legal and the courts decide who gets what.
Some are opposed to the idea of giving priority to pension funds as the bill proposes. They believe that this will make it more difficult for a business to raise money from investors and get loans from banks. Bankers will not want to lend them money because, in the event of bankruptcy, the money will go to the pension fund. It is true that it will be more difficult to repay other creditors if the pension fund does not have enough money, but this bill would incentivize CEOs to properly fund their pension fund so that investors will be confident that, in the event of a bankruptcy, the money will be there.
Personally, I think this bill is not only compassionate towards people who have worked and expected to receive this money, but also a way to force the market to consider whether the pension fund is adequate today, not 20 years from now, when the company declares bankruptcy.
This will force CEOs to invest enough money today to secure the future and the retirement of their workers. If they want to get loans, they will have to prove themselves to the market.
People who work their entire lives and are promised a pension should receive it, and that is why the official opposition will support this bill and we will work to bring it into force.
I would like to thank the hon. member for Sarnia—Lambton, who represents working-class people in her constituency. We know of the grand refineries that do so much of the necessary energy refining for Ontario and that turn our raw materials into final end-use products. These are the hard-working people who should be able to count on their pensions. That is why our colleague, the member for Sarnia—Lambton, has brought this initiative forward.
As a quick background, right now, when a company goes bankrupt, all the creditors are roughly on equal footing unless they have secured credit and unless they have collateralized their loan against a particular asset within a company. This means the money can run out as the liquidation happens before a pension shortfall is corrected. This happened to Nortel when it went bankrupt in Ottawa: The largest private sector employer at the time went bankrupt and the pension fund was down. Often, bankruptcies happen when the economy crashes, and that is just when the stock market crashes, which means the funds invested in the pension fund drop dramatically. That awful convergence of factors means that pensioners could be down 30%, 40% or 50%.
This bill would put pensioners at the top of the list and give them superpriority in the event of bankruptcy so that when assets are sold, the pension fund gets made whole before other creditors get paid. Some will say this will make it harder for businesses to raise money. That is only the case if their pension is not properly funded. If it is funded properly, the investor will not have to worry about being knocked back behind the pensioners in the event of bankruptcy. The pension fund will already have sufficient dollars with a significant buffer that will protect the viability of the pensioners, and all the other creditors will be in the same position they were without this bill.
What the bill would do is incentivize CEOs to make the investments today to make sure their pension funds are in good shape down the road. What happened during the 2008 financial crisis was similar to when Warren Buffet said: When the tide goes out, we find out who was not wearing a bathing suit. That is the case with pension funds. When the tide goes out and the economy crashes, we find out which companies were not investing enough in the viability of their plans. They are then in trouble and are looking for a bailout from everyone else, including the workers who have to take a shortfall.
I would like to think that CEOs today would put aside the money for that ugly day down the road when there is a recession so that if God forbid they go bankrupt or God forbid the markets crash, their pension fund is secured. This bill would incentivize them to do that. If they do not, lenders will be worried about lending to them. A lender would go to them and say, “Listen, I would like to buy your bonds or give you a directed loan, but I'm concerned that your pension fund isn't fully solid and that I would fall behind that fund in the event of a bankruptcy.” That would put real-time, immediate pressure on the management of every country to solidify its pension funds in the here and now while times are good in order to raise debt and raise capital for the future.
It is for that reason, and for the reason that we must be compassionate to those who have worked hard all their lives, who are counting on those pensions to pay for their golden years and who have earned them, that we have made a promise and that the promise will be kept. That is why the Conservatives are proud to be supporting the bill by our fellow colleague, the member for Sarnia—Lambton, to secure and protect the pensions of our hard-working Canadians.