Werner Schmidt

[Veterans, November 23rd, 2005]

Mr. Speaker, in the final days of the Year of the Veteran, Canadian veterans are being punished by the government.

Under the Canadian Forces Superannuation Act, veterans who marry after 60 cannot leave their survivors a portion of their pension, but veterans married before 60 can. These veterans have contributed equally to that pension plan, yet they are not entitled to the same benefits.

The government tells them to put aside money, overlooking the fact that veterans are senior citizens living on fixed incomes. Is this the dignity the government says they deserve?

Decorated veterans like Pete Buell of Halifax, Helen Rapp of Ottawa or Gordon Read of Kelowna want change. Veterans associations across Canada want change. On this side of the House, we also agree.

Give the veterans fair and equal treatment. Amend the Canadian Forces Superannuation Act. Our veterans stood up for Canada. Is it not time the Ministers of National Defence and Veterans Affairs stood up for them?

[Criminal Code, October 24th, 2005]

Madam Speaker, I commend my hon. colleague for his exposition of this bill but I think there is another dimension to Chuck Cadman that I would like to ask the member to perhaps address.

I knew Chuck from the day he was first elected to the House. In fact, I had the opportunity to follow Chuck Cadman to a public meeting shortly after his son had been murdered. It was quite an experience because Chuck had a compassion for his fellow Canadians. The one thing that seemed to be motivating Chuck more than anything else that I can recall was the injustice perpetrated on the victims of crime. They are not recognized in our society. It seems almost as if the protection of the criminal is greater than the protection of the victims. It is almost as if the victims do not count in this world. I wonder if my colleague could address some of those sorts of situations.

We have the indirect victims of car theft, for example the insurance companies that have to pay out the owners' claims and therefore the premiums go up. Now the victims are not just the insurance companies that have to pay the claims but insurance premiums go up when car thefts increase. The other group of victims are those who perhaps inadvertently buy a car that has been stolen and then lose it on that basis.

It seems to me that the whole motivation that Chuck Cadman had in presenting this bill was to do exactly what my hon. colleague from the Bloc mentioned. He asked whether we needed deterrents and that is precisely the issue. Chuck Cadman wanted to make sure that people who perpetrated crimes would not do so in the same way they had done before. There would be fewer and fewer people engaging in crime because the victims are the people who are left without any recourse.

I think it is important to recognize that the life and motivation of one of our fellow legislators was not designed primarily to punish people or to get even with people. It was simply to recognize that we need to make some changes in our society because unless we make those changes people will continue to engage in crime and the victims will increase. It is time we recognize the victims and protect people from becoming victims of vicious crime.

[Telecommunications Act, October 24th, 2005]

Mr. Speaker, one of the amendments to the bill that was adopted by the committee had to do with the registration of charities and they would be exempt. The type of registration we are talking about in particular refers to charities that are registered within the meaning of the Income Tax Act. That is the significant proviso. If they are registered under the Income Tax Act as a charity, they would be exempt. That is very significant.

I agree with the hon. member that the lifeblood of many of these charities depends on the ability to solicit by telephone and most people would not object to that.

There was another provision that was accepted by the committed and it had to do with people who perhaps are called by a charity and would wish their names to be registered as not wanting to be called again. The charity would then have to keep that list and not call those people again, but that is a small detail because it does not cover the overall situation. It just allows individuals to make exceptions for themselves for particular charities.

[Telecommunications Act, October 24th, 2005]

Mr. Speaker, I will be splitting my time with the hon. member for Newton—North Delta.

In discussing the bill, a couple of things need to be said, some complimentary and some that are perhaps not quite as complimentary.

The bill came to the committee before second reading. It had sort of a framework but there was nothing in it. We did not know exactly what the bill would actually be doing. All the parties came together and looked at the bill. We listened to witnesses and to what our constituents were saying about the do not call list for people soliciting merchandise, opinions or whatever by telephone. The committee looked at what could be done. In a short time it became very apparent that the bill was sadly deficient. The bill lacked certain provisions.

However something happened this morning that really shows the irony of this place and, in particular, the fickleness of the Liberal government that is in charge of this place at this time. I believe it was on Thursday of last week when the hon. member for Edmonton—Leduc presented a motion to the House to add to the list of those who were to be excluded from the do not call list certain solicitations by newspapers using a telephone. At that time the hon. member asked for the unanimous consent of the House because clearly the amendment had not been made in committee but was being made to the House at the report stage.

The Liberals decided that because it came from the hon. member for Edmonton—Leduc, who is a Conservative and on the opposition side of the House, they refused unanimous consent. Lo and behold, a weekend passed and the first thing Monday morning when the House resumed, the parliamentary secretary said that they would like to have the unanimous consent of the House to introduce a motion. What was the motion? The motion was identical, even to the wording, to what the hon. member for Edmonton—Leduc had presented to the House.

It must have become apparent to the Liberals that the member for Edmonton—Leduc had once again demonstrated the wisdom of listening to constituents so that over the weekend suddenly the Liberals realized this was a good motion. Today, lo and behold, they presented the motion and it was unanimously accepted by the House. It is amazing what a weekend will do. I just hope the Liberals will recognize over the years that these weekends can be very significant.

It is the one exception, I think, that has happened in this House. I have a list here of about 19 different promises that have been made by the Prime Minister to bring about democratic reform. Over and over again the House has passed motions and has agreed to take certain actions but what happened? Nothing. I believe the time has come for us to realize that we need to do the things we say we are going to do and live up to our promises.

While this is a good thing that is happening, there are also some very negative things that happened. On the good side, it should be noted that all the political parties in the House worked very cooperatively together to build the legislation to set up a do not call registry. In fact there is no dissension among the political parties. I and my party will be supporting the legislation. In fact, it will not be necessary to call for a standing vote, as far as I am concerned, on the legislation

I would also like to refer to another thing in this bill that we want to look at, and that has to do with the definition of existing business relationships. A number of presentations were made and one of the bones of contention concerned the definition of an existing business relationship. We know the do not call registry exists in the United States and that it has defined an existing business relationship in its legislation. The Americans have said that one of the criteria of an existing business relationship is that the relationship has been in existence for 18 months. After that it is no longer considered to be an existing relationship.

If this kind of thing is legislated and the proposal now is that this be legislated, this causes certain hardships in certain cyclical businesses. I would like to read what the Canadian Marketing Association said on this particular subject. What I am going to read is in reply to a particular request from one of the small businesses to the president of the Canadian Marketing Association. This particular concern was raised in the spring of 2004.

Mr. John Gustavson, the president and CEO of the Canadian Marketing Association which, by the way, is the largest marketing association in Canada, has been one of the most well-known proponents in favour of creating a federal do not call list in Canada. He concurs that the cyclical nature of businesses should be looked at. Mr. John Gustavson said:

Thank you for taking the time to write respecting our position on a national do not call registry.

“Our position” being this particular business. He said:

We agree entirely with your position. Every piece of legislation passed in North America on this subject so far (in 26 states prior to the U.S. federal legislation taking effect) has provided an exemption for business to contact existing customers. While there have been variances on the definition of “existing customer”, we believe it is important to include in the exemption customers that would only be contacted during a normal buying cycle.

That is very significant, a normal buying cycle. He continued:

Similar to your situation, these contacts may be several years apart.

What is being proposed is 18 months. That is not several years. That is less than that. He added:

In fact, our own Code of Ethics contains such an exemption.

That is the Canadian Marketing Association. He concluded:

Unfortunately, in trying to summarize our position in a few words, the details of our position were omitted by the reporter. I can assure you however that we consider such an exemption to be fundamental and may even be protected constitutionally.

Thank you again for your comments and I can assure you we will vigorously advocate for the right of business to contact its own customers by telephone.

We are not saying there should not be a definition for an existing business relationship. We are suggesting that when legislation is so specific as to require 18 months as the maximum duration of a business relationship, that makes it impossible for the regulating body to exercise any judgment. It seems to me that on the three year review, which is definitely part of the legislation, that may very well come up for review and consideration at that time.

I would like to encourage us to be very cognizant of the fact that in order for legislation to meet the real needs and requirements of business and to support small businesses in particular, we be cognizant of that particular fact.

I suppose I should recognize that some legislation that we have before the House now and that exists in our books is so general as to make interpretation so broad that no one knows for sure what is meant. In this particular case, the legislation is so specific that it provides absolutely no discretion or judgment on the part of those who are implementing this legislation.

Every once in a while we ask ourselves when are we going to develop a concern that in fact creates a situation that allows businesses to prosper, and allows the concerns of our constituents to be expressed and adopted and included. It is time for some common sense to prevail, both in the writing of legislation and in the actual implementation of it.

My appeal is for us to work on principle, but at the same time let us also exercise judgment, so that we do not have a biased position that works against the particular group and in favour of others.

[Telecommunications Act, October 24th, 2005]

Madam Speaker, the member was a hard-working member of the committee and asked many thoughtful questions and made many very useful interventions. There is one intervention for which we did not receive an answer, at least I do not recall receiving one but perhaps he does. The question has to do with the cost of the registry itself.

It seems that this registry is supposed to be self-supporting in terms of the money that it generates, in that the people who are involved will pay for the services rendered. It is something like a $2 million initial fee to set it up, or something like that, I am not quite sure. The hon. member probably remembers in detail.

Would the member speculate about the possible costs after it is set up? It seems that the firearms registry was originally supposed to cost $2 million, which is a number somewhat similar to the present one, and that one I think has mushroomed to a number that is way beyond the $2 million. I think it is approaching $2 billion now. I wonder if the hon. member could tell us what he thinks will happen to the actual cost of the do not call registry.

[Telecommunications Act, October 24th, 2005]

Madam Speaker, I have one observation for the hon. member. Is it not encouraging to see a first time member of Parliament stand in the House and say clearly and unequivocally that he will evaluate legislation on the basis of principle, not simply take a position on particular legislation, whether it is partisan or otherwise, and that the will look at the principle that is involved first and make sure the people understand why he voted a particular way by enunciating what those principles will be? I want to commend the hon. member for making it so abundantly clear as to how he will do certain things.

At the end of his speech he talked about the compassion that we should be directing toward those who are working in call centres. Even though many people object to getting these phone calls, he says that is how some people make a living, and that is important.

When the hon. member worked in a call centre like that did he find that it was a rewarding experience? We like to work, we want to work and the hon. member received a little extra money for doing that. I wonder if he could tell us exactly what his experience was in terms of a personal relationship with the people he called.

[Telecommunications Act, October 19th, 2005]

Mr. Speaker, I have to commend the hon. member opposite who is the chair of the industry committee. He demonstrated again a wonderful attitude that there should be no problem. I agree that there should be no problem, but we were assured of that when it came to the gun registry, that there should be no problem. If everything works the way the hon. member described it, there will be no problem. But he did not ever say that there will be no problem; he simply said that there should be no problem.

The hon. member opposite asked what guarantees we have and the hon. member said that there should be no problem. He went through the process as to what would be required. I quite agree that the way the hon. member described it there should be no problem because this is perfectly legitimate. I could not help but make that comment.

I also want to ask a question which has to do with what is an existing business relationship. We spent a great deal of time at committee trying to define what that is. There was a very serious shortcoming in the bill as it was presented in defining that. The committee finally said that an existing relationship is where someone made contact or entered into a contract 18 months previously.

I would like to ask the hon. member whether we could actually put into that kind of timeframe every sort of business relationship. Are there some perhaps that should go beyond 18 months and are there some that might be shorter?

[Telecommunications Act, October 19th, 2005]

Mr. Speaker, I want to commend my colleague for his contributions to the committee. It was a committee that was actually fun to be on. The industry committee has always been fun, but this particular bill made it more so.

I do have a question for the hon. member. If I recall correctly, and I think my colleague from Edmonton--Leduc also alluded to this, certain witnesses who wanted to appear before committee were not accepted or somehow did not get to appear before it. One case involved small business people, one of whom came from Vancouver Island. Another who wanted to appear came from a larger organization, which I think was the Canadian Federation of Independent Business. These people wanted to appear before the committee but somehow did not.

I wonder if the hon. member could perhaps speculate as to why these people did not come to the committee.

[Wage Earner Protection Program Act, September 29th, 2005]

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.

[Gasoline Prices, September 26th, 2005]

Madam Speaker, while the Minister of Finance rubs his hands gleefully over another surplus, Canadian taxpayers are searching their empty pockets for the money it will take to keep their families warm this winter.

Gas prices are threatening to reach $2 a litre at the pumps and heating costs could double. The finance minister shrugs his shoulders and suggests that a few cents here and there will make no difference. What arrogance.

In fact, each increase of 1¢ per litre at the pump is equal to $32 million to the Government of Canada. The minister has a choice and he knows it. He can help Canadians immediately by reducing the GST on fuel.

This is not the time to be profiting from high gas prices. This is the time to reduce the GST, reduce the price at the pumps and help Canadians.