Werner Schmidt

[Business Development Bank Of Canada Act, June 21st, 1995]

Madam Speaker, is it interesting how the parliamentary secretary gets so excited about this issue. That is to be a fundamental question not only for the parliamentary secretary but for all members on that side of the House. How well do they recognize democracy and the wishes of the people when it comes to voting in the House?

[Business Development Bank Of Canada Act, June 21st, 1995]

Madam Speaker, there are a number of principles I would like to adhere to when rising to debate on this first group of motions having to do with changing the name of the Federal Business Development Bank. A number of the principles I want to centre on are fiscal responsibility, democratic decision making, and some of the provisions in the bill itself.

My hon. colleague from the Bloc has illustrated so clearly and so well the additional cost that will be incurred because of these kinds of changes that I do not think are necessary. If on the one hand it would change the function of the bank by changing the name, then let us do it but it does not.

In the whole function of the bank the mandate has been expanded and the capitalization structure has changed. The capital that is available to be lent out has changed. In fact the current capital is about $3.2 billion and under the new provisions of this bill it rises to $18 billion. There are some points there that this bank now becomes a very major player in small business lending.

The parliamentary secretary made a big point about the fact that this is going to be the small business bank and that we all have an emotional attachment to small business. My attachment to small business is not on an emotional basis. My attachment to small business is very pragmatic and very hard headed. It is very simply that 85 per cent of the new jobs created in Canada are created by small business. That is the significant part. If we ever want to really build this economy, we have to pay attention to small business. We have to grow it and we have to develop it. It has to become larger and eventually has to graduate from a small business to a big business.

Those are all very desirable things. The big point here is that we are entering into a request to change the name of a bank. I really wonder what the result will be of changing that name.

What bothers me on the democratic part of this thing is that we entered into an arrangement in this House where we could get the bill to committee before second reading, a bill that was supposed to be discussed in the House. What happened? It meant that all the members in the House were not able to contribute to the debate on the provisions of the proposed legislation in the House.

The bill went to the committee and the committee worked on it. It worked fast. All parliamentary standing committees should take a lesson from the way the industry committee works. It gets co-operation. It works well. There is a lot of disagreement and fighting back and forth but there is no recrimination and that is very significant. We recognize a good idea. It does not matter where it comes from and that is wonderful.

When the decisions of that kind from committee are presented to the minister and he turns right around and says he is sorry about that committee but he is on his way, it will be the Business Development Bank of Canada and he does not care what we think, that calls for real criticism and begs the questions of how important a committee is. What has happened to the procedure?

If everyone in the House agreed to name the bank the small business bank of Canada, would the minister have said sorry, Parliament of Canada, but the name will be the Business Development bank of Canada not the small business bank? The minister exercised that kind of authority in committee, which he would not dare do in the Parliament of Canada. There has been an abuse of the intent and the spirit of bringing this to committee before second reading.

I also want to come to grips with the word complementary which was touted. This new bank is now supposed to be complementary. We could not get the experts, legal or anything else, to define complementary clearly. It was ultimately brought into the bill in a new kind of way. I hope the parliamentary secretary, the minister and all of the department officials will be able to administer this act so it is complementary and not in direct competition with the existing field.

I do not think it is fiscally responsible to incur costs of making all of those changes from the Federal Business Development Bank to the Business Development Bank of Canada. It is unnecessary and will change nothing. If we are to do it that way let us not change it at all.

Democracy needs to prevail in the House. We ought to recognize how important it is the wishes of committees have meaning. I must recognize at the same time, although it is not part of these motions, that in the committee there were some significant amendments made and the minister accepted them. We need to recognize the minister went the other way around, which I think is an abuse of his privileges.

[Business Development Bank Of Canada Act, June 21st, 1995]

Madam Speaker, before I get into the debate I would like to express my appreciation for the unanimous consent given to the grouping and that all of these motions are deemed to have been put, to expeditiously advance the debate and the passage of the bill.

However, I also need to register very clearly and unequivocally that the establishment of a crown corporation like the Federal Business Development Bank or by whatever other name it might be called in the future is not consistent with Reform Party policy. We would suggest that such a crown corporation, organization or corporation not exist. Even though that is our position, we want to make the crown corporation as efficient and effective as it can be. That is the purpose of the amendments that our party is presenting to the House this afternoon.

With regard to Motions Nos. 16, 17 and 18, which refer to clauses 23, 24 and 27 of the act respectively, each of these amendments and those respective clauses refer to the capital structure of the proposed FDBD. The capital structure as covered in clause 23 suggests that it consists of a variety of instruments. The first of these are common shares with a par value of $100 each and an unlimited number of preferred shares without par value, but the paid-in capital of the bank together with any contributed surplus related to it and any proceeds referred to in paragraph 30(2)(d).

This paragraph from 30(2)(d) really has to do with hybrid capital instruments. We will talk about that in just a moment. We also need to recognize that those things that have been described as equity have to do with contributed surplus and retained earnings.

Therefore, a couple of things need to be suggested here. First, the categorization of common shares versus preferred shares needs to be distinguished. The common shares and the preferred shares will be owned by the crown which is the Government of Canada. However, as I understand it, there is a difference in how they are treated in terms of the presentation of the budget to the House of Commons.

The preferred shares, to the best of my knowledge, will not be in the budget but off budget. In other words, they are considered as an investment of the government so the people are unaware of what the disposition or exposure is of the Government of Canada in the equity of the Federal Business Development Bank.

Motion No. 16 deletes from the capital structure of the bank the category of preferred shares. This would suggest that it is better to take them out.

When we get to clause 24, if there is going to be a share capital part of the capital structure of the bank, to make it more efficient then it ought to be possible, in fact it is necessary in our opinion, that there be a variety of classes of shares and that they be created in such a way that there is a maximum of flexibility possible.

If some future government would like to do what the current government is doing, that is privatizing crown corporations like CNR, then this capital structure would be a very convenient way to make the thing go smoothly. From that point of view, it is an improvement to go to a share capital position.

Our suggestion is that there be only one class of shares which are common shares rather than preferred shares. Motion No. 17 clarifies and makes more efficient the disposition, control and management of those shares.

I would like to focus briefly on the hybrid capital instruments. Nowhere does the act define exactly what is meant by a hybrid capital instrument. This raises a whole series of questions. The

first question has to do with what is the priority claim in the event of dissolution of the bank or in the event of looking at the earnings of the bank as to who gets paid and in what order they get paid. Do they take preference to the preferred shares or do they take a secondary position or do they maybe even take a tertiary position? It is not clear.

Therefore the act is deficient in not making that clear. The act is also deficient in not clarifying exactly who will own these hybrid financial instruments.

The question really arises of who will be expected to buy these things. Are they going to be individual citizens? Is it going to be the Government of Canada?

The way the act is written, it is possible that the government could own these, that individual citizens could own these, that corporations could own these. That raises the other good question: Could some kind of persuasive power be directed towards the banks and it be requested that they supply this hybrid capital, in which case it is almost an expectation that it is just short of exercising a tax on the banks in order to supply the capital for this crown corporation? I do not think that is a desirable situation to be in.

The other situation is that if you create a hybrid capital instrument and nobody knows exactly what we are talking about, that is like creating something we are supposed to be supporting and we are not sure what it is we are supporting. One has to be very critical of that kind of provision in an act of this kind.

There is one other point that has to be raised here, and that is the actual manner in which the retained earnings and the contributed surplus is going to be handled by this bank. On one hand, the bank is told that it must manage its affairs in such a way that there is complete cost recovery in terms of the loans and the financial transactions it engages in. On the other hand, there is a provision that the capitalization of the bank contain a parliamentary appropriation.

It depends a lot now on what the mix of these equity positions is going to be. If the major portion of the capitalization of the bank is going to be a hybrid capital instrument and if that has prior claim, then indeed the bank is obligated to pay the holders of these hybrid instruments before it considers any profit to the bank or any return on investment. If the major part of that is there, that becomes a direct charge against the earnings the bank might make. Most of those earnings will come from the money it lends to various entrepreneurs.

I would respectfully suggest to the House that we adopt these three amendments to the act.

[Agreement On Internal Trade Implementation Act, June 19th, 1995]

Mr. Speaker, I would like to ask my hon. colleague whether he might want to make a comment about the difference between governing and leading. Is it the role of the government to make sure that the laws of the land are obeyed and enforced or is there a need to provide some leadership, to create a vision so that the country can grow and develop and the economy can become more innovative?

Would the hon. member make a comment about those two aspects?

[Agreement On Internal Trade Implementation Act, June 19th, 1995]

You mean any law?

[Agreement On Internal Trade Implementation Act, June 19th, 1995]

Mr. Speaker, I think that was a very thoughtful question.

No, I am not calling into question the fact that the premiers got together to work on things. That is commendable. However to suggest that what they agreed to was meaningful and actually resolved some of the trade barriers is false because the trade barriers were not eliminated in many instances.

We are supposedly being presented with a breakdown of internal trade barriers in Canada, but I submit to the House that is not the case. We are being led to believe something which is not complete. We should not be led to believe that it is complete. It is not.

[Agreement On Internal Trade Implementation Act, June 19th, 1995]

Mr. Speaker, that is probably one of the most thought provoking questions I have heard in the House for a long time. I appreciate the question. It is a good one.

In no way do I wish to suggest that the consultative process is not a good one. It is a good process and one that should be observed, absolutely. However there comes a time when the consultative process breaks down and does not result in an agreement. Then senior government has to come in and make some essential changes.

Another point I recognize is that the primary criticism is not in the process. There is no criticism of the process. The criticism is in bringing to the House a bill which says we have an agreement. It is not an agreement. There are major parts of the economy of Canada that are totally exempted from the agreement.

Let me mention one area. The whole energy sector is exempted from the agreement. It is not a complete agreement. Yet it was presented as if it were.

I say again that consultation is essential, but leadership is also essential in a country when the consultative process breaks down. The three principles in my speech are the ones we ought to take forward. The responsibility lies with the Parliament of Canada to say that we have to solve the question. We can go this far and then we have to say that we have consulted so long but there is an end to the process.

[Agreement On Internal Trade Implementation Act, June 19th, 1995]

Mr. Speaker, I rise to debate Bill C-88, a bill to implement the internal trade agreement signed last July by the various participants.

Last July the Prime Minister and the premiers came together in Ottawa to announce an agreement had been reached to break down the barriers of internal trade between provinces.

Canadians were hopeful that at last barriers would come down and they would have free access to goods and services, jobs and the competitive marketplace because the trade barriers between provinces would be broken down.

The agreement reached was said to be an important part of the Liberal promise to build an innovative economy within which all Canadians would benefit. It was touted as a vision for the future and it reflected well on the premiers and the Prime Minister. Canadians were happy.

Today, almost a year later, the euphoria has died and Canadians are questioning the vision they saw one year ago. Last July the premiers and the Prime Minister held up the internal trade agreement as a reflection of unity but Quebecers did not see it that way. They responded by electing a PQ government in their province. The premiers and the Prime Minister held up the agreement saying: "This is what we can do for one another". The then premier of Quebec was defeated in the subsequent election.

They said the agreement was a reflection of growth, but the inadequacy inherent in maintaining the status quo saw little job creation. Within the last five months job creation has dwindled to practically nothing.

Last July the premiers and the Prime Minister held up the internal trade agreement as a reflection of stability, but months later Moody's bond rating service put Canada on the alert then downgraded our credit rating because our debtload remained too high.

Today this House is being asked to ignore those undercurrents and put that internal trade agreement into practice by passing Bill C-88. The Reform Party of Canada cannot do this. We cannot support an agreement that so blatantly ignores the necessity to pull this country away from the edge of permanent economic instability. We came to Ottawa to prevent that. We came to champion the right of Canadians to a balanced budget, to deficit reduction, to more effective government, to a productive and stable economy and to national unity.

Despite the rhetoric that flies across this room every day, we have made every effort to keep that promise. By challenging this bill we remain true to that mandate given to us by our constituents who have asked again and again for freedom from internal trade barriers.

By not supporting this bill we know we run the risk of being accused of not supporting free trade in Canada. I ask Canadians to recognize that kind of accusation is a political move and not the truth.

Let us make it absolutely clear this afternoon that the Reform Party of Canada is committed to the removal of interprovincial barriers to trade through agreements among the provinces but we will not support any so-called agreement under the guise of freer internal trade when that agreement does not achieve this.

The Reform Party cannot support any internal trade agreement that does not once and for all recognize that the barriers to internal trade in this country are killing our marketplace. Higher taxes, a higher cost of living and an uncompetitive marketplace create a heavy and unnecessary burden on Canadians and guarantee the deterioration of our economy.

Bill C-88 I subdmit is a disguise for a non-agreement which purports to improve internal trade in Canada and improve our economic stability but does neither.

The Liberal government won an election on a promise to build a better Canada, to get Canadians employed and to ensure a stabilized economy. If this government truly seeks revitalization then it must admit that this agreement fails to keep that promise because it fails to eliminate internal trade barriers in this country.

I would like to believe that the government is committed to the future of this country but I cannot as long as politically motivated agreements like this one are held up as agreements. Canadians are looking for strong leadership, not the kind of leadership that is acted out every night on television, but real leadership, the kind that works hard behind the scenes at achieving what is best for our country. For months we were led to believe that this was happening and last July we had hoped to see the effects, but it did not materialize. What we witnessed was a photo opportunity and nothing more.

Canadians did not see progress. The government did not realize our goals. It did not put our economy on a better footing and Canadians continue to pay the price.

Some may think it is easy for me to stand or to sit on this side of the House and criticize the government for failing to produce an effective agreement. I am well aware of the difficulties involved in negotiating with many different parties. I know it is important to ensure fairness and the democratic process and that these be observed and to avoid dictating what is best. However when the stakes are high, when the best interests of the nation lie at the mercy of the government leaders, then I know that the time has come and the place has been arranged for strong and courageous leadership.

If I have one criticism this afternoon it is that the Liberal government failed to provide the necessary leadership. In an effort to avoid creating enemies it opened up a nothing lost, nothing gained, be happy approach. What we got was nothing gained and almost everything lost.

This country is threatening to break apart. Canadians no longer have that sense of unity they should have. Now more than ever we need leadership that will bring us together at every possible opportunity. Failure to bring about a good internal trade agreement only serves to enforce our differences, create more barriers and reveal a lack of confidence in ourselves.

The internal trade agreement was a failure. The blame must lie squarely and we must lay it squarely on the federal government. I believe the government failed in its mandate to first and foremost preserve the country. The government not only had an obligation to the future of the country to see that this happened, it had a vision to carry out, a vision that was created many years ago when the nation was first born.

In 1867 Canadian leaders saw fit to entrench within the Constitution these wise words: "All articles of the growth, produce or manufacture of any one of the provinces shall, from and after the union, be admitted free into each of the other provinces". That is section 121 of the Constitution Act. In that section there was an agreement that was a true reflection of unity and a commitment to growth and stability.

Perhaps in those days it was easier to recognize the danger. In those days, in our bid to resist American pressures and maintain a distinct culture, we could see that strengthening our internal economic ties would be the foundation of our identity and our unity. In the Constitution was laid the reflection of courage and co-operation, of government doing what was right and fair for the Canadian people and an example of strong leadership.

Today we face a greater danger. It is a danger because we failed to recognize it ourselves. We are spurred on by protectionist attitudes that really serve no one. We have reached a critical point and it is time for strong leadership to prevail.

We are a big country, a beautiful country. We have a small population. We are a wealthy country. However we are not an economic power in the world. We are a vast land of people with different orientations. That is our identity. However we have lost sight of the common ground: our economic alliance, one with another.

In 1867 the leaders of the day recognized the need for leadership and an economic alliance. They added section 91, which declared that the exclusive legislative authority of the Parliament of Canada extends to the regulation of trade and commerce, the very essence of what we are talking about in Bill C-88 and the internal trade agreement.

The Constitution recognizes that government leadership must begin by assuring economic stability to ensure the survival and unity of our country. That is why the Reform Party of Canada has made it the foundation of its mandate and why every day in the

House we fight for economic stability. It is why we debate the bill and why we cannot support it, because the government has failed to see the urgency in removing internal trade barriers for the good of the economy and has failed to reaffirm the objectives of section 121 of the Constitution, the free flow of articles of growth, produce and manufacture.

By ignoring the precedent of section 121 of the Constitution the successive governments of the country have assured an atmosphere of protectionism, disunity and almost certainly economic vulnerability. That is why this agreement and this bill fall short.

My colleagues have stood during this debate and pointed out a number of deficiencies inherent in the agreement and in the bill. One emotion that has prevailed throughout is frustration. Their frustration comes from not being able to say Canada is a nation of free trade. Many are embarrassed to acknowledge that there is freer trade north and south between Canada and the United States than there is east and west among the provinces and territories of Canada. They are frustrated, as are all Canadians, because they can see the way toward economic rejuvenation being thwarted. They can see the opportunities that exist for them in their ridings and in their home industries if those barriers are removed, as local industries are given a fair and competitive chance to become national industries. They are frustrated because they must answer the difficult questions of constituents who want to know why their industries are not doing better and why those industries are laying off people in times when the government purports that jobs are being created.

If this nation would commit to breaking down internal trade barriers Canadian industries would flourish. Entrepreneurs would find a reason to create innovation. Investors would find a reason to support the innovation and innovation would build the economy.

Once we have created an innovative economy internally we will be poised to enter into the global marketplace and we will succeed there. In the process, we will have obtained many things: a strong economy and more importantly pride in ourselves and confidence in our abilities.

Canada has the potential to be more than just a collection of small protected markets, but governments must implement the means that will change what currently exists. I believe Canadians deserve that chance. Canadians deserve the rewards of an open market, job mobility and economic stability, not the provincial protectionism that creates high taxes, low productivity and unemployment. This agreement will not provide those rewards and this bill will not implement an agreement that will provide them.

It is time to stop hiding behind regional development schemes, equalization payments and cost sharing agreements. It is time the inefficient government policies were thrown away rather than contributing to the financial burden on Canadian taxpayers. It is time the provinces stopped working on the false premise that exclusivity will protect their own markets. It is time the inherently weak marketplace created by protectionist policies gave way to vital marketplaces, strong, self-sufficient industries and real job creation.

The bond markets have made it clear that we can no longer continue the premise of borrowing more and more and creating a perpetual debt. The demise of our economy will not come some day, it will come soon because we have failed to act as a nation and correct the wrongs that pull us down. It is time to revive our nationality so we can say we have our wealth in common not our debt.

It is time for strong leadership to set in motion the process of eliminating internal trade barriers. The strong leadership we want will pull together the commitment of governments at all levels, business, labour and taxpayers, all the contributors. Together we can build a common market, establish compatible standards of licensing, certification, education and create the mobility and open markets that will become the fertile ground for new industries and generate innovation.

It is time to shut out the protectionists, the naysayers and weak leadership, the businesses built on protectionism provided by internal trade barriers and the governments with poor, ineffective policies which cost the taxpayers. Those things should be stopped.

The plan has been laid out for us. In 1992 the committee of ministers for internal trade adopted these guiding principles, which we should note carefully: one, that governments treat people, goods, services and capital equally irrespective of where they originate in Canada; two, that governments reconcile standards and regulations to provide for the free movement of people, goods, services and capital within Canada; three, that governments ensure that their administrative policies operate to provide for the free movement of people, goods, services and capital within Canada.

Those are strong, good, solid principles. These were the guiding principles necessary to ensure a successful agreement but they were not implemented. It is time for this government to show leadership that is necessary to enact these principles.

I say to the Liberal government, tear up Bill C-88, go back to the bargaining table, apply the principles of the CMIT and the spirit of the Constitution and build something meaningful, something we can support. Fashion an agreement that will build trust among the provinces and give them the courage to break down the barriers. Let us do what is right for Canadians and rebuild trust in our democratic process. Let us acknowledge Canadians' right to economic unity and their desire to declare their sovereignty.

Canadians will not be served well should this bill pass. It does not reflect the government's commitment to building an innovative economy, except for one exception which is the deletion of part III of the vehicle and transportation act. This particular section within the proposed bill is the only section that was not part of the internal agreement negotiated a year ago. It is also the only provision in this act that does in fact put into practice the provisions of sections 121 and 91 of the Constitution Act. Other

than that this bill does not reflect the process which begins on the right footing.

It does not reflect a country built on the principles of freedom, democracy and unity. In fact it goes beyond that. There is a provision within the bill which allows the governor in council under certain conditions to amend and to suspend application of any provision legal or otherwise of another province or department.

It is unpardonable to think that Parliament should be able to tell another government: "The particular law that you passed, you cannot have it any more because we are going to suspend its operation". It does not inspire a sharing of ideas, products, technologies and people. There is no structure for innovation in it and nowhere for the talents and skills of the people of the country to grow and provide stability.

We must try to do it now and not later. Canadians deserve the chance to develop into a nation of free traders before their industries are exposed to the larger global market. If we do that Canada will be ready to take advantage when the moment comes, and that moment is coming quickly.

I urge the government to go back to the bargaining table. I urge the government to show a strong leadership and not just political rhetoric. I urge the government to provide Canadians with a free interprovincial trade agreement and begin the process of economic rejuvenation.

It will symbolize to Canadians and everyone in the world, but more important to us and our young people in particular, that we are a confident people, strong and self-assured. We are an economically stable, united nation with the ability and skills required to face the challenge of a modern world.

[Electoral Boundaries Readjustmentact, 1995, June 15th, 1995]

Madam Speaker, there are three responses. First, it would be very beneficial for the member who has just spoken to read the code of ethics of Reform Party MPs. He would be rather severely chastised by the content of that ethics statement for the words he used. He needs to examine very carefully his facts before he makes statements such as the ones he made.

Second, with regard to representing the people of Okanagan Centre, I stand here as I stand there to represent all of them whether or not they voted for me. The issue is not one of representing Reform Party members only. It never was. It is not now and it will not be. I was elected by the community. The member ought to be very careful about the kinds of statements he is making.

With regard to the third aspect of being captive of the religious right, there has not been a more irresponsible statement than that one in the House since I was elected as a member. No religious right has the dominant power within or without or in support of the Reform Party of Canada. It represents all people to the degree that they identify with the principles the Reform Party stands for.

It is for virtue and truth that the House ought to stand. That is what the Reform Party stands for and that is where we need to put our mark.

[Electoral Boundaries Readjustmentact, 1995, June 15th, 1995]

The C twins, the member for Sherbrooke and the Deputy Prime Minister, between these two alone there will be a payout of more than $6 million if they retire and live to age 75, with an inflation rate of approximately 5 per cent.

There is nothing in this bill that will in any way come to grips with these things. We have seen the opposite. We have seen debate on certain bills stopped. There is another way this new bill negates the work of fiscal responsibility. It will do away with the work that has already been done if it is passed, and the $6 million already spent will be gone.

Fiscally the attitude seems to be to spend, don't worry, be happy. We have seen how democracy works in the country with closure on Bill C-41, closure on Bill C-85 concerning MP pensions, closure on Bill C-68, the firearms legislation. In each case the government has stopped the debate. In each case the government has ignored the wishes of a large proportion of our country. Worst of all, MPs are being warned that not toeing the line could put their opportunity to stand for election on the line and it definitely puts into jeopardy advancement in their political careers.

The people have told them what to stand for and they have been told to stand for what the Prime Minister says. In my opinion that is completely backward and is not the way it ought to go.

Probably the most difficult thing for me to stomach is the message this is sending to our young people. The message that seems to be coming from the House as exhibited by a bill like Bill C-41 is families are old-fashioned. I know as do many members in the House that families are the social institution best suited for the transmission of values from one generation to another. They are where we learn such things as accountability, that freedom has a price and that we must be responsible for our actions, that there is such a thing as common decency, that there is such a thing as respect for another person without fear.

It is necessary to develop courage, to have the guts to stand up to say what we believe and to be honest and true representatives of the people who have elected us to stand in their stead in this place to govern the affairs of the nation in a manner best suited to their interests, to look after their interests and not our interests.

The government did-