David Collenette

[Canada Transportation Act, May 15th, 2000]

Mr. Speaker, I would like to speak to the second group of motions.

Motion No. 5, in effect, would negate the point in the bill to increase the shareholder limit from 10% to 15% in the Air Canada Public Participation Act. Without doubt this was certainly one of the two pivotal issues that came to the fore during this entire restructuring, the other being the use by the government of section 47 of the Canada Transportation Act.

As members know, the superior court in Quebec made a ruling about one of the private sector proposals put forward by Onex Corp. The court said that technically it was against the law, and the inference was that it should not proceed. Onex decided not to appeal the decision and, as a result, the remaining private sector option, the Air Canada offer, which has been implemented in the last few months, was the one that came forward.

There are some issues as to whether it is a good idea to have limits on individual shareholder participation in these companies. When Canadian National and Air Canada were privatized, as well as some other crown corporations, it was felt that by having a shareholder limit of 10% or 15%, as in the case of Canadian National, this would somehow dissuade a foreign takeover. We could understand this in the case of Canadian National because 65% of the shares of Canadian National are owned by people outside Canada. Obviously there is a 25% foreign ownership limit on Air Canada, and on Canadian airlines in general. Therefore, the argument that there could, in effect, be a de facto foreign takeover is really not valid.

The limit could increase to 20% or 25% and have foreign equity and voting control, but still remain Canadian controlled. This happened with American Airlines when it injected money into Canadian Airlines some years ago. It had 33% of the equity and 25% of the voting shares. That it had to be kept at 10% to prevent a foreign takeover became a very emotional issue during the debate.

Let us not kid ourselves. This kind of rule makes it very difficult for outside groups to exercise normal business behaviour and vie for control of companies. This protects existing management. It entrenches existing management and existing directors.

Air Canada argued very strenuously that it would not want it to go above 15%, and the government reflected upon that. Both committees of the Senate and the House wanted the limit to go up to 20%, but the government took the view, given all of the turmoil created with the section 47 process, which I think was very valid because it did find private sector solutions, that Air Canada should be allowed to digest this acquisition without the fear of a third party coming along and staging a raid on the company.

Therefore, the government agreed to increase it to 15%. Air Canada is in agreement with that. I do not think it should be debated at this point in time. It will be for politicians in the future to decide whether the arguments remain valid. Certainly, for the next 18 months to two years during this restructuring process, this is something we should put aside. It was a very difficult issue to deal with, a very emotional issue to deal with and as a result I think we should vote this down.

Similarly, Motion No. 6 should be defeated because its purpose is to negate the government decision to bring the provisions of the Air Canada Public Participation Act in line with the Canada Transportation Act.

Failure to implement the proposal in Bill C-26 is to make it possible to increase the limit on foreign ownership by regulation for all of the industry except Air Canada. The motion means that it would continue to take an amendment of the act to increase Air Canada's limit on foreign ownership, an unfair burden on a national carrier.

I think this should be rejected. I would hope my friends in the New Democratic Party would understand that this is something that was agreed to with Air Canada as part of the deal. I know they have strong feelings for 10%, but I would ask them before they force a recorded division to reflect upon this because the 10% clause has been raised to 15% with the agreement of Air Canada.

I do not think it is for us as parliamentarians to disagree with a deal that has been negotiated between the Competition Bureau and Air Canada to put this matter to rest. It is not as if Air Canada is asking any one party in the House to carry its cause. In fact, I think that when the president of Air Canada came to the committee he made it quite clear that he accepted 15% and would live with it.

I believe that these two motions should be rejected. With respect to Motion No. 6, if my friends in the New Democratic Party are concerned that somehow there is a Trojan horse, I have said consistently that it is not our intention to increase the foreign ownership of the airlines beyond 25%. We already have the statutory authority to go to 49%. We do not intend to do that because we believe, Canadians believe and I know that the New Democratic Party believes that one of the cardinal issues we have to face is the growing foreign domination of our economy, and we do not want that to happen with the airlines. We are in agreement with the NDP on that point. However, as I have mentioned, if we fail to make the change in clause 17 we would not even be allowing Air Canada the benefit of having the 25% foreign ownership that others are entitled to. I think we have to treat Air Canada with some degree of fairness.

This is not a question about losing control. Neither of these amendments would do anything. They would not change the fact that the Air Canada regime will have some stability throughout this re-organization process. Certainly, with respect to the 25% issue, members of the committee, in fact members on my own side have said that it should be raised to more than 25%. I have discussed it with cabinet and we believe it should remain at 25%. We are not playing games. We will not raise it to 49% next week. I would ask my friends in the New Democratic Party, once again, to continue their great co-operation on this matter and agree to allow this particular vote to pass on division so that we do not unduly delay the bill any further.

Every day that the bill does not get dealt with gives licence to the monopoly tendencies of Air Canada to push the envelope. Notwithstanding what it may say, it is natural that when a corporation has that much authority it likes to test it in the marketplace.

We have to get this bill to the other place so that it can deal with it. Right after the break it should be in place. Then the competition commissioner can start to use the cease and desist powers, which will give absolute comfort to all those new entrants who come into the market. I want to talk about that at third reading.

I would ask my friends in the New Democratic Party to show some good sense and allow this to pass on division.

[Canada Transportation Act, May 15th, 2000]

Madam Speaker, I welcome the opportunity to deal with the amendments from the New Democratic Party. I understand the reasoning in putting the amendments forward but we believe the three amendments should be defeated, notwithstanding the sentiments that I understand.

Motion No. 1 mixes the questions of licensing and penalties for offences. I remind hon. members that section 174 of the Canada Transportation Act already provides for penalties for contravention of section 64 as follows:

Every person who contravenes a provision of this Act or a regulation or order made under this Act, other than an order made under section 47, is guilty of an offence punishable on summary conviction and liable

(a) in the case of an individual, to a fine not exceeding $5,000; and

(b) in the case of a corporation, to a fine not exceeding $25,000.

The motion insofar as it provides for penalties would overlap and be inconsistent with section 174. At the very least we would need to provide that section 174 does not apply to any offence covered by subsection 2.1.

Also, section 65 provides that in cases of failure to comply with section 64 the agency may direct the reinstatement of the service, which is considered the most appropriate remedy.

Motion No. 3 removes the time limit during which the agency can act on its own motion on review of prices on monopoly routes. The government is of the view that such time limits are appropriate to cover the transition period. As we move to a more healthy and stable airline industry, the government has given itself the latitude to extend the period of time for an additional two years if competition is not developed and there remains a significant number of monopoly routes.

The hon. member may be able to make the case that during the statutory review of the Canada Transportation Act which must begin July 1, this period could be extended even further. We are open to that.

When we debated this in the department, I was very insistent that we put this clause in to allow the agency on its own motion to review the monopoly prices and have the power to roll back and not just wait for complaints. We have to have a proactive Canada Transportation Agency. We have seen in recent weeks some of the inherent dangers. Notwithstanding all the best intentions that Air Canada may espouse, the fact is that when one has 80% of the market, there is a tendency to try to push the envelope a bit more.

On the question of monopoly prices, we want to make sure that small communities are protected. Even though I believe we are going to get a lot of competition in the months ahead, there is no question that some of the smaller communities are vulnerable because they may not be as attractive to competitors. Therefore, the only way we can help the people in those communities is to put this particular clause in play.

This in effect is going to have a two year life. If toward the end of next year we believe that is not going to be enough, then I would certainly, if I am still Minister of Transport at that time, be open to bringing forward amendments to the Canada Transportation Act to entertain extending this motion on its own motion authority for the CTA. The hon. member has made a valid point. Even though I think the transition period will deal with these issues, we cannot ultimately let the power lapse if indeed it is required. I hope that will help the hon. member even though she probably will not withdraw her motion at this stage.

We also think that Motion No. 4 should be defeated. The current process puts the onus on the carrier to produce a fair rate that is reasonable in the opinion of the agency. The effect of this motion would allow the agency to fix prices where certain indices have been met. That goes a bit too far in terms of reregulation. The government prefers to have the agency retain the discretion it would have under the provisions of Bill C-26 as they currently read.

When this was debated in the department a balance had to be struck. If we accept the amendment, we are going further down the road to adopting the 1987 psychology with respect to the Canada Transportation Act which really reregulates the whole market.

Even though I think my friends in the NDP and others make valid points that base airfares have grown unconscionably in the last 10 years, the fact is that advance booking fares and all the other fares one can get with layovers are reasonable. We cannot forget that about 90% of the travelling public use that kind of method. The number of people travelling by air today proportionate to the population is significantly greater than it was before deregulation.

Something which may confuse hon. members and others is that for 10 years there was a duopoly with Canadian Airlines and Air Canada. Everybody talked about it being a competitive environment but it was not. The two carriers knocked themselves over the head each and every day putting on too much capacity, but the base fares were the same. If Air Canada had a seat sale, Canadian Airlines was ready to have one within a few days and vice versa. It was a duopoly. I would not say it was a cartel but it was a duopoly and it was unhealthy.

I travel to Toronto two or three times a week. Before the merger, if a person travelled on an economy or business class ticket, the ticket was interchangeable between Canadian Airlines or Air Canada. There was no price break. There was no real competition for the business traveller. We have to be serious about competition. Some of the measures in the bill, especially on predatory pricing and the powers given to the commissioner, will deal with competition in a very strict fashion.

I was surprised to hear the member say that the bill needed more teeth. This has to be the toothiest bill that has come forward in a long time with respect to regulation of a private sector company. In fact, it is even toothier as a result of what the hon. members and our colleagues did in committee, and I think with good reason.

There is no question that even though we wanted this bill through earlier, the delay in getting it to this stage in the House has turned out to be a bit of a blessing in disguise. We have seen some of the effects of the consolidation of Air Canada and some of the things we do not like about it. There have been a lot of good things, but we have seen some of the negative things. That is what led hon. members to convince me and my colleagues in the government to come forward with another commissioner at the CTA. That alone gives much added protection for the consumers.

In terms of the powers dealing with the Competition Bureau, there was another amendment that came forward from the bureau which helped to toughen up the act. This regime is as tough as we want it to get without going back to the old days of reregulation.

With great respect for my hon. colleague, while the three motions obviously have merit, they should be defeated.

[Grain Transportation, May 12th, 2000]

Mr. Speaker, the details of this program are still being worked out but there is a precedent with the money that was put in to compensate western provinces under the WGTA reforms. We will be looking at that in the next little while.

We do hope that the provinces will do their bit as well to assist with the rebuilding of these grain roads. The $175 million that we are allocating is new money and I think it will be well spent.

[Shipbuilding, May 12th, 2000]

Mr. Speaker, perhaps the hon. member knows something more about shipbuilding than most other people in Canada but to say that we could have had a ship designed and constructed within the last 18 months to put in service in the next couple of weeks on the gulf between Nova Scotia and Newfoundland just defies any logic.

The fact is, we had no choice but to acquire a ferry offshore. What I have just said is that for the future replacement programs of the Caribou and the Joseph and Clara Smallwood we will look to a Canadian built solution.

[Shipbuilding, May 12th, 2000]

Mr. Speaker, I hope that the hon. member is fully aware of the pressure on the Canadian government. Marine traffic to Newfoundland has increased in the past two years and we did not have the time to wait for a new boat to be built.

That is why we bought one offshore. However, I have instructed my officials regarding the future replacement of Marine Atlantic's existing fleet. A Canadian replacement program will be developed.

[Highways, May 12th, 2000]

Mr. Speaker, the hon. member is talking about two different programs. I have said to him that there is money available under the infrastructure program to deal with the very tragic circumstances of Highway 104 in Nova Scotia. I would ask him to talk to his provincial colleague in Nova Scotia to make that a priority at the provincial level.

[Highways, May 12th, 2000]

Mr. Speaker, my hon. friend well knows that in the budget the Minister of Finance announced that there would be $2.65 billion over six years for infrastructure, including $600 million specifically for national highways. The province of Nova Scotia will certainly have access to those kinds of funds.

He will also know that the $175 million of new money that I announced this week will help farmers in western Canada adjust to the new competitive world. I assume the Conservative Party has some cares about western Canada, at least as much as the Liberal Party does.

[Gasoline Pricing, May 12th, 2000]

Mr. Speaker, the hon. member has it all wrong. We are not in any collusion with the oil companies. In fact, I have to say the government generally agrees with the tone of the hon. member's concerns.

The fact is that the health benefits of what the oil companies have been proposing are not good enough. My colleague, the Minister of the Environment, has said quite consistently that the oil companies would have to propose something that protected the health of Canadians to the same degree or better than the current regulation.

He also said that the regulation was about protecting the health of Canadians and that any proposal by the oil companies would have to demonstrate that there could not be any exception to the protection of health.

[Grain Transportation, May 11th, 2000]

Mr. Speaker, perhaps there is infighting in the Alliance Party but in the Liberal Party there is constructive dialogue on the issues of the day. This constructive dialogue has helped to bring forward a balanced package.

The bottom line in that package is that the paramount issues affecting western producers have been addressed. One hundred and seventy-eight million dollars have been put into the hands of farmers and $175 million will be spent to improve grain roads. This is a victory for dialogue and a victory for the producers in western Canada.

[Grain Transportation, May 11th, 2000]

Mr. Speaker, the hon. member from western Canada knows that this issue divides everyone in the western provinces. It is full of emotion. It is full of history. What Mr. Estey did in his report was to give us the framework. What Mr. Kroeger did was to show us how to implement it.

We have used their work as a basis of the package we announced yesterday. Yesterday's announcement marks the beginning of a competitive system that will continue for years to come.