John Manley

[Supply, May 5th, 1994]

Mr. Speaker, the hon. member is trying to misrepresent what I said. In my remarks, I tried to explain that in a strategy for the conversion of defence industries, we need to have, first of all, in the private sector, the sort of initiative that can provide direction to every company affected.

Take for example Paramax, now Unisys GSG, the prime contractor for the helicopter contract the government cancelled on November 4.

I am quoting from a Canadian Press article published in the Gazette of April 19, 1994:

Paul Manson, president of Unisys GSG-says the company may end up better off than it might have had it carried the multibillion dollar helicopter contract through to its conclusion.

"We've gone through the worst of the setback from the helicopter", he said.

The articile goes on:

He said Unisys is using the expertise gained in military work for commercial contracts, especially in the field of total systems integration. "Once you would sell a mainframe or a mini-computer or a PC and then walk away", he said.

"Now we're involved in the whole package-maintenance, software, systems and integration.

The article goes on:

The cancellation cloud may have had a silver lining in that it forced Unisys into diversification at a time of "intense downward pressure on defence budgets".

My point is simply that I hope this indicates a success for the particular company. It has a highly motivated very professional manager as president, Mr. Manson. He has done a good job trying to anticipate where his company can find new successes. He spent a fair bit of time discussing strategy with Industry Canada. We have tried to be helpful to him as a government should be in identifying opportunities and in looking for possibilities.

Indeed the DIPP fund may prove useful in this exercise again as a repayable contribution to research which will lead to the production of new products to sell into new markets.

This is a very clear strategy. It is not a do-nothing strategy as the hon. member has attempted to characterize it. It is a practical pragmatic strategy that reflects two things, first of all the important contribution that these firms make to Canada's base of highly skilled, highly educated technical people. Second, it reflects the reality of the fiscal situation of the Government of Canada.

With all due respect to the hon. member who makes quotations from press releases at a time when the government in office was projecting $30 billion deficits, times have changed. Any government is forced to see how it can make most effective use of the resources that it has available.

If he has practical suggestions on that or if he would like to come forward and say that he thinks the DIPP fund should be increased by another $250 million and here is where we take the money from then let him suggest that. So far, other than his ranting and raving I have not heard any specific suggestions from him as to what it is exactly he wants us to do.

[Supply, May 5th, 1994]

Mr. Speaker, I have three children at home. I am used to talking when others are talking, so it is not really a problem for me and there are children here too.

The other comment I make arising out of the remarks of the member for Hochelaga-Maisonneuve is the notion which appears to underlie his basic thesis which is that we should give money to individual firms in order to assist them in converting.

He mentions DIPP and that is an important tool of industrial development. In fact it has historically given money to firms. As we revise DIPP, and I will say more about this in a few moments, what we have been doing is essentially making DIPP a refundable, repayable contribution to assist firms in developing products for markets.

There is quite a distinction between a strategic approach to an industrial sector and one which focuses on bailing out particular firms by writing cheques for taxpayers' money.

As we talk about defence conversion most members will agree that what we have here is a very complex process. I do not think there are simple answers or formulas. Furthermore Canada's position with respect to defence conversion is unique among industrialized nations. The hon. member for Hochelaga-Maisonneuve and many of his colleagues need to be informed about exactly what it is we are attempting to do. Let me try to provide some perspective on just where we are coming from in Canada in this area of industrial conversion.

In the red book we stated that many opportunities are available for industries which recognize and exploit the trends in global markets. We knew that the time had come to help defence industries to make the transition from high tech military production to high tech civilian production.

We are determined to achieve this objective. For that matter, we have made great progress in developing an effective strategy.

Our defence conversion program has three major components: first, redefining Canada's defence policy; second, rationalizing the military infrastructure in Canada; and third, rationalizing the defence industrial base. Really what we are talking about here is the third of these points, rationalizing the defence industrial base.

Our defence industry is largely composed of fully diversified businesses, most of which depend only moderately on military markets. For these businesses, the rationalization of our defence sector does not pose major problems. Sales of military material will be maintained at a relatively high level, but companies like CAE Electronics, Canadair and Spar will be able to make gains on both commercial and military markets.

We have a second group of companies capable of further diversification. These companies have the technology, skills and the manufacturing base to achieve long term growth in non-military markets. However, they may need assistance in analysing the most advantageous areas for diversification. This is where a broadening of the criteria for the defence industry productivity program, DIPP, will be particularly applicable.

We have a third group of companies. They are the strong niche players in the global military market. They fully expect to continue to grow and prosper in this market and nothing will be gained from attempting to discourage this growth. While they may remain primarily defence oriented they nonetheless are innovative and contribute to the advancement of technology which often leads to substantial commercial applications.

Finally, we have a fourth group of companies whose futures are very much in doubt. These are companies that are heavily dependent upon the domestic defence market, companies with little or no readily commercialized technologies. They have little export potential and may not be able to compete in the international marketplace. Conversion for these companies would likely be cost prohibitive and their futures must be managed on a case by case basis.

While we can make predictions about each of these groups of companies and their future prospects for growth and diversification, there are very few certainties. What it really boils down to is the fact that the future of defence companies in Canada will hinge on the defence market itself and the ability of companies to diversify into other product lines.

The future demands of the domestic defence market will not really become clear until we have completed a defence review. That is not something which is done overnight or even over a couple of months.

It is clear that we cannot wait for the completion of the defence sector review. Canadian businesses cannot wait. We are all very well aware of the fact that competition is intensifying on international markets; no one can afford to wait for the results of a review to be published. Therefore, the government must go ahead, resolutely.

Our main objective is to reduce the dependence of Canadian firms on defence sales. We want to encourage a greater focus on research and development, on dual use technologies to support product development and on improving market access.

In pursuit of these objectives there are a number of principles that I believe will guide us toward success.

First, the process must be industry led. It only makes sense that industry is in the best position to determine how it will meet the challenges and recognize the opportunities presented by defence conversion. There is a role for government in all of this, and it is a very important role. The government can facilitate that conversion by providing some assistance in identifying market opportunities and removing barriers to growth.

Second, defence conversion should not imply massive subsidies. There is no room for bailouts, for attempting to rescue companies that have suffered through market disruptions. Simply put, such an approach would be fiscally irresponsible and in the long term would do no one any good. What resources the government does have at its disposal-and I do not think I need remind anyone in the House that those resources are limited-should be focused on support for entering new promising markets. They should be focused on innovative projects and initiatives that will continue to contribute to economic growth and the creation of high value employment.

The government is aware that its primary responsibility is to the citizens of this country, the taxpayers of Canada. They would not accept massive financial help programs because it would go against the present thrust which is to try and reduce our huge deficit. But, they need not worry about that, the government will not launch such programs.

To that end we will be utilizing to the extent possible existing programs. That does not mean they will be infused with a flood of new funding. We are looking at what works, what does not work, and what can work better. We are asking industry to be innovative, and we intend to be equally innovative in the design of policy and program initiatives.

If we ask the Canadian industry to diversify its activities, if we exert pressure to achieve conversion, we must help companies respond to the needs of the military as well as the requirements of the commercial markets.

In order to do this we will work to introduce early into the procurement process industry views that can shape specifications to meet military requirements and diversify into production for commercial requirements.

Simply put, there is no room for the one-off, one of a kind military products of the past. No one can afford them. They do not fit into any logical equation for promoting competitiveness, innovation and economic growth.

It is no secret that governments, any governments, are always ripe for a little simplification of procedures and administration. This is an area we are looking at very closely. It is an area where changes will have to be made. The system as it exists now in Canada makes it difficult, if not impossible, for companies to support efforts in both military and commercial markets.

In fact the U.S. is already moving in this area and we will be following in the same direction.

I have a couple of final points to make, if I may. In no way do we intend to pursue a course that is defence conversion merely for the sake of defence conversion. By that I mean that the government has no intention of subsidizing the conversion of defence industries into commercial activities and commercial sectors that are already effectively serviced by existing firms. This is one of the dangers in the argument that was being made by my friend from Hochelaga.

I will not go any further into that, but I will just point out that when people try and criticize the government for not doing enough to help defence industries switch to civilian production, their arguments only underline the fact that this is a complex question, that many did not take the time to research fully.

No one gains when the end result of conversion is oversupply in another commercial sector. In fact the results would likely be more damaging than they would have been had there been no conversion effort at all.

Finally, job creation is still an absolute priority of the government and yes, certainly, the process of conversion of defence industries could result in the creation of new and very interesting jobs. However, we should not forget that this will lead to disruptions within the labour force. The market will take care of some of the affected workers and many of the highly qualified defence industry workers will find jobs in other sectors.

There is no doubt, however, that there will be some problems with less qualified workers. In those cases, to help the workers involved, the government will use, as much as possible, its industrial and community adjustment programs as well as programs geared to human resources.

I only mention this because it is an element of the whole question of defence conversion that is often ignored by those who wish to give advice or criticize. There are some knowledge gaps out there. There may be some knowledge gaps in the House. Over the course of the debate I hope we can perhaps fill some in.

For my part I am eager to hear the recommendations and suggestions of opposition members on this matter, especially those who have within their constituencies companies or sectors that have been affected by the changes in the international environment, particularly with respect to defence acquisition.

I should add that when we talk about the private sector we should remember that the shareholders and the managers of the companies also have obligations.

Shareholders and managers of companies have an obligation to invest in their own strategic development, to invest in marketing and to foresee changes that are coming.

We stand here today in 1994, almost five years after the Berlin wall fell. The fact that companies in the defence sector face significant challenges should not come as a surprise this year or last year to those companies. Government is prepared to work with companies that are trying to make conversions, trying to develop products that have dual use, or trying to find new markets for their goods.

Let us never lose sight of the fact that governments do not solve problems for firms. Firms, individual enterprises and individual shareholders have a big responsibility to help solve their own problems.

[Supply, May 5th, 1994]

Mr. Speaker, when the hon. member suggests that we make tools available to these companies, what he really means is a cheque book. That perhaps is where I should begin.

I would like to make a few general remarks about what the hon. member for Hochelaga-Maisonneuve has said this morning. I do welcome this debate. It is an opportunity for us to talk about an important aspect of industrial policy, that being defence conversion, but I want to put it in the broader context.

I have a few comments though arising from the hon. member's remarks. First of all, let me say how pleased I am that the Bloc Quebecois members are interested in talking about defence conversion. Realizing that their political objective is to create a new country, one which would have no army, navy or air force, one would have expected they would be anticipating massive expenditures on defence itself. If they succeed in their objective they may as well anticipate that. Therefore defence conversion is not what they should be concerned about, but in fact the creation of a defence industry.

Second, it occurs to me from listening to his remarks that he described the loss of jobs in this sector as a social catastrophe. I agree with him, if he means that any unemployment is catastrophic to the persons involved.

We have experienced over the last number of years many job losses in Canada in many sectors. We have seen it most recently in the fisheries in Atlantic Canada. We have seen it, although it is recovering well right now, in the automotive sector in Ontario. We have seen it in industries in western Canada. As we live at the moment with 11.5 per cent unemployment, 1.5 million Canadians out of work, for those people it is a catastrophe.

I suggest however it is no greater catastrophe for those in the defence industry than for those in any other industry. What we really are talking about-

[Canada Business Corporations Act, May 4th, 1994]

moved that Bill C-12, an Act to amend the Canada Business Corporations Act and to make consequential amendments to other acts, be read a second time and referred to a committee.

Mr. Speaker, I am pleased to rise today to begin debate on second reading of Bill C-12, an Act to amend the Canada Business Corporations Act and to make consequential amendments to other acts.

As a piece of federal framework legislation, the Canada Business Corporations Act helps promote the competitiveness of Canadian businesses. It is a key element of our national economic union and our internal market. The act must be kept up-to-date so that the government can use modern technology to provide better services and to improve administrative efficiency. It must also respond to the emerging challenges of a rapidly evolving global market.

This new law must be fair. The Canada Business Corporations Act will continue to provide a practical balance of interests among shareholders, creditors, management and the public.

This House will recall that the CBCA came into force on December 15, 1975 in order to revise and reform the law applicable to companies incorporated to carry on business throughout Canada. At that time the CBCA was heralded as an exemplary act, a model to be followed in Canada and abroad. For nearly 20 years it has acted as a model and promoted order and fairness in the corporate environment.

The CBCA is important to the competitive position of small and medium sized businesses as well as for the many large corporations registered under it. Over half of the top 500 companies in Canada are registered under the Canada Business Corporations Act. Approximately 190,000 corporations in Canada are covered by the provisions of the act.

However, after nearly two decades we need to update the provisions of the CBCA. Business practices and legal developments in a number of areas such as shareholder communications and the roles and responsibilities of directors have evolved considerably since the act was originally passed.

Corporations today must take into account the intensified competition of an international marketplace and the globalization of capital markets. Our framework laws must take into account increased share ownership by institutional investors and the holdings of shares through intermediaries.

The Canada Business Corporations Act must keep pace with the changes that are driving the competitiveness of Canadian industry. It must be amended to ensure that it will continue to be a useful tool for Canadian businesses and a model for others to follow.

The legislation before us today represents the first of two phases that will reform the framework legislation which governs federally incorporated businesses. We are introducing these amendments now so we can move quickly on a number of technical but important reforms. They represent a first step in renewing the CBCA. They will be followed by more substantive revisions after consultations with all interested parties.

Hon. members will note that the legislation before us provides for a parliamentary review of the CBCA within three years. We intend to introduce substantive amendments when the act comes up for review. Hopefully we will be in a position within 18 months to proceed with the review, but at the very latest we will have an opportunity to review the need for further amendments within three years.

In the meantime, Industry Canada will consult extensively with those who have a stake in the CBCA. We have prepared a consultation package and hope to complete our consultations and have draft recommendations ready for review by the government within 18 months.

The phase II consultation package deals with such issues as the liability of corporate directors, shareholders communications and other substantive issues. The package has been submitted to interested Canadians, including corporate executives, corporate law experts, institutional investors, shareholders' representatives, the accounting profession, business associations and other stakeholders.

After we have heard back from those who have a stake in reforming the CBCA, we will recommend to Parliament further amendments to the act to reflect business and community needs.

I want to emphasize that the legislation before us is a necessary first step. It enables the government to proceed with some important technical changes to the CBCA while we prepare for more substantive revisions. The primary objectives of the legislation before us lie in four areas and I would like to go over each of these briefly.

First of all, the legislation provides for improved service to federally incorporated companies. It brings the CBCA in line with technological advances and permits the introduction of more equal service across the country.

In the years that have passed since the CBCA came into effect, technology has revolutionized the way in which business is conducted. The drafters of the 1975 legislation could not have foreseen the day when, for example, fax machines would be used to transmit key corporate documents. They could not have known that, within a few decades, electronic data interchange would have the potential of reducing the paper burden for business.

I must confess that in my days of practising law here in Ottawa it was quite convenient to act as Ottawa agents for firms across the country as we delivered and collected documents from the corporations branch of the then consumer and corporate affairs department.

I suppose I really ought to apologize to some of my former colleagues still in practice in Ottawa that we are now making it possible for firms across Canada to deliver their documents directly and electronically.

My friend from Toronto says "hear, hear". The one benefit of the old rules was that we found ways to collect fees from Toronto law firms.

The director who administers the CBCA through the corporations directorate of Industry Canada receives a variety of notices and documents from corporations, directors, shareholders and others.

Many representatives of CBCA corporations have requested that facsimile transmission and electronic filing and issuance of documents be permitted under the act. The CBCA director has begun to accept some documents transmitted by facsimile, but there are certain impediments in the existing act to the use of modern technology.

The amendments before us provide broad regulatory making power to prescribe the form and other details of electronic filing and issuance of documents. They authorize the CBCA director to deal with the technical details. These changes will result in eventual same day incorporation from all regions of Canada, not just the national capital region, thus again saving money to industry across the country.

CBCA corporations and others will have easier access to the information that the corporations directorate provides.

I would like to emphasize that while we want to amend the act in order to better enable the corporations directorate to keep abreast of modern information technology, clients will still be able to use paper-based communications if they prefer.

The second broad area that the amendments before us address is the need to simplify certain corporate government procedures and record keeping and filing requirements. For example, the amendments will permit current directors to appoint a limited number of directors in the time between shareholders meetings if the corporation's articles so provide. While shareholder democracy is safeguarded by the limits placed on this power, the change will give CBCA corporations the flexibility to react quickly and with less expense to unforeseen events.

Under the amendments shareholders can also elect a reduced number of directors at the same shareholders meeting that they approve the reduction. As the law now stands shareholders can vote to reduce the minimum number of directors but must wait until the next meeting to elect that reduced number of directors.

Another amendment would permit the CBCA director to exempt the filing of specified classes of documents when they are publicly available elsewhere. This will reduce the burden of multiple filings of certain documents and thus the costs incurred by CBCA corporations.

In keeping with the trend towards reducing paper and administrative costs for users of the CBCA, the amendments will establish a six-year period for which accounting records and files must be retained. Currently, the CBCA gives no direction to corporations as to how long such records must be maintained.

The amendments will eliminate public financial disclosure now imposed on large, privately held CBCA corporations while maintaining disclosure to shareholders. The CBCA currently requires public disclosure of the financial statements of privately held CBCA corporations whose assets exceed $5 million or whose gross revenues exceed $10 million.

Mandatory public disclosure of financial statements of large private corporations is not required by the provinces, nor is it required by the laws of our major trading partner, the United States. The CBCA therefore places federally incorporated companies at a competitive disadvantage and increases their compliance costs. This may discourage foreign businesses from establishing in Canada, certainly under federal jurisdiction.

Shareholders of privately held companies will continue to be protected because an audit can only be waived if all shareholders agree. Financial statements will still be prepared and sent to shareholders in any event.

Financial statements of all corporations, not just those that are federally incorporated, must be disclosed to Statistics Canada through other legislation such as the Corporations and Labour Unions Returns Act. This information is publicly available on an aggregate basis.

The third broad theme of these technical amendments is clarification. Some amendments have been introduced to clarify the language of certain sections of the CBCA through changes to the French or English versions or through the use of better terminology. For example, revised definitions of control and subsidiary are proposed in order to capture the whole chain of corporations under the ultimate control of a holding corporation, thus simplifying amalgamations and financial assistance within corporate groups.

Finally, the fourth area addressed by the bill before us is efficient administration. The act now requires that before an administrative dissolution of a corporation can take place the CBCA director must give notice of the decision to dissolve a corporation in, among other things, a local newspaper.

By removing this requirement for publication in a local newspaper the CBCA director will be able to move expeditiously against defaulting corporations. This will help encourage companies to comply with the public information filing provisions of the law. Also, the government will avoid a publication cost of almost $1 million over the next few years.

The amendment will not affect the statutory requirement to notify directly the corporation in default and each director personally, nor the requirement to publish notices in the Canada Gazette and the Canada Corporations Bulletin .

To promote effective administration, the amendments before us also include provisions to strengthen the CBCA rules governing corporate names. For example, under one proposed amendment, corporations will be prohibited from using words such as "Limited", "Limitée" and "Corporation" in names other than their corporate names.

Industry Canada is committed to the continued modernization of the CBCA. We will proceed with the technical amendments of the kind I have outlined today. In the meantime we will continue to work with the Canadian business and professional communities to design more substantive changes to the law. Our overall objective is to help the conduct of business in Canada and to contribute to the competitiveness of federal corporations.

The amendments before the house render the CBCA more efficient. They simplify filing and record keeping requirements and certain corporate grievance procedures and they allow for technological innovation.

They also allow for improved service to corporations governed by the CBCA by reducing overall paper burden and the cost of compliance under the act. Overall they make the CBCA a more useful instrument to businesses and investors who use it.

This government is committed to helping small and medium sized Canadian business. We want the CBCA to serve Canadian businesses in their bid to become competitive at home and internationally.

They also allow for improved service to corporations governed by the CBCA by reducing paper burden and the cost of compliance with the Act. Overall, they make the CBCA a more useful instrument for businesses and investors who use it.

I hope that my hon. colleagues from both sides of the House will join me in supporting this legislation and in helping ensure its speedy passage. Thank you.

I know late in the afternoon it is hard to find enthusiasm for a bill on the Canada Business Corporations Act and I do find myself concerned that I will contribute further to my generally perceived image of being rather dull and boring. However, it is the best we can do with the Canada Business Corporations Act.

[Bill C-91, May 3rd, 1994]

Mr. Speaker, certainly the member's position is clear on the issue. I thank him for that.

As the Prime Minister said in the House last week, the review that was promised during the election campaign is one which is ongoing. We are looking at the question of prices. We are also conscious of our international commitments under the Uruguay round. Likewise we are conscious of the fact that the present legislation, Bill C-91, contains within it a statutory review mechanism which will occur prior to the completion of this Parliament.

[Publishing Industry, May 3rd, 1994]

Mr. Speaker, as I was about to say a moment ago, the important thing that was also contained in this memo was to grind down the questioner with facts.

Unfortunately the facts have not been of great interest to the hon. member who has put a number of questions on this file; but the facts include the fact that when Investment Canada approved the acquisition of Maxwell Macmillan limited by Prentice-Hall, it approved the acquisition of a company which was in receivership.

The result of the acquisition was the preservation of about 100 jobs in Canada, as well as the acquisition of a series of undertakings given by Prentice-Hall and its owner, Paramount, with respect to the distribution of publications within Canada, as well as the continuation of as many employees as possible.

There is a series of undertakings there. We received undertakings which we think are meaningful and which made this a good deal for Canada.

The facts are not of a lot of interest around here a lot of the time, but it is time members started to take recognition of the fact that in this case we got a good deal for Canada.

[Publishing Industry, May 3rd, 1994]

Mr. Speaker, the secret memo the member refers to is so secret that none of the ministers involved had seen it or heard of it in fact until this morning; but I am told there was some advice contained in a

communications memo prepared although I am not sure by whom.

They tell me that it said among other things: "Be boring and dull". I can assure the hon. member I have been doing my best to fulfil that qualification. It has worked so far, has it not?

[Futuropolis, May 2nd, 1994]

Mr. Speaker, I would be glad to receive and study a proposal from the city of Montreal. Up to now, our commitment to finance the information highway has been limited to supporting the CANARIE project establishing networks across Canada to form the basis of the electronic highway.

Moreover, as the member knows, we are in the process of drafting regulations regarding the electronic highway.

[Regional Economic Development, May 2nd, 1994]

Mr. Speaker, as the hon. member knows very well I believe, we have just received a draft of a comprehensive business plan for MIL Davie. Our officials are presently reviewing this plan and, when a decision is made with the stockholder who has the greatest share of responsibility for MIL Davie, we may have an opportunity to give it some advice on the company. We are perfectly aware of the major role of this company in the Quebec City region.

[Points Of Order, April 29th, 1994]

Mr. Speaker, certainly out of deference to your wisdom and your office I will withdraw the comments and I shall in future endeavour not to associate the member for Roberval with Mr. Shakespeare.