Madam Speaker, this bill provides that in cases of bankruptcy wages be paid as a first priority, up to a limit of $9,000 for each worker.
The present Bankruptcy and Insolvency Act passed in 1992 by the Conservative government maintains the preferred claim status for wages when an employer files for bankruptcy. It covers wage-earners by giving them preferred creditor status for wages earned during the six months previous to the bankruptcy, up to a limit of $2,000.
Wage claims rank fourth in the priority of preferred claims. Since claims of secured and preferred creditors must be paid first, there is not always enough money left to cover wage claims. Workers suffer the consequences.
Progress on that issue did not lead to a fair solution for workers. The problem has been dragging on since 1980, when the Standing Senate Committee on Banking, Trade and Commerce mentioned three possible solutions. The first was to give absolute priority to wage claims by putting them first, before those of any other secured creditor. That is exactly what the hon. member for Portneuf suggested today and I want to commend him for that.
Therefore, for almost 14 years now, this House has been analyzing the possibility of amending this legislation which is unfair to workers. For 14 years, by not addressing this problematic issue, this House has shown that it does not give a hoot about the interests of workers and what they produce.
Why hesitate so much on this single issue? Because we have to choose between the workers and the banks. That is the choice we have to make.
Why have we not made any progress? Because successive governments have not had the courage to come to the defence of the most disadvantaged in our society.
We are talking here about a ludicrous situation that has been going on for years. The struggle in this area has been tough. It took 40 years of fierce fighting to have the Bankruptcy Act reviewed in 1992. Extensive consultations were held with the stakeholders and people concerned because many divergent interests were involved.
Undeniably, some social choices are at the basis of such a bill. Unfortunately, and we must be clear on this, each time it has been proposed, the idea of giving first priority to wage claims has always been defeated by the banking lobby. This is obvious in all the documents dealing with this sensitive issue.
Some members claim that this bill would cause a rise in the unemployment rate, since according to them, lending institutions might reduce the amount of credit available to businesses if employees were given absolute priority over other creditors.
Of course jobs must be protected, but one can hardly argue that the success of an SME depends on whether it can avoid paying employees the wages, leave and pension fund contributions they rightly earned.
We must also consider the precarious situation facing employees who have no way to recover wages in arrears. We cannot endorse the principle of protecting the banks and letting employees who earn a modest wage fend for themselves.
Of course bankruptcy is an unpleasant situation and it always means someone will have to pay. In this instance, the House has the option of identifying four preferred creditors and deciding which creditor will be first in line to be reimbursed. These four creditors are: the government, suppliers, lenders and employees.
The House must now decide which of the four is best able to absorb the loss resulting from the bankrupt individual's lack of assets to reimburse each creditor. Who has the most to lose and who is the most vulnerable? Is it the government? Is it the suppliers? Let me explain my point of view.
For the government, despite the dismal state of its finances, the loss would be negligible, compared with the national debt.
As for the suppliers, they can claim losses due to bad debts and thus reduce their taxable income.
I am not worried about the lending institutions. They can consider bad debts as an incentive to improve their follow-up in the future, which should increase their sense of responsibility to society instead of encouraging them to ignore their customers' problems the way they do now.
Finally, we have the employees, who have no way of absorbing the losses they suffer following a bankruptcy. In fact, under our existing legislation, employees are forced to absorb these losses. They have no alternative, no way out.
This is not intended to be an exhaustive analysis of the subject, but employees are not only penalized by being unable to recover their salaries but also because they will not be reimbursed for expenses incurred during their period of employment: food, transportation and accommodation, in some cases.
Why up to $9,000? Because even when employers pay their employees wages every week or every two weeks, in some cases where substantial amounts well in excess of the $2,000 guaranteed thus far may have accumulated. Money owed to the employees in excess of this ceiling is not reimbursed and they have to absorb their loss.
In my view, this bill is a tool to motivate workers, a tool to foster productivity. Workers will be encouraged to take chances and accept compromises to help their SME go through rough times, if they are assured that at the end of the day, they will get their salary or their investment back, that is to say that they will recover their outlay before the government, banks and suppliers.
This is a far cry from the present legislation which makes workers bear the brunt of the losses by paying them back last, while we know full well that they do not get one extra penny when business is booming.
The government, by refusing to amend this unfair act, is applying double standards more than ever. I believe that amending the act and putting employees at the top of the list of preferred claims would be a matter of basic social justice, but it would seem that fairness is not a priority for the Liberal Party.
I will draw a parallel with the family trusts the Liberals are intent on protecting. This is another example of double standards where the rich are favoured at the expense of the poorest members of society.
Just as banks are protected by the Bankruptcy Act which makes sure that they are paid before the employees, the rich are protected once again through family trusts which make it possible for them to be granted a tax exemption for up to 80 years. This is a tax loophole available to the rich, while there is talk of taxing RRSPs, a plan designed for private sector employees who do not have a generous pension plan.
I repeat, this is a case of double standards.
It must be said: maintaining family trusts and the Liberals' refusal to change the order of priority of claims guaranteed under the Bankruptcy Act, serve only one purpose: to protect the wealthiest members of society.
Indeed, the family trusts the Liberals are steadfastly defending are not used by middle-income families. In this respect, I would like to quote the findings of a study by Ernst and Young which showed assets averaged $47 million in a random sample of 121 family trusts.
I repeat, Madam Speaker, this is a blatant case of double standards.
