Morris Bodnar

[Fednor, March 29th, 1996]

Mr. Speaker, there was an announcement last week by the Minister of Industry revitalizing FedNor and providing the financing that has been referred to in the question.

This is a necessary step in helping small business in northern Ontario. By setting up the system that has been put in place there will be a leveraging approximately fivefold in the money from the banks in helping establish greater financing for small business in northern Ontario.

FedNor is a regional agency along with other agencies in Atlantic Canada, Quebec and western Canada; the same agencies the Reform Party would have destroyed in its budget. It wants to eliminate development and employment in the different regions of Canada.

[Canada Business Corporations Act, March 28th, 1996]

Mr. Speaker, I am pleased to respond to Bill C-204 today, an act to amend the Canada Business Corporations Act.

The hon. member for Mississauga South has presented this private member's bill to prohibit any person from being a director of more than 10 federally incorporated business corporations in which such person holds less than 5 per cent of the voting stock.

I appreciate the ideals that motivated the hon. member. Investors in federally incorporated companies want to be assured that directors are doing their duty.

No matter how effective and dedicated a person might be, there is a limit to how much energy or attention an individual can give to an enterprise when there are too many responsibilities conflicting for a director's time. The hon. member for Mississauga South believes that a director is unlikely to satisfy adequately the duties and obligations of more than 10 directorships.

The hon. member wants to address these concerns through legislation. This law would prohibit a director from holding more than 10 directorships for which he holds less than 5 per cent of the stock. Moreover, it would impose heavy fines, up to $25,000 for the first breach of the law and up to $50,000 for the second offence.

I have two major concerns about this legislation. First, is legislation the route to go in trying to create a corporate governance system that discourages directors from assuming more responsibilities than they could reasonably be expected to handle? Second, is the hon. member's bill the appropriate vehicle and is this the appropriate time to raise this issue?

Let me deal with both of these concerns. First, should we legislate how many directorships an individual can hold? This would be a first in Canadian corporate law. No other Canadian jurisdiction directly limits the number of directorships that an individual may hold so this is a question that should not be taken lightly. None of the provinces has seen fit to limit the number of directorships. Provinces may also be concerned about the ability of directors to attend to their responsibilities if they are overloaded with work because they have taken on too much.

Instead, they have allowed the same approach that the Canada Business Corporations Act has taken. The CBCA favours a self-enforcement approach to corporate governance. The philosophy behind the act is that corporations and their investors are in a better position than legislators to determine the appropriate qualifications which their directors should have.

I think this is sound. Corporate governance laws provide a foundation through which management directors, investors and creditors can have confidence that the system works fairly and openly.

I am not alone in believing that it would be inappropriate to legislate limits to the number of directorships an individual can hold. In December 1994 the Toronto Stock Exchange committee on corporate governance in Canada issued its report entitled Where Were the Directors. The report emphasizes that not only must corporate governance be enhanced but it must be perceived by the public to be enhanced and it offered a number of recommendations for assessing existing directors and identifying, recruiting, nominating, appointing and orienting new directors.

According to this report, how should directors be chosen? It recommends that the board of every corporation appoint a committee of directors composed exclusively of outside directors, the majority of whom are unrelated directors. This committee would then be given the responsibility for proposing new nominees to the board and for assessing directors on an ongoing basis. The actual decision on who should be nominated would then be the responsibility of the full board after considering the recommendations of the nominating committee.

This view appears to be widely held. The committee included not only representatives from the business community but also from institutional investors, the academic community and other groups interested in corporate governance. In other words, the private sector should put in place a careful process for choosing board members.

The Toronto Stock Exchange has implemented the report's guidelines for disclosure of corporate governance practices as a listing requirement.

In compiling this report of the TSE, the authors received suggestions that a guideline be adopted limiting the number of board appointments an individual can hold. This is what the authors had to say on the issue: "While we agree there must be a limit to the number of appointments, we have concluded that a specific guideline is unnecessary. The nominating committee in assessing the suitability of an individual to be elected to a board will take into

account the individual's other commitments, resources and time available for input to the board".

If the TSE reports shies away from issuing guidelines on this topic, I think it would be very inappropriate for this House to take the much more draconian step of enacting legislation. Let the corporation decide what is most appropriate. A legislated rule limiting the number of directorships would be arbitrary. Why do we set the limit at 10 directorships? Why not 5 or 15? How are we in this House to decide what is the appropriate number? It is a matter best left to those who choose the members of their individual boards.

Let me now turn to my second concern regarding this legislation. Is Bill C-204 the appropriate vehicle and is this the appropriate time to raise this issue? As the House is aware, the government is now in the process of undertaking a wide ranging review of the Canada Business Corporations Act. We saw technical changes implemented in the last session of Parliament through Bill C-12. The Minister of Industry told us at that time those changes were but the first phase of a process that would reform the CBCA for the first time in 20 years.

In preparing for phase 2 of the reform the government has consulted extensively with all elements of the business community, shareholders, managers, board members and corporate counsels to determine what needs to be changed and how it should be changed.

These consultations have taken several forms. First, Industry Canada began in 1994 to meet business people, investors and corporate counsel across Canada. These were preliminary consultations. From the input Industry Canada received, it could begin to focus on those areas thought by the business community to be in most need of reform.

As a result of these preliminary consultations, nine discussion papers were prepared, examining in considerable detail the issues of the CBCA that were considered to be priorities. These included directors' liability, insider trading, shareholder communication, takeover bids, financial assistance to directors and officers, directors' residency requirements, unanimous shareholder agreements, going private, transactions and technical amendments.

I would have to advise the House, however, that the issue of excessive numbers of directorships was not raised as a concern.

Industry Canada has received a number of responses to the suggested reforms contained in these discussion papers. The department plans to consult with clients once again to discuss the papers in detail. The responses will help the government prepare the amendments to the CBCA.

I would remind the House that Bill C-12 requires the Minister of Industry to submit recommendations on further, more substantive changes to the law to Parliament by June 1997.

Meanwhile, there has been another process of consultation to help focus on the areas where we must reform corporate governance in this country. Members of the Senate committee on banking, trade and commerce recently conducted hearings across the country on ways to reform corporate governance laws and are currently preparing a report. Senator Michael Kirby's committee has met with chief executive officers or chairpersons, board members and investors. These senior representatives of the business community have been asked to discuss corporate governance issues in general and to respond to key strategic questions on the issues under consideration by Industry Canada.

The other place is performing a valuable service in using the skills and knowledge of the senators to help explore the options available to the government in its reform of corporate governance. This is an excellent example of how this House and the other place can work together for a more efficient legislative process.

The result will be legislation that the Minister of Industry will table some time next year. At that time a committee of this House will be able to study the legislation carefully and make its recommendations for amendments. In other words, we have a very thorough process already in place to provide a detailed assessment of the issue that the hon. member from Mississauga South raises in this legislation.

The question of whether there should be limits placed on the number of directorates an individual can hold is a suitable topic for discussion, for Industry Canada's consultations, the inquiries by the other place and eventually by the Standing Committee on industry.

I am confident that the issue will receive the attention it deserves. However, I do not think this is the appropriate time to pass a law that would run counter to the corporate governance practices in other jurisdictions.

Let the hon. member for Mississauga South bring his concerns to the other forums I have mentioned but I do not believe that this House should support this bill.

[Agreement On Internal Trade Implementation Act, March 28th, 1996]

Mr. Speaker, having listened to the proposed amendment of the hon. member from the Bloc, I can indicate that this amendment

would have one effect. That effect would be to tie the government's hands in fulfilling its commitments under the agreement on internal trade. The amendment would in effect unilaterally change the provisions which were agreed upon by all provinces and the federal government.

This is but an implementation bill. The proposed amendment would prevent the federal government from honouring the obligations that were agreed to by all parties. In fact the proposed amendment is intended to respond, I would suggest, to pressure from those within Quebec who have indicated that they wish to keep certain barriers in place.

In presentations to the industry committee, the Association des cammionneurs artisans du Québec made it clear that it wished to retain current measures that restrict trucking of bulk commodities in the province. Those measures are based on Quebec legislation which depends on part III of the Motor Vehicle Transportation Act for its effectiveness. The federal government in the internal trade agreement has agreed to repeal this provision. It is interesting to note that the Quebec government agreed to this provision being repealed in the Motor Vehicle Transport Act when the agreement was signed.

The Bloc is trying to have it both ways. It cannot agree to remove barriers on one hand and insist on keeping them on the other hand. That is the effect of the BQ amendment.

Further, the amendment would, for practical purposes, require that the federal government not fully comply with the agreement on internal trade. It would not be acceptable for the government to go back on its agreed obligations to suit the convenience of a single interest group that wants to maintain internal barriers.

If it was the desire of the Quebec government to change the agreement on internal trade, which it has already agreed to, then it would have to take that matter up with the 12 other parties to the agreement, not just with the federal government.

Trying to amend this bill to avoid meeting the obligations of the agreement is, simply put, not an acceptable way to proceed. For that reason, the government is not in favour of the proposed amendment.

[Agreement 20 On Internal Trade Implementation Act, March 27th, 1996]

Mr. Speaker, with the two motions on the floor I will deal first with the matter that was brought forward by the hon. member from the Bloc Party.

I would suggest this amendment is one that really reflects a continuing misunderstanding of how the dispute resolution procedures of the agreement are intended to operate.

The amendment is quite unnecessary because then the federal government would be tied to a procedure to which none of the other parties under the agreement are tied. There are 13 parties and the other 12 would not be tied to the procedure.

Further, Motion No. 1 is nothing but an attempt to restrict the scope of action that the government may legitimately expect to have to ensure that it is able to protect the national interest in the negotiated balance of benefits in the agreement on internal trade.

The proposed amendment by the hon. member for the Bloc is a cumbersome procedure. It is unnecessary and it is time consuming. It is unnecessary because the government in any retaliatory procedure under the act, the retaliatory measures first of all by the government must be fully consistent with the agreement on internal trade. Second, they are matters that are entirely within the government's constitutional jurisdiction.

Again I emphasize that the procedure being suggested is one that only the federal government would be required to follow. None of the other parties would have to follow it.

The amendment in effect would be an attempt to unilaterally amend the agreement that all parties have agreed to already. This cannot be done. The amendment is a disguised effort to delay or to impede the ability of the government to act in the national interest in areas that are clearly within its own jurisdiction. For these reasons I suggest that this amendment does not warrant the support of the House.

The amendment proposed by the hon. member from the Reform Party involves a much broader question. It that involves the question of approval of government appointments. This was dealt with in committee and has already been rejected.

The committee was not the place where this matter should have been dealt with. The motion should be dealt with in another committee if the Reform Party is intent on pursuing such a matter.

This amendment proposes a complex method of making appointments. It is obvious the Reform Party has one intention, to tie up the House continuously in matters like this so business cannot go ahead. That is all on which the Reform Party is intent. The amendment is an attempt to grandstand, it is not an attempt to try to see that the business of the House proceeds in an orderly manner.

I would suggest this is a matter that it is not appropriate to deal with at this time and it should be rejected.

[Law Commission Of Canada Act, March 27th, 1996]

Madam Speaker, the hon. member for Kootenay East managed to get through that particular matter without answering the question as to why he was not in committee. He has made comments about the member for Kingston and the Islands who was fulfilling his duties in the House, quite different from some of the members opposite. Again, he has not mentioned why he was not in committee.

I am sure he cannot make that comment about me in the justice committee because I was in that committee all the time, even on this bill. I never saw him once. Perhaps he can now take this opportunity to answer why he was not at any time at any of those committee meetings dealing with this bill.

[Bell Canada, March 21st, 1996]

Mr. Speaker, the forecasts that Bell Canada has proposed are just those. They are forecasts and estimates for the coming year and may vary by the end of the year.

It is my understanding that by means of voluntary packages and attrition Bell Canada has not laid off any employees to date. We also expect that Bell Canada, with the increase in profit they are projecting, will use this money to fulfil its commitments to increase investment and to provide a low cost in basic services.

[Competition Act, March 20th, 1996]

Mr. Speaker, it is my pleasure to speak on private member's Bill C-221 as introduced by my colleague representing the riding of

Lambton-Middlesex. I congratulate and thank my colleague for the work and research she has put into this bill.

This bill proposes to amend the Competition Act by making it a criminal offence to prohibit manufacturers and distributors of motor vehicles and farm equipment from engaging in certain marketing practices with their dealers.

As I understand it, the purpose of the bill is to improve the efficiency of dealer operations. The view has been expressed by my colleague that restrictive arrangements between manufacturers and dealers prohibiting the the practice of dualling may result in inefficiencies for dealers in the sales and servicing of motor vehicles and farm equipment.

The objective of increasing efficiencies is a valid one in the context of competition legislation. Promoting efficiency and adaptability of the Canadian economy is specifically cited at section 1.1, the purpose clause of the act, as one of the principle purposes of the legislation. The provisions of the Competition Act have been created with this objective in mind.

The second objective addressed in Bill C-221 is to protect and encourage franchise dealers operating throughout the country by allowing them greater opportunity to realize gains in efficiency in their operations. Small and medium size businesses are at the very heart of our country and their success is key to the growth of the Canadian economy.

Accordingly, this objective is equally as important and noteworthy and is also recognized in existing competition legislation. It is recognized throughout the specific provisions of the Competition Act, which have been created with this purpose in mind, and more specifically in the purpose clause which provides that the purpose of the act is to ensure that small and medium size enterprises have an equitable opportunity to participate in the Canadian economy.

While the objective of the proposed legislation to control the anti-competitive consequences of prohibitions against dualling is worthwhile and should be supported and encouraged, the proposed bill is not the most appropriate for ensuring this objective.

A provision which addresses the very same objectives and conduct as the proposed bill attempts to address can already be found in section 77 of the act. This section deals with the issues of exclusive dealing. In order to understand why the existing provisions are more appropriate than those found in Bill C-221 to address the conduct complained of, it is important to consider the Competition Act and the structure under which it has been created.

The current legislation is a framework law of general application. It applies with some notable exceptions to all sectors of the Canadian economy, namely manufacturing, resources and services. The law touches on the everyday life of all Canadians by maintaining and encouraging competition in the marketplace with the objective of providing consumers with competitive prices and a variety of choices in the goods and services they buy.

Competition policy is a fundamental element in the government's economic framework aimed at fostering efficiency, adaptability, innovation and growth in the Canadian economy.

Bill C-221 would create criminal offences punishable on summary conviction or on indictment with the possibility of a fine in the discretion of the court or imprisonment for a term of up to five years. It is important to remember that criminal law is a powerful legislative tool, one that ought to be used with restraint.

In particular, this is a legislative tool that ought to be invoked in limited circumstances. It should be invoked in respect of conduct that gives rise to clear, serious harm and in respect of types of conduct that are likely to be harmful across a wide variety of economic conditions and business circumstances.

This is why the Competition Act has been drafted to include both criminal prohibitions and civil reviewable matters. Criminal law should be reserved for the most serious acts where it is clear that a particular conduct should be outlawed. Offences of the act which fall into this category include conspiracy and bid rigging.

On the other hand, the Competition Act contains other matters which are not criminal prohibitions but are categorized under the legislation as matters that may be reviewed by the competition tribunal, an administrative body under a civil standard of proof.

The tribunal may make remedial orders to overcome the effects of such practices but penal consequences are not imposed for a violation of these provisions.

Bill C-221 would create an absolute prohibition and declare certain conduct undesirable in all circumstances without recognizing that circumstances may equally exist which would make the conduct pro-competitive or competitively neutral.

This issue will certainly be raised in committee when we discuss the amendments to the Competition Act once they are introduced.

[The Budget, March 18th, 1996]

Mr. Speaker, after hearing the speech by the member for Edmonton Southwest I cannot help believe I have heard those words before. It appears he simply paraphrased the budget speech of the hon. Minister of Finance.

He also talked about creating at atmosphere for business. There was a major announcement by the Minister of Industry last week dealing with science and technology. He indicated there is a need to create at atmosphere for private business. Friday's Calgary Herald said: "The Liberals have moved on settling the economic table for private business".

I ask the hon. member whether he approves of the budget, of the atmosphere being created by the Minister of Finance. In effect is he putting his stamp of approval on the budget speech?

[Speech From The Throne, March 5th, 1996]

Mr. Speaker, we have heard in the speech by the hon. member for Regina-Lumsden about the cuts that have been made in Saskatchewan. No one is happy at all with the cuts that have been made by Hollinger.

The hon. member has not mentioned the cuts that have been made by his former colleagues, the NDP government in the province of Saskatchewan. Saskpower has cut literally hundreds and hundreds of jobs in the workforce and the government in Saskatchewan has devastated rural health care. Nothing is being mentioned of these matters.

When the federal government is creating work in Saskatchewan the NDP in Saskatchewan appears to be destroying the jobs as quickly as we can make them. Has the hon. member overlooked this particular matter of the job devastation which has occurred in Saskatchewan with the provincial government or is it simply something that has slipped his mind?

[Petitions, March 1st, 1996]

Mr. Speaker, I have a further petition with 100 signators from my constituency and that of Saskatoon-Humboldt requesting that Parliament not increase the federal excise tax on gasoline in the next federal budget.