Madam Speaker, it is a pleasure to participate in this debate. It is important for me, representing Edmonton Southwest, to ensure some views are put on the table that would reflect the views of Canadians with regard to the privatization of CN.
The Reform Party is generally speaking in support of the bill. We think the privatization of Canadian National makes a good
deal of sense. If we think it is such a good idea and if the government thinks it is such a good idea to privatize CN, perhaps the next bill to be discussed will be the establishment of another crown corporation, the Federal Business Development Bank, which will be continued and greatly enlarged to compete in the financial services sector.
The debate today concerns the privatization of Canadian National. Whenever the name of a railroad is invoked sooner or later taxpayers will have their hands in their pockets. That has been the case ever since day one in the railroad industry in Canada and nothing will likely change that.
Canadian National is the result of an amalgamation of a number of smaller money losing operations which about 30 or 40 years ago were combined into Canadian National. The wisdom of the day was a lot of small money losing operations could be combined into one big money losing operation, and that is exactly what happened.
Canadians have been throwing money at Canadian National hand over fist ever since it was put together to compete with Canadians Pacific. Canadian Pacific was established with a great deal of government largesse. It received copious quantities of land in return for building the railroad. It promptly sold off the land and came cap in hand to the people of Canada saying it needed subsidies or it will close this or that.
Thus is the story of big business in Canada. An hon. member from the New Democratic Party many years ago coined the phrase corporate welfare bums, and he is quite right. The larger the business in Canada, the closer the tentacles of that business are to the coffers of the country.
It is Mr. and Mrs. Taxpayer, people struggling to get buy, who seem always to be dipping into their pockets to subsidize somebody else. At least with this legislation there is half a chance the subsidization to CN will come to an end, which begs the question of who in their right mind would buy anything that has been losing money since time began.
It was an amalgamation of money losing railroads turned into one big money losing railroad and now carries a debt of about $2.5 billion. Why would anyone in their right mind buy this railroad? Privatizing will not make it profitable. If one takes a historically unprofitable entity and privatizes it, that in itself will not make it profitable.
Canadian National will have to be privatized in a manner which will remove the shackles that have prevented it from being profitable. That means whoever will be buying this railroad, whether it is a zillion individuals or a half a dozen large organizations and a lot of other individuals, these people will need the ability to make the decisions necessary to turn this railroad which has historically lost money into a profit making venture.
That was the purpose and rationale behind some of the amendments we offered to the bill. The Reform Party is by and large in support of the bill. We think it is a good idea and we respect the government for taking this initiative. It has not been an easy chore over the last year or so for the Liberals to reverse direction, as they have in many of the bits of legislation which have come to the table. Who would have thought there would ever be in this day a Liberal government bringing in legislation to privatize a crown corporation? That has not been the Liberal way over the past 30 or 40 years.
When the prodigal son comes home we should welcome him and say: "Well done. We are glad you are seeing the light. What can we do to help?" To dump all over the government because there are some things about the bill we do not like would be counterproductive.
As my colleague from Calgary Centre mentioned, when a private corporation is looking at any venture, granted this is a big venture, business principles are business principles. It is really a question of adding a number of zeros once we get started; it is a question of how many zeros are behind the decimal point.
Canadian National in order to be palatable to future investors must reduce some of its debt load. The debt load is $2.5 billion and people have said it should be reduced to something in the order of $1.5 billion.
A truism in the business world is the first hit you take is always the easiest. Therefore if we are to sell this off we are far better off taking the hit by reducing the the debt CN carries the first time around rather than trying to drag it out. We are far better off getting the price and the debt to a level attractive to purchasers at one time than we are trying three or four different levels.
There are a couple of ways this could be achieved. One is to sell assets CN presently has. That is the way it should be done. CN should not come to the public coffers of Canada, individual taxpayers, and say: "Dip into your pockets and pull out $5 or $10. This is your contribution to getting this white elephant off our backs, this albatross of our necks. Your contribution is $100".
We should be saying CN is in the transportation business, the rail business, and had better sell off a whole lot of these assets. This is exactly what we would do in the private sector; get down to the bare bones, the core business. Once that is done and the assets are sold we could look at how much we have to write down on this debt in order to make it saleable.
CN is a national company. I believe I am accurate in saying that something in the region of 70 per cent of the revenues of CN are generated west of the lakehead. It is a national company but the majority of the revenues of Canadian National are generated
in the transport of raw materials such as coal, sulphur, grain and parts of the resource industry.
That is why this is a reasonable question to ask. If the bulk of the revenues are generated in western Canada and the company is to be privatized, does it not necessarily follow that the privatized Canadian National in order to become profitable will accelerate in closing parts of the operation which are losing money which would then inevitably be that part of the operation probably east of the golden triangle or golden horseshoe of central Canada? In order to be a viable entity CN must have access to the country's industrial heartland. It may not have the wherewithal to continue to operate money losing parts of its operation elsewhere in Canada.
This brings into the debate where the head office should be. We are not talking about where the various repair shops should be. Earlier a member mentioned that a high tech operation in Montreal keeps track of the locomotives and the trains. I always wondered how on earth railroads kept track of their rolling stock. That can stay in Montreal. We are talking about the head office. The head office could be wherever the majority owners of the new privatized Canadian National would want it to be.
There is quite a disparity in the number of employees working across the country. Today, 29,541 people work for Canadian National. Of those 29,541 individuals 2,526 live in British Columbia; 3,567 live in Alberta; Saskatchewan has 1,380; Manitoba has 4,498. Alberta has the western regional headquarters. In Manitoba there is a major repair facility. It is a major yard. Ontario has 7,165 employees and Quebec has 7,795 employees.
Perhaps the head office should be somewhere in Ontario. There are the same number of employees. Perhaps the head office should be in Prince Edward Island. There are five employees in Prince Edward Island; Newfoundland, 167; Nova Scotia, 393; New Brunswick, 1,903; and I mentioned that Quebec has 7,795. With the exception of the maritimes where there is not much of a presence of Canadian National, outside of New Brunswick which did have a repair facility, most of the employees of Canadian National are spread out pretty evenly across the country.
The Liberals dictate that the head office should be permanently in Montreal is because of the delicate nature of the relationship between some people who live in Quebec and the rest of Canada. The government just does not want to ruffle any feathers right now. It does not want to add another ingredient that could possibly be disturbing. It does not want to risk the enmity and the ire of the Bloc Quebecois by saying that the head office can be wherever the owners want it to be.
There are issues of principle that go beyond whether or not members of the Bloc Quebecois get upset. Let them get upset. Who cares? We are running a business here. We make business decisions for business decisions. We could have the Holy Mother here and the Bloc would find some reason for getting upset. Let us just assume that the Bloc is going to be upset no matter what we do.
The next thing then, when we are looking at some of the suggestions that we have made, is the restriction of 15 per cent. Earlier someone said it is not a big deal because the maximum number of shares that anyone has of CP is 11 per cent. What difference does that make? Who cares what the share structure of CP is? What we are trying to do is sell CN provided that the debt reduction on CN is not so much that it makes it an unfair competitor to CP, which is, of course, the private entity enterprise. We do not want to repeat the mistake we made with Air Canada, which was to write off all the debt, throw a competitor that has lots of cash into the marketplace to compete with the private sector, which at the time was Canadian Airlines or whatever its precursor was, and start a price war. That almost put both of them out of business.
In any event the situation is that no one owner may own more than 15 per cent of the shares of the privatized CN. People representing the government have said that it is a non-issue because the maximum share ownership of CP is 11 per cent. Surely it would not be a problem to take this restriction out of the legislation. The government has said it is not a problem, so why have it there?
It is important with Canadian National that if a group comes to the table and is prepared to invest enough money to own more than 15 per cent, then why on earth should it not? It may need to have that control in order to make Canadian National a competitive, profitable enterprise.
I have no reason to believe that this is the case but I am thinking aloud that it could be because so much of the Canadian National business is resource based, it is possible that a number of resource based companies will come to the table in a consortium wanting to buy Canadian National. Perhaps that consortium will want to have more than 15 per cent. The restriction of 15 per cent is artificial. It is not necessary and it does nothing to move the legislation ahead.
Another sop to Canadianism in the legislation is the requirement that Canadian National must remain bilingual just as it is as a crown corporation or as a federal government entity. There are institutions in Canada that are rightfully bilingual, such as the House of Commons and law. Many of the institutions across Canada that are bilingual should be bilingual because we are a bilingual country. When those of us who have lived most of our lives in other parts of Canada come to central Canada we see just how bilingual the country is. Being bilingual, trilingual or multilingual is to our benefit.
What we are talking about now is privatizing an operation that has been losing money for many years. There should be as few strings attached as humanly possible. If the corporation is to become a private corporation, then let it become a private corporation without the strings attached. If it is in the interests of the corporation to be bilingual or multilingual, we can be sure it will remain so, as it should. It may well become multilingual because there are parts of this country where the second language is not English or French, but may well be Mandarin.
Another point I raise is if we are going to privatize CN, let us honestly privatize it without all the strings attached in order to make it more palatable to the people. I do not want ascribe motive here, but it would seem to me that one aspect of the bill is nothing more or less than a sop to the Bloc Quebecois so that it will not get upset about it. If we are going to privatize it, let us do it.
Another point has to do with the marine strategy, the railroads in Canada and the fact that everything in Canada is interconnected. There is not much point developing a port in Halifax if there is no facility to move products from that port to the rest of the country. To do that we will require rail lines.
As this is privatized it is wholly appropriate there be certain restrictions on the new ownership to ensure that any transition is done carefully and in the public interest.