Mr. Speaker, I would like to make some brief remarks with respect to Bill C-281.
There is no question that when it comes to protecting the rights of workers and their wages and salaries, every member of the House would agree that those are important issues which need to be addressed. Workers need to be protected. We have many human tragedy stories that would indicate people have suffered through loss of pensions, entitlements or severance pay. It is not a question of whether those rights need to be protected. The big issue is how they are best protected without creating problems in other places and with regard to other interested parties.
There are obvious examples in a bankruptcy of people who have to take economic loss. Many suppliers are even below the worker in terms of unsecured status. They too suffer significantly.
When a business comes into being, there are many dreams, aspirations and hopes by many parties. Fundamental to getting that business started is the ability to raise capital and operating funds to buy inventory, goods and supplies and to have the plant and the process operate. Most people would go to banks, credit unions or third parties to obtain finances to get their businesses started and to establish those jobs in the first place. Those parties provide funds in return for security. It could be hard assets, inventory or floating charge debentures, but they take those things in exchange for providing cash. They expect to realize on that security. That is why secured creditors have been given preference.
I find it hard to understand how employees are in a situation where pensions are unfunded to the degree they are without some policing taking place. The one who provides the funding expects to get the cash back when the business fails. If we start to destroy the concept of secure transactions, we will be unable to start businesses and create the jobs. We need to be careful.
When we look at the scheme that presently exists under section 36 of the Bankruptcy Act, secured creditors are first, then preferred creditors and outside of bankruptcy fees and costs, the workers are number four. Then it goes to unsecured creditors. Workers are protected to the sum of $2,000 in past wages.
The previous bill introduced by the member talked about super priority status for workers, and it was limited to $10,000. Why was it limited to $10,000? It was for good reason. It is hard to estimate or understand the amount and value of unfunded pensions, et cetera. The present bill places the workers ahead of all creditors, regardless of time and dollars. How is a person, who is advancing funds, to know what these liabilities may be?
If this bill were passed, there would be severance, which would depend on the length of time the worker was employed. There would be unfunded pensions. A lack of money in the pension fund could be created by it being actuarially unsound by the economic conditions, or by perhaps negotiations through collective bargaining agreements that would enhance the pension which has not yet been funded or to which no contributions have yet been made. These amounts could be huge, but unknown at the time the business started up and unknown at the time the financing was advanced. The only thing that can happen is they would have to plan for a contingency. They would have to plan for what the eventuality may be, which would then restrict credit, lower the amount that could be loaned or increase the interest rate.
This is not the way we want to go. This is not the way we want to deal with business, taking the problem from one area and placing it in another, particularly when the secured creditor has little to do with funding pensions and policing how that happens.
We must look at other alternatives that would preserve the current lending system and that would look at protecting the workers. I think that is a valid concern.
It is interesting to note that workers in other jurisdictions, the United Kingdom, the United States and Australia are not given a super or high priority status over secured creditors. They have considered something akin to a worker's protection fund where there is a contribution from the employer, the employee and perhaps from the government. These funds are then used in part to protect workers. It is funded by the people who are affected and the people who have some control of the government.
In each of the jurisdictions they have limitations, so there is some certainty as to what is involved. The United States has put a cap in dollars but has given them a preferred status. It is those kinds of options that need to be reviewed. These are options that take into account the rights of the workers and the security of the market. They ensure that trade and commerce can continue, that we are able to do business as we have known business to be done, and it does not take a resolution that resolves one problem and creates another.
It is for this reason that I feel this particular bill ought not to be approved. It should be opposed. We should look at a bill, introduced in proper time, that takes into consideration all of the stakeholders, all of the parties that are involved, and addresses the issue fairly and into the future.
It is not something we can resolve in what is happening today in a particular situation. It is what we do to resolve an industry issue that is of concern to us. We need to address worker protection. We must address the issue of pensions. Some of that may need to be addressed through pension legislation separate and apart from the bankruptcy legislation. In any event, it must be a broader perspective. It must have a broader view. It must take all of the interests into account when it is being drafted.
