Madam Speaker, I too welcome the opportunity to speak on the issue of pensions, the proposed amendments to the Bankruptcy and Insolvency Act, and the Companies' Creditors Arrangement Act as envisaged by Bill C-501.
I think it is certainly appropriate that we have these conversations and discussions in regard to dealing with the issues that impact Canadians in such a way. My comments today will be on the necessity that we must always keep in mind the potential economic effects of a higher priority in insolvency for unfunded pension liabilities, and in particular the importance of considering the impact such a priority may have on capital markets and the access to credit for Canadian companies.
I would like to begin by acknowledging the challenges that are being faced by today's Canadian pensioners and their families in this uncertain economic environment, and it is for that reason that our government has taken and will continue to take measures that will better protect the pensions and pensioners.
Indeed, the government committed, through the throne speech of last March, to explore ways to better protect workers when their employers go bankrupt. Canada's insolvency and restructuring laws are an important part of our economic framework legislation and play a key role in making our economy strong and stable. They strive to find the proper balance between the competing interests of debtors and creditors as well as those between the various categories of creditors. I say competing because, of course, there are usually insufficient assets in the debtor's estate to satisfy the entire amount of debt owed to creditors.
To meet that test of balance, the law has to be fair and be seen to be fair by all those who might be affected by its provisions. To do otherwise could lead to unintended consequences.
It is of fundamental importance that insolvency legislation be structured in such a way that it does not impede our ability to promote a competitive marketplace nor impinge on our ability to increase the availability of credit to businesses and maintain efficient capital markets.
Rational and reasoned legislation contributes to building confidence in the economy, to improve the competitiveness of Canadian businesses, and serves to make Canada a more innovative and productive country. Without such a principled approach, our efforts could result in little long-term relief for potential aggrieved parties.
While assessing the various ways to protect workers and their pensions, the government must be mindful of the effects such changes may have, including the effect they could have on credit markets, which are integral to the smooth operation of businesses in Canada.
Here is what is critical. Amounts related to unfunded pension liabilities can represent significant claims in bankruptcy and can arise without any wrongdoing on the part of the employer. Let me emphasize this point, if I may. Several external factors, such as investment performance, can affect the funding level of a defined benefit pension plan. Therefore, a plan can be underfunded even if the employer provides for all regular contributions, which are already protected by a super priority in insolvency and other required payments in a timely manner.
We should remember that, when a company is insolvent, its assets are usually insufficient to cover all the claims. This means that everyone will not be fully paid. I will continue.
