Pat Martin

[Bankruptcy and Insolvency Act, October 24th, 2002]

moved for leave to introduce Bill C-253, an act to amend the Bankruptcy and Insolvency Act (unpaid wages to rank first in priority in distribution)

Mr. Speaker, hopefully this bill will be a little less controversial.

The bill seeks to amend the bankruptcy act so that unpaid wages owing to an employee at the time of a bankruptcy will rank first in priority in terms of distribution of the assets of the company. The purpose is to give unpaid wages and other compensation due for benefits in a bankruptcy first priority, the logic being that other secured creditors know full well the risk of a possible bankruptcy of the company in which they are investing and compensate for that by charging interest and making profit on the loan.

In the case of an employer and employee relationship, all that exists is the trust relationship that the employee will be compensated fairly for hours worked. Therefore, it is up to Parliament to add the protection for the worker in this case, and I seek broad support from the House on that matter.

(Motions deemed adopted, bill read the first time and printed)

[Income Tax Act, October 24th, 2002]

Mr. Speaker, I think the hon. House leader for the government is right. This is not the place to debate the merits of the bill. However I could make the simple point that nothing in this bill would have anyone pay more taxes. It simply would eliminate one tax deduction, which most Canadians believe is simply bad public policy. The Supreme Court said it is a matter for Parliament to decide.

[Income Tax Act, October 24th, 2002]

moved for leave to introduce Bill C-252, an act to amend the Income Tax Act.

Mr. Speaker, I am happy to move this bill which calls for an amendment to the Income Tax Act to change the it in a very minor and subtle way so that a business cannot deduct fines from its income tax. The act is currently silent on this issue, and the Supreme Court has ruled that fines, penalties and levies that are levied against a company for breaking the law can be deducted as a legitimate tax deduction. We think this is fundamentally wrong and we call for broad support for this simple amendment to the Income Tax Act.

(Motions deemed adopted, bill read the first time and printed)

[Canada Pension Plan, October 23rd, 2002]

Madam Speaker, if the hon. parliamentary secretary is really interested in my views, he would not have used nine and a half minutes of the ten minutes allotted to questions and comments to ask the question. However, I will answer some of the things he raised.

In terms of ethical investment, I was not recommending we get into some kind of social engineering. I was not even directly recommending that we use the fund in any specific way to achieve secondary goals. I was raising the point that we do not want to encourage bad behaviour in terms of investing in negative things that some of us have strongly held views about such as off-shore sweat shops in some free economic trade zone.

Some of the funds that we might invest in that show an attractive rate of return could be in things that we would not tolerate on our own shores. Given the off-shore permission now of 30%, that is even more of a factor. That could happen without ethical guidelines. I do not think Canadians would like it if they knew it was happening. Specifically, the spokesperson for the CPPIB says that our legislation specifically prohibits us from engaging in any investment activities other than maximizing investment returns. This is exactly what the parliamentary secretary said, that the only criteria, the only objective, is the maximum rate of return.

That is a crude, outdated and obsolete view on investment these days because even as a trustee of a union pension fund many years ago, we started to take into consideration that there is more than one bottom line. Obviously we must get a reasonable rate of return and hopefully the maximum rate of return. However, we do not have to compromise that to have an ethical investor. That is what the empirical evidence shows, that sometimes the ethical investment funds outperform. Plus, if we did use any of those funds in our Canada pension plan fund for secondary goals, we would be limited in some plans to 10% of the actuarial surplus.

In other words, we do not gamble the actual body of the equity in the fund. The limit is 10% of the surplus that we can participate in those side issues. We should not be rolling the dice with the whole shebang on the stock market and losing billions of dollars, which we are. The status quo is also not very good. No one would say that it is good to lose $1.5 billion per quarter. The only justification is that the CEO says that we did not lose as much as some other people because the stock markets have been bad lately. I am saying maybe we should not be there at all. Maybe the jury is not in as to whether we should be rolling the dice with the future of retirement funds of Canadians.

[Canada Pension Plan, October 23rd, 2002]

I do not know why I am being heckled by the Canadian Alliance. They are not even heckling on topic. It is really quite bizarre.

When the board does report back once every two years, there are not even the same rights that shareholders have at meetings. At least at a shareholders' meeting the shareholders can move a motion, an amendment or a resolution and maybe give direction to the board as to how they would like it to conduct itself.

We do not have that privilege. We do not have that right. We will be told how it did and did not do. I suppose the board will allow us to speak at the mikes and say a few things, but there is certainly nothing binding about those meetings. It is completely undemocratic. It has nothing to do with good corporate governance. It encompasses none of the basic tenets of good governance, which is now gaining a certain popularity throughout the investment world.

These are some of our serious concerns about Bill C-3. I would add that the fund controlled by the Canada Pension Plan Investment Board will become so massive that it will be impossible to invest that amount of money throughout Canada, even the 70% that will be invested in Canada, without political implications. Some of the decisions made by this 12-person political patronage board will surely be driven by some regional political or sectoral political influence. We cannot move that amount of money around Canada without causing a wave, a ripple effect. This is billions and billions of dollars. What if it were decided that an area needed some political tweaking, perhaps, a little more economic activity? Instead of the government spending some money there in economic development, it could simply direct its political patronage employees, and I will say could, to invest a whole bunch of money in that particular region, sector or industry sector. These are all worries that are very valid and very real. I am not saying that this will happen. I am saying it could happen without the proper guidelines and controls built into the system. None of that do we see in Bill C-3.

This bill started out as Bill C-58. We had a similar debate when it was introduced. I believe it was introduced last spring and had second reading on June 21 before Parliament prorogued. We had these same debates and frankly we were optimistic because we thought we had made a sufficient number of points. We thought that when Bill C-58 was reintroduced and tabled as Bill C-3 some of those concerns would have been addressed, the very least of which is the ethical guidelines. The government chose not to avail itself of the window of opportunity to give us some satisfaction on these issues.

On the issue of ethical guidelines, we do not even have to compromise profits. As many members here will attest, for instance, some of the ethical mutual funds perform better than the general mutual funds. I would argue that ethical investment funds can perform at least as well and in many cases better.

In terms of foreign investment, if I may I will restate the argument that we do not want our pension plan invested offshore. We want it to do the maximum amount of good in terms of secondary benefits in this country. Again, the experience to date has been, ideology aside, that those offshore investments of the Canada pension plan investment fund have lost 3%. They are minus 3%. They are showing a negative. In the investments made locally, other than stock market investments, which have been disastrous, there has been an average gain of 13%. Investing domestically has actually performed better than investing internationally, so we really do not need any more arguments.

First, we can be ethical and show a better rate of return. Second, we can be domestic and show a better rate of return. Third, we could be a lot more transparent and introduce a code of good corporate governance at least in terms of the structure of the 12-person investment board. Last, we could have a board that would be accountable to the Canadian people in a structure that at least would report back more than once every two years, something that I think is almost comical. There also should be some give and take, some mechanism or vehicle by which the Canadian people could make their wishes known and which would be binding on the board in terms of giving direction, through some kind of motion, plebiscite, vote or process. We have none of that.

No one tried very hard with respect to Bill C-3 to meet any of the concerns that we raised last spring with Bill C-58 and which we now see again before us in the same type of document. We in the NDP are disappointed, and as might be expected our caucus will vote against Bill C-3 based on the items I cited and many others.

[Canada Pension Plan, October 23rd, 2002]

He does have a close relationship with the Minister of Finance, that is true, so maybe that is enough to qualify a person for that 12-person board. That is the reason they chose 12 people: that was how many Liberal political hacks were out of work at the time and needed patronage appointments. This is why we are critical.

We have $53 billion there, which is soon to be $120 billion. Can members imagine the responsibility of investing $120 billion to $150 billion on behalf of working Canadians? It is a staggering duty and obligation. It takes a great deal of finesse and experience not to squander and lose it, like these guys have been losing it on the stock market, and as I have said, doubling their salaries in the meantime. The CEO's salary doubled even though they lost $1.5 billion the first year out. Somebody said to them, here is $11 billion, do not lose it, and they went and lost it. So we rewarded that by doubling his salary and doubling his performance bonus. It is like taking a cow to the market and trading it for three beans, none of which sprout. There is nothing to be rewarded here.

We have serious reservations about this. Personally I am furious about it. I sat as a trustee on a union pension fund. I know a bit about this kind of thing, and I also know about some of the ethical guidelines that we built into our trust documents because we chose not to invest in the tobacco industry, for instance. I do not care what the rate of return is at R.J. Reynolds. I do not think Canadians want their pension fund invested in the tobacco industry, because (a) it would be offshore, helping an industry in the United States, and (b) it is something that we ideologically do not support. But we will not have that opportunity.

There is another thing. This 12-person board, the one that is hemorrhaging money and bleeding like a cut vein, only has to report back to Canadians once every two years. Has anyone ever heard of a board of directors that does not have to come back to their shareholders except for once every two years?

[Canada Pension Plan, October 23rd, 2002]

Mr. Speaker, I was only five minutes into my speech when the House adjourned for the day yesterday so I am glad to continue with some of our thoughts regarding Bill C-3, an act to amend the Canada Pension Plan and the Canada Pension Plan Investment Board Act.

Yesterday I dealt with some of the reservations of the NDP. To summarize the points I raised, the question that arises is this: Is it a good idea for us to be on the open market with our Canada pension plan savings? I will try to answer that not in an ideological way but just by looking at the empirical evidence.

If we look at the actual experience in the last period of time since the Canada Pension Plan Investment Board was struck, put in place and put in charge of investing our hard earned pension contributions, the experience has been terrible. I could have done better by playing pin the tail on the donkey when it comes to the stock market investments it has made. Unfortunately, it chose to get into this free market, the stock market, at exactly the wrong time, like a bunch of amateurs or a bunch of tourists. It was seduced by the high earnings in the bubble that took place in the high tech sector when people were getting returns of 20% and 30% per year on their investments. The board wanted a piece of it and got in, but it got in at the wrong time and has lost a fortune. Originally the board was given $11 billion to invest on our behalf. In the first return that came back, it had lost $1.5 billion of that.

I am not trying to argue ideologically that it should not be in there. I am just trying to share with the House the empirical evidence. It has been a disaster. What struck me as odd in that first quarterly financial statement is that the board doubled the CEO's salary even though he lost $1.5 billion in the first venture into the stock market. It also doubled his performance bonus. His performance bonus went from I believe $140,000 a year to over $200,000 a year. Imagine that. If the board is going to reward bad behaviour so generously, what if we ever do show a profit? It will be staggering. What I am saying is that we seem to have adopted the worst corporate models in the structure of this board, not some best practices or some unique structure, because let us face it, this is unique. This is the taxpayers' money being invested on our behalf on the private market. Those are my reservations. Yesterday I did raise some of the details of what our reservations are but this summarizes them.

We are apprehensive. Now the fund is no longer $11 billion. The fund has grown, not because we have made smart investments but because the rate of contribution has been massively increased. It is now $53 billion in spite of the fact that in the next quarterly report the board reported a loss of $800 million. In the quarter after that it lost another $1.5 billion. In the quarter ending in September 2002 it lost $1.3 billion. The fund is hemorrhaging. We are making bad investments. The people we have put in charge of our retirement security are investing badly on our behalf.

Whether it is a good idea or not, we cannot argue with the fact that had we not gone down this road those many billions of dollars would not have been lost and would still be sitting there or maybe would have been loaned to municipalities or provinces, as was our past practice, so that the money could have been used in relatively low interest infrastructure loans to benefit Canadians. It certainly would not have been invested offshore, which is the experience now.

Part of the bill would allow the Canadian Pension Plan Investment Board to invest on foreign shores 30% of the $53 billion it now plays with. Surely parliamentarians would argue that we are trying to maximize the benefit to Canadians with the use of this money by providing a good rate of return, yes, but that we have as a secondary objective economic development in our own country. Besides, there are no ethical guidelines built into Bill C-3. In fact it specifically states in the CPPIB mandate document that no other consideration other than the “maximum rate of return” shall be contemplated in the investment strategy.

I will not buy shares in a mutual fund if I know that mutual fund is investing in some maquiladora sweatshop on the Mexican border where child labour or rampant abuses take place. I choose not to have my investment dollars invested in unethical investments, but no such guidelines exist within Bill C-3 or within the trust document of the Canada Pension Plan Investment Board. What if it would get a great rate of return for clear cutting the rain forests of the Amazon? Do Canadians want to participate in that even if we would get a better rate of return? I say no.

If we were to put it to Canadians they would say no, but they will not have a chance to say no. Why? Because of the other thing I raised yesterday, which was the composition of the 12-person board entrusted with our the security of our pension future. It is not representative of Canadians. There is no worker representation. There are no working people, no organized labour, no pensioners and no participants in or beneficiaries of the plan represented on the 12-person investment board that makes the decisions. It is a basic tenet in the trade union movement I come from that any employee benefit plan should have equal joint trusteeship. Labour and management jointly decide how a pension plan is invested, not a bunch of Bay Street appointees of the Liberal Party who are appointed by the minister.

One of them who was appointed is a Liberal member of Parliament whom I beat to win my seat. He has no financial background. David Walker is a political scientist. He is now one of the 12 people in charge of investing $56 billion on our behalf. What is his brilliant financial experience? I am not saying he is not a competent and capable guy, but he is certainly no financier nor does he represent any of the groups that should be represented on the board. I think it is crazy.

[Income Tax Act, October 23rd, 2002]

Mr. Speaker, six months have gone by and Revenue Canada could not find time to put an end to this farce of tax deductible fines, yet it found plenty of time to crack down on disabled people. In fact it launched a nationwide campaign of harassment over the paltry $900 disability tax credit and drove 30,000 disabled people off the program.

How can the Minister of National Revenue defend such a warped set of priorities? Will she agree today to put in place the simple amendment required that the court suggested to the Income Tax Act to plug the loophole, to do it in this session of this Parliament and before the end of this year?

[Income Tax Act, October 23rd, 2002]

Mr. Speaker, six months ago I asked the revenue minister to plug the tax loophole that allows businesses to deduct fines and penalties from their income tax as a business expense. Since when is breaking the law supposed to be tax deductible? The minister seemed to agree that it undermined the very purpose of a fine if they could use it as a tax write-off.

Again, why is she letting yet another tax year go by without making a simple amendment to the Income Tax Act, putting a stop to this outrageous practice of business fines as tax deductions?

[Canada Pension Plan, October 22nd, 2002]

Mr. Speaker, I am not satisfied with the minister's message read by the parliamentary secretary.

We believe that when the national round table studied the issue and recommended at least $120,000 per veteran, that should have been binding. The offer made to the veterans, many of whom are in a desperate situation and either their health is failing or they are getting older, was less than one-fifth of the most conservative estimate of what the value of those benefits should have been.

Again, I say the high end was $430,000 each. The low end was $120,000 each. The offer made was up to $20,000 and they had to sign a release saying that they would not go after any further funds.

I believe it was a cynical move. The government should be ashamed of itself for not dealing with these people honourably and giving them the compensation that all Canadians deserve after serving in the conflicts overseas.