Hon. Pierre Bussieres (Minister of National Revenue) moved

that Bill C-25, An Act respecting the Canada Development Corporation, Canada Development Investment Corporation and certain other corporations, be read the second time and referred to the Standing Committee on Finance, Trade and Economic Affairs.

Mr. Speaker:

Is it the pleasure of the House to adopt this motion? The Minister of National Revenue (Mr. Bussieres).

Mr. Bussieres:

Mr. Speaker, it is my pleasure today, in the House, to propose the second reading of Bill C-25, an Act respecting the Canada Development Corporation, Canada Development Investment Corporation and certain other corporations.

Mr. Speaker, this Bill has basically two objectives.

First, this legislation will enable the Government to meet a commitment made in May 1982 regarding its assets in the Canada Development Corporation, the CDC. At the present time, the CDC is a corporation created by an Act of Parliament, but by adopting this bill, Parliament will authorize the CDC to pursue its activities in accordance with the Canada Business Corporations Act. The CDC's name will be changed to reflect the fact that the Government will no longer have a sustained interest in the corporation. I should point out that the arrangements approved by the Government and the CDC were made two years ago and that they have received the wholehearted approval of private sector shareholders within the CDC.

The changes announced in the Bill are necessary so that the CDC can be managed as a private corporation under the Canada Business Corporations Act, and also to enable the Government to divest itself of its shares in the CDC.

Second, the purpose of this Bill is to establish the Canada Development Investment Corporation, the CDIC, as a corporation created under an Act of Parliament. The House will recall the CDIC was established in accordance with the Canada Business Corporations Act and is being managed according to the provisions of several Orders in Council. These orders impose restrictions and guidelines similar to those imposed by special legislation, and it is desirable to have these provisions confirmed by Parliament.

The CDIC has already proved that Government made a wise decision in creating the Corporation. The Bill will give the CIDC the legal status of a Crown corporation and a clear and limited mandate from Parliament.

Before turning to the provisions of the Bill itself, I would like to outline the current and continuing responsibilities of CDIC. CDIC has four basic functions.

Mr. Malone:

Take over. Take over. Take over. Take over.

Mr. Bussieres:

First, CDIC is a vehicle for the sound commercial management of various assets and enterprises that have been acquired earlier by the Government of Canada for public policy reasons. The Government has found that there are some cases where, contrary to what is expected, its commercial assets have not been operated in a commercial manner. The controlling shareholder of any company should take a keen interest in that company's activities. In cases where the Government is the controlling shareholder, it needs a vehicle that can provide for that active presence on a continuing and effective basis.

CDIC is intended to be that vehicle in order to achieve commercial performance by these companies and to act as a mechanism for public accountability. This does not absolve the boards of these companies from their responsibilities. The boards of CDIC's underlying companies have an important role to play. We expect the boards of directors of these companies to supervise vigorously the business activities of their respective enterprises.

Mr. Stevens:

That will be a first.

Mr. Bussieres:

The board and management of CDIC works with the boards and managements of its subsidiaries to help provide a commercial operating environment through the developing and monitoring of performance standards. In this way, CDIC brings a shareholder's perspective to complement

May 28, 1984

Development Investment Corporations Act

the operating perspectives of the subsidiaries; experience has already demonstrated the utility of this approach.

The second function of CDIC is to privatize. This is an important part of its over-all mandate, and CDIC will be judged in part by its progress in divesting to the private sector assets which the Government no longer needs to own for policy reasons. In its divestment activities, CDIC is to ensure that sales are made according to commercial standards, so that the public realizes a fair return from assets which are sold. CDIC has made initial assessments of the prospects for commercial sale of certain of the assets, including consideration of market conditions and timing factors.

The CDIC's third role consists in acquiring new investments from the Government. There is no contradiction here with the corporation's second role. Experience has shown that the private sector will provide other opportunities for the Government to invest, in accordance with the public interest.

Such opportunities were offered recently with respect to the fisheries industry in Eastern Canada. Having decided to invest in fish processing plants in Newfoundland, Nova Scotia and Quebec, the Government is now transferring its shares in those companies to the CDIC. It will be up to the latter to communicate the views of shareholders to those administering the shares on behalf of the Government, and to find private sector buyers when commercial opportunities arise.

CDIC's fourth role is to provide commercial advice to the Government when the Government calls for such advice. Industry and government have different roles in Canada, but it is important to ensure that they do not drift into isolation from each other. The Government hopes CDIC, because of its activities in and work with industry, can help to create a better understanding between government and industry of one another's objectives and procedures.

Government plays many roles in the economy. It establishes fiscal and monetary policies. It regulates some industries. It provides tax incentives. It provides various forms of financial assistance to industry and, in some cases, government invests directly and takes equity in return. It is in these cases where CDIC will play a role, cases where the Government is a direct investor and needs a vehicle to manage its shareholding wisely.

CDIC has established its credentials as the vehicle to bring about commercial quality expertise and practices where they are called for in government investments. Its efforts have produced detailed accountability to Parliament, more constraints on Canadair and de Havilland, and timely disclosure of important developments. CDIC is a pragmatic response to the need for a better means of managing government investments, as well as to the need for a vehicle with a public mandate, including the divestment of government investments when there is no longer a public policy reason to hold those investments.

Mr. Speaker, there are people who are afraid that the CDIC will have wide-ranging powers to make its own investments. That is absolutely false. In accordance with provisions to be found in this Bill, the CDIC has no authority to take control of existing companies or to set up new subsidiaries.

The CDIC is a tool created by the Government to manage investments. However, Government and Parliament will decide what those investments will be. In a few moments I shall indicate the various provisions of the Bill that relate to such decisions.

The Bill has seven main parts. The first three clauses of the first part are the introduction and include definitions and provisions dealing with the event of inconsistencies between this bill and the Financial Administration Act.

Clauses 4 to 8 contain provisions concerning the Canada Development Corporation. These provisions authorize the Government to divest itself of its assets, which represent 48.2 per cent of the shares of the CDIC. The Board of Directors of the CDC believes that the present business climate as well as the market situation are not favourable for immediate privatization of these shares. We feel that the public has a right to expect a reasonable return on its investment, and as soon as the time is ripe, we want to be ready to proceed with privatization, with the authorization of Parliament.

Bill C-25 will bring CDC under the Canada Business Corporations Act as soon as the Bill is passed and proclaimed. This will end the provision for a minimum 10 per cent government shareholding. In other words, even if there were buyers for our CDC shares at the present time, we would not be able to sell them without this legislation. In order to improve the marketability of the CDC shares, the restrictions on the number that any individual investor may hold are also being eliminated, though in this case in two stages. At the present time, non-government voting shareholders are limited to a holding of 3 per cent. This limitation will be permitted to be set at 10 per cent for all non-government shareholdings. This limitation will be removed altogether after a transitional period of three years. This transitional step is designed to allow CDC shareholders protection from unexpected changes in control without their approval. I should also note that the shareholders of CDC have approved these transitional arrangements.

The next part of the Bill, clauses 9 to 24, deals with the activities of the CDIC. These clauses are the actual basis of the CDIC. While the CDC's status as a corporation created under an Act of Parliament is being changed to that of a corporation formed in accordance with the Canada Business Corporations Act, the reverse is true of the CDIC, which was

May 28, 1984

created under the Canada Business Corporations Act and will now become a corporation formed under an Act of Parliament.

Clause 11 is the key clause of the Bill. It specifies the four roles of the CDIC which I mentioned at the beginning of my speech:

(1) To manage assets in a commercial manner;

(2) To privatize assets;

(3) To acquire new investments from the Government;

(4) To advise the Government on matters pertaining to business and industrial issues.

The powers of the CDIC are not as wide-ranging as these objectives might lead us to believe. In fact, the corporation must conform to strict standards for public disclosure and accountability, and must always obtain Parliament's approval before investing in a new business.

When Hon. Members examine Bill C-25, they will see a number of provisions requiring CDIC to obtain the authorization of the responsible Minister, the corporation's Board of Directors, the Minister of Finance, Cabinet, Treasury Board and finally, in other circumstances, the authorization of this Parliament.

The Bill provides for a board of 20 directors and introduces staggered terms so that in any one year the terms of no more than one-half of the directors expire.

Normally the Bill directs the board and management of CDIC to operate in a commercial manner, but should government decide that some specific course of action is in the public interest, it will be able, under the CDIC Bill, to issue a directive. This directive will be made public, indicating the activity government wants CDIC to undertake and taking appropriate policy responsibility for that instruction. The directive must be given with board consultation. The directors then have a duty to ensure that the directive is implemented in a prompt and efficient manner.

The fourth segment of the Bill is found in Clauses 25 to 41 inclusive. This portion of Bill C-25 covers the financial provisions relating to CDIC and its wholly-owned subsidiaries. Clause 26 sets out CDIC's authority to borrow money and puts a limit of $3 billion on the over-all borrowings and loan guarantees for CDIC and its subsidiaries. The long-term debt of Canadair, de Havilland and Eldorado, a total of $1.9 billion at the end of 1983, is included in this amount. Before CDIC can exercise an unused portion of this debt authorization, it must first obtain the approval of the Minister of Finance as set out in Clause 27. In addition, each year CDIC will be required to indicate its intended borrowings in its corporate plan which requires the approval of Cabinet.

The Bill, in Clause 28, also authorizes the Government to provide up to $1 billion of equity capital to CDIC. This funding will be activated in the context of the corporate plans and capital budgets of CDIC and its operating subsidiaries,

Development Investment Corporations Act

summaries of which will be made available to Parliament. Another clause of the Bill allows the Minister of Finance, with Cabinet approval, to require CDIC or a wholly-owned subsidiary to pay surplus funds into the Consolidated Revenue Fund.

The financial record of the CDIC and its investment activities will be carefully scrutinized by Parliament and the Government.

In accordance with Clause 30 of the bill, the CDIC shall submit annually to Cabinet a plan encompassing all the businesses and activities, including investments, of the company and its wholly-owned subsidiaries. The CDIC and its wholly-owned subsidiaries shall conduct their activities in accordance with this plan.

Furthermore, Clause 31 provides that the CDIC shall submit annually a capital budget to Treasury Board, for its own investments and those of its wholly-owned subsidiaries. The CDIC and its wholly-owned subsidiaries shall not incur, or make a commitment to incur, a capital expenditure in any financial year before the budget has been approved, unless the expenditure or commitment is part of a business activity that has already been initiated.

We shall table summaries of these plans in Parliament. This provision appears in Clause 33 and will prove very useful to Parliament when evaluating and scrutinizing the activities of the CDIC and its subsidiaries.

[DOT] (M30)

Clauses 34, 35 and 36 restrict CDIC or its wholly-owned subsidiaries from acquiring and operating businesses or setting up new companies without meeting certain tests. In cases of a corporate reorganization, for example, where it might be necessary to set up a new corporation, Cabinet must approve the transaction. More important transactions involving entering a new business would require the approval of Parliament.

I wish to stress this latter point. Some have suggested that CDIC is being cast loose to invest in ventures and companies as it chooses. That is not the case. Before CDIC can enter into any new activity, it must receive the approval of both Cabinet and Parliament. Clause 36 sets out the mechanics for obtaining parliamentary approval. As the Bill states in Clause 35, CDIC will not be able to acquire control of an operating business without the approval of Parliament unless the business is complementary to an existing business of CDIC, in which case the approval of Cabinet is sufficient. The exemption from parliamentary approval would not apply where the acquisition would involve substantially all the holdings of another corporation directly owned by the Crown. Cabinet approval is required for CDIC to dispose of any securities transferred to it by the Government or any voting shares. [Translation]

The fifth part of the Bill consists of clause 42, which concerns CDIC's subsidiaries: Canadair Limited, The

de Havilland Aircraft of Canada Ltd., Eldorado Nuclear Lim-

May 28, 1984

Development Investment Corporations Act ited, Teleglobe Canada and, in the near future, Pecheries Cartier Inc. and Fishery Products International Ltd., and subsidiaries of those corporations. The clause deals with the relationship between the CDIC and its subsidiaries, and the aim to change the status of those subsidiaries to private sector corporations. The clause also guarantees that through the CDIC, these companies shall be accountable to Government and finally to Parliament.

The sixth part of the Bill covers clauses 43 to 46 which deal with general provisions for disclosure and specific accounting requirements. Clause 43 obliges the CDIC and its wholly-owned subsidiaries to conform with the requirements for disclosure of information that apply to corporations whose securities are offered for sale to the public in Canada. Mr. Speaker, as Hon. Members are aware, the CDIC has been following this policy for some time by publishing quarterly and annual financial statements for itself and its subsidiaries. This form of full and rapid disclosure of the general productivity of the companies is important for Parliament and also for the general public. It also acts as an incentive for those directing the companies to perform satisfactorily, since the results of their performance are published within a relatively short time. [English]

Clause 45 will transfer the Government's shares in CDC to CDIC. This will replace the requirement in the existing CDC Act-which is being repealed by this Bill-that the Government's shares be registered in the name of the Minister of Finance.

The final segment of Bill C-25 deals with Teleglobe Canada. Clause 47 transfers Teleglobe Canada to CDIC and clarifies the shareholder-subsidiary relationship between CDIC and Teleglobe. The final two clauses of the Bill contain the necessary amendments to the Teleglobe Canada Act. Because of the unique policy role of Teleglobe and its strategic importance to Canadian telecommunications policy, parliamentary approval will have to be obtained for any future sale of Teleglobe.

Members will see that this is an important piece of legislation. It is designed to deal in a realistic, sensible fashion with an issue that concerns all-the sound management of government investments in commercially-oriented companies and the sale of those investments when the commercial opportunity arises. In cases such as Canadair and de Havilland, it is the investment itself-that is to say, the decision to maintain these companies-which is the public policy choice. But the day to day operations of those companies must be based on commercial principles. The policy decision is that they exist, but they can only exist in the long term if they become commercially viable. They can only become so by following commercial routes.

At the same time, Mr. Speaker, they shall continue to be accountable to Parliament. They shall do so through the CDIC, which will publish quarterly financial statements and annually submit investment budget summaries and general

plans for the CDIC and its subsidiaries, all of which underlines the Government's commitment to ensure that Parliament knows what is going on and that responsibility areas are clearly defined.

The financial statements and summaries of investment budgets and general plans of the CDIC will be available as reference documents to the committees of Parliament concerned, which may summon the Minister responsible for the CDIC and senior administrators of the CDIC and its subsidiaries, to ask for clarification. This means that in addition to conforming to the principle of full and rapid disclosure of financial results, general plans and investment budgets, the CDIC and its subsidiaries will be at the disposal of Parliament. [English]

Experience has shown that government needs an effective vehicle for the management and subsequent sale of commercial-type assets it has acquired at one time or another. There is a need for a clear and on-going shareholder presence to ensure adherence to commercial standards. CDIC, I believe, can be that vehicle. Indeed, it is already performing these responsibilities in a business like manner under the supervision of a board of directors made up of eminent Canadians.

Hon. Members may not agree with certain investments made by the Government, but I think the House will agree that all our political parties, both on the federal and on the provincial scene, have traditionally accepted the principle that in special circumstances, Government intervention is needed to protect the national interest or even to protect regional interests. It is unlikely that this approach will be abandoned in future, at a time when our economy is going through a difficult stage towards recovery and renewal.

In the present economic situation, the CDIC can play a major role in ensuring that these investments are administered as efficiently as possible, that they are privatized as soon as a commercially attractive opportunity arises, and that these activities are carried out in accordance with strict requirements for accountability and public disclosure of any information requested by Canadians.

Mr. Speaker, Bill C-25 meets these objectives and meets this requirement, and I hope we can count on the co-operation of all the Members of this House for approval of the Bill before the House adjourns for the summer.

Mr. Waddell:

I rise on a point of order. I am sorry, Mr. Speaker, I should know this, but perhaps you could tell me if there are questions and comments after the first round?

The Acting Speaker (Mr. Herbert):

There is no provision for a question period following the speeches of the first three lead-off speakers.

May 28, 1984

Mr. John Thomson (Calgary South):

Mr. Speaker, here we go again with the sticky hands of government. Here is another piece of legislation to demonstrate the sticky hands of the Liberal Government. If there was ever a case where we were letting the foxes in with the chickens, this has to be it. Can you imagine letting Senator Austin, Maurice Strong and Joel Bell run footloose and fancy free with $4 billion worth of public assets? I suppose we could entitle this piece of legislation "the interventionists". That would be an appropriate title for the Bill.

If the Government has a problem, rather than dealing with the problem, rather than exercising any political will, the Government simply creates a new Crown corporation. That is the solution to all problems in so far as the Liberal Government is concerned. If we have a problem, let us not deal with it. Let us not exercise any political will. Let us create a new Crown corporation. And this is the granddaddy of them all; $4 billion for a brand, spanking-new CDIC. It is the solution to Canadair, de Havilland, Eldorado, Teleglobe and Massey-Fer-guson. I could go on talking for a week about the Government's Bill to continue the Canada Development Investment Corporation or, as it is often referred to, the CDIC, and its deficiencies.

I really do not know where to begin because there is so much I would like to say on this Bill and on CDIC generally. However, I have decided to limit my talk today to four points. The First point is with respect to the origins of CDIC; second is the CDIC's proposed mandate; third is the serious defects which we have identified in Bill C-25; and fourth, the relationship between Bill C-25, which is before us today, and Bill C-24, the Government's Crown corporation Bill, on which we have just concluded second reading debate under government closure.

CDIC was incorporated under the Canada Business Corporations Act in May of 1982, but the roots of CDIC reach back much farther, back to the failure of the Canada Development Corporation. And let us not confuse the Canada Development Investment Corporation with the Canada Development Corporation. The creation of CDIC represented an admission of defeat by the Government. It represented the culmination of a decade-long struggle between the Government on the one hand and CDC management and the business community on the other. The Government wanted to play both sides of the street with CDC. It said it wanted a commercial operation with control residing with the private shareholders. However, when the occasion arose, the Government tried to use the CDC to bail out companies. It did not have any respect for the private investor. It was prepared to put private shareholders' money at risk in order to pursue its own political purposes. When the CDC resisted the pressure of the Government, the Government cast around looking for another vehicle of intervention. The result was the CDIC.

However, it was not quite that simple. I would like to go through some of the steps which the Government followed in setting up the CDIC to demonstrate two things: first, that the Government really had no strategy for the CDIC. The Govern-

Development Investment Corporations Act ment's explanation of the need for the CDIC is really an ex post facto justification for a series of haphazard, accidental actions. Second, some of its actions were and remain today legally questionable.

As I said earlier, Mr. Speaker, the CDIC was incorporated on May 26, 1982. It was incorporated by Robert James Hamilton, a Toronto lawyer. The sole shareholder of the company was Mr. A. H. Hampson-Tony Hampson-the President and Chief Executive Officer of the CDIC. On September 15, 1982 Tony Hampson gave his shares in the CDIC to the federal Government. The grateful Government accepted the shares and, voila, we have one more Crown corporation! On the same date, the Government made CDIC an agent of Her Majesty by Order in Council under the Government companies operation Act. This means that the CDIC was given a wide range of privileges and immunities not available to private sector corporations, such as immunity from the federal Government's own Combines Investigation Act, and if allowed to borrow money it does so with the full faith and credit of Her Majesty.

Let us stop right here for a moment, Mr. Speaker, and review what has happened. We have a brand-new corporation here, an agent of Her Majesty, and Parliament has not even been consulted. We have a new corporation. We have given it an agent of Her Majesty's status, made it immune to the Government's own Combines Investigation Act, and Parliament has not even been consulted. Why was Parliament not consulted in the creation of this corporation? Why the deviousness? Why not bring the whole thing into the light of day and ask Parliament to review the new corporation in the same way as Parliament reviewed the Petro-Canada Act in 1972 to 1975, or the new Air Canada Act in 1977? Why the secrecy? Why not put it out on the table and let us have a public debate on the creation of CDIC? Why do we create the CDIC without parliamentary approval and the approval of this Chamber? What is the Government trying to hide?

It does not stop there, Mr. Speaker. In September of 1982 the shares of Eldorado Nuclear Limited were transferred to the CDIC, again by Order in Council. However, we will contend, Mr. Speaker, that the Government acted illegally in doing so. We contend that under one Act of Parliament, Appropriation Act, No. 4, 1980-1981, and possibly a second Act of Parliament, Section 10 of the Atomic Energy Control Act, CDIC was precluded from holding the shares of Eldorado. The issued and oustanding shares could only have been held by the Ministry of Energy, Mines and Resources. The shares were illegally transferred by this Government by Order in Council to this new corporation, CDIC. In doing so, the Government acted in total contempt of this Parliament and the people of Canada. Legally, the Government acted improperly and in total disregard of one and possibly two Acts of this House. Clause 42(2) of Bill C-25 is designed to set part of this right but, of course, it does this retroactively.

And it did not stop there; oh, no! The Government was not finished yet. CDIC needed cash for working capital but had no revenues. The Government began to consider its options.

May 28, 1984

Development Investment Corporations Act

Could it charge a management fee to the subsidiaries? Maybe. Could it force one of the corporations to declare a dividend to CDIC? Yes. The Government decided that Teleglobe had lots of cash so it would force Teleglobe to supply the money. However, there was a problem in that Teleglobe does not have a share structure, so there were no shares for CDIC to hold. Under the Teleglobe Canada Act dividends were payable directly to the Consolidated Revenue Fund. That put the kibosh on that.

The Government could borrow the money only if Parliament approved and it did not want to subject the CDIC to a debate in Parliament at that time. A debate on the creation of CDIC in Parliament would almost be democratic, would it not? Rather, the Government resorted to a seldom used clause, Section 72 of the Financial Administration Act, to give CDIC a 12-month loan of $500,000. In the 30 years since 1952, Section 72 of the Financial Administration Act has been used only twice.

The amount of $500,000 was not enough to satisfy the appetite of CDIC. It would not even pay the salaries and they required more money. Therefore, the Government performed a complex share conversion with Eldorado which magically netted the CDIC $10 million. There were two problems. The shares owned by Her Majesty could not be sold or transferred without Her Majesty's Governor in Council permission. Yet we can find no evidence of any permission being given. More importantly, the cash from the transaction should have gone to the Consolidated Revenue Fund rather than into CDIC. However, the money finally ended up in CDIC. In our view, this is totally contrary to the Financial Administration Act.

Why is Bill C-25 before the House now, almost two years after its creation? Has the Government all of a sudden recognized the error of its ways and repented? No. CDIC needs a lot more money and cannot get it until its status is changed. The Government had to bring this legislation forward at this time in order to fund CDIC. There was no alternative to bringing the legislation forward so that CDIC can borrow up to $3 billion and raise equity of $1 billion.

Why should the House look favourably upon Bill C-25 when the Government has ignored and avoided Parliament for two years while the CDIC was set up, financed and operating? Second, the Government has ignored, twisted or subverted Acts of Parliament. Third, the Government only comes to Parliament now in desperation when it has no other choice. For the reasons I have cited, Mr. Speaker, C-25 offends me deeply. I feel as though I am being asked to be an accessory after the fact to legitimize the Government's very questionable past dealings.

I will now turn to CDIC's proposed mandate. In his opening remarks the Minister made much of the fact that CDIC was an instrument to privatize certain corporations. It has had two years to come to grips with the problem. I have not seen one single corporation privatized or even close to it. The Government says it needs to wait until the appropriate time to sell

these corporations. There will never be an appropriate time to sell these corporations because they are not saleable. They are all dogs except for Teleglobe. Teleglobe is the only viable corporation among them.

Mr. Whelan:

We privatized grain elevators in Alberta and the Alberta Government bought them.

Mr. Thomson:

I beg your pardon? Perhaps the Minister will have his chance to let us have the benefit of his great wisdom on this Bill.

Mr. Taylor:

He talks better sitting down.

He just gave it.

Mr. Thomson:

The problem is not the question of privatization, Mr. Speaker. All the Government really wants to do is create more and more Crown corporations. That is what CDIC is designed to do. Under Clause 11 of Bill C-25, the CDIC is to hold and manage assets, to effect divestitures and to make investments. In so doing, it has all the legal powers of an actual person. That is a very wide mandate, Mr. Speaker. I would characterize it as a blank cheque to do anything.

What does the Government intend for CDIC? That depends upon whether you listen to the Chairman, the President, or Senator Jack Austin. They all have a different story to tell about what they think CDIC should do. From his speech to students at York University, it would appear that the Chairman of CDIC, Mr. Maurice Strong, sees the CDIC as an instrument of massive intervention into the economy. His blithe assumption that only the Government can respond to new economic challenges through ever greater involvement in the economy is amazing. Why do we have a private sector? If his view is that only the Government can respond, then why have we 1.5 million people out of work in the country today? Did the Government solve that problem? The problem is government intervention. Government intervention is directly and solely accountable for the 1.5 million people unemployed today.

From other statements and speeches of Mr. Strong we learned that he envisages CDIC as a merchant banker, a holding company and, in his words, a much needed mechanism to buy into strategically important corporate bail-out cases. Publicly the Minister responsible tends to emphasize the management and divestiture aspects of CDIC.

Mr. Joel Bell, the President of the company, sees a wide mandate for the company which includes international joint ventures that would give CDIC access to foreign technology and markets. That sounds wonderful. These gentlemen are very clever at crafting the words. They craft the words to mislead public opinion. It sounds great to say that CDIC is going to have access to foreign technology and markets.

In an article in The Globe and Mail Mr. Bell played down the divestiture aspect of CDIC's mandate. He said that divestiture talk was premature and that, in any event, the CDIC may want to retain a stake in the companies for a considerable period of time. Which one of these stories can we believe? The

May 28, 1984

mandate is so broad that the Government is free to do anything it wants. All three of these fellows are free to do whatever they want at any particular point in time.

I obtained a copy of the articles of incorporation of the CDIC in the hope that they would give me a clue as to what it intended to do. I thought that the incorporators might be a little more forthcoming, effusive and informative in the articles than they are in the Bill itself. I thought that the articles would be the true test of the incorporators' intent. What I found was that under the clause entitled "Restrictions on Business the Corporation may Carry on", the incorporators typed in one word. That word is "none". There are no restrictions at all. This corporation can do whatever it wants, regardless of the words that are written in the Bill.

Today Eldorado and Teleglobe; tomorrow Maislin; the next day Power, Argus Corporation or a shoe factory in Argentina. Who knows?

Even more instructive was the Order in Council attached to the articles of incorporation. I assume that this represents Cabinet's real view of the mandate of the corporation. Allow me to quote from the "Objects" part of the Order in Council. It reads;

(A) To assist in the creation or development of businesses, resources, properties and industries of Canada;

(B) To expand, widen and develop opportunities for Canadians to participate in the economic development of Canada through the application of their skills and capital in any activities carried on by the corporation.

(C) To invest in the shares or securities of any corporation owning property or carrying on business related to the economic interests of Canada:

(D) To invest in ventures or enterprises, including the acquisition of property, likely to benefit Canada: and,

(E) To carry out all activities in the best interests of Canada, operating in a commercial manner.

That is like something sent from heaven. Those objects allow it to do anything it wants. This comes from an Order in Council, yet there is no mention of divestiture or privatization. It does not mention anything about operating these companies in a good commercial manner like the Minister said it would. It only says "to acquire". Make no mistake that CDIC is an instrument of acquisition. It is supposed to be acquisition in the best interest of the people of Canada, but it is another $3 billion down the tube or perhaps more. That is only a start.

It is fascinating to realize that divesting is not even mentioned once in those objectives. However, "assist" is mentioned twice, "invest" is mentioned twice and to "expand, widen and develop" is mentioned once. There is no mention of the word "divest".

What has government ownership really accomplished for us in Canada today? Are we better off for it? Are we better off for more government intervention? Are we better off for more and more central planning? Do you really believe, Mr.Speak-er, that politicians or governments can create jobs through government ownership? We see only more bureaucracy and more deficit. We on this side of the House do not believe that the ills of the world are solved by more government interven-

Development Investment Corporations Act tion. Even if we did, the current personalities associated with the CDIC have not demonstrated any particular gift for management that I am aware of. The evidence cries out for less government intervention, not more. Bill C-25, the CDIC and the current cast of characters at the CDIC are all going the wrong way.

I spoke earlier of the Government's failure with the Canada Development Corporation. One of the reasons for that failure was the broad and vague mandate given to the corporation under Section 6 of the Canada Development Corporation Act. Apparently having learned nothing from that experience, the Government is asking us to repeat the same folly through Bill C-25.

My colleagues and I in the Progressive Conservative Party believe that one of the solutions to the Crown corporation problem is a more clear and precise definition of the mandates and objectives of Crown corporations. Bill C-25 violates that very basic and fundamental principle.

The first principle in coming to grips with Crown corporations is disclosure. The Government has made much of the standards of public disclosure that the CDIC will have to submit. If the business plans and financial statements submitted thus far by the CDIC are an example of these new high standards of public disclosure, we want no part of it. If the Government will continue simply to wipe out important portions of the plans and budgets, as Bill C-25 would let it do, we want no part of it. Parliament and the people of Canada have a right to know. The public's right to know would be seriously eroded under Bill C-25.

Let me refer to Clause 41(4) of the Bill. It reads:

Sections 24 to 26 of the Statutory Instruments Act do not apply-

-in respect of directives and certain orders made under C-25. What are Sections 24 to 26? Section 24 provides access for the public to such statutory instruments. Section 25 allows the public, for a fee, to copy and take away copies of these orders and directives. Section 26 provides for permanent reference of these directives and orders to the appropriate standing committee of the House of Commons or Senate.

In one contemptuous swoop, the Government wipes out a large portion of Parliament's and the public's ability to know where the taxpayers' money is being spent by CDIC. Yet the Government has the temerity to say that CDIC will be subject to a new and rigorous regime of public disclosure. What unmitigated gall! What contempt for the intelligence of Members of Parliament! The Government's only concern is money, money, money.

According to Clause 26 of Bill C-25, the CDIC would be able to borrow up to $3 billion. That is roughly one-tenth of the Government's yearly deficit. It is $3 billion that the CDIC could raise as a direct charge against the Consolidated Revenue Fund and with no need for any further approval whatsoever from Parliament. It boggles the mind.

As if that were not enough, Bill C-25 would allow the Government to raise that debt ceiling to infinity by a $1 item in the Appropriations Act. I point out that this provision is a

May 28, 1984

Development Investment Corporations Act

clever but transparent way to circumvent the Speaker's ruling of June 12, 1981 on matters such as this.

The Minister responsible for the CDIC issued a press release that makes much of the control Parliament is to have over any future acquisitions by CDIC. But where in Bill C-25 is that control provided for? Clause 34 provides for control by the Cabinet by secret Order in Council, but I see no control by Parliament. It is simply not there. The Government has conveniently forgotten it.

My final point refers to the relationship between Bill C-25 which is before us today and Bill C-24, the Government's Crown corporations bill, tabled on March 15. When the Government presented Bill C-24, there was much fanfare about how it would resolve the problems of control, direction and accountability of Crown corporations. This was to have been the solution to the problem. After nearly 14 years of study, Bill C-24 had finally found a solution.

If Bill C-24 is so great and will do everything the Government says that it is supposed to do, why does it not apply to the CDIC? The CDIC is a Crown corporation, is it not? If it is good enough for Air Canada, for the CNR or Petro-Canada, if Bill C-24 is good enough to put them under a regime of accountability, why is it not good enough for the CDIC?

According to Bill C-24, the chief executive officers of Crown corporations would be appointed by Cabinet. Under bill C-25, the chief executive officer of CDIC would be appointed by the board of directors.

Under bill C-24, the chairman of Crown corporations would be appointed by Cabinet. Under Bill C-25, the chairman of the CDIC would be elected by the board of directors. Bill C-24, in Clause 98, says that it is to apply in the event of any inconsistency between it and other acts of Parliament. In the case of CDIC, which applies? Which route is the Government asking Parliament to approve?

Second, Bill C-24 was supposed to be the framework for all Crown corporations. Yet there are at least half a dozen provisions within Bill C-25 that would exempt the CDIC, or allow the Cabinet to exempt the CDIC, from Bill C-24. Bill C-24 and Bill C-25 were drafted at about the same time, probably drafted by the same person, reviewed and approved by Cabinet at the same time and brought before the House at roughly the same time. Why the differences? Why the inconsistencies? Has the Government not made up its mind?

Is the Government trying to play both sides of the street? Have the Minister and CDIC management made a special deal with the Prime Minister (Mr. Trudeau)? What is going on here? How can the Government expect Parliament to treat these two Bills seriously when it is obvious that the Government does not know which way it is going? Since Cabinet solidarity on the Crown corporation issue is so obviously fragmented, one of the Ministers, either the one responsible for Bill C-24 or the one responsible for Bill C-25, should resign because they differ substantially as to the regime that should exist.

In closing, Mr. Speaker, I would like to say that we on this side have no confidence or expectation that the CDIC will be anything other than another unmitigated disaster. Contrary to the recommendations of the Public Accounts Committee on Canadair, the CDIC will downgrade the boards and managements of the individual corporations. The chief executive officers will be treated as divisional vice-presidents. Does the Government think this will foster accountability? Hardly, Mr. Speaker.

The CDIC is defended on the grounds that it will resolve the problems these "commercial" corporations have had in dealing with Government. Has anyone stopped to ask why the Government need be involved in commercial enterprises? The CDIC is supposed to make up for a range of structural deficiencies in the Government. Why do we not fix those structural deficiencies rather than creating another bureaucratic layer? Why do we not cure the disease rather than the symptoms?

One day the 19 member board at CDIC-yes, 19 members, Mr. Speaker-that 19-member collection of Liberal financiers, door knockers and campaigners, will oversee issues and events relating to international telecommunications; the next day it will be uranium mining and refining; the next day the airframe industry; the next the fishing industry; the next the farm implements business; and on and on. You cannot expect anything more than another series of disasters a la Canadair and de Havilland. By putting this Bill before the people of Canada, we are asking for more intervention and more throwing good money after bad.

When I addressed the House on Bill C-24 I found the proper place for the Government to put that piece of legislation. If the bin is not too cramped with other useless pieces of bogus Bills, the Government can add Bill C-25 to the pile. And so, Mr. Speaker, we intend to resist this Bill with all of the strength and energy we can summon.

Mr. Ian Waddell (Vancouver-Kingsway):

Mr. Speaker, when I was listening to the Hon. Member for Calgary South (Mr. Thomson) I was thinking about Sir John A. Macdonald.

I am a great admirer of Sir John. I was born in Scotland and like Sir John came to Canada at age five and became a barrister. But there the comparisons end. He, of course, was a Conservative and I am a New Democrat.

Mr. Stevens:

You are a socialist.

Mr. Waddell:

If Sir John had heard the speech given by the Hon. Member for Calgary South, I think he would spin in his grave. I think Sir John and that kind of Conservative realizes that there is a mixed economy in Canada and there is a kind of a role between government and business in its own peculiar Canadian way. I agree with some of the criticisms made by the Hon. Member for Calgary South about this Bill, but for him government is like a disease. It seems to me there is a much more positive way of approaching the criticism of this Bill which would serve the public good in the end much better than this kind of negative and quite reactionary approach.

May 28, 1984