The Acting Speaker (Mr. Paproski):

The Hon. Member for Cape Breton-The Sydneys (Mr. MacLellan) had the floor.

Mr. Russell MacLellan (Cape Breton-The Sydneys):

Mr. Speaker, when we adjourned yesterday I was speaking about the retrogressive policies that will be undertaken by Air Canada when or if this privatization takes place. The major losers of these retrogressive steps will be the Canadian public, and they are not being taken into consideration. Yesterday I was mentioning that what was likely to happen is that there will be one central reservations area in this country. This is what Air Canada has done in the United States. It has provided one reservation area and if one calls for a reservation or information, the call goes to one city in the United States. That is possible in Canada with the technology that is in place at the present time. There is no reason, technologically speaking, that this cannot be done. This is what the Government and the management of Air Canada are saying can be done.

What is not being considered are the feelings of the people of Canada having to call to a special telephone line, for example, to some person in Toronto that perhaps has never been to the area in which the caller lives, or experienced the difficulties that the caller has experienced in arranging flights from that area, or the weather conditions. These are things that were not conceivable a few years ago, but now with privatization on top of deregulation, not only is it conceivable, but it is very possible.

In the one day of committee hearings held we asked what questions we could within that one day time frame. We asked the management of Air Canada about maintenance and contracting out maintenance and flight attendants' times. The management said: "No, that was not going to be done". But what we heard from the unions that appeared before the committee was totally different. The unions stated that contracting out has very definitely been considered and discussed by the management of Air Canada. They said that they have openly considered the possibility on their flight from London to Singapore through Bombay of actually contracting out flight attendants in the portion between Bombay and Singapore, and that that is now being actively considered.

What about maintenance? Maintenance has been at a high standard in this country. We have always boarded our airplanes in Canada and felt that they were maintained as well as any airplanes in the world could be maintained. Now, what about contracting out of maintenance and doing maintenance outside Canada? This is something that most Canadians would not even consider being possible, but it is something that is and has been talked about.

The management of Air Canada has stated that it is not considering that, but in a statement before the committee by the National Automobile, Aerospace and Agricultural Implement Workers Union of Canada they stated: "More recently, in an issue of Air Canada's in-flight magazine, EnRoute, Mr. Jeanniot sang the praises of contracting-out

Air Canada

work to other countries". They went on to state: "What is hailed by the company as global generosity is a mean-spirited attempt to find cheap labour. When a government does nothing to prevent the possibility of such business practices, it gives its consent." I think that says it as well as anyone can say it.

Obviously the Government knows that contracting out is being considered, and the Government is going along with the practices that Air Canada will be undertaking if privatization takes place. That is not only a mean-spirited attitude on the part of the Government, but it is an irresponsible attitude.

In committee we heard from the executive of Air Canada that employees of Air Canada will share in the largess that will occur as a result of privatization of this Crown corporation, and they will be able to buy shares. Nothing was said about whether some employees of Air Canada can afford more shares than other lower paid employees. Nothing was indicated about whether employees with more seniority would be offered the shares at a reduced price. There were questions along those lines, but no assurances were given.

What happens if the employees of Air Canada are successful in being able to buy the shares of Air Canada? The Government will have us believe that this would give the employees a voice in the operation of the airline. That path has been trodden many times, particularly in the United States with airlines that were in difficulty. Employees were told that the company could not afford to pay the salaries that they were asking for, and were even telling employees that they would have to take a cut in salary, but in exchange the company was going to give the employees shares in the airline. The employees were not pleased about this and did not want their salaries reduced, but the shares in the airline would at least give them an opportunity to have some say in what the airline would be doing. Well, it meant absolutely nothing. The employees had such a small number of shares that they were insignificant in comparison to the number of shares held by the rest of the private sector that the employees were not even contemplated. When their actual in depth knowledge and experience in the airline was brought up, it was not listened to. All that was considered was the bottom line. That is exactly what the situation will be with respect to Air Canada.

Mr. Speaker, Canada is a very large country. We need a service such as Air Canada currently provides, because it is a public company and only a public company can provide such a service in a country as large as Canada.

If there is no public company to provide this service, the citizens of Canada will feel the difference, because the service will be completely different. The service will be less regular, with fewer flights, less comfort and fewer in-flight services.

There is no doubt that this will happen. That is because if Air Canada is not a public company, there is no need for a service of that sort because that service costs money. It is

July 14, 1988

Air Canada

expensive! But if it is possible to provide the same service at a lower cost than Air Canada does now, Air Canada will cut its expenditures. When Air Canada cuts its expenditures, other airlines-Air Canada's competitors-will do likewise. This will not result in good service for Canadians.

[DOT] (U30)

Mr. Speaker, Air Canada has been a Crown corporation in this country for 51 years. Fifty-one years. We have a company on which all Canadians can rely. We are going to destroy it because the Government finds this offensive to its political ideology. Air Canada has not received a government subsidy in 25 years.

It is interesting to hear that one of the Conservative Members complaining is from the Northwest Territories. If anybody in Canada should know the importance of the servicing of our regions, it would be that Hon. Member. We are not going to help the employees if we privatize the airline, because whether the employees gain shares or not is insignificant. They are not going to be heard. In addition, the employees already have shares in Air Canada, as does the public of Canada right now.

Why the erratic behaviour on the part of the Government in not really coming clean and telling us why it wants this privatization? Why has the Government denied the public of Canada the right to be heard to the extent that they should have been heard? We had one day of hearings-and that was on June 22-yet a couple of weeks went by before we actually got to report stage. We could have heard many more Canadians, many more groups, without delaying this Bill one day. In fact, in testimony before the committee, the member of the Canadian Labour Congress said that when she called to find out why there was not more time allowed for witnesses, she was told that this Bill had to be passed by June 30. We knew, when she made the call, that the House was going to be sitting in the month of July. They could not use the excuse that the House was going to be closing. This is the irresponsible, clandestine, derogatory nature and atmosphere in which this Government has forced the Canadian public to consider the privatization of this very valuable asset.

Yesterday I mentioned that there will be a reduction of flights, that more communities will cease to be serviced by Air Canada. What Air Canada and the other major airlines would like is to just fly between and among the large centres of this country, the metropolises of this country, where the big volumes are. They do not want to go to Sydney, Nova Scotia, to St. John's, Newfoundland or Charlottetown, Prince Edward Island, or areas like that. They may have a token presence in Halifax, but that would be all that they really would have.

We will have to serve the feeder aircraft with people coming out of hospitals having to stand and wait until each airline gets its engine started and backs away. The major airlines want to reduce service in Canada, to reduce the number of cities and

centres in this country between which they have to fly and, of course, to broaden their international activity. That is something they really want to do.

They are going to be competing against other international airlines. They feel that Canadians should be proud. This is something that is supposed to fulfil and gratify Canadians, that their former national airline is going to be playing with the big boys internationally. How can a Canadian feel proud when that same Canadian is being rejected by their own Crown corporation? The service in Canada is going to be diminished. Why should we feel proud about increasing foreign flights when our own service in Canada is being diminished? We are not going to have the same service, and Air Canada does not deny that.

I referred yesterday to Great Britain, which privatized British Airways, and then British Airways proceeded to purchase British Caledonian. There is now only one airline in Britain. It is one thing to deregulate because you are going to lose services. It is even worse if you add privatization to deregulation. Then you have Air Canada not forced to keep a certain standard, and the standard of all of the airlines is going to suffer.

If you only have one airline in Canada, it is open season on the Canadian public, not to mention the employees of Air Canada. When British Airways was getting ready for privatization, they laid off 23,000 employees. What is the value? How will the value of Air Canada be determined? We are going into the privatization for two reasons: first to satisfy the ideology of this Government; second, to provide a down payment for new planes.

How is the value of Air Canada going to be determined? We have not been told that. We have not been told how the value of this very valuable national resource is going to be determined. Are we are giving up carte blanche in this House of Commons to an underwriting syndicate decision-making on the value of Air Canada? We are giving up, without any parliamentary review, to an underwriting syndicate the right to determine the value of Air Canada. That is incredible, particularly in view of the changes that were made in 1984 to the Financial Administration Act.

Under the Financial Administration Act, Parliament should be provided the opportunity to review that very vital aspect of a privatization of our national airline. We are not being given any consideration on that. Not only that, but both the Government and Air Canada have hired separate advisers on how they are going to handle the privatization. It is difficult to arrive at a fair price. It seems that the Government and Air Canada have no idea as to how they are going to arrive at that fair price. The people who are continually going to be left in the dark and in the lurch are the public of Canada.

What consideration should the people of Canada be given? One thing that should not be happening is the public of Canada being treated with indifference in the attempt by this Government to privatize Air Canada with obscene haste. That

July 14, 1988

is exactly what is happening. The Government does not want public scrutiny of this privatization. That is the reason why it is pushing the Bill through so quickly. That is the reason why it only allowed one day of hearings, without opportunity for the people in the regions to be heard. Air Canada has not only been a service; it has been a builder of Canada. It has had a binding effect and it has been a source of bilingualism in Canada. It has been in existence for 51 years.

It was a reason and a force for bilingualism in Canada. Now bilingualism is no different from any other subject, and it is not very important to this Government.

It is incredible! But thinking about public issues, about the needs of the public, about the future of bilingualism, is not very important to this Government.

The privatization of Air Canada is giving us a tremendous insight into this Government. Along that same vein, the Government does not want Air Canada to be a window on the commercial airline practices of this country. The Government says it knows what is going on in the airline industry because it has a Crown corporation that is a player. The Government says: "Let's get rid of it and turn it over to the private sector. The people of Canada have no reason to know about what is going on in the airline industry in Canada or internationally."

What about prices, Mr. Speaker? We have been told by the Government that prices will go down with privatization. We were told that airline fares would go down with deregulation. Prices are not going down in the United States. They are going down on some select sexy routes people may want to take for winter vacations or routes between certain large cities. You see the rates advertised in the various newspapers and magazines. But if you ask people in the smaller towns and smaller cities, they tell you prices are going up because there is no regulation on what airlines can do or charge. If one company raises prices, you will certainly not get a reduction in price by another airline, Mr. Speaker. You will most probably get an increase and maybe competing airlines will hold on to the prices they had before. When one airline increases its prices, they all increase their prices. That is the way things have worked. We saw that happen at the gasoline pumps and with drug prices. There is no reason to think that this sort of thing will not happen with airline fares.

I would like to speak about some of the witnesses who came before our committee, particularly the unions who I thought gave excellent testimony. They were very sincere and pointed out an awful lot about the inside workings of Air Canada and the airline industry about which the people of Canada have a right to know. I am referring to the International Association of Machinists and Aerospace Workers who complained, as did all unions, about the way the Government was rushing this Bill through committee without adequate debate and the hearing

Air Canada

of sufficient witnesses. That was a position taken by all unions which appeared before the committee. With respect to the Canadian Union of Public Employees, CUPE, it said;

New owners can contract out the work to foreign nationals possibly creating a lay-off situation. Air Canada threatened this in 1985 but backed off under political pressure. Once privatized, they will try again.

That is the word before a committee of a very important and significant union in this country which obviously knows what Air Canada tried to do in 1985. Although we were told that contracting out is not being contemplated, the union knows that contracting out was contemplated. CUPE is concerned not only about jobs but the level of service.

Air Canada wants more international routes-

Mr. Johnson:

Mr. Speaker, I rise on a point of order. At this time I would like to give the Hon. Member for Cape Breton- The Sydneys (Mr. MacLellan) an opportunity to make a correction to something he said in his speech. I heard the Hon. Member say that he had questioned as many people as possible during the committee hearing. I was a member of the committee and I am sure the Hon. Member will recall that when the Air Canada Employees Ownership Committee appeared before us the Hon. Member refused to question its witnesses. That is on the record of the committee.

The Acting Speaker (Mr. Paproski):

That is not a point of order.

Mr. Orlikow:

On the same point of order, Mr. Speaker.

The Acting Speaker (Mr. Paproski):

If the Hon. Member for Winnipeg North is going to elaborate on the same statement, it will not be a point of order either. It is debate. But I will listen to the Hon. Member for Winnipeg North.

Mr. Orlikow:

Mr. Speaker, as you have already pointed out the Member's intervention was not a point of order. The Member will remember that I did question that so-called committee and it had very few answers about its membership, its constitution-

Mr. Johnson:

Mr. Speaker, I made reference only to the Hon. Member for Cape Breton-The Sydneys.

The Acting Speaker (Mr. Paproski):

The Hon. Member for Cape Breton-The Sydneys has the floor.

Mr. MacLellan:

Mr. Speaker, I do not recall having said what has been attributed to me by the Hon. Member for Bonavista-Trinity-Conception (Mr. Johnson) because we could not have possibly questioned all the witnesses, so few came before the committee on that one day that we were allowed to hear witnesses. I will certainly mention the group to which the Hon. Member referred. I have not left that out by any means. I am coming to that and I will be doing it very shortly.

Mr. Orlikow:

A group of phoneys.

July 14, 1988

Air Canada

Mr. MacLellan:

I want to refer now to the National Automobile, Aerospace and Agricultural Implement Workers Union of Canada, the CAW. I have referred to its statement about contracting out. In the statement other good points were made which I think bear mentioning. These people reminded the committee that at least three criteria were identified by the former Minister of State for Privatization, now the Minister of Employment and Immigration (Mrs. McDougall), as prerequisites for a Crown corporation to be turned over to the private sector.

The first of these criteria is that the Crown corporation in question no longer serves a public policy purpose. Air Canada certainly continues to serve a public policy purpose. It is serving the needs of the public of Canada. Air Canada is serving the Canadian public and is looking after the interests of Canadians with respect to the expected level of maintenance as well as competition. If we do not have that public policy purpose, then, of course, it is the Government that is throwing away the public policy purpose. Certainly one is there if the Government is to recognize its responsibility.

The second criteria governing the sale of Crown corporations is that the corporation adds to the national debt. Air Canada does not add to the national debt. Air Canada has not been granted any funding for a great many years. Since 1973, I think, there have been only two years when Air Canada had a deficit. But the Government will ignore that. In 1986, Air Canada reported a profit of $40.4 million. In 1987, Air Canada reported a $45.7 million profit, a 13 per cent increase over the profit in 1986.

The third criteria stated by the previous Minister of State for Privatization for a change from public to private status is that the Crown corporation is unable to compete effectively. Air Canada has shown that it is perfectly able to compete effectively. The Government sets out these three criteria and has proceeded to ignore them. How many times have we seen that happen not only with respect to Air Canada but with respect to so many other things? The Government tries to set out policy, then does not like the results of the policy it set out and proceeds to ignore it. Perhaps it is because the Government has become bored trying to act in the public's interest or because it offends some of the vested interests to which this Government tries so hard to be nice.

In the same brief it is quoted by the CAW that:

Air Canada workers in Atlantic Canada, Quebec, northern Ontario,

Saskatchewan and British Columbia can look forward to a choice between

leaving their homes and communities or accepting a $6 an hour job with a

commuter carrier or being out of a job altogether.

That is a sad commentary if that is what is going on in this country. We were assured that that is exactly what is going on in this country today.

The major airlines are dropping services to many communities and some of these services are being picked up by feeder

airlines which pay their employees considerably less than the major airlines. The alternative is that service is not being provided at all.

We were told something very interesting by the executive of Air Canada. We were told that there was no surplus in the Air Canada pension plan. Yet, the presentation made to us by the CAW states:

As of December 31, 1987, according to the company's annual report, the Air

Canada pension fund had a market value of $2.35 billion (this was after the

October 1987 stock market crash), compared to liabilities of $1.87 billion, for

a surplus of $485 million. This pension piggy bank will be a very tempting

target for a private corporation.

The company told us that there was no surplus in the pension plan. I refer this very important question to the other place when it gives consideration to this Bill, as it undoubtedly will shortly.

I want to refer to the group that the Hon. Member from Newfoundland mentioned just a few minutes ago. This is a group called the Air Canada Employee Ownership Committee.

Mr. Orlikow:

Who are they?

Mr. MacLellan:

Who are they indeed. That is probably one of the best kept secrets in Canada.

We have to take this in the context of the situation in which it occurred. We have to consider first that the Government only allowed one day for witnesses in committee, and the pilots were our first witnesses. Then all the other unions were lumped together in one group. Then as our third set of witnesses we heard two people from the private sector. The fifth group, the executives of Air Canada, followed in the evening, but the fourth group of witnesses was this group called Air Canada Employee Ownership Committee.

This is a group with no constitution, no executive, no standing before the law whatsoever-

Mr. Orlikow:

No membership list.

Mr. MacLellan:

No membership list whatsoever. It is one of the most clandestine organizations, evidently, in Canada. This group was brought in even though public consumer groups such as Transportation 2000 were denied access to the committee. This group was brought in to refute the testimony of the unions. It was the equivalent of union busting.

The Government flatly denied that the unions had the right to speak on behalf of the workers of Air Canada so it brought forward this group comprised of employees of Air Canada. The only criteria for being a member of this committee is to send in $2.

The Hon. Member from Newfoundland is correct. I refused to question this group because I refused to be a part of what the Government was trying to do. I took this as an affront. Even if the union executive did not have any members who agreed with it, the union executive still, constitutionally, has the right to speak for its membership. The Government did not

July 14, 1988

recognize that and it agreed to let the union speak only to try to overturn its testimony by having members of the government side put the same questions to this bogus group as were put to the unions in the morning.

I have no objections to the members of this committee. They are good people. I do not want to be condescending to them, but I do not-

Mr. Blenkarn:

You wouldn't even question them. You wouldn't even talk to them.

Mr. MacLellan:

That's right, because they don't have any standing. It was trumped up by the Government to override what the unions were saying.