Mr. David Kilgour (Edmonton Southeast):

Mr. Speaker, as someone who at one time, and this was quite some time ago, worked for three banks, including the Bank of Montreal, perhaps I may offer my comments on this bill.

I believe I am now considered a fairly good critic, at least I hope so, of the banking industry.

Any legislation that will serve to strengthen the confidence that all Canadians have in our financial institutions is obviously something that we in the Official Opposition would like to support.

The fact of the matter is that this government has done more to sabotage that confidence than to build it. Bill C-48 is an exception, as just indicated by the member for Moncton. It adequately addresses many of the problems that the Canada Deposit Insurance Corporation has been faced with when confronting financial institutions on the verge of failure. As my colleagues from Malpeque and Moncton have just indicated, our party will support this bill.

I would like to use my brief time this evening to speak of the absurd fiasco that has haunted the path to CDIC reform. In 1985, two banks in my own province of Alberta met a tragic and inglorious fate. The Northland Bank and the Canadian Commercial Bank suddenly collapsed under the weight of too many high risk liabilities and several bad investments. I might say the

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collapse of real estate in my province was a major factor in both those banks' problems.

CDIC was on the hook for $417 million in insured deposits for those two banks alone. These were the only two financial institutions to fail, other than trust companies, since the Great Depression. That was in 1985, seven years ago. The Berlin wall has come down, the Soviet Union has dissolved, yet the government has just now woken up to the fact that the CDIC needed to have broader powers over financial institutions in trouble in order to avoid the problems, the misery and the suffering of people associated with the collapse of the CCB and the Northland Bank.

The minister responsible at the time, who is now the Secretary of State for External Affairs, was very concerned, as she ought to have been then. Unfortunately, she was not able to transform her concern into meaningful action. Perhaps her colleagues would not let her.

The renowned Justice Willard Estey, now a business person, was asked to investigate the failures. He stands today as one of the main authors of the bill before the House tonight. The problem is that it is now 1992 and the matter should have been taken care of years ago.

In December 1985, the Senate banking committee reported that the CDIC should be granted broader powers to assist financial institutions in difficulty.

In an article in The Globe and Mail published December 26, 1985, reporter Bruce Little wrote that the Senate committee: "said that the CDIC should not take over the role of primary regulator of banks and federally incorporated trust and loan companies, but should move in when institutions run into trouble". That is exactly, thankfully, what this bill attempts to do.

To use a somewhat macabre analogy, the CDIC will now be able to act as doctor in nursing a financial institution back to health, rather than as an undertaker.

Since this bill was introduced in the House last December it has been the subject of some tumultuous hearings of the House finance committee. A bill that could have been passed expeditiously, I believe with the co-operation of our party-I cannot speak for the other opposition members-was subjected to barbs from various industry groups who had not been given the opportunity to give their input on the bill in the drafting process. That was, I believe, a major error and one that demeans

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our legislative process. It was delayed, I might add, on the advice of such great consumer advocates as the Canadian Bankers' Association. This is the same Canadian Bankers' Association that wants now to reduce the maximum level of insurable deposits from $60,000 to $20,000. We know whose interests they are looking after. The people of Canada, especially small depositors who are most at risk, deserve better than that from a strong Canadian industry and the organization which speaks for it, the CBA.

I have been critical in the past of how the CDIC has dealt with certain failures only because those failures could have been prevented had this reform taken place at the right time long ago.

I would ask my colleagues to hearken back to the summer of October 22, 1985. That is when the former auditor of the Northland Bank appeared before the Senate banking committee investigating the failure of two banks.

In his testimony, Crawford Smith noted the following: "I personally think that had the public not lost confidence and begun withdrawing deposits, the bank would have survived".

This arises from the belief that the CDIC could only intervene in the operation of a financial institution if it had already failed. By virtue of its traditional role as an undertaker of financial institutions, once the CDIC appointed a curator to run the Northland Bank, it was by all accounts clinically dead.

At what cost did this occur? The CDIC was forced to compensate insured depositors to the tune of $161 million and it threw about 200 Albertans, many of them residents of Edmonton, out of work.

What other results has the outdated mandate of the CDIC wrought on our financial institutions across Canada? In 1983 the collapse of the Alberta based Fidelity Trust Company cost taxpayers $359 million to repay depositors. The 1987 rehabilitation of the North-West Trust cost the CDIC $275 million. More recently, the Standard Trust Company, the Standard Loan Company, the Bank of Credit and Commerce Canada and the Saskatchewan Trust Company will all need assistance from public sources to satisfy depositors and investors.

Central Guaranty and First City Thist are currently in dire straits. Hopefully the passage of this legislation will allow those two firms to pull out of the fire that they now find themselves in.

This bill will transform the CDIC into a body that will build confidence in financial institutions rather than take away the respirator. As most Canadians know, if there is anything that is desperately needed in Canada's economic environment, it is confidence, the more confidence the better.

Why are we on this side concerned about the sluggishness of this initiative? It is kind of like molasses flowing up a very steep hill in Alberta, in January.

If anybody has had the chance to look at the financial condition of the CDIC lately, the answer is clear. In calendar year 1990 the corporation borrowed $1.28 billion from the federal government in order to compensate depositors. Last year, in 1991, $1.9 billion was needed. CDIC debts stood at around $600 million at the end of 1991. Obviously any new action that would help the corporation aid institutions without decapitating them, without killing them, would have a positive effect on the deficit, a deficit which members know has been virtually more than doubled since this group opposite took office in 1984.

I would conclude by reminding the House that we certainly welcome this legislation on this side. But dilly-dallying around with important measures like this for years and years and years has to stop. The failures I mentioned earlier could have been prevented had the lessons of the failure of Northland and the CCB been acted upon right away with due diligence, with responsibility and with concern for the people of Canada.

Just a couple of days ago I spoke on Bill C-78 dealing with amendments to several pieces of legislation to enhance the rights of Canada's 3.3 million disabled fellow citizens. It is another bill that has been delayed, studied, toyed with and eventually watered down by a terribly discredited government. Indeed, the polls will show it is the most unpopular government in Canadian history, at least since they started taking polls, and they call the Liberal opposition obstructionist.

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Finally, I hope the government has learned a lesson from this bill. Consumer confidence in our financial institutions of all sorts is not something that any government worthy of the name should trifle with. I do not know why the government would want to treat this matter lightly either. I think we will all stand a little taller when this bill becomes the law of the land.

The Acting Speaker (Mr. DeBIois):

Is the House ready for the question?

Question.

The Acting Speaker (Mr. DeBIois):

Is it the pleasure of the House to adopt the motion?

Agreed.

On division.

The Acting Speaker (Mr. DeBIois):

Carried on division.

Hon. Pierre Blais (Minister of Consumer and Corporate Affairs and Minister of State (Agriculture)) moved

that Bill C-22, an act to amend the Bankruptcy Act and to amend the Income Tax Act in consequence thereof, be read the third time and passed.

He said: Mr. Speaker, I welcome this opportunity today to speak to Bill C-22, which proposes to reform the Bankruptcy Act. I know members opposite will agree that this bill has been a long time in coming and that our economy desperately needs this legislation.

Canada must have bankruptcy legislation that reflects the realities of 1990, not 1949. Our country needs legislation that is easy to implement, effective and less costly for taxpayers and that requires less expense and effort on the part of those who must use it as a last resort.

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Canada wants bankruptcy legislation that is fair to creditors. Above all, we must have legislation that gives companies in financial difficulty more breathing space in which to reorganize their affairs.

Bill C-22 contains a number of key objectives.

First, the bill aims to strike a better balance between the rights of various classes of creditors and the rights of creditors and debtors. It will also update the legislation to make it more effective, less costly and easier to implement on a day to day basis.

The new legislation will also make it possible for individuals and businesses to restructure and, if possible, avoid bankruptcy.

The thrust of this reform is to provide a mechanism that will safeguard businesses that have the misfortune to be in financial difficulty but are still viable. It is not, as I have said from time to time, to give artificial respiration to businesses that are clinically dead but to ensure that businesses that are viable get the help they need to keep going. Thanks to this mechanism, we will save thousands of jobs.

The bill stresses restructuring, not liquidation. These changes are something we have needed for a long time. As I said earlier, the Bankruptcy Act was passed in 1949. Members on both sides of the House are aware that today's market requires legislation that provides a greater degree of equity, effectiveness and certainty.

The new series of bankruptcy provisions we have developed considers the needs of debtors, creditors, consumers and suppliers. We succeeded in getting this bill where it is today because we consulted a great many people, because we also listened to the people we consulted, and also because we provided the flexibility and initiative that were required in this process.

I realize that members on both sides of the House are disappointed that the government rejected the proposals for wage claim protection.

I would remind those members that in the absence of consensus on how to provide wage protection, we must move forward where there is consensus. Canadian work-

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ers will indeed significantly benefit from this legislation which helps companies avoid bankruptcy altogether.

This piece of legislation is very much designed to protect Canadian jobs. It gives companies time to restructure in order to survive. Had previous Parliaments been able to pass this legislation, there is no telling how many companies might have survived this recession. There is no telling how many jobs might have been saved.

We cannot fail where Parliaments before have failed. This seventh attempt to reform Canada's bankruptcy laws must succeed. The hon. member for Glengarry- Prescott-Russell put the matter very well last May 22 when the Standing Committee on Consumer and Corporate Affairs and Government Operations tabled its report.

I would like to thank him for his intervention on that occasion when he said: "Hundreds of thousands of jobs are at stake if we do not get the new bankruptcy law. I do not want to see any more workers lose their jobs in the depths of this recession. We need to help workers immediately. I do not want to see this delayed any further, notwithstanding my great desire to have the wage earner protection plan which I certainly hope the government will introduce at the earliest opportunity".

The government shares my hon. friend's concern for a wage earner protection program. This issue will be given the highest priority when the act comes up for parliamentary review in three years.

The government also strongly agrees with my hon. colleague that now is the time to act. We do not want to see this reform delayed any further, not when thousands of jobs may be at stake.

Bill C-22 vastly improves the effectiveness and fairness of the federal Bankruptcy Act. By making provisions relating to restructuring more flexible and accessible, Bill C-22 helps safeguard jobs while providing businesses and individuals with greater leeway to turn the situation around without having to resort prematurely to bankruptcy. By providing businesses and individuals in financial difficulty with more breathing space to negotiate with their creditors, Bill C-22 helps avoid unnecessary bankruptcies and, as a result, helps to safeguard jobs. By expanding the rights of unpaid suppliers, Bill C-22 helps to counter the familiar domino effect.

By eliminating Crown priority in some cases, Bill C-22, I am sure you will agree, makes bankruptcy rules more equitable. As hon. members are aware, the new provisions are the result of intensive consultations conducted by the government and the Standing Committee on Consumer and Corporate Affairs and Government Operations.

Both the government and the standing committee consulted with industry, the unions, consumers, financial institutions, legal experts and the provinces. Mr. Speaker, this reform was not planned in a vacuum by people who never had to manage a payroll or a budget. Those with concerns about the new proposals had ample opportunity to express their views and make a very positive contribution to this final version of the bill before us this evening.

This legislation is the product of an experiment in sending a bill for pre-study by the standing committee. The government has accepted the vast majority of the committee's recommendations, from large policy issues such as the rights of farmers and fishermen as unpaid suppliers to questions of courtesy and logic such as making draft regulations available to the standing committee.

These amendments are a tribute to the manner in which all parties can work together to improve a piece of legislation that is vital to our countiy's economic health.

In line with recommendations made at the pre-study stage, we adopted the committee's suggestion to stop the clock, if I may use that analogy, for unpaid suppliers, pending implementation of reorganization measures. We adopted the eminently reasonable recommendation requiring the bankrupt consumer to engage in financial consultations as a condition for his release.

In the past, many consumers have been involved in multiple bankruptcies. Because the same consumer would occasionally be faced with another personal bankruptcy a couple of years later, it was necessary to be able to offer these people, and the system as well, the assurance that we could also help consumers find ways to reorganize so as to avoid another bankruptcy.

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In other words, we made good use of the excellent report drafted by the standing committee. We carefully considered the views expressed by various intervenors who appeared during the pre-study.

Bill C-22 reflects many years of intensive consultations with business, unions, consumers and legal experts-with all the people who deal with insolvency. Where a consensus seemed possible, a consensus was achieved; where compromise was necessary, a compromise was reached; where leadership was required, leadership was given.

The result was a set of proposals that provides a reasonable and balanced response to a host of complex problems that must be dealt with as soon as possible, in order to safeguard businesses and jobs. Let us try to succeed where other governments have failed six times over.

After waiting more than forty years, Canadians can no longer afford outdated bankruptcy legislation. Bill C-22 is a basic component of the framework put in place by this government to promote a competitive and productive economy that will provide prosperity for all Canadians.

In a few days or a few hours, it will be a year since this bill was tabled for first reading, a bill that we amended with the help of my colleagues who participated in the process, like 'the hon. member for Dartmouth, who is in the House this evening, and the hon. member for Nickel Belt, both of whom worked very hard in committee with government members. Unfortunately we could not satisfy all the requests or suggestions made to us. The art of governing is being able to go ahead with what we have a consensus on and to implement mechanisms to help businesses first thing tomorrow morning and save jobs for thousands of workers.

I almost feel like saying when we finally pass this bill, that I look forward to next time because in a few years, we will review it in a more permanent way. With the legislation we have passed since 1984, we try as much as possible to have a mechanism in the law to review it regularly so as to avoid the absolutely unacceptable situation of legislation remaining on the books for 40 or 50 years without significant amendment.

I think that the Canadian parliamentary system now allows us to do it and this ongoing review will no doubt

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give Canadians legislation, including the Bankruptcy Act, that is more dynamic and can be amended from time to time over the years.

I thank all hon. members who will pass this bill tonight.

I think it is a great day.

Mr. Ron MacDonald (Dartmouth):

Mr. Speaker, it is high time that I finally have the chance to address this bill at third reading.

It has been one year since the minister made his announcement and tabled the bill in the House. I made a mistake the other night, or I think I did, in discussing this at report stage. It has been one year almost to the day. It was on June 13 of last year after much deliberation, after years of discussion and debate, that this minister finally made the announcement that the government would be proceeding with yet another attempt to reform Canada's Bankruptcy Act.

The minister said it well, that the act we currently have and that is still the law of this country was passed by Parliament in 1949 and it has not been substantially amended since then.

It took us one year to get to this point. June 13 will be the one-year anniversary of the tabling in this House of Bill C-22. What started off with a great deal of promise a number of times hit the shoals. It landed on the rocks. We started off and figured it would be a noble adventure.

The minister was very kind in the beginning. We sat down and talked. Because of the economic situation that the country found itself in, primarily due unfortunately to this minister's government's policies, we were looking at record bankruptcies around the country. We were seeing economic decline in this nation unlike anything we had seen since the dirty thirties.

The opposition, myself included, felt that we had a fundamental responsibility. If the government was not going to listen and change its ways and abandon the economic policies that has forced so many Canadian citizens into bankruptcy, then we felt it was incumbent upon us in the opposition to co-operate wherever we could with the government. We felt we should at least try to improve the legislative infrastructure in the marketplace to catch those being forced out of the economic

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mainstream and on to the economic trash heap of bankruptcy.

The minister will recall back on June 13 when he made the announcement. I was not here. My youngest son, Stephen, was being bom that very day. So I have two reasons to remember that date. I have to thank the minister and I will do it publicly now. He sent the nicest bouquet of blue flowers. I did not think you could get blue flowers but his florist found them somewhere. He sent a bouquet of blue flowers to my wife, congratulating her on the birth of our son, Stephen.

What we did at that point in time in recognition of the difficulty Canadians were finding themselves in is the opposition parties agreed to a novel approach. We agreed to pre-study the bill.

The difficulty we have here is that when a bill comes through the House, once it gets approved in principle at second reading, everybody digs in their heels. The job of government members on committee is not necessarily to improve the legislation, it is to get the legislation through with the integrity of the government intact. If there are any major flaws, they have to find ways that the government can change them a little later.

I believe the creativity that is absolutely necessary in this House and through the legislative process to bring back to this place any integrity lost is to allow private members to participate in the formulation and betterment of legislation.

We agreed to that on this side of the House, and sure enough we did it all through the month of September. We came back early and pre-studied the bill. It was fabulous. None of the members of the committee felt bound by any party ideology or philosophy. What we said we would do is we had a fundamental responsibility to the Canadian public as parliamentarians to go through the legislation and to squeeze out of that process of pre-study the best possible amendments to the Bankruptcy Act that we could possibly arrive at.

I have spoken two or three times on this and hundreds of times in committee. I asked dozens of questions of the minister, so I am not going to go through all the provisions of the Bankruptcy Act. My comments on them

are well recorded in the Hansard both of committee and of this place.

There were a number of major parts of this bill. The bill sought to rebalance the bankruptcy legislation, the infrastructure legislation in the marketplace. It sought to go and change the regulatory environment of 1949 and to take into account the interests of the very stakeholders in a bankruptcy situation.

One of the first things obviously that the minister and the government saw that was out of whack was the fact that individuals who put their labour into a company or a business and do not get paid should be near the top. That is because those individuals had invested their labour and it is usually one of the last inputs into a company before it becomes insolvent and is forced into receivership or bankruptcy.

The minister and the government decided that rather than rebalance the bill and recognize right in the body of the Bankruptcy Act that wage earners had a right to be protected and they had a right to be up front in the process, it said: "We cannot do that because of the big financial institutions".

Sometimes I accuse the minister of being too good a friend of the big institutions, and perhaps that is unfair. But the big financial institutions in this country carry a heck of a lot of clout, not just over parliamentarians but over businesses as well. These institutions can make a decision based on one slight modification in the formula of the credit worthiness of an organization that may mean that it cannot access the lines of credit needed in order to carry on its business.

In the five or six previous attempts, I believe, to reform this bill we could never get it right because the big interest there, the financial institutions, which were usually secured creditors, if too much of their security was taken away in the legislation it would scare the life out of the business community. The financial institutions would then tell the businesses that they were not going to be able to lend them money any more and that they were not going to be able to have their revolving lines of credit. The business community would fall back and say: "My goodness, if the banks turn their backs on us we will not be able to do business". It is no different for political parties.

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The banks have clout in this country because they are large financial institutions. They wield a lot of power. Rather than face up to the bullies on the block, the big financial institutions, the government said: "No, we recognize that there should be a rebalancing of this bill. We recognize fundamentally that the workers have to be up front here, but we are not going to do it in the body of the act because the big banks are going to squeal too loudly. Therefore what we are going to do is set up a fund called the wage earner protection fund".

In and of itself it is not a bad idea. In recognition of the fact that workers had an interest in the assets of a bankrupt company and that the wages should be paid, a fund would be set up. This fund was going to pay them up to 90 per cent of the wages and vacation pay they were owed, up to a maximum of $2,000. The government wanted to ensure that there was a system in place that provided for certainty and immediacy of payment for those workers. In many cases they were only getting $4.50 an hour and every dollar they got went to feed, clothe and shelter their children. They were the two criteria that were used.

We said we would rather see it in the bill. We would rather see some super priority given to the wage earners in the body of the bill. Recognize for goodness' sakes that that is where it should be done. The rest of the interests will just have to move on down a little bit because it is not a lot of money.

The government said it could not do that, so it set up a fund. The original name of this bill before it was amended at committee was an Act to Enact the Wage Payment Claim Act and to amend the Bankruptcy Act and related statutes. I guess I could have swallowed that. I recognized where the pressures were. I was pleased that the government recognized there was a fundamental responsibility to those workers in cases of bankruptcy to get the few dollars back that they were owed.

But the government had a problem. The government's problem was that it was going to fund this by a tax. It was going to implement a new tax. This is the government that has implemented 34 new taxes since it came to power. This is the very government that has come in and shifted the tax burden away from corporations and on to the middle class. This is the very government that at 11

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per cent in the polls for goodness' sakes came in with the most unpopular tax in the western world, the GST. But this time Canadians were taxed out.

What this government was going to do was tax everybody. It was even going to tax public corporations. It was going to go to the school boards and tax school boards. Public corporations do not go bankrupt. It was going to tax hospitals. Hospitals do not go bankrupt. It was going to tax municipalities. Municipalities do not go bankrupt. It was going to tax small and medium sized businesses, businesses that do go bankrupt all too frequently because of this government's policies.

The business community came in and it said it agreed with most of this bill. When it came time to deal with the wage earner protection fund, it thought it was a great idea.

But do you know what? We do not trust this gang opposite. We do not trust governments any more when they say it is only a small little tax because we think you guys lacks integrity and we do not think you are always up front with us.

We think if you get a small little tax, to start off it is going to be 10 cents a week, and before you know it, it is going to be one of those big taxes.

They had heard throughout the GST debate about all the wonderful attributes of the GST. Do you remember it all? It was going to be revenue neutral. It was going to be transparent. You were going to be able to see it when you paid it. It was going to be single tiered. It was going to be fair. Most important, it was going to be revenue neutral.

There is nobody in the country that has an ounce of sense left in his head who would believe this government when it says it is only a small tax and it is not going to grow.

At that point the government said to every one of these businesses that came in, every organization: "We promise you that this tax will not change without coming back to Parliament". Some officials are watching this debate from various parts of the building, I hope. I can see a few here. It told them over and over again: "You do not have to worry. Trust us because this tax cannot be changed unless it goes back to Parliament".

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The committee, Tories included-I know it is hard to believe it-listened to all the debate and listened to the witnesses. After all the debate and all the witnesses, after everything was said and done, we came in with the report back in September. You know what we reported? We reported that more properly the interest of the wage earner should be in the act itself. We did not believe one word that came out of the mouths of the big financial institutions, crying in their cups at the committee that they would lose money. This was at the same time that we were in the worst recession since perhaps the 1930s. It was at the same time that the big banks were making record profits. The minister knows that. They made $3.4 billion in profits in 1991. In the middle of one of the worst recessions we have ever seen, they had the highest profits they had ever seen.

The Liberals, New Democrats, and Conservative members of Parliament sitting on that pre-study committee made a recommendation. The recommendation said: "In the event that the bankruptcy, liquidation, or receivership of an employer, claims by employees for unpaid wages, for salespersons' expenses up to a maximum of $3,000, should be given priority over the claims of all other creditors, including the Crown". This priority, however, should be subject to the right of unpaid suppliers of the employer.

Do you know what that means, Mr. Speaker? It means an idea called super priority, which means that they take the first crack at the assets. It was recommended by Conservatives and not just left wing Conservatives. We have some members over there who even my hon. colleagues would consider right wing Conservatives.

They say: "Yes, it may cause some trouble in the financial communities, but by God this is the way it has to be done". We made all kinds of other recommendations about how this bill should be changed. The government came back at second reading, accepted a lot of the other recommendations of the committee and ignored the recommendation about the wage earner protection fund.

There was a particular problem caused at this point in time: There were at least eight members of the government benches who said: "I will not support this legislation because it implements a new tax. I no longer will support my government if it introduces new taxes".

"By God, you have made me swallow the GST and I have the scars to prove it", they told the government, "but I am not going to swallow another tax. I have finally listened to my business community and I am going to do what my constituents think is right, not what my government says is right. I am not going to support a tax".

We get to committee. We had a fine time. We were still friendly then. We were still working in a vein of co-operation, and all of a sudden what happened? There was complete discord. We had the parliamentary secretary come in, and because there was a problem with the Conservative caucus the government announced to its caucus, not to me: "You don't have to worry about it. We know this tax thing is going to give you a problem because the municipalities, the universities and the schools and the hospitals, the MUSH sector, are all on your case and they are sending you petitions. What we are going to do is we are going to fund the program out of the CRF, the consolidated revenue fund".

The government was going to pay it. We did not have to worry about the tax. We thought it was rather kind of the government to do that. Its members came into the committee and had a double-headed amendment. The first part of the amendment said that it would be funded by CRF. All the Tories were saying: "Great, no tax". I was saying: "Great, no tax. The government has listened". We recognized that the government which caused this recession should pay a small premium to try to rectify some of the damage of the recession. We thought they recognized that but obviously they did not.

Upon prying into the amendment, my hon. colleague over here realizes, we found out that there was another part of the amendment. After telling all these businesses, hospitals and universities across Canada that the tax could never be raised unless it came back to Parliament, we found out that this amendment which was ostensibly going to give a year and a half without a tax also gave the Governor in Council, which is cabinet, the ability to raise the tax unilaterally without ever coming back to Parliament.

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In short, they had misled every single witness who had come into our committee, every single witness. They had misled members on the committee.

Second, upon further questioning we found out that there was no holiday for anybody. There was no freebie here. They were going to lend the money to the fund. That is all they were going to do: lend the money to the fund. At some point in the future they were going to get future employers to pay back the money for the first two years of the fund.

It was the height of hypocrisy, a sleight of hand, and dare I say, a deceit to come forward at that point in time. They destroyed the discord of the committee. We argued the point that what the government was doing was wrong. It flew in the face of the rules and regulations and precedents of this place.

Lo and behold, another miracle happened at that committee. The New Democratic Party and the Liberal Party argued that the government's amendment was out of order. I will never forget that day either. We were right, and the chairman of the committee came back and said: "I checked with the clerk and the opposition is right. You can't do this". Then the Tories did not know what to do. Do members remember that? The Tories did not know what to do. They were going to kick the chairman off the committee because he had not done what they wanted him to do.

So much for harmony, so much for co-operation, and so much for doing it the right way.

What happened then is that the government did not know what to do with the bill. That was in early December. It did not call the committee back and the bill basically got stuck in neutral. The government then ran around the Parliament Buildings trying to figure out what in the name of goodness to do next. At the same time, every day the bill was not put back into the House and every day that the government did not know what to do with the bill hundreds of Canadians were going bankrupt.

We went to the minister on a number of occasions and said: "We realize that the Minister of Finance will not give you the money to fund this fund". We put at least four different proposals as to how they could fund this particular program privately to the minister and his officials, and each and every time it was met with no response.

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Finally, a bill was brought back to the House of Commons, stripped of the entire wage earner protection program.

My hon. colleague from Nickel Belt had spent a considerable amount of time with me and the minister and members of the Conservative caucus trying to be innovative. We said the bill indicated in its title that the government recognized there was a right that wage-earners had in this and therefore how could it possibly split that part of the bill? It is done and history will judge these people opposite for doing that.

We fully support most of the aspects of the bill dealing with reorganization. We support the ability of suppliers under this act to be able to revindicate or take back their goods. I must give the minister some credit because that must have been a tough one to get by some of the lobbyists from the banks because it affects their secured position. The minister stood tough and we all win on that one.

There are some other provisions of the bill, just introduced recently in amendments, for farmers and fishermen which recognize that they are a little different. The minister and the government agreed with members of the committee from all sides and included special protection for farmers and fishermen. The Cattlemen's Association did not get everything it wanted but I guess half a loaf is better than none on this particular count.

Things have changed. This bill goes a long way in taking an outdated Bankruptcy Act, because that is all it is now it is not a wage earner protection act anymore, and rebalancing it to a great extent. It takes away the right of the big financial institutions to walk in and almost unilaterally pull the rug out from under businesses that might be experiencing some cash flow problems. Businesses are not always solvent, sometimes they are insolvent but that does not mean they are not good businesses. It may be because of fluctuation in the market, it may be because of problems with cash flow, it could be for a whole number of reasons. However, all too often the banks could quickly appoint a receiver, pull the rug out out from under the business, and the business would go belly up.

They cannot do that any more, they are going to have to give notice, I think it is 10 days, before they appoint a receiver. The individual or the corporation now, rather than saying that they cannot do anything unless they find the money to pay everybody off, are going to be able to file for protection and are going to be able, just as in the United States, to put a proposal together to reorganize

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without a gun at their heads. This means they can have an orderly repayment of their debts so that they can save jobs. When a business goes bankrupt we lose jobs and we lose productive people from the economy and the community.

This bill goes a long way toward fixing that. We support those provisions and they were equally contributed to by all parties in this House. Even after that rocky period in November, December and January we have shown that this place can still work and we have pulled it together, and the minister has been able to bring this back to the House.

However, we cannot sit here and talk about bankruptcy without really understanding what has happened in the last 12 months. I started off my speech by saying that in the last 12 months a lot has happened in my life. I have a new child who is going to be a year old on June 13. This bill has been in and out, up and down, and all over the place. All kinds of things have happened here. However one of the things that-

Mr. Blais:

Do you still want blue flowers?

Mr. MacDonald (Dartmouth):

You can send more flowers, though make them red this time.

One of the other unfortunate things that has happened is that the recession, which this government denied was a reality for so long, continued at a breakneck pace. Between June 13 of last year and June 13 of this year about 70,000 individual Canadians and Canadian businesses have been forced into bankruptcy. There have been billions of dollars in liabilities left over by those companies.

In 1991 in Nova Scotia alone there was one bankruptcy for every 305 Nova Scotians. Think about that. It means in every neighbourhood in Nova Scotia, people have either lost their jobs because of a bankruptcy, perhaps have had to file for personal bankruptcy, or somehow are affected by this outbreak, this plague of bankruptcies that is spreading through the economy.

It has to be understood when we talk about the statistics on bankruptcy they are not just sterile numbers. These are real people. They are just like me or the minister. They have families, children, parents, they contribute to their community. They have some pride, integrity, and they work hard.

People find themselves up against that big grindstone of debt because they have lost their jobs, cannot pay their mortgages, their kids cannot get into sports, and maybe they cannot even feed their families without going to a food bank. They lose their integrity, that sense of community, of being able to contribute to their family and their community.

Each and every one of these cases where somebody is forced into a bankruptcy is a personal tragedy. It is not something that just goes away the day they get their discharge. Unfortunately there is a stigma attached which is with them for the rest of their lives. They have problems with their spouses, their children, their parents, their neighbours, because the emotional anxiety they go through may never be erased.

Many times they never again contribute to the same extent they had contributed when they were productive members before the stigma of bankruptcy.

There was a new record established every month for the last 16 or 17 months. We broke records in this country; not of productivity, not of employment growth, but of a growth in bankruptcies. There was a tragedy unfolding.

Since this government's made-in-Canada recession began there has been over 130,000 Canadians, individuals, businesses, which have gone belly up. It is fine for the government to spend all their time talking about their prosperity budget, $50 million here, $25 million there. These people have been the real casualties of this government's economic policies.

There is a lot of stuff we do not like in this bill. I do not like the fact the wage earner protection fund has been done away with. There are a few provisions I would like to see changed but I have some sense of what I am supposed to be doing as a member of Parliament. I think most members of this House have.

When we look at the economic calamity taking place in every comer of this nation, when we look at an unemployment rate in the province of Newfoundland in excess of 20 per cent, when we look at over 1.5 million Canadians unemployed, when we look at over one million Canadian children living in poverty and 2.5 million Canadians on welfare, anything we can do on this side of the House to offer even a modicum of relief we will support.

June 10, 1992

The members opposite are saying, why not? We are going to support this bill but my time will be spent today not just saying what is good about the bill but also telling Canadians what could have been done and how it could have been better.

There are an awful lot of definitions of bankruptcy. Webster's ninth edition says: "Bankruptcy: One who is destitute, exhausted of valuable qualities, impoverished". The Penguin Canadian Dictionary says: "One totally lacking in specific qualities". The Gage Canadian Dictionary says: "Bankruptcy: A person who is completely lacking in something".

If we get into the etymology of the word "bankrupt" we cannot help but contrast it with the activities of this government over the last number of years. This government has proven over and over that no matter what definition of bankrupt is given, this government meets the criteria. Economically they are bankrupt. They got into power on the promise of jobs, jobs, jobs in 1984 and what we have seen is rising unemployment.

In 1988 they said to the Canadian public: "We are going to come in with a free trade deal and that deal is going to open up markets in the United States. We have to get away from countervail. We have to get access to their markets and the world is going to be rosy again because we are going to create all these jobs".

We see how many jobs have been created. By some estimates, there were over 1 million jobs lost in the Canadian economy because of free trade. The manufacturing sector in southwestern Ontario has been decimated because of this government's economic policies.

It talked about spreading prosperity around. In actual fact, if you measure regional disparities by unemployment rates and by family income, you will find out quite quickly that there is no prosperity in places like Newfoundland and there is no prosperity in places like Saskatchewan, where this government is presiding over the very death of the family farm. In Saskatchewan there are more acres of farmland that are now owned by banks that have foreclosed than are owned by individual farmers. Every day, every week, every month of every

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year this government is in power the family farm goes further on to the endangered species list in places like Saskatchewan.

This government is bankrupt of policies. This government has gone into the management of the fisheries on the east coast of Canada. Because it does not really care about the east coast of Canada, because it does not have the electoral seats there, it has decided that in a great effort to try to cleanse itself of its bad image at home, it is going to do it by being friendly to the foreigners. It has effectively mismanaged and handed over that once great resource called the northern cod stock to foreign fleets.

In Newfoundland, which has always suffered more disparity than any other region of the country because of this government's bankrupt economic policies, we have a situation quickly developing where within the next weeks we may have the Minister of Fisheries announcing that there is no more fish because he has given it all away or he has mismanaged the stock into near extinction. There will be 35,000 jobs in the province of Newfoundland that will go with it, 35,000 jobs. It is a province of 570,000 people. In terms of Montreal or Toronto, it would be like Montreal losing perhaps 120,000 to 150,000 jobs.

Newfoundland is destitute because of this government's bankrupt policies on the fisheries. This government lacks the integrity to understand that when it is at 11 or 12 per cent in the polls, it does not have the support of the Canadian public to pursue policies with the Americans, with foreigners, or with the North American free trade deal where we are now in phase one.

It is like Freddie Kruger and Nightmare on Elm Street. There was a number in the series. Well the Nightmare on Elm Street No. 1 for the Canadian public was 1984 when it elected these guys the first time.

Chapter 2 in the trilogy was when it told us it was going to have a free trade deal with the United States. Chapter 3 was the GST and NAFTA, two issues it has on its economic agenda that will ensure that the demise of the Canadian economy will continue and that the destruction of this nation will continue unabated as long as this bunch opposite is at the helm.

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This government is bankrupt of any idea of what to do with this once great nation. It has taken a nation of incredible promise, a nation that is extremely diverse but was extremely tolerant and turned it into a nation where nobody feels secure that they have any future here any more.

It has turned it into a country where anglophones are battling francophones, whites discriminating against blacks. It has turned it into a country where it has pitted region against region against region. We have race riots in Toronto and in my hometown, Dartmouth and Halifax. We have economic conditions leading young black youth to stop trusting that the system will get any better and who are taking things into their own hands.

We have had outbreaks of racism in western Canada against the Sikh community. We have had Canadians from coast to coast to coast who have lost that sense of Canadianism and have started to question whether or not there is even any hope for this country. That is only after a few years of this government's bankrupt direction.

In conclusion, I wish that we could apply this bill to the Conservative government. I talked about reorganization and meetings of creditors. I wish we could apply this bill to this government, because I think if we could the Canadian public would serve notice. They would give it its 10 day notice just like banks do when they appoint a receiver. They would appoint a receiver against this government and that receiver would be the Chief Electoral Officer of this country.

There would be a vote in this country by the shareholders, the stakeholders, Canadians from coast to coast to coast. They would come up with a reorganization plan. In that reorganization plan, the first plank would be that they would get rid of the board of directors which is the cabinet, and they would send the CEO south, and that is the Prime Minister of Canada.

Maybe if we had the opportunity to do with this government what businesses can now do when they find themselves in times of turmoil, we would have some future.

Canadians will never forgive this government for what it has done to this great nation over the last number of years. Perhaps the final and the most telling testament to

the greatness of this nation is that yes, this nation will survive even eight years of Tory mismanagement.

Finally, I want to give a quote because I think this quote suits this government perfectly. It is a statement about how I and every Canadian feels after this government has driven this economy straight into the cellar. It is a quote from, of all people, Trotsky: "You are pitiful, isolated individuals. You are the bankrupts. Your role is played out. Go where you belong from now on, into the dustbin of history".

I can assure you that the next time Canadians have an opportunity to judge this government, they will remember that quote and this government will be destined to the ash pile of history.

Mr. Phillip Edmonston (Chambly):

Mr. Speaker, I looked on with great interest as we have gone through a perilous journey with Bill C-22, the Bankruptcy Act and the insolvency act as presented by this government.

One gentleman asks if I would support this bill. Unlike my Liberal colleague, I would not support this bill. Fundamentally it is flawed, and I would not support it for the same reason I would not support the referendum. I thought that it was fundamentally flawed. Something is flawed when it does not do what it is supposed to do. 5 it does not give wage protection to workers then it is not worth being supported.

Just to respond specifically to the question on the other side, a bad bill is a bad bill is a bad bill.

Let me give a bit of history on this Bankruptcy Act and the insolvency act. It is very important. This goes back to 1949. The last time we dealt with bankruptcy in a substantial manner was 1949. As far back as 1970 there was a study committee. The report coming from the study committee said that the 1949 act essentially reflected the 1949 situation. It meant that the moneys that workers could get were expressed in 1949 dollars. We are looking at very little money.

What we are looking at here with this proposed law is a bill which is unbalanced. To give the minister his credit, as originally presented to us I believe that was a balanced bill. It did what it said it was going to do. There were the workers' protection funds and there were a number of articles dealing with reorganization to make bankruptcy more responsible and easier to go into and easier to avoid in many instances.

June 10, 1992

Something has happened, however. It changed along the way. We do not know why. We have our thoughts on it, but we know that no longer do we have the workers' protection fund. That is extremely important. The main reason we felt this bill was important for Canada and for workers was that for the first time it brought the amount of money they could get into real 1990 dollars. No longer were we dealing with 1949 dollars. We were dealing with more money than they were getting in the past.

As we look at the travelling this bill has done over the past year or so we see that the bill has been changed substantially to the effect that all it does is reorganize and leave the workers out in the cold. We are talking about workers who are affected by bankruptcy. We are talking about workers who all of a sudden find that the vacation pay they have coming and the back pay they are due will no longer be given.

I think it is important for us to come to terms with a certain number of definitions. There are three definitions we want to be sure we are aware of. First, we are looking at super priority. Now what does that mean? Super priority is what was originally intended in this bill. It is no longer there. What super priority means is that if you are a worker you go to the front of the line. You do not wait at the back of the line until the money dissipates and then when you come up you find that the banks, the government, the secured creditors and those other people got their money before you. Yes, you do have a right: You can claim as much money as you want, but it is not there.

That is what super priority means. You, as the worker, the person who is least able to assume the burden of the debt of this company, you get paid first with what is left when that company declares bankruptcy.

That super priority disappeared. It is no longer there. That was an essential or quintessential part of this bill. That is why we in the NDP said that we had better support this bill with the government because it is doing the right thing. Well, they did the right thing but not for very long.

That super priority for workers was tossed aside and the first priority was still given to banks and to secured creditors.

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How do we define secured creditors and unsecured creditors? These are two definitions. Secured creditors are those who are at the front of the line. They are there and they get paid. They are the first ones who get paid. Generally, after they have been paid, we find out that close to 70 per cent of the time there is no money left for the others.

Unsecured creditors are those who are left after secured creditors have been paid out. Among those unsecured creditors are the employees.

What we have here is a bill called Bill C-22 which originally was going to give super priority to workers. It does not do that. It continues along the line of making sure that the banks get their money.

There is something else here in this bill which is one of the most surprising things. It is that even the government has decided to allow a certain amount of its own rights to taxes and so forth to go by the wayside so there would be more money in the fund for banks and others. It has decided to forego some of its own rights so that the taxpayer, who is counting on the government to recapture its own taxes and other moneys owing, will not be paid.

Not only do you have the workers being shafted, but you have the public in general being shafted as well.

When the government dropped the idea of super priority it proposed a tax which was going to be levied on the employers. This tax, as proposed by the Conservative federal government, was to be about 10 cents per worker. This would make it approximately $61 million in order to create a fund which would be used to pay workers.

We on the NDP side said: "No, we think people are taxed enough", and the government was quite surprised. It did not expect the opposition that came from the NDP and from its own members. We felt that taxing people for this fund was not the way to go and that it should come from general revenues.

When we made this representation the government was freaked out because the NDP said, as did the backbenchers of the Conservative government, that

June 10,1992

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people have been taxed enough, between the GST and all these other taxes. We said that we were not prepared to see another tax even though the government said it would only be 10 cents a week, less than a cup of coffee.

We did not believe the government. It had misled us with the GST. It said that it would be a transparent tax, but it has not been a transparent tax. It said that it would be revenue neutral and that it would not hurt, but it has hurt an awful lot. It has not been transparent, it has not been revenue neutral and we felt that this cup of coffee might sooner or later become much more than a cup of coffee. It might be a full steak dinner.

We as a party rebelled against the tax. The hon. member for Nickel Belt and myself said that this was unacceptable, and we still maintain that. When it came to the question of levying a tax we said no.

However, we did suggest that the government take this money from the general revenue fund. The government has already taxed us and the money is available. We are talking about $61 million to do an honest deal with workers. The $61 million is there. Right now the government is talking about paying $4.3 billion for helicopters that are not needed. When we talk about money being available in government we find that when the government really wants to fund some sort of a pet project, whether it be a prosperity agenda for $18 million or advertising campaigns to convince us to vote one way or another, it can find the money when the time comes.

The government did not accept the idea of taking this money out of general revenues. It said: "If we do not get this tax, which represents $61 million from business, we are going to completely drop this protection for wages of workers". The government had already dropped the super priority idea.

When it came to the fund the government said: "If we cannot tax people anymore"-and there have been 34 tax increases since this government came to power-"if we cannot have another tax you are not going to get anything".

My colleague said that Freddie Kruger came on the scene and we found that this became a nightmare on Wellington Street. It was worse than that. If we are going to look at movies I remember Love Story, in which it was said that being in love means not having to say you are

sorry. Being Tory with this bankruptcy bill means not having to say that you are sorry or that you are wrong.

The Tories simply shifted from second to third gear and said: "No, we won't have a tax. We won't have super priority. We won't have a wage protection fund. What we'll simply do is rewrite history, change those 28 original parts of the bill that we had already agreed upon and come back with something else entirely different".

That is when we really started getting worried. At that point this bill, which seemed to be balanced and initially seemed to be fair, took on a life of its own. It became a grotesque caricature of itself and ended up not giving super priority to the worker, not to most workers. It ended up not doing what it said it would originally do, which was to provide a fund for most workers who would be needing it.

It finally ended up essentially caving in to the corporations. At the same time, the government relinquished its rights to the close to $25 million that the government could expect in receipts or in money owing to it from the bankruptcies on an annual basis.

This is difficult to take for the average consumer or the average worker who wants to believe in a government and finds out that it does not want to do the right thing. Whether you are a Conservative, a Liberal, an NDPer or what have you, you know that at the grassroots level people are hurting.

We have had thousands and thousands of people involved in bankruptcy situations who have been looking to this government to help them out. We are not talking about a benign problem where people just say: "I will take my lumps and that is it".

We are talking about a malignancy which is eating away at the fabric of trust we have in this government. What particularly irks me is that while we are talking about protecting the banks, protecting the secured creditors and making sure the bankruptcy process becomes much more logical, rational and easier in certain cases, we have left a primary person outside the protection of this law.

That is what is wrong and that is what is so indicative of this government's heartlessness. This government does not have a heart. This government cares about the bottom line, as long as the bottom line benefits or works in favour of corporations.

June 10, 1992

Our party, the NDP, originally came to support the bill because we thought it was balanced. We thought that the bill would do something for workers. Essentially the government has let us down. The government has let workers down.

It is not just myself and the NDP who are saying this. Even members on the government side have expressed their discontent with what has happened here. They have wanted to see workers better protected, and they are not. That is very obvious when we take a look at the bill.

The major weakness with this bill is when it comes time for a worker to get some protection, to get some money owing. I am not talking about charity. I am not talking about UIC. I am not talking about welfare. I am talking about money that is owed to a worker for his or her time and effort put in on the job. That worker is not in this bill.

As much as we try to get the minister to say that he has forgotten the key element he was supposed to protect, all we get back from the government side is ideology. All we get back is that this is good for the country. It is not good for the country. If the people of our country, our citizens, lose confidence in our government being able to provide for them, it is not good for the country.

At this time we are having a constitutional crisis. People are looking to the federal government to show them where it is standing up for them and protecting them with a social contract. We give up certain liberties, our taxes, and a certain amount of freedom in order get a certain amount of protection. When the other side of the contract does not come down to our level we are actually creating a disrespect, a kind of annihilation, anarchy, where people do not believe that the federal government really cares about them.

At this time when we are dealing with the Constitution and trying to keep our country together, this kind of law is working against that end.

We are going to vote against this law. We think it is bad and wrong. We will not hold our noses, close our eyes, and say the government could have done better. It did not do better. There are some small things which are wrong with this law.

The protection of workers' wages is not a small addendum. It is the principal part of any protection and it is not in there. If we do not have a law that is fair,

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equitable and applies to people who are most in need then we do not have a law that is acceptable to a political party or to members of Parliament.

As a member of Parliament who followed this bill through the committee stage, I believed in this government as far as this bill was concerned. I believed in you. I felt you were going to do a good thing. I felt you were going to do the right thing. I thought you really cared about the average Canadian worker. I was duped along with the other workers in this country. Unfortunately the only people who are going to benefit from this bill are those who need it the least, corporations and banks; not us, not the workers.

By betraying the people who believed in you, you are going to pay and that payment will come on election day.

The Acting Speaker (Mr. DeBlois):

Is the House ready for the question?

Question.

The Acting Speaker (Mr. DeBlois):

Is it the pleasure of the House to adopt the motion?

Agreed.

No.

The Acting Speaker (Mr. DeBlois):

All those in favour of the motion will please say yea.