We have to cope with the existing business, the secondary rate of growth which topples out in this case-
This is typical Ottawa "bafflegab", you will notice, Mr. Speaker.
-and the fact that we are prepared, if and when this increased ceiling is approved, to start writing some front-end risks of performance bonds, frivolous call and cross liabilities, which the companies have been crying for for some time.
Who can understand what he is saying?
We anticipate that on these two counts the new ceiling we put forward will carry us, we hope, through the end of 1978.
So last year at the committee meeting, when the president was asked whether this would keep them going, he said "through the end of 1978". Now we have the minister, acting like a cry-baby in the financial pages of the financial press in North America, bawling, crying and moaning that if it is not put through, they will stop operating some time in 1978.
They better get their act together. Either the president of the corporation knew what he was saying in May of 1977 and the minister does not know what he is saying now-that is my preferred solution to the problem-or else the president in 1977 did not know what he was saying and the minister does know now. That is so unlikely as to make it beyond belief. We know the minister does not know what he is saying. He has not said a sensible thing since he became minister. A more puerile performance by a minister of this government has not yet been seen.
The president of the corporation then went on to say:
That is, it will give us ample time to come back to parliament when we hope to have a major revision of the statute on the lending side.
This is certainly a major revision; it is in the billions of dollars. It raises the authorized capital from $400 million to $1 billion. It raises the number of shares from four million to ten million. It raises the ceiling for all contingent liabilities from $2.5 billion to $10 billion. We are talking about billions of dollars, Mr. Speaker. This crowd has gone wild with power! They have come to this parliament and they ask to be given extra authority to raise the amount from $2.5 billion to $10 billion, and we do not even have a chance to scrutinize properly what this corporation is doing.
I went to a meeting of the public accounts committee where this corporation came before it. It was sickening to see a corporation that is able to lash out guarantees in the hundreds of millions in loans and credit-in excess of $1 billion-and we in that committee unable to really dig in and get any information. Grown men and women were given ten minutes to ask questions while the "bafflegabbers" you asked the questions of took up nine minutes of "bafflegabbing" in response to the questions you asked. That is the only scrutiny that this parliament has had as respresentatives elected to represent the Canadian people over this Crown corporation, and we are now asked to go on and give them the ability to make $10 billion in contingent liabilities, up from $2.5 billion, and to raise the ceiling for all contingent liabilities re the government account to $3.5 billion from $1 billion. Not on your life, Mr. Speaker!
April 24, 1978
We would be derelict in our duty were we to rush this through as the Minister of Industry, Trade and Commerce wants.
We want an accounting, we want this corporation before a committee of this House and we want them put under a grilling, a real grilling. We want to see what they are doing. We want to see what they are up to. That is what we want to see, Mr. Speaker. We are not just going to walk this through because the Minister of Industry, Trade and Commerce thinks this is an election year and we are going to fall over and play dead while he raises to industry and business the spectre that before the end of the year the corporation may run out of credit facilities. It is not going to run out of credit facilities. It is going to run out of credit with us unless it comes before a committee of this House and lets us get right into the meat and potatoes of that corporation and see what it is up to and what they are doing.
Now, Mr. Speaker, just look at the provision for loan losses this outfit has that is dealing in the hundreds of millions and even billions of dollars. What have they got there for loan losses? This is an example of "bafflegab" gone berserk, Mr. Speaker. Their provision for loan losses you will see in their financial statement for the end of December, 1977, page 5. The provision for losses and loans receivable is $4 million; provision for claims in insurance in force is $5,026,000. These are minuscule amounts when you are dealing in the huge amounts they are dealing in. What is the answer? We are told this at page 9:
Provisions for losses are based on a review of collectibility of all outstanding loans to sovereign and commercial borrowers. In respect of this review, the corporation recognizes that the future economic and political conditions in some of the countries where the corporation has made loans are subject to varying degrees of pressures, some of which are unpredictable.
You can bet your "bafflegab", Mr. Speaker; you can bet it is unpredictable what they are going to do in some of those countries. Have you seen the list of the outfits they are lending to and the countries? There is not enough sovereignty in most of those countries to put in a glass of water.
Accordingly, delays in the repayment of principal and interest may well occur from time to time.
That is an astute prophecy!
In the case of loans made to sovereign borrowers-
Now we are going to get it right square between the old eyes. Here we were worried about our money and about the difficult conditions and delays that might well occur from time to time with the varying degrees of pressure. We were getting worried, but now we come to the punch line so we won't worry any longer, the soporific statements that put the minister to sleep. Oh, the minister loves to hear statements like this. He does not need to worry then about the EDC and their billions of credit. What is the statement? The statement is, Mr. Speaker:
In the case of loans made to sovereign borrowers, that is the governments of countries or their agencies, payment delays are not necessarily indicative of a future loss requiring a provision.
Export Development Act
Why not? Here is a sovereign that has defaulted-defalcated. They have said, "Buzz off, we can't pay you". We are not going to worry about that. Why not? It states:
Sovereign entities and their international financial obligations do not have commercial mortality-
They might not have commercial mortality, but they have got an awful lot of other mortality in the barrels of their guns, Mr. Speaker. In other words, they are going to exist whether they pay their bills or not. That is exactly what they are going to do.
Sovereign entities and their international financial obligations do not have commercial mortality, and the international system does not allow the unilateral denial of a sovereign obligation.
What bellywash! Did you ever hear the like of that, Mr. Speaker? International law does not allow sovereign entities to unilaterally deny their sovereign obligations. What a joke! All through the centuries they have done it tens of thousands of times, and the only way you can stop them is if you go in and invade, take them over and give them the iron fist.
Can't we see dear old Canada putting the iron fist to all these countries in Africa and South East Asia, not to talk about Poland? Suppose the Poles do not meet some of their obligations? Are we going to send the Canadian armed forces steaming over to Poland to show them that it is just not allowed by the international system for them to internationally spurn their obligations? What a laugh. Imagine this appearing in an official government document. It might have made the minister feel better but it does not make me feel better. I want this outfit before a committee where we can question them hour after hour, day after day and week after week until we find out what they are up to.
This is another quotation:
Furthermore, the international system provides several mechanisms and institutions through which countries facing repayment difficulties can effect remedial measures in agreement with their creditors.
Did anybody read about Indonesia a few months ago and how the whole shooting match just about went up the spout with their great company pertimax, whatever it is called, over in Indonesia which was unable to meet its obligations? All the great U.S. banks and others that have been lending all the money, and who pretend to know so much about international economic order, just about all went down with Indonesia and had to get together and kiss the old Indonesian whatnot so they would not go under. Because if they had gone under, they would have taken all of them with them. That is what is happening, Mr. Speaker. The creditor countries are afraid to collect. They cannot put any pressure on to collect because if they do the whole house of cards will come tumbling down. Then they state:
Therefore, except in the rare instance of outright repudiation or a write-off of asset value agreed to by creditors, in the opinion of management the ultimate collectibility of a sovereign obligation, and thus its asset value, is not subject to question although delays may have to be accepted.
Yes, delays-something like a thousand years. They do not want to put this in their accounts. They do not want to allow reserves for it. What is a thousand years in the life of a
April 24, 1978
Export Development Act
sovereign entity? Have you ever in your life, Mr. Speaker, had this kind of malarkey thrust before you in an official document?
Finally, if the review of the outstanding loans does not specifically indicate future loss, it is the policy of the corporation nonetheless to set aside each year some provision in consideration of the total loan portfolio.
Something like $1 for $100 million, I presume, because they certainly do not show much allowance here.
I am only giving the House this example, not because I want to denigrate the Export Development Corporation, but because I want to get them on the right track. I want to get them under the scrutiny of the people who are elected to this parliament to govern these things. Because in twenty years' time, or thirty, they will be looking back to see what we did and how we acted with this corporation that is now so proud of itself, and so boastful about itself, and which so easily gives away billion dollar credits around the world.
There is an oil refinery in Come-By-Chance, Newfoundland, that was not financed by the EDC because it is in Canada. They are not financing or helping with development anywhere in Canada in the underdeveloped areas. No, that is one of the things that is wrong. We should have a credit agency that does that. That oil refinery in Come-By-Chance was financed by the ECGD, the English export credit department of the board of trade which is the equivalent in England of the Export Development Corporation here.
I remember Mr. Smallwood saying how the ECGD had said the whole thing at Come-By-Chance was feasible and economically sound, and that is why nobody should question it. I had the temerity to question the deal; I had the effrontery to question the great wisdom of the deal at Come-By-Chance. I got jumped all over for three years, and brutalized politically, but I fought back, Mr. Speaker, and here I am ten years later and I am still going to speak my mind and expose this kind of chicanery whenever I come across it.
They went ahead and ECGD financed it, and they are holding the bag for $110 million today. That is what ECGD is doing because they are interested. And so the EDC; they are interested in financing Canadian exports and it is, very, very secondary whether the credit they are giving is sound or not. They are not concerned about how sound the credit is. They are not concerned. They want to have a big record. Mr. MacDonald wants to come before the committee and say: "We had a billion dollars; we whacked out a billion dollars last year in credits. We financed a billion dollars worth of exports."
The January/February "EDC News" states in the heading, "EDC Loans Top Billion Dollars in 1977". That is what they want, another record, not whether the $1 billion in loans is sound from a banker's point of view. They are interested in financing and their job is to finance Canadian exports and to help us export more. Therefore, Mr. Speaker, they are prepared to take risks and they are taking risks that bankers would not take.
They are going to get stung with big losses, Mr. Speaker. The losses that ECGD are suffering in Come-By-Chance, Newfoundland heralds the losses that EDC are going to have the way they are operating around the world. Mark my words. I do not know how long it is going to take, a year, five years, ten; but they are going to suffer some big, staggering losses. You can see it there now. They have got huge outfits like Inco who have gone ahead in Indonesia, and Falconbridge in other parts of the world, in nickel mines. They compete with their own nickel mines over here where they are having big problems now because of the economic conditions of the world, the demand for nickel has gone down, and so on. And these are large projects that one would normally think there would never be any trouble with. The whole thing is a shaky edifice, Mr. Speaker. We can only hope that in the next or 24 months it is not going to topple.
I have another point to make with this EDC. They had the unmitigated audacity, Mr. Speaker, the unmitigated gall as a Crown corporation-this House should take notice of this and put them in their places-to say this in their "EDC News", January/February, 1978. I turn to page 2 and I see "EDC answers MPs charges". Then they say in an article that recently appeared in a number of local newspapers:
Conservative MP William C. Scott (Victoria-Haliburton) called for the abolition of EDC and charged that it was a "threat to the future of some of (Canada's) domestic industries".
And then EDC went on to answer what they said were the hon. member's charges. He identified Mr. John Bowles, EDC's director of corporate communications, and he identified four statements that he said were particularly misleading. Then there is practically a whole page answering what they said were charges by a Conservative MP.
What is this outfit doing, having the audacity and the gall, Mr. Speaker, to interfere in our political life and to criticize what a Conservative MP had to say about them? That is the job of their political master, or their supposed master, the Minister of Industry, Trade and Commerce. How dare they take it upon themselves in their "EDC News", to attack a Conservative MP. The minister should act on this. There should be people dismissed for this. It is the minister's job. If the minister does not agree with what the MP from Victoria-Haliburton said about the EDC, it is up to the minister to respond, not the EDC.
I am surprised and shocked, Mr. Speaker. As far as I know this has not been brought up before. I have not had a chance to bring it up. We have not had them before a committee, or at least not a committee that I have been at. If this was a Liberal MP, Mr. Speaker, do you think this outfit would dare criticize a Liberal in their "EDC News"?
Topic: GOVERNMENT ORDERS
Subtopic: EXPORT DEVELOPMENT ACT