38th PARLIAMENT, 1st SESSION
EDITED HANSARD • NUMBER 128
CONTENTS
Thursday, September 29, 2005

Mr. Ed Komarnicki (Souris—Moose Mountain, CPC): Madam Speaker, it is easy for the government to say that it is sympathetic with the employees who have lost vast sums of money in their pensions, in fact everything they may have saved for the future is wiped out in a bankruptcy. I have to wonder why the government would not address that situation by sister or companion legislation to the worker protection. The worker protection is one segment of it and that segment was added, along with others, into the bankruptcy legislation and the legislation relating to pension protection could just as well have been added to it and dealt with so that this problem does not arise.

How is it that we can have $1 million short in the pension fund or better? How does that happen? How does that arise? Why is there no legislation? This problem is not new. It has existed for a number of years. It may require some tightening up of the pension legislation that would deal with things like ensuring that it is properly inspected and that there are proper audits on a quarterly or regular basis to ensure that it cannot be in a position where it is underfunded to such a significant degree.

I would say that a good start is to ensure that happens, to ensure when there is a collective bargaining agreement and that there are some additions to be made for the pension benefits of a fund that those are put in practice in a realistic manner so that the employees can bank on it or count on it and there is someone policing it. It would not have been so difficult for the government to have added some specific companion pension legislation that would really have protected the worker.

The bill that we see here that has included a segment of worker protection was born or came out of the NDP budget bill. When $100 million was assigned toward worker protection, it was a good start, but it was a government knee-jerk reaction and the bill was put together in haste in an attempt to fulfill that promise. In putting it together in haste to attempt to fulfill the promise, the most the Liberals think they will expend is $30 million to $50 million when they ought to have spent at least $100 million.

That amount is really an insignificant amount when we look at what the government has done to workers. It has taken $45 billion out of moneys that have been contributed by workers and by employers and placed it in general revenues. It was used for general expenses of the country when the moneys have come from workers and employers. Instead, the government has given them, as I said before, one-quarter of one-quarter of 1% of what it had taken and the Liberals said they had done something.

It is a meagre first step and I would expect that the government would review that part of the employer-employee legislation when the bill goes to committee. We are essentially supporting the bill because the workers need some protection and it is a good first step, but when the Liberals previously indicated that they must have balance and that they cannot put liabilities such as the pension liabilities ahead of other secured creditors, how is it that in this particular case they have placed the amount that they pretend to pay to the workers in a super priority status to the extent of $3,000 ahead of secured creditors?

We look at the Liberals' promise to the NDP to give them $100 million. When we break it down, at most it is $30 million to $50 million. Of that $30 million to $50 million, they stand to recover more of that through the super priority status that they have given to themselves.

I agree that the worker needs to have access to whatever money is available on a quick and immediate basis and, to that extent, I think it is feature that we have proposed. In fact in our subcommittee, the Conservative Party were first out of the gate to suggest that there should be a worker protection fund that is funded properly and is easily accessible by the worker to meet the immediate needs of the worker.

However, when we look at this particular case, the Liberals have said that the worker has the option, limited to the extent of $2,000 and $1,000 for disbursements, a total of $3,000, to claim from this fund, and then they must assign their interest in the assets to the Government of Canada, essentially, to pursue the particular assets of the business. The assets they are talking about are accounts receivable that have come by work in progress, inventory or cash on hand.

Eventually, those kinds of assets are not ones that will take years and years to follow. It will take some time but we will have an assurance of some collection where the government will get that back.

The Liberals are not really giving very much to us or to the worker but in its knee-jerk reaction it has probably harmed workers into the future and small business without intending to harm them because they have not looked at the big picture.

They say that our secured transaction in this country works on the basis that when people lend money they want security on their assets and if a business does go bankrupt or bad they can get those assets or that money back. Small businesses, medium sized businesses and large businesses, particularly those that are labour intensive, as our country is in a large measure, need start up funds to start a business. Any business that has 10, 50 or 100 employees, we can rest assured it will be producing a product or goods that will take it 90 to 120 days to get paid and it will build up receivables. However the company needs to start, it needs to have employees and it needs to pay them so it goes to a financial institution and asks for a line of credit.

What do we suppose the bank uses for security for the granting of a line of credit? It uses cash, accounts receivable and inventory, the very things that the government is attempting to take away as secured assets and really take away from small business in order to obtain financing.

It does not take a rocket scientist to figure out that if a small businessman goes into the bank to obtain an operating line of credit the first question the bank will ask him now under this legislation is how many employees he has or intends to have. If he says 10 employees at $3,000, that is $30,000 right off the bat that will come off his operating line of credit which is perhaps what a small business needs to stay in business or to start up in the first place. If a businessman has a business with 50 employees times $3,000, that is $150,000 on a cash operation taken without blinking an eye.

What the government has said it will do is take this burden that the workers have to face and place it on, as it says, the bank or secured creditors, but it is not really placing it on the bank or the secured creditors. It is placing it on small business because the banks will certainly protect themselves and will not lend the money. However the small businessman will not be able to start up or even operate a business. Anyone with 100 employees is talking about $300,000 taken out of operation. That is the very kind of dollars that are needed for a business to operate.

I think this particular solution is half-baked, knee-jerked at the expense of small business and the employers and in the end will hurt workers. Surely that is not what we want to achieve.

Our particular submission was, yes, we do need a worker protection fund. Workers do need to be protected but the fund needs to be exactly what it is. It does not need to distribute the burden on those involved in business. It needs to come from either an insurance fund, to which employers and employees contribute, or from general revenues to cover the problem. We need to police it so that the problem does not escalate or happen in the first place. However we do not want to create a bigger problem by half solving another problem, which is what I believe the government has done by the way it has proceeded with this particular measure.

It has been our party's position that we need to strongly look at arriving at a situation where employees can access and be covered for what they have lost. I think there is nothing more important than ensuring that those workers who have invested their energy, their time and who have already performed the labour get paid.

Many of the workers have families, mortgages, car payments and things that are required on an immediate basis. It is on a week to week or bi-weekly or at least monthly basis that they need to have those funds. They cannot go through the protracted legal process of a bankruptcy and wait months and months and sometimes years to get their cash. They need to have easy access.

We support in principle the fact that there needs to be a worker protection fund, that workers need to have easy access to it, but at the same time we do not support the fact that there is a partial super priority status that is placed on secured creditors and ahead of secured creditors, That will simply spell disaster and take many dollars out of our economic business.

In our labour intensive operations, there are companies operating with an operating line of credit. We know the percentage that goes bankrupt will need $30 million to $50 million a year, but the percentage of companies that go bankrupt are very small compared to the number of small businesses that operate across the country. In my community of Estevan, Saskatchewan very few will go bankrupt, but there are many companies. Each of those companies will pay the price for that $30 million or $50 million because they will be unable to get their operating lines of credit.

When we look at the cumulative effect, $300 million in 10 years is into the billions because of the vastness of the operations in Canada. Billions of dollars taken out of our economy from businesses that are able to operate is a travesty on account of a $30 million to $50 million investment. The government needs to rethink its position and the committee needs to look at this aspect very closely before the harm done far outweighs the benefit we are attempting to achieve.

[Translation]

Mrs. Carole Lavallée (Saint-Bruno—Saint-Hubert, BQ): Mr. Speaker, I want to thank the hon. member from the Conservative Party for his presentation. However, I would like him to explain his take on the section of bill dealing with bankruptcy related to student debt.

As you know, the Bloc Québécois has long been committed to abolishing the period of eligibility before a former student can be discharged of his or her debt through bankruptcy. We believe there is a lot of prejudice on this matter. We believe that people think it is easy to declare bankruptcy. However, everyone knows that a judge has the final say. There are others who think that students are more likely to declare bankruptcy in order to be discharged of their student debt, but there is no study to prove it.

Furthermore, they think that changing the eligibility period from 10 years to 7, as proposed in Bill C-55, is completely arbitrary. People do not understand the reason for 7 years. Why not 6, or 3, or any other number? Why not nothing at all?

I would like my colleague from the Conservative Party to share his opinion on student debt.

Mr. Ed Komarnicki: Mr. Speaker, there is no doubt that we as a country are piling debt on our young people to such a degree that it becomes an impediment to many of them who want to advance. Many of them for reasons, perhaps beyond their own control, are facing bankruptcy. It is unfortunate we have brought them to that. I have a family. I know what it costs to go to school and what it takes to obtain an education.

I am well aware of the fact that there are hardship cases. I agree with my colleague that the periods of 10 years or 7 years are arbitrary. The big issue is the hardship of ensuring that is the case, but even then, why 7 years? Why not 5 years or a shorter period? I am not opposed to seeing that period of time reduced, providing the student can show a hardship case and proper parameters are set so there is no abuse of the system.

Because we have created such a vast indebtedness and because students must rely on loans to the degree they do, we have to be careful that it does not become too easy for them to go to university, get an education and then declare bankruptcy. There must be some preconditions to how that happens. I realize that 10 years, or 7 years or 5 years is a long time. I would be in favour of reducing the period, but at the same time ensuring that the case is legitimate, is compassionate and requires intervention to the degree a bankruptcy would.

[Translation]

Mr. Gérard Asselin (Manicouagan, BQ): Mr. Speaker, this morning, the Minister of Labour and Housing explained the principle of Bill C-55. It seems as though they are merely paying lip service to this bill. They say that it will be passed and that it is a step forward. Obviously, any effort to improve working conditions, job security and the state of affairs after a bankruptcy is a step forward.

When such a bill is before the House, the Bloc Québécois can assure the government of its full cooperation so that all the necessary changes can be made in committee in order to make this a viable, useful and effective bill.

There is talk of this being a step forward, but it may be the smallest of steps. What is needed is a big step or even a leap forward. Already, Parliament is decades behind when it comes to working conditions in the event of a bankruptcy. We are talking about protecting wages, pension plans and students declaring bankruptcy.

Like the NDP, the Bloc Québécois has already assured the government of its full cooperation and willingness to improve Bill C-55 in committee.

I want to ask the Conservative member the following question. Does the Conservative Party believe that this bill is satisfactory? Does it intend to introduce improvements and amendments in committee in order to ensure that this is a viable and useful bill?

[English]

Mr. Ed Komarnicki: Mr. Speaker, there is no question that I would go on the record and say it is a good first step. In some ways we need to learn how to walk before we can run. We are headed in the right direction. My disappointment is it does not have any sister or companion legislation to deal with unfunded pensions.

My major concern, and it will require some vast consultation in committee, is to deal with the partial super priority status. We have reports throughout saying that super priority status is a bad way to go. To say that we will go with a half a super priority status is still a bad way to go.

The fundamental principles are wrong. It needs to be changed. I will be very vigorously defending and promoting a change to that aspect. It is something that will do an injustice to workers and business. More important, it will do harm to our economy, and it does not need to that. We are able to fund it without imposing it on every businessman across the country, and there are many of them. We are talking about millions of dollars. We cannot hastily say that we will approve the bill because it has some good segments. It has some bad stuff that needs to come out and we will speaking vigorously to that.