1986-11-27

Mr. Doug Lewis (Parliamentary Secretary to Deputy Prime Minister and President of the Privy Council):: Mr. Speaker, there have been discussions among the Parties as to the order of business today. I believe you will find unanimous consent of the House for me to put a motion which would have the effect of moving the House directly to Orders of the Day.


Mr. Speaker:: The House has heard the motion and the Chair will resist all temptation to take it under advisement. Is there unanimous consent?


Some Hon. Members:: Agreed.


Philip Derek Lewis: Mr. Speaker, I move, seconded by Mr. Bouchard:
That the House do now proceed to Orders of the Day.


Mr. Speaker:: Is it the pleasure of the House to adopt the motion?


Some Hon. Members:: Agreed.


[Stage Direction]
Motion agreed to.
Philip Derek Lewis: Mr. Speaker, there have been discussions among the Parties as to the order of business today. We have agreed that Bill S-2 will be called first and dealt with in all stages by the House. Immediately thereafter, the House will proceed to completion of debate on Bill C-27.
I would ask that Bill S-2 be called at this time.



GOVERNMENT ORDERS

[Stage Direction]
CANADA-NETHERLANDS INCOME TAX CONVENTION ACT, 1986; CANADA-JAPAN INCOME TAX CONVENTION ACT, 1986; CANADA-CHINA INCOME TAX AGREEMENT ACT, 1986; CAN AD A-MALTA INCOME TAX AGREEMENT ACT, 1986

Hon. Tom Hockin (Minister of State (Finance)) moved: that Bill S-2 (from the Senate) an Act to implement conventions between Canada and the Kingdom of the Netherlands and Canada and Japan and agreements between Canada and
the People's Republic of China and Canada and the Republic of Malta for avoidance of double taxation with respect to income tax, be read the second time and, by unanimous consent, referred to Committee of the Whole.
He said: Mr. Speaker, I want to begin by thanking Hon. Members on all sides of the House for allowing us to introduce this technical, but very important Bill which must be introduced today if we are going to take advantage of the fiscal year which begins on January 1, 1987. Apparently a 30 days' notice is needed so if this Bill is passed today we will have the proper notice period.
The purpose of this Bill is to implement conventions between Canada and the Kingdom of the Netherlands, Canada and Japan and what are known as agreements, not conventions, between Canada and the People's Republic of China and the Republic of Malta for the avoidance of double taxation with respect to income tax. Before discussing the details of the Bill, and I will try to be very brief, I would like to say a few words about the whole desirability of the role of tax treaties.
Tax treaties are useful in order to promote international trade and to facilitate international investment. In particular, the existence of a tax treaty enshrining the basis as well as the rate of the applicable taxes provides a general air of tax stability which can only be reassuring to investors and traders. In short, a treaty rate of tax cannot be increased unless the treaty itself is modified or terminated. That is the heart of it. Termination is a rare event while revision is a lengthy process requiring the concurrence of two Governments. In both cases, taxpayers will normally receive advance notice of the impending changes.
Tax treaties also reduce annoyance in the operation of the tax system by eliminating the necessity of paying tax to the source country, if there is no permanent establishment in that country, and by providing a mechanism to settle problems encountered by taxpayers. More important, tax treaties eliminate or alleviate double taxation in instances in which international transactions are involved that may give rise to the same income being taxable in the hands of the same person by more than one state.
For the purpose of eliminating double taxation the tax treaties establish two categories of rules. First, in the case of a number of items of income, an exclusive right to tax is conferred on only one of the contracting states. In this way, the other contracting state is prevented from taxing and double taxation is absolutely avoided. Second, for other items of

November 27, 1986
Income Tax Agreements, 1986
income, the right to tax is not an exclusive one. These provisions confer on the state of source or situs a full or limited right of tax, and the state of residence must allow relief so as to avoid double taxation.
As we all know, the major reform of Canada's income tax legislation in 1971 required Canada to expand its network of double taxation conventions with other countries. Since that time negotiations for the conclusion of new treaties, or the revision of existing ones, have been entered into with almost 60 countries. I will be naming an additional number of them this morning.
In this Bill the four tax conventions under review follow the general pattern of the conventions previously approved by Parliament. Thus this Bill does not break the pattern but is consistent with it. The number of tax treaties in force at present is 40. The coventions with Cameroon, Guyana, Kenya, the Soviet Union and Zambia approved by Parliament in 1984, 1985 and 1986 are expected to be ratified in the near future. After their ratification the number of conventions in force will reach 45.
I would like to indicate briefly the main elements of these tax treaties. The country of which the payer is a resident can withhold tax, but the rate is generally limited to 10 per cent or 15 per cent in the case of dividends, branch tax and interest and, in the case of royalties, to 10 per cent.
Under the Canada-Netherlands Double Taxation Convention, the rate of withholding tax on dividends is reduced from 15 per cent to 10 per cent if the recipient is a company, other than a partnership, which owns directly at least 25 per cent of the capital of the company paying the dividends. Elowever, the existing convention contains a provision allowing corporations which meet a number of specific conditions to rapatriate dividends without having to pay any withholding tax. That convention will continue to apply for qualified corporations until December 31, 1988. The exemption in the Netherlands for mortgage interest received from Canada will continue to apply until June 30, 1987.
Some of the other matters also dealt with in these tax treaties include the following: capital gains, pension annuities, teachers and double taxation relief. I would be happy to go into them if it is necessary.
On balance, the terms of the tax conventions provide equitable solutions to the various problems of double taxation existing between Canada and these countries. Each of these countries hopes to implement the bilateral tax convention as soon as possible. Consequently, I commend this Bill to the most favourable consideration of the House.


Mr. Raymond Garneau (Laval-des-Rapides):: Mr. Speaker,
I analyzed the hearings held by other place and read the answers given by officials from the Department of Finance. This morning, the Minister gave us the assurance that this was
in fact a housekeeping measure similar to measures implemented under other treaties, and we shall therefore support the Bill without further debate.


Mr. Nelson A. Riis (Kamloops-Shuswap):: Mr. Speaker, we too have every intent to facilitate the rapid passage of this Bill. It is a technical Bill. The Minister has outlined it very clearly in terms of a tax treaty that Canada has with such countries as China, Japan, Malta, Netherlands, and part of the package that we have with some other countries. Before I make specific comments about the Bill before us I wish to raise the issue that the Bill has to be passed today. As the Minister has indicated, it is the eleventh hour and we have to move on this Bill.
I must say that this makes me somewhat uncomfortable, especially on a day when we will be debating again the rescue of the Bank of British Columbia. We are debating this legislation under a great deal of duress in terms of time. We have not had adequate information. I suggest to the Government that, whenever possible, rather than wait until the absolute maximum limit in regard to matters on which the House of Commons has to move, it bring these matters forward more quickly. In this way if the Opposition were interested in carrying out some examinations with regard to this particular Bill to avoid double taxation, perhaps we would have a whole number of questions. Again, we feel limited because we simply cannot pursue those inquiries. However, we have faith in the Minister of State for Finance (Mr. Hockin). We will certainly take his word today with no hesitation that this is a technical Bill, that the appropriate thought has gone into its implications by members of the other place and that it really updates previous legislation. But the principle is important, especialy if it had been another Minister, a Minister who in the past has not always been as forthright as the present Minister, a Minister who in fact on other occasions might have inadvertently misrepresented an issue. I speak of none other than the present Minister of Finance (Mr. Wilson) who, on many occasions, has told Members of the House and the people of Canada about the security and stability of certain western banks which proved to be totally and utterly incorrect comments.
We do not plan to impede the progress of this Bill. We want to co-operate as much as possible. Again, the principle of the Bill that we are debating at second reading recognizes Canada's participation in other countries in a whole variety of ways, whether it is through mortgage lending, work, investments or incomes derived from investments in foreign countries. Nationals in Canada deriving income from one source or another, working in a variety of capacities, are simply facilitated by this Bill, and encouraged by it. As Members of Parliament we want to do everything in our power to encourage Canadians who have the expertise and the interest to go abroad to carry Canadian expertise and the Canadian way of life into other countries. This Bill simply encourages that. It recognizes the contribution that Canadians are making in
November 27, 1986

other countries and the contributions that others make in Canada. It is our pleasure to co-operate and move the completion of second reading of this Bill.


The Acting Speaker (Mrs. Champagne):: Is it the pleasure of the House to adopt this motion?


Some Hon. Members:: Agreed.


[Stage Direction]
Motion agreed to, Bill read the second time and, with unanimous consent, the House went into Committee thereon, Mrs. Champagne in the Chair.
The Assistant Deputy Chairman:: Order. House in Committee of the Whole on Bill S-2, an Act to implement conventions between Canada and the Kingdom of the Netherlands and Canada and Japan and agreements between Canada and the People's Republic of China and Canada and the Republic of Malta for the avoidance of double taxation with respect to income tax.
Shall Clause 1 carry?


Some Hon. Members:: Agreed.
Clause 1 agreed to.
Clauses 2 to 24 inclusive agreed to.
Schedules I to VII inclusive agreed to.


[Stage Direction]
Title agreed to.
Bill reported.
The Acting Speaker (Mrs. Champagne):: When shall the Bill be read the third time? By leave, now?


Some Hon. Members:: Agreed.


Thomas Hockin: that Bill S-2, an Act to implement conventions between Canada and the Kingdom of the Netherlands and Canada and Japan and agreements between Canada and the People's Republic of China and Canada and the Republic of Malta for the avoidance of double taxation with respect to income tax be read the third time and passed.
Motion agreed to and Bill read the third time and passed.


BANK OF BRITISH COLUMBIA BUSINESS CONTINUATION ACT
[Stage Direction]
The House resumed from Wednesday, November 26, consideration of the motion of Mr. Hockin that Bill C-27, an Act to facilitate the continuation of the business of the Bank of
Bank of British Columbia Business Continuation Act
British Columbia, be read the second time and referred to Committee of the Whole.
Mr. Benno Friesen (Surrey-White Rock-North Delta):: Madam Speaker, I rise to speak on this Bill with some pleasure, pleasure because it is satisfying for us from the West to be able to perform a service for the western people by dealing with legislation to enable the Bank of B.C. to continue its operations. I rise also with some sadness that it is necessary to do this. It is a tragedy for the Canadian economy and particularly the western Canadian economy that it has been made necessary to deal with legislation of this kind.
I would like to remind Hon. Members that the Bill is entitled an Act to facilitate the continuation of the business of the Bank of British Columbia. This Bill is about making sure that the Bank of B.C. can continue to operate without the threat of closure. We are acting upon the request of the Board of Directors that we do this. This is a business transaction that has taken place between two banks in order to facilitate the continuing operation of one of them.
Yesterday I listened at some length to the Hon. Member for Laval-des-Rapides (Mr. Garneau). I enjoyed his intervention very much. He spoke like a banker. It was plain to see that he had been in the banking business for some time. He was at ease with the subject. It was clear that he was preoccupied with the ledgers of the banks and particularly the transfer of the $200 million from the CDIC to this particular transaction. I wish he had been equally concerned with some of the transactions in which the Big Five are engaged. I wish he had been as concerned about the millions of dollars the Bank of Montreal has had to write off in Latin America. Perhaps he could explain to us sometime how much that cost consumers of the Canadian banking industry.
The Big Five banks took risks in Latin America and now they have to write off amounts which they are asking Canadian consumers to pay. What about the Big Five's investment in Dome Petroleum to the tune of billions of dollars? They have exposed themselves so much that Dome has them where it wants them. The banks are continually rescheduling their debts so that Dome can stay afloat and they have to agree with everything for which Dome asks.
I wish the Hon. Member had been just as concerned about the activities of the Big Five as he was about the $200 million from CDIC which he keeps calling taxapayers' money. It would have been more proper for him to say that it was a part of company accounts and transfers into the CDIC made to ensure that the banking industry could remain afloat.
Why is this sale of the Bank of British Columbia to the Hongkong Bank necessary? As a non-banker, I would like to suggest that no bank the size of the Bank of British Columbia can withstand pressure from other corporations over a long period of time without getting into trouble. I would like to refer Hon. Members to a series of articles that appeared in Western Report magazine in January of this year. The first such article appeared on January 27, to be exact, and was

November 27, 1986
Bank of British Columbia Business Continuation Act
entitled "Let the T-D deny it's trying to devour the West's winning bank". In the opening paragraphs, Mr. Ted Byfield said:
A curious paragraph apepared last week in a Vancouver Sun advertisement run by the Toronto-Dominion Bank. It informed Vancouverites that the Toronto-Dominion is "a bank for British Columbians." The T-D has a quarter of a million customers in B.C., said the ad. It is "a major investor in B.C.," and while "nation-wide" in its operations it's "a British Columbia bank too."
A similar advertisement appeared in The Calgary Herald, aimed at Albertans. No such ads appeared, so far as we can tell, anywhere else in Canada. The question, of course, is why. Why this sudden regional consciousness? Why this abrupt discovery by a purely Toronto-based institution of an intense identity with the aspirations of two western provinces?
There can be only one possible answer. The only bank that operates chiefly in these two provinces is the Bank of British Columbia. The ads must therefore be aimed at the Bank of B.C. Unlike its two hapless Alberta neighbours, the Canadian Commercial and the Northland, the Bank of B.C. has achieved in the last two years an astounding success. It has written down its real estate loans to realistic levels.
It has wiped out most of its sour foreign investments (something that Toronto's Big Five have not attempted and do not like to discuss). It has secured an enormous injection of new equity capital. It has registered a $7 million profit. It has steadily expanded the number of its depositors. It has western stockholders, western directors, and western management, and it stands ready to provide alternative financing for western business when our loan applications are referred by the Big Fives' branch managers to their bosses in Toronto. So what's wrong with it? In the view of orthodox Canadian banking, one thing alone. Its headquarters are at Burrard and Pender Streets in Vancouver. To be a "sound" Canadian bank it must be located within a block of King and Bay Streets in Toronto. It must, that is, belong to The Club.
The article goes on to describe what Mr. Byfield sees as a concerted attempt on the part of the Big Five, or certainly on the part of the TD, to siphon off or drain away the customers who have been the loyal customers of the Bank of British Columbia, and therefore, weaken its position in the banking industry in western Canada. He then also invited the Toronto-Dominion Bank to reply, which it did in a subsequent issue. But Mr. Byfield goes on to say, in the February 17 issue of the Alberta report, under the headline "Just a few figures the TD mysteriously didn't notice". He makes several very important points as follows:
1.	Between June 1983 and June 1985, Alberta bank deposits increased by $599 million. That is, Albertans loaned that money to the banks. During the same period total bank loans to Albertans dropped by $1.24 billion. This can only mean that there was an outflow from Alberta of $1.84 billion over the period. Odd that the T-D didn't notice this.
2.	Similarly between June 1982 and June 1984, deposits of B.C. residents increased by $1,347 billion while total reported bank loans in B.C. declined by $769 million, resulting in a capital outflow from B.C. via the banking system of $2.116 billion. During the subsequent 12 months to June 30, 1985, deposits continued to grow faster than loans resulting in another $ 170-million outflow via the banks.
3.	In contrast, during the period from June 1981 to June 1983, bank loans in Ontario grew by $14,918 billion while bank deposits rose by a mere $2,359 billion. This reveals a $12.559-billion inflow into Ontario via the banks. This, of course, was when the Ontario-supported National Energy Program struck Alberta.
The statistics reveal another noteworthy fact. As of June 30, 1985, almost three-quarters of the $15 billion in business loans booked in Alberta fell into the category of $5 million or more, meaning of course that they would require approval in Toronto.
It goes on to deal with one other very important point. It
says:
There is one other banking statistic that the T-D has (one suspects unwittingly) divulged. It operates, it says, 122 branches in Alberta and 101 in B.C. According to the Canadian Payments Association Directory, Volume 1 for 1984 the Toronto-Dominion Bank as of December 1983, had 134 branches in Alberta and 107 in B.C. In other words during that 24-month period the T-D has closed 18 branches in Alberta and B.C., almost one every six weeks, a cutback of about 7.5 per cent.
The same directory reveals that between December 31, 1983 and December 31, 1984, the T-D reduced its national branch network by 10 (from 983 to 973), six in Alberta, four in B.C. and none in Ontario. As the Wyoming cattleman said, "When things get tough in our industry, our bank keeps on loaning money to us 'cause our bank's got nobody else to loan money to". The T-D on the other hand can find all kinds of people to loan money to, but they aren't in Alberta and B.C.
Now that, Mr. Speaker, is one of the reasons why I suspect the Bank of British Columbia has been in some difficulty. There has been a cash outflow by way of deposits from British Columbia and Alberta into central Canada into the five majors. There has been a disproportionate unwillingness to carry on a loan activity in those provinces that would become comparable to the type of investments made by the people of those two provinces in the five majors. If there is that type of siphoning off of cash from the western provinces, and an attempt on the part of the TD, and possibly the others, but certainly on the part of the TD, to get a market share that normally would have gone to the Bank of British Columbia, we can understand why there has been some pressure on the Bank of British Columbia.
I mentioned yesterday that the other possible reason is the fall-out from the National Energy Program. It would be easy to blame everything, all of our ills and woes on the National Energy Program. While much of it can be, it may be unfair to do all of it. I think we can conclude this. As I mentioned yesterday, we now know that about $60 billion flowed out of Alberta alone by way of the National Energy Program into eastern Canada, $60 billion that otherwise would have stayed there and would have been used in some other way than through the national tax scheme. That $60 billion means a lot to the western economy. Is it not possible, Mr. Speaker, that the Bank of British Columbia, in all good faith during the good years, lent $5 million, $10 million or $15 million to a small business in Alberta or British Columbia on the assumption that the economy was doing well, it would continue to do well, and that the cash flow would continue? Then, with the introduction of that Draconian tax program, bit by bit the $60 billion flowed out of the western economy.

The businesses were shocked by that siphoning off of funds from the economy and could no longer continue because of excessive taxation. They became overly exposed and had to declare bankruptcy. The Bank of British Columbia had to recognize that many of its loans were bad loans. It was not necessarily because of bad management; some of them may have been. It was because of a dramatic shift in the economy which nobody in the banking industry could have predicted.
November 27, 1986

There are just not the reserves in an institution the size of the Bank of British Columbia to withstand that kind of shock.
It is tragic that we have to deal with this legislation. It should never have happened. However, since we must do so, I am pleased the Government is in a position to help the economy of British Columbia and to help the B.C. banking industry remain solvent. The good news is that we will now have a bank in place in British Columbia which will have the security to withstand the kind of shock the Bank of British Columbia had to face and was unable to withstand. The Bank of Hongkong with its reserves will not be easily shaken by the kind of treatment the Bank of British Columbia had to endure.
There are some other advantages. B.C. is looking forward to taking part in western and Pacific Rim expansion. All of us recognize that much business is legitimately carried on through networking. The Big Five in Toronto know personally members of the corporations with whom they do business. They pick up the telephone and make agreements. It is not because they are avoiding any traditional business-like way of doing things, but because they know each other. We call it networking. That is one of the big pluses in having the Bank of Hongkong involved in a very substantial way in the banking industry in B.C. It opens up a whole new world of networking in the Pacific Rim. That is something which is possible now and was not possible hitherto. These people know each other. There is every reason to believe that people involved in the Bank of Hongkong know who are the movers and shakers in the Pacific Rim industry. They are willing to work with them. They can talk to them. That is very important in this business.
I am pleased that the federal Government is operating as a steward of our resources. At a time when we are to monitor financial institutions to make sure that they are solvent and functioning well, we can be facilitators to ensure that the industry on the West Coast can operate as it ought to. The opposition Parties are supporting us in this endeavour. I am pleased that they are, but I know that they are kind of reluctant debutantes. They would like to use this occasion to flail the Government. I am pleased they are supporting us because they know the welfare of western Canada is tied up in the welfare of a sound banking industry in British Columbia.
I return to my original statement. If the five major institutions had not been so avaricious in their dealings with Latin American countries, if they had not looked for an easy way out and over exposed themselves in Dome Petroleum, that $2 billion or $2.5 billion would have been available to Canadian consumers, particularly western Canadian consumers. They tried to negotiate a quick, slick deal with Dome Petroleum and leveraged themselves beyond all reason in the transaction. They withdrew from the small business community the millions and billions of dollars which would have been available to consumers and would have been of vital importance to the health of the business community, particularly in western Canada.
Again I return to my beginning remarks. This Bill will facilitate the operations of the Bank of B.C. so that it can
Bank of British Columbia Business Continuation Act
continue in business and can continue to contribute to a healthy western economy. In that event it will get its fair share of the market out there and provide healthy competition for the rest of the Canadian banking industry.


Nelson Andrew Riis: Madam Speaker, I listened with interest to my hon. colleague from British Columbia. I have two or three questions for him.
1 would like to know what he would do if someone offered him the following deal-we will take $200 million of Canadians' money and give it to him, but once he gets it he must use $63 million of it to buy the bank. He would probably take that deal.
Why is the Hon. Member so enthusiastic about a deal where the people of Canada are putting up $200 million and getting absolutely nothing for it in terms of equity or ownership? Why is he enthusiastic about it being given to a foreign bank which will take $63 million of it to buy the Bank of British Columbia? How is that a good deal for Canada? Could he explain?
While he is on his feet, would he also explain why we have required no guarantees that the new Bank of British Columbia (Hong Kong) keep open its branches in B.C.? After the deal is finalized, it may perhaps decide to close down most of them. Why would the Government accept a deal with no guarantees whatsoever or no ownership whatsoever on $200 million of enticement money to the Hongkong and Shanghai banking corporation?


Benno Friesen: Madam Speaker, in order to answer that question, I will draw on the wealth of experience I have had in the boardrooms of the banking industry in Canada.


Mr. Rodriguez:: Your time is up.


Benno Friesen: That is right. I will tell him why it is a good deal. It is because it is so much more attractive than the alternatives. Would the Hon. Member rather have, as the Chairman of the board said last night, a total loss, or would he rather have the bank stay in business? If he watched television last night, he heard the Chairman of the board say that it was no longer possible for the bank to stay in business. It seems to me that the $200 million was a much more attractive option than going out of business.


Nelson Andrew Riis: Guarantees.


Benno Friesen: Guarantees. Knowing that the New Democratic Party believes in institutions, structures, regulations, and so forth as a security blanket for everything to stay in place-


Nelson Andrew Riis: Tell that to the CCB.


Benno Friesen: -I can understand that it would not appreciate the dynamics of a free market competitive system. The fact is that the branches will remain open because it is good for the bank. The Bank of British Columbia intends to make money from them, and that is a good thing.

November 27, 1986
Bank of British Columbia Business Continuation Act


Raymond Garneau: Madam Speaker, I should like to ask a question of the Hon. Member for Surrey-White Rock- North Delta (Mr. Friesen). I listened to his speech. I would like the Member to explain to the House whether the difficulty of the Bank of British Columbia came from uncertainties facing depositors. In other words, were depositors withdrawing their funds because of lack of confidence in the bank after the unsuccessful bail-out of the Canadian Commercial Bank? Is it a question of confidence on the part of depositors or did the difficulty come from the quality of the assets? I would remind the Hon. Member that the Inspector General of Banks in October, 1985, after analysing the assets stated they were sound. Did the difficulty come from the deposit side of the balance sheet or from the value of the assets?


Benno Friesen: Mr. Speaker, as I said in my earlier remarks, the man talks like a banker and he is good at reading ledgers. As I said to the Hon. Member for Kamloops-Shuswap (Mr. Riis) the problem is solvency. When you are concerned about staying afloat, you are terribly concerned about why you are drowning. What you want is to be rescued. That is what we are dealing with today.


Raymond Garneau: Madam Speaker, I am very worried that government Members are reluctant to give us information. I do not disagree with the fact that the objective is to keep the regional banking system alive in western Canada. I said that in my speech yesterday, but it is the way it is done that concerns us. We are asking Canadians through CDIC to put $200 million into the equity of the Bank of Hongkong Canada, a division of the Bank of British Columbia which will be the Bank of Hongkong, without receiving any shares. The Bank of Hongkong will buy the quasi-totality of the assets and liabilities of the Bank of British Columbia for $62 million. If it is a question of uncertainties on the part of depositors, then the problem of the bank is a problem of liquidity, and there are solutions for that. If, however, the problem comes from the quality of the assets, that is another problem. Once again I want to ask the Member, who is a member of the government side and who must know the details, what is the situation about the quality of the assets? Another Member from British Columbia suggested yesterday that those assets may have to bear a $1.3 million loss. Is it true or not? I would like the Hon. Member to comment on that.


Benno Friesen: Mr. Speaker, I think the banker would realize that if all of the insured depositors had to be reimbursed through the CDIC then it would come to $1.3 million. That is not a very desirable option.


Raymond Garneau: Is it true?


Mr. Langdon:: Madam Speaker, I want to raise a question with the Member emanating from his suggestion that there is no option but to shut down the bank, and thereby obviously hurt British Columbia, or to sell it to non-Canadians, and thereby lead to further difficulties in our monetary policy
being effective in the future. Specifically, was the offer not a viable offer from the Vancouver City Savings Credit Union? That offer could have been supported at less cost than this particular bail-out and it would have kept the bank in the hands of British Columbians instead of handing it over to foreign bankers from outside the country.


Benno Friesen: Mr. Speaker, I would like to correct a couple of statements and perhaps make a point. The amount of foreign ownership in the banking industry has increased by less than 1 per cent by this transaction. It is well within the limits of the regulations of the Bank Act. I think the Member would agree with that. Certainly the Hon. Member for Kamloops- Shuswap, since he is a former financial critic, would agree with that. Second, while I think it is desirable to have as much of the banking industry owned by Canadians as possible, I do not think that we should be so xenophobic about foreigners coming into any kind of a commercial enterprise as long as it strengthens the Canadian economy. To say that it is a foreign bank-


Nelson Andrew Riis: That is correct.


Benno Friesen: Yes, of course it is correct. I do not deny that at all. But to say it is a foreign bank is distorting the major issue. We will have a sound, very strong Class A bank on the West Coast that can contribute to a Pacific Rim option which British Columbia has had a hard time developing and which it hopes to exploit in the years ahead. We think this will help. It will not do everything, but it will help.
As to the other option which the Member speaks about referring to Vancouver City, as I understand it there were several weeks of discussions with Vancity's Board of Directors. I will restate what I said earlier, we are discussing a request by the Board of Directors of the Bank of British Columbia. The Board of Directors felt that the finances involved were not adequate to satisfy the security requirements for the Bank of B.C. Therefore, it did not become a viable option because the cash reserves were not there.


The Acting Speaker (Mrs. Champagne):: Resuming debate. The Hon. Member for Kamloops-Shuswap (Mr. Riis).


Nelson Andrew Riis: Madam
Speaker, unlike the previous speaker, I am saddened to stand up this Thursday, November 27 to rescue another failing bank. I think it is fair to say, without causing any undue concern, that we have been asked as a Parliament to rescue a failed bank.
We must be perfectly clear about what led up to this emergency debate in the House of Commons rescuing the Bank of British Columbia. I remember not many months ago when the Minister of Finance (Mr. Wilson) and the then Minister of State for Finance stood in their places and indicated that we had nothing to fear because the Inspector General of Banks had evaluated the Canadian Commercial Bank and the Northland Bank in western Canada and said
November 27, 1986

they were totally sound and secure. The Governor of the Bank of Canada, Mr. Bouey, spoke out publicly for one of the very first times in Canadian history and said Canadian depositors and people doing business with the Canadian Commercial Bank and the Northland Bank had nothing to fear, that everything was sound. The Prime Minister (Mr. Mulroney) stood in his place and said we had nothing to fear, that everything was sound with the two western banks. As you well know, Madam Speaker, all of those people were wrong. The Governor of the Bank of Canada was wrong, the Inspector General of Banks was wrong, the Minister of Finance was wrong, the Minister of State for Finance was wrong, and the Prime Minister was wrong.
As a result of many, many months of inquiry into the collapse of these two western banks it turned out that there was a great deal of bungling going on. The Inspector General of Banks was pointed at and told that he did not do his job properly, and he has left his position, as he should have.
In a sense, and probably inadvertently, Members of the House of Commons and the Cabinet responsible for the Canadian banking industry misled Canadians. They were using, I guess, the best information presented to them by financial officials, the Inspector General of Banks and the Governor General of the Bank of Canada, and said everything was fine. The Inspector General of Banks, in October of 1985, sent an inspection team to review the Bank of British Columbia's loan portfolio. That review concluded that the portfolio was sound. It was a sound banking institution. All Members of Parliament from British Columbia knew for many, many months, as it was known on the streets of British Columbia and on the streets of the financial community in Canada, that that was not the case. Anyone who understands banking, anyone who understood what was going on in the British Columbia economy, knew that that was inaccurate. Yet once again we are being asked to co-operate with the Government to ensure that this rescue package is assembled in two days. Unfortunately, once again, our backs are against the wall. We have no choice but to co-operate and we do so in the best interests of the Canadian economy and financial community.
Whether they be borrowers, creditors, depositors or shareholders, the confidence western Canadians have in the ability of the Government to manage the financial affairs of Canada is abysmally low. The Government has bungled in the matter of the Canadian Commercial Bank and the Northland Bank. When that happens, confidence is eroded. When word got out on the streets of western Canada that the Bank of British Columbia was in some difficulty, there was no confidence at all that the federal Government, the Inspector General of Banks, the Bank of Canada, or the Minister of Finance could do anything about it. In fact, I suspect a lot of people in western Canada were hoping that no one, not the Prime Minister, the Minister of Finance, the Inspector General of Banks or anyone else would go to western Canada
Bank of British Columbia Business Continuation Act
because every time they did, they messed up totally. If anyone here disagrees, please indicate where those people and organizations have not messed up. Where has their involvement not made the situation worse? Now we are told to have faith because this time they have done it right. Yet we do not know what the Government has done. We do not have any details. The Government asks us to have faith, but many of us have lost faith in its ability to manage the financial community.
Two years ago the Government promised it would bring in legislation to stabilize our financial industry, but it has done nothing. Last summer the Standing Committee on Finance and Economic Affairs sat late night after night, long into the summer, giving up what is traditionally the summer recess, to advise the Government on what it thought was appropriate. Yet the Government did nothing for months and months. What we have ended up doing now is almost unbelievable.
I think it is appropriate to indicate just what the Hongkong and Shanghai banking corporation is. Based in Hong Kong, it has 1,200 offices in 55 countries around the world, employing
46,000	people. It has consolidated assets of $110 billion. In short, it is one of the world's largest financial institutions. So when the Government approached them, presumably, or they showed some interest in this small western Canadian bank-


Benno Friesen: Which Government?


Nelson Andrew Riis: -they said, "we would like to help out, but good grief, we need some help." So the Government of Canada said it would cough up $200 million of taxpayers' money. It would sugarcoat the deal to entice the bank into this rescue package. All the bank would have to do in return is pay $63 million. Can you imagine that kind of a deal? Canadians give the Hongkong Bank $200 million and the bank gives back $63 million of that to buy the Bank of British Columbia. You can bet that is a good deal for the Hongkong and Shanghai banking corporation. I suspect that in its boardroom in Hong Kong the directors are sitting around today drinking champagne and giggling because they cannot believe there is a Government that would be so silly. We have a Government that practises day and night to make up these goofy deals. Every deal so far has been just that. When you look at what we have done it is almost unbelievable.
I am a Member of Parliament from British Columbia. In my home community of Kamloops we have a Bank of British Columbia office. It does a good business and has helped an awful lot of people. As a matter of fact, my mother and father had some of their money on deposit in that bank. Yet what guarantees are there for the continuation of that bank's operations? None. If the Hongkong an Shanghai banking corporation wants to close down two-thirds of the Bank of British Columbia's branches, that is fine. If it wants to lay off all its employees in British Columbia, I guess that is okay. There are no guarantees. Nothing.
The Bank of British Columbia is a regional bank. It was set up so that western Canadians, mainly in Alberta and British

November 27, 1986
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Columbia, could have their financial decisions made in western Canada. If you were putting a deal together you did not have to go to an eastern bank. People were suspicious of eastern banks. Yet we now have two easts here, the near east and the Far East. There was some fear of the near east. We said we do not want Toronto bankers. I certainly do not think British Columbians want Hong Kong bankers making investment decisions in the province. Yet that is exactly what we have. The major decisions on the what, where, when and how on investments will now be made in a foreign country. It was bad enough when they were being made in Toronto, but now they will be made in Hong Kong.
Do members of the Government really believe that a board of directors in Hong Kong will have the best interests of British Columbians at heart when it makes its financial decisions? Of course not. When the decisions were being made in Vancouver, the people involved were concerned about their friends, their communities and their industries. They were personally involved. That is the kind of financial institution we need in Canada. We need regional institutions in this country to cater to special needs.
We have sold out once again. This is a sell-out Government. There were other people interested. In the beginning there was a great deal of negotiation with Vancouver City Savings Credit Union, one of the largest credit unions anywhere. It is very profitable and sound and does an increasing level of business each year. It indicated an interest, but I suspect it got very little consideration from the federal Government or the British Columbia Government. Mr. Vander Zalm, the Premier of British Columbia, is delighted that a foreign bank now controls the Bank of British Columbia. I cannot see how anyone can be delighted that a British Columbia bank is now foreign controlled. I do not see how that is, to use his terms, "a fantastic idea".
The Vancouver City Savings Credit Union was a cooperative. I do not suspect it got much of a hearing when it put forth various options for taking over the Bank of British Columbia and continuing to operate it throughout the province. It needed support from the federal and provincial Governments which was not forthcoming. No one was prepared to entertain those ideas.
Let us be honest. I believe that both the federal Government and the provincial Government of British Columbia believe that foreigners can do the job better. It is almost as though we welcomed foreigners to take over when we get into difficulty. When the Continental Bank got in trouble, it was rescued by Lloyd's of London, a British bank. The Morguard Bank was taken over by Security Pacific Bank of Canada, which is a subsidiary of an American-based parent. Now the Bank of British Columbia is being taken over by the Hongkong Bank. I believe that the Government actually thinks this is good business, that it is in our best interest to lose control of our own destiny. New Democrats do not believe that.


John R. Rodriguez: What happened to good old risk-taking?


Nelson Andrew Riis: Well, there was no risk-taking in this. When one is given $200 million, one only has to give out $63 million and can pocket the rest, there is little risk involved. That is a very good deal for the Hongkong and Shanghai banking corporation.
Members of Parliament have not been given the necessary information. We have once again been asked to buy a pig in a poke by supporting this emergency legislation. When background information has been provided in the past we have found most of it to be inaccurate and inadequate. We are very reluctant to be enthusiastic about what we are doing today. However, in the best interests of the security of financial markets and the like we will co-operate. I say that with a great deal of trepidation and hesitation. We certainly expect the Minister of State (Finance) (Mr. Hockin) to ask the Finance Committee to examine this matter to determine what went wrong and who, if anyone, was at fault.
The Government ought to have built guarantees into this very lucrative agreement with the Bank of Hongkong. We should have guarantees that the branches will be kept open. The Hongkong and Shanghai banking corporation could say that the 41 branches in western Canada are not making enough money, that it is in the business of international profits and it would be in its interest to close them down.
That is not why the Bank of British Columbia was started. It was created to be sensitive to the needs and concerns of western investors, depositors and business people. It was concerned about its 1,400 employees. Now that this bank is in the hands of one of the largest foreign banks in the world, we have lost the sensitivity about which British Columbians felt so strongly that they kept their deposits in the bank during the very difficult times. I am disappointed that the Government did not make more of an effort to make a deal with a Canadian institution, specifically the Vancouver City Savings Credit Union which indicated a real interest. If it had been given the same support which the foreign bank received from the Government of Canada and a bit of support from the provincial Government of British Columbia, it could have put a deal together. We could have kept the decision-making on financial matters in British Columbia in the hands of British Columbians. Decisions on investment in B.C. could be made in board rooms in British Columbia rather than being subject to intervention from a foreign country.
If the Government of Canada had operated in a prudent, professional, business-like way in the best interests of western Canadians and had understood the reality of economic conditions in western Canada at the time, the Bank of British Columbia would not have gotten into difficulty. Western Canadians would have had confidence in the office of the Inspector General of Banks, the office of the central bank, the office of the Minister of State (Finance), the office of the Minister of Finance (Mr. Wilson), and the Government. It is very sad that that confidence no longer exists.
November 27, 1986

As far as western Canadians are concerned, we have simply replaced the dominance of an eastern bank in Toronto with that of an eastern bank in Hong Kong. The only change is from near east to Far East. In the minds and imaginations of British Columbian citizens they are equally far apart. This is a sad day. Had the Government of Canada acted in a more proactive manner rather than sitting back and trying to put together a sugarcoated deal to develop the Bank of Hongkong throughout British Columbia and parts of Alberta, we could have kept this bank in Canadian hands so that investment decisions for British Columbia would be made by British Columbians rather than in the board rooms of Hong Kong.


Raymond Garneau: Madam Speaker, the Hon. Member for Kamloops-Shuswap (Mr. Riis) represents a constituency in British Columbia. Since this debate has begun, we have not been able to get much information from the government benches. Could the Member tell us whether, if the same offer as was made to the Bank of Hongkong had been made to Vancouver City Savings Credit Union, it would have been able to buy the Bank of British Columbia?


Nelson Andrew Riis: Madam Speaker, it is unfortunate that the Hon. Member has to ask this question, that we do not already have this information. That is a most reasoned question. It is unfortunate that we do not have the precise details. The best information we now have is that if the Vancouver City Savings Credit Union had been offered up to $200 million in enticement money from the Canadian Deposit Insurance Corporation and had received some support from the Province of British Columbia, the Bank of British Columbia would today be a western Canadian financial institution. We have only scanty information, but that is the best I am able to offer at this point.


John R. Rodriguez: Madam Speaker, I recognize that my hon. colleague was the finance critic for the New Democratic Party in the previous session and I would like him to explain something to me. The CDIC is putting up $200 million to the Hongkong Bank to purchase for $63 million the Bank of British Columbia. That $63 million is going to be put in trust for the Bank of British Columbia or the Hongkong Bank to pay the shareholders. Does the Hon. Member not think that the whole $200 million ought to be paid to the shareholders of the bank? Why are they only going to receive $63 million? Where is that $137 million going? To whom is it going? Why can the shareholders not receive that money?


Nelson Andrew Riis: Mr. Speaker, the response to that very important question is simply that the difference goes to the Hongkong Bank itself. That is the enticement, the encouragement, the sugar coating on this financial deal which has made it attractive to this foreign bank. I think it is important that we recognize that this is not some small financial institution. We are talking about one of the largest banks in the entire world. It has $110 billion in consolidated assets, branches in 55
Bank of British Columbia Business Continuation Act
countries and tens of thousands of employees. Is it realistic, Madam Speaker, to expect Canadian men and women, through their financial institutions and the Canadian Deposit Insurance Corporation, to use their hard earned dollars to bring in this giant to take over this small regional bank? Surely to goodness, as a bottom line, if we were going to use Canadian money in the amount of $200 million to give to this foreign bank, we should take some ownership or equity. We should not just shovel it out as a gift. Is this the free marketplace at work? Is this the invisible hand of the market-place operating? As someone said the other day, not only is the invisible hand operating but we are getting the digit finger from that invisible hand.
I simply want to say that this is a very serious situation. We have no equity and no ownership. It is just an outright enticement grant, and that is wrong. As my hon. friend, the Hon. Member for Nickel Belt (Mr. Rodriguez), pointed out through his question, the majority of the $200 million goes directly to the Bank of Hongkong, not to the shareholders of the Bank of British Columbia who are going to take an incredible beating as a result of this particular transaction.


Mr. Ravis:: Mr. Speaker, I have some questions for my western colleague, the Hon. Member for Kamloops-Shuswap (Mr. Riis). I think he understands well the kinds of difficulties we went through in western Canada as a result, particularly, of the oil industry being devastated through the national energy policy. As someone from Saskatchewan, I am very disappointed to see any regional bank in difficulty, and we have had our fair share of them.
Why is the Hon. Member for Kamloops-Shuswap saying his back is against the wall, that he has to co-operate? He lives out west, in British Columbia of all places, the home of the Bank of British Columbia. Surely to goodness, he is prepared to stand up for those people who are depositors of that bank, the shareholders and the people who are looking at the positive side of this mess, who will be able to come out with this bank intact rather than letting it slide, in which case rather than $200 million being put in from CDIC, it could very well be triple or even quadruple that amount.
My second question is with regard to confidence being eroded. I remember so well, with respect to one of our own Crown corporations, the talk about banks which are in trouble. Does the Hon. Member think that that contributed in any way to the erosion of some of the western regional banks, especially when people in the media might scare the shareholders by indicating that perhaps a bank is in trouble? I would react in exactly the same way. I would rush down the next day and withdraw my deposits.


Nelson Andrew Riis: Mr. Speaker, I appreciate receiving those questions from my colleague. Let me make it perfectly clear at the outset that we are in no way suggesting, nor is anyone suggesting, that the Bank of British Columbia should be allowed to collapse and fail as did the Canadian Commercial Bank and the Northland Bank. That is not what we are saying.

November 27, 1986
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What we are saying is that we have our backs to the wall today because the Government has presented to us only one option. It has said: "Buy this because if you do not, we are going to get into serious trouble financially", which is true. However, what are the other options? There was the Vancity option and other banks. Have we approached the other Schedule A banks with respect to their participation? Was there, for example, any effort made that the depositors and major shareholders mutualize the bank? Was there some interest in having the people already involved take over the bank? Was that option explored? But we were told nothing. There was no information. We were simply told: "This is it. You have to buy this". That is my concern. I am not suggesting for a moment that we should not rescue this ailing financial institution and try to get it back on its feet.
Second, I think we have to recognize that activities of the Bank of British Columbia, by the name itself, have been largely focused in British Columbia, although very recently in Saskatchewan because of the collapse of the Pioneer Trust.
While the national energy policy, as the Hon. Member for Surrey-White Rock-North Delta (Mr. Friesen) indicated earlier, might have had some minimal implication on the economy of British Columbia, we have also had the 50 per cent tariff on softwood, and the shake and shingle tariff imposed by the United States closed down a whole set of sawmills in my constituency and other constituencies. I am aware that a number of them did business with the Bank of British Columbia. I think it was a whole number of things. However, had the Government of Canada handled the collapse of the other western and regional financial institutions in a more sophisticated, business-like and appropriate manner, I do not believe the domino effect would have continued and we would not be debating this Bill today. I only hope that it will now stop and the domino effect will not continue to affect other financial institutions.


Mrs. Mary Collins (Capilano):: Madam Speaker, I am pleased to have the opportunity to participate in the debate today on the the sale of the assets of the Bank of British Columbia to the Hongkong Bank of Canada. I come to the debate with mixed feelings because, of course, as one who comes from British Columbia, I remember when the Bank of British Columbia originally started. I remember the very high hopes we had for it. We were all excited about having our own bank in British Columbia. Now because of what has happened in the last few years, we have come to the realization that the bank itself cannot stand on its own and that the assets must be sold. So in that sense it is not necessarily a happy debate.
On the other hand, I am very pleased that the Bank of British Columbia has been able to work out what I think will be an excellent purchase arrangement with the Hongkong Bank of Canada, and I would like to speak about some of these issues as we proceed in the debate.
I have been concerned by some of the comments I have heard from my colleagues opposite because I do not think they
truly reflect the situation with which we are dealing today. In fact, the legislation which is before us today is legislation which was asked for by the Board of Directors of the Bank of British Columbia. It is not something that the Government imposed on the bank. This is not a,Government deal about which we are talking. It is a private sector arrangement between the Bank of British Columbia and the Hongkong Bank of Canada.
In order for this arrangement to take place without further erosion of the assets or confidence in the Bank of British Columbia the legislation we are discussing today will enable the sale to go through and to delay a meeting with the shareholders for 14 days. As the Government what we are doing is helping to facilitate the arrangement. This is not in any way a sale that we have arranged ourselves.
My colleague, the Hon. Member for Kamloops-Shuswap (Mr. Riis), asked what the other options were. If we look back at what has happened over the last year in which the Bank of British Columbia recognized the difficulties it was facing, as my colleague from Saskatoon has mentioned, we see that many of these difficulties were brought on because of the previous Government's initiatives concerning an energy policy which left many western companies in a bad situation. As I remember it, the Bank of British Columbia had a great deal of sensitivity for western concerns and western companies. Unfortunately, many of the companies which have had loans with the bank have not succeeded and have fallen on hard times. The loss position in the bank's loan portfolio has increased dramatically. In fact, it was in the fourth quarter of this year that the bank recognized that with the growth in this loss position it would have to take action quickly or face liquidation.
I understand that in the last few months the bank has had discussions with a number of other financial institutions, including financial institutions in eastern Canada. Perhaps some Hon. Members will agree with the article in this morning's issue of The Globe and Mail which quotes the President of the Toronto-Dominion Bank, Mr. Robin Korthals. He is reported as saying that the deal with the Hongkong Bank of Canada was the best solution under the circumstances for the shareholders and depositors of the Bank of British Columbia. He stated that their only other alternative was liquidation. He also pointed out that despite overtures from the Bank of British Columbia to other major Canadian chartered banks, and some U.S.-based banks, eastern Canadian banks would be concerned about the problems in the Bank of British Columbia's loan portfolio.
I also know that there were discussions with Vancity and that some proposals were put forward. However, my understanding is that that company was not able to raise the capital required. Discussions then proceeded with the Hongkong Bank of Canada.
November 27, 1986

I would now like to clarify a point since there has been some discussion about the decisions being made offshore. What is happening with this transaction is that the assets of the Bank of British Columbia are being sold to the Hongkong Bank of Canada and the new bank will operate as a Canadian bank, a subsidiary of the Hongkong and Shanghai Bank. The new bank will have its own board of directors based in Vancouver. Canadians will be involved in the decision making with regard to the future of the bank. It is not as if that function were suddenly to be shipped off someplace outside the country. The people I have met who will be involved with the bank have shown great concern and interest in the future of British Columbia. I have every confidence that they will make decisions that will be in the best interests of the business community and the depositors of British Columbia.
Another point I wish to make is that this sale is equivalent to 1 per cent of the total assets of banks in Canada. So in terms of foreign ownership it is a very minor portion of banking assets in Canada.
When one considers the alternatives compared to with what has happened, I must congratulate the Bank of British Columbia and the Hongkong Bank of Canada for being able to come to this arrangement. I believe it is an arrangement that will augur a great deal of potential in terms of the expansion of the bank's activities.
Premier Vander Zalm was here in Ottawa only yesterday. We met with him and he is pleased with this arrangement because it will give British Columbia another window into the Pacific Rim. We know of the extensive assets of the parent company, the Hongkong and Shanghai Bank. We know of its connections around the world and its experience and knowledge in terms of international finance. I believe it will be a positive asset in terms of opening up business opportunities in the Pacific Rim, something which is of top priority for British Columbia since we see much of our future in trade as being with the Pacific Rim.
One topic of discussion which we have undertaken with the Government is with respect to the possibility of establishing an international financial centre in Vancouver. The arrangement with the Hongkong Bank of Canada illustrates the importance of such a move, and it helps to facilitate its becoming a reality.
Other Hon. Members have mentioned a concern about what will happen to the branches and the employees. If a sale arrangement had been made with one of the traditional eastern banks which already has branches in British Columbia, then the chances would have been very great that the purchaser would close down the branches and that there would not be much potential for growth. However, the purchase by the Hongkong Bank of Canada, as pointed out by its President, presents an excellent opportunity for the Hongkong Bank to expand its personal branch network. Western Canada will continue to benefit by having a strong bank with its headquarters and its major assets in the west.
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I recognize that there may have to be some rationalization in terms of the sale. We all know that in business people cannot be ordered to keep all their offices open and to keep all their employees. What the Hongkong Bank of Canada is buying as part of its assets is certainly these branches, deposits and goodwill that have been generated by the Bank of British Columbia. This deal augurs the best opportunity for the 1,400 employees and the 41 branches to be maintained.
There has also been some discussion that the taxpayers are involved in this deal. I would like to clarify that point because I think it is important that the public understand what is involved in this deal. The $200 million which the Canada Deposit Insurance Corporation will be putting into the new bank is money to help recapitalize it. The funds from the CDIC are not funds from the federal Government or from general revenues. They are funds that the CDIC collects on a premium basis from all banks in Canada. The payment of this sum of money will help to ensure the continued viability of the new Bank of British Columbia.
I think this is a much better deal for the depositors of the Bank of British Columbia and for British Columbians. The other alternative was liquidation. If the bank were liquidated, there would be nothing to pay out to the shareholders and there would have been a potential run of up to $1 billion on the CDIC as a result. It seems to me that this course of action is the prudent one in terms of being able to maintain the credibility of the deposit base and the employment in the bank for what I hope will be many years to come.
Because of the sale of the assets to the Hongkong Bank of Canada, we now look forward to the existence of a new bank in British Columbia. This bank will have the backing, expertise and network of the parent company and this will assure depositors. In my opinion, most of the employees and branches will be maintained. I would hope that the bank will be able to deal with the problems of outstanding loans and the loss provisions and once again emerge as a very healthy western-based bank, a bank that will indeed be sensitive to the kinds of initiatives and opportunities for expansion and trade in the Pacific Rim that we in British Columbia wish to undertake.
I think this initiative and many other initiatives the Government is now taking will improve the economic conditions in western Canada. I know that my colleagues on all sides of the House are familiar with those initiatives. There have been important initiatives in the energy industry. We have got rid of the National Energy Program and the PGRT. There has been $1 billion of assistance to western farmers and there are activities in British Columbia through ERDA agreements. The Micro-Tel agreement is helping to strengthen the business base in British Columbia.
In the past two days, a group of 50 business people from the secondary manufacturing sector in British Columbia came to Ottawa to seek out new opportunities. Many exciting businesses are starting out in British Columbia in the marine and
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high-tech industries. Many of these businesses are looking for export markets and new kinds of financial arrangements. I am sure that the new bank in British Columbia will assist in those endeavours. With the kind of initiatives presented by the Minister for International Trade (Miss Carney) who recently implemented a $350 million line of credit for the Export Development Corporation to China, we will be able to look forward with some degree of comfort and confidence to moving in the right direction and providing a new financial outlook for businesses and the financial community in British Columbia.
I would hope that my colleagues on all sides of the House will give swift passage to this Bill today so that the sale itself will be able to go forward and meetings will be able to be held with shareholders. We in British Columbia will be able to look forward with confidence to a viable bank in British Columbia in co-operation with its new parent, the Hongkong Bank of Canada.


Donald Paul Ravis: Madam Speaker, I was particularly interested in hearing my colleague from Vancouver talk about the importance of western-based banks, particularly with reference to Pacific Rim countries. British Columbians certainly feel much closer to the Pacific Rim than do we in Saskatchewan, but when we think of international markets, we too look in that direction. I certainly feel much the same way as she does even though she lives in the City of Vancouver where much of the commercial activity is related to Asian countries.
I would like to ask the Hon. Member for Capilano (Mrs. Collins) what kind of reaction she has had, if any, from her constituents. Has she received any phone calls or has she spoken to anyone about how the average person in Vancouver feels about this issue? Do British Columbians think that it is a positive move to salvage the bank even though it will be owned by the Hongkong Bank which comes from outside the country?


Mary Collins: Madam Speaker, I would like to thank my colleague for the question. As I mentioned, Premier Vander Zalm was in Ottawa yesterday and had the opportunity to be aware of this discussion. He, of course, has welcomed this move and has drawn attention to the regional strength of the Hongkong Bank. He feels that this is an opportunity for unparalleled investment and growth opportunities in the region. The new arrangement with the Bank of Hongkong will help facilitate and accelerate that growth.
I was rather interested to learn this morning that the morning issue of the Vancouver Province ran this particular story on page 41. There was a rather unfortunate incident at the Vancouver Aquarium yesterday which took over the headlines. The local news has carried the bank story, and I feel that there has been a sense of relief over it.
Over the past year, there have been concerns about the Bank of British Columbia. These concerns began when it closed down some of its branches in Alberta and Saskatchewan. Over the past few months, that uneasiness has grown as rumours have circulated first in the financial community and then in
the market-place. As we all know, rumours in the banking community can be very hurtful because they may undermine the credibility of a bank. When this happens, people wonder whether to leave their deposits in the bank or take them out.
It was important to have a firm deal announced and a very credible purchaser. That announcement would ensure a feeling of confidence on the part of depositors, and that is what has happened. I sense a sigh of relief in the community. Anticipation is sometimes worse than reality and the reality here has, I think, been the icing on the cake.
In my own constituency, I think there will be both a sigh of relief and a very good feeling about this action. The Hongkong Bank of Canada has been an extremely good corporate citizen of Vancouver. It has been involved in the business community and has been very accessible. It has created a great deal of goodwill so I think there will be a great deal of goodwill surrounding this particular sale as well.


John R. Rodriguez: Madam Speaker, the Hongkong Bank will be receiving $200 million from the CDIC for this bank, but something else really bothers me. In Ontario, there has been a great deal of sensitivity about moneys taken from pension funds. There was the case of Conrad Black who went into the Dominion Stores employees' pension fund and court decisions have ordered Dominion Stores to put the money back into the pension fund.
I understand that part of the discussions surrounding the sale of the Bank to the Hongkong Bank have been about giving the new owners permission to go into the pension fund and remove $10 million which would then be paid to shareholders along with the $63 million. I understand that consultations are going on between the directors of the bank, the Inspector of Insurance, the Inspector General of Banks, and the Governor of the Bank of Canada. Are the employees being consulted in any way? Does the Government have a position on this, given the sensitivity about removing money from pension funds? If there are surpluses in a pension fund, they ought to be used to improve the pension plans for the employees.
I am not prepared to accept a Bill like this one. Perhaps the Hon. Member and the Government are prepared to break a bottle of champagne over this deal, but I think there are some tough questions to be asked. The question I am asking her is, can she stand in her place and agree that the funds from the employees' pension fund can be taken to sweeten the pay-off to the shareholders? I wish the Hon. Member would come clean with the House and tell the British Columbian people that is what she is prepared to do.


Mary Collins: Madam Speaker, I wish to reply to the Hon. Member for Nickel Belt (Mr. Rodriguez) on this question, because obviously it is a very important question. Perhaps I could draw his attention to the facts of what has actually happened with respect to the pension fund situation.
November 27, 1986

During the second quarter of the fiscal year 1986, the Superintendent of Insurance approved withdrawal of surplus contributions to the pension fund of the Bank of British Columbia, which was based on an independent actuarial report. That was then revoked and no further withdrawals were allowed, although it was left open for the Bank of British Columbia to reapply to withdraw the surplus, in accordance with new guidelines.
In connection with the sale to the Hongkong Bank of Canada, it is proposed that the pension plan accounts with the balances of all Bank of British Columbia employees be transferred to an equivalent pension plan with the Hongkong Bank of Canada. So those assets will be transferred. The Bank of British Columbia may reapply to the Superintendent of Insurance for permission to withdraw surplus funds remaining in the pension plan. If the application is successful, this surplus could accrue to the benefit of the shareholders. I would like to advise my hon. colleague that the Superintendent of Insurance and the Inspector General of Banks are on top of this situation. No withdrawals will be allowed if it is not in the interests of the employees of the pension fund. I can assure my colleague that they are much more aware than I am of how the actuarial benefits for the pension plan are done. I am confident that this matter will be addressed. If it is possible for any surplus funds to be transferred to the benefits of shareholders, it may be so. But there is no decision on that, and there will be no decision on that unless the Superintendent of Insurance and the head of the banking system for Canada are absolutely assured that that can be done without in any way harming the pension entitlement of the employees of the Bank of British Columbia. I am confident that this is the case.


The Acting Speaker (Mrs. Champagne):: The time for questions and comments has expired. Resuming debate, the Hon. Member for Ottawa-Vanier (Mr. Gauthier).


Mr. Jean-Robert Gauthier (Ottawa-Vanier):: Madam Speaker, I cannot say I welcome the opportunity to take part in this debate. However, I am doing so because my constituents in the riding of Ottawa-Vanier are starting to wonder about this Government's ability to manage its affairs. Considering the experience we had with the Canadian Commercial Bank and the Northlands Bank, we are very seriously wondering, first of all, whether the Government really wants to know what is going on, and second, whether it is a good manager. And I could argue demonstrably that the Government has been very remiss in the way it has managed the business of this country and has failed to give the House all the information it needs to be able to give all these issues careful scrutiny.
Madam Speaker, Bill C-27, an Act to facilitate the continuation of the business of the Bank of British Columbia, is one more example of the Government's incompetence and clearly shows that this Government has yet to establish an overall policy, to review legislation and keep its promises. Goodness knows, Madam Speaker, they said they would do so
Bank of British Columbia Business Continuation Act
many times. They said they would review all the legislation on financial institutions. And today we have yet to see any concrete evidence of this on the part of the Government.

I would like to remind the House that we have had at least seven or eight in-depth studies on the question of financial institutions, yet this Government has not come forth with anything. We had the Green Paper in April, 1985, we had the Wyman Report in June, 1985, we had the House of Commons committee go into the whole question in November, 1985, we had the Senate Finance Committee Report, we had the consultant's study on the Office of the Inspector General of Banks, we had the Estey Commission, and now we have from the Economic Council of Canada a whole document on this question published in November, 1986. Yet this Government has failed to act and has not come to terms with the problems that are facing this country. We are caught again in the House having to approve, in an adult manner, a very difficult situation. We are asked to approve urgently another bail-out of a bank.
Let me state very clearly that we are unfortunately in a situation of having to accept that information coming from the Government. We know for a fact, because of the documents that we have gathered overnight, that the information is not forthcoming, that the Government is not coming clean with us in the House as to what it knows on this matter. Therefore, we are very hesitant to go ahead and give the Government our support.
Nevertheless, will the Government make a reference of this whole question, in due course after passing the legislation, to the Finance Committee for extensive study? Will the Government allow witnesses, those involved in this whole mess, to come before the committee and explain to parliamentarians why this was necessary? We want to know when the Government will act on financial institutions. We want to have the assurance that the Government takes things seriously and will act accordingly. We would insist on guarantees for the staff of that bank. We would insist that they be taken into account and that the Government get the guarantees necessary for their continued employment. We would insist that the Government obtain from the Hongkong Bank an assurance that the Bank of British Columbia will be maintained as a regional bank. We believe that there is a need, and we believe that there is a right to have regional banks. We would like to see that guarantee from the Government that would give us that assurance. If we get these guarantees, reluctantly-very reluctantly-we will support this measure in the House.

Madam Speaker, the Government must act responsibly and, here again, it should take full responsibility for this disaster. The problems with the Bank of British Columbia are due to the incompetence of this Government and its lack of concern for the situation in our banks and for the need to amend the legislation on financial institutions. The Government has been

November 27, 1986
amateurish in this respect. We saw this with the Canadian Commercial Bank, we saw it with the Northland Bank, and we are seeing it again. They come rushing in with a piece of legislation and they tell Members: Take our word for it, adopt this Bill because it is vital to support this bank and prevent another bank from going bankrupt.

1 would like to give a brief summary, Madam Speaker, of what this Bill does. The Bill eliminates the need, under the Bank Act, for shareholders of a bank that has sold its assets to approve the transactions at a meeting to be held within 28 days of the announcement of the deal.
Second, the Bill proposes that 14 days' notice be given before calling a shareholders' meeting. Failure of the shareholders to adopt the proposal at the meeting will not affect the transaction itself. Instead, it would lead to the appointment of an assessor who will determine whether the $63.5 million paid by the Hongkong Bank should be increased or decreased. This evaluation would be binding. If the assessor concludes that the purchase price must be increased, CDIC, and not the Hongkong Bank, will pay the excess. If the assessor concludes that the purchase price must be decreased, the excess will be paid to the CDIC.
That is a brief summary, Madam Speaker, of this Bill. I will be brief because we are getting close to one o'clock. 1 would like to resume my comments at three o'clock.
This is a bail-out of a bank, Madam Speaker. It is a $200 million bail-out of a bank. Let us be frank about it. Let us call things as we see them, with the information that we have at our disposal right now and after reading the comments of the Minister and reading the comments of the Board of Directors of the BBC, which ruled out liquidation and I will quote as follows:
Liquidation is not a reasonable alternative, as realized asset values would-be affected to the point that it would be questionable whether any amount would be available for shareholders of BBC and there might well be a loss to uninsured depositors.


An Hon. Member:: That's a bail-out.


Jean-Robert Gauthier: This means, Madam Speaker, that this is a bail-out.
[ Translation]


The Acting Speaker (Mrs. Champagne):: Perhaps I may remind the Hon. Member for Ottawa-Vanier (Mr. Gauthier) that he will have twelve minutes later on to continue his speech.
It being one o'clock, I do now leave the chair till two o'clock this afternoon.
At 1 p.m. the House took recess.


[Stage Direction]
AFTER RECESS

The House resumed at 2 p.m.


Mr. Keith Penner (Cochrane-Superior):: Mr. Speaker, important decisions are about to be announced by the Government on a new native claims policy. At last week's First Ministers' Conference in Vancouver, the government Leaders of both Yukon and the Northwest Territories tied the political and economic future of the North and its people to an acceptable new claims policy. They said that the new policy must recognize the right of aboriginal people to share in the resources of their traditional lands and to participate in the management and development of those resources.
On Monday Canadian churches sent a similar message to the Prime Minister (Mr. Mulroney), urging him to adopt a policy which recognizes aboriginal rights, including the right of self-government.
I expect these elements, which all fair-minded Canadians believe essential, must be incorporated into the new claims policy. I call upon the Government to announce the policy without any further delay.



MEMBERS OF PARLIAMENT


Mr. Ted Schellenberg (Nanaimo-Alberni):: Mr. Speaker, recently the media reported that several Liberal Members of Parliament who oppose a leadership review this weekend have used their House of Commons photocopying privileges to duplicate press clippings favourable to their present Leader.
One newspaper reported that a set of clippings containing 28 pages was mailed to 2,000 delegates. That is 56,000 photocopies for which Canadian taxpayers paid.
I suggest we review the "Unacceptable Requests" list from the House of Commons Printing Branch to see if this is acceptable.
Section 1 mentions that "solicitations of party membership" are a no-no, as are "requests for monetary contributions". Section 6 indicates that "party leadership election campaign material" is unacceptable according to the Printing Operation Branch.
I suggest that when the Hon. Member for Shefford (Mr. Lapierre) tells the media "if you want to have anything printed-you're more than welcome as a Member of Parliament, aren't you", the answer is no; 56,000 times no.
November 27, 1986



PHARMACEUTICAL INDUSTRY


Mr. Neil Young (Beaches):: Mr. Speaker, I want to share with the House some additional letters we have received from Canadians about the Government's proposal to amend the Patent Act in so far as pharmaceutical drugs are concerned. One writer writes:
Dear Mr. Broadbent:
I am very much opposed to any legislation put forward that would increase prices of drugs.
I have no medical plan for drugs and could not afford to buy them for my high blood pressure and arthritis, if they go any higher. I am not old enough to receive old age pension and there are many Canadians like me.
Another person writes to the Minister of National Health and Welfare (Mr. Epp) as follows:
I am 61 years old and have been retired for three years.
My wife and I live on a fixed pension which is not indexed as yours would be.
I enclose a photocopy of my most recent bill for Amiodorone. I am sure that you can readily verify my statement by contacting Toronto General Hospital... 1 can only wait very apprehensively to see what will happen to the prices of the rest of my medication.
Will you please send a copy of this letter to Mr. Andre so that he can be aware of how one former Conservative feels-
P.S. And a very Merry Christmas to you too!



INDUSTRY


Mr. Bob Corbett (Fundy-Royal):: Mr. Speaker, concern has been expressed by sugar-cane refiners and those who use refined sugar in their products about the inquiry by the Canadian Tariff Board into the operations of Canadian sweeteners industries.
This sector is understandably afraid that measures will be installed to make raw sugar less competitive than it is now. Should this favourable situation be seriously disrupted, the consequences would be very serious indeed.
In Saint John, New Brunswick, there are 400 men and women employed at the Atlantic Sugar Refinery whose livelihoods depend upon the competitive price of raw sugar. There are many thousands more people throughout the city and the region whose livelihoods indirectly depend upon the vitality of the refinery. The refinery plays a significant role in the economy of the region. It brings business to the port and injects millions of dollars worth of business into various goods and services.
I would strongly urge that no action be undertaken which would disrupt the vitality and viability of sugar-cane refineries and force the loss of jobs in an area already suffering from high unemployment and a weak economic performance.



PHARMACEUTICAL INDUSTRY


Mr. Dave Dingwall (Cape Breton-East Richmond):: Mr. Speaker, on the occasion of the thirty-fourth birthday of my colleague, the Hon. Member for Hamilton East (Ms. Copps)-


Some Hon. Members:: Hear, hear!


David Charles Dingwall: -I rise today to express my outrage at the attempt by the Government to raise the cost of prescription drugs for Canadians. Canadians are appalled that a Government elected on its commitment to protect sacred trusts would take such action that will undermine the health and well-being of Canadians.
The Conservative Government has decided that appeasing foreign multinationals is more important than providing affordable prescription drugs for all Canadians. Canadians are well aware that the people who will be hurt the most by this legislation will be those least able to bear the burden of increased drug costs, namely, the elderly and those on fixed incomes. It is predictable and fitting for the Tories to ignore the interests of those Canadians, but as we all have come to know, Mr. Speaker, the interests of those with special influence and money will always get more attention from a Tory Government.
I call on the Government to withdraw this reprehensible piece of legislation immediately and allow the sick and the elderly to have affordable prescription drugs. If the Government believes so much in its case, why does it not call an election and call it now?



THE ECONOMY


Donald Paul Ravis: Mr. Speaker, Japan's most powerful business group has highly commended Canada as being one of the most promising markets for Japanese foreign investment.
Today I rise in praise of Canada's economic stability which has provided an incentive for countries such as Japan to invest with us. Canada has significantly improved production levels which are of the best among OECD industrial countries. Clearly the investment climate is favourable in Canada. Our energy costs are low and the labour force is well educated. Japan recognizes a strong relationship among academics, industry, and the Government in basic research and development, and the cost of production has become more competitive.

November 27, 1986
The business group found the risk of investing in Canada to be among the lowest anywhere.
I congratulate individual Canadians and small-businessmen and women who have contributed to this surge in productivity and have helped stimulate growth in the economy.



INDUSTRY


Mr. John Parry (Kenora-Rainy River):: Mr. Speaker, there is a need for immediate action by the federal Government to halt the rapidly declining economy of northern Ontario. Week by week we hear of lay-offs, closings, and shutdowns of different forestry and mining operations which are the backbone of our northern economy, culminating yesterday in the announcement of the closure of northern Ontario's largest sawmill.
We all know that the Government is aware of the economic situation within the region for it has talked of what it calls a recovery package for northern Ontario. However, actions speak louder than policy papers, statements, and the establishment of even more committees. Time is of the essence and the people of northern Ontario are anxiously awaiting leadership on the lumber front, announcements that will result in actions leading to job creation and the end to recurring reports of the laying off of workers in Ear Falls, Sudbury, Terrace Bay, Nairn Centre, Wawa, Thunder Bay-and the list goes on and on.
Northern Ontario does not want patronage, palliatives, or a penitentiary, such as the one planned for the Prime Minister's (Mr. Mulroney) riding with the Solicitor General's (Mr. Kelleher) acquiescence. What our communities need are jobs.



SCIENCE AND TECHNOLOGY


Mr. Len Hopkins (Renfrew-Nipissing-Pembroke):: Mr. Speaker, it is about four weeks ago today since we first learned that the Government and National Research Council senior officials were secretly arranging to close down the world-class Algonquin Radio Observatory in Algonquin Park. The Government is always bragging about promoting research and development, and yet it is destroying more science and technology and research and development in (Canada than it ever thought of implementing.
During the election campaign the Prime Minister (Mr. Mulroney) and every Tory candidate talked about the wondrous things that were going to happen in the science [ community and every area of the Canadian economy. Today
Canadians are wondering how they are ever going to tolerate or withstand another two and a half years of this Government. Everything the Government puts its hands on, from science and technology to the softwood lumber industry, seems to disintegrate before our very eyes.
The phasing out of the observatory in Algonquin Park and the severe cuts in science and technology are a disgrace on the part of the Government, and the departure of highly trained Canadians to other countries to find new challenges is a brain drain on Canada from which it will take many years to recover. It will be three weeks tomorrow since the announcement by British Telecommunications to close down the four year-old Mitel plant in the town of Renfrew-


Mr. Speaker:: I regret the Hon. Member's time has expired.



HUMAN RIGHTS


Mr. Andrew Witer (Parkdale-High Park):: Mr. Speaker, for a Canadian it is impossible to imagine being the object of harassment or imprisonment for religious beliefs. It is a scenario we cannot comprehend because religious freedom is considered a basic human right to which we are entitled as Canadian residents. For Pavlo Hryhorovych Protsenko, a Ukrainian religious dissident, such freedom must seem luxury indeed. On June 4 of this year he was arrested while visiting the home of a nun. His family has been subjected to threats of arrest for attempting to defend his position. Prior to his arrest, Protsenko was detained at a Moscow station and searched, ostensibly, for drugs. All that was found was a Bible, a prayer book, a cross, and a religious manuscript describing the life of orthodox believers in the U.S.S.R. Dangerous items indeed.
It is inconceivable that we who enjoy such freedoms should stand silently by while such acts of repression are perpetrated against those who dare to stand up for their religious beliefs. I urge the Government to make Soviet officials forcefully aware of our opposition to their continued repression of religious freedom.



NEW DEMOCRATIC PARTY


Mr. Gabriel Fontaine (Levis):: Mr. Speaker, I should like to draw the attention of the House to the fact that, this fall, Quebecers received correspondence from the office of the leader of the socialist Party.
November 27, 1986

This overtly political message relates to old age security pensions and the Canadian tax system, it is printed on House of Commons stationery, and it was delivered by Canada Post at taxpayers' expense.
Can the socialist leader explain why his Party did not pay for distributing their partisan literature?
Should the majority of Canadians, who are not socialists, be expected to foot the bill for this socialist message?
The socialist leader often talks about fairness, justice and integrity, but he ought to be the first one to show respect for Canadian taxpayers by paying for his own publicity without reaching into the pockets of others.



STATUS OF WOMEN


Mr. Lome Nystrom (Yorkton-Melville):: Mr. Speaker, last week the Canadian Congress for Learning Opportunities for Women released a very important study on the status of women in education, training, and development. The study says the proportion of women in federal job training programs dropped 10 per cent between 1977 and 1985. Those were Liberal years. Since the National Training Act came into effect in 1979, women's participation has dropped every year.
The federal Government dumped the NTA and replaced it with programs under the Canadian Jobs Strategy. CJS emphasizes private-sector training. The Congress believes that emphasis will worsen the trend of participation by women because employers are more likely to train men than women. As executive director Aisla Thompson observed: "CJS puts the training money into employers' hands ... you can reach your own conclusion". This important study says that setting targets for groups such as women is not good enough. The Congress calls for controls which will monitor the amount and type of training women receive.



PHARMACEUTICAL INDUSTRY


Mr. William G. Lesick (Edmonton East):: Mr. Speaker, drug prices will not go up as a result of Bill C-22. Yesterday four prominent Canadian medical researchers strongly endorsed our Government's plan to provide patent protection to producers of newly-discovered drugs. They, as well as other academics, including Dr. John Bachinsky, Dean of Pharmacy at the University of Alberta, agree that these changes are long overdue.
Dr. Jacques Gagne, Dean of Pharmacy at the University of Montreal, used the example of a powerful new heart drug called milrinone. That drug is unavailable here as the manufacturer does not want to leave it open to copy-catting by generic drug producers. As you can see, Canadians are missing out on the latest drug discoveries. Why should we be forced to do without the best in medical technology? Why should we allow a brain drain to the U.S.? As a pharmacist and concerned Canadian, I, too, add my voice to the strong support given these changes and urge all Canadians to endorse the fairness of full patent protection for the benefit of all Canadians.



RAILWAYS


Mr. Fernand Robichaud (Westmorland-Kent):: Mr. Speaker, the other day in New Brunswick, people heard the Minister of National Revenue (Mr. MacKay) say on the radio that CN should buy rails from SYSCO and create jobs for workers in Cape Breton.
I certainly agree with the Minister that CN should try and create jobs for Canadians. Only yesterday, CN announced it will be laying off 87 workers in Moncton, adding up to a total of 403 since 1985.
Why do we never hear federal Ministers from New Brunswick support local workers? We never hear them say that CN should maintain its shops in Moncton.
Why shouldn't these Ministers do like their colleague, the Minister of National Revenue? Why the silence about the CN shops?
If the problem is ever settled, the Ministers will never be able to say they did what they could, because they did nothing. If 1 didn't know better, I would think that as far as the CN shops are concerned, New Brunswick has no representation at all in Cabinet.



THE ECONOMY


Mr. John Oostrom (Willowdale):: Mr. Speaker, Canadian Press reported yesterday that Japan's most powerful business group has issued a glowing report on the investment climate in Canada. In 1976 this same group, in assessing the investment

November 27, 1986
Oral Questions
climate, said that Canada was a country plagued with labour problems and political strife, and with a population of overpaid and under-productive workers.
This is clear evidence that the Government and its policies are making us an economic power once again. The report praised our free trade initiative with the United States and it praised Investment Canada, an agency we created for encouraging foreign investment. Further, the business group found that labour problems have died down. Our productivity levels are among the best of the Twenty-four Countries for Economic Co-operation and Development.
The Prime Minister (Mr. Mulroney) and the Minister of Finance (Mr. Wilson) deserve our congratulations for initiating this major economic reversal which will give all Canadians a secure financial future.



ORAL QUESTION PERIOD


Hon. Lloyd Axworthy (Winnipeg-Fort Garry):: Mr. Speaker, in the absence of the Minister of Finance I will direct my questions to the Secretary of State for External Affairs. Yesterday when we attempted to obtain answers about what the Government was proposing in the United States on the softwood lumber issue we received nothing but a stonewall. Fortunately that fountain of information, the Premier of British Columbia, revealed last night that the Canadian package will include stumpage fee increases and an export tax.
I would like to ask the Minister specifically about the imposition of the export tax. According to Article 1 of GATT an export tax must be applied to all contracting parties. What will the impact be of Canada honouring that obligation to apply an export tax to all countries to which we export lumber products? What will the cost be to the industry and its competitiveness? What will be the cost in terms of lost markets?


Right Hon. Joe Clark (Secretary of State for External Affairs):: Mr. Speaker, as I have indicated before, while there are still negotiations under way it is, at best, premature to get into a discussion of the specific nature of any border measure which might be applied by the Government of Canada.


U S. INDUSTRY'S ACCESS TO INFORMATION ON CANADIAN POSITION
Lloyd Axworthy: Mr. Speaker, why is it proper for the U.S. lumber industry to have full access to information on what the Canadian Government is proposing when the Canadian lumber industry does not have that information? Why are we discriminating against our own
lumber industry? It will not be able to make any response to the directions or decisions which the Government has taken. Why are we supplying information only to the U.S. lumber industry?


Charles Joseph Clark: Mr. Speaker, it is the U.S. lumber industry which brought the countervail action. It is the U.S. lumber industry which we must persuade to stop the countervail action. I think all Canadians would be encouraged by the statement of the Chairman of the Coalition for Fair Lumber Imports in the United States, Mr. Stanley Dennison, who said yesterday after his conversation with Mr. Baldrige:
The Coalition is approaching this proposal in the spirit of seeking a mutual resolution to a difficult problem. We do have a number of questions about the proposal. Our next step is to consult with the membership of our Coalition and we plan to give our government-
-that is the United States Government-
-a response during the coming week.


POSSIBLE TAX LEVEL
Lloyd Axworthy: Mr. Speaker, as indicated by the Minister's own response, is it not only fair that our own lumber industry be given the same right to make a response? Have we made it very clear in that proposal to the U.S. lumber people that there would be no consideration whatsoever of increasing, beyond the 15 per cent already established, the concessionary package which Canada is offering? Can we get that assurance from the Minister today?


Charles Joseph Clark: Mr. Speaker, as the Hon. Member knows, there were extensive consultations between the Government of Canada and the industry, the provinces, and the labour unions involved, prior to the discussion with American authorities of the approach now under consideration. I really do think it is premature to discuss the contents or consequences of that approach until there has been a response by the U.S. lumber industry. They are the people who have to make the decision either to continue with or to withdraw the countervail.


COURSE CHOSEN BY GOVERNMENT
B. Keith Penner: Mr. Speaker, my question is directed to the Secretary of State for External Affairs. Would the Minister explain carefully to the House and to the country why the Government chose an out-of-court settlement with the Americans on the softwood lumber issue when the entire lumber industry in Canada from coast to coast has urged the Government to stand firm and fight that countervail? In replying, I would ask the Minister if he would please not use that spurious argument that he is stopping the haemorrhaging of funds into the United States because he knows those moneys would be returned to Canada once the countervail action had been won.



November 27, 1986


Charles Joseph Clark: Mr. Speaker, I am very much aware, as is the Hon. Member because he approaches his responsibilities in this House seriously, that the process which is begun with a countervail action in the United States can be a very, very long process. It can lead to appeals of various kinds. It can consume not just months but years. While it is true that if at the end of that process we do prevail, as we believe we would, there would be the piling up of Canadian payments to Americans in the neighbourhood of $600 million a year, year after year after year. That is money taken out of circulation in Canada. It might be returned if we win; it would not be returned if we did not.


Lloyd Axworthy: It would be returned.


Charles Joseph Clark: It would at least take a long time. What the Hon. Member should be particularly concerned about, coming as he does from northern Ontario, is that it would perpetuate a climate of uncertainty which is not good for the industry and particularly not good for the people who work in that industry.


B. Keith Penner: Mr. Speaker, under a Liberal Government this country fought and won a countervail action.


Some Hon. Members:: Hear, hear!


COUNCIL OF FOREST INDUSTRIES
B. Keith Penner: Mr. Speaker, in considering the imposition of an export tax on lumber, how does the Minister respond to the Council of Forest Industries who have said that such a tax would be outrageous, unaffordable, that it would lead to the closure of more sawmills and the loss of thousands of more jobs?


Charles Joseph Clark: Mr. Speaker, a Liberal Government left in place a trading system which has resulted in this countervail.


Some Hon. Members:: Oh, oh!


Charles Joseph Clark: A Progressive Conservative Government is seeking to negotiate a better trade arrangement with the United States-


Mr. Guilbault (Saint-Jacques):: That is pie in the sky.


Charles Joseph Clark: -so we will not be faced with this kind of situation in the future. With regard to what I take to be the substance of the concern quoted by the Hon. Member, we are confident that any border measures we take will not result in any actions under the GATT.


STATEMENT MADE BY CANADIAN MINISTER
Nelson Andrew Riis: Mr. Speaker, my question is also directed to the Secretary of State for External Affairs. He will be well aware that at the end of last week the Minister for International Trade said: "We have a
Oral Questions
firm commitment from the United States administration that they will seek to have the industry withdraw the petition". The Minister will also know that last night it was reported that the United States lumber industry was not at all satisfied with this last final, final, final offer and it has indicated that the United States administration is behind it all the way. Can the Minister explain why the Minister for International Trade said that the support of the American administration was behind this offer?


Charles Joseph Clark: Mr. Speaker, I have two responses. First, she said it because it is the case. Second, the Hon. House Leader of the New Democratic Party may find it more useful to rely upon the actual words of the chairman of the Coalition for Fair Lumber Imports in the United States which I have read into the record than relying upon news reports of the attitude of that organization. They are capable of speaking for themselves. They have.


STATEMENT ATTRIBUTED TO UNITED STATES SECRETARY OF COMMERCE
Nelson Andrew Riis: Mr. Speaker, perhaps the United States Commerce Secretary, Malcolm Baldrige, is also able to speak for himself when he indicated that he never intended to convey the impression that a 15 per cent lumber price increase by Canada would do anything more than give the two sides something to talk about. He feels his credibility is being undermined by the Minister for International Trade of Canada. Will the Minister simply explain why Mr. Baldrige says that in no way did the administration of the United States give any indication that it was in support of this 15 per cent position?


Charles Joseph Clark: Mr. Speaker, I wonder if the Hon. Member would help me out a little bit. He has just quoted an inaccurate CBC report about the position of the Coalition for Fair Lumber Imports. Will he tell me from what document he is quoting now and whether or not the declaration he just read is in quotes?


RESPONSE TO CANADIAN APPROACH
Nelson Andrew Riis: Mr. Speaker, rather than refer to the article in The Financial Post by Mr. Solomon-


Charles Joseph Clark: In quotes?


Nelson Andrew Riis: -in quotes-I wish to ask the Secretary of State for External Affairs this question.


Some Hon. Members:: Oh, oh!


Nelson Andrew Riis: After we did our homework and put an iron-clad position before the ITC we backed off. Then the Minister for International Trade put forward the last and final offer of 10

November 27, 1986
Oral Questions
per cent, after doing our homework, and it failed. We now have another final offer of 15 per cent. Why is it that after we do all of this homework, time after time we come up getting an "F" on our report card?
Right Hon. Joe Clark (Secretary of State for External
Affairs): Mr. Speaker, Mr. Solomon is not Mr. Baldrige.
What is at issue here is an approach that is being discussed. 1 have just read the statement of the Coalition for Fair Lumber Imports in the United States which brought the countervail action. It is seriously considering the approach. I think that all Canadians who are interested in bringing stability to the Canadian industry and in keeping money in Canada hope that that approach will succeed.
ask the Minister: Would the Government consider putting pressure on the United States to respect its obligations under the Salt II Treaty and stop the Cruise missile tests?


Charles Joseph Clark: Mr. Speaker, in Canada we have an obligation, a commitment signed by the previous Government of which the Hon. Member was a Minister, a commitment to NATO on the Cruise missile. We intend to respect our obligations.


NUCLEAR ARMAMENTS
Hon. Donald J. Johnston (Saint-Henri-Westmount):: Mr. Speaker, my question is also directed to the Secretary of State for External Affairs. The Government has been almost silent while the United States has jeopardized disarmament talks, pursued its star wars program, launched a new program for chemical weapons, refused to match the Soviet moratorium on nuclear testing, and today we learn that it intends to breach its obligations under SALT II by putting a B-52 in service armed with Cruise missiles. Canadians want to hear from the Government. They want a message sent to the Americans. Will the Secretary of State for External Affairs send a note of protest to the President of the United States advising him that Canada finds a breach of those obligations under SALT II totally unacceptable?
Right Hon. Joe Clark (Secretary of State for External
Affairs): Mr. Speaker, we have made clear our views about the importance of respecting the SALT II limits from the very beginning of the rumours that there might be an intention on the part of the United States to breach those limits. Within the last week both myself personally to Secretary Shultz and the Prime Minister to President Reagan reaffirmed our position that it would be better for the world if the United States would respect the SALT II obligations. Canada is heard from on international affairs and arms controls questions. Canada is respected on those questions.


Mr. Blackburn (Brant):: Then do something about it. [Translation]


OBLIGATIONS STEMMING FROM SALT II TREATY-GOVERNMENT POSITION
Donald James Johnston: Mr. Speaker, I think the time has come for action. I would like to


UNITED STATES DUTY ON CANADIAN SOFTWOOD LUMBER-POSSIBLE RETURN OF REVENUE
Steven W. Langdon: Mr. Speaker, my question is for the Secretary of State for External Affairs who, frankly, is trying to squirm out of this issue of return of duties. He said that these duties might be returned. I wish to ask point-blank the following of the Minister. Is it not absolutely clear-cut that if we win our case, as every Minister has predicted we would, that we would get every penny back from the United States?


Charles Joseph Clark: Yes, Mr. Speaker.


Steven W. Langdon: I thank the Minister for the most frank answer we have heard this week.


EFFECT OF POSSIBLE EXPORT TAX ON JOBS
Steven W. Langdon: 
CANADA POST CORPORATION
Mr. Alfonso Gagliano (Saint-Leonard-Anjou):: Mr. Speaker, my question is directed to the Minister who is answering for the post office, if there is one. On November 24 Fred Masaro went before the North Vancouver District Council to complain that Canada Post, without warning or apparent concern for individuals, installed a supermailbox in front of his house. Is the Minister aware that the placing of supermailboxes in front of a house depreciates the value of that property? A recent study in Ontario showed that this depreciation amounted to $7,000 on a $100,000 house, and in Calgary $14,000 on a $200,000 house? Is that fair?


Hon. Bernard Valcourt (Minister of State (Small Businesses and Tourism)):: Mr. Speaker, I am not aware of the matter the Hon. Member has raised. Certainly I will look into the matter today.


REQUEST THAT INCONVENIENCED HOME OWNERS BE COMPENSATED
Alfonso Gagliano: Mr. Speaker, given that the Government has created a superfiasco when it introduced the supermailboxes, will it compensate Canadians whose real estate property value has declined since these supermailboxes were installed in front of their homes?


Bernard Valcourt: Mr. Speaker, one thing Canadians have made quite clear is that they now would much rather have these supermailboxes than the old rusted green boxes of the Liberal Party. Mr. Speaker, a Decima poll taken last summer indicates that 93.4 per cent of Canadians serviced through these supermailboxes are satisfied with them.
 * *


PHARMACEUTICAL INDUSTRY
Mr. Howard McCurdy (Windsor-Walkerville):: Mr. Speaker, my question is directed to the Minister of Consumer and Corporate Affairs. What has been his response to a letter that says in part:
On behalf of our organization, which has a membership in excess of 590,000,1 wish to express disapproval to the Government's proposed course of action which may force Canadian taxpayers to pay more than they now do to subsidize the pharmaceutical industry.
What has been the Minister's answer to the Royal Canadian Legion?
Oral Questions


Hon. Harvie Andre (Minister of Consumer and Corporate Affairs):: Mr. Speaker, my answer has been to encourage that organization and every other organization to have members of the NDP let us take this Bill to committee so that we may explore all aspects of it, and so the Legion and everyone else can see that this is a good Bill for Canada. It will generate thousands of jobs, it will improve health services to Canadians, it is fair to consumers, and it is a package they ought to support.


Howard Douglas McCurdy: I hope that the Minister of Veterans Affairs listened to that answer which was no answer at all.


REQUEST THAT MINISTER RECONSIDER LEGISLATION
Howard Douglas McCurdy: Mr. Speaker, let me pose another question. Don't you think, in view of the fact that the-


Mr. Speaker:: Order. I know the Hon. Member will pose the question through the Chair.


Howard Douglas McCurdy: Does the Minister not think-


Some Hon. Members:: No.


Howard Douglas McCurdy: -that in view of the objections of the Government of Ontario and the Ontario Hospital Association, and in view of the help he received from scientists yesterday which left him so helpless, he ought to reconsider this Bill, go back to square one, give us a Bill in the interests of the Canadian people, and cut the strings to the United States?


Harvie Andre: Mr. Speaker, if the Hon. Member is so confident in his opinion, why then is he not encouraging his colleagues to help us get this Bill into committee so we may explore all those questions? He knows that this is a good Bill. It is a necessary Bill if Canada is to participate in these important areas of health research. It is for the benefit of Canadians so that we may develop drugs and cures which it will serve the health needs of Canadians as well as the economic welfare of young Canadians who are now doing research and earning degrees in this area. They will be able to have jobs in Canada. I do not know why members of the New Democratic Party are opposed to having those people work in Canada.


EXTERNAL AFFAIRS
John Martin Oostrom: Mr. Speaker, my question is directed to the Secretary of State for External Affairs. A short time ago groups in Canada raised with the Government the concern that having the places of birth of passport holders printed on their passports could, in certain cases, make them the targets of terrorist attacks. The Government undertook to

November 27, 1986
Oral Questions
review the policy at that time. When will the Government announce the results of that review?


Charles Joseph Clark: Mr. Speaker, let me thank the Hon. Member for the very real interest he has taken in this issue. He has helped bring to my attention deficiencies in a former policy. We have changed that policy and I am pleased to announce today that it will now be possible for Canadians to obtain Canadian passports without having places of birth shown.


Some Hon. Members:: Hear, hear!


REGIONAL DEVELOPMENT
David Charles Dingwall: Mr. Speaker, my question is directed to the Deputy Prime Minister. Much has been said about the Atlantic Canada Opportunities Agency. In fact the Premier of Nova Scotia has said of this agency: "You can set up an agency-but unless you fund it properly, then it wouldn't work".
How much money has the Government budgeted for this particular agency? What is the time frame for the agency? Will the Deputy Prime Minister inform the House whether or not a specific request has been made of the First Ministers of the Atlantic provinces to make matching contributions to this agency?


Bernard Valcourt: Mr. Speaker, as the Hon. Member knows, the Government has appointed a person to effect consultations with the Atlantic Premiers and with groups in Atlantic Canada on the agency in question. We will have to wait for the report of this gentleman before we will be able to answer the specific questions raised by the Hon. Member.


PROVISION OF FUNDING
David Charles Dingwall: Mr. Speaker, my supplementary question is directed to the Deputy Prime Minister. I admit that consultations are important but what is more important is action. I find the vacillation on the part of the Government of Canada with regard to this funding issue to be remarkable. Would the Deputy Prime Minister inform the House and the people of Atlantic Canada how much money will be bugeted for this agency, or is this yet more political rhetoric on the part of the Prime Minister who has no real concern for the people of Atlantic Canada?


Hon. Don Mazankowski (Deputy Prime Minister and President of the Privy Council):: Mr. Speaker, the Government has initiated a number of programs which would help alleviate the problems in Atlantic Canada including the Atlantic Enterprise Program, the Cape Breton investment tax credit,
the topping-up assistance program, and the Enterprise Cape Breton Program. All of these programs have been geared to help specific areas and indeed the entire Atlantic region. If the Hon. Member has a little patience, I am sure he will find that the program that was announced in the Speech from the Throne will be promulgated in a proper fashion with Atlantic Canadians having input in the process so that it will serve not only the Atlantic provinces but indeed will allow Atlantic Canada to take its rightful place in the Canadian Confederation.


NATIONAL DEFENCE
Mr. Svend J. Robinson (Burnaby):: My question is for the Associate Minister of National Defence and relates to the proposed F-18 fighter firing range in the Saguenay-Lac-Saint-Jean region. Considering that for three and a half years now local residents have been voicing strong opposition to this military project, can the Minister assure the House that, if Quebec Government officials were to withhold approval for this project, the federal Government would accept their decision and refrain from expropriating these Crown lands?


Hon. Paul Dick (Associate Minister of National Defence):: Mr. Speaker, the fact of the matter is that negotiations have now been going on for about eight or ten months. There were very slow replies made to the inquiries by the federal Department in the winter and spring. But the two Governments have been sitting down and discussing these matters. It is not only that range, the Peribonca Range, but there are two other ranges, one in Ungava and one near Labrador City. So there are three ranges involved in the Province of Quebec. We are continuing with those discussions.


REQUEST THAT DEPARTMENT'S RESPONSE BE MADE PUBLIC
Svend Johannes Robinson: A supplementary, Mr. Speaker. Of course the Minister did not answer my question, but local residents did send me metallic confettis which were dropped from military aircraft flying over their farms and which even killed their ducks. I have some here, Mr. Speaker. Will the Minister make public his Department's answer to the questions asked by the Quebec interdepartmental committee, apparently as unacceptable and unsatisfactory as it is? When will he make the answer public?
November 27, 1986


Paul Wyatt Dick: Mr. Speaker, it seems that the unacceptable and unsatisfactory thing is the Member breaking the rules of Parliament once again, as he always does when he tries to make a point around here.


ENVIRONMENTAL AFFAIRS
Mr. Alan Redway (York East):: Mr. Speaker, my question is for the Minister of the Environment. Two months ago in the Speech from the Throne we were promised a new environmental protection Act, we were promised measures to improve water quality, we were promised measures to safeguard citizens from the hazards of chemicals, and we were promised that there would be established a work-place hazardous material information system. That was two months ago. Would the Minister advise the House and Canadians when we can expect to see at least the first of these pieces of legislation introduced in the House?


Hon. Tom McMillan (Minister of the Environment):: Mr. Speaker, the Environmental Protection Act has been approved by all relevant committees of Cabinet, and by Cabinet itself. It is now being drafted by the Department of Justice. Most of the drafting is completed. I expect to have the complete drafted Bill in my hands within the next three weeks. We will then make it public as an instrument for consultation throughout the winter for entry into Parliament early in the new year.


OFFICIAL LANGUAGES
Mr. John Nunziata (York South-Weston):: Mr. Speaker, my question is for the Deputy Prime Minister. The Canadian Security Intelligence Service is breaking the law. The Government knows it, and it is doing absolutely nothing about it. For over two years the spy agency has been systematically violating the Official Languages Act. The Government's inaction reflects its lack of commitment to bilingualism. Will the Deputy Prime Minister admit today that the spy agency is in fact breaking the law? Will the Minister take immediate action to ensure that the Canadian Security Intelligence Service complies in each and every respect with the Official Languages Act?


Hon. James Kelleher (Solicitor General of Canada):: Mr. Speaker, I would like to assure the Hon. Member that we are
Oral Questions
aware of some difficulties down in the Province of Quebec with respect to the use of the French language vis-a-vis CSIS. But having been made aware of it, I can tell you that this Government acts. We requested several months ago that the Security Intelligence Review Committee look into the problem. It is conducting a full study on it. I expect to have a report in my hands by the end of the year.


John V. Nunziata: Mr. Speaker, the problem isn't down in Quebec, it is right here in Ottawa with that Minister. The law is being broken. The Government knows it, and it is doing absolutely nothing about it. You cannot be half pregnant. You have to comply with the law.


REQUEST THAT SERVICE BE ORDERED TO COMPLY WITH ACT
John V. Nunziata: I would like to repeat the question to the Government. This time I hope that the Deputy Prime Minister answers, because we are getting nothing from the Solicitor General.


Charles Joseph Clark: Distance yourself from Bay Street.


An Hon. Member:: Watch your back, Joe.


John V. Nunziata: Will the Government take immediate action? If the Government is truly concerned and truly committed to bilingualism in Canada, will it act to order the Canadian Security Intelligence Services to comply, starting today, with every section of the Official Languages Act?


Donald Frank Mazankowski: Mr. Speaker, the hon. gentleman has repeated the question. The Hon. Solicitor General has provided a full and comprehensive answer. Surely that should be good enough. The Solicitor General will certainly undertake to report back to the House immediately upon the investigation being concluded.


AIR TRANSPORT
Mr. Mike Cassidy (Ottawa Centre):: Mr. Speaker, I have a question for the Minister of Transport concerning the advisory committee report to the Cabinet committee on the development of the Montreal region.
The advisory committee concluded that Toronto would stand to benefit, and that services would decline in Montreal. It is indeed a two-airport system, and committee members have recommended that all air transport activities be concentrated at only one airport, Dorval in this case.
Is the Government prepared to accept this recommendation and shift all activities to Dorval, or will it maintain the two-

November 27, 1986
Oral Questions
airport system in Montreal regardless of the negative impact on air transportation in that region?


Hon. Andre Bissonnette (Minister of State (Transport)):: Mr. Speaker, I answered this question earlier this week but, for the benefit of Hon. Members, I will repeat it again and say that the Montreal advisory committee report is very important for the development of Montreal and the region. As Mr. Picard pointed out, the chapter on airports was the result of an analysis made by another group on airports headed by Mr. Sauriol which proved to be rather incomplete.
The Government and I, in this case ... I am considering every aspects of this report and will make an announcement very soon.


AIR SERVICES AT MIRABEL-GOVERNMENT POSITION
Michael Morris Cassidy: Mr. Speaker, I wish to direct a supplementary question to the Minister.
Is the Government prepared to maintain the white elephant created by the Liberals if it should decide to keep Mirabel operational, for now is the time to upgrade air transportation in the Montreal region, in Dorval to be precise?


André Bissonnette: Mr. Speaker, I do believe the Hon. Member ought to seek relevant information about the Mirabel-Dorval issue before before making unfounded statements in the House.
Any time he wishes I am prepared to give him a thorough briefing along with full background information just so he might be in a better position to appreciate our problems at Mirabel and Dorval.
Hopefully I will have the full support of the Hon. Member when I announce our decision.


CANADIAN NATIONAL RAILWAYS
Fernand Robichaud: Mr. Speaker, my question is for the Minister of Transport. Yesterday CN announced a further lay-off of 87 workers in Moncton. This brings the total lay-offs in Moncton to 400 since 1985. More lay-offs are planned before Christmas. How many more lay-offs will there be in Moncton before the Minister of Transport honours his Government's commitment that there would be no massive lay-offs, or have he and his Government forgotten the meaning of the word "honour"?


Hon. John C. Crosbie (Minister of Transport):: Mr. Speaker, I think that the hon. gentleman is fully aware of the fact that the Canadian National, with the encouragement of the Government, has done everything possible to ensure that further employment would be offered in Moncton to certain employees who had to be laid off in Moncton because of changes in the rail transportation services in this country about which neither CN nor we can do anything. It is a pity that the hon. gentleman has not attempted to persuade the small minority, in the two unions which refuse to accept the proposals that were put forward. He should be using all his efforts to persuade them to withdraw their objection, so that these people can be employed, and so that Moncton's economy can be strengthened as we have arranged, if only they would cooperate.


REQUEST THAT MINISTER MEET UNION LEADERS ON ISSUE OF CN SHOPS IN MONCTON
Fernand Robichaud: Mr. Speaker, I am doing everything I can to try and persuade the Minister to take some kind of action because, up to now, he has done nothing at all and it is about time he moved on this issue.
Is the Minister prepared to meet with the union leaders to discuss the problem of sub-contracting and any option that might save jobs at the CN jobs in Moncton?


John Carnell Crosbie: Mr. Speaker, the hon. gentleman conveniently forgets that during the period from 1980 to 1984 while his Party was in power, 8,000 jobs disappeared from the Canadian National Railways system, with the hon. gentleman not opening his mouth once about them.


Some Hon. Members:: Oh, oh!


Fernand Robichaud: What about now?


John Carnell Crosbie: In respect of what action we have taken, we have set up a fund with CN of $4 million to help economic and industrial development in Moncton. I have met with Premier Hatfield. I met with him again yesterday and with the Hon. Member from Moncton who is trying to be constructive and do something, while the hon. gentleman is doing nothing but being destructive and negative in his approach to the problem.
November 27, 1986


FINANCE
[Stage Direction]
Oral Questions

Mr. Rod Murphy (Churchill):: Mr. Speaker, my question is directed to the Minister of State for Finance. The Hudson's Bay Company will be holding a major fur auction in Toronto in which it is insisting, for the first time ever, that all bids be made in American dollars. Would the Minister explain to Canadian fur merchants why they cannot buy Canadian goods on Canadian soil with Canadian dollars?


Thomas Hockin: That is a good question, Mr. Speaker. I will try to get the answer for the Hon. Member.


CANADIAN NATIONAL RAILWAYS
Mr. Guy St. Julien (Abitibi):: Mr. Speaker, my question is directed to the Minister of State for Transport. For several months, the CN in the Saint-Laurent area has been preparing a single track strategy for Abitibi-Temiscamingue: the exit track. Following all the memoranda made by the CN to prevent the use of its tracks, the Senneterre Chamber of Commerce, our CN workers and their families, our mayors and businessmen are worried about some of the lay-offs orchestrated by the CN.
Mr. Speaker, my question is as follows. Would it be possible to get an immediate moratorium on these lay-offs, before an independent company, in co-operation with the Government of Quebec and the Government of Canada, starts and completes a study on the railway network in Abitibi-Temiscamingue?


André Bissonnette: Mr. Speaker, the Hon. Member's question is most relevant, and I want to congratulate him on his concern for the people of his riding. Mr. Speaker, CN has to rationalize if it is to continue to exist, for the greater benefit of Canadians and of these tens of thousands of workers.


Mr. Malepart:: Who wrote the speech?


André Bissonnette: I thank the Hon. Member. Not long ago, I had a meeting with CN representatives, even this morning, as a matter of fact, and employees affected by cutbacks in the region will be reassigned to other jobs. They will be retrained and transferred, if they are willing.
Mr. Speaker, I hope that these measures will be of assistance to the people of Abitibi.


IRRADIATION WITH COBALT-60
Hon.   Chas. L. Caccia@Davenport: Mr. Speaker, my question is for the Minister of National Health and Welfare. The public is increasingly nervous about the idea of irradiating food with cobalt-60. Apparently it is now the practice south of the border with certain food items. Could the Minister inform the House whether he intends to approve the practice and, if so, what time frame he has in mind?


Hon. Jake Epp (Minister of National Health and Welfare):: Mr. Speaker, the process of irradiating certain foods, such as in the treatment of potatoes, onions, wheat, and flour, has been used in the United States for some period of time. It is being used in Canada as well. In 1983 the former Government put forward an information letter proposing further regulations for the expansion of the process developed in Canada by, for example, AECL, a Crown corporation. I have recommended that we put forward proposed new regulations regarding the process, possibly in February next year. There is then a period in which there can be public comment. That did not exist before when regulations were to be changed. It is the process we now have in mind. Every study by the United Nations, agriculture, and the World Health Organization, within their prescribed limits, indicates that it is a safe process.


SCIENTISTS' RESERVATIONS-SAFETY OF PRACTICE
Hon.   Chas. L. Caccia@Davenport: Mr. Speaker, there is a tremendous pressure to add additional food items such as poultry and certain fruits to the irradiation process. Certain scientists have expressed serious reservations about the health consequences of the practice, as already observed on mice. In view of these facts, will the Minister assure the House that he will not proceed with additional items until he is 100 per cent sure that the practice is safe and until the public at large is clearly informed about irradiated produce by way of labelling?


Arthur Jacob (Jake) Epp: Mr. Speaker, the concern for safety is overriding, and that remains. I could only repeat the information which we have in Canada-both prior to the election and today-that it is a safe process within the limits which have been prescribed. All international studies have indicated that. What I have said additionally is that unlike previously regulations can be changed now. The Government has put in place a pre-notice period wherein the various representations to which the Hon. Member has referred can be made.

November 27, 1986
Oral Questions AGRICULTURE


ASSISTANCE FOR GRAIN PRODUCERS-ROLE OF PROVINCES
Mr. Vic Althouse (Humboldt-Lake Centre):: Mr. Speaker, my question is directed to the Minister of Agriculture to obtain some clarification on the billion dollar farm aid promise. On October 23 in the House the Minister suggested that he hoped the provinces would add supplementary funds to the federal program. How can he justify supplementary provincial payments in this case, yet vigorously oppose what he called provincial "top loading" in all other agricultural assistance schemes such as agricultural stabilization programs?


Hon. John Wise (Minister of Agriculture):: Mr. Speaker, I think the Hon. Member is mixing apples and oranges in his question.


Victor Fredrich (Vic) Althouse: It is the same principle.


John Wise: No, it is not. The Hon. Member makes the same mistake as do many people on the fringe of agriculture by trying to generalize. I indicated to him that he was quite accurate in his reference to encouraging provincial assistance. Given the shortfall in the grain and oilseeds market today, it is obvious from our point of view that those farmers need all the help they can get from the federal Government and indeed from the provincial Governments. The Hon. Member knows enough about tri-party stabilization not to confuse it with this issue or to combine the two of them in the same question.


Victor Fredrich (Vic) Althouse: I assume from that answer that, if the provinces commit funds, they will be committed on an equitable basis; they will all commit equal amounts of funds.


REQUEST THAT PROVINCES NOT BE PERMITTED TO GARNISHEE FUNDS
Victor Fredrich (Vic) Althouse: Mr. Speaker, I have another question for the purpose of clarification. Since the Minister previously indicated that the billion dollars would not be used as a loan, could he further guarantee that the provinces will not be permitted to garnishee any of these funds in order to collect on provincial loans which may be due and payable by farmers by the time the federal help is put in the mail?


John Wise: Mr. Speaker, the importance of the agricultural industry from the point of view of the federal Government and the provincial Governments is a given. Obviously I cannot guarantee what provincial Governments will do, but I cannot imagine, given the tough conditions of the time, that any provincial Government would take such action.


ENVIRONMENTAL AFFAIRS
Donald Paul Ravis: Mr. Speaker, my question is for the Minister of the Environment. I am sure he is well aware of my ongoing interest in toxicological research, particularly at the Western Canadian Toxicology Centre in Saskatoon. Could the Minister comment upon the recent press release of the Canadian Chemical Producers' Association regarding potential investment intentions in toxicological research in conjunction with the federal Government?


Thomas Michael McMillan: Mr. Speaker, the Hon. Member knows that the federal Government and the provinces spend fairly massively on toxicology. The Hon. Member has been vigorous in putting forward the idea that the centre already existing in Saskatoon, should, in effect, become a regional centre of excellence. The same proposal has been put forward for Toronto and Guelph. In light of the idea from the Chemical Producers Association that the industry might link arms with government in funding such centres of excellence, I have instructed my officials to begin negotiations for that purpose.


DIFFERENCE IN GASOLINE PRICES BETWEEN CANADA AND UNITED STATES
Mr. Russell MacLellan (Cape Breton-The Sydneys):: Mr. Speaker, my question is directed to the Minister of Energy, Mines and Resources. The price of gas is rising in Canada, while it is dropping in the United States. Yesterday, the price of a litre of gas at a Petro-Canada station in Montreal was 59 cents CDN, while at an Atlantic Petroleum station in northern New York State, it was 25 cents CDN.
When will the Minister stop taking advantage of the public and offer Canadians gas at a reasonable price?


Hon. Marcel Masse (Minister of Energy, Mines and Resources):: Mr. Speaker, the Hon. Member knows perfectly well it is not up to the Government to set the price of gas at the pump, and I wonder why he is raising the issue in the House.


PRICE CHARGED BY PETRO-CANADA
Russell Gregoire MacLellan: Mr. Speaker, the Minister knows full well that he can order Petro-Canada to reduce its price to a reasonable level for consumers in Canada. Why is the Minister telling Petro-Canada to gouge the Canadian consumer for the sole purpose of fattening up this Crown corporation for privatization?
November 27, 1986


Marcel Masse: Mr. Speaker, Petro-Canada is a Crown corporation that operates the oil sector according to normal business practice.


NUCLEAR ARMAMENTS
Derek Nigel Ernest Blackburn: Mr. Speaker, my question is for the Secretary of State for External Affairs. It has now become patently clear that the Government's representations to Washington with respect to increasing the number of B-52s armed with Cruise missiles have come to naught. The United States is determined to break the SALT II Agreement, and that is that.
Will the Minister now screw up his courage at the next NATO Ministers' conference and tell the United States that Canada will not permit any further testing of the Cruise missile over Canadian territory?


Charles Joseph Clark: Mr. Speaker, I know that question is based in the ideological opposition of the New Democratic Party to Canadian membership in NATO and Canada playing its part in the defence of freedom. This Government believes that we have a part to play in the defence of freedom. We regret the decision that has been taken by the United States with regard to the SALT II limits. We have made that clear. We have a commitment to NATO to test the airlaunch Cruise missiles. We intend to keep our word.


Mr. Heap:: You have a commitment to SALT II.


REQUEST THAT TESTING WITHIN CANADIAN TERRITORY BE STOPPED
Derek Nigel Ernest Blackburn: Mr. Speaker, the Secretary of State for External Affairs is obviously aware of the fact that one of the major components left out of the nuclear arms talks is Cruise missiles. He also knows that both the West and the East are on the verge of expanding greatly the number of Cruise missiles. Is it not prudent, therefore, for Canada to show a lead in trying to reduce the number of Cruise missiles being produced on both sides? This could be accomplished by sending a very strong signal to both Moscow and Washington that we will not have the Cruise tested in Canada because of that reason.


Charles Joseph Clark: Mr. Speaker, in arms control negotiations that rely principally upon the ability of the superpowers to meet and negotiate with authority, one does not show leadership by
Point of Order-Mr. Robinson
breaking agreements or breaking out of alliances of which you are a part and indicating to the Soviet Union that there is a weakness on the western side, which might exist if there ever were a New Democratic Government in Canada but which does not exist while there is a Progressive Conservative Government in Canada.


Daniel James Macdonnell Heap: Break SALT II instead.


BUSINESS OF THE HOUSE
Hon. Herb Gray (Windsor West):: Mr. Speaker, this being Thursday, I want to ask the Government House Leader what business he intends to call for the coming week. We know the House is not sitting tomorrow, but we would be interested in knowing what business he has in mind for Monday on to next Thursday.


Donald Frank Mazankowski: Mr. Speaker, the Hon. Member is correct. The House will not be sitting tomorrow because of a very important event that is taking place in Ottawa.
Today we will conclude Bill C-27, the Bank of British Columbia Business Continuation Act. Monday I intend to call Bill C-25, that is, privatization of Canadair, followed by Bill C-22. The Hon. Member is aware that there are currently discussions going on with respect to trying to reach an agreement with regard to the timing of that piece of legislation. This will be followed by Bill C-18 and Bill C-19, the two transportation Bills.


POINTS OF ORDER
Nelson Andrew Riis: Mr. Speaker, I rise on a point of order. I want to point out that on page 1551 of Hansard during a discussion on the matter of concurrence in the report of the Special Committee on Child Care, it reads in Hansard that the motion was agreed to. It should read that the motion was passed on division. I just wanted to make that point clear.


REQUEST FOR WITHDRAWAL OF ALLEGED UNPARLIAMENTARY REMARK
Svend Johannes Robinson: Mr. Speaker, I gave Your Honour notice of a point of order which arose from the response of the Associate Minister of National Defence to a question that I asked of him during Question Period. In his

November 27, 1986
Point of Order-Mr. Riis
response, the Minister in question indicated that the Hon. Member is always out of order. Not only is that factually incorrect but, more important, I believe it is the role of the Chair and not the role of the Minister or any other Member to make that kind of suggestion which, as I emphasize, is completely unfounded. Nevertheless, I would ask that Your Honour call upon the Minister to withdraw the suggestion which is both unparliamentary and unfounded.


Paul Wyatt Dick: Mr. Speaker, on a number of occasions, more than any other Member, the Member from Burnaby tries to show exhibits in this House, which is against the rules of the House. He did so today.


Mr. Speaker:: Order. The Hon. Member for Burnaby (Mr. Robinson) has raised a point of order. The Hon. Minister responded until the Chair intervened. Perhaps both Hon. Members, the Minister and the Hon. Member, would leave it to the Chair to decide who is or who is not out of order. The Hon. Member for Burnaby is often in order and sometimes is out of order.


Some Hon. Members:: Oh, oh!


OFFICIAL REPORT-RECORDING OF DECISION
Donald Frank Mazankowski: Mr. Speaker, the Hon. Member for Kamloops-Shuswap (Mr. Riis) rose on a point of order with regard to a procedure that took place yesterday. He has left the House. I am not just precisely sure to which motion he was referring. I understand that what he wants to do is to make a correction to Hansard inasmuch as he suggested that the motion was agreed to but that it should have been stated that it was agreed to on division. I would like to have the clarification as to which it was. Just further on that point, Mr. Speaker, may I point out that the reason I rose is that I was in the House at that time and I did not hear a dissenting voice at the time. It may be a very minor technicality. However, I certainly did not hear any "noes" or interjections, and neither did the Speaker in the Chair at that time.


Nelson Andrew Riis: Mr. Speaker, I noticed the procedure as it appears in Hansard because I was in my place at the time and thought I said in a loud enough voice "on division". Presumably, I should have followed it up. I assumed that it was never in question. That is why I wanted to raise that point today just to put it clearly on the record that while the motion passed it was, in fact, on division. It was not a unanimous motion.


Mr. Speaker:: Perhaps the Deputy Prime Minister could help the Chair here. It seems that the Hon. Member is rising to place in the record what the Hon. Member intended to do. If there is no disagreement with that, I think the Chair could take notice of that and the appropriate steps could be taken.



GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration of the motion of Mr. Hockin that Bill C-27, an Act to facilitate the continuation of the business of the Bank of British Columbia, be read the second time and referred to Committee of the Whole.
Mr. Speaker:: When the House recessed at one o'clock the Hon. Member for Ottawa-Vanier (Mr. Gauthier) had the floor.


Jean-Robert Gauthier: Mr. Speaker, again I remind the House that the Official Opposition reluctantly agreed to the Government request to study and adopt Bill C-27 in one and a half days. Mr. Speaker, we did so because we were concerned about employment security and also because of our strong support for this regional concept. We want to say quite clearly that even though we feel compelled to believe this Government, it will have to bear the onus of proof, assume its responsibilities, and produce all figures and details for the Canadian public, because it was the Government that brought this issue before the House and sought our support. We are prepared to co-operate, but we can tell the Government that we have just about had it, we are beginning to be rather tired because, ever since this Parliament opened, we have been asked many times to rescue this Government which does not know how to manage, behaves like an amateur, and shows incompetence when it has to deal with such important issues as our financial institutions. Mr. Speaker, I am not mincing my words because this same Government has delivered two throne speeches in which it kept repeating that it would introduce a Bill to eliminate the flaws in the legislation on financial institutions.
I do not want to take too much time. I know the House wants to proceed to the question and we would like to get into Committee of the Whole. However, I want to give a brief overview of this Bill. It is indeed a bail-out, a $200 million bail-out, by CDIC. We are operating in a policy vacuum. The Government has failed to come forward with legislation to tighten control over financial institutions. Over the last year we have been asked, after the fact, to legislate the Imasco-Genstar takeover, the Lloyds Bank merger, and here we are again being asked to approve this takeover after the fact. The Government promised on many occasions, in every Throne Speech and every speech made on the CCB and Northland Banks, that everything would be all right. The Government asked us to trust it. However, everything was not all right. The Government had not done its homework. It did not know what it was talking about. We trusted the Government but we are
November 27, 1986

getting pretty fed up with doing that when it does not deserve it.


Mr. Fennell:: That is a convention speech.


Jean-Robert Gauthier: I hear them laughing over there. This is not a laughing matter. We are talking about billions of dollars. We are talking about the financial institutions which are so very important to the survival of this country, economically and otherwise.
I want to touch on two very specific items. First, the CD1C will have to put up $200 million, and in return the Hongkong Bank will buy the B.C. Bank for $63.5 million. Shareholders will have no say. According to the Bill, if they do not agree with the deal an assessor will be named. The assessor will decide whether the purchase price of $63.5 million is all right. If it is excessive, the excess will go back to the shareholders of CDIC. If it is deficient, then the CDIC will have to produce the money to allow the deal to go through.
Then there is the question of the pension fund. I know the Hon. Member for Capilano (Mrs. Collins) is not here but she mentioned that this morning. I agree with her to a certain extent that the BBC received permission from the Superintendent of Insurance to withdraw the pension fund surplus. That surplus could go back to the shareholders if, and this is the big "if', the Superintendent of Insurance allows it. Our position is that since the CDIC is the one doing the bail-out, it should get that money. Even better, the employees, whose pension fund is at stake here, should get the money.
We are concerned about the jobs involved and the regional bank system. We are concerned about this whole deal. We will be asking questions in Committee of the Whole. We will support the Bill in principle. We have to because the Government says it has an obligation to govern and we will help it to do so. However, we are getting pretty damn fed up with giving this Government our confidence.


@Acting Speaker: Is the House ready for the question?


Some Hon. Members:: Question.


The Acting Speaker (Mrs. Champagne):: The question is as follows: Mr. Hockin, seconded by Mr. Mazankowski, moves that Bill C-27, an Act to facilitate the continuation of the business of the Bank of British Columbia, be now read the second time and, by unanimous consent, referred to Committee of the Whole.
Is it the pleasure of the House to adopt the motion?


Some Hon. Members:: Agreed.


Some Hon. Members:: No.


The Acting Speaker (Mrs. Champagne):: All those in favour of the motion will please say yea.


Some Hon. Members:: Yea.
Bank of British Columbia Business Continuation Act


The Acting Speaker (Mrs. Champagne):: All those opposed will please say nay.


Some Hon. Members:: Nay.


The Acting Speaker (Mrs. Champagne):: In my opinion the yeas have it.
And more than five Members having risen:


The Acting Speaker (Mrs. Champagne):: Call in the Members.


Mr. Speaker:: I declare the motion carried.


Mr. Prud'homme:: Mr. Speaker, I would like to indicate that I was present for the vote but I abstained.


John V. Nunziata: Mr. Speaker, I too was present and I too abstained because of a conflict of interest.


Mr. Speaker:: Pursuant to Standing Order 78,1 do now leave the Chair for the House to go into Committee of the Whole.


[Stage Direction]
Motion agreed to, Bill read the second time and the House went into committee thereon, Mrs. Champagne in the Chair.
Steve Eugene Paproski: Order, please. House in Committee of the Whole on Bill C-27, an Act to facilitate the continuation of the business of the Bank of British Columbia.
Shall Clause 2 carry?
On Clause 2-Interpretation


Michael Morris Cassidy: Madam Chairman, I believe that on Clause 2 we are allowed to ask a few questions which may go somewhat beyond the clause but which relate to the Bill and why it has been brought forward.
First, I would like to congratulate the Minister of State for Finance on the first Bill that he is taking through the House, or perhaps it is the second.
Is the Minister prepared and does the Government welcome reference of this matter to the Finance Committee at a relatively early date even though the Bill will be given third reading later today?


Thomas Hockin: Madam Chairman, I have indicated to the Hon. Member that if I am called before the committee I am prepared to attend. Of course, my being invited is up to the committee. I believe it will invite me and I will be pleased to attend and discuss this matter.


Michael Morris Cassidy: Madam Chairman, effectively, there seems to be in this deal the fact that the Government of Canada will give $200 million to the Hongkong Bank in order to facilitate its taking over the assets of the Bank of British Columbia, with a payment of some smaller sum to shareholders. Is this payment related to a reluctance on the part of the Government to see a credit union grow the way that Vancouver City Savings Credit Union would have grown had it gone ahead with the projected merger which was under very active discussion just a couple of weeks ago and which was suddenly forgotten at the time the Hongkong Bank deal came forward?


Thomas Hockin: Madam Chairman, I think this is one of the more important issues which can be raised with regard to the Bill. I am happy to respond to the Hon. Member. Since we are limited in time and there may be a number of questions with regard to the Bill, I will try to answer as many questions as possible as quickly as possible.
With respect to the question of Vancity, it was afforded the same degree of consultation and opportunity to bid as anyone else. It turned out at some point in time that there was an agreement between Vancity and the Bank of British Columbia to begin negotiations. There was no agreement on the deal, but there was an agreement to begin negotiations, which did not go anywhere. With respect to what actually happened, the Hon. Member will have to ask those involved in the transaction. Of course, all we are doing here with the Bill is facilitating a sale and dealing with the time period concerning the notification of shareholders.
I have been told that the parties could not consummate a deal because Vancity's capital base was not sufficient to go it alone. It was something like a mouse swallowing an elephant. If Vancity could have obtained a large source of capital to add to its own capital base then it might have been able to go through with the transaction. However, that did not happen and then this other offer emerged.


Michael Morris Cassidy: Madam Chairman, I would like to pursue this matter a bit further. The Minister knows that the Vancity proposal included a request to which the Province of British Columbia was sympathetic, that is, that it participate thereby enabling the Bank of British Columbia or its successor to remain as an important and regionally-controlled financial institution which would operate under the control of British Columbia in the Province of British Columbia.
We have often seen situations of foreign bidders being given contracts in Canada because they have the technology while Canadian companies with equivalent skills are shunted aside or ignored because they are seen to be too small or inexperienced. These companies cannot get the experience because they cannot get the bids and therefore they cannot grow. It seems to me that this may be the case in this particular instance as well.
Did the Government indicate to Vancity that if the B.C. Government was prepared to come into the deal, it would have the political will to put this deal through, or was the Government's indication of being willing to legislate, as we are now, only a commitment made to the Hongkong Bank? In other words, were we kowtowing to a foreign bank because of its size while failing to co-operate with a domestic institution on the grounds that it was too small?


Thomas Hockin: Madam Chairman, it was not the Government that was involved in these discussions, it was the Canada Deposit Insurance Corporation. The Canada Deposit Insurance Corporation was aware of the discussions because it
November 27, 1986

might have been asked to participate at some point in arrangements leading to a deal.
I think the Hon. Member would have to ask the Government of British Columbia about what went on between Vancity and the Government of British Columbia. The assessment made by the Government of British Columbia in deciding whether or not to help in this transaction would be something about which the Hon. Member should ask that Government. Otherwise, I would have to make the same inquiry myself. Since this was a private transaction, I think it would be best for the Hon. Member to ask the Government of British Columbia what its assessment of that was.


Michael Morris Cassidy: Madam Chairman, in the first place, government consent was required for the transfer of assets. Therefore, the Government cannot say that it was not involved. Presumably, if the Bank was seeking the Government's consent, some discussions were taking place.
Second, is the Minister saying that the Canada Deposit Insurance Corporation committed $200 million to this deal without the approval of the Government or was the approval of the Government sought? I find it inconceivable that the CDIC would make this commitment without informing and getting the approval and acceptance of the Government.


Thomas Hockin: Madam Chairman, I understand the question. The Government was not informed in the first instance of any Vancity-Bank of British Columbia discussions because a deal had not been put together which involved the CDIC. It never got to the stage that the Government would have to be informed. We were informed, of course, of the arrangement which is the background to the Bill we are putting forward now.
The Canada Deposit Insurance Corporation made some prudential decisions. It decided that a capital provision of $200 million for the Hongkong Bank of Canada would do two things. First, it would protect the Canada Deposit Insurance Corporation against the future because this new entity, a strong bank almost the size of the world Bank of Canada, would be taking the bank over with its reputation and resources behind it. All the uninsured depositors and liabilities would be off the hands of the CDIC and would be taken on by this new entity. Therefore, protection against the future was part of the reason for the expenditure of $200 million.
The second reason is that the money is to be used as a source of capital, as a provision against future loan losses and as a capital base that will allow the Bank to do any corporate reorganizations that may be required. The decision made by the CDIC protects against the future and provides capital for a strong base for the present. CDIC decided that $200 million was much better than what it would have been exposed to had there been a liquidation. It could have been exposed to an amount many times greater than that.


Michael Morris Cassidy: Madam Chairman, this is all very bizarre. Did the Government have specific information on the quality of the
Bank of British Columbia Business Continuation Act
loan to the Bank of British Columbia that led it to judge that the expenditure might be several times $200 million if this particular course of action was not taken? May we see those reports?
Second, if the CDIC was prepared to offer $200 million to a foreign bank to bail out the Bank of British Columbia, was that specific offer made to Vancity? Was Vancity asked to put together a deal which included the provision of $200 million for recapitalizing and taking over the Bank? Was that specific offer made to the Canadian financial institution which was worth $1.5 billion or was it only made to foreigners?


Thomas Hockin: Madam Chairman, let me start with the question about foreigners first. That is for the Hon. Member to ask CDIC, the extent to which-


Michael Morris Cassidy: Oh, no, you're the Minister; you reply here.


Thomas Hockin: I would be quite happy to reply but the fact is that the resolution of whether or not to offer amounts of capital in the place of continuing liabilities for deposit insurance was made by the Board of the CDIC and-


Michael Morris Cassidy: But you speak for CDIC. You're the responsible Minister.


Thomas Hockin: Yes, I do. I am not saying that I am not responsible.


Michael Morris Cassidy: Then answer.


Thomas Hockin: I am answering. I am saying that the Board of CDIC did the negotiations and can tell the Hon. Member about the ins and outs of its discussions with Vancity and the proposals that were put. I can tell the Hon. Member that-


Michael Morris Cassidy: This isn't satisfactory.


Thomas Hockin: No, no. Because Vancity did not have the capital base to offer that amount of money it would not give the kind of guarantee into the future that could be given by strong institution like the Hongkong Bank of Canada. That is the reply to the second part of the Hon. Member's question. I forget what the first part of the question was. I suppose I will have to ask the Hon. Member to repeat it.


Michael Morris Cassidy: Was this offer made to Vancity, and I gather you are answering no.


Miss Nicholson:: Madam Chairman, I rise on a point of order. I believe it has been customary that general questions are asked when dealing with Clause 1. When Your Honour called Clause 2, we assumed that we would have to wait to ask our questions on a clause-by-clause basis. Since the Chair has agreed to accept general questions from the Hon. Member of the New Democratic Party under Clause 2,1 assume the Chair will extend the same privilege to us.

November 27, 1986
Bank of British Columbia Business Continuation Act


Steve Eugene Paproski: I intend to act exactly the same way when the Hon. Member will be recognized for putting questions to the Minister.


Michael Morris Cassidy: My understanding was that I had 10 minutes. I think I may have pushed it a bit and I was expecting at about now that the Hon. Member from the Liberal Party would intervene in the same way as I had.


Steve Eugene Paproski: The Hon. Member has had 20 minutes and that is why I did not interrupt.


Michael Morris Cassidy: Oh, in that case, I do beg your pardon, Madam Chairman.


Steve Eugene Paproski: The Hon. Member for Ottawa Centre has the floor.


Michael Morris Cassidy: Madam Chairman, did the Government seek any specific commitment from the Hongkong Bank in terms of maintaining jobs in the Bank of British Columbia, and what was that commitment?


Thomas Hockin: Madam Chairman, the agreement as structured by the CDIC gives an unconditional guarantee by the Hongkong Bank of Canada, supported by its parent, to carry on this bank indefinitely into the future. That is the commitment that we probably could not get from anyone else without a great deal of trouble. The Hongkong Bank will carry this bank, its liabilities and its risky loans into the future. To do that, it will have to do some reorganization.
I noticed that in the press release, no reference was made to numbers of branches or employees. However, the Hon. Member should compare a bank such as this buying the assets of the Bank of British Columbia with a Schedule A bank buying the assets. A Schedule A bank would probably have a branch right across the street from every one of these BBC branches. A Schedule A buy-out would have been disastrous for the employees and branches. Many branches would have been declared redundant and therefore many employees would have been declared redundant.


Thomas Hockin: This particular transaction affords a very great opportunity for the vast majority of employees to remain employed, and the branches to remain open. That is another very attractive feature of this particular transaction.


Michael Morris Cassidy: My pursuant question is this. The Minister has said that there was not a specific employment guarantee. The Bank of British Columbia has as number of interior branches in British Columbia, in Kamloops, Vernon, Kelowna, Penticton, Cranbrook, Abbotsford, Chilliwack, the Kootenays, Delta, White Rock, Langley, Port Coquitlam, and Surrey.


Benno Friesen: Which of those are in the interior?


Michael Morris Cassidy: Some of those are a bit more interior than others, I would say to the Hon. Member.
As 1 was saying yesterday, being a British Columbian native, I would like to ask the Minister, in view of the fact that the Hongkong Bank is essentially an internationally trading bank, which has not been focused on retail banking or small business banking, what commitment, if any, did the Hongkong Bank make with respect to maintaining those banks which provide valuable service, and perhaps valuable competition to the eastern banks at those branches in the interior of British Columbia? What commitment, if any, did it make to continuing the focus on small and medium business loans where the Bank of British Columbia was providing a particularly valuable service?


Thomas Hockin: My prediction would be that because its retail base has been small in Canada, this is an additional reason for it to keep as many branches as possible. If, in fact, it was a heavily retailed bank taking over a heavily retailed bank, there would be very severe redundancies in the offing, and I would be as concerned as you. In this case we have a beautiful fit whereby, as you quite rightly say, it has not been into retail deposits in a big way. This is the kind of fit that they need to allow them to do it. I am very optimistic that there will be more branches in the long run rather than fewer.
But in terms of guarantees about the interior of British Columbia, this is a private company, a private bank. We do not ask for guarantees from every bank in Canada that is operating in the private sector-


Steven W. Langdon: It's a foreign bank.


Thomas Hockin: -to maintain certain branches and move them across the street, or whatever. This is a private transaction. We do not require those types of guarantees from any other bank about rationalizing branches. Therefore, it would be quite inappropriate for that to be structured as part of the deal. I really must express my optimism that, because of the fit here, we will see more branches in the long run, not fewer.


Michael Morris Cassidy: I am delighted to hear the Minister's optimism, but once again it is clear that there are no specific commitments. What troubles my Party and myself on this particular issue is this. The Hongkong Bank, thanks to the intervention of the Government of Canada, through the Minister of Finance and the Governor in Council giving their approval to the transfer of assets, and through the Government's using its majority in the House and its powers of persuasion perhaps on opposition Parties to get this legislation through, is enabled to increase its assets roughly sixfold, to increase its branch network about fourfold in Canada through Government action. In addition, it is being paid $200 million to do so. This obviously raises the question that if we cannot ask for these commitments when we are giving it permission to greatly increase its business, and those are essential permissions-it could not do this without Government permission- and paying it a very large amount of money in the process, then under no circumstances does Government have any right to seek any commitments. Is it always just a matter of seeking
November 27, 1986

favours from private business? I know that is a rhetorical point.
I have one other point I wish to make, followed by a specific question. In October, 1985, the Inspector General's staff and special inspectors reviewed the loan portfolio of the Bank of British Columbia and concluded that the bank loan portfolio was sound. Now we are told it was not sound and that the bank would have to close if the Hongkong deal was not approved immediately. At what point was the Government told by the office of the Inspector General that the 1985 report was no longer valid, and that the activities of the bank were not sound? Or are we seeing another instance where the Inspector General's office blew it, and where in fact the early warning system broke down and the Government should have known long before November, 1986 that there were serious problems in the Bank of British Columbia?


Thomas Hockin: Let me take the last point first. This is an example of us finally proving how in fact the Inspector General of Banks has done such an excellent job in the last year with the early warning system identifying the health of banks-


Michael Morris Cassidy: God save us if they have blown it.


Thomas Hockin: -warning us early enough abut this that we can put together a deal. This results from their research, their supervision, inspection, and constant efforts, and I must tell you that we are talking about seven-day weeks, long days by very hard working people in the OIGB who have identified the problem and helped through their work to put together this deal. I think that the people of British Columbia should thank them for the role that they have played.
The second point I wish to make has to do with commitments about the number of branches, because you asked the question again in a different way. The Bank of British Columbia's history was down-sizing, down-sizing, down-sizing. Because it was losing money at a very rapid rate, it came up with a corporate plan to down-size, so that it would cut its overhead expenses. This was its way to try to stay alive. It seems to me that there has already been much of that downsizing there should not be too much need for any more. That is another reason for my optimism. It may be the reason, too, why Mr. Nesmith, the President of the Hongkong Bank of Canada said that tomorrow will be business as usual at the Bank of British Columbia, that the Bank of British Columbia customers can expect the same innovation and service that has been the bank's trademark since opening and that it is an excellent opportunity to expand their personal branch network, and western Canada will continue to benefit by having a strong bank with its headquarters and its major assets in the west. The basic down-sizing has occurred, therefore, this expression of optimism can be there for the present.


Steve Eugene Paproski: The time has expired for the Member for Ottawa Centre. I see many Members rising to ask questions. I wish to point out that, even though there are
Bank of British Columbia Business Continuation Act
20 minutes available to each Member, if each Member takes 20 minutes it will not be possible to hear all of you before 4.45 p.m. Please try to keep that in mind.


Aideen Nicholson: I would like to ask the Minister some questions about matters that are not specifically covered in this Bill, but which he did include in his speech, or which were referred to in the press releases which he also mentioned in his speech.
To begin with, what about the other assets of the Bank of British Columbia, which are not included here, which apparently the Bank of Hongkong decided to leave behind, particularly REIT Properties Ltd., which is a real estate company fully owned by the Bank of British Columbia? I would like to know what arrangements are being made in that regard.
Perhaps it may save some time, Madam Chairman, if I ask more than one question at a time and the Minister may answer them together.
I would like to know why the pension funds are being treated differently from the way they were treated in the case of Canadian Commercial Bank. In the case of the Canadian Commercial Bank, the surplus pension funds went to the liquidator. In fact, experienced staff lost their vested pensions. But in this case we are advised that the surplus pension funds may go directly to the shareholders. I would like to know the reason for the different treatment here. I would also like to know the rationale for this use of pension funds. I would also like to know more about the role of the Department of Finance. The Minister referred to officials who helped to put together this deal. I would like to know if the officials particularly sought out this bank more than any other financial institution.


Thomas Hockin: In answer to the REIT Properties Ltd. question, on the approval of the Governor in Council being obtained, all of the assets of BBC will be transferred to Hongkong Bank of Canada, other than the shares of REIT Properties Ltd., which is a wholly owned subsidiary of BBC that owns real property. I will check my notes, but I think there is litigation in connection with that property and that is why it was not conveyed.
The Hon. Member's second question concerned-


Aideen Nicholson: The use of pension funds surplus.


Thomas Hockin: Yes. It was covered in the news release in a rather detailed way. By way of summary let me say that the pensions surplus will only go to the shareholders if there is enough after the transaction is sorted out. Of course any dealings with the surplus have to be fully in accord with Mr. Hammond and his office and the supervision provided thereby.


Aideen Nicholson: Madam Chairman, if it is possible, I should like to yield some of my time to the Hon. Member for Laval-des-Rapides. Perhaps I could ask one last question before

November 27, 1986
Bank of British Columbia Business Continuation Act
doing that. What about the $430 million which the Bank of Canada advanced in liquidity support? What are the arrangements for paying that back?


Thomas Hockin: Madam Chairman, the information I have is that the Bank of Canada had advances totalling $583 million to the Bank of British Columbia in September, 1986. I could obtain more up to date information, but I do not have it here.
The Hon. Member asked whether or when it will be paid back. It is a bit like the Continental Lloyds arrangement. It will be paid back very soon in a manner which is best for the Bank of Canada and the bank in question.
There is a problem with the deposit of the Bank of Canada because it has a preferential position. That often discourages non-insured depositors to deposit in a bank if they know they are parked behind the Bank of Canada and the insured depositors. The so-called solution-and very often it must be a solution in the short run-of the Bank of Canada putting in deposits to maintain liquidity ends up being a bit of a kiss of death. I think the bank will be anxious to get that preference removed and the Bank of Canada paid back.


Mr. Belsher:: Madam Chairman, I should like to go over some points with the Minister.


Aideen Nicholson: Madam Chairman, I rise on a point of order. Perhaps I misunderstood. I thought that by not taking my full 20 minutes, the rest of the time would be given to the Hon. Member for Laval-des-Rapides. I requested that and I thought that you, Madam Chairman, nodded. If I misunderstood, perhaps you could explain and in that case I could continue.


Steven W. Langdon: Madam Chairman, I rise on a very brief point of order. There is no precedent which I have yet seen for yielding time to another Member.


Aideen Nicholson: In that case I would like to continue.


Steven W. Langdon: Thus I think your ruling, Madam Chairman, was quite correct when you recognized another Hon. Member. I think you should continue to do so so, that each of us who wish to raise questions may do so as quickly as possible.


Steve Eugene Paproski: Earlier I asked Hon. Members to try to keep their interventions short so that as many Hon. Members as possible could ask questions of the Minister. The floor has been given to the Hon. Member for Fraser Valley East.


Ross Belsher: Madam Chairman, how long had the Bank of British Columbia been seeking a suitor? It is my understanding that it is the Bank of British Columbia which asked CDIC to make a $200 million deposit. Am I correct, or is it the Hongkong Bank which asked for it? There seems to be some misstatement of the facts, and I should just like to make sure of them in my own mind. Some of the interior branches to which reference has been made happen to be in Abbotsford
and Chilliwack. One from British Columbia does not consider those communities to be in the interior. When I return home this weekend I should like to be able to assure my constituents of some of those facts.


Thomas Hockin: Madam Chairman, I appreciate my hon. colleague's interest in the matter and I want him to take back the facts to his constituency. I will summarize them as best as I can.
I have in my possession a press release by the Bank of British Columbia which perhaps will provide the Hon. Member with some additional information. In terms of suitors or how long the courting period went on, I think it really started in the summer. The Bank of British Columbia was becoming increasingly concerned about non-performing loans and loan-loss provisions. There were not many suitors, I must say from what I understand, but there were a few. The Hongkong Bank emerged in the fall as a serious suitor. However, I would not say that in the summer it was necessarily involved as a serious suitor, although I think the name was mentioned.
The whole canvas was initiated as a matter of prudent foresight really as early as late 1985, according to the press release, when the Board of Directors of BBC concluded that BBC like a number of other smaller Canadian banks would have difficulty recovering from the loss of confidence which followed events then taking place in the banking system and that the time for recovery might be unacceptably long. Then the canvas was accelerated during recent weeks when it became apparent that the BBC financial results for the fourth quarter ending October 31 could signal a worsening of the financial position of BBC. "This would be likely to continue through 1987 and probably longer", to quote from the press release. Tentative discussions were initiated during this recent period with a number of possible candidates.
I am glad to talk about the press releases of various parties to the transaction. However, essentially what we are doing in the Bill is just facilitating a private arrangement by adjusting the time period of notice for shareholders.


Ross Belsher: Madam Chairman, I guess that is the point I want to make sure is clearly established. This is a request from the Board of Directors of the Bank of British Columbia through the CDIC for permission to go ahead and consummate the deal. In order not to have to give 28 days' notice to shareholders, it is necessary for the legislation to be enacted.
Could the Minister tell us what could have been the worst case scenario as far as the CDIC was concerned, rather than paying out $200 million at this time to facilitate the arrangement?


Thomas Hockin: Madam Chairman, in answer to the Hon. Member's first question I will again refer to the press release. It indicates that expeditious completion of the transaction was essential if the continuity of the business of BBC was to be
November 27, 1986

preserved and the interests of depositors, employees, shareholders, and others were to be protected. In recognition of this, the BBC has requested the Government of Canada to introduce before Parliament special legislation to authorize expeditious completion of the transaction. That is what we are doing now.
In terms of the worst case scenario, I do not know how helpful it is to portray a nightmare scenario. However, I will give the Hon. Member the facts. If the Board of Directors of the Bank of British Columbia feels, as it felt, that the possibility of the bank remaining viable in the months ahead is very slender, we are faced with $1.3 billion worth of deposits insured by CDIC. That is a very big hit on the CDIC's budget, less whatever is recuperated by way of assets. That is the worst case scenario. That is the liquidation. Depositors would be nervous and would go somewhere else. As British Columbians they would probably have to go to a non-regional institution. Borrowers would be very unsettled and this experiment of having a regional bank would have failed.
A very important thing about this deal is that not only are the depositors doing business as usual, and borrowers doing business as usual with the regional bank continuing to go from strength to strength with a very good capital base, it will have an international network which is really what the people of British Columbia have been looking to in terms of trade, investment and everything else. It is something we have had some difficulty putting in place up until now.


Raymond Garneau: Madam Chairman, unfortunately, we have only seven or eight minutes left to ask questions, and I am very disappointed in what the Minister had to say.
From the outset, he has been trying to explain this is a private transaction and that the Government and the House of Commons are merely facilitating that transaction.
I say to the Minister that $200 million in public funds | are going to the Hongkong Bank, funds that belong to the Canada Deposit Insurance Corporation which is a Crown corporation. These are public funds. Two hundred million dollars in public funds will be given to the Hongkong Bank. There is also the fact that Parliament is being asked to sit in an emergency session to adopt a Bill. And this is supposed to be a private transaction?
Madam Chairman, some people are trying to shirk their responsibilities and wash their hands of the whole affair.
Madam Chairman, we have eight minutes left till 4:30 p.m., when the Minister, as agreed, will go to the other place to answer questions from Members of the other half of this parliamentary institution to which we belong.
For the first time, a Minister, the Minister of State for Finance, is saying and repeating, as a Minister of this
Bank of British Columbia Business Continuation Act
Government, that the possible loss on the transaction could be around $1.3 billion.
Madam Chairman, if that is the case, I ask the Minister why we are going to take public funds to help this company's shareholders. Why are we going to take the employees' pension fund surplus and add it to the $63 million referred to earlier?
Madam Chairman, there is something here that does not make sense, and as the debate on this Bill progresses, I find that although I have no objection to giving concrete assistance to one of our western financial institutions so that it can continue to offer its services to the people of British Columbia, I am becoming increasingly convinced of the Government's utter lack of competence in this affair.
For instance, what is going to happen with the assessor referred to earlier, unless the Minister intends to use scare tactics to get shareholders to vote immediately in favour of the proposal that will be put before them. Otherwise, I would ask the Minister: If an assessor is appointed, should the shareholders refuse to accept the proposal, does that mean that the only money the Canada Deposit Insurance Corporation is likely to recover would be the $63 million in public funds invested through the Hongkong Bank? Would the pension fund surplus go to the shareholders, as well as the contract guarantee of one of the senior officers, for which the former bank will maintain responsibility, and also the surplus of the $23 million in assets, that is, the $8 million referred to in the documentation?
If, as the Minister said, losses could be around $1.3 billion, does that mean that all funds other than the $63 million would go to the bank's shareholders, and that the Canada Deposit Insurance Corporation would shoulder the entire burden?


Thomas Hockin: Mr. Chairman, let me say to the hon. gentleman that I will try to stay for 15 minutes more, if I can, so that he can get as many questions in as possible. I understand the Member is trying to get to the bottom of a number of issues.
First, the pension funds will not be released for distribution to the shareholders unless Mr. Hammond, the superintendent, agrees. They will not be released unless it is appropriate for the funds to be released, in the same context as for any other company. It is very important that I make that clear.
The second point has to do with the $200 million. I understand the point the Hon. Member is making, namely, that CDIC's premiums, although collected from member institutions, benefit from cash flow injections from time to time from the federal Government. Therefore, CDIC has a kind of public character that I should not forget and Parliament should not forget. Hon. Members should not forget that it is just a cash flow situation. It is not a transaction that affects the deficit of the Government of Canada. If nothing was done you would have exposed the CDIC to a far greater amount.

November 27, 1986
Bank of British Columbia Business Continuation Act
Essentially what has been done with the $200 million-there is nothing magic about it-is bought future protection and avoided the huge costs of liquidation now. The costs of liquidating now would have been much higher, plus having to pay a receiver and having to go through all those other nightmare expenses. CDIC found it could avoid that and maximize protection into the future by paying the $200 million. It is a prudential decision in order to avoid further expenses in the future. The job of the CDIC board is to make those kinds of resolutions and decisions. Having done that it looks as though the board will save the CDIC a great deal of money in the future and, by extension, giving the analogy the Member used, it has lessened the pressure on the Government of Canada from a cash flow point of view.


Raymond Garneau: Madam Speaker, concerning the superannuation fund, the Minister does not seem to realize what is going on. I am not talking about the actuarial fund that is to be transferred to the Hongkong Bank to provide for the benefits the employees will be entitled to as employees of the new BBC Division of the Hongkong Bank. I am not talking about that, I am talking about the surplus.
The actuarial surplus will be going somewhere. Either it will follow the bulk of the superannuation fund moneys and accrue to the Hongkong Bank, because with an actuarial fund having a $20 million surplus, or $10 million after tax, their contributions to the pension fund could be cut down over the years, and we just gave the Hongkong Bank another $20 million before tax. That is one option.
The alternative is that the surplus could stay with the Bank of British Columbia, the selling out bank which is liable to be dismantled, I would think, some time in the future. This $20 million surplus, or $10 million after tax, will be used by someone, and this is the question I am asking the Minister, and it seems to me that if in fact, as he told us, the potential loss could reach the $1.3 billion mark, I cannot see why that money would be paid out to shareholders who, according to what we heard from the board of directors, would not get a penny if the bank were dissolved, with a possible loss of uninsured deposits on top of that, or at least a partial loss.
So, turning back to the pension fund issue, I would like to point out that there is a problem that somehow would have to be solved. Either it is turned over to the Hongkong Bank to be included in the management of the existing employee pension fund, or it is distributed among employees who have already retired, or again it accrues to the benefit of existing BBC , shareholders. I would like to know what the position of the Minister is on that.
Secondly, with respect to the determination. As I understand the mechanism, if the amount set by the assessor is in excess of $63 million, the Canada Deposit Insurance Corporation will pay the difference. If the amount is much lower, then the $63 million could be used up.
I also ask the Minister, since I assume his remarks to be true, whether the potential loss could be $1.3 billion because when you refer to the legislation, you are led to believe that the reference points on which the determination will be based will be the selling out value of the assets, in any case the words used both in English and in French seem to me to mean the winding-up value. And in that case, if the Minister is right, unless he wants to scare the shareholders and force them to accept the deal, it could be that $500 or $600 million-and this I would like to know-would have been paid in excess. Clearly then, the Hongkong Bank people would have made a very bad deal and I would be quite surprised if such were the case. However, if it were so, since the Minister has mentioned that possibility, would the surplus left with the selling out bank, as I gather it is called in the Bill, be available to the Canada Deposit Insurance Corporation? Could that surplus not be used to the benefit of the Canada Deposit Insurance Corporation?
And this is perhaps the last question allowed to me, Madam Chairman. I would also like the Minister who said it was a private transaction to tell us if by chance that private transaction will have to be approved by cabinet. Since we are dealing with public funds, can the Minister assure the House that before this order in council is accepted by the Government, not the order in council itself but the other one which will ratify the contract submitted to the shareholders, that this contract will be referred to the Standing Committee on Finance and Economic Affairs so it may have an opportunity to debate it and eventually hear witnesses, because that is the crux of the issue we are debating today, this contract which in a way will be a Government contract since it will have been approved by Cabinet?


Thomas Hockin: Madam Chairman, there are essentially three questions. First, it is very important that we understand the pension surplus matter. It is clear that we are not making new pension policy on the fly here this afternoon. Any pension surplus will not be distributed to anyone except the pensioners without the agreement of Mr. Hammond and the appropriate supervisors. If the Hon. Member is saying that any pension surplus, even if it is over and above what the supervisors feel is properly owed to the employees, should still go to those employees, then he is making pension policy on the run. I cannot agree to that.
Second, as to the assessor, I appreciate the distinction the Hon. Member is making. Insured deposits are $1.3 billion. I cannot speculate on what the losses would be on liquidation; of course, it is a different number. It could be less. The losses on liquidation-


Michael Morris Cassidy: You could not make a decision without having an estimate.
St

r

November 27, 1986


Thomas Hockin: Of course we have an estimate but I cannot speculate on what the exact amount is.


Michael Morris Cassidy: What is it?


Thomas Hockin: No one knows that.


Michael Morris Cassidy: If you had an estimate, what is it?


Thomas Hockin: I should not speculate on that.


Michael Morris Cassidy: Either you have an estimate or you do not.


Thomas Hockin: The assessor has to make a judgment on that.
As to whether the Order in Council will be submitted to a parliamentary committee, the deal has to be approved and it has not been. We have an offer but we do not have a deal which has been approved. When it is approved we will have a document that I can take to committee with me when I discuss this matter.


Steve Eugene Paproski: The Hon. Member for Laval-des-Rapides has the floor but I ask him to use as little time as possible so other Members who have not yet spoken will have an opportunity.


Raymond Garneau: Madam Chairman, the Minister just said he does not have a deal.


Thomas Hockin: Formally, that is right.


Raymond Garneau: We have been told that the deal has been signed by the board of directors of the two banks. Otherwise, what are we doing here?


Thomas Hockin: It has not closed.


Raymond Garneau: We have been told through a press release that the board of directors of the banks have agreed upon this transaction. The final decision is linked to the decision of this House. So there is a deal. The only decision to be made concerns the shareholders. Are they going to accept the $63 million, yes or no? If not, an assessor will be appointed to deal with it. So there is a deal.
I want to ask the Minister about the involvement of the Government concerning two things. First, who brought the Bank of Hongkong back into the discussion at the last instance? Second, who made the decision? The Minister said he cannot speculate on the value of the assets. Someone made a decision and the Government will have to approve the deal through an Order in Council. The Government had to make a decision at some point.
Who brought the Bank of Hongkong back to the negotiating table? What was the involvement of the Government in the decision concerning the $200 million and the $63.5 million? What involvement did the Minister have in that transaction?


Thomas Hockin: Let me clarify the question of the deal. The deal does not close until we pass this legislation. We are
Bank of British Columbia Business Continuation Act
shortening the notice period to shareholders in this Act. When I say we do have a deal, I am speaking formally. We have to do what we have to do today in Parliament and then the deal can close. I just wanted to clarify what I was saying. I did not mean to mislead. The deal is closed, dependent upon our doing what we have to do.
What is the value of the assets? The assets are now part of the ongoing new bank. For us to speculate on what they are worth now-


Raymond Garneau: Some $200 million is not speculation.


Thomas Hockin: It is more than that.


Raymond Garneau: How have you been able to establish that? Someone must have made a decision on the $200 million?


Thomas Hockin: CDIC has to do that and they did it.
The third question dealt with who brought the Hongkong Bank into the picture.


Raymond Garneau: Brought them back.


Thomas Hockin: The Bank of British Columbia brought them back. The Government of Canada was informed by the CDIC that they were brought back. That occurred in the last month or so.


Mr. Dantzer:: Madam Chairman, I have a question for the Minister following up on the discussions of the last few days. We have heard a lot of complaints from the Opposition that a Canadian banking institution should have taken over this bank. That is a motherhood question. I guess we would all liked to have seen that happen. However, there are good aspects of having this large Asian bank take over the assets of this British Columbian bank. I would like the Minister's opinion on my remarks.
Anyone who has lived in western Canada and done business there for the last 30 years, as I have, will know that when there were no regional banks in western Canada the minute there was a credit crunch or recession the central Canadian banks immediately called in their loans in the western Canadian towns and cities. I have had personal experience with that. As a practising lawyer I have had many clients complain that their loans had been called in. It is only natural that the big banks headquartered in central Canada would look after their most important customers first, who were usually located in central Canada.
The presence of the Hongkong Bank in western Canada will provide much more competition for the central banks. If we have a credit crunch in Canada, the Hongkong Bank with branches worldwide would not necessarily have such a credit crunch and would be in a better position to meet the needs of western Canada.

November 27, 1986
Bank of British Columbia Business Continuation Act
Would this bank which has worldwide connections not provide British Columbia and Canada with much greater access to the tremendous opportunities which will continue to occur in the Pacific Rim? Will the Minister confirm my opinion that this bank is a better choice than a central Canadian bank?


Thomas Hockin: Madam Chairman, I thank the Hon. Member for his comments. As far as I know there is no greater source of surplus capital in the world today than that which is sitting in Hong Kong. This particular bank has 400 branches soaking up this capital. If things went bad in the Canadian economy and British Columbia did not have the access to loans from Canadian banks which they would like, they would have tapped into this huge source. Canada is internationally mature and should have sources of capital independent of the five major regional banks and Canadian investment sources.
In addition to the 400 branches this bank has in Hong Kong, it has another 800 branches around the world which will provide a source of capital needed by British Columbia. If I were in British Columbia I would be glad to have such a balanced source of capital. They have sources of Canadian capital and sources of the huge surpluses in the Pacific Rim through this network. In my opinion this is very good news. I join the Hon. Member in his assessment that this is good for Canadians. We are only being asked to adopt a very brief Bill which deals with shareholders' rights. The background to it is this opportunity.


Steve Eugene Paproski: 1 will recognize the Hon. Member for Essex-Windsor for a very short question.


Steven W. Langdon: Madam Chairman, you should know what a challenge that is. I would like to deal with the issue of the Vancouver City Savings Credit Union Option. In his earlier comments the Minister stated that a large amount of capital would have to be provided for such an arrangement to take place. Precisely how much capital would be needed? Would it have been more than the $200 million which CDIC is providing in this case? Our information is that any figure discussed was considerably smaller than $200 million and that we could have kept this bank in Canada under the auspices of an important regional institution in Canadian hands-


Steve Eugene Paproski: If the Minister wishes to answer, I must now interrupt the Member.


Thomas Hockin: Madam Chairman, I remind the Hon. Member that this remains a Canadian institution. It is not a branch of the Hongkong Bank but a separate subsidiary with its own board, directors, head office and branches in Canada. It is a national institution in that sense.


Steven W. Langdon: Not Canadian-owned.


Thomas Hockin: Getting to the Member's wider question-


Steve Eugene Paproski: I regret that I must interrupt the Minister.


Thomas Hockin: I would be glad to pursue this further with the Hon. Member outside the Chamber.


Steve Eugene Paproski: I must interrupt the Minister now.

It being 4.45 p.m., pursuant to order made Wednesday, November 26, 1986, it is my duty to interrupt proceedings and put forthwith every question necessary to dispose of the Committee of the Whole stage of the study of Bill C-27 now before the House.

Clauses 2 to 12 inclusive agreed to on division.
Clause 1 agreed to on division.


Steve Eugene Paproski: Shall the title carry?


Some Hon. Members:: On division.


[Stage Direction]
Title agreed to.
Bill reported.
Michael Morris Cassidy: Madam Speaker, I see that the next item of business will not take place until five o'clock when we move to private Member's business. Under those circumstances possibly Your Honour would allow a few comments on third reading as is normal at this time-


Some Hon. Members:: No.


Michael Morris Cassidy: -with an understanding that the time will be shared among those who wish to comment as there will be no division taking place at 5 p.m.


The Acting Speaker (Mrs. Champagne):: There is a special order that we stop at 5.45, so there should be no further comments. I am obliged to put all the questions at this time pursuant to order made on Wednesday.


Michael Morris Cassidy: Madam Speaker, I listened in vain for some unanimity from the other side that this might take place.


Mr. Gurbin:: So were we a little while ago.


The Acting Speaker (Mrs. Champagne):: Is there unanimous consent?


Some Hon. Members:: Agreed.


Some Hon. Members:: No.


Philip Derek Lewis: Madam Speaker, I rise on a point of order. Since it was a House order, everyone has agreed that this would be the only item of business dealt with today. In view of the fact that there is Private Members' Hour at five o'clock, I would suggest we suspend the sitting until five o'clock, which will enable my colleagues opposite to begin at five, and anyone
November 27, 1986

from this side who expected to speak on the Bill of my colleague would have ample time to get here.


The Acting Speaker (Mrs. Champagne):: 1 have yet to put the question. 1 think the point of order is a bit premature.
When shall the Bill be read the third time? By leave, now?


Some Hon. Members:: Agreed.


Some Hon. Members:: On division.


Thomas Hockin: that Bill C-27, an Act to facilitate the continuation of the business of the Bank of British Columbia, be read the third time and passed.
Motion agreed to and Bill read the third time and passed. SITTING SUSPENDED


The Acting Speaker (Mrs. Champagne):: Is it the unanimous wish of the House to suspend the sitting to five o'clock?


Some Hon. Members:: Agreed.
At 4.52 p.m. the sitting of the House was suspended.


The Acting Speaker (Mrs. Champagne):: Order, please. It being 5 p.m. the House will now proceed to the consideration of Private Members' Business as listed on today's Order Paper.


PRIVATE MEMBERS' BUSINESS-MOTIONS   SOCIAL AFFAIRS REVISION OF EMPLOYMENT POLICY AND OBJECT OF PROGRAMS
Jean-Claude Malépart: That, in the opinion of this House, the Government should consider the advisability of reviewing its policy on employment and the thrust of its programs so that social and community organizations may really fulfil their self-assigned role.
He said: Madam Speaker, I think this motion concerns Members from every part of this country. At least once a year, and sometimes twice or more, Members meet with non-profit or community agencies in their ridings to discuss and select so-called job creation projects for the Challenge '86 programs, formerly known as Summer Canada projects or job development programs, formerly Canada Works.
Madam Speaker, I am sure that last year, all Members received, and are still receiving, complaints or were told about people's dissatisfaction with some of the criteria for these programs which have been maintained this year. The criteria may affect a number of agencies and even threaten the very existence of certain non-profit organizations that fill a need and provide an excellent service to the people in our respective ridings. I am thinking of various organizations that deal with
Employment
senior citizens, young people, the handicapped, women's rights and various other concerns. One of the criteria 1 referred to just now provides that to be eligible for the projects that provide training, the candidate must have been unemployed for 24 of the last 30 weeks.
This year, if no changes are made, thousands of men and women in Canada, in our respective ridings, who last year agreed to work or receive training under various job development programs, will not be eligible this year and will thus be forced into unemployment as a result of a decision by the Conservative Government. There are those who will say: Yes, but the rule was made to give everybody a chance. A mistake governments tend to make, whether they are Liberal or Conservative or otherwise at the provincial level, is that they sometimes make regulations and_ laws that apply across the country but are not flexible. For instance, in the riding of Montreal-Sainte-Marie, we would need this flexibility to enable one of our community groups to survive and to give somebody a chance, and this is an example in my own riding where we have a mother who has been on welfare for 10 years. It took two years to convince that person to get involved in a job development program. If she was afraid to get involved in such a program, it was not because she was afraid to work- for she did a lot of volunteer work-but simply because she was afraid to get off social welfare and be compelled to ask to get back on it once the projects were completed. Madam Speaker, after being trained for two years, if changes are not made, this person will be compelled this year to seek again social welfare.
1 am convinced that this concrete example is repeated hundred of times in my riding, and thousands of times everywhere in Canada. Sometimes, a six-month training period will not be considered adequate by the private sector to hire that person.
Madam Speaker, I think this is a major point. In the case of non-profit organizations, I think the Government has had the unfortunate tendency to favour the private sector too much at the expense of non-profit or community organizations. The best example of this is Challenge '86, where the Government insisted that, in each riding, a certain quota be reserved for the private sector.
In my own riding, and I am sure such is the case in all the other ridings in Canada, some companies employed young people who had not received better training than employees of non-profit organizations, but they saved money because they created jobs just the same and could claim Government subsidies, instead of spending their own money.
I am sure that other Members would have similar cases to report in their own ridings.
Instead of that, and I am not against providing subsidies to the private sector, the Government should use as criterion the projects which would provide the best training and would

November 27, 1986
Employment
better benefit the public. Such projects should be accepted, no matter the quota or the amounts of money involved. It may be that in a riding like mine 75 per cent of the community organizations would have the best projects, or it may be that in another riding elsewhere in the country 80 per cent of the best projects would come from the private sector, so these would be accepted.
We at the federal Government level are making a mistake. I should think that all Members, particularly in Ontario and Quebec, know that every member of the provincial legislature has a budget for recreational activities, a budget which ranges from $30,000 to $50,000, and recommendations can be made to give grants or assistance to any non-profit organization related to schools, the elderly, sports, or recreational activities.
Unfortunately the federal Government does not make this kind of grants. The only way we can help various organizations is through employment creation programs. I am sure all Hon. Members agree that the Government should launch the kinds of programs available at the provincial level, programs to fund applicants submitting financial statements and where Members might act as advisers. There is a program at the Department of Secretary of State, for example, so all we need to do is to provide funding for each riding and Members could make recommendations from a list of projects. For instance, this organization in my riding is active in such or such a field and needs $2,000 to carry out this or that project.
I think that setting all political considerations aside, Members should get together and pressure governments to do something about this. And I don't see this as a way to win votes. It's not a matter of winning votes, because I have won elections without having those budgets. There are other people here who were elected without the benefit of this funding.
In any case, I think it would help give Quebecers and Canadians generally a perception of the federal presence across the country.
If we consider sports, I have a list of organizations here from the riding of Lac-Saint-Jean. Madam Speaker, these organizations do not receive federal grants but they are eligible for grants at the provincial level. The federal Government is prepared to provide funding for skating, hockey, skiing and athletics, but only for top players and young people who do well in competition.
I think that organizations involved in sports, recreation, cultural activities and social concerns, whether they are in Vancouver, Alberta, New Brunswick, Quebec, the Sagenay- Lac-Saint-Jean area, or anywhere else in Canada, should be eligible for federal grants. After all, the people in these ridings pay federal income tax. 1 hope Hon. Members will be agreeable to the Government earmarking funds for this purpose.


Gary Michael Gurbin: Madam Speaker, I am pleased to be able to respond at least in part to the motion put forward by my colleague, the Hon. Member for Montreal-Sainte-Marie (Mr. Malepart). I did not quite follow the last intervention the Hon. Member made regarding sports, but I think we will have to leave the question of sports aside for today. We can get involved in sporting activities another day.
The essence of the motion the Hon. Member has proposed has really to do with the Canadian Jobs Strategy and the difference between what that Hon. Member would do as a part of a Government and what this Government has done with remarkable success since 1984. I think all Canadians would be interested in knowing that 610,000 new jobs have been created since September 1984 and there has been a net increase of 255,000 Canadians of all ages, all stripes and both sexes employed who were not employed before. This has occurred largely because of the approach the Government has taken to provide Canadians with job opportunities.
The motion suggests that we have provided these jobs by somehow causing non-profit organizations or community groups to do without or to not be allowed to participate in the activities we are trying to encourage. That is far from the truth. The figures do not justify any of the suggestions in the Hon. Member's motion or any of the comments he has made.
The Hon. Member has spoken of the groups in his riding. It is fair to say that not every group has been funded, but neither have they ever all been funded.
In the short time I have, I would like first to describe the Canadian Jobs Strategy. It consists of about six different parts and Community Futures, one part of the Canadian Jobs Strategy, and provides perhaps the best example of how we are trying to encourage community acitivity. That program is 100 per cent oriented toward letting individual communities themselves determine their futures and their best opportunities. The program itself is entirely based on flexibility and on opportunities for long-term jobs, not make-work projects. It is not for a Member of Parliament from any constituency to give a person a job for a few weeks and then leave that worker hanging with no future, no dignity and no hope to be able to provide for security in the long term.
We have provided the Canadian Jobs Strategy with programs like Community Futures, Job Development and Challenge programs. We have spoken of private and nonprivate sectors. Under the Challenge '86 Program, the total number of jobs provided by the private sector in 1986 is 29,619 and for the non-private sector, that figure is 48,204. The percentages are the most important in terms of the motion before us. The percentages entirely refute anything the Hon. Member has suggested or tried to suggest. The total percentage of jobs created in the private sector is 38.1 while in the
November 27, 1986

non-private sector it is 61.9. The same kinds of figures can be given for the rest of the Canadian Jobs Strategy.
The private sector is certainly an area that has been targeted because that is where the long-term jobs are. However, the private sector has by no means taken over the show. In fact, in general the non-private sector accounts for most of the continuing activity.
It is important for the Canadian people to understand that there is flexibility in the Canadian Jobs Strategy. In Ontario, there is a great deal of activity and many jobs. The unemployment rate in Toronto is now 5.1 per cent. However, perhaps there are not that many jobs in the Hon. Member's riding or in Newfoundland. The Canadian Jobs Strategy provides the flexibility to deal with that. The figures prove it is working in terms of employment and the absolute figures prove that we are still encouraging the non-private sector to become involved in the Canadian Jobs Strategy. The figures are there for the Hon. Member or any other Canadian to see if they choose to look at the statistics.
The real difference will be proven in the coming six months to one year. The unemployment rate in Canada has dropped dramatically. It is now at 9,4 per cent, the lowest it has been in nearly seven years. All of the other economic indicators suggest that the programs supported by the Hon. Minister of Finance (Mr. Wilson) and other Ministers are working for Canadians and are providing the long-term economic climate in which Canadians can thrive and provide for their own futures.
I think it would be fair to say that the Canadian Jobs Strategy has yet to prove itself entirely in all of its different components. There is one component of it called Innovations that will allow private or non-private individuals or groups to come forward with ideas which we may incorporate into our thinking. It is almost like a mini research and development program and it will let individual Canadians and groups, perhaps some from the Hon. Member's own riding, come forward to make suggestions to Government. With our support, they will be able to find out if new approaches and new ideas might work better in a particular job scene.
I would like to make a suggestion to the Hon. Member. He talked about the involvement of individual Members of Parliament. Another important element of the Canadian Jobs Strategy is the local advisory council. That local advisory council is meant to include the Member of Parliament if he or she chooses to become directly involved and it provides sensitivity to the local area. It provides an opportunity for the Member of Parliament to tell the Minister of Employment and Immigration (Mr. Bouchard) and the Government itself what is wrong with the programs as they are delivered into particular areas.
I do not know if there is a local advisory council in the riding of the Hon. Member for Montreal-Sainte-Marie and I do not know if he participates on it. He is shaking his head to indicate no. That means that he is a little bit like a dinosaur. In spite of
Employment
the fact that solid results that have worked right across Canada are there, he is resisting them. He is even resisting participation. His constituents are probably suffering because he will not take the initiative to change from the old way, which was to hand out jobs that lasted two weeks or two months and then to leave people stuck at the end of it.
This Government will not approach the employment scene that way. It is developing its strategy and has a solid performance record to date. We know that within another six months or so we will be able to give an even better total assessment of our efforts and make changes where necessary. We will look forward to suggestions for constructive changes from the Hon. Member who put this motion, but this motion is clearly out of order. It is certainly inaccurate because the figures simply do not bear it out. I could tell the Hon. Member of other figures that support my position as well.
Under the Challenge '86 Program, as I have mentioned, the non-private sector is still getting the lion's share. Nearly two-thirds of the Challenge '86 Program is on the non-profit side. There are no quotas. We have targets, because the private sector is one that we are trying to support, as it provides longterm jobs. It provides jobs that last not two weeks, not four weeks, not six weeks, but two years, four years and six years. The Hon. Member who has spoken against that belongs, I think, in the Party he represents and on the other side of the House.


Mrs. Anne Blouin (Montmorency-Orleans):: Madam Speaker, I find it difficult to take the Hon. Member seriously when he says that social and community groups have no place in the Government's employment programs.
No other administration has shown as much determination in consulting Canadians, and I may say all Canadians, on the future orientation of this country's labour market. Private citizens as well as agencies responded to the call for consultation and met the challenge to work with us and find solutions to the unemployment problem.
Madam Speaker, the job strategy does not exclude any part of our society that could help develop the human resources of our country. On the contrary, its aim is to obtain the cooperation of all intervenors and to meet and identify needs as specifically and appropriately as possible. Our challenge is to select the best way to meet identified needs, and that is the strength of our program. Thanks to its great flexibility, the job strategy is able to meet a range of needs as vast and diversified as the country itself.
Our program does not overlook the contribution made by social and community agencies that are active in our towns and cities and on the reserves. Although the program stresses action by the private sector, that does not mean non-profit organizations do not have a role to play. In many cases, they

November 27, 1986
Employment
will remain the real basis of many of our initiatives. Many communities rely on them for their infrastructure.
For instance, Challenge '86, our summer employment program for students, has demonstrated that non-profit organizations play a major role in providing career-oriented training. In fact, 62 per cent of the jobs were created in cooperation with non-profit organizations, including municipalities, while 69 per cent of the funding went to that sector.
Madam Speaker, this Government realizes that in some communities in this country, the private sector is practically non-existent.
The increasing emphasis, however, on private sector employers in the job strategy compensates for the years of neglect by previous governments. Consultations which led to the employment planning process taught us that young people, women, long-unemployed Canadians, and workers confronted by technological progress have one common aspiration, that training be geared to labour market opportunities.
Quickly implemented ad hoc employment-creation programs were an appropriate and temporary approach, a good solution. These programs had become necessary and made it possible for workers and communities alike to mark time through short-lived economic downturns.
Madam Speaker, conditions have changed in recent years. The way the previous administration tackled this problem during the recession of 1981 and 1982 prompted us to reconsider our employment strategy. Now we know that workers want a sound vocational training system which will make it possible for them to keep pace with the current technological evolution. Training must be consistent with the dictates of the economy and lead to lasting employment. Through sheer necessity, employment planning tends to meet the practical and basic needs of our labour force, and by that I mean all Canadians.
Thanks to the employment equity legislation adopted last summer the most vulnerable groups-women, native people, visible minorities, the disabled-know they can take an active part in the six programs of our strategy.
Madam Speaker, employment planning principles acknowledge that job training and development must be viewed as the aim of collective efforts on the part of the private sector, nonprofit organizations, and other management levels. Our strategy rests on the enduring good will of all Canadians. The small businessman, the community worker and the volunteer worker can still make their contribution. Madam Speaker, we would be remiss not to give consideration to the most underprivileged in our system. Our efforts to remain competitive on international markets would be wasted if we were to ignore the fundamental structural problems of our society.
Our strategy is directed to responding to the needs of the unemployed that are genuinely underprivileged. This means developing our resources, and it is in that area indeed that the non-profit social and community groups have a major role to
play. Long after an economic recession, we will still have to deal with the problems caused by long-lasting unemployment. This is why social and community groups are entirely free to take part in the implementation of our employment strategy.
For instance, the success of an important program called Job Development largely depends on the participation of community groups and volunteer organizations. That program is aimed more specifically at solving the problems caused by long-lasting unemployment.
We are strongly urging community and social groups to play a co-ordinating role within the Integration and Re-integration options of the Job Integration Program. As you know, that program was designed to help young people move from the classroom to the workplace, and women from the home to the labour market. Beside the participation of those agencies is essential to ensure program efficiency.
Under the Innovation Assistance Program, community and social agencies are invited to apply for funds to test new solutions to problems linked with to the labour market. The potential is tremendous.
Madam Speaker, the Community Futures program is based on direct community resources. It is aimed at supporting iniatives originating from the private sector and the community. Madam Speaker, I do insist on the latter, the community initiatives.
In addition, social and community groups are invited to become active and efficient members of local advisory councils. Their participation is especially appreciated when it comes to establishing priorities with respect to local labour market planning. With the help of local advisory councils, a key objective in our employment strategy is being achieved which is that programs should respond to regional and local needs.
Clearly, Madam Speaker, the Canadian Jobs Strategy provides for a prominent role by community and social organizations. The problems resulting from long term unemployment will not be wiped out overnight. To achieve this, it will be necessary to spend much time and resources in the purest tradition of local and community enterprise.
Madam Speaker, co-operation is the very source of the strength which characterizes our country. The Canadian Jobs Strategy relies on this strength because, in this area, the past is a guarantee for the future.


Lorne Edmund Nystrom: Madam Speaker, I should like to speak briefly on this motion moved by the Hon. Member for Montreal-Sainte-Marie (Mr. Malepart). I support this motion. It reads:
That, in the opinion of this House, the government should consider the advisability of reviewing its policy on employment and the thrust of its programs so that social and community organizations may really fulfil their self-assigned role.
Madam Speaker, when I say that I support this motionjhk:

November 27, 1986



I wish to read into the record some of the points of view about the Canadian Jobs Strategy of a number of social and community organizations. Madam Speaker, some of the social and community organizations are concerned about the direction of the Canadian Jobs Strategy in terms of more and more privatization, and a move away from organizations like community colleges.
First of all, I have a letter written to me by Lynda Murdoch who is from Mohawk College in Hamilton. She is concerned about a number of aspects of the Canadian Jobs Strategy. She states in part in her letter:
Under Canadian Jobs Strategy, the Government of Canada is severely restricting training opportunities for under-employed women and implementing eligibility criteria for unemployed women which encourage them to remain unemployed for longer periods of time.
In direct contravention of the Government's stated goal of promoting equal opportunity, projects based in the profit-making sector which are funded under the Re-Entry component of Canadian Jobs Strategy are providing training which reinforces job ghettos.
As I indicated, the communication was from Lynda Morgan Murdoch of Mohawk College. She is concerned that the reentry component of the Canadian Jobs Strategy will reinforce job ghettoes with women working as waitresses and so on. That is one of her concerns as a result of analysing the programs.
I also have a copy of a brief which was sent to me, as well as to a number of Members of Parliament and Senators. It is from Mr. Terry Dance, Chairperson of the Community Outreach Department of George Brown College in Toronto. The brief was presented in response to the Canadian Jobs Strategy in which he expressed concerns similar to those of other community colleges in Canada. In part it reads:
The Job Entry Program in the Metro area gives a representative picture of the diversity of projects, and the new funding priorities of the federal Government. Of the 40 projects funded for youth and re-entry women in Metro Toronto as of March 20, 1986, over 70 per cent were in the profit-making sector.
It continues:
Consulting firms and individuals, previously unknown in the training field, are tapping into the Job Entry Program.
Terry Dance indicated that over 70 per cent were in the profit-making sector and that various unlicensed firms with no experience and previously unknown in terms of training were now tapping the field. He is concerned about the matter and how it affects long-term training. He is a member of an institution which is well known in the Canadian educational field.
In that we only have 10 minutes each within which to speak, I will refer very briefly to the comments of a third person from the Province of Saskatchewan.
Back in May I received a letter from Mr. Julius Friesen, Executive Director of Saskatchewan Community Colleges Trustees Association.


Benno Friesen: Julius Friesen.
Employment


Lorne Edmund Nystrom: I do not know whether he is related to the Hon. Member for Surrey-White Rock-North Delta (Mr. Friesen), a very esteemed Member of Parliament from British Columbia. Perhaps he is his cousin. However, I think Julius Friesen is more enlightened than the Conservative Member across the way. I know that he thinks in a very progressive way politically; I know him very well. In any event, he is the Executive Director of a very important organization in my province. In referring to the Canadian Jobs Strategy, he wrote:
It appears CJS has not established linkages with post-secondary institutions. Some linkages are essential if the quality of the CJS sponsored programs is to be adequate. In Saskatchewan, at least 80 per cent of industry and business firms employ fewer than 20 people. These firms rarely have the expertise, time or financial resources to develop training programs to meet their needs. In the absence of linkages with the traditional post-secondary institutions, sometimes hastily formed consulting firms and private trade schools are developing projects which may not meet the needs of our business sector, which are not monitored with respect to quality standards, and which may raise false expectations.
He is concerned that some of these hastily formed training schools, companies, and firms may produce people who are improperly trained for many of the small businesses in Saskatchewan. I also have a copy of the letter which he sent to the then Minister of Employment and Immigration, the present Minister of Communications (Miss MacDonald), but I do not have the time to go into it. It is along the same lines.
I should also like to refer to a letter dated March 6, 1986 which was sent to me by J. P. Robert LaRose, Executive Director of the Association of Canadian Community Colleges. Attached thereto is a brief to the Standing Senate Committee on National Finance which was presented by the Association of Canadian Community Colleges. It deals with national support for post-secondary education and it is dated January, 1986 for presentation on March 13, 1986. With reference to the Canadian Jobs Strategy, the brief indicates:
While there are great advantages to on the job training-as part of a comprehensive strategy for training and employment, cautions should be exercised. On the job training is by its nature job-specific, and inappropriate reliance on this kind of training can only lead to enormous costs of retraining at a later date in the kind of fast paced economy to be experienced by Canada in the immediate future. Secondly, a predominant emphasis on the job training undervalues the potential of the training infrastructure built up by the community colleges through Canada over the past 25 years.
I see Madam Speaker signalling that I have only two minutes remaining. I should like to refer very quickly to the assessment of the Canadian Congress for Learning Opportunities for Women of the status of women. It indicates that training programs are becoming less and less relevant for women over the passage of time. I do not have time to read parts of the document into the record, but I should like to indicate that its concerns are similar. It is a very well researched document and I recommend it to Hon. Members of the House. They can obtain copies by contacting the association's office.
My last point concerns what we find in the Government's documents. For example, there is a tremendous increase in funding for unlicensed people in training. I have a copy of a
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November 27, 1986
Employment
document whose source is Canada Employment and Immigration. It indicates the status of job entry programs as of June 30, 1986.1 should like to put a few of them on record.
Of a total expenditure of some $17,738,000 in Ontario as of June 30, 1986, almost half or some $8.8 million was spent in the unlicensed sector. We also find that colleges received $1.8 million; schools, $1.5 million; private vocational schools, $2.2 million; non-profit organizations, $1.8 million; and subcontracts to colleges, under $500,000.
I should like to refer to my very last point. Of the 161 projects in Ontario as of June, 1986, 70 of them went to unlicensed organizations. The community associations to which I have referred are concerned about that direction of the Government. Perhaps some government Members could respond to those concerns later. I have referred to the comments of these organizations. They were not partisan comments by any politician on either side of the House.

Thank you, Madam Speaker, for your kindness towards me this afternoon. You are very nice.


Mr. W. Paul McCrossan (York-Scarborough):: Madam Speaker, it is with pleasure I rise to participate in the debate today. Upon reading the motion my first impression was perhaps to agree with it. Any Government should be constantly reviewing its policy on employment and the thrust of its employment programs. Any Government should be looking at the role of social and community organizations in its job strategy.
However, the implication in the motion is flawed. It is indicated that the Government has not been doing that. Obviously the Government has been much more active in terms of redesigning job programs than any recent Government. Certainly our activities in the non-profit field-and the previous Hon. Member who spoke challenged me to refer to it-have been very active.
Recent economic forecasts indicate that the Canadian economy will experience significant real growth in the future. As a result, Canadian workers should enjoy improved employment prospects. However, these better times will not be shared equally by all Canadians. The seriousness of the situation and the changing demands of the labour market call for new approaches to the problem if Canadians are to have improved employment opportunies now and in the future.
In response to the employment needs of Canadians, the Government has undertaken several initiatives. For example, it has undertaken a major restructuring of labour market policies to assist all workers and has recently entered into an agreement with the provinces and the territories to increase the labour market opportunities of social assistance recipients. In large part the voluntary sector deals with such recipients. I can assure the Hon. Member that the initiatives contain strong
community focus and involvement which effectively strengthen the interests of community and social organizations.
All Canadians who wish to hold a job can now look to the future with greater expectations with the Government's new strategy to prepare Canadians for the changing labour market-the Canadian Jobs Strategy. Because the strategy is based upon consultations with Canadians concerning their greatest needs, it addresses a wide variety of employment and training needs which range from labour shortages in some areas to the requirements of lower skilled and disadvantaged Canadians who would otherwise have little hope of ever entering the labour market. The flexibility of this new approach to the employment needs of all Canadians ensures that particular community and local needs will be addressed.
Briefly, the Canadian Jobs Strategy is a blueprint for revitalizing Canada's labour market. Currently it has six programs which have been created to meet immediate needs and to offer a framework for national action. They are not the final solution, but they are just specific and pressing problems.
Skills Investment, the first program, helps workers whose jobs are threatened by changing technology. The second program, Job Entry, helps young people and women to get their first job.
With respect to the challenge thrown out by the Opposition, it is worth noting that with the job entry programs in the last Fiscal year some 47 per cent of the moneys was distributed to the non-profit sector. So far this year distribution is running at 57 per cent, hardly indicating that the motion has validity.
The third program, the Job Development Program, offers meaningful assistance for the long-term unemployed. Just looking at this program, we can see also that the motion is flawed. In the last fiscal year 63 per cent of the moneys under this program went to the non-profit sector, 28 per cent to the private sector and 9 per cent to the municipal sector. This year, so far, we are running at 54 per cent to the non-profit sector with a decrease in the private sector to 18 per cent and an increase in the municipal sector to 28 per cent, exactly what the motion would suggest we are not doing, namely, putting money into non-profit and community organizations. Fourth is the Innovations Program which stimulates the search for new initiatives. Fifth is the Skill Shortages Program which ensures that critical skill shortages are alleviated. Sixth is the Community Futures Program which offers help to workers in communities facing chronically high unemployment, plant closures or massive lay-offs. So far, Madam Speaker, 90 communities have been selected. There is an obvious commitment by the Government to communities to give communities a voice in their own futures, exactly what the Hon. Member's motion is suggesting. I think the Member should be applauding us for doing what we are doing rather than suggesting in some way that we have been negligent.
November 27, 1986

Let me turn now to the agreement that the Minister of Employment and Immigration (Mr. Bouchard) and the Minister of National of National Health and Welfare (Mr. Epp) have concluded with their colleagues in all the provinces and territories on initiatives that will assist social assistance recipients to move to self-sufficiency. After all, most of the non-profit organizations around are concerned with those on welfare. Obviously there have been major initiatives to help those on welfare.
We tend to forget that social assistance recipients represent a significant portion of unemployed Canadians. In the past, their participation in federal employment programs has not been representative of their share of the jobless. The agreement that we have signed with the provinces and territories is intended to provide social assistance recipients with the opportunity to participate fully in the Canadian Jobs Strategy. Moreover, the initiatives in this agreement should be more responsive to the needs of individuals at the community level.
One initiative in the agreement states that participation levels for the social assistance recipients will be set in the Canadian Jobs Strategy. As a result, Canadians having serious difficulty in entering the labour market can expect improved job and training opportunities from the increased access to programs in the Canadian Jobs Strategy. This initiative is a major step forward for disadvantaged Canadians.
In addition, another feature of the agreement provides the provinces and the federal Government with the ability to divert resources that would have been used to maintain a person on social assistance to work experience and training programs.
In the February, 1986 Budget, the Minister of Finance (Mr. Wilson) announced that the federal Government would provide $100 million a year for this agreement for the next three years and that this would be matched by the provinces. To date, three provinces have signed agreements; British Columbia, Saskatchewan and Newfoundland. As well, we have developed a national evaluation strategy to provide a cost benefit analysis framework so that we may determine which programs work best during this three year experimentation process rather than just throwing money at the problems, as the previous Government did, and not assessing the worth that is produced.
Other measures in the federal-provincial agreement have also been initiated to make existing programs more responsive to individual needs. One measure deals with changes to the guidelines to the Canada Assistance Plan, a major program in the Department of National Health and Welfare which supports Canada's network of social assistance and social services. While the program meets its basic task of maintaining persons who are on social assistance, it will now provide improved tools to assist those persons in getting off social assistance and into long-term employment. This agreement goes a long way toward minimizing disincentives to work or training for social assistance recipients. The changes to the CAP guidelines permit provinces to allow social assistance
Employment
recipients to keep some of their social assistance benefits in addition to their training allowances.
This initiative has provided three important achievements. First, we are spending the money smarter. The money is not just going to help maintain an individual on social assistance, but to enhance the employability of that individual. Second, we are aiding the poorest of the poor and helping them to become employable. Third, we are working in excellent harmony with our provincial counterparts and in community organizations which are most concerned with the poor.
As the Hon. Member can see, the Government is committed to helping unemployed Canadians receive training and find useful and productive jobs. Moreover, this commitment is based on a flexible strategy, that is, one responsive to individual and community needs. As well, these programs are targeted to those regions that are hardest hit and those Canadians that are most disadvantaged. This Government recognizes its role in helping these Canadians and has responded to it by establishing a job strategy that keeps pace with a continually changing labour market and does so with simple, realistic, effective programs that develop our most important resource, the people of Canada.


Mr. Gilles Grondin (Saint-Maurice):: Madam Speaker, I just wish to add a little weight to the proposal made by my friend the Hon. Member for Montreal-Sainte-Marie (Mr. Malepart). You will certainly understand why I would not readily support what my hon. colleague was asking for the organizations which had been made by this Government in the job creation field and especially for those from non-profit organizations.
Madam Speaker, you will understand that I, for one, think that one of the basic points raised by my friend the Hon. Member for Montreal-Sainte-Marie was dealing less with job creation than the assurance that non-profit organizations could benefit fully from programs offered by the Government. As a matter of fact, even though I was not then a Member of this House, I had the opportunity to work with organizations in my region, and the basic problem which we faced this summer was that, with the change in eligibility criteria, non-profit organizations in the region were penalized and could not find programs or were unable to find projects which would have allowed them to create a few jobs, to develop and to survive because, without the financing of the federal Government, these organizations would have great difficulties in surviving.
Madam Speaker, I also want to point out to the Parliamentary Secretary that, unfortunately, the federal Government and Quebec have not signed any agreement for training. This absence of an agreement causes problems for the non-profit organizations which would like to apply for training programs.
The examples mentioned by the Parliamentary Secretary are more closely concerned with the Toronto region, while we are proposing programs for all of Canada. As for me, I am more interested in dealing with programs for young people.

November 27, 1986
Employment
If we look at an assessment of the Challenge '85 program prepared by the Department of Employment and Immigration, we find for instance that only 33 per cent of the jobs giving work experience in the field of study of young people were found in the private sector. Generally, the non-profit sector has had more success in creating new jobs than the private sector.
Analysis of the program also confirms that many jobs, especially in the private sector, would have been created in any case, even without the support of Government subsidies.
Madam Speaker, although my hon. friend from Edmonton stated that many programs were being offered to non-profit agencies, 300 agencies in this country have joined together to form a coalition, and they have indicated they were being affected by most of the cutbacks in the federal Challenge '86 program. This program is of course concerned with providing jobs for young people.
In fact, although it had a budget of $215 million in 1985, the Challenge program's budget for this year is $180 million. To everyone's surprise, it was the non-profit sector that absorbed most of the cutbacks, over 95 per cent, although that sector was given the best evaluation last year. And the private sector, which did not do as well as expected in the summer program last year, suffered only minor cutbacks. If we put this in percentages, about 40 per cent of Canada's non-profit organizations have been affected by this measure.
I think that although my hon. friend was enthusiastic about the Government's decision to promote programs that would benefit all Canadians, the fact remains that at least 300 agencies have protested these cutbacks.
When all is said and done, there were concrete results in British Columbia: out of 20 Vancouver organizations sponsoring youth summer camps, eight had to abandon their projects, two kept operating with budget cuts of 50-odd per cent, and one with budget cuts of about 20 per cent. This prompted the Little Mountain Neighborhood House executive director to say that indeed this Government is inspired by a philosophical trend whereby social services have much less priority, and ever larger funds are given to the private sector rather than to nonprofit organizations.
Madam Speaker, I should point out as well that this year 65 per cent of the Challenge '86 budget was allotted to the public sector and non-profit organizations in British Columbia. Last year, the proportion was up to 75 per cent. The federal Government made job creation by the private sector one of its priorities, even though, as I said, the evaluation of the program Challenge '85 that was done by the Department of Employment and Immigration showed that the non-profit sector was generating more jobs than the private sector.
Closer to us, about a hundred groups have protested against the cuts in Challenge '86, pointing out that last summer's $34 million cutbacks deprived nearly 115,000 Canadians of the services they had enjoyed in previous years. Summer camps for
underprivileged young people and assistance programs for senior citizens especially were affected.
Finally, before I conclude I would like to bring to your attention, Mr. Speaker, certain figures which reach beyond the statistics that may be used regularly by Government Members to justify or show a measure of job creations, because we note from year to year that programs or budgets allotted by the Government keep decreasing. Taking for instance the budget for Challenge '86, there were $180 million for job creation, of which $127 million went to the major components Summer Employment and Job Experience. The Challenge '85 budget included $205 million for job creation, $163 million of which were used for Summer Employment and Job Experience. This means there was a $25-million cutback for 1985-86.
Under Challenge '85, non-profit groups produced twice as many jobs throughout Canada as the private sector. And the distribution of the 29,170 jobs, jobs generated in Quebec under Challenge '85 was: 50 per cent with the non-profit groups, 40 per cent with the private sector, and 10 per cent with the municipalities.
All this, Madam Speaker, goes to show that this Government's commitment to reducing the reliance on non-profitable organizations as compared with previous years is a policy which is very bad in itself and which condemns the federal Government's current action. I therefore support the proposal put forward by my colleague for Montreal-Sainte-Marie, which is to go ahead with the best projects submitted, whether they come from non-profit or profit groups, provided they give an opportunity to young people in a given region to work and acquire job experience.


Mr. Clement M. Cote (Lac-Saint-Jean):: Madam Speaker, I just could not begin my remarks the way the Hon. Member for Saint-Maurice (Mr. Grondin) did and say that I will try to give more weight: you will understand that it would be difficult for me to give more weight, but I will try to set the record straight, Madam Speaker.
On the one hand, the Hon. Member for Saint-Maurice (Mr. Grondin) stated that in the Greater Toronto area, under Challenge '86, more money had been given to the private sector than to non-profit organizations. Well, I hope that the Hon. Member can use a pencil to jot down a few figures. In the Greater Toronto area, some $6,195,672 were given to the private sector, compared with $9,829,757 to non-profit organizations.
1 should like to add something to what the Hon. Member for Yorkton-Melville (Mr. Nystrom) said concerning job creation for women. Madam Speaker, may I say that compared with the former program, there has been an increase from 36 per cent to 45 per cent in the number of jobs for women.
The objective sought by the Hon. Member for Montreal- Sainte Marie is quite commendable, that is for the Canadian Government to give more to non-profit organizations and to
November 27, 1986

the most needy. Where the Hon. Member for Montreal- Sainte-Marie gets off the track is when he asks the Government to scrap the present policy on job development and return to the previous system. He mentioned a while ago the riding of Lac-Saint-Jean. Let me say, madam Speaker, and I could deal with that for an hour or even more, that in my riding, the new program made it possible this year to increase the number of recommended projects by 28 per cent. I wish I could have dealt more with this program which is quite welcome back home, because it is very helpful to the unemployed, the needy, and the non-profit organizations, contrary to the former program.


The Acting Speaker (Mrs. Champagne):: The hour provided for the consideration of Private Members' Business has now expired.
Pursuant to Standing Order 42(1), the item is dropped from the Order Paper.
Pursuant to the Order adopted on Wednesday, November 26, 1986, the House is now suspended to the call of the Chair.


SITTING RESUMED The House resumed at 8.35 p.m.
The Acting Speaker (Mrs. Champagne):: 1 have the honour to inform the House that a message has been received from the Senate informing this House that the Senate has passed Bill C-27, an Act to facilitate the continuation of the business of the Bank of British Columbia, without amendment and with observations.