1986-11-26

STATEMENTS PURSUANT TO S.O. 21


Mr. George Henderson (Egmont):: Mr. Speaker, the fishermen in our country depend on the fishery resources to survive. These resources have been threatened by the dramatic increase of infractions and overfishing by foreign offshore vessels. The number of violators caught and punished are just a drop in the bucket compared to the global problem. But what has the Government done to stop this illegal activity?
In a document released at the recent First Ministers' Conference, it was clearly pointed out that air surveillance and observer coverage were well below the effective levels established in the late 1970s. Air surveillance has been greatly reduced, by 550 air hours since 1970. Observer coverage on foreign vessels has been reduced by 50 per cent to 80 per cent.
Does the Government expect these violators to turn themselves in because they are overcome by remorse? If they are not caught, they cannot be prosecuted. The price of fish is high today. With a low likelihood of being apprehended, the risks are worth it. But these risks are taken at the price of Canadian fishermen. I demand that the Government increase its air surveillance and observer coverage on foreign vessels immediately, before there are no fish left for anyone to catch.


INDUSTRY
Mr. Jean-Luc Joncas (Matapedia-Matane):: Mr. Speaker, very soon it will be a year since a now well-known project has been unveiled-the Matane paper mill. First I might indicate that, for some people, this project may have been oversimplified, even though Lower St. Lawrence and Gaspe residents view it as a rather challenging and extremely important venture.
Be that as it may, Mr. Speaker, given such protracted negotiations between the various interested parties, people
generally and my constituents in particular are now becoming increasingly concerned and wondering whether they are being taken for a ride.
Indeed no one would tax me with being excessive if I were to suggest that, in some respects, this project which has been bandied for over 20 years smacks of some kind of mental cruelty.
Mr. Speaker, I am sure you understand why my constituents now want the powers that be to honour their commitment and come up with an early decision on this matter which has .a serious impact on a region of our country where unemployment is rampant.


FISHERIES
Mr. Jim Fulton (Skeena):: Mr. Speaker, a moratorium on the granting of fish farm licences is in effect in British Columbia while a Commission of Inquiry led by David Gillespie takes place. However, a real comprehensive study of the aquaculture industry is long overdue. The concerns of both aquaculturalists and traditional fishermen must be addressed. The fact that this Socred Commission has a mere two weeks to report, however, proves the present process a farce.
The federal Government has its own role to play in the granting of fish farm licences. It must ensure the environmental quality of salmon habitat and guard against the deposition of substances like tributyl tin and other chemicals that prove toxic to fish. British Columbians look to Ottawa for leadership but all they find is a Conservative administration which has not done one comprehensive public review of the budding aquaculture industry. Because of continued inaction, events have been allowed to proceed to the present state of chaos.
It seems those involved in the fishing industry can expect little else from the Mulroney Government. It promises $200 million for salmon enhancement and then delivers cut-back after cut-back. It promises a $100 million for fleet stabilization and now, over two years later, still nothing. It allows weather forecasting to deteriorate and is now abandoning lighthouses. The Minister's Advisory Committee has been abandoned-


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

November 26, 1986


LABOUR CONDITIONS
Mr. Jim Jepson (London East):: Mr. Speaker, Canada's unemployment rate has gone down again. More Canadians are finding gainful employment across this vast nation of ours. Last month Canada's seasonally adjusted unemployment rate stood at 9.4 per cent, down from its previous September rate of 9.5 per cent. Moreover, the unemployment rate for my Province of Ontario is now 6.9 per cent and 17,000 new jobs were created last month.
In the city of London, where my constituency is located,
12,000	new jobs have been created since the last election, and the unemployment rate has fallen from 9.9 per cent in September, 1984, to a level of 6.1 per cent today. I know there are regional disparities in the country but our Government's Speech from the Throne on October 1 specifically referred to new efforts and initiatives which will redress these imbalances. Our Government is determined to see that improvements in employment situations will be brought forward to benefit all Canadians from coast to coast. Truly, Canadians do have hope for tomorrow.

[ Translation]


REGIONAL ECONOMIC DEVELOPMENT
Mr. Jean-Claude Malepart (Montreal-Sainte-Marie):: Last Monday, Mr. Speaker, regional development advisory committee president Picard released his one-year study report. Everyone recalls that last July 4 the Montreal East survival committee members met with Mr. Picard's team to make sure that the advisory committee report would contain constructive suggestions to help Montreal East residents develop new employment opportunities.
Mr. Speaker, allow me to voice my disappointment because the reports submitted by the committee members are little more than pious wishes. Unfortunately they failed to make sound recommendations to restore the confidence of people who work for Vickers, Canadian Steel Wheel, La Forge and Bombardier. It is a shame, Mr. Speaker, and I hope the Conservative Government and Conservative Members will wake up and find ways to create jobs for Vickers and Bombardier workers in Montreal East.


SMALL BUSINESS
Mr. Don Ravis (Saskatoon East):: Mr. Speaker, Canada has more than 700,000 small businesses which are the backbone of our economy. They are our greatest resource of new ideas, new opportunities, new wealth, and new unemployment. Our Government encourages entrepreneurial spirit, the same spirit Kristan Shannon, head of the Canadian Trend Report, referred to at Forum 2000, a national New Democratic Party Satellite Conference on the Future.
Ms. Shannon stated: "Canadian workers will have to look more to their entrepreneurial spirit and self-help potential". The Conservatives recognize the every-day risks involved in independent business and the fact that jobs cannot be guaranteed. The New Democratic Party and some unions must face the economic realities in Canada that we cannot guarantee all jobs. Small-businessmen and women across the country can continue to count on the support of our Government which is committed to entrepreneurial drive.


POLITICAL PARTIES
Mr. Rod Murphy (Churchill):: Mr. Speaker, at a recent meeting of the Conservative Party in my riding, Frank Clark, a paid federal organizer for the Conservative Party, was reported in the Thompson Citizen as stating that he defended the move of a penitentiary to the Prime Minister's Manicoua-gan riding, a move which will cost the taxpayers $40 million extra, because its former location was in a Liberal stronghold.
He also defended the recent CF-18 decision, saying that it was "morally unjust" but "politically correct".
Mr. Clark's clumsy defence of the Government brings to mind the story of a man who was accused of visiting a prostitute. He excused his action by saying that it was morally wrong but biologically necessary. The judge replied that the man must learn to follow the dictates of society rather than the dictates of his own needs.
The Government must learn to respond to the needs of the Canadian people whom it was elected to represent, not the needs of the Conservative Party.
November 26, 1986


VOLUNTARY ORGANIZATIONS
Mr. Albert Cooper (Peace River):: Mr. Speaker, 1 wish to draw to the attention of the House a great example of Canadian volunteerism, a book entitled Dear World/ Cher Monde. This book is part of a Canadian children's project to help children less fortunate in the Third World. The question was asked of our youth: "What would you do to put the world right?" Their drawings and messages are both a celebration of hope and a cry from their souls puzzled by the cruelty and disparity of the world.
These young people remind us that this is indeed a dear world. By their talent, honesty, and desire to contribute their thoughts and ideas they give us confidence to continue an ongoing search for a resolution to the disparity and turmoil around us.
Most of the money earned from the sale of this book will go to Global Ed-Med Supplies, a Canadian charity which provides medical training, supplies and other support material to developing countries. Specifically, funds will be used to establish health care clinics in Jamaica and Haiti.
If youth are the barometer of tomorrow, I can tell you, Mr. Speaker-


Mr. Speaker:: Order, please. The Hon. Member's time has expired.


LABOUR CONDITIONS
Mr. John Nunziata (York South-Weston):: Mr. Speaker, as you know, youth unemployment in Canada is a national tragedy. The Conservative Government is doing absolutely nothing about it. There are some 600,000 young people in Canada who are without jobs. That is an unemployment rate of 16 per cent to 18 per cent, double the adult unemployment rate. Yet the Government has not seen the wisdom to address itself to this very serious problem.
Instead of combating youth unemployment the Government and the Prime Minister (Mr. Mulroney) are content to build prisons in his riding.
If the Government is able to find SI billion for farmers, $1 billion for banks, and billions of dollars for the oil industry, then surely the Government can find sufficient resources to give our young people hope for the future instead of wasting millions of dollars to accommodate the Prime Minister's constituents in his own riding. I call upon the Government of Canada to be-


Mr. Speaker:: Order, please. The Hon. Member's time has expired.


S.O. 21 ABORTION CALL FOR MORE FREQUENT PUBLICATION OF STATISTICS
Mr. Alan Redway (York East):: Mr. Speaker, it was announced recently that Statistics Canada will only compile and publish complete socio-economic and medical data on abortions in Canada once every three years. In England and Wales information on legal abortion is not only published in regular annual reports, the agency concerned also publishes quarterly reports on abortions, including specific demographic and medical data.
Under the former Therapeutic Abortion Program of Statistics Canada, the interval between the date of data collection and the date of publication was about two years. We have no reason to believe this system will in any way be improved. Therefore, with complete data collected every three years, we can expect the next complete statistics to be compiled in 1988 and published in the year 1990.
The abortion issue is a vital one for all Canadians. We should be publishing this data more frequently, as is being done in Britain, not less frequently as Statistics Canada has recently announced.


CANADA POST CORPORATION
Mr. John Parry (Kenora-Rainy River):: Mr. Speaker, as a representative of a rural riding I am alarmed by what I see the federal Government doing to rural postal service in Canada in the name of cutting costs. Currently, Canada Post has 5,221 rural post offices. From the President's statement on November 20 it appears that there are 5,221 too many, not to mention rural route service. The plan is to turn 3,500 of these offices over to the private sector. One does not have to be a prophet to see the resulting variation of services in different areas with no national standards. The remaining 1,700 offices are to be amalgamated or replaced with multiple-site mailboxes.
When Canada Post was created it was established to extend its products and services and provide a standard of service that would meet the needs of the people of Canada. Neither these goals nor the rural way of life are obsolete but they could become so if the Government does not change its current tack.

Mr. Speaker, in most villages and smaller cities the post office is the only sign of a federal presence, the only place where residents can see the Canadian flag. The closure of rural post offices undermines Canadian unity.


Mr. Speaker:: 1 regret to interrupt the Hon. Member, but his allotted time has expired.

November 26, 1986
Oral Questions


UNITED NATIONS
Mr. John Reimer (Kitchener):: Mr. Speaker, on May 7 I
spoke critically in the House of Canada's Ambassador to the United Nations, Mr. Stephen Lewis. Today I rise in praise of the Ambassador for his November 5 address to the United Nations in which he justifiably condemned U.S.S.R. Foreign Secretary Eduard Shevardnadze for his gross misrepresentation of events in Afghanistan as a "national democratic revolution". Mr. Lewis properly characterized this incredible description of Soviet intervention as a "linguistic mask designed to hide the brute face of oppression".
When Mr. Shevardnadze later complained that the UN debate on Afghanistan was destroying "the fruits" of the revolution, the Ambassador quickly cited the one million Afghan dead and asked "what revolutionary fruitfulness transforms an entire country into a killing field?" Canadians will not be appeased by pathetic rhetoric and Ambassador Lewis is to be commended for reminding the U.S.S.R. of that fact.



ORAL QUESTION PERIOD


Right Hon. John N. Turner (Leader of the Opposition):: Mr. Speaker-


Some Hon. Members:: Hear, hear!


John Napier Turner: It will be even more enthusiastic on this side of the House and less enthusiastic on that side of the House on Monday.

My question is directed to the Prime Minister. These days, developments regarding the final agreement on softwood lumber are showing once again the incompetence of the Prime Minister and his Government. Doesn't he realize that his Government's performance will destroy Canada's credibility in any future trade talks, not only with the United States but with other countries?


Right Hon. Brian Mulroney (Prime Minister):: Mr. Speaker, I think the position taken by the Government of Canada is a position that shows reasonable and thoughtful leadership, in that we are trying to find a formula that will resolve a complex and serious problem in the interests of Canadians. I admit quite frankly this is not an easy matter. It is a very complex situation, but nevertheless, we are trying to
solve these problems on an entirely reasonable basis. Up to now, the approach submitted by the Minister for International Trade and supported by the provincial premiers seems to be working in favour of Canadian interests.


POSSIBLE EXPORT TAX INQUIRY
John Napier Turner: Mr. Speaker, today there is complete confusion in provincial capitals about the position of the federal Government in these negotiations, and indeed, no agreement as to any rate of stumpage fees individual provinces might impose will leave the federal Government in a position of having to impose an export tax if it will fulfil its understanding with the United States, whatever that understanding is. Will this export tax be on lumber directed solely to the United States market, something which would be contrary to international trade law, or will it be an export tax on lumber generally, something which would absolutely destroy our Pacific Rim markets and opportunities?


Right Hon. Joe Clark (Secretary of State for External Affairs):: Mr. Speaker, the Right Hon. Leader of the Opposition has been a long time in Parliament and knows the rules about hypothetical questions. I am not in a position nor is anyone in the Government to describe the nature of action Canada might take in the event of an agreement with the United States except to say that the action proposed now would keep in Canada money that would otherwise go to the United States and would end a countervail petition that could be harmful to this country.


GOVERNMENT POSITION IN NEGOTIATIONS
John Napier Turner: The
Secretary of State may call the question hypothetical. He has two days left to make it concrete, because time is running out for him.
My final question is for the Prime Minister. When are he and the Government going to stop acting like branch plant managers allowing the United States customer to set our prices for international commodities?


Charles Joseph Clark: Mr. Speaker, I would think that the Leader of the Opposition would want to refrain from using phrases like "time is running out".


An Hon. Member:: Be careful, Joe, it is a very delicate situation.


Mr. Axworthy:: Mr. Speaker, that is obviously the voice of experience talking.


WASHINGTON MEETING-CANADIAN APPROACH
Lloyd Axworthy: My
question is directed to the Prime Minister. The Secretary of
November 26, 1986

State said that the proposed deal is hypothetical yet we know that a meeting was held in Washington today between Canadian officials, lumber industry officials, and members of the U.S. Government. Does the Prime Minister not think that now that the U.S. lumber industry knows what the deal is, the U.S. Government knows what the deal is, it is time that Canadians knew what the deal is and what it will cost? When is the Government going to come clean as to what it is going to cost Canadians in this type of deal that it is offering the Americans?


Charles Joseph Clark: Mr. Speaker, yesterday in the House of Commons I read into the record the statement that had been made by my colleague, the Minister of International Trade, as to the nature of the approach that is being discussed with the United States. It is known here in the same terms that it is known elsewhere.
As to the consequences, if there is an agreement by the United States, among the consequences will be that hundreds of millions of dollars would stay in Canada that would otherwise flow from Canadian hands to the United States. We think that that is a goal to be pursued.


IMPACT ON LUMBER INDUSTRY
Lloyd Axworthy: Mr. Speaker, my supplementary question is directed to the Secretary of State. When the Minister says hundreds of millions of dollars will stay in Canadian hands, is it not true that those hundreds of millions of dollars will either be drawn from the Canadian consumer because of exorbitantly higher prices for Canadian housing, if the stumpage fee is raised, or those hundreds of millions of dollars will be added to our exports to other countries? What we are trying to find out in the House is what is the Canadian Government putting on the table. What is going to be the impact of cost to the Canadian lumber industry of that deal? Why will the Government not tell the truth in the House as to what it is offering the Americans?


Charles Joseph Clark: Mr. Speaker, I make it a practice of telling the truth. We are doing that here. We have indicated to the House of Commons the nature of what is being discussed with the United States. There is no question at all, the simplest mind can comprehend it-


Lloyd Axworthy: We want you to do it. That's why we asked you.


Charles Joseph Clark: -that if we are able to have an arrangement that keeps in Canada money that would otherwise go to the United States, that is in the interest of Canada.


STUMPAGE FEES-EFFECT ON EXPORTS
Hon. Edward Broadbent (Oshawa):: Mr. Speaker, my question is a very serious question for the Minister. The Minister knows that the Government has publicly said that one
Oral Questions
of the proposals is to have stumpage fees increased by the provincial Governments. Considering that only one-fifth of the $18 billion in forest product exports is made up of softwoods going to the U.S., will the Minister now acknowledge that the Government's proposed solution is going to drive up the cost of 100 per cent of Canadian exports in this sector?


Some Hon. Members:: Hear, hear!


Charles Joseph Clark: No, Mr. Speaker, I will not acknowledge that.


John Edward Broadbent: Why not?


Charles Joseph Clark: What I will do is remind the House of Commons that not very long ago when my colleague, the Minister of Finance, brought down a Budget, the response of the Leader of the New Democratic Party was to predict that there would be massive job losses across the country. His prediction was wrong then. His record of prediction is well known. He will be proven wrong again.


John Edward Broadbent: Mr. Speaker, you can always tell when a Minister does not wish to answer the question. He knows that the truth will be painful for his Government.


Some Hon. Members:: Hear, hear!


MINISTER'S POSITION
John Edward Broadbent: I wish to ask the
Minister this. Doesn't he realize that by yielding to this U.S. blackmail in this way he is going to drive up the cost of all our exports in this sector, which will likely cost jobs in almost every province in Canada. How stupid can you get?


Some Hon. Members:: Hear, hear!
Right Hon. Joe Clark (Secretary of State for External
Affairs): Mr. Speaker, I do not like to sink to this level, but not as stupid as the Hon. Member.


Some Hon. Members:: Hear, hear!


Mr. Speaker:: Perhaps the Hon. Member could use some appropriate restraint in his final question.


GOVERNMENT POSITION
John Edward Broadbent: Mr. Speaker, I hope the Minister will answer questions about the facts. If the Minister is willing to discuss the facts, we can have a discussion without the rhetoric. However, it is up to him and to the responsible Minister to answer. My question is simply this: Does he agree that by taking this approach, the Government will increase the price of all exports in this industry? Is that true, yes or no?


Charles Joseph Clark: Mr. Speaker, as is always the case under a truly

November 26, 1986
Oral Questions
bilingual system, the answer is the same, in French and in English.


ANNOUNCED CLOSURE OF LUMBER MILL AT NAIRN, ONT.
Mr. Maurice Foster (Algoma):: Mr. Speaker, my question is for the Prime Minister. Last night he received a telegram from the Vice-President of Eddy Forest Products indicating that the company is shutting down its softwood lumber mill at Nairn, Ontario, which employs some 300 workers, because the Government has undercut the efforts of the Canadian Forest Industries Council in its fight against the United States countervail, and thus abandoned the industry and workers involved. Why is it abandoning the industry and the workers involved and causing these lay-offs?
Right Hon. Joe Clark (Secretary of State for External
Affairs): Mr. Speaker, the Government of Canada is taking action which will precisely protect Canadian workers and the Canadian softwood industry. We are now faced with a situation which not only involves the exodus from Canada of hundreds of millions of dollars but could perpetuate a system of uncertainty in that industry. That is not in the interest of the country, of the industry, or of the people who derive their employment from it.


Maurice Brydon Foster: It is too bad the Prime Minister would not respond to the question, since 300 workers are involved and it is the third sawmill to shut down in northern Ontario in the last week.


RESTORATION OF JOBS-GOVERNMENT POSITION
Maurice Brydon Foster: Mr. Speaker, my supplementary question is directed to the Prime Minister. How will the Government restore these 300 jobs lost at Nairn and the others in northern Ontario? When will the Government stand up to the countervail, fight for Canada and fight for Canadian jobs?
Right Hon. Joe Clark (Secretary of State for External
Affairs): Mr. Speaker, there is absolutely no contesting the fact that, as a result of protectionism in the United States and elsewhere, jobs across the country are threatened. The position the Government has been putting forward for some time is that we should not simply back away from that reality and accept continuing unemployment and continuing deterioration as a part of Canadian reality, as did the old Liberal Government. Instead, what we must do is try to put in place a better system. That is why we are undertaking trade negotiations with the United States and with the world to try to restore Canada's reputation as a competitive and effective international trader.


POSSIBLE EXPORT TAX-ALLOCATION OF REVENUES
Mr. Nelson A. Riis (Kamloops-Shuswap):: Mr. Speaker, my question is for the Minister of Finance. It has been confirmed that the Department of Finance has now drafted legislation for an export tax. Will the Minister of Finance
assure us that moneys raised from such an export tax from each province will be returned in full to the provinces so that revenues raised in the Province of British Columbia and others will in fact be returned to them to reinvest in the forest industry?


Hon. Michael Wilson (Minister of Finance):: Mr. Speaker, as the Secretary of State for External Affairs has said, these discussions are proceeding with the Governments of the provinces. When there is an announcement to make to that effect, to answer the question put by the Hon. Member, the announcement will be made.


REQUEST THAT REVENUES BE PAID TO PROVINCES
Nelson Andrew Riis: Mr. Speaker, my supplementary question is for the Minister of Finance. Since legislation has been drafted and the imposition of such a tax is now inevitable, does the Minister of Finance not think it would be appropriate, to alleviate any fears and concerns in the producing provinces, for him to stand in his place to guarantee to Canadians, particularly to Canadian forest producers, that any revenues raised from such an export tax will in fact be returned to the province from which the money is derived?


Michael Holcombe Wilson: Mr. Speaker, the Hon. Member knows well that there is very, very close discussion and consultation going on between the federal Government and the provincial Governments. That is the intent of the proposed legislation and the precise means by which that will be done will be discussed and announced in due course.


PRESENCE IN GALLERY OF VICE-PRESIDENT OF ECUADOR
Mr. Speaker:: I wish to draw to the attention of Members the presence in the gallery of His Excellency Blasco Penaherr-era Padilla, Vice-President of Ecuador.


Some Hon. Members:: Hear, hear!


CANADA POST CORPORATION
Mr. Jacques Guilbault (Saint-Jacques):: Mr. Speaker, my question is for the Minister responsible for Canada Post. We understand that the so-called superboxes do not provide security for parcels as they are placed together in one parcel
November 26, 1986

Oral Questions
compartment. They can be seen or taken away by anyone accessing the parcel compartment. How does the Government intend to provide security for these parcels? Would it not be a better solution to deliver parcels to Canadians at home, which is what they want?


Hon. Bernard Valcourt (Minister of State (Small Businesses and Tourism)):: Mr. Speaker, it is the responsibility of Canada Post to ensure a safe system of delivery. The Government will ensure that Canada Post lives up to its obligations.
We have witnessed in recent days something happening with the supermailboxes. We are informed by Canada Post that measures have been taken to correct the situation. We are also informed that the system is safe.


Mr. Gauthier:: The open-door policy.


Jacques Guilbault: Mr. Speaker, it is certainly the open-door policy. How can parcels be secure? They are all bunched together in the same compartment.


COST OF RATIONALIZATION PROGRAM
Jacques Guilbault: Mr. Speaker, the Government is about to close down 1,700 rural post offices, which means that Canada Post customers will have to go out and get their mail elsewhere.
I want to ask the Minister why the Government is cutting a service that is so essential, especially for rural areas. Why ask people in remote areas to pay the cost of the Government's rationalization program? The Conservative Government is the worst thing that could have happened to our postal services.


Bernard Valcourt: Mr. Speaker, I would be tempted to answer that the worst thing that ever happened to Canadians was the previous Government.
Mr. Speaker, the issue raised by the Hon. Member is before a committee of the House, and that is where these issues can be discussed.
Contrary to recent reports, however, I have been informed by Canada Post that it will not be closing down 1,700 post offices across the country. In fact, together with the private sector, Canada Post will be opening more facilities over the next ten years. This does not mean less service, it means more service. Furthermore, business hours will be extended beyond what they are now, for the benefit of Canadians.


UNITED STATES DUTY ON SOFTWOOD LUMBER-LAY-OFFS IN NORTHWESTERN ONTARIO
Mr. Iain Angus (Thunder Bay-Atikokan):: Mr. Speaker, my question is for the Prime Minister. In northwestern Ontario we have hundreds of workers being laid off. We have plants closing in the softwood lumber industry. What hope can the Prime Minister offer to those workers that action taken by the Government will put them back to work in the same jobs they had when the lay-offs started? What action will the Government take to do that?


Charles Joseph Clark: Mr. Speaker, the action that this Government is taking on the trade front is to try to pursue an approach that has been discussed with United States Government authorities that might end the situation, first, where uncertainty prevails in the softwood lumber industry and, second, where there is a haemorrhage of money out of Canada that would otherwise stay in Canada.
The action we have taken on the economic front through a series of very courageous and effective measures introduced by my colleague, the Minister of Finance, has been to lead to the creation of in excess of 600,000 jobs in Canada since the Progressive Conservative Government was elected. We intend to continue with those policies which will bring benefit to all regions of the country.


Iain Francis Angus: Mr. Speaker, I can certainly tell the Minister that the people in northwestern Ontario do not want part-time jobs and part-time wages.


GOVERNMENT POSITION
Iain Francis Angus: Mr. Speaker, the Minister has spoken a number of times about keeping money in Canada and stopping the haemorrhage. When did the Minister decide that we could not win this case?


An Hon. Member:: When did he sell out?


Charles Joseph Clark: Mr. Speaker, what we know about the case and what was agreed among all the Governments gathered at Vancouver, with the exception of the Liberal Government of Ontario-


An Hon. Member:: And New Brunswick.


Charles Joseph Clark: -was that it would take a long, long time for us to go through all of the procedures that are available under the system now in place in the United States. During all that time Canadians are paying, paying, and paying. What we are looking for is a situation where we may be able to stop the haemorrhage out of this country of

November 26, 1986
Oral Questions
hundreds of millions of dollars and provide security for an industry.


REGIONAL ECONOMIC DEVELOPMENT
Jean-Claude Malépart: Mr. Speaker, my question is directed to the President of the Treasury Board. Monday, the Chairman of the Consultative Committee on the Development of the Montreal Area published his report. The Minister is aware that the Montreal East Survival Committee met with the Picard Committee on July 4 to ensure that the report would contain specific and concrete recommendations for saving jobs in Montreal East.
My question is this: Now that the report is published, can the President of the Treasury Board give the 450 employees of Versatile Vickers who were laid off six months ago the assurance that they will be able to get their jobs back in time for Christmas?


Hon. Robert de Cotret (President of the Treasury Board):: Mr. Speaker, first of all, I think it is clear the Hon. Member did not read the report. And he never understood exactly what the report was for. And this is also an insult to all the volunteers in the Montreal area who helped to prepare this report, which deals with the region's economic problems as a whole.
It is also obvious, by the very fact that we had a consultative committee and that there is a Cabinet committee, that we intend to take quick and effective action to restore the vitality of Montreal's economy. As we have said many times before, the Government intends to keep its promises.


REQUEST FOR PARTICULARS
Jean-Claude Malépart: Mr. Speaker, the Minister's answer is an insult to the 4,000 workers in Montreal East who need the Government's help to get jobs.
Mr. Speaker, this report is nothing but 351 pages of mutual admiration and pious wishes. What I want to know is where the people who worked for Bombardier, Canadian Steel Wheel, Vickers and La Forge are going to find jobs in this report for Christmas and the new year? Where are they going to find recommendations to help them?


Robert René de Cotret: Mr. Speaker, the Hon. Member for Montreal-Sainte-Marie has a very short memory. Monday afternoon, I was with the Hon. Member at the official opening of Kemtec, which has created 200 new jobs directly and 75 jobs indirectly in Montreal East. Where were you? Don't you remember?


AGRICULTURE
Mr. Stan J. Hovdebo (Prince Albert):: Mr. Speaker, my question is for the Minister of Finance. It has been eight weeks since the Prime Minister announced a billion dollar assistance program for grain producers. Farmers now believe that delay has nothing to do with the method of payment but everything to do with the fact that the Finance Department has not been able to come up with the money. Would the Minister of Finance assure us today that he has the billion dollars in this year's fiscal accounts and that the pay-out will be made to the farmers as a price support program and not as a loan program?


Hon. John Wise (Minister of Agriculture):: Mr. Speaker, I appreciate the Hon. Member's continuing interest in the plight of the agricultural industry. If he were truly in touch with the farm community he would recognize that at the conclusion of our last meeting a number of challenges were issued to us. We are exploring those and doing the final calculations on the two or three requests made of us by the farm community.


PROVISION OF FUNDS
Stanley J. Hovdebo: Mr. Speaker, the grain producers would like to believe the Minister of Agriculture. They would also like to know that the money is available in this year's budget and will be paid out as a support program, not as a loan program. I direct that question to the Minister of Finance.


John Wise: Mr. Speaker, if the Hon. Member is following the exchanges in the House on the aid package he would recognize, as clearly stated in Hansard, that we ruled out two options, one being a LIFT program and the other being a loan program.


REFUGEES
Mr. Sergio Marchi (York West):: Mr. Speaker, my question is directed to the Minister of State for Immigration. It concerns the request made by Canadians from Yarmouth, Nova Scotia, regarding the refugee application by a 25-year old Iranian student who will soon be deported by the U.S. back to Iran. This man has already tried to commit suicide rather than return to Iran where ten of his family members have been executed. He will surely face the very same fate. Therefore, why has the Minister consistently and coldly refused to allow this gentleman status in Canada? It is an issue of life or death
November 26, 1986

and Canadians are prepared to sponsor this man. Why the obstacles?


Hon. Gerry Weiner (Minister of State (Immigration)):: Mr. Speaker, Akbar Moatamedi is an American issue. He has lived in the U.S. for eight years. The Hon. Member and others should be making representations to the highest authorities in the U.S.


REQUEST FOR CANADIAN ACTION
Sergio Marchi: Mr. Speaker, it is ironic that the Minister gives a special immigration permit to a Hungarian spy and an individual with 20 criminal convictions, yet turns down an application by an individual who will lose his life if he returns to Iran. Why can the Minister and his Government not extend the hand of humanitarianism and compassion in order to spare this man's life? Why is it that meritorious and life or death cases cannot capture the attention and goodwill of the Minister?


Gérard (Gerry) Weiner: Mr. Speaker, the Americans have taken a new interest in the case.
I can assure the Hon. Member that they are reviewing the case. Akbar Moatamedi is being given every opportunity to bring new information forward.


INDUSTRY
Mr. Steven W. Langdon (Essex-Windsor):: Mr. Speaker, yesterday in Toronto the Prime Minister boasted of the economic prosperity his Government has created.


Some Hon. Members:: Hear, hear!


Mr. Crosbie:: Give us the figures again.


Steven W. Langdon: In view of that, what does he intend to do about the almost 3,000 Goodyear and General Motors jobs lost in Toronto in the last month which make a mockery of his words?


Bernard Valcourt: Mr. Speaker, we indicated yesterday the reason why Goodyear made this decision. We indicated that this Government was willing to sit down with the company and look at its long-term plans for new investment in Canada. At this time officials of the Department are in contact with the company to see how we can minimize the impact of that decision.


REQUEST FOR GOVERNMENT INTERVENTION
Steven W. Langdon: Mr. Speaker, is the Minister aware that action by the Ohio Legislature saved Goodyear jobs in that state? Will his Government
Oral Questions
effectively intervene in the same way in order to save those 1,600 jobs for the workers who will be so badly affected?


Bernard Valcourt: Mr. Speaker, I will repeat that the Department is ready at any time to sit down with company officials and be as helpful as we can given the circumstances of the case.


CANADA EMPLOYMENT CENTRES
[Stage Direction]
Hon. Warren Allmand (Notre-Dame-de-Grace-Lachine
East): Mr. Speaker, my question is directed to the Minister of Employment. As he knows, racial discrimination is illegal in this country by virtue of the Charter of Rights, the Canadian Human Rights Act, and the employment equity legislation passed last spring. Therefore, will he appoint an independent investigator to examine the charges that his employees in the Saint-Denis Employment Centre in Montreal have been given instructions not to refer blacks for jobs on the Montreal waterfront? Would he also tell us how many blacks are now working on the Montreal waterfront?
Hon. Benoit Bouchard (Minister of Employment and Immigration):: Yes, Mr. Speaker, the matter raised by the Hon. Member was brought to my attention quite recently. We took immediate action to look into it and, as a result of our preliminary investigation, the supervisor involved has been suspended for the time being.
However, I think we would show fairness if we were to continue the investigation and, as soon as more definite conclusions are available and if they confirm the situation, we will certainly take the appropriate steps because, under the Employment and Immigration Act, the attendant regulations and the Canadian Charter of Rights and Freedoms, we simply cannot tolerate any kind of discrimination against anybody in this country.


REQUEST THAT MINISTER TABLE GUIDELINES GIVEN TO EMPLOYMENT CENTRES
Hon. Warren Allmand (Notre-Dame-de-Grace-Lachine East):: Will there be an independent inquiry? After the employment equity legislation was passed last April, what specific implementation guidelines were given to Canada Employment Centres? Is the Minister now prepared to table these guidelines in the House?


Benoît Bouchard: Mr. Speaker, employment equity provisions come under the jurisdiction of the Department of Employment and Immigration. All manpower centres and agencies covered

November 26, 1986
Oral Questions
under this legislation have been advised and provided with the necessary background information concerning the extent and meaning of the law. I should think that none of the Canada Employment Centres can pretend to be unaware of the law, because we have taken every appropriate measure with this in mind. I repeat, we simply will not condone any kind of discrimination in this country.


ANTI-DISCRIMINATION MECHANISMS
Mr. John R. Rodriguez (Nickel Belt):: Mr. Speaker, I want to follow up on the last two questions. Information brought forward indicates that this practice is widespread in the Department across the country. Can the Minister tell the House what mechanisms he would put in place to ensure that kind of discrimination is not perpetuated?
[ Translation]


Benoît Bouchard: First, Mr. Speaker, I am pleased to answer for the first time a question from my New Democratic Party critic. On the basis of one case singled out by the Hon. Member for Notre-Dame-de-Grace-Lachine East, I think it would be premature to conclude that such incidents are a common occurrence in this country.
I repeat that an investigation is under way. Temporary measures have been taken and, should we have any indication that a similar situation might prevail elsewhere, of course the same measures would apply in every instance.


PROTECTION OF EMPLOYEE DENOUNCING DISCRIMINATION
John R. Rodriguez: Mr. Speaker, in light of what the Minister has said and the investigation we hope will follow-

-my supplementary is for the same Minister. Can he guarantee that the employees who denounced this racial discrimination will be protected?


Benoît Bouchard: Mr. Speaker, there is only one answer: absolutely!

[DOT] (M50)


ABORIGINAL RIGHTS
Mr. Thomas Suluk (Nunatsiaq):: Mr. Speaker, my question is directed to the Minister of Indian Affairs and Northern Development. Many northern native groups, such as the
Tungavik Federation of Nunavut, are anxiously awaiting a decision on a new land claims policy. Will there in fact be a new policy and, if so, when can we expect the decision?


Hon. Bill McKnight (Minister of Indian Affairs and Northern Development):: Mr. Speaker, the Hon. Member is certainly aware of the need for a new claims policy. It has been discussed on the initiative of my predecessor, the present Secretary of State. We will continue to reflect the contents of that task force report. In the very near future we hope to be able to present a new claims policy that will remove the log jam to development in a large part of our country and to give a final settlement to aboriginal people that will make Canadians proud of the Government.


SETTLEMENT OF LAND CLAIMS
John Edward Broadbent: Mr. Speaker, I have a supplementary question for the Prime Minister. He will know that in the meeting last week with the provinces and territories, the Governments of the Yukon and Northwest Territories put the settlement of the land claims at the top of their agenda. Will the Prime Minister assure the House and, more relevantly, the native people that the Government of Canada will press forward as fast as possible to achieve a land settlement that is based very solidly on the Coolican Report?


William Hunter (Bill) McKnight: Mr. Speaker, the answer to the question put by the Leader of the New Democratic Party is that which I just provided to another Member of the House. However, I can assure the Hon. Member that the efforts of the Government to remove the blockage not just of economic development but of justice that all Canadians want to see for aboriginal people are a priority of the Government. This will be put forward in the very near future.


PHARMACEUTICAL PRODUCTS
Mrs. Therese Killens (Saint-Michel-Ahuntsic):: Mr. Speaker, my question is directed to the Minister of Consumer and Corporate Affairs. The CDMA has said that the average multinational drug cost is 200 per cent to 400 per cent more than the no name equivalent. How can the Minister still deny that under his Bill dramatic price increases of 200 per cent to 400 per cent will not be commonplace?


Hon. Harvie Andre (Minister of Consumer and Corporate Affairs):: Mr. Speaker, since 1979-seven years ago-there have been 145 new brand name drugs introduced in Canada and only one generic copy of those drugs. According to our Bill, after seven years those drugs, if manufactured in Canada by a generic, can be marketed in Canada. That is why I make the claim I do.
November 26, 1986


PRICE OF VALIUM PILLS
Marie Thérèse Rollande Killens: Mr. Speaker, the Minister knows that the prices of most drugs will at least double. Valium brand name pills are 3,000 per cent more expensive than a no name drug-$80 compared to $2.31. Why is the Minister taking away the competition? Why is he selling out the sick and the old of this country?


Harvie Andre: Mr. Speaker, valium is off patent here and in the United States. The generic copies will continue on valium. Generic competition will continue to be there. It will serve the purpose that the Hon. Member is talking about. The price increases that the Hon. Member talks about are fictitious, but most important there will be 3,000 research jobs in Canada for the young scientists who are working in Canada and searching for cures to the diseases that afflict Canadians. I think the Hon. Member would be in favour of that.


APARTHEID
Mr. Howard McCurdy (Windsor-Walkerville):: Mr. Speaker, my question is directed to the Secretary of State for External Affairs. This morning he met with the only Canadian Premier to have ignored the Canadian sanctions against South Africa and who indeed has become a collaborator with the apartheid regime. What was the outcome of that meeting in terms of attempting to change that stance of the British Columbia Government that is so offensive to so many Canadians?


Charles Joseph Clark: Mr. Speaker, first let me dissociate myself from the language that was used by the Hon. Member. I do not think language of that kind is helpful or constructive. Second, this morning I had a conversation with Premier Vander Zalm which I think was quite helpful. I set forth to him our view of the situation in South Africa, the very great danger of explosive violence if there is not a change in policy on the part of the South African Government, as well as an indication of our encouragement at finding the private sector taking actions to an increasing degree which will increase the pressure on South African authorities. I indicated our view that it would be helpful for all aspects of government and indeed the private sector in Canada to contribute to, rather than detract from, that pressure.


REQUEST SANCTIONS BE MANDATORY
Howard Douglas McCurdy: Mr. Speaker, is it not just about time that the promise of the Prime Minister was kept, and that the present voluntary sanctions be
Oral Questions
made mandatory so that the people who listened to the Prime Minister at the United Nations will have confidence that his promises will be kept?


Charles Joseph Clark: Mr. Speaker, we have recently heard from the President of Cameroon and the President of the Central African Republic in this country. We have heard from a variety of other people directly involved with trying to bring some resolution, hopefully peaceful resolution, to the situation in South Africa in a way that will respect human rights. All of them have been unstinting in their commendation of the policy that has been followed by this Government with respect to the situation in South Africa. We are trying to build up steadily, step by step, pressure by Governments and by the private sector to cause the South African Government to bring an end to apartheid. We think that that practical progress is more important than an excess of rhetoric.


POSSIBLE EXPORT TAX ON LUMBER
John Napier Turner: Mr. Speaker, my question is directed to the Minister of Finance. It appears that this afternoon he admitted that he was planning an export tax on lumber. I want to hear from him because, if that is so, will he draft that tax in accordance with international GATT rules? In that case it will have to apply to Canadian exports of all lumber to all countries, not limited particularly to the United States.


Charles Joseph Clark: Mr. Speaker, I can understand the Right Hon. Leader of the Opposition's interest in hypothetical matters.


Lloyd Axworthy: He said it.


John Napier Turner: He said it to the Member for Kamloops-Shuswap.


Lloyd Axworthy: There is nothing hypothetical. He admitted to it.


Charles Joseph Clark: It is difficult for me to get the attention-


Lloyd Axworthy: He said it.


Charles Joseph Clark: If the Hon. Member for Winnipeg-Fort Garry will permit me, I will try to respond to the question.


Mr. Speaker:: Order. I think Hon. Members would want to hear the Minister.

November 26, 1986
Oral Questions


Charles Joseph Clark: Thank you, Mr. Speaker. Any announcements that the Government of Canada has to make as a result of the approach that is being discussed with the United States will be made in the appropriate course. There is no point in making announcements or exciting speculation about those announcements until those events have occurred.


John Napier Turner: We will check the "blues" on that.


EFFECT OF POSSIBLE EXPORT TAX
John Napier Turner: Mr. Speaker, I have another question for the Secretary of State for External Affairs, if he insists on answering this way. Has he not recognized that instead of merely furnishing provincial coffers by way of stumpage in the short term, if an export tax is phased in, this tax, applied to Canadian lumber world-wide, will absolutely cripple the Canadian lumber industry, particularly in the Pacific Rim?


Charles Joseph Clark: Mr. Speaker, I do not know what tax the Right Hon. Leader of the Opposition is talking about, and neither does he.


MINISTER'S STATEMENT
John Edward Broadbent: Mr. Speaker, my question is directed to the Minister of Finance who referred to it earlier in the Question Period when he said to the House Leader of the New Democratic Party that the purpose of the tax that his Department was considering was to ensure an equitable distribution of the benefits to the provinces. Will he tell us what tax he was talking about?


Michael Holcombe Wilson: Mr. Speaker, just to clarify for both the Leader of the Opposition and the Leader of the New Democratic Party, what I meant when I said "That is the intent", was the recycling. That is what I was referring to. It has been made very clear by statements by the Secretary of State for External Affairs and the Minister for International Trade that the final decision on the mechanism has not been taken.


RECYCLING OF PROCEEDS
John Edward Broadbent: The Minister has put his foot into it even further. He just talked about recycling. The recycling of what? Can he explain that to the House?


An Hon. Member:: Come on, Mike.


Lloyd Axworthy: Where is the money coming from?


Michael Holcombe Wilson: Mr. Speaker, I forget which of the Hon. Member's colleagues asked the question, but the point-


John Napier Turner: The Hon. Member for Kamloops-Shuswap, that's the guy.


Michael Holcombe Wilson: The Hon. Member's seat-mate asked the question in the sense that were the proceeds going to be shared with the provinces. That is what I acknowledged in my answer.


John Edward Broadbent: Thank you, Michael.


INDUSTRY
Mr. Don Boudria (Glengarry-Prescott-Russell):: Mr. Speaker, my question is directed to the Prime Minister. It concerns the Conservative Government's job elimination program in the footwear industry. A year after the quotas were imposed, quotas that the Prime Minister himself and his colleagues said were going to lower footwear prices and that we were not going to lose Canadian jobs, can he tell us why the factories in my riding have had two-thirds of their employees laid off? One thousand people in this industry have lost their jobs and footwear prices have increased by 12 per cent over one year. Is it not time to admit that this policy was a failure and revert back to the old Liberal policy which was far better than the policy of this Government?


Charles Joseph Clark: Mr. Speaker, I take it that the Hon. Member is putting a question with regard to the specific application of a policy with respect to particular industries in his constituency. In the absence of the Minister for International Trade I will take that question as notice and we will try to get back to the Hon. Member with specific information on that very specific question.


REQUEST THAT MINISTER MEET CANADIAN SHOE INDUSTRY REPRESENTATIVES
Don Boudria: I wish to direct a supplementary question to the Prime Minister, Mr. Speaker. Four times since the beginning of July, Canadian shoe industry representatives have sought to meet with Department officials and the Minister for International Trade, but to no avail. Will the Prime Minister tell his Cabinet colleague to meet immediately with these representatives, or is he waiting for that industry to collapse before he steps in?


Charles Joseph Clark: Mr. Speaker, on behalf of the Minister for International Trade I can assure the Hon. Member that the Minister and the Department officials are ever prepared to meet with representatives of the industries involved. Should he have
November 26, 1986

specific requests he might convey them to me and I will see if I can arrange these meetings.


POINT OF ORDER
James Ross Fulton: Mr. Speaker, I have a point of order arising out of answers made in this House by the Minister of Finance (Mr. Wilson). On October 8, in Hansard at page 192,1 asked the Prime Minister (Mr. Mulroney):
Will the Prime Minister explain why the Minister of Finance drafted a softwood lumber export tax and what its terms of application are going to be?
The Secretary of State for External Affairs (Mr. Clark)
answered:
Mr. Speaker. 1 can only assume that the Hon. Member is dreaming.
1 then asked at page 193:
-will the Prime Minister assure this House that, should the export tax be put in place, those dollars will be returned to the forest sector for job retraining, market diversification, and reforestation?
The Secretary of State for External Affairs then said, and this is my point of order:
Mr. Speaker, the Hon. Member is speaking of a tax which he has invented, and he is now asking us to comment on its implementation. We do not propose to implement his inventions.
1 think it is clear now that the Minister of Finance-


Mr. Speaker:: Order. I have listened to the Hon. Member for Skeena (Mr. Fulton) on his point of order. 1 think it is quite clear that that is not a point of order, it is a matter for debate.


Rodney Edward Murphy: Mr. Speaker, yesterday as reported at page 1501 of Hansard the Hon. Member for Beaches (Mr. Young) quoted from a letter-


Mr. Speaker:: Order, please. Could I ask the Hon. Member if he is rising on a point of order or question of privilege?


Rodney Edward Murphy: Point of order.


Mr. Speaker:: I should advise the House that the Chair has notice of a question of privilege. If it pleases the House I think we should proceed to it. I recognize the Hon. Member for Etobicoke North (Mr. Pennock). I will hear other Hon. Members after that.
Privilege-Mr. Pennock PRIVILEGE


INVESTIGATIVE INDEPENDENCE OF STANDING COMMITTEES
Mr. Bob Pennock (Etobicoke North):: Mr. Speaker, today I raise a question of privilege which affects every Hon. Member because it directly impacts on the conduct of our committee system and in particular on the spirit and intent of parliamentary reform. Although I will deal briefly with specifics, I use them only as an example because I am more concerned about the global implications for all committees.
On November 12, 1986 the Chairman, on behalf of all Members of the Standing Committee on Communications and Culture, wrote to the Auditor General seeking answers to nine questions regarding the Auditor General's most recent audit of the CBC, which was referred to the committee by the Minister. Rather than have the Auditor General appear before the committee, it was felt that writing a letter would save valuable time and money.
In responding to this direct request, the Auditor General sent the information to the Minister of Communications (Miss MacDonald) and the President of the CBC to obtain, by his own admission, their concurrence before releasing the information to the Standing Committee. This information was intended to be used in developing a specific line of questioning for witnesses. Any direction the committee might have taken with respect to this information has now been altered by the actions of the Auditor General. Would a lawyer supply a witness with a list of questions before he or she takes the stand?
This action goes against the spirit and intent of parliamentary reform because it limits the effectiveness of the investigative capacity of the Standing Committee. This is a dangerous precedent. I believe that as a servant of Parliament the Auditor General should respect the independence of the Standing Committees. I feel he had no right to vet this information through the office of the Minister of Communications and the president of a Crown corporation before the members of the Standing Committee had a chance to view the information. These are questions he would no doubt have answered if we had called him to appear as a witness. I feel he infringed on my privilege as an Hon. Member to have the capacity to privately seek information from a servant of Parliament.
In closing, my concern is that this action could establish a precedent which would ultimately reduce the independence of Standing Committees. Your decision in this matter, Mr. Speaker, is of critical importance. Parliamentary reform is still in its infancy. It is up to this House to ensure that the new authority and independence of the Standing Committees is respected.


Mr. Speaker:: The Hon. Member for Etobicoke North (Mr. Pennock) has raised a matter of obvious concern. Other Hon. Members in recent weeks have risen on matters arising out of committee and I believe the Chair has had an opportunity to

November 26, 1986
Point of Order-Mr. Murphy
comment on the fact that the committees working under the reform procedures are breaking new ground. The Chair takes quite seriously the representations which have been submitted to the Chair and the representations made by the Hon. Member for Etobicoke North. I can advise the Hon. Member that I will carefully consider his representations and report back to the House.
I said I would hear the Hon. Member for Churchill (Mr. Murphy) on a point of order.


POINT OF ORDER
Rodney Edward Murphy: Mr. Speaker, yesterday in the House the Hon. Member for Beaches (Mr. Young) quoted a letter from the Hon. Member for Kent (Mr. Hardey). By the rules of the House I believe it is necessary for that Hon. Member to table the document with the House. I think it is very important.


Mr. Speaker:: I do not believe the Hon. Member about whom the Hon. Member for Churchill (Mr. Murphy) refers is in the House at the moment. The Chair will take notice of the request and perhaps return to the Chamber on the matter.


Mr. Young:: I have no difficulty at all in tabling the letter, Mr. Speaker, if that is what you desire.


Mr. Speaker:: The Hon. Member has made his point and, as I said, the Chair will consider it and come back to the House at an appropriate time.



ROUTINE PROCEEDINGS


Hon. Tom Hockin (Minister of State (Finance)):: Mr. Speaker, we will be seeking leave to introduce a special Bill this afternoon, something which I gather has been provided for by special agreement among all three Parties for consideration this afternoon.
Hon. Members have no doubt been aware for some time about media reports concerning the difficulties being faced by the Bank of British Columbia. Attention recently has been focused on the efforts of the bank to find a buyer to assume its assets and liabilities and to put the operation back on a strong financial footing. I am grateful to you, Mr. Speaker, and to
Members on all sides of the House for being able to bring this motion forward.
Recently, the search for a buyer intensified as the financial condition of the bank continued to weaken as a result of the erosion of its capital base. This erosion was caused by nonperforming loans. For the past several weeks, at the request of the bank, the federal and British Columbia Governments have been assisting in the effort to find a buyer to carry on the business of the bank. This effort has been successful. I am speaking today because the bank has requested the assistance of the House now in facilitating the sale of its operations. Our role is to facilitate this sale.
In responding to this request the Government has been guided by four basic considerations. First, such a transaction should ensure the long-term financial viability of the ongoing institution.

Second, such a transaction should provide to the fullest extent possible for the needs of the depositors, other creditors, borrowers and shareholders.

Further, and this is most important, it should result in a strong regionally-based institution to serve the needs of the western-most part of our country. Finally, this should be done without the expenditure of federal public funds as part of the purchase agreement. In short, the buyer of the bank should be able to inject new capital, maintain the confidence of depositors, assume its assets and liabilities and keep the bank operating as a going concern.
During the search for a buyer a few institutions indicated some degree of interest in the Bank of British Columbia. However, in the opinion of the management and the board of the bank, only one proposal adequately meets the needs of depositors, other creditors, borrowers and shareholders. It has been put forward by the Hongkong Bank of Canada, a subsidiary of the Hongkong and Shanghai Banking Corporation. The board of directors of the Bank of British Columbia met in special session to give its formal approval to the offer and to request that the Government propose legislation to Parliament to facilitate the sale.
The Government has determined that this purchase fully meets the basic considerations that I have outlined, the four objectives to which I have spoken. The purchaser is a subsidiary of one of the world's largest banks. It has the resources to maintain and strengthen the business of the Bank of British Columbia, and it has pledged to do so. In fact, it will be obligated to do so if we agree to this transaction. Moreover, the Hongkong and Shanghai Banking Corporation is firmly based in the Pacific Rim, as is the Bank of British Columbia. As many Hon. Members are aware, Premier Vander Zalm has publicly indicated his preference for a Pacific Rim bank. Furthermore, he has endorsed this transaction with enthusiasm, as has the Government.
November 26, 1986

The management of the Bank of British Columbia has advised the Government that this transaction is necessary for its survival, and the Government agrees with that assessment. The rapidly worsening condition of the bank has been closely monitored by the Office of the Inspector General of Banks.
I would like to quote from the press release issued by the Bank of British Columbia just a few moments ago which contains the details of the transaction. It states:
The board of directors of the Bank of British Columbia believes that it is essential for BBC to enter into a transaction if liquidation is to be avoided and further believes that no other transaction can be identified that would be as beneficial as the proposed transaction with Hongkong Bank of Canada.

Liquidation would not be in the interests of the Bank's 1900 employees, its depositors, other creditors, borrowers and shareholders. It would not be in the interests of the Province of British Columbia and it would not be in the interests of the Canadian banking system.

As part of the initiative to ensure that the business of the bank continues, the Canada Deposit Insurance Corporation has agreed to extend the sum of $200 million to help recapitalize the bank. I remind Hon. Members that the Canada Deposit Insurance Corporation is funded entirely from premiums paid by deposit-taking institutions. There will be no impact on the Government's deficit.
The only realistic alternative, as the bank's board has indicated, would be for the bank to shut its doors. The cost of paying the insured depositors in this situation would be considerably greater than $200 million. Consistent with its statutory authority, the board of directors of CDIC has determined that this payment will minimize future losses for the corporation. The board of the CDIC must determine in matters of this sort whether it will pay less than it ordinarily would through liquidation unless it is determined very clearly.
I would like to explain briefly the role the House is being asked to play in facilitating this transaction. Ordinarily we would say that this is a transaction which has been done, why are we taking the time of the House in this matter? Sections 273 to 275 of the Bank Act provide that the sale of bank assets and liabilities be approved at a shareholders' meeting 28 days after formal notice is given of the terms of sale. What has happened is that the Government has been requested by the board of directors of the Bank of British Columbia to avoid the uncertainty that would be created by such a delay and thereby to minimize disruption for depositors and borrowers. Accordingly, Parliament is being asked to enact the necessary legislation to enable the transaction to be completed on a timely basis.
The legislation recognizes the interests of shareholders. It provides for a shareholders' meeting with 14 days' notice to approve the consideration received for the sale of the bank's assets. Or, if shareholders so choose, when they have their meeting they can choose to have an independent assessor
Statements by Ministers
appointed to evaluate the value of their shares immediately prior to the time of sale. This evaluation by the assessor would be binding.
This Bill facilitates a solution that is in the interests of depositors and other creditors, borrowers and shareholders of the Bank of British Columbia. It is in the interests of the Province of British Columbia and very much in the interests of the Canadian banking system.

I ask Hon. Members to adopt this Bill immediately.

I urge immediate and unanimous approval. This piece of legislation will ensure the safety we need for the depositors, other creditors, borrowers, employees and branches of that bank in the province. It will also ensure a window to the Pacific Rim, to the connections and network of the Pacific Rim that the financial system of British Columbia has long wanted. I am very pleased to bring this Bill before the House and I thank Hon. Members on all sides for making this possible.


John Napier Turner: Mr. Speaker, once again, in a hasty, spontaneous, disorganized way, the Government has raised an issue of major importance to the Canadian banking system. It is quite clear from the way Ministerial benches have proceeded that the Government is in disarray once again on the crucial and vital issue of Canadian banking.
The Minister of Finance (Mr. Wilson) was courteous enough to call me this morning and advise me of what he had in mind. Before that, those of us representing constituencies in British Columbia had some understanding of the difficulty in which the Bank found itself. This action shows how badly the Government has managed the rebuilding of confidence in our financial institutions. We have been waiting for two years for the proposed reform package for financial institutions. We still do not have it. The Canadian public is still waiting. Of course, another stop-gap, ad hoc measure is being taken to rescue a bank at the last moment.
Taking you back a bit in history, Mr. Speaker, the Bank of British Columbia was at the leading edge of the aspirations of the people of the province and western Canada to have their own financial institutions. They wanted to do things their own way at their own speed and to have credit authorizations given by British Columbians who lived in the province close to where the people seeking credit lived. It was created in part at the behest of the late W. A. C. Bennett, then Premier of the Province of British Columbia. Despite political differences, he was certainly one of the great institution builders of British Columbia.
I recall that Premier Bennett came personally to Ottawa in 1967 to ask the Government to incorporate the Bank of British

November 26, 1986
Statements by Ministers
Columbia. He sat in the Prime Minister's gallery while the Bill was being debated. He personally attended the opening of the first branch of the Bank and he summoned all British Columbians to give it their full support.
The Bank of British Columbia has played an important role in bringing about the creation of small and medium-sized businesses in British Columbia and, indeed, throughout western Canada. It proved that in British Columbia the best decisions for small and medium-sized businesses were made closer to the businesses and operations concerned. That is why the regional banking system was so welcomed in western Canada.
At the beginning of 1985 the Bank of British Columbia was the most conservatively financed financial institution of its size in the country. It had a leverage ratio about comparable to the average ratio of the leading banks in Canada. It had very little foreign exposure and, of course, it had a substantial market share in British Columbia. Many of the problems it is having today originated with the collapse of the Canadian Commercial Bank and the Northland Bank.
You know our views on the collapse of those two banks, Mr. Speaker. The banks were very badly mismanaged to begin with but the way the Government handled that crisis led to the current instability in the banking system and later effected the forced merger of the Continental Bank with Lloyd's of London and now the proposed arrangement between the Hongkong Bank and the Bank of British Columbia.
The Government made two grave errors. When the Minister of Finance and the predecessor of the Minister of State for Finance brought the bail-out package to Parliament, we asked the Ministers and indeed the Prime Minister (Mr. Mulroney) whether or not the bail-out package was sufficient. We were assured that it was, but it turned out that the Ministers and officials had not bothered to look at the books of the Canadian Commercial Bank. The arrangement was insufficient. On the basis of what the Minister of Finance, the Governor of the Bank and the Minister of State for Finance's predecessor said, people continued to deposit money in those banks as well as in the Continental Bank and the Bank of British Columbia.
A year ago September, it was found that the package was indeed inadequate and the Government had misrepresented the viability and solvency of those two banks to Parliament and the Canadian people. As a result of that lack of confidence, both the Continental Bank and the Bank of British Columbia have had repeated difficulties in persuading other banks, large corporations and credit unions to maintain deposits. I can understand that. The teasurer of a major organization, a town council or a municipality has a fiduciary role to play. He must protect the money of his shareholders or taxpayers. Therefore, both banks, the Continental Bank and the Bank of British Columbia, had a difficult time persuading other banks and depositors to stay with them.
We blamed the Government on these two issues. First it did not know what it was doing when it brought in the original
bail-out package for the Canadian Commercial Bank. Second, it misrepresented the facts to the Canadian people and Parliament between March and September. Mr. Justice Estey confirmed that the bail-out was an amateur night effort and that it was insufficient. He confirmed as well that the two banks had not been solvent.
We are now being asked to provide a hurried solution in the form of a sale of assets of the Bank of British Columbia to the Hongkong Bank of Canada, a Schedule B bank. The parent bank is one of the world's largest and best managed banks. The headquarters of the subsidiary of the Bank is in Vancouver and thus we understand that the executive direction of the Bank of B.C. division of the new bank will be maintained in Vancouver. This provides at least some solace for the regional aspirations of British Columbians. There will at least be one institution of its size with a head office in British Columbia.
The employees of the Bank of British Columbia, some 1,400 in number, will, I am advised, have continuing employment assured, and I hope the Minister will assure us of this during the course of the debate. I am also told that the 39 branches of the Bank will continue to be open for the time being. The Bill will obviously be of some assistance to the employees and will assure some 200,000 depositors of the safety of their funds.
I am not unmindful of the fact that the CDIC, an agent of the Government of Canada, is declaring a loss of some $200 million in connection with the Bank of B.C. It is our understanding from what the Minister of State for Finance has told us that if this Bill is not passed today or tomorrow the shareholders themselves stand to lose whatever net worth is today available to them. Frankly, although we want to hear more about it during the course of debate, this is probably the only reason that I personally would agree to a Bill of this kind.
The Bill limits drastically and in a Draconian fashion the rights of shareholders under the Bank Act. The Hon. Minister is frowning, but he knows about the delays that are necessarily incurred in sending out notices telling shareholders that they have the right to approve of or disagree with any merger or deal like this. From what I understand the Minister to say, under this Bill the shareholders will be limited to either approving or disapproving of the amount of the deal, not the deal itself. That is a very drastic limitation of the rights of shareholders, and we will require proof here in the House that that is necessary.

Before the Bill is adopted by the House, Mr. Speaker, I think we should insist that the Standing Committee on Finance and Economic Affairs be ?'lowed to proceed with a full review, as it did in the case of the Continental Bank and Lloyds, review, with witnesses and officers of the two banks appearing before the Committee, so that we as Members of this House will have the assurance that there was indeed an emergency and a pressing need to have this Bill adopted.
November 26, 1986

It is deplorable that the Government should only this morning spring a request for parliamentary action in these circumstances. It is not a compliment to Parliament.

It is without a doubt an admission of incompetence on the part of the Government and it is one more example of the state of complete disarray of the Government's policies, especially where the banks are concerned, and as I said at the beginning of my speech, it reflects the utter chaos caused by the Government originally in the case of the Canadian Commercial Bank and the Northlands Bank several months ago in this House.

However, I believe in the interests of British Columbians as depositors, employees, and shareholders, that we are compelled to accept the Government's representation. As to the need for haste, we are going to hold the Government responsible in demonstrating to us and to the country the need for that urgency, the need for a restricted debate, the need for the restriction on the right of the shareholders of the bank. We will want that confirmed in a hearing of the Standing Committee on Finance and Economic Affairs after this debate is concluded.
Finally, Mr. Speaker, we come to this issue understanding the urgency-if the representations of the Government can be accepted at face value-but still stung by the experience that we had in this House in March, 1985 when the Minister of Finance and the then Minister of State for Finance brought us a bail-out package for the Canadian Commercial Bank. We were misled. The Government did not know what it was doing. It had not searched the books. Parliament was taken for a ride. We do not underestimate the gravity of the situation. We do not underestimate what the Minister of Finance told me personally, and what the Minister of State for Finance (Mr. Hockin) told Parliament this afternoon. The burden of proof is clearly on the Government. We are relying on the Government.


Mr. Mike Cassidy (Ottawa Centre):: Mr. Speaker, this particular project is brought forward because of the situation of the Bank of British Columbia. It is a regional bank. Members of my Party, and particularly my colleagues who come from western Canada, are very much concerned about the continuing need for regional banking in western Canada. Whether that will be achieved with this particular proposed takeover by the Hongkong Bank is another matter. Within the time that is available, which is not long, and for reasons that I will come to shortly, essentially on this side of the House we are not in a position to judge whether or not the Government has taken the correct course of action.
I have some substantial misgivings over what the Government is prepared to do. However, having only been brought
Statements by Ministers
into the Government's confidence on this issue at 9.15 this morning, our role is simply to decide whether to adopt this measure in the course of the next day or two, or to string it out and let it take a week or two weeks, whichever it might take, if the parliamentary devices available to us were used, or if the matter was to be referred to the Commons finance committee for a hearing prior to passage some time early next week.
It has been represented to me and to my Party that delay at this time would or could lead to difficulties for the Bank of British Columbia in terms of its deposit base, and that that in turn would affect the viability of the bank in terms of its ability to do business in British Columbia and Alberta under the new ownership. I accept that that argument has some validity. Therefore, since the only solution that the Government has been prepared to put forward has been this particular takeover, we are in the position of either saying that we are going to resist it, although we are not in a position to put forward an alternative because we do not have the facts or the number of seats in the House to make that work, or alternatively to simply accept the Government's decision.
Let us be very clear that this is a Government decision. The only role that Parliament can play is to decide whether we wish to make this decision and allow this decision to become law by tomorrow evening, or to string this out for another few days. I have had occasion to speak to people in financial circles in Vancouver, including people from the Vancouver City Savings Credit Union, which was in very serious discussions with the Bank of British Columbia a few days ago. It is disappointed at being excluded from doing a deal with the Bank of British Columbia, largely because of a policy decision by this Government. It, too, indicates that if it is going to be done at all, it is better to do it in a couple of days than to allow the agony to continue.
Let us be very clear that the Government says in the statement of the Minister of State for Finance (Mr. Hockin) that it is important to retain a strong and regionally based institution to serve the needs of the most western part of Canada. It is questionable whether that will be what is achieved by this particular measure.
I do know that the Canada Deposit Insurance Corporation, using what are essentially public funds, will advance $200 million to the Hongkong and Shanghai Bank, the parent company of the Hongkong Bank of Canada. The parent Hongkong Bank will then turn around and give $60 million to the subsidiary, and that in turn will be passed on to the Bank of British Columbia in return for transferring substantially all of its assets and liabilities.
In other words, we Canadians, if I can be simple about it, are paying $200 million to a foreign institution so that they can take over the control of a $3 billion Canadian bank. That is essentially what the Government is telling us is the best solution that was available for this important regional institution in British Columbia, an institution which was founded with high hopes some 10 years ago, and which has

November 26, 1986
Business of the House
extended service to many people in western Canada over the course of the last couple of years.
The Government is also telling us that the asset base of the Bank of British Columbia was sound, according to the Inspector General of Banks and a special team review, in October, 1985. At that time the bank portfolio was studied in detail. The Inspector General told us that it was okay, in fact that loan loss experience was going down. The Government is now telling us that there is an over-all erosion of those assets which, by my calculation, is somewhere in the nature of $300 million to $350 million. This is enough to wipe out the equity of both the preferred and the ordinary shareholders of the bank, and then to contribute to a loss of some $150 million, or thereabouts.
Nonetheless, the Government is stating that in its wisdom and opinion the shareholders and the preferred shareholders of the Bank of British Columbia should be repaid to the extent- not a lot, I agree-of $60 million or $75 million. That money essentially is going to come from the taxpayers, at least for the next six or seven years.
The Minister's statement is that this payment to the Hongkong Bank, so it can take over our Canadian bank, is being made without the expenditure of federal public funds as part of the purchase arrangements. I have had occasion to look at the annual report of the Canada Deposit Insurance Corporation. At the end of 1985 this institution was in the hole to the extent of $1.25 billion. It was paying that off at the rate of about $200 million a year through an increase in premiums, which went through the House a few months ago. The $200 million which is now being advanced from the Consolidated Revenue Fund, that is, from the taxpayers to CDIC to go to the Hongkong Bank, will not, therefore, be repaid until 1993, assuming that the Canada Deposit Insurance Corporation has no further losses to contend with-no other institutions go bust or require its assistance over the course of the next six or seven years.
I recognize that the situation is difficult. Financial markets are changing very rapidly. But I wish to point out that the Government could have had a regional solution with control in the head office fully under the control of British Columbians by means of assistance to the Vancouver City Savings Credit Union proposal. Apparently the Government of British Columbia was not prepared to go along with that particular measure, and neither was the federal Government. The Government could have kept control of the Bank of British Columbia's business in Canada, because there are at least a couple of Schedule A banks, the Bank of Nova Scotia and the Toronto-Dominion Bank, which are not heavily represented in their branch network in western Canada, and from which there would have been a good fit if discussions on a merger or takeover of assets had been encouraged by the Government, rather than discouraged or ignored. Instead, the Government has chosen a foreign solution which will cost everyone who gets bank interest over the course of the next year or so $1 for every
$1,000 of investment. If I may put it in very practical terms, that will be the cost.
I hope we will receive a commitment from the Government that the matter will go before the Standing Committee on Finance and Economic Affairs after the Bill has receivd passage tomorrow. For the reasons I have given, we have agreed, although we have questions about the Bill, that it should at least come to a conclusion tomorrow. However, I believe that the issue should not be forgotten because the Bill itself goes to third reading and is then given approval by the Senate and Royal Assent.
This is ad hoc banking policy. The Government has had two years to implement a policy on financial institutions. It has not done so. Canadians are now paying the price. They are paying the price in terms of the $1 billion or so we advanced in respect of the failure of two western banks the Canadian Commercial Bank and the Northland Bank. Now they are paying an additional price. One way or another, as taxpayers, depositors, or customers of Canadian banks, every Canadian will participate in the cost of $200 million which is now being advanced to take control of the Bank of British Columbia. It will take control out of British Columbia hands, out of regional hands, out of Canadian hands, and put it into the hands of the Hongkong Bank.


BUSINESS OF THE HOUSE
Mr. Mazankowski:: Mr. Speaker, there have been discussions with the House Leaders of the opposition Parties with respect to the business for the rest of today and tomorrow.
I have a series of four motions which I should like to put. Perhaps I could seek leave of the House to introduce them one at a time.
The first one concerns the Standing Committee on External Affairs and International Trade, and I seek unanimous consent to put the motion.


Mr. Deputy Speaker:: Does the Deputy Prime Minister and President of the Privy Council have unanimous consent of the House to introduce the motion?


Some Hon. Members:: Agreed.


EXTERNAL AFFAIRS AND INTERNATIONAL TRADE
Donald Frank Mazankowski: Mr. Speaker, I move:
November 26, 1986

That the Standing Committee on External Affairs and International Trade be authorized to travel to Africa to visit Tanzania, Ethiopia, and Senegal before December 15, 1986, to study specific projects which are recipients of Canadian aid.


Mr. Deputy Speaker:: Does the Deputy Prime Minister and President of the Privy Council (Mr. Mazankowski) have the unanimous consent of the House to introduce his motion?


Some Hon. Members:: Agreed.


Mr. Deputy Speaker:: The House has heard the motion. Is it the pleasure of the House to adopt the motion?


Some Hon. Members:: Agreed.


[Stage Direction]
Motion agreed to.

Donald Frank Mazankowski: Mr. Speaker, the second motion concerns the proceedings of the Special Committee on Child Care. I would seek leave of the House to present a motion based upon the discussions which have already been held.


Mr. Deputy Speaker:: Does the Deputy Prime Minister have unanimous consent to move the motion?


Some Hon. Members:: Agreed.


Donald Frank Mazankowski: Mr. Speaker, I move:
That, notwithstanding any standing or special order of the House, the House now proceed to motions, Mr. Speaker call the motion of Mrs. Martin, Chairman of the Special Committee on Child Care, and Mr. Speaker then recognize, for comments of 10 minutes each, on the motion to concur in the first report of the Special Committee on Child Care, presented to the House on Wednesday, November 19, 1986, the following Members: Mrs. Martin, Madame Pepin, Ms. Mitchell; and that Mr. Speaker then forthwith put the question for the concurrence.


Mr. Deputy Speaker:: The House has heard the terms of the motion. Is it the pleasure of the House to adopt the motion?


Some Hon. Members:: Agreed.


[Stage Direction]
Motion agreed to.

[Stage Direction]
CONCURRENCE IN FIRST REPORT OF SPECIAL COMMITTEE Mrs. Shirley Martin (Lincoln) moved:
Motions
That the first report of the Special Committee on Child Care, presented to the House on Wednesday, November 19, be concurred in.
She said: Mr. Speaker, in requesting concurrence in the report of the Special Committee on Child Care, I am asking the House for the opportunity to table a quality document reflecting the evidenced needs of Canadian children and parents, while making responsible suggestions for government action through the range of components which comprise the child care delivery system in Canada.
Our committee travelled to every province and territory in Canada to listen to the needs and recommendations of Canadians. The response was impressive. Over 2,000 people were heard and almost 900 written submissions were received. In addition, existing research in the field required investigation, and new research was required. As we reviewed our initial report, we determined that to rush the preparation of this document would be a great disservice to the people of Canada.
I know that Hon. Members of both opposition Parties join with me in their concerns that the report provide the best available research and recommendations. Therefore, in the interest of all Canadians, especially the children of Canada, I respectfully ask that this extension be granted with the approval of all Hon. Members of the House.
Mrs. Lucie Pepin (Outremont):: Mr. Speaker, unfortunately, I cannot accept a proposal by the Chairman of the Special Committee on Child Care for an extension for the Committee's report. In fact I find it very distressing. When we consider the urgent need for daycare centres, asking for an extension of several months does seem rather strange. I might have been agreeable to an extension of several weeks, but I think that in the circumstances, several months is out of the question.
All we have to do is go back to the reports of the various commissions of inquiry, including the Bird Commission and the Report on Equality in Employment, where the situation is described and identified as a priority, because something must be done for children, not just for children from zero to five but also for children from six to fourteen, especially when we consider that 54 per cent of our children are alone after school.
We have had a parliamentary committee that travelled across the country and heard a number of briefs, many from parents who were unanimous in urging the Government to take action and do so very soon.
I read news reports on the First Ministers' Conference last week, when the Prime Minister (Mr. Mulroney) said quite clearly that it was very important for women to have employment equity and that he felt employment equity started with
1550

November 26, 1986
Motions
daycare. I would like to remind him-of course daycare centres are important for women-but he said that daycare was a women's problem, and I would like to say here to the Prime Minister that daycare is a problem for society and for our families, not just for women.
He also said that he intended to start consultations with the provincial governments. I am all in favour of consultations with the provincial governments, but since 1984 when the Conservative Government and this Prime Minister came to power, all we have seen has been consultations and discussions. I think that it is important for the Government to act and to stop consulting because this is a priority issue. Each child is entitled to daycare services.
It is rather shocking to see that the only result we have had is still more consultation. It is difficult to believe that the Prime Minister really wants to take action.
Our Committee voted to request an emergency fund of $150 million in the next Budget in January 1987, because the Prime Minister has said several times since his Government has been in power that the 1987 Budget would provide the allocations needed for child care programs. The report would by then have been tabled in the House. The Prime Minister also said in Vancouver that the funds would be allocated. If the Conservative Government is really serious about child care, it will allocate at least $ 150 million as an emergency fund to be used from February 1987 until the report of the Parliamentary Commission is implemented, perhaps one year from now.
In addition, the Minister of National Health and Welfare (Mr. Epp) has asked for a Social Affairs Ministers' Conference in January 1987. If the Government wants to show its commitment to child care, one of the priorities at this conference should be to examine this issue because the only way we can know whether the Government wants to give priority to child care services will be to see it do it with our own eyes.
We have been hearing about daycare centres for two years, but this should not remain at the level of lip service or be simply an exercise in public relations. If the Government is truly serious, the first thing to do is to prepare the report quickly and the second is to make sure that the amounts allocated in the next budget are large enough to provide an emergency fund as well as daycare services for our children. Moreover, the Minister of National Health and Welfare should make this a priority issue at this meeting next January.


Ms. Margaret Mitchell (Vancouver East):: Mr. Speaker, there is no question at all that adequate funding of quality child care services is one of the most important issues facing the Government, and especially the Minister of Finance (Mr. Wilson).
I am very concerned that the report of the Special Committee on Child Care will be delayed to March 21, long after the 1987 budget has been prepared and presented. We would have
preferred to have extended the reporting date to January 21 so as to include recommendations for funding in the upcoming budget. This delay leaves one to suspect that despite the Prime Minister's (Mr. Mulroney) lip service again last week in Vancouver, the federal Government does not intend to introduce federal initiatives to deal with the well-documented child care emergency in the coming year. Obviously the Government prefers to delay such action until just before the next election when the Government can say: "Look what we are doing for children and families". The Government wants to leave it to provincial Governments to initiate action in the child care field knowing that this will be delayed for several years.
We opposed this motion in committee, Mr. Speaker. We do not approve of a delay unless Government Members are prepared to support a motion which I presented to the committee for emergency federal funding for child care services. The motion I presented last week reads:
That the committee request the Minister of Finance to include in the upcoming budget a child care fund of up to $150 million to be used as an emergency fund for stabilizing and upgrading child care services until the committee report is tabled and implemented.
This is a very reasonable request. I hate to use the word, but it is a very conservative request. As a matter of fact, the New Democratic Party for several years has advocated federal expenditures in direct grants of up to $320 million. We estimate that this amount is needed to upgrade the quality of existing day care services to help reduce fees so that that care is affordable, and to create an additional 25,000 new child care spaces. This money would also cover a development fund to assist poorer regions and native communities which have a deplorable lack of child care services.
I expect a positive answer to the motion I presented, which I am glad to say was seconded by my colleague, the Hon. Member for Outremont (Mrs. Pepin) of the Official Opposition. As a result of the presentation, several questions have been raised in relation to the request. First, is there a child care emergency? Second, funding should be based on sound research and planning.
Speaking quickly to the emergency, there is no question that there is a national case of child neglect in Canada. This was documented extensively in the Chile Care Committee report and has been repeated over and over again in public hearings held across Canada. The lives and well being of children are at risk in an informal babysitting arrangement because working parents simply have no other alternative. There is no licenced monitored child care in many communities, and if there is, most parents cannot afford it.
One working mother told us she had to use nine different babysitters in the first year of her child's life. She had to work because her family was living on poverty income. Many children have no care at all or are left in the care of older siblings.
We were told repeatedly of concerns about latch-key children who go home to an empty house and who have
November 26, 1986

unsupervised situations during the summer months because there is no affordable child care.
Many day care centres have questionable standards. Children are being placed in situations where care is not up to the standard it should be. Centres are forced to charge fees that are too high. They pay very low wages to care givers because child care centres are grossly underfunded.
The only way centres can improve their standard of care is with direct government grants to help defray overhead costs, to reduce fees and to pay adequate wages. Dedicated care givers will continue to subsidize child care across the country. Many of these people are burning out and leaving the field because the federal Government refuses to act in this year's budget. Many long hours at minimum wages are expected of care givers. This refutes the statements made by the Prime Minister in Vancouver about equality. The Government is condoning the exploitation of women workers by refusing adequate funding for child care services in the upcoming year.
Many communities have no licensed child care services at all. Children of farm families are left alone in unsafe conditions. There are no services for children in northern and isolated communities and native communities. Shift workers and seasonal workers need flexible hour care. They have none. Children are often removed from their homes in native communities because there is no emergency care and no support of family services. This is a tragedy.
Funding should be based on a sound plan, of course. I agree, Mr. Speaker. A team of researchers and experts spent several years documenting the needs resulting in the Cooke report. They came up with an adequate plan advocating good faith grants from the federal Government that would stabilize existing services and establish a floor of good quality services until provinces can develop a comprehensive, affordable system of quality child care right across Canada. The Cooke report also proposed that federal grants be available as conditional grants to every province and territory on condition that funds be forwarded to licensed non-profit centres to provide operating and capital funds until cost sharing arrangements can be worked out with the provinces.
The Cooke report also proposed a formula. The plans are there. The research is there, Mr. Speaker. All we need is the Government will to start in 1987 with some up-front funding to show its intentions are right. We are tired of platitudes and words from the Prime Minister and others which really mean nothing unless there are some funds available to do something about this drastic emergency.
I am surprised that the Minister responsible for the Status of women yesterday in committee would say to me: "If it was just a matter of direct grants, Margaret, your committee would come out with a one-line report." That shows how little that Minister knows about the situation. There have been 15 years of reports that documented the needs. Obviously the Minister has not studied the Cooke report which provides an
Motions
adequate funding mechanism and formula that could be adopted in the upcoming budget.
I repeat to this House and the Government that the need for adequate funding of child care services is urgent. Children are being damaged, dedicated care givers are being exploited and working parents are being subjected to unnecessary stress and worry while the Government apparently is refusing to take action in providing any funds in this year's budget.
The Prime Minister's promises last week are a laugh. He talked about equality. Obviously he wants the women's vote. I can assure you, Mr. Speaker, he is not going to get it unless he puts some money where his mouth is. We are appalled at his lack of understanding. The main need in the whole field of child care is for some out front federal funding and it must be in this year's budget. That is why we do not want to delay any longer. We want to go forward with a proposal for emergency funding in this year's budget and we want to get our committee report out just as quickly as possible.


[Stage Direction]
Motion agreed to.
Mr. Deputy Speaker:: I wish to inform the House that because of the ministerial statement this day's sitting will be extended by 30 minutes.


BANK OF BRITISH COLUMBIA
Donald Frank Mazankowski: Further to previous motions, I seek leave to deal with another motion, which is a motion dealing with the introduction of a Bill to facilitate the continuation of the business of the Bank of British Columbia. If I could have leave to do that, I would so move.


Mr. Deputy Speaker:: Is there unanimous consent?


Some Hon. Members:: Agreed.


Donald Frank Mazankowski: The motion reads as follows:
That, notwithstanding any standing or special order of this House;
that, when the House reaches Government Orders this day, the House shall proceed directly to second reading and reference to a Committee of the Whole of a Bill entitled "an Act to facilitate the continuation of the business of the Bank of British Columbia";
that, on Thursday, November 27, 1986, the first order of business under Government Orders shall be the continuation of debate on the above-mentioned Bill;
that, not later than 4:45 o'clock p.m. on that day, Mr. Speaker shall interrupt any proceedings then before the House and shall put forthwith and successively, without any further debate or amendment, all questions necessary to dispose of the remaining stages of the said Bill;
that, at the ordinary daily hour of adjournment on Thursday, November 27, 1986, if necessary, Mr. Speaker shall suspend the sitting to the call of the Chair for the purpose of giving Royal Assent to the said Bill.

November 26, 1986
Introduction of Bills


Mr. Deputy Speaker:: The House has heard the terms of the motion. Is it the pleasure of the House to adopt the motion?


Some Hon. Members:: Agreed.


[Stage Direction]
Motion agreed to.
Donald Frank Mazankowski: Mr. Speaker, I seek leave of the House to introduce a motion concerning the business of the House, that we proceed directly to Orders of the Day to consider this Bill.


Mr. Gray (Windsor West):: Mr. Speaker, I seek a bit of clarification with respect to the business tomorrow. Does the Deputy Prime Minister (Mr. Mazankowski) or any of his colleagues contemplate taking any action under the heading of Motions tomorrow before we reach Government Orders?


Donald Frank Mazankowski: Mr. Speaker, pursuant to our discussions earlier this day, I would indicate that the purpose of this order is to move on the Bill concerning continuation of the business of the Bank of British Columbia in all stages. There will be no motions and hopefully no petitions or any stalling tactics so we can get through the Bill in all stages and give all Hon. Members an opportunity to debate it in full.


Nelson Andrew Riis: Mr. Speaker, I just wanted to indicate our intention to co-operate fully in this very serious matter. I just want it to be perfectly clear, and I seek some assurance from the Government House Leader, that anything dealing directly or indirectly with Bill C-22, either today or tomorrow, will not be considered by the Government.


Donald Frank Mazankowski: I will repeat again that both Hon. Members know there are discussions going on in an attempt to seek an all-party agreement as to time. As long as those discussions are going on, then in the spirit of goodwill we will certainly co-operate in that regard.


Mr. Deputy Speaker:: Does the Deputy Prime Minister (Mr. Mazankowski) have unanimous consent of the House to move the motion?


Some Hon. Members:: Agreed.


Donald Frank Mazankowski: Mr. Speaker, I move:
That, the House now proceed to Introduction of Bills, for introduction and first reading of a Bill by the Minister of State (Finance), following which the House proceed directly to Orders of the Day.


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


Some Hon. Members:: Agreed.


[Stage Direction]
Motion agreed to.

Thomas Hockin: that Bill C-27, an Act to facilitate the continuation of the business of the Bank of British Columbia, be now read the first time and be printed.


[Stage Direction]
Motion agreed to, Bill read the first time and ordered to be printed.
Mr. Deputy Speaker:: When shall the Bill be read a second time?


Some Hon. Members:: Now.


Herbert Eser (Herb) Gray: Point of order, Mr. Speaker. I wonder if the Government has printed copies of the Bill, even if it does not know the Bill number. Perhaps they could be distributed?


Donald Frank Mazankowski: Mr. Speaker, I thought the respective critics had copies of the Bill. There are others available and they are being distributed now.



GOVERNMENT ORDERS


Thomas 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.
He said: Mr. Speaker, I will be brief. I just want to make a few comments in reply to some of the questions posed a few minutes ago.
First, the urgency of this legislation has been explained. I agree with the Right Hon. Leader of the Opposition (Mr. Turner) who identified precisely what this Bill will do. It does not prevent shareholders from meeting to determine compensation. It will allow that to happen. He understood that clearly. The Bill also deals with winding up and so on which I can explain when it goes to committee.
The issue of financial institution reform has been a major priority of this Government. It has been decades since we have had financial institution reform. We propose to bring forward a comprehensive set of reforms very shortly. The Right Hon. Leader of the Opposition expressed his concern that we would be making ad hoc decisions forever unless this reform takes place. The new framework will be put in place very shortly, but
November 26, 1986

until then, of course, we operate within the existing framework. It is my hope we can bring it in very shortly and that it will cover essentially both parts of the financial institution regime, that being inspection and supervision. It will address all of the problems that Mr. Justice Estey referred to which concern Canadians regarding the liability of inspection and supervision of deposit-taking institutions, insurance and trust companies. Nothing has been done in this regard for literally decades and I am very proud to have the opportunity to bring in major changes which will further strengthen the Canadian financial system. I will not speak further about that because the time will come for that.
The second part of our task over the next few months is to come to terms with the rules of the game, so to speak, as they affect ownership and the function of financial institutions. As we all know, financial institutions would like to broaden their base of activity. What should be the parameters? Who should be able to own a financial institution? How big should they be? Those questions have been examined in very great detail through a host of studies, foremost of which would be in the standing committee of this House. That committee had important things to say on these subjects. As well, the Senate dealt with it, and there have been important studies at the provincial level. Then we have the Estey report. 1 would say that never has a subject been better researched or prepared for than financial institution reform. Therefore we are ready for reform and ready to bring in the package. I will be consulting with provincial Ministers on this issue on Sunday and Monday. That is one of the very last steps we must take in order to bring the package forward. I hope all Members will agree that this package will greatly strengthen the system and lay down rules so that business plans can be made and the activities of our financial sector can grow and prosper. I believe depositors will feel more secure and borrowers will find a more competitive environment. We will be internationally competitive, rather than a financial non-competitive island unto ourselves. This massive new structure will be in place shortly.
In my view, the Bill before us is a symbol of the confidence that foreign banking institutions show toward this country. Our banking system must be extremely strong to attract this kind of interest. While I share with my colleagues a concern about too much foreign ownership, the transaction we are being asked to facilitate today constitutes only approximately 1 per cent of the Canadian banking system. I believe that Schedule B banks will move from 10.7 per cent to 11.8 per cent of the total assets of the Canadian banking system, so that this is not a massive foreign invasion of the Canadian banking system.
When the Bank Act was changed in 1980, we explicitly wanted to have foreign institutions admitted to Canada. This would allow reciprocal rights for our financial institutions abroad because they cannot operate effectively unless there is an opportunity for foreign institutions here. Second, we wanted
Bank of British Columbia Business Continuation Act
the competition and the skills that foreign entry can sometimes bring. What better example of that than this legislation?
In my opinion, this legislation is the quintessential example of the importance of having Schedule B banks at certain times because it allows the skills, contacts and the network that exists in the Pacific Rim with one of the largest banks in the world to be linked with the Bank of British Columbia.
Let me make it clear that banks that are constituted as Schedule B banks are not branches. They are separate corporations with their own directors and a Canadian head office. It is important to note that it is a Canadian operation. The Bank of British Columbia will have its head office here and the majority of directors will be Canadian. Its branches and employees will remain in place. By giving it this transfusion, I believe we have found a way not only to save an institution that was wounded, perhaps fatally, it will be stronger and more robust than ever. That is the purpose of the Bill.
Furthermore, this legislation will add a presence in the Pacific Rim that British Columbia has never had. I know that Hon. Members will want to deal with the importance of this to Canada and the western part of our country. This Bill represents an act of confidence and makes proper use of the provisions of the Bank Act.
Let me deal with how the operations of the Canada Deposit Insurance Corporation are affected by this transaction. The CDIC is an institution with its own board, and operates on premiums it receives from member institutions. Its decision on whether to make a transfusion of $200 million is based on the consideration of whether it will ultimately pay less through this transfusion than if the Bank of British Columbia were liquidated. That is the decision that the CDIC is making, and it has been constituted to make those kinds of judgments.
There is concern that we are asked to make last minute decisions. Decisions on any transactions such as this often must be made quickly. Quite frankly, this is an opportunity for the CDIC to minimize its obligations while allowing the bank to grow and prosper.


Michael Morris Cassidy: You protest too much. It is hardly an independent institution.


Thomas Hockin: I will explain. If the Bank of British Columbia were to be wound down the CDIC would have to make approximately $1.3 billion in pay-outs to insured depositors. Furthermore, upon liquidation, lower recovery values to the CDIC would have to be anticipated. Therefore, this solution is most appropriate from the perspective of the CDIC.
It is quite true that the Governor of the Bank of Canada and the Deputy Minister of Finance are on the board of the CDIC. We are in constant contact with the CDIC when it makes decisions. However, it is an independent board-


Michael Morris Cassidy: It is not.

November 26, 1986
Bank of British Columbia Business Continuation Act


Thomas Hockin: It has to make judgments about what is best for those who pay the premiums.


Michael Morris Cassidy: The Deputy Minister of Finance is independent?


Thomas Hockin: The contributors of premiums are the ones paying for the CDIC.


Michael Morris Cassidy: They have no say.


Thomas Hockin: Yes, they do. Let me make it clear that the CDIC is constituted to make these judgments not when banks collapse but to prevent them from collapsing. In this situation, this transfusion will allow this institution to become healthy and more robust than ever.
I believe it has been alleged that the Government is paying $200 million. While the CDIC receives advances from the Government, they are paid back with interest. It is important to understand that the financial operations of the CDIC are not a burden to the cash requirements of the Government of Canada in the long run.


Jean-Robert Gauthier: If we wait long enough.


Thomas Hockin: This is one example of the many cash inputs from the Government of Canada that must be paid back.
I am grateful to all Members that we could introduce this legislation today. It makes it possible for the Province of British Columbia to have a linkage with the Pacific Rim that did not exist before. It will allow this important institution to continue and even grow stronger, given the additional skills and contacts it will have through this international linkage. I commend this Bill and I thank Hon. Members for letting us bring it forward.


Miss Aideen Nicholson (Trinity):: Mr. Speaker, we in the Official Opposition have agreed with some reluctance to the Government's request to consider and pass this legislation immediately. Our reluctance was overcome by our wish to safeguard the jobs involved and to avoid disrupting the regional economy. However, we take strong exception to the habit the Government has developed of ad hoc regulation and legislation in the financial services industry. It is ad hoc because, despite the promises in two Throne Speeches, we have had no reform legislation on financial institutions. The Government continues to operate in a policy vacuum.
All of us remember only too well when, on March 25, 1985, the former Minister of State for Finance announced the Government's decision to bail out the Canadian Commercial Bank and asked for the co-operation of the House in passing the enabling legislation immediately. We agreed and found out later that the information we were given was totally inaccurate. The Government gave guarantees that with the bail-out package the Canadian Commercial Bank could be viable. We found later that those guarantees were worthless. The Government did not know and did not use information which was available.
When the committee on finance examined the situation, after the passage of the legislation, it became clear that the loan assets of the Canadian Commercial Bank had not been accurately valued and that there were many problems with its administration. These were problems of which the Government should have been aware but was not. There was a Memorandum of Understanding signed but there was a 30-day period before that memorandum was confirmed. In that 30-day period, the Government made no serious examination of the loan assets, even though the other banks participating in the bail-out had requested this be done.
Therefore, we in the official Opposition agreed to give passage to a Bill in the spring of 1985 because we believed the Government. We accepted the undertakings we were given, but later we found these undertakings were worth nothing.
Even up to mid-August of 1985, the Government was still saying that with the bail-out package it had arranged, the Canadian Commercial Bank was viable. Yet, as we know, by September 1 it was in liquidation.
Perhaps we should be appreciative of the fact that the Government is not seeking that sort of arrangement this time. However, we would not be responsible members of the Opposition if we did not insist on better information from the Government than we were given a year and a half ago. We intend to hold the Government responsible for the accuracy of information it brings forward in this debate. Our passing of this Bill is conditional on our receiving an assurance that the matter will receive a very thorough examination afterward by the Standing Committee on Finance and Economic Affairs.
After the bail-out of the Canadian Commercial Bank and the Northland Bank depositors last year, there was the takeover of Canada Trust, a financial institution, the fourth largest holder of personal savings accounts in Canada, by the industrial giant, Imasco Limited. This was a clear situation of a financial institution coming under the control of a nonfinancial group, which is something the Standing Committee on Finance and Economic Affairs had recommended against in its report on the Government's Green Paper on the Regulation of Financial Institutions. However, the Government has not responded to that report, nor indeed has it responded to any of the stack of reports on financial deregulation. Therefore, when the Canada Trust-Imasco deal came up, the Government had no legislation in place to deal with it, with the less than satisfactory result that the deal was approved but the new owner was asked to give certain undertakings. Again, we have an ad hoc solution.
On October 2 this year, there was the announcement that the Government had approved a sale of assets enabling the British owned Lloyd's Bank to take over the Continental Bank which is, or was, a Canadian bank. Again, we in the official Opposition directed our criticism not at the particular transaction but at the Government, because yet again it had put itself in the position of having to make important and
November 26, 1986

precedent setting decisions involving financial institutions without the benefit of a policy framework. That is no way to govern.
As I have said before on a number of occasions in this Elouse, the process of reform of financial institutions' legislation began with the previous Government and bogged down with the present Government at a time when the need for it is becoming clearer and clearer. The pace of change in the financial services industry is not slackening, it is accelerating. The Government must get a handle on this to ensure that these changes work in the best interests of Canadians.
Almost a year and a half ago the Government made a hasty and ill-considered decision to bail out a bank. Less than six months later that bank and another small regional bank had failed amid well founded charges of Government mismanagement and misinformation. Since then it has become more and more obvious that the Government has failed in its responsibility to restore stability and confidence to the banking industry, and that small Canadian regional banks have been the major casualties.
Look at the evidence, Mr. Speaker. First, the Canadian Commercial Bank and the Northland Bank failed and are now in liquidation. Then the dominos began to topple. Morguard Bank was taken over by Security Pacific Bank of Canada, a subsidiary of a U.S. based parent. The Mercantile Bank was taken over by the Canadian owned National Bank, or Banque national. Last month the Continental Bank was taken over by British-owned Lloyds Bank. Now we have the Bank of British Columbia going in with the Hongkong Bank. What is happening to the regional banks under this Government? It seems that they are disappearing one by one in the fall-out from that ill-fated attempt to save the Canadian Commercial Bank, a bank which, as Mr. Justice Estey has confirmed, was already dead on its feet.
The Bank of British Columbia, on the other hand, was by all accounts a healthy institution before the CCB bail-out raised fears and anxieties which spread to all small regional banks and financial institutions. As my leader said earlier, in January 1985 the leverage ratio of the Bank of British Columbia stood at 13 as compared to an industry average of over 20. It was in sound condition but, faced with the Government's poor handling of affairs at the Canadian Commercial Bank, it just could not recover the investor and depositor confidence on which financial institutions depend for their life and health.
The press release issued today by the Bank of British Columbia does indeed point the finger fairly clearly at the relationship between that bank's difficulties and the Government's actions in relation to the Canadian Commercial Bank. There is a reference in the news release to the fact that the Bank of British Columbia has been canvassing for possible partners or successors with the ability to carry on the business of the Bank of British Columbia. It states:
The canvass was initiated as a matter of prudent foresight in late 1985 when the board of directors of the BBC concluded that BBC, like a number of other smaller Canadian banks, would have difficulty recovering from the loss of
Bank of British Columbia Business Continuation Act
confidence that followed the events then taking place in the banking system and that the time for recovery might be unacceptably long.
Therefore, we have a bank, which by all accounts was sound, well managed, put into a difficult situation where it cannot survive by the actions of the Government.
A much smaller institution in British Columbia also collapsed as a result of the Government's ill-advised and uncoordinated attempts to deal with the Canadian Commercial Bank and the Northland Bank. I refer to the British Columbia Teachers' Investment and Housing Cooperative. This was an organization apparently in good shape up until the collapse of the Canadian Commercial Bank when some members of the organization became anxious. There was a run on deposits which caused the organization to fold. This was a particularly difficult situation because so many of the deposits were not covered by deposit insurance. Those of us who have received very poignant letters from retired teachers who have seen their whole retirement security disappear certainly feel that the Government has a lot to answer for.
I would now like to return to the terms of the takeover of the Bank of British Columbia. This bank will be taken over by the Hongkong Bank, which is one of the world's largest. I believe it is the fifteenth largest bank in the world. It is well managed with its Canadian operations headquartered in British Columbia. Since the Bank of British Columbia has to have a merger it has undoubtedly found an acceptable partner. My criticisms are not in any way directed at the Hongkong Bank but at the Government which has again put Parliament in a situation of having to make a last minute decision in a policy vacuum.
For two years the Ministers have been dreaming and studying but not bringing forward clear decisions. The Government has not been willing to deal with the question of ownership. The Minister of State for Finance (Mr. Hockin) tells us that legislation will be forthcoming within a few months. We might feel more assured by that statement if we had not heard it so often. If the recommendations of the finance committee with respect to ownership had been adopted then the Bank of British Columbia in its canvas would have had a much broader base. There would have been many other choices. Similarly, the Continental Bank would have had many other choices. However, in a policy vacuum the Government makes some type of ad hoc decision.
We will not be opposing the legislation, as I said earlier, because on the face of it this is a fair solution. Some 1,400 staff members of the Bank of British Columbia are guaranteed that their employment will continue. I believe there are about 39 branches of the bank which are expected to continue in operation. The depositors will be protected. However, the shareholders will certainly be losing something. It seems as though this solution is the lesser of the two evils for them.
There is a proposed $200 million infusion from the Canada Deposit Insurance Corporation, which infusion will be

November 26, 1986
Bank of British Columbia Business Continuation Act
financed by a levy on the financial institutions concerned. This, of course, means that somewhere along the line a consumer will be paying something for it. None of this would have been necessary if it were not for the Government's ill-advised actions 18 months ago and all the chaos which flowed from it.
Our leader spoke of the fact that the Bill removes from shareholders the right of approval. They have a limited right to approve the sale; but the basic right to assess the quality of the decision making is being removed from them. I am very uneasy about using Parliament for this type of measure. Again, I reluctantly recognize that it is probably the best decision that could be taken in the circumstances.
I repeat, if the Government had acted earlier with legislation we would not be so circumscribed, and nor would the Bank of British Columbia be so circumscribed in this situation. It would have had a broader range of options if it wished to have a merger or sale. If the Government had acted differently, I am convinced we would not have had such an erosion of confidence in the economy which caused the Bank of British Columbia's difficulties in the first place.
I conclude by pointing out that we on this side of the House will want fuller information from the Government with respect to this matter, more than can be had in a short debate. We will want to have committee hearings after the event. We will want an opportunity to assess the accuracy of the information provided to us today.
I can hardly say strongly enough that it is more than time for the Government to proceed with legislation. Again today the Minister of State for Finance promised us legislation "soon" on the aspects of supervision and regulation. There was proposed legislation of that type on the Order Paper before the House recessed in July. The Government chose not to proceed with it. However, the all-important and more fundamental issue of ownership has not been addressed. While the Minister of State tells us it will be addressed in the next few months, all I can say is that we have heard that before. We have been promised new legislation in two Speeches from the Throne and in innumerable statements in the House. That leaves us to ask: When, oh when?
I sincerely hope that we have seen the last of this type of ad hoc solution and that the Government will come forward with some serious attempts to define policy for financial institutions before we run out of financial institutions.


Michael Morris Cassidy: Mr. Speaker, I have a number of comments to make on this Bill. As I said in response to the Minister's statement, we come to this debate in sorrow, regret and in a great deal of puzzlement because of the lack of information upon which we have to act. I understand that there are some difficulties, because in dealing with financial institutions a great many of the discussions between Government and those institutions, of necessity, and for reasons of confidentiality, have to be carried out in secret. However, we were called in today and asked to react constructively and positively to the Government's proposal that
legislation be enacted which would, within a day or so, wipe out the provisions of the Bank Act for the protection of shareholders. We are being asked to allow this particular transfer of assets to take place, in the course of which yet another of our chartered Schedule A banks will be put under foreign ownership.
In response to the Minister I expressed my reservations and my concerns about this move. I have to say that the information which I have so far been able to find indicates that there is substantial reason to believe that there were other options available to the Government with respect to the future of the Bank of British Columbia which, for various reasons, the Government, having a major say in this, chose not to follow.
The legislation before us, Bill C-27, allows changes to the Bank Act which essentially override the provisions for the approval of shareholders of the transfer of assets from the Bank of British Columbia to the Hongkong Bank of Canada and presumably its parent company in Hong Kong. The shareholders will not be able to ruminate over this deal and come up with a decision in a month's time as it is the advice of the Director of the Bank of British Columbia, advice which has been accepted by the Department of Finance, that that would create uncertainty and that that uncertainty would be damaging to this important regional institution. Therefore, if the deal is to be consummated, it should be consummated now. The wedding night should be tomorrow night. We should not wait for another month before putting this Bill through. A period of engagement would be destabilizing for the bank.
An arbitration process is put forward in the Bill. I do not think we know how that will work because it is virtually without precedent. The shareholders have been told that the only thing they can do in a couple of weeks' time is to decide whether to accept the offer which will be in trust from the Hongkong Bank or, in the hopes of getting more, to put the matter to arbitration. They will receive some $60 million to $75 million, I am not exactly sure of the total amount, and after preferred shareholders are paid off, as we were told this morning by the Minister, shareholders will receive about 75 cents per share for common shares. Incidentally, as recently as a year or two ago, those shares sold for some $6 per share. In a few weeks' time, the shareholders are likely simply to take the money they have and run with it.
All of the evidence before us shows that in a liquidation mode, the bank is not solvent. It may be, as has been argued by Department of Finance officials, that as an operating bank it was solvent. This is a matter about which we have no information. While I have asked in the corridors for some background information about the situation, for any evaluations made available to the Department of Finance and for other kinds of information about the options, that information has not yet been forthcoming.
Perhaps I could say a word about the process. The House of Commons has moved into a new era and I think now we must
November 26, 1986

go beyond the view that the government of the day and the civil servants serving the government of the day need only provide information which supports the publicly announced decision of the Government and that no other information will be made available.
I have a number of misgivings about this particular deal. I have had a very short time to come to grips with exactly what has happened. I have had the opportunity to talk to one or two people from Vancouver and to have my research staff do some work. However, I do not know what information was availble to the Government and the only information I have is that the Government has said that this was a judgment call and we have to trust it.
The fact is that we have trusted the Government before by allowing legislation to come to third reading without unduly blocking it and we have been deceived and dismayed by the results again and again. The Hon. Member for Trinity (Miss Nicholson) has commented on the bail-out of the Canadian Commercial Bank and the Northland Bank. At the Estey Commission and at hearings of the House of Commons Finance Committee with which I was involved from time to time, we have heard of a sorry story of regulation. The Minister of State for Finance (Mr. Hockin) has just talked to us in rosy terms about how on the one hand the Bank of British Columbia was terminally ill and how on the other hand it would become robust and walking through the takeover by the Hongkong Bank. He has also suggested that this takeover will give British Columbia a presence in financial circles around the Pacific Rim. That suggestion, I submit, may prove to be somewhat naive. It is like saying that Canada has a presence in the world automotive market because of General Motors of Canada, a subsidiary of General Motors of the United States. Everyone knows that that is not true and that while General Motors is a productive corporation which provides much employment and has a relatively good investment record, it has next to no influence on the world-wide or American operations of its parent company in the United States.
The Bank of British Columbia, or whatever it is to be called under its new ownership, will have assets of $2 billion or $3 billion and will be part of a banking empire which stretches around the world and has particular emphasis in Australia, the United Kingdom and the Far East and assets of over $50 billion. It is an international trading bank. The Bank of British Columbia has been devoted to lending to small and mediumsized businesses. It has a network of some 39 branches in the Lower Mainland and throughout British Columbia with only one or two branches left in Alberta since the downsizing that took place a few months ago. Will the Bank of British Columbia with 3 per cent or 4 per cent of the assets of the Hongkong Bank group really have the kind of leverage it will need to influence the operations of that group or will it be in the same situation as General Motors of Canada? I could cite many other Canadian subsidiaries of American companies with far less influence, a good example of that being Goodyear Canada which has just been forced to close its plant in
Bank of British Columbia Business Continuation Act
Toronto, creating the lost of 1,500 jobs, because of corporate manoeuvring involving takeovers on Wall Street which have affected the parent company in the United States.
This is a very serious question. The Government has been looking for positive arguments to justify a measure which is difficult to justify, which at best is regrettable and which at worst may in fact be an avoidable loss of control of yet another important regional financial institution. The Government has tried to put the best face on it but I really think it exaggerates the case a bit too much according to what the Minister of State for Finance said a few moments ago.
The Minister of State also suggested that the Canada Deposit Insurance Corporation was somehow acting independently in reaching a decision as to what should be done about this particular case on its injured list. I cannot believe that he can say that after looking at the composition of the Board of Directors of the Canada Deposit Insurance Corporation. The Board of Directors consists of the Governor of the Bank of Canada, the Deputy Minister of Finance, the Superintendent of Insurance and the Inspector General of Banks. I presume that the Chairman works full time with the Canada Deposit Insurance Corporation.
Does the Deputy Minister of Finance act independently when he puts on his hat as a member of the board or is he not in fact carrying out government policy? Does the Superintendent of Insurance not carry out government policy when carrying out his duties on the Canada Deposit Insurance Corporation Board? The same is true of the Inspector General of Banks. I am not sure if he has been replaced since Mr. Kennett offered his retirement just a few months ago.
The CDIC collects premium incomes from banks and other financial institutions but there are no representatives of the banks that provide that premium income on the board. There is no indication that the board has an independent view. It is simply a quasi autonomous government organization but nonetheless it is still a government organization.
If the CDIC was acting in place of the Department of Finance during the course of these proceedings, it is wrong for the Government to try to claim that it was somehow acting at arm's length. In fact, when I asked what had happened, I was told that the Department of Finance acted in this particular measure as a facilitator. The statement made by the Minister of State today would indicate that that was in fact the case.
It would appear that the operation of the Bank of British Columbia began to turn rather more sour sometime in the summer or fall of 1986. As a consequence, its quest for a merger or a takeover partner intensified. What we do not know and, therefore, this is one of the reasons why this is really a matter for judgment, as far as the Government is concerned, is under what circumstances that search for a merger partner took place.

Mr. Speaker, I am wondering whether or not the Government paved the way for merger discussions between the

November 26, 1986
Bank of British Columbia Business Continuation Act
National Bank of Canada, which operates mainly in the Province of Quebec, and the Bank of British Columbia.
Here are two Schedule A chartered banks which do not compete with one another since the National Bank does business in eastern Canada whereas the Bank of British Columbia deals almost exclusively within provincial boundaries.
So was there any possibility of these two banks merging or, when they did entertain such a possibility, did the National Bank know that the federal Government was quite prepared to provide $200 million one way or another to help the Bank of British Columbia get back on an even keel, to make sure it would continue its banking operations in western Canada?
In the discussions with the Vancouver City Savings Bank it was made quite clear that an injection of about $200 million was to be expected just to make sure the merger of the two banks would put both institutions on the right track.
But what I am asking, Mr. Speaker, is if the National Bank, for example, was aware of the possibility of getting $200 million in financing to make a merger possible? What about the Bank of Nova Scotia? What about the Toronto-Dominion Bank? If the Government was prepared to come in with legislation and to ask the House to legislate in order to expedite this particular deal, then was it possible that there was a trust company somewhere in western Canada, or elsewhere in Canada, that wished to enter into an arrangement with the Bank of British Columbia, and which would have done so had it been aware that the Government was prepared to bring legislation before the House of Commons?
I know that in the case of the Continental Bank when it was considering a merger with Lloyd's Bank, which is a Schedule B bank, it shied away from that particular solution on the grounds that it thought that legislation would take too long. Therefore, it chose a transfer of assets. It was able to do so with the consent of the Minister of Finance (Mr. Wilson) and then of the Governor in Council in a way which effectively evaded any form of parliamentary scrutiny.
But in this particular case the Government was prepared, as apparently it was not prepared for Continental, actually to bring legislation into the House of Commons. It puts us in the Opposition into a very difficult situation. We finally have to say, "Look, you guys have chosen to take this particular course of action. We are going to have to go along with you and let you have your Bill because of the impact upon depositors and the institution if this is allowed to drag for a period of time". This is not real accountability to Parliament. This is just a debate of a couple of days. Unless overnight there is a groundswell of anger and outrage over the fact that yet another Canadian bank is being sold to foreign interests, we are in a situation where, by agreeing to allow all matters to come to a vote at 4.45 p.m. tomorrow, we have essentially
agreed to allow Parliament to be defanged and have no effective power to force the Government to back off from this particular proposal.
We do not have enough information, Mr. Speaker. All we can do is simply go along with the Government when it says, "Trust us".
I look at the list of banks which have disappeared from this country over the last couple of years, Mercantile, CCB, Northland, and now the Bank of British Columbia. There was another small one, I believe.


Thomas Hockin: It hasn't disappeared.


Michael Morris Cassidy: Of course, it's disappeared. The Hongkong Bank is coming into its place. Continental has disappeared, it is no longer a Canadian bank.


Thomas Hockin: It's keeping the branches.


Michael Morris Cassidy: The branches will be there, but it will be under another proprietorship. I am not sure if the Bank of British Columbia will keep its present name, or whether it will become the Bank of British Columbia (Hongkong). I am not sure. But, for example, the Continental Bank, which had built up a great deal of goodwill in terms of its name, is now Lloyd's Bank of Canada. It is no longer the Continental Bank. I am not sure of the arrangements. All I am saying is that this Government which is dedicated to maintaining the corporate sector and maintaining free enterprise, has presided over a tremendous disappearance of Canadian banks over the last few years. The Government has not functioned to try to keep those important institutions in the hands of Canadians. Let us be very clear about that. We are spending $200 million. It is coming out of my pocket and out of the pockets of the Member for Joliette (Mr. La Salle), and all of the other Members here, and every Canadian one way or the other from premiums and from taxes. That money will be paid to the Bank of Hongkong so that they in turn can turn around and buy this bank. That is exactly what is happening, of course it is coming from taxes.


Thomas Hockin: It comes from premiums.


Michael Morris Cassidy: It is not coming from premiums. There is no money available from premiums, Mr. Speaker. The Minister of State for Finance is interrupting me, Mr. Speaker. He says it is coming from premiums. Let me read the figures. The Canada Deposit Insurance Corporation is currently in the hole, according to its last annual report, to the tune of $1.25 billion. With the increase in its premiums to three times the former rate, it will pay that off sometime in the next six or seven years, assuming that there are no further losses. After that, it can then get around to paying the $200 million which it will owe as a consequence of this particular infusion of capital into the Hongkong Bank.
Now, if I can continue-and I say this to the Minister of State for Finance, who seems to be quite worked up about this situation-in addition, over that period of time, the Canada
November 26, 1986

Deposit Insurance Corporation will have to pay interest on the money that it is currently borrowing to the Consolidated Revenue Fund. Borrowing $200 million dollars at 10 per cent per annum, and keeping it for six years until it is repaid, means that the CDIC will have to find an additional $125 million in interest for the money which is being advanced to the Hongkong Bank. The Minister nods his head. I am glad I have his agreement finally.
The point I am trying to make, Mr. Speaker, is that whether it is $200 million or $300 million, that is an awful lot of money. The CDIC, if it is going to get out from under this particular liability, will likely want to increase its premium rate yet again. The directors, all of whom are appointed by the Government and are high government officials, will turn around and will say to the Minister of State for Finance, "Look, we need to increase our premium rate again". Right now we pay through taxes or through interest on the national debt, or whatever it is, for money that is being advanced. Sooner or later we, who are customers of the banks, and we cannot help but be, and I speak for all Canadians, will have to pay for this particular reinjection of capital into the Hongkong Bank. One way or the other we are paying. Right now, I suggest the Minister is being quite specious when he states in his statement that one of his goals is to do all of this without the expenditure of public funds as part of the purchase arrangement.
I raised this question when it came to the Continental Bank. We were told that the sale of the Continental Bank was good for the shareholders because they got more dollars than if the Continental Bank had merged with a Canadian Schedule A bank. We were told it was good for the depositors because they had the backing of Lloyd's Bank which is one of the biggest and wealthiest banks in the world. We were told that it was good for the lenders because they had this source to all types of new capital. We were told that it was good for the employees because there would not be any downsizing of the bank. What we were not told was that in the meantime a substantial chunk of the financial industry in Canada was passing under foreign control. The Minister has suggested that only 1 per cent of Canadian banking assets are going under foreign control as a result of this particular deal. But it was 2.5 per cent with Lloyd's, it is 1 per cent with this particular deal. I am not sure what will come next. But that is a substantial shift in control in the matter of a couple of months. It shows no sign of coming to an end. In fact, I suspect that the Government will very shortly come to us and say that the 16 per cent limit on foreign banking assets in Canada will have to be increased, because all the Schedule B banks are getting too close to the limit, and so we will have to increase it.
1 am not sure where all that leads us. However, I can say that there has not been nearly as vigorous a drive by the Government to see whether there were Canadian solutions.
Bank of British Columbia Business Continuation Act
I talked with officials of the Department of Finance today. Essentially I asked them what was really going on. They said that by going with the Bank of Hongkong, by paying $200 million for Hongkong to buy our bank, we minimize the risk and we minimize uncertainty as far as the Treasury or the CDIC is concerned. The Minister cannot have it both ways. If he is trying to minimize risk to the Bank of Canada, he cannot argue at the same time that the CDIC is not the Government of Canada. Also I was told that if a Canadian solution had been pursued, there would have been greater risk to CDIC.
I find the information before us is in fact contradictory. The Bank of British Columbia was given a clean bill of health by a special inspection team of the Inspector General just 13 months ago. In its release today the Bank of British Columbia indicated that in the event of liquidation, the shareholders might come out without anything and that there might be some loss to uninsured depositors. That would suggest, according to the records of the Bank of British Columbia, that in liquidation there would be no net loss to the Canada Deposit Insurance Corporation.
The Minister of State or the Government may argue that there are public policy reasons, even if that were the case, for the deal to go through in the form in which it is now proposed. Nonetheless, it suggests at the very least that there is a very substantial difference in perception between the people who know best the business of the Bank of British Columbia and the Government of Canada. The Government is saying that there will be a net loss of some $300 million or $400 million of which $200 million will have to be taken up by means of the CDIC infusion of capital. I am not sure what is the situation.
The economic situation in British Columbia has not changed that appreciably. It was pretty bad a year ago and it is pretty bad today. It is not as though there has been a sudden new and sharp downturn in the economy of British Columbia over the course of the last period of time. The Bank of B.C. says that while there might be a net loss of uninsured depositors, it is not suggesting that it will go further than that. On the other hand, the Government says that it is going an awful lot further than that.
One question must be asked-who is right? While taxpayers, either as taxpayers or as premium payers, are putting up $200 million, is it fair that the shareholders in a bank which is essentially without net worth or net assets should walk away with $60 million or $75 million? I ask that question. I cannot give an answer to it. I do not have the information from the Government. Is it in fact that it is in the form of a bribe from the CDIC so that shareholders will shut up and not make waves in terms of legal action which might impede the particular deal?


Thomas Hockin: It has net worth as a going concern.


Michael Morris Cassidy: I hear the Minister of State. We are being told at the same time that the bank was finished as a going concern, if not this month, next month or the month thereafter.

November 26, 1986
Bank of British Columbia Business Continuation Act
They cannot have it both ways. If the bank is to be finished in a couple of months without either a merger or a takeover, the moment it became known, the bank would be finished- and the Minister knows enough about finance to know it- because banking rests so much on confidence.
Also the Bank of British Columbia indicated that no organization was identified with which a transaction on a going concern basis would have been feasible. 1 have suggested a few, but it was suggested to me that the Government of British Columbia did not want to see an eastern bank take over control of the Bank of B.C. In its view it was better to have Hongkong than eastern Canada. That is questionable. I do not necessarily want to come down on either side of that, but I suggest a better solution-better a B.C. solution than any other.
I am very disturbed that the proposed merger of the Vancouver City Savings Credit Union and the Bank of British Columbia was stymied. I want to find out why. This is one reason I trust the matter will in fact go to the Standing Committee on Finance and Economic Affairs. In fact, the Minister of State has assured me that he will use his best offices-I think that was the essence of our discussion-to ensure that the matter is raised before the standing committee. Two and a half weeks ago negotiations between Vancity and the Bank of British Columbia were going well. If it took place, it would triple the size of Vancity from $1.5 billion in assets to $4 billion. It would take Vancity from 15 per cent of the British Columbia market, where it was behind the Royal Bank and the Bank of Commerce in terms of deposits, to a point where it would become the largest financial institution in British Columbia. If I may say so, the Government is putting up a red herring in suggesting that the problem was that the Bank of B.C. would become a trust company. The problem was making the necessary legislative arrangements, because it was a provincial institution, in order to ensure that the long-term merger could take place.
Frankly I have not had enough time to establish exactly what was in mind. Within a very short period of time it was intended that the Bank of British Columbia would become a kind of co-operative bank as a consequence of the merger with Vancity. The trust company solution would ensure that the Bank of B.C. could continue to serve its customers and depositors over the period of time in which that took place. As we are seeing today, when there is a political will and when there is co-operation from the opposition Parties, it is possible to put new arrangements in place very quickly. That is one of the attributes of the parliamentary system.
The problem was not between Vancity and the Bank of B.C., according to the information I have. It was the fact that the Government of British Columbia backed away from suggestions it become involved in order to ensure that there was a B.C. based regional bank. That was Premier Vander Zalm who made a number of bold promises during the course of the election campaign. When it came down to putting some money
where his mouth was, in the form of debentures which would carry interest and would have been repaid, he backed away.
When it came to the role of the federal Government, it was simply asked to have CDIC take over a portion of the debt of the Bank of B.C. It was soft debt or questionable debt. Since the shareholders would begin by absorbing their losses, it was very unlikely that it would have come up to $200 million. The net cost to the federal Government would have been the same or less as this particular solution. The net benefit to B.C. would have been an institution which remained a British Columbia institution.
Since 1982 there has been no increase in loans from the big five chartered banks in British Columbia. In other words, they have not been doing the job of putting money raised in deposits back into the province. They have increased their deposits in B.C. by $10 billion since 1982, but they are not putting money back into the economy of British Columbia. While we talk with reason about the need for a regional banking institution in British Columbia or in western Canada, there is also a responsibility on the part of chartered banks to do their job and not to suck dry financial assets from western Canada in order to lend them abroad or to bring them into Ontario or central Canada. That has been the complaint of British Columbians for a long time. I say to my hon. friends from British Columbia that I speak as a native of B.C. who was born in that province in 1937 and as someone who retains a certain attachment to the province even though I was moved by my parents at a somewhat early age.


Mr. St. Germain:: I did not know what it was.


Michael Morris Cassidy: I hear the Hon. Member.


An Hon. Member:: Maybe you should run there.


Michael Morris Cassidy: I will see what my constituents have to say about that.
Another matter I should like to raise is that obviously the Bank of British Columbia could not make up that shortfall in deposits on its own. There is an over-all problem in terms of banking policy toward British Columbia in which the Government since 1984 could have and should have become involved but did not.
We do not know if there is a job guarantee from the Bank of Hongkong. I note there is no reference to it in its statement. We do not know what kind of bank or business plan it has. The Government says that it does not know what is the business plan. In other words, they are buying on the reputation of the Bank of Hongkong, not on specific commitments to Canada. The Hongkong Bank is an international trading bank. I suspect one of the reasons the Government has bought this solution is that it believes that it will somehow encourage the desire to make Vancouver an international financial centre.
November 26, 1986

I will have some words to say at some other time about the proposed tax exemption being discussed. Most people who are experts in the banking system say that whatever the political rights or wrongs of the proposal, it is unlikely to bring banking business to Canada that would not otherwise have come here. Will an international trading bank with business on four or five continents want to continue to provide loans of $200,000 to $2 million to motel operators, hardware store operators, outfitters, tourist operators and that kind of thing in the interior of British Columbia? Is that possible or will the Hongkong Bank in its new role as the owner of the Bank of British Columbia decide that that is not the strategic direction the Bank should follow?
I was looking for a list of the bank's branches in the interior of British Columbia, but unfortunately I do not have it. But from Hong Kong to Kamloops, from Hong Kong to Lillooet, from Hong Kong to Port Alberni, is there a real fusion of interest that will allow branches in those areas to continue to be in operation, or will we see a further pruning of the Bank of British Columbia in order to turn it into an international trading bank? If that is the case, Mr. Speaker, I suggest we might have been a lot better off having kept this institution under Canadian control.
What about the question of the head office? If the head office of the Bank of British Columbia (Hongkong) is going to be in Vancouver, does that mean decisions will be made there, or will the real decisions be made at North American corporate headquarters in New York or in world headquarters which, I presume, are in the Far East? I do not know. I think that is a very relevant question. It is certainly clear that the Government has not used any leverage at all in seeking to get answers on those questions from the Hongkong Bank. Nothing I say is to denigrate the stability, the size or the reputation of the Hongkong Bank. It is one of the largest banks in the world. I go back to the example of Continental and Lloyds. If every time we have a Canadian financial institution in trouble we allow it to be taken over by a stronger institution, we will wind up with no financial institutions in Canada in Canadians hands. They will all be bought up by banks or other financial institutions abroad which happen to be bigger than most of our Canadian financial institutions.
What arrangements has the Government made for additional branching? We do not know. That is a question I have to which it is not possible at this moment to have an answer. I would ask the Minister of State and his officials to provide as much information as is possible between now and tomorrow prior to our going into committee on this Bill. I would like to raise a number of questions with him and his officials at that time.
It does seem to me, however, in looking-

-it seems to me as a Member of the Opposition who has examined this Bill that the only sound and valid reason to
Bank of British Columbia Business Continuation Act
adopt this measure is simply the argument that, if after studying the Bill the House of Commons were to endorse the Government's option to allow the Bank of British Columbia to be sold to this foreign institution, the Hongkong Bank, the only justification would quite simply be that a long period of uncertainty might compromise the survival and profitability of the Bank of British Columbia under its new owner, the Bank of Hongkong.
Of course, if the Government uses its majority to provide for the financing with this Bill, or if the two banks, with the approval of the Minister of Finance (Mr. Wilson) and the Governor in Council were able to transfer assets without permission from the House of Commons, it would be our responsibility as Members of the Opposition to accept the situation. This does not mean we agree with the Government's decision, but we must accept its right to make that decision.
However, there are all sorts of precedents indicating that many mistakes have been made on the initiative of the Inspector General of Banks, and that may have been the case last October, when the Inspector General judged the Bank of British Columbia to be in good shape. We are now hearing statements to the effect that the Bank is not in good shape.
There are many indications that this Government, because it has delayed introducing a new policy on financial institutions, has allowed our financial institutions to lose a considerable amount of funds and credibility.
We have seen how much this has cost taxpayers through taxes and the premiums paid to the Canada Deposit Insurance Corporation. It cost us nearly one billion dollars after the collapse of the Canadian Commercial Bank and the Northlands Bank. Now we are spending, either directly or indirectly, a total of $200 million that will go to a foreign bank, which in turn is going to pay $60 million to the shareholders of the Bank of British Columbia.
I find it very difficult to support this measure. We are being asked to accept the Government's judgement that this is the best solution available, despite the fact that the Government has done practically nothing in the way of looking for and supporting a truly Canadian solution, such as a merger with the National Bank, with one of the chartered banks in Eastern Canada or the merger that was almost achieved with the Vancouver City Savings Credit Union, an institution with assets of $1.5 billion and which, I believe, was quite capable, with the support of this Government and the provincial Government of British Columbia, of becoming the real owner.
The Canadian or regional option was ignored in favour of a foreign option.

We have lost sight of the possibility of regional solutions. Instead the Government has chosen to have solutions which involve alienating once again the control of a prominent and important regional and Canadian financial institution by putting it into foreign hands.

November 26, 1986
Bank of British Columbia Business Continuation Act


Gerry St. Germain: Mr. Speaker, problems with our financial institutions is not a subject matter in which one should revel or celebrate. I know that the Government has been working on this matter for a considerable period of time and has monitored the situation. The Minister of Finance (Mr. Wilson) and the Minister of State for Finance (Mr. Flockin) should be complimented on coming forward with a solution that minimizes the loss to Canadian taxpayers.
Mr. Speaker, the Act which is Bill C-27 which is before the House is a Bill to facilitate the continuation of the business of the Bank of British Columbia. 1 think those words in themselves are of great significance to all of us that are British Columbians. 1 know one of the dreams of W.A.C. Bennett, a man who governed our province as Premier from 1952 into the 1970s, was to have a regional bank to deal with the concerns and needs of British Columbians. Today, as we prepare the legislation that will maintain or continue the operation of the Bank of British Columbia, I think it is a positive step.
With regard to the legislation, the Government has been guided by four basic considerations, Mr. Speaker, in this transaction. Firstly, to ensure the long-term financial viability and continuation of the institution. Secondly, to provide to the fullest extent possible for the needs of its depositors, other creditors, borrowers and shareholders. Thirdly, to serve the needs of the westernmost part of Canada and to do so without the expenditure of federal public funds as part of the purchase arrangement. In addition to that, it secures the jobs of bank employees at the 39 bank branches. Job security has to be a significant factor. When we look at the plight of the employees and the high level of unemployment in British Columbia, the unacceptable level that the federal Government is making every effort to reduce at the present time, this particular aspect of the legislation definitely has to be taken into consideration.
Members of the NDP spoke about their dislike of foreign ownership. Philosophically and ideologically they oppose any foreign ownership in Canada. They compare the situation of this bank with the Goodyear closure in Toronto. There is really no comparison. Obviously, if you are philosophically opposed to something, there is no way you can accept it. Any critical remarks they make in this situation have to be seen in that light. The NDP Members also made reference to General Motors in this context. That company is a good, responsible corporate citizen. It may be foreign-owned but it is a part of Canada. This is a huge country with too small of a population and that is why we have to attract foreign investment, but under our terms of reference.
I would now like to speak about the Hongkong Bank of Canada. It is a wholly-owned subsidiary of the Hongkong and Shanghai Bank Corporation. It began operations as a Canadian chartered bank in Canada in July, 1981. As of October, 1986, its assets exceeded $735 million. It offers the entire range of banking services such as term and operating credits,
trade financing, deposit services, foreign exchange, remittances, documentary credits, personal banking, private banking, and assistance with business activities in the Pacific Rim. We have to address the importance of the Pacific Rim countries as trading partners for British Columbia, and I will deal with that a little later. The bank has its head office in Vancouver with offices in Toronto, Montreal, Edmonton, Calgary, Saskatoon, Winnipeg, Halifax and Victoria. The Board of Directors has five Canadians and two non-resident representatives of the shareholders. The Chairman is Angus R. Petrie, and the President and Chief Executive Officer is Eugene Nesmith of Vancouver. That is an indication of the bank's intention to do business in Canada utilizing Canadians and making the entire operation a Canadian operation.
We also have to look at the fact that it is a world-wide bank. The Hongkong Bank group, headquartered in Hong Kong, has consolidated assets exceeding $108 billion as of June 30, 1986. It has 1,200 offices in 55 countries with more than 46,000 employees. That is an indication of the financial depth and strength of this institution. Members opposite have referred to the fact it is a foreign-owned bank with branches in Australia and New Zealand. That fact will be of assistance to us. It will give us a common interest with the Pacific Rim countries and countries like New Zealand and Australia. We on the West Coast have to establish a more viable trade relationship with these countries. We cannot be as dependent as we have been on our trading partner immediately to the south. Members of the Hongkong Bank include a multitude of banks, including the Hongkong and Shanghai Banking Corporation and the Marine Midland Bank, just to name two. This is another indication of the bank's tie-in with the world banking community. Other companies in this group are involved in commercial and merchant banking, investment management and financing, as well as leasing and insurance services. There are more than 400 branches in Hong Kong and an extensive Asian branch network in one of the world's most rapidly developing areas. It has more than a century of experience in financing international trade. These are the things that Canada and British Columbia need.
As the Hon. Member for Ottawa Centre (Mr. Cassidy) pointed out, I do not think anyone in Canada would settle for anything less than total Canadian ownership if it were possible. That would be Utopia. Unfortunately, that is not the way it is in the real world. The credentials of the Hongkong Bank of Canada are impeccable and it will bring financial stability and security to the banking community, especially the Bank of British Columbia.
In dealing with some of the problems in western Canada we have to ask why these banks failed. That question is going through the minds of a lot of Canadians, including my constituents in Mission-Port Moody. People like Alistair Brown are really concerned, wondering just what has happened to cause these bank failures. I guess the first question you have to ask is whether it is a matter of regulation. What kind of regulation? Should the regulations be changed? Should they become more stringent? Should we have done it more quickly? Should the previous Government have taken a
November 26, 1986

stronger role in changing the regulatory environment which governs these institutions? Or is this simply an indication of the economic plight of western Canada? That is something western Canadians have tried to point out to eastern Canadians time after time. Or is it possibly the policies of the federal Government in the late 1970s and early 1980s which led to high interest rates and runaway inflation? These are some of the questions we have to ask as we enter this debate on the problems the banks are facing.
As a small businessman in the housing construction business in the late 1970s and early 1980s, 1 can tell you unequivocally that high interest rates and runaway inflation, as well as Ottawa's monetary policies, are at least partly responsible for the dilemma we are facing today. Eastern Canadians have to understand what is really taking place in western Canada today. Let us consider the commodities industries, such as the grain industry. There are massive subsidies by the European Common Market, and the United States Government is massively subsidizing grain in retaliation. This is devastating the economy of the grain farmers in western Canada.
We can look at the mining industry. It is suffering one of its worst slumps in our history, and there is no indication of an improved market. Our coal industry is barely holding on as a result of the reduced orders from our major customers in the world. The forest industry in British Columbia is plagued by a strike that has resulted in some $20 billion in lost income. This is compounded by the uncertainty brought on by the countervail action of the U.S. lumber industry under the International Trade Commission.
The really devastating impact has been the price drop in the world oil market. The federal Government and eastern Canadians, especially those in central Canada, must understand that all of these factors combined have led to a severe economic dilemma in western Canada. We are not asking for hand-outs, just for consideration. The uniqueness of our industries and of our sources of income means that we must have banks with their headquarters located in our regions so they can understand our uniqueness and the needs of our various industries and agricultural sectors.
There are Members who oppose the free trade initiative. 1 mention free trade because the free trade initiative and the other requirements 1 have mentioned are a prerequisite in establishing a viable and strong economy in western Canada. We cannot terminate this very positive initiative of the Minister for International Trade (Miss Carney) because in order to remain viable and enhance our economic position, a free trade agreement with the United States is absolutely necessary.
If we do not establish such a free trade initiative, there will be further countervail actions like that taken by the U.S. lumber producers. We will become islands, without a secure access to at least 250 million people. We will become nontraders as opposed to the aggressive traders that we are today.
Bank of British Columbia Business Continuation Act
Dealing with regional disparity must be a priority. That is why the Minister of State for Finance (Mr. Hockin) and the Minister of Finance have seen fit to take the action they have in regard to the banking dilemma facing western Canada.
The Hon. Member for Trinity (Miss Nicholson) referred to bail-outs of banks. The banks were not bailed out, the depositors were assisted in that situation in western Canada. We must address the western economy as a whole and the British Columbia economy in this case. Let us consider what the Government has done to assist western Canada and assist British Columbia in removing any economic uncertainty and providing banks, businesses and British Columbians with an opportunity to prosper.
I want to review some of the events that I believe were devastating and caused the collapse of banks in certain cases and required the consolidation of others. I believe the National Energy Program was one of the most devastating programs for any region of Canada, and it was one of the major contributing factors to the dilemma that these banks in western Canada faced.
Since you have indicated that I only have two minutes left, Mr. Speaker, let me say in conclusion that Parliament was requested by the private sector to take this initiative. We were asked to assist in facilitating this transaction.
The management of the Bank of British Columbia advised the Government that this transaction is necessary for its survival. The Government agrees with that assessment. The Bank of British Columbia announced today that its Board of Directors believes that it is essential for the bank to enter into a transaction if liquidation is to be avoided. The board further believes that no other transaction can be identified that would be as beneficial as the proposed transaction with the Hongkong Bank of Canada.
Smooth transition is another aspect that had to be taken into consideration. Parliament was asked to expedite this private sector transaction in order to ensure the smoothest possible transition, in the best interest of all concerned.
Shareholders' interest had to be taken into consideration. The legislation recognizes the interests of shareholders. It provides for a shareholders' meeting, with 14 days notice, to approve the consideration received for the sale of the bank's assets, or if the shareholders so choose, an independent assessor will be appointed to evaluate the worth of their shares immediately prior to the time of sale. This evaluation would be binding.
The transaction does not appreciably increase the level of foreign participation in the banking sector. The level is raised slightly, to 12 per cent of the assets of the entire system, which is well below the permissible 16 per cent.
The transaction has the support of British Columbians. The Member for Ottawa Centre questioned the role played by the Premier of the province. The Premier of the province was elected by the majority of British Columbians, and we are

November 26, 1986
Bank of British Columbia Business Continuation Act
proud to have a Premier with such a strong majority in British Columbia. I know it was a moral victory for the NDP, but it was a true victory for Mr. Vander Zalm.


Michael Morris Cassidy: It was a victory for gerrymander and you know it.


Gerry St. Germain: The Premier shows that he supports a viable regional bank in British Columbia and supports the economic base in British Columbia. I am proud to take part in this debate on behalf of British Columbia.


Michael Morris Cassidy: Mr. Speaker, I am glad to hear that the Hon. Member supports gerrymandering, which is what gave the Premier of British Columbia his majority in the latest election.
The Hon. Member also says he is proud of the fact that his Premier supports a foreign controlled regional bank. Would he not prefer to have a Canadian controlled regional bank? Specifically, if the Government of Canada comes up with $200 million, would he not think that a solution which perhaps allowed for some injection of capital into the Bank of British Columbia might make greater sense rather than putting it into the hands of foreigners, which is what is happening?
We are now in a situation where directly or indirectly taxpayers are coming up as customers, depositors or as taxpayers with this $200 million that is going into the hands of a foreign bank, into the hands of the shareholders, but in fact we are losing control of a bank in the process.


Mr. Siddon:: You want to nationalize the banks?


Michael Morris Cassidy: Perhaps that is a good idea, as a matter of fact. The Hon. Member suggests that we should put out $200 million and not get a nickel's worth of equity for the people of Canada in the process. That is irresponsible investing, it seems to me. I do not think the Minister would do that in his own personal life. Would he take $200,000, if he had that much, Mr. Speaker, and put it into an enterprise and have no equity, no ownership? Would he do that? Of course, he would not. He would insist on getting something back. The Minister, I suggest, would know he was taking risk for that money. In fact one could argue that perhaps by bailing out the shareholders in this particular case we would get far more than liquidation value in terms of the value of the shares.
What would the Hon. Member think of simply keeping the Bank of British Columbia owned and controlled by British Columbians even if it meant using some of that $200 million in order to do so?


Gerry St. Germain: Mr. Speaker, again our socialist friends want to nationalize the banks. At this point in time they always want to nationalize the banks. When it gets close to election time they say: "Oh, no, we would never nationalize the banks", but between elections they want to do so.
As a British Columbian, as one who lives there, who is very current with its financial institutions, and as one who deals with one of the major credit unions, I was quite excited to hear that Vancity Savings was interested. I was disappointed it was not able to facilitate the acquisition of the Bank of British Columbia because it would have been better. There is no doubt about that. Anything Canadian owned is better, and I will stand front and centre for that at any point in time. However, the fact remains that like the free trade issue, if we do not develop a bilateral free trade arrangement which gives us access to more people, we will become a little island surrounded by ourselves. Unfortunately, we cannot rely solely on Canadian investment, although that would be Utopia. Had the Hon. Member listened to my speech during the debate, that is what I pointed out.
It is without question that I would feel better had the bank been Canadian owned. However, I think the Hon. Member leaves a misconception and possibly a misunderstanding with the general public and Hon. Members of the House in saying there is $200 million coming out of the taxpayers' pockets. There is not $200 million coming out of the taxpayers' pockets. It is coming out of the CDIC funding. The CDIC is planning to raise its premiums to recover the $200 million. It is not the best deal in the world but it is a good deal for British Columbia and anything that is good for British Columbia, I will support.


Iain Francis Angus: Mr. Speaker, I have a question for the Hon. Member for Mission-Port Moody (Mr. St. Germain). I listened with interest to his remarks, particularly his remark about, shall I say, the sensitive nature of the coal industry in British Columbia. Listening to him today was the Minister of the Environment (Mr. McMillan) and the Minister of Transport (Mr. Crosbie) both of whom have recently, among others, presented a report which recommends the use of western Canadian coal in Ontario Hydro generating stations. I wonder if the Hon. Member could advise us whether he thinks that report will be the salvation of the western Canadian coal industry, particularly the B.C. coal industry? If so, what action is he and his colleagues taking to convince the powers that be to implement that report?


Gerry St. Germain: Mr. Speaker, unfortunately I have not read the report. The fact is it is something I have not studied at length. However, I know one thing, and that is, that this administration is moving in that direction. It is taking a leadership role in shipping coal from the west to central Canada. That is something that when the New Democratic Party was in government in British Columbia, it could not do. I can tell you, Mr. Speaker, that the Premier of British Columbia is in Ottawa today. He is going to Toronto tomorrow. He made a public announcement. And the entire Government of Canada supports working towards this initiative. I can assure the Hon. Member that every effort will be made, and like everything else the Government does which is good for Canada, this will become a reality and he will see
November 26, 1986

that western coal flowing east as it should have been doing 20 to 30 years ago.


Mr. Orlikow:: Mr. Speaker, the Hon. Member suggested that the $200 million would come from the CDIC, that somehow it would not come from the people of Canada. Does he not understand that the funds of the CDIC come from premiums paid by the financial institutions, and not only has its funds for the next number of years been used up by the failures of the banks but, in any case, the premiums it pays will come from its customers because it will just pass the cost of paying for those premiums on to its customers?


Gerry St. Germain: Mr. Speaker, obviously the Hon. Member deals with one of the "big five". I deal with a credit union. I do not believe the credit unions contributed to the CDIC. I believe in the credit union because I believe in community banking as something which is good for the communities. Possibly the Hon. Member who is from Manitoba does not realize the disparities and problems we have suffered over the years. That is why it is so important that we have regional banks in British Columbia.
All I wanted to point out with regard to the Hon. Member's comment is the fact that this will not be paid from Canadian tax revenues. I merely point out that it will come from the CDIC which, as the Hon. Member points out, is an insurance corporation which receives premiums which are deducted through the large banks, and logically someone has to pay. I do not believe that anyone would believe that money drops out of the sky.


David Orlikow: Mr. Speaker, the Hon. Member comes from British Columbia and I come from Manitoba, which is also a have-not province. I am particularly supportive of credit unions and the concept of regional banks. However, one would hope, one would want, and I would almost say one would insist, that regional banks be run better than the Bank of British Columbia which seems to have got into trouble along with the Canadian Commercial Bank and the Northland Bank. We do not need banks, regional or otherwise, which are operated in such a manner and with such little care and attention that they get into the kind of situation of those three banks so that the public either directly or through the CDIC has to carry the burden.
Let me just say to the Hon. Member that I am a supporter of the credit union but, unfortunately, the "big five" do 75 per cent, 80 per cent, 90 per cent of all the banking business in this country. I wish that the credit unions were in the same position as the big banks, but they are not.


Gerry St. Germain: Mr. Speaker, logically, I am glad to see that the Hon. Member definitely supports the credit union system. I would have been disappointed if he did not.
Bank of British Columbia Business Continuation Act
As for the Hon. Member coming from a have-not province, I think that this is what part of this debate is all about. Traditionally, had the National Energy Program dealt with the West fairly we would not have seen the collapse of these various banks. There is no doubt that no one relishes or enjoys standing up in a debate of this nature. We would sooner have seen the banks succeed, each and every one of them. However, we are faced with a dilemma with which we must deal. I can only say that I am pleased that British Columbia will have a regional bank as a result of the actions taken by the Right Hon. Prime Minister (Mr. Mulroney), the Minister of Finance and the Minister of State for Finance.


Jean-Robert Gauthier: Mr. Speaker, to set the record straight and just so the Hon. Member's remarks will not leave any doubt in the public mind as to whether or not the caisses populaires contribute to the deposit insurance fund-

I wish to tell the Hon. Member that all banks and all credit unions pay premiums to insure the deposits of those who have moneys in their institutions. I think the Hon. Member would want to rectify his remark in which he said that he did not think that credit unions pay premiums to the CDIC.


Gerry St. Germain: Mr. Speaker, as far as the insurance is concerned, my understanding is that credit unions certainly pay a deposit insurance but that it is managed by the provinces and not at the federal level by the CDIC in Ottawa. That is the only clarification I have to make.


Mr. Raymond Garneau (Laval-des-Rapides):: Mr. Speaker, for the second time in about fifteen months here we are in the House debating the banking situation, the possibility of a bank going under, or situations such as we are experiencing today. I have no intention of going over the debates and arguments we had when we examined the Canadian Commercial Bank and the Northland Bank failures because obviously we would have to rehash the past and repeat many of the arguments which focused on the Government's incompetence when it comes to the administration of its own financial institutions, particularly with respect to the western banks, the Northland Bank and the CCB, and now the Bank of British Columbia.
Mr. Speaker, this time I do not understand anything. I do not understand anything because, for openers, the Government wants us to act quickly without giving us full details and, secondly, those we do have are contradictory. If I may, Mr. Speaker, I should like to comment on some of the information given to the public at large by these financial institutions, more specifically on the information made available about the Bank of British Columbia. In the document provided by the Financial Post information service which reports-this is not an analysis-which reports a number of facts, we read this among other things, and if I may, Mr. Speaker, I will quote the report on the Bank of British Columbia.

November 26, 1986
Bank of British Columbia Business Continuation Act [English]
An inspection of the bank's loan portfolio was completed in October, 1985 by a special team of inspectors acting under the jurisdiction of the Inspector General of Banks. The review concluded that the bank's loan portfolio was "sound".

Mr. Speaker, the Inspector General of Banks conducted a special investigation of the Bank of British Columbia and reached the conclusion that its loan portfolio was sound.
He goes on to say that in the course of a year, the percentage of losses on loans had dropped and that percentagewise, non-performing loans were below the average for the banking sector. That was in October 1985. If we look at how the Bank evolved since then, and I have been looking at quarterly and annual results, we see the following: after nine months, on July 31, 1986, the Bank's net profit was $6,653,000, compared with $5,696,000 for the first nine months of the previous financial year, an increase of nearly one million dollars, and this information supported the conclusions of an investigation conducted by the Inspector General of Banks, which indicated that the Bank's loan portfolio was sound.
Mr. Speaker, we are told that the bank is in great difficulty. It was always my understanding that the problem at the Bank of British Columbia was not the loan portfolio but the deposits, and that what happened to the Canadian Commercial Bank in Alberta and the Northlands Bank had created a climate of uncertainty, leading depositors to withdraw their money, and that the loan portfolio was sound. Like many other Members of this House, I had every reason to believe the report of the Inspector General of Banks who had conducted a special investigation in October 1985. Today, we are told it is not a matter of depositor confidence but of the value of the Bank's assets. The Minister goes on to say that this Government, through the Canada Deposit Insurance Corporation, will be giving $200 million to the Bank of Hongkong which will be used to purchase all or almost all of the assets of the Bank of British Columbia for $63 million. They are going to put $200 million into the assets of the Bank of British Columbia, as a branch of the Bank of Hongkong, without receiving in return any shares or ownership in the new bank that will have been created. They are going to give it to the Bank of Hongkong, and-

-the Hongkong Bank of Canada will buy the Bank of British Columbia or place in a trust fund for shareholders some $63 million. That is the deal that we have in front of us.
I cannot understand why the Canadian Government will take $200 million from the pockets of Canadians in one way or another, through insurance premiums or otherwise, to place it into the equity of the Hongkong Bank, British Columbia Division, while at the same time allowing the shareholders $63 million. There is something wrong with that. If the assets of the bank are sound, as was suggested in the report of the Inspector General of Banks in October of 1985, then I see no reason why the Government would put $200 million into this deal. The Minister cannot have it both ways. Is it that the
report of the Inspector General of Banks was wrong, or that since October of 1985 the situation has deteriorated substantially?
We do not know exactly what happened because we do not have the facts. What the Bank of British Columbia told us in its statement dated November 26, 1986, is that liquidation is not a reasonable alternative as realized asset values, in the view of the Bank of British Columbia's board, would be affected to the point that it would be questionable whether any amount would be available for the shareholders of the BBC and there might well be a loss to uninsured depositors.
[ Translation]
Mr. Speaker, this is a very serious matter, because according to the Board of Directors of the Bank of British Columbia, liquidation would, to all intents and purposes, mean the loss of all assets held by common and preferred shareholders, of subordinate debentures and of cumulated surpluses, if any. Furthermore, uninsured depositors would be put in a loss situation.
Mr. Speaker, if that is the case, I ask the Government: Why take $63 million in taxpayers' money, because the taxpayers are in fact paying for the insurance premiums that are paid out of the banks' surpluses, and basically, Canadian depositors, whether they have their deposits in banks or credit unions all contribute towards guaranteeing deposits of up to $60,000-why take $63 million to protect shareholders who knew perfectly well that by taking shares in a bank they were taking a chance and that they were not protected in any way?
Mr. Speaker, I think it is incredible the Government should be proposing this kind of solution to the problem.
In this case I am saying to the Government that, if the assessment made in the Bank of British Columbia report sent to the shareholders accurately depicts the existing situation, and if chances are that liquidating the bank's assets would entail similar losses, this means, and already I can hear the tacit argument of the Minister, namely that as a going concern it may have some value. Fair enough. I agree, it has some value. But, as I see it, only if the same shareholders are involved.
If, as a Government, we were to decide to maintain a regional bank and use Canadian taxpayers' money, not as taxpayers but as depositors in financial institutions on which, as depositors, they pay premiums through the financial institutions which take their money, then 1 say: Why not add the $200 million to the assets of the Bank of British Columbia shareholders and give BBC shares to the Canada Deposit Insurance Corporation? Why not take the risk, if we are going to hand the money over to the Hongkong Bank, why not take the risk with the present shareholders of the Bank of British Columbia and keep the bank going as a regional institution which can operate normally? Because, I will be told, it was a matter of long-term credibility.

November 26, 1986

Until now, Mr. Speaker-


Thomas Hockin: It is not enough.


Raymond Garneau: -the Minister says it is not enough.
Well, if it is not enough it is because somebody somewhere is not doing his job. What 1 cannot understand is that, although it is enough for the Hongkong Bank, it is not enough for Canadian taxpayers. As a matter of fact, just what is the position of Hongkong Bank management? They say: We put up $63 million, we get $200 million to boot, so we will go ahead and buy a network of 39 branches with 200,000 depositors and a ready-made clientele. Try and develop a network of 39 bank branches and build up a certain reputation and attract 200,000 to 300,000 depositors. Try and do this within a financial institution and see if it doesn't cost at least $63 million. It's a good deal for them. It certainly is. It would be a good deal for just about any foreign bank that does not have a network and that wants to buy one. I wonder, however, why we are taking taxpayers' money to do this. And if we do, and that is what the Minister is suggesting- Yes I realize they will assume all the Bank's liabilities, but they are getting $200 million to help them do that, $200 million that will go into their equity. Imagine! The Bank of Hongkong doesn't have to do much to have the lowest ratio between assets and equity of any bank in the Canadian system.
They already have $200 million which isn't costing them a cent, and there are assets worth $2.8 billion. They're starting practically with a ratio of one to ten. All they have to do is put in a few million more and they will have the lowest equity to asset ratio there is in our banking system and our financial institutions here in Canada, except perhaps for the other bank that was taken over, which of course had practically no deposits and was very highly leveraged, as they say. But I don't think that is a very relevant example.
Mr. Speaker, the fact remains that they have taken $200 million in taxpayers' money-I don't think we have to quibble about this being taxpayers' or other people's money-it all belongs to Canadians, because the Canada Deposit Insurance Corporation belongs to Canadians. They are taking $200 million and giving it to the Bank of Hongkong, which then turns around and buys almost all the assets for the sum of the $63 million, and also assumes responsibility for the Bank's liabilities, as the Minister said. I should hope so.
I submit, with respect, that taking the money of Canadians to sell one of our financial institutions to foreign interests, and Em not questioning the competence of the Bank of Hongkong, on the contrary, 1 think they are very astute businessmen to have managed this kind of deal, and if they manage the bank as well as they managed the deal with the Government, 1 think the new bank's depositors can rest easy.
However, the fact remains that if the Government is at all concerned about good management of public funds, and if we want to help British Columbia have a bank that is regional and managed by their own people, we do not take $200 million and
Bank of British Columbia Business Continuation Act
give them away to foreign interests. We take the $200 million and make a deal with the present shareholders. The Minister says it might cost more than that. And I say to him: He must have ... Well, I suppose the Office of the Inspector General is somewhat confused these days, but somewhere in this Government there must be somebody and there are experts elsewhere as well who can determine exactly what is involved.
If these $200 million . . . Mr. Speaker, as a Member and on behalf of Canadian taxpayers, I would much rather support a $225 million payment and end up with Bank of British Columbia shares held by the Canada Deposit Insurance Corporation than hand over $200 million and never again see the colour of my money. Why, with 200 or 225, if I am wrong the Minister will correct me later. We will have a question period, but right now he is disturbing my concentration. Perhaps that is precisely what he wants to do.
If the solution I am advocating were to be accepted, the shareholders of the Bank of British Columbia would continue to be shareholders of the Bank of British Columbia. The Canada Deposit Insurance Corporation would become a BBC shareholder. Let no one talk to me about nationalization, we are not dealing with theology here, this is a practical matter because we are going to pay out $200 million. If we were to form a partnership, the Canadian people with the Deposit Insurance Corporation and the present shareholders, I am sure that with such an asset to equity ratio we would be able to restore confidence and maintain a regional bank under the management of British Columbia residents and for the benefit of British Columbia residents. What we are doing now ... It is true that the bank will stay in British Columbia, it is true that it will employ local people, but any decision concerning a wholly-owned branch whose head office is in Hongkong will be made by management in Hongkong.
Before concluding, Mr. Speaker, I would have many other questions to raise, but I have only 20 minutes. I would like to say something about the bank staff.
Mr. Speaker, the Hongkong Bank will acquire most of the assets.
We are told-and I have yet to receive confirmation of this-that the 39 branches will be kept open. We do not know yet. There are 1,400 employees. In the case of the merger, of the take-over of the Continental Bank's assets by Lloyds Bank of Britain, we were told all the employees would be maintained in their jobs.
This time we have no such assurance. Firstly, we have no assurance that tomorrow morning the new owners who were given a $200 million handout to buy a business for $63 million will guarantee those employees'jobs.
Secondly, according to the Board of Directors, discussions are still going on with the Inspector of Insurance and Superannuation Plans for $10 million to be withdrawn to the benefit of the Bank of British Columbia's present shareholders, and if

November 26, 1986
Bank of British Columbia Business Continuation Act
such a request is guaranteed or accepted over the coming months, that money could be redistributed to the shareholders. Not only is the Hongkong Bank given $200 million to buy the Bank of British Columbia, and shareholders given $63 million, part of their assets, but $10 million may be taken out of the employees' superannuation fund to increase the price the shareholders will be getting for their shares.
Mr. Speaker, this is written in black and white on the document I have before me, which was published by the Bank's Board of Directors, and from which I quote:
During the second quarter of the fiscal year 1986, the Superintendent of Insurance approved the withdrawal of surplus contributions from the pension fund of BBC based on an independent actuarial report. After the Bank's year end the Superintendent of Insurance, in view of subsequent jurisprudence, revoked his permission to withdraw these surplus funds, but has left it open for BBC to re-apply to withdraw the surplus in accordance with new guidelines. This may result in BBC having to reverse $20.4 million of pre-tax income during 1986.
In connection with the sale to Hongkong Bank of Canada, it is proposed that the pension plan account balances of all BBC employees will be transferred to an equivalent pension plan with the Hongkong Bank of Canada. BBC will re-apply to the Superintendent of Insurance for permission to withdraw the surplus funds remaining in its pension plan. If the application is successful, this surplus would accrue to the benefit of the shareholders of BBC.

If, Mr. Speaker, in addition to giving $200 million to a bank which, according to its own board of directors, is not just insolvant but would be nibbling at uninsured deposits, if in addition to handing out those $200 million, we allow them to use the superannuation fund to increase the amounts the shareholders would be getting, I am at a loss to understand. What I am saying is, we will have to pass the Bill because we have no choice, and because the Government insists that if we do not pass it the whole system will collapse. Mr. Speaker, I must tell you it is with the utmost reluctance that I am going to support the Bill. It is only because the Government is pointing a gun at our heads that we must take its word for it. I had really promised myself after March 25, 1985, when we were asked to approve the package to solve the problem of the Canadian Commercial Bank that I would never again take the word of the Minister of Finance (Mr. Wilson) about a banking matter. Yet, once more, we have to give our approval because we are asked urgently to pass legislation to maintain a financial institution in Western Canada, to protect jobs and to keep an institution under foreign control in business. I must say that it makes no sense to ask responsible Members of Parliament to approve such a measure in only 24 hours.


Mr. Deputy Speaker:: On questions or comments, the Hon. Member for Mission-Port Moody (Mr. St. Germain).


Gerry St. Germain: Mr. Speaker, the Hon. Member states that it does not make sense. The Hon. Member was not part of
the last Government that brought in the devastating, destroying horror story of the national energy policy on western Canada. I cannot blame him for that, but his Government did.


Jean-Robert Gauthier: Did you read the Estey Report? Estey said there was nothing involved.


Gerry St. Germain: Estey exonerated all Ministers of any blame, Mr. Speaker.


Jean-Robert Gauthier: You should read the Estey Report.


Gerry St. Germain: The point is, Mr. Speaker, that the $200 million is from the CDIC, which is an insurance corporation which has a mandate and which is completely within its own right to act in this particular instance. Had we not gone this route and had the Hongkong Bank not decided to carry on- and it is committed to carry on the operations of the bank- the loss to taxpayers would have been $ 1.3 billion or more. Is this what the Hon. Member would advocate? Or is the Hon. Member anti-western?


Jean-Robert Gauthier: Oh, come off that.


Gerry St. Germain: Does he not want these regional banks? That is the only question I ask. If he does not want to vote for this, he would have to be anti-bank, and anti-bank in western Canada is anti-regional bank. Now, Mr. Speaker, I do not believe that the Hon. Member honestly thinks like that. However, this is the best deal that will provide security, provide a regional banking system in British Columbia which is an absolute necessity because of the uniqueness of our economy in British Columbia, which in a lot of cases eastern Canadians do not understand. I ask you, Mr. Speaker, would the Hon. Member have sooner seen the collapse of the bank and the destruction of the western economy, or have a $1.3 billion situation staring him in the face, rather than take this action? Obviously, Mr. Speaker, we would have sooner had a Canadian owner. But the Hongkong Bank is a viable organization. In our understanding, and in my understanding, it is a reputable firm. Would the Hon. Member not sooner have this solution? And if not, why not?


Raymond Garneau: Mr. Speaker, I am even more worried now that the Member has just asked the question than I was before. The Member is telling us something that the Minister of Finance (Mr. Wilson) did not tell us. He is telling us something that nobody in the House, and nobody outside of the House, dared to say, that the loss could be $1.3 billion. This is what the Hon. Member said.


Jean-Robert Gauthier: It is irresponsible.


Raymond Garneau: If that is the reality, and what the Member just said is true, it means that we are giving away $63 million to keep the operation open to shareholders who do not deserve to have one cent.
November 26, 1986



Mr. Speaker, the Hon. Member is telling us, and I do not know where he is taking his figures-does the Minister of State for Finance (Mr. Hockin) confirm that the amount is $1.3 billion? This would mean that, in one year, after the report of the Inspector General of Banks prepared under this Conservative Government, which said that the assets of the bank were solid, the situation has so deteriorated that the value of the $2.8 billion assets of the bank now constitutes losses of $1.3 billion. Mr. Speaker, this is enough to scare any Member of this House. The Government is about to give away $63 million. First, this Conservative Government found $1 billion for uninsured depositors, and now, it will give away $63 million to protect shareholders.
It would not protect the shareholders, even if they were the small Northland Bank or Commercial Bank shareholders, and now, it will spend $63 million to protect those of the British Columbia Bank. Moreover, it may get for these same shareholders $10 million from the pension fund for assets which, according to the Hon. Member from B.C., are not worth their book value; indeed there would have to be losses of over 50 per cent.
I am compelled to ask the Minister: Are these figures accurate? If so, I am wondering about the value judgment of the Hongkong Bank directors, for they are purchasing-well it is given to them-as much as $1.3 billion in liabilities against net assets of $200 million less $63 million.
Mr. Speaker, the Hon. Member wanted to know whether we are for or against banks or Western Canada.
I have no lesson to receive from him because I have criticized his Government's actions concerning the Northland Bank on the basis of the data then available, because the option I was suggesting was based on these informations. The Northland Bank could have been saved. I was then even more sure of that. We had a report from the Inspector General of Banks which had been provided to us, under the authority of the Minister, which said that the assets were solid. Now, we are being told something else. I agree that the Bank of British Columbia should be saved, but if what the Minister has told us is true, I say: Let us not give $200 million to the Hongkong Bank; let us keep them for the current shareholders and keep the British Columbia people with their bank to administer. They are Canadians. But if the remarks made by the Hon. Member who raised this issue are true, it is then another story altogether and it makes an intelligent study of this bill even more difficult.


Mr. Friesen:: Mr. Speaker, I have a question for the Hon. Member for Laval-des-Rapides (Mr. Garneau). He has been very exercised about the $200 million, and it is no small amount. However, I remind him that the National Energy Program-
Bank of British Columbia Business Continuation Act


Jean-Robert Gauthier: Oh!


Benno Friesen: The Hon. Member should not say "Oh". Many westerners are saying a lot more than that. It drained $60 billion out of the western economy which normally would have stayed in western Canada. I think that is an admitted fact by the former Minister of Energy, Mines and Resources, Mr. Lalonde.
Over the years 1977, 1978, and 1979 the banks in western Canada lent money on properties on the strength of the economy of western Canada, particularly the oil economy. With the introduction of the National Energy Program in 1980, the resources which would have normally flowed into those banks so that they would not be so exposed were not there.
Now that we have been raped of $60 billion and have left the banks exposed so that they could not cover their losses, is the Hon. Member saying that the transfer of $200 million from CDIC is wrong? Is he saying that it is wrong to transfer this money to a western institution which was made vulnerable because of the $60 billion drained out of the western economy?


Raymond Garneau: Mr. Speaker, I do not know how many times I will have to repeat what I said. The Government wants to put in $200 million. I say to it that it should go ahead but should put it into a Canadian institution and have shares in return for the $200 million.
They are taking $200 million from the CDIC and giving it to the Bank of Hongkong so that that company can buy the assets. It is nonsense. It should be given to the Bank of British Columbia as a shareholder side by side with those there now to keep the bank alive.
Turning to the energy situation, I have asked many times in the House, who destroyed the energy policy? It is this Tory Government. I have always said that, and I repeat it.


Some Hon. Members:: Oh, oh!


Raymond Garneau: Hon. Members may laugh, but the energy policy was like an elevator. It should have worked both ways. At one point the price of oil was excessive. It was not due to the Canadian market, but it was due to decisions taken outside of Canada by a monopoly or cartel. In that event Canada turned to the owners of the resources, generally Alberta, but it should have also turned to the multinationals. The Hon. Member said that the $60 billion would have stayed in Canada. I am not sure whether it would have been paid in dividends to the multinationals and would have been sent to the United States.
The former Liberal Government, through its energy policy, built an elevator. The elevator played it one way when the price was high. Now that the price is low, not due to Canadian producers but due to a decision taken by the cartel, the elevator should have gone up and helped western producers. However, government Members destroyed the elevator, so they

November 26, 1986
Bank of British Columbia Business Continuation Act
have no instrument with which to help Canadian producers. This is why they are in difficulty.
By the way, the Estey Commission suggested after a thorough analysis that the economy of western Canada had nothing to do with the collapse of the CCB. The Minister and the Hon. Member should have known that. If they read the Estey Report, they would know that the energy crisis had nothing to do with the collapse.


Mr. Deputy Speaker:: The period for questions and comments is over. Am I correct in calling it 6.30 p.m.?


Mr. Simon de Jong (Regina East):: Mr. Speaker, I am sorry, but I should like to participate in the debate. I thought I would have at least 10 minutes in which to put a few comments on record.
As a western Canadian I am deeply concerned about what happened today. We have seen a western Canadian financial institution going down like ten pins. I agree with some of the comments of Hon. Members opposite which point to the fact that the source of the problem is in the past. However, for the Government to believe that the only reason was the National Energy Program of the Liberal Party is to delude itself. It is a case of bad management on the part of the previous Government and as far as this Government is concerned.
We have been promised reforms. We have been promised legislation dealing with financial institutions for almost two years. Members of the Standing Committee on Finance and Economic Affairs spent last summer travelling the length and breadth of the country to hear submissions. We have been promised legislation, but the Government has not brought in any legislation. I do not think the Government knows where to go.
It is not surprising from a Government which believes in the free market economy that it would let the free market sort it out. However, this generally means as far as Conservatives are concerned that if there are profits to be made, they should not be touched. On the other hand, they believe that if they are in
difficulty, public funds should be used to bail them out. We have seen the Government bail out several major financial institutions. Now it is doing it again.
The Government is helping the shareholders of the Bank of British Columbia and it is helping the Bank of Hongkong. I sat here listening to members of the Conservative Party from British Columbia who said: "But we are saving a regional institution". I do not understand. Again it is Orwellian thinking. How can the Bank of Hongkong be a regional institution?
I am also greatly concerned about the types of guarantees we will have. Will the head office remain in British Columbia? What will happen to the 1,400 employees? What will happen to the branches throughout the interior of British Columbia? Is the Bank of Hongkong interested in keeping open a branch in the interior? Is it interested in keeping open branches in local communities and in servicing local communities? Is the Bank of Hongkong only interested in some of the major branches in Victoria and Vancouver?
Unfortunately we are again in a position where we have a gun to our heads. We should be discussing the details of the matter in committee before being asked to vote.
What efforts did the Government make to find Canadian buyers? I have read in the press that Vancity was very interested in taking over the Bank of British Columbia. I want to know what type of negotiations occurred. Why was it not possible for Vancity, a Canadian institution owned by the people of British Columbia, to take over the Bank of British Columbia? Many very important questions need to be asked. Unfortunately we are being asked to vote on the Bill without hearing the answers.


Mr. Deputy Speaker:: It being 6.30 p.m., this House stands adjourned until tomorrow at 11 a.m., pursuant to Standing Order 3(1)


[Stage Direction]
The House adjourned at 6.30 p.m.

ti
[Stage Direction]
Thursday, November 27, 1986