1987-05-04

Mr. Doug Lewis (Parliamentary Secretary to Deputy Prime Minister and President of the Privy Council):: Mr. Speaker, pursuant to Standing Order 106(8), I have the honour to table, in both official languages, the Government's response to Petitions Nos. 332-1512, 332-1516, 332-1517, 332-1522, 3321523, 332-1524, 332-1532, 332-1535, 332-1538, 332-1539, 332-1568, 332-1653, 332-1655, 332-1701, 332-1712, 3321722, 332-1727 to 332-1729 inclusive, 332-1731, 332-1758 and 332-1765.


Mr. Les Benjamin (Regina West):: Mr. Speaker, 1 wish to take the opportunity, as is my honour and duty, to present several petitions. The first is signed by a number of Canadians from Grande Prairie and Beaverlodge, Alberta.
Whereas in the opinion of your petitioners the Government has inflicted a severe injustice on one of its citizens by wrongfully depriving Mr. Fred Turner of the right to earn a living through the operation of his family business, the undersigned, your petitioners, humbly pray and call upon the House of Commons to ensure that an independent arbitrator be assigned to this matter to investigate the details of the case, and negotiate an offer from the federal Government to Fred Turner in order to reach a settlement which better reflects the true nature of his loss.


Leslie Gordon Benjamin: I have further petitions from citizens in a number of places in Canada, including Belleville and Cornwall, Ontario, Cranbrook, B.C., and a number of locations in Newfoundland, in which the petitioners call upon the House of Commons to withdraw Bill C-18 and retain public convenience and necessity as a fundamental
factor in the development of public transportation policy, and to retain licensing in order to restrict market-place activity to a positive level functioning in the best interests of the public as a whole, all of which your petitioners humbly pray.


Mr. Jean-Robert Gauthier (Ottawa-Vanier):: Mr. Speaker, I would like to table two duly certified petitions this morning. The undersigned do now avail themselves of the ancient and undoubted right to present a grievance common to your petitioners, namely that the monopoly granted to innovative pharmaceutical companies will prevent competition from generic companies and will result in an increase in drug costs for Canadian consumers and severely restrict the ability of many people to purchase necessary prescription drugs; that the proposed changes to the Patent Act, set forth in Bill C-22, will affect directly all Canadians who are not covered by Government or private health insurance plans; that the Government's proposals will raise the already high cost of provincial health insurance plans; and that the proposed changes to the Patent Act are another example of the Canadian Government's concessions to the free trade negotiations with the United States, at the expense of the average consumer.
Wherefore, the undersigned your petitioners humbly pray and call upon Parliament to reject these proposals which will increase prescription drug prices for Canadians.
[DOT] (U10)


Mr. Lome Nystrom (Yorkton-Melville):: Mr. Speaker, I would like to present a petition which I am sure is supported by the Member for Saskatoon West (Mr. Hnatyshyn). It is signed by constituents of mine from the City of Yorkton with one exception, that being from the great Town of Springside.
The petition calls upon the Government to change its mind on its patent drug legislation. The petitioners are concerned about the price of prescription drugs increasing after this terrible Conservative Government does what it wants to do.
The petitioners also say that it will unfairly hurt those Canadians whose health needs require the purchase of prescription drugs on an ongoing basis.
They are also concerned about the higher cost of prescription drugs in Saskatchewan which would, of course, hurt the Saskatchewan plan and the great friend of the Member for

May 4, 1987
Introduction of Bills
Saskatoon West, the Premier of Saskatchewan, who will be further in debt.
Therefore, I am very honoured to present this petition on behalf of people in God's land, namely, the constituency of Yorkton-Melville.


Mr. Svend J. Robinson (Burnaby):: Mr. Speaker, I have the honour to present a petition today which has been signed by over 3,500 people with reference to the Canadian Committee against Customs Censorship. These petitioners, who live in all parts of Canada, call upon the Government to end its discrimination against gay and lesbian Canadians through the way in which customs regulations regarding book and magazine imports are enforced.
In particular, the petitions are protesting the recent unfair seizures of gay and lesbian literature which was destined for bookstores in Vancouver and Toronto. They call upon the Government to repeal these discriminatory provisions.



SUPREME COURT ACT


Hon. Ray Hnatyshyn (Minister of Justice and Attorney General of Canada) moved: for leave to introduce Bill C-53, an Act to amend the Supreme Court Act and to amend various other Acts in consequence thereof.


Mr. Speaker:: Is it the pleasure of the House that the Hon. Minister shall have leave to introduce the Bill?


Some Hon. Members:: Agreed.


[Stage Direction]
Motion agreed to, Bill read the first time and ordered to be printed.


Ramon John Hnatyshyn: for leave to introduce Bill C-54, an Act to amend the Criminal Code and other Acts in consequence thereof.


Mr. Speaker:: Shall the Hon. Minister have leave to introduce the said Bill?


Some Hon. Members:: Agreed.


[Stage Direction]
Motion agreed to, Bill read the first time and ordered to be printed.

[Stage Direction]
(Questions answered orally are indicated by an asterisk).
Philip Derek Lewis: Mr. Speaker, the following questions will be answered today: Nos. 98 and 101.


Mr. Gauthier: 1.	For each year in the 1986-2005 period, what is the rate of interest assumed to be earned by the Public Service Superannuation Account (PSSA), the Canadian Forces Superannuation Account (CFSA) and the Royal Canadian Mounted Police Superannuation Account (RCMPSA) in producing the estimate contained in the 1985-86 Public Accounts that if these accounts were combined with the Supplementary Retirement Benefits Accounts (SRBA) and valued on a fully-funded basis, they would have an actuarial deficit of $4.0 billion as of March 31, 1986?
2.	For the same years, what is the new money interest rate assumed to produce the interest rates referred to in Part 1 ?
3.	As of the most recent date for which data is available, what is the annual rate of interest actually being earned by the PSSA, CFSA and RCMPSA?
4.	As of April 1, 1987, what is the estimated balance of the PSSA, CFSA, RCMPSA and SRBA?
5.	From 1952 to the present (a) what has been the annual real rate of interest assumed in the actuarial valuations that have been carried out of the PSSA, CFSA and RCMPSA (A) what has been the basis of these assumptions (c) what have been the Financial consequences, in actuarial terms, of any changes made in the assumption of this factor?
6.	For the same years (a) what has been the annual real rate of salary increases resulting from salary revisions assumed in the actuarial valuations that have been carried out of the PSSA, CFSA and RCMPSA (A) what has been the basis of these assumptions (c) what have been the financial consequences, in actuarial terms, of any changes made in the assumption of this factor?
7.	For the same years (a) what has been the average of retirement assumed in the actuarial valuations that have been carried out of the PSSA (A) what has been the basis of these assumptions (c) what have been the financial consequences, in actuarial terms, of any changes made in the assumption of this factor?
8.	As of March 31, 1987, what is the actuarial surplus that would be realized by the PSSA, CFSA and RCMPSA if the assumption changes mentioned in Parts 5 to 7 had not been made?


Hon. Robert de Cotret (President of the Treasury Board):: I.	In estimating the financial status of the Public Service, Canadian Forces and RCMP pension plans as of March 31, 1986, the following interest rates were assumed to be earned by the pension accounts for the period 1986-2005:
	Per Cent		Per Cent
1986	10.2	1996	9.01987	10.2	1997	8.71988	10.2	1998	8.51989	10.1	1999	8.31990	10.1	2000	8.01991	10.0	2001	7.71992	9.9	2002	7.21993	9.7	2003	6.91994	9.5	2004	6.61995	9.2	2005	6.3
Note: These assumed interest rates reflect a margin of one percentage point for approximately 20 years and then a gradually diminishing margin until the long
May 4, 1987

term assumed rate is reached, (e.g., actual 1986 rates were 11.2 per cent instead of the 10.2 per cent assumed). The margin is included to make some allowance for such contingencies as unanticipated increases in inflation and salaries or decreases in interest rates.
2.	The assumed new money interest rate for the years referred to in Part 1 were:
	Per Cent
1986	10.2
1987	9.7
1988	9.7
1989	9.5
1990	9.1
1991	9.0
1992	8.0
1993	7.0
1994	6.0
1995 - 2005	6.0
3.	As of March 31, 1987, the quarterly interest rate earned by the PSSA, CFSA and RCMPSA is 2.6817 per cent which represents an effective annual rate of 11.2 per cent.
4.	Estimated balances as of April 1, 1987
(000,000,000's)
PSSA -	24.8
CFSA-	16.2
RCMPSA -	2.4
SRBA -	3.4
The answers to Parts 5-8 of Question No. 98 will require further computer programming and testing by the Department of Insurance. The response to those parts is expected to be provided between now and the end of May.


Mr. McKinnon: In each of the years 1985 and 1986, did Canadian Armed Forces personnel contribute to unemployment insurance and, if so (a) what was the total amount collected from them (b) did the Government match these contributions (c) what amount was paid out of the U.I.C. fund to unemployed exservice personnel?


Hon. Benoit Bouchard (Minister of Employment and Immigration):: Yes.
	1985	1986
(a)	$45,700,712	Not yet available.*(b)	Yes, the government contributed $56,988,788	Not yet available.*(c)	$39,992,164	$28,165,859
* The Department of National Revenue is presently verifying the employer's contributions to the UI fund during 1986. This audit will be completed in October, 1987, and the data will then be provided to the CEIC.
Financial Institutions


Philip Derek Lewis: Mr. Speaker, I ask that the remaining questions be allowed to stand.


Mr. Speaker:: Shall the remaining questions be allowed to stand?


Some Hon. Members:: Agreed.


BUSINESS OF THE HOUSE
Philip Derek Lewis: Mr. Speaker, there have been discussions with the other House Leaders. I think you will find unanimous consent to change the committee reference of Bill C-42, an Act respecting financial institutions and the deposit insurance system, to read "Second Reading and reference to the Standing Committee on Finance and Economic Affairs" rather than "Second reading and reference to a legislative committee".


Mr. Speaker:: Hon. Members have heard the suggestion of the Parliamentary Secretary. Is that agreed?


Some Hon. Members:: Agreed.



GOVERNMENT ORDERS


Hon. Tom Hockin (Minister of State (Finance)) moved: that Bill C-42, an Act respecting financial institutions and the deposit insurance system, be read the second time, and by unanimous consent, referred to the Standing Committee on Finance and Economic Affairs.
He said: Mr. Speaker, it gives me great pleasure to begin the debate on Bill C-42. This Bill is the first of a number of Bills which will implement my new policy on financial institutions.

May 4, 1987
Financial Institutions

On December 18 last year, 1 tabled in the House a document entitled: New Directions for the Financial Sector, and 1 am very pleased it was so well received, both by the public and the industry.

During the last two and one-half years the federal Government was faced with a formidable challenge. It had the responsibility of formulating a policy which would, first and foremost, protect public interest and the safety of depositors. Second, we wanted to introduce a policy which would allow our Canadian financial institutions to compete in a rapidly changing global environment. The two great objectives were to protect the system and the depositors while making it a modern, global system.
I wish to begin by acknowledging the contributions of industry, other interested parties, and the public in general for their helpful suggestions and comments since the release of the Government's Green Paper on the regulation of Canadian financial institutions in April, 1985.
In addition to benefiting from our extensive consultations with the provinces and the public, we have greatly benefited from a number of major studies and reports which were prepared over the last few years. These have contributed greatly to the Government's understanding of what needs to be done in order to create a better, sounder and more competitive financial system in Canada.
In particular I commend the important contributions of the reports prepared by Justice Estey, the House, the Senate, committees of the House and the Senate, the Wyman working committee on the Canadian Deposit Insurance Corporation and others. In fact, this area of legislation is one of the more heavily studied areas on the Government's agenda and we have benefited very much from these studies.

I also wish to express my appreciation to representatives of the financial sector for their suggestions and comments. Mr. Speaker, I realize that the industry is anxious to see us proceed with this Bill.
Mr. Speaker, we have promised to act quickly. We want to take away much of the uncertainty concerning the implementation of the main proposals I announced on December 18 last.
Let me speak to the legislative timetable that flows from this paper. I have been concerned from the outset and have said many times that in order to draw the maximum benefit from the proposed changes we would have to move quickly to implement them. We would lose a great deal of this impact if we were to move too slowly.
I have indicated in particular that I intend to introduce the necessary legislation as quickly as possible. This will enable financial institutions to plan ahead for what is recognized to be
a period of great change in the industry-both in Canada and internationally.
Bill C-42 is the first of several legislative packages that I will be introducing over the course of the year. This Bill implements a significant part of the policy proposals, those dealing with the structure of the supervisory and deposit insurance system. It also contains measures that will enhance the protection enjoyed by Canada's depositors and insurance policyholders and promote the soundness of our financial system.
It will be followed later this spring by legislation that will reinforce existing supervisory powers and enable all types of financial institutions to own security subsidiaries.
By the summer, I hope to introduce the final package of legislation which will change institutional powers; implement the new ownership policy; establish new rules to control selfdealing and conflict of interest; and will set up the new financial institution restructuring program. That is the third and final piece of legislation that will be introduced later this spring.
Let me outline the Bill before us. The provisions of Bill C-42 primarily involve a realignment of existing regulatory agencies and a reform of the deposit insurance system. One could call this the "office Bill".
The first part of the Bill constitutes a new Act, the office of the Superintendent of Financial Institutions Act, which merges the Department of Insurance and the Office of the Inspector General of Banks into a consolidated regulatory agency. I expect that this new office will be better equipped to meet the regulatory challenge posed by the blurring of the distinctions between different types of financial institutions. Consolidation is necessary as a result of this blur.
The new office will continue to be funded in the same way as its two predecessors, but will have better access to qualified professional personnel by virtue of its status as a separate employer. These provisions will enable the office to hire and retain the skilled manpower that it needs to properly fulfil its regulatory responsibilities.
The office Bill also contains revised confidentiality provisions and provides for the creation of a committee of the heads of federal regulatory agencies. This will remedy a shortcoming of the existing regulatory structure, which was pointed out by Justice Estey, by facilitating the exchange of information among the new office, the CDIC, the Bank of Canada and the Department of Finance.
The second part of the Bill amends the Canada Deposit Insurance Corporation Act in order to: first, clarify the objectives of the CDIC, notably with regard to its obligation to protect the interests of depositors; second, to enhance its ability to meet those objectives; third, to provide a more parallel treatment of federal and provincial member institutions; and fourth, to place CDIC on a more sound financial footing.
May 4, 1987

In particular, the amendments to the Canada Deposit Insurance Corporation Act will enhance CDIC's ability to protect depositors by providing the CDIC with the power to cancel, with ministerial approval, the deposit insurance policies of federal member institutions that violate the provisions of the Act or of CDIC's own by-laws. That power already exists with respect to provincial member institutions. As well, the amendments will levy premium surcharges on member institutions that do not follow standards of sound business or financial practice.

In addition to the power to collect additional premiums, the amendments to the CDIC Act will enable management to take a more flexible approach with respect to the establishment of premium rates. The CDIC management need these new provisions to be able to proceed with the orderly repaymewnt of their accumulated deficit. They will also enable the Governor in Council to set the annual premium rates, subject to a ceiling of one-sixth of 1 per cent of insured deposits.

As announced in a press release issued last week, I will be recommending to the Governor in Council that the current premium rate of one-tenth of 1 per cent, which has been in effect since May 1, 1985, be retained for the 1987-88 premium year. The retention of the existing rate will not result in an undue burden on deposit-taking institutions and is expected to yield sufficient revenues to amortize the current CDIC deficit over a reasonable period.
The Bill also amends a number of other Acts governing particular types of financial institutions. These include the Bank Act, the Trust Companies Act, the Loan Companies Act, insurance companies Acts and others. The changes made to these Acts will share a common purpose and can be grouped into three categories.
First, substantially revised procedures for taking control of the assets of financial institutions, or of the institutions themselves in some cases, are being implemented in order to enhance the ability of the Superintendent of Financial Institutions to protect the interests of depositors, policyholders and other creditors.
Second, responsibility for a number of essentially supervisory and administrative matters is to be transferred from the Minister of Finance (Mr. Wilson) to the Superintendent of Financial Institutions. Third,-

-the transfer from the Minister of Consumer and Corporate affairs (Mr. Andre) to the Minister of Finance of responsibility for various aspects of the incorporation of financial institutions.

Those are the three groups of miscellaneous amendments.
In conclusion, this Bill represents the first concrete steps taken toward implementing our comprehensive new policy in
Financial Institutions
the area of financial services. More important, it constitutes a major part of the changes that the Government will be introducing to improve the protection enjoyed by Canada's many depositors and policyholders, large and small, and to promote the soundness of our financial system.
My riding of London West is home to the head offices of some of Canada's finest financial institutions, including London Life and Canada Trust, to name just two. Our new policy is welcome news for them, as it is throughout the country.
Given the need for rapid implementation of these measures, I would urge the Flouse to move Bill C-42 quickly into committee.


Miss Aideen Nicholson (Trinity):: Mr. Speaker, I welcome the appearance of this Bill in the House today. It has been over a year since the House last debated a Bill pertaining to the regulation of Canadian financial institutions. That was Bill C-86, concerning the Canada Deposit Insurance Corporation.
Of course, last November we dealt with Bill C-27 which facilitated the Hongkong Bank's takeover of the Bank of British Columbia. But that was not a regulatory Bill, it was more of a clean-up Bill to take care of a situation that had developed beyond the Government's ability to deal with. We have seen several such Bills, which only reinforces the need for the Government to get on with the process of regulatory reform.
We in the Official Opposition support the reform process. We want to see the existing legislation updated so as to have a coherent operating standard for Canadian financial institutions as they are today and as they evolve. The traditional concept of the four pillars has given way to the more recent trend to integration of services. We want Canadian institutions to be a part of the increasing internationalization of financial services and, above all, we want to ensure that the interests of consumers are well protected. The pressure for change has been coming from the industry, not from consumers, who also have their concerns about the over-all stability and solvency of the system.


The Acting Speaker (Mr. Paproski):: Order, please. The Hon. Member does have some very interesting comments, and 1 would appreciate it if Members would listen or go behind the curtain or into the lobby so the Hon. Member can carry on.


Aideen Nicholson: I was saying, Mr. Speaker, that the pressure for change has been coming from the industry, not from consumers, who also have their concerns about the overall stability and solvency of the system as well as about the quality of service, wherever they happen to live. We want to be very sure that the Government has the interests of the consumers as well as the industry in mind when it brings forward its proposals.

May 4, 1987
Financial Institutions
Bill C-42, as the Minister has said, is the first of a series of three Bills arising out of the White Paper tabled last December. After two and a half years and two very expensive bank failures, Bill C-42 is the first piece of legislation to come out of a process of reform which began with the previous Liberal Government.
The proposals in Bill C-42 are the least contentious of those put forward in the White Paper. There has been near, if not complete unanimity on the need to strengthen the supervisory system for federally regulated financial institutions and to make some changes in the deposit insurance system. This is essentially what Bill C-42 proposes.
The more contentious issues, such as ownership of financial institutions, expansion of their powers, prevention of selfdealing, and the role of accountants and auditors, have been left for later and there really is no excuse for this.
To begin with, we know what are the Government's intentions. We have had two sets of comprehensive proposals. We have had stacks of reports and submissions from the Commons committee on finance, Senate Banking Committee, Government appointed studies and the Estey Commission of inquiry.
The Government claims its reform process is a priority. Therefore, why after two and one half years are we not seeing action? Bill C-42 is a first step but why does the Minister not accelerate his timetable? The Minister has said that a future Bill will be an amended version of Bills C-8 and C-9. These Bills have been around since the last session. Therefore, why have we not seen it tabled in the House?
It is disconcerting to find in particular that legislation covering all the most controversial aspects of the reform scenario have no firm date for introduction. We have had all too many opportunities to see the Government's reform program go awry over the last two and a half years.
It is not as though anyone is urging the Government to keep the brakes on. On the contrary, it is my impression that the Government has industry-wide support and encouragement to get on with it. If we had all the Bills before us, we would be better able to assess them individually because we would be able to examine the parts and the whole. As it is, Bill C-42 gives us proposals for the regulatory apparatus but we will have to wait until later, possibly much later, to see exactly how this apparatus functions and who regulates what.
However, as I said at the outset, we welcome this Bill and since we are in general agreement with what the Bill proposes and have no desire for a protracted debate, my comments today will be relatively brief.
Bill C-42 corresponds roughly to Chapter 5 of the White Paper issued last December. Part I of the Bill creates a new regulatory body, the Office of the Superintendent of Financial Institutions, by amalgamating the existing office of the Inspector General of Banks with the Department of Insurance. This is consistent with what Liberal Members of the Commons
finance committee proposed in our minority report which was issued in November 1985 at the time of the finance committee's report on the Green Paper. We were not in agreement with the finance committee's proposal to establish a "mega-regulator", but we did see a need for more regulatory muscle.
I am also pleased to see that Bill C-42 proposes that the Canada Deposit Insurance Corporation remains separate from the regulatory body. Insuring and regulating are different functions and are probably best kept separate.
The Bill proposes that the new office be funded partly through parliamentary appropriations and partly through assessments levied on the institutions, presumably to be scaled somehow to their size. I will be interested to know how the Government plans to implement this system of levies and how it will decide what a given institution should contribute. Will the institutions themselves have any input? What if they do not agree with their assessment, will there will be any means of appeal or review? There are no answers in the Bill.
In the organization of the new office, the Bill provides for it to be a separate employer under the Public Service Staff Relations Act. This means that the superintendent may hire staff without being bound by the Public Service classification system. This is a proposal I support because it gives the superintendent the leeway to hire the kind of specialized, high calibre staff needed to inspect and monitor our financial institutions.
There is also a need for greater numbers of staff. Hon. Members will recall that at the time of the bank failures there was a certain amount of emphasis placed on the fact that the office of the Inspector General of Banks did not have the numbers of people needed for the standard of supervision required. There has since been an increase in person-year allocation for the 01GB, and with its amalgamation, of course, it will become larger. However, I would like to see some assurance that, in terms of person-years, the new office will be more than the sum of its parts.
The new superintendent is already in place as the present Inspector General of Banks. He is fortunate to enjoy the confidence of the industry as well as the Government. It would have been better if the Government had brought the Bill forward earlier for debate. However, as it is, we will do our part to see it through in reasonable time so that the new superintendent can get on with the job.
The superintendent, under the Bill, acquires new powers. There is some adjustment of the powers held by the Minister and by the superintendent. It might perhaps be said that the Bill leaves the Minister with final approval over the birth and death of an institution while the superintendent makes the decisions about what happens during its life. Put in those terms, it sounds quite cut and dried. The real test of this regime will be when an institution falls into poor health.
May 4, 1987

The existing legislation allows the regulator to take control of an institution when it can be proved that its assets are not properly accounted for. Bill C-42 would allow the regulator to assume control of an institution for seven days or longer and to make business decisions for the institution if he sees that "there exists any practice or state of affairs which may be materially prejudicial to the interests of the policyholders or creditors". Obviously this is not an action to be taken lightly or often.
I would like some definition of the terms used in this part of the Bill and a clearer idea of some of the circumstances under which the regulator would assume control of an institution. Also, according to the Bill, the regulator is not required to consult the Minister before taking this action, although it certainly would be sensible to do so. At any rate, it is something I would like to see included in the Bill. Regardless of how much good sense the regulator may have, it should be very clear that the Minister is to be kept informed.
The Bill also contains an interesting proposal to form a coordinating committee whose members would be the new Superintendent of Financial Institutions, the Governor of the Bank of Canada, the Deputy Minister of Finance and the Chairman of the Board of the CDIC. The proposal is interesting because it actually sets out in legislation the requirements for consultation and the framework, which is this committee. This is most definitely a reaction to the gaps and breakdowns in communication which so complicated and contributed to the bank crises in 1985.
The membership of this committee is identical to that of the CDIC Board of Directors, but the function of the committee is different. The whole purpose of this new committee is to share information and advice. I approve of this goal, obviously, but it is also clear that the success of this committee as a monitoring group and consultative body will depend a great deal upon its terms of reference and the personal willingness of each of its members to make it work.
It is encouraging to note that the superintendent designate, who would chair this committee, has served notice that he intends to interpret the legislation rigorously and will not permit its members to send substitutes to committee meetings, which often happens in the case of CDIC board meetings.
The proposal as it is does not allow for industry representation on this committee, presumably on the assumption that the potential for conflict of interest would outweigh the benefits of input from people with experience and up-to-the-minute knowledge of industry conditions and trends. However, there is no doubt that the regulators need this kind of contribution, whether it is on the co-ordinating committee or a separate professional advisory group.
Bill C-42 also makes a number of substantive proposals concerning deposit insurance. Before discussing them I would
Financial Institutions
like to refer briefly to Bill C-86 which was passed about one year ago and which allowed for up to four private sector representatives on the CDIC Board of Directors. To date, not one has been appointed.
I would also mention that the practice of sending substitutes to board meetings does not sit well with me. It seems only logical that if the regulator's co-ordinating committee prohibits substitution, the CDIC board should do so as well. Substitution at private sector board meetings is unheard of. In this particular area of the public sector it should not be permitted either.
To return to Bill C-42, it proposes an increase in the premiums paid for deposit insurance by financial institutions. The current rate is one-tenth of 1 per cent of insured deposits. The Bill proposes increasing this to a maximum of one-sixth of 1 per cent. At this rate we are told CDIC's $1.2 billion deficit will be retired by 1994, assuming no more institutions fail. The Bill also proposes doubling to $3 billion the CDIC's line of credit from the Government's Consolidated Revenue Fund.
If these proposals are meant as a serious response to the CDIC deficit, then I am not satisfied. I would prefer to see the CDIC handling its deficit quite separately from normal operations. I am quite surprised at the Government's reliance in this scenario on there being no further failures of financial institutions. Even if this new regulatory system were to be successful in staving off any disasters under federal jurisdiction, the CDIC also insures provincially-regulated institutions, which have been particularly vulnerable in the years during and since the recession. So I do not think that the Government is justified in relying on wishful thinking to eliminate the CDIC deficit.
I also note that the proposals concerning CDIC do not in any way acknowledge the fact that the Government itself is partially responsible for the CDIC's deficit. This is a matter I have raised on a number of occasions. CDIC funds have been used more than once to implement decisions that were policy decisions of the Government rather than part of CDIC's mandate, for example, part of the Canadian Commercial Bank bail-out, the $200 million paid to the Hongkong Bank to take over the Bank of British Columbia and, most recently, $275 million to the Province of Alberta to restructure a couple of ailing trust companies. If government funds had been used I suppose it would have added to the deficit. But why is it more acceptable for the Government to transfer part of its deficit to the Canadian Deposit Insurance Corporation?
Another section of the Bill, Clause 71, proposes that CDIC investment, which was previously limited to the Bank of Canada, now be extended to all member institutions and to financial institutions outside Canada. I would like to know more about this. For example, what are the criteria for investment outside Canada?

May 4, 1987
Financial Institutions
There are other proposals concerning the CDIC which can be characterized as incentives to good business practice, or perhaps as having a stick as well as a carrot. It is proposed, for example, that CDIC have the power to terminate insurance coverage, with the approval of the Minister. CDIC has had this power relative to provincially-regulated institutions. Bill C-42 extends it to federally-regulated institutions. This is, of course, a Draconian measure since an institution cannot legally operate without deposit insurance-withdrawal of insurance forces closure.
Another new proposal would allow CDIC to levy a premium penalty on institutions deemed to be carrying out unsafe or unsound business practices. This could be risky. A premium surcharge on an institution would not force it to close its doors, but it could result in a crisis of confidence if it were to become known that CDIC was assessing penalties for substandard operating procedures. Of course, the intent is that it should not be in the public knowledge, but the question must still be addressed.
There is also the question of public knowledge versus industry knowledge. I would like to see a definition here bearing in mind the consumer's right to know in order to make intelligent decisions. 1 would also like to know how the Government defines "sound business and financial practices", the expression used in the Bill. I would like to have some idea of how it is to be interpreted relative to the risk experience of the different kinds of financial institutions.
These are matters which we can examine more deeply in committee. There is also the question of alternatives to the current system of how CDIC sets premium rates for its member institutions, if they should be risk-related or if there should be separate pools of funds for the different kinds of financial institutions. I look forward to hearing at committee about what work the Government is doing in the whole area of risk assessment.
What we have in some of the provisions in Bill C-42 is essentially a dose of preventive medicine. A number of proposals are there mainly for their value as deterrents and only to be used as a last resort and, in some cases, with concurrence by the Minister.
It is a useful first step in the process of legislating reform in the financial services sector. I regret that it has taken the Government over two and a half years to get to this point. However, I look forward to seeing the remainder of the legislation and hope that there will be no further delays in the Government's timetable.


Mr. Mike Cassidy (Ottawa Centre):: Mr. Speaker, Bill C-42 is the Government's first response in legislative terms to the problems that have been endemic, not just for a year or two and not just after the collapse of the CCB and the Northland Bank but long before that. Thus, I have a real sense that we are closing the stable door awfully late and that the over-all cost to depositors, to the institutions, and directly or indirectly to Canadians as a whole, for a while at any rate, through the
tax system, is now approaching some $2 billion. That is a great deal of money to go out the stable door.
I was recalling as the debate began on Bill C-42 how long it has been evident that there are problems in terms of the regulation of financial institutions, an issue which this Bill is intended to address. I had the opportunity to take part in the Ontario committee which reviewed the collapse of Crown Trust and which sought to review the regulation of financial institutions at the provincial level. This occurred in about 1982, a year or so after the collapse of Crown Trust and several other related companies.
At that time, one of the very sad and sorry things we learned as we looked into the operations of the Superintendent of Insurance of Ontario, who had jurisdiction over provincially chartered trust companies, as well as the Ontario Superintendent's interrelationship with the Inspector General of Banks and the Department of Insurance on the federal level, was the degree to which regulation of financial institutions was lax, slow and insensitive to the real problems. These real problems came about because of a change in practice and, I believe, a change in ethical standards on the part of people operating financial institutions.
One of the reasons Crown Trust was so easily raped and pillaged, in my view, was that the people who were there were running it like a crusty old institution for so many years and just did not know how to respond when a bunch of fast-buck operators with no ethics or morals at all sought to clean out the treasury in order to finance the flip that involved the Cadillac-Fairview buildings and Leonard Rosenberg.
The people running the trust company did not know what to do, and it is sad to say, albeit with hindsight, that they did not even know that someone should have taken their ethical principles in hand and simply walked out the door and gone to the newspapers to say that this will not do and explain what was happening before it was too late. That did not occur.
One of the things that sticks out in my mind from that particular episode is that at the time that there were questions about the financial regulation of the various trust companies involved, the discussions between the Department of the Superintendent of Insurance of Ontario and its federal counterparts was a comedy of errors. In their attempt to take effective action to stop these fast-buck artists, they found that whoever was in charge of the matter was off on a French course, or on holidays, or for some other reason had not bothered to inform the Inspector General of what was going on. A pattern like that became very obvious to us at that time.
I believe the previous Government is to be criticized as well as the present Government for not responding to that pattern, by recognizing the very grave risks that were being taken, particularly after the financial turmoil that began to occur in the market with the very sharp rise in interest rates at the beginning of the 1980s. The previous Government did not respond, and then when the new Government came into power
May 4, 1987

it inherited a situation which it should not have had to inherit, but it has tolerated that situation. Then, perhaps in the interest of winning western votes or perhaps as a preconceived notion that when the Liberals had been in power the Government was traditionally opposed and insensitive to the needs of western financial institutions, the present Government galloped to the defence of the Canadian Commercial Bank and the Northland Bank in a manner which we now know led to a loss of more than $1 billion to the public through deposit insurance institutions.
That is all history. I believe it is relevant to discuss that history in discussing Bill C-42, and the other parts of the financial package the Minister has promised that we will see some time in the next month and a half or two months. I think the necessary action must involve all of the elements cited by the Minister and not just an improved pattern of regulation.
It is clear that excessive concentration in the industry is a problem. In our opinion, the Government's proposals on ownership are inadequate. It is clear that there are real problems with self-dealing, particularly in some of the smaller institutions. We do not yet know what will happen about that.
I believe there are clear danger signals in the degree to which the four pillars are being collapsed into one. The White Paper indicates that the Government more or less supports that collapse but it seems to me that we are embarking on a difficult and possibly perilous path. The new Superintendent of Financial Institutions will be charged with bringing together two organizations which did not co-operate very well in the past, and will also be responsible for this committee which will bring together the different players.
The CDIC, the Department of Finance and the Bank of Canada will get together formally in order to talk about things from time to time. If I recall, these elements did meet regularly on the Bank of Canada Board, if not elsewhere, but those meetings did not appear to be particularly fruitful. It is useful that the Bill provides for such meetings, but I think there is still the potential for human error and for the regulators to be too trusting, as they were in the past with Crown Trust, the CCB and the Northland Bank.
I took an opportunity to have a quick look at the summary of the Estey Commission inquiry. What a tragedy of errors that was. Auditors did not do the jobs for which they were being paid. I think it is bordering on the criminal that to this day there has been no effective action taken to discipline auditors who failed to notify the public, through annual reports or other means, of the situation that existed, and who consistently over a lengthy period of time tolerated the phoney devices which were being used by those two banks to make it look as though they were profitable and their balance sheets were still in order when that was not so.
The Minister knows the degree to which there was capitalization of interest taking place and the extent to which there were roll-overs upon roll-overs and work-outs upon work-outs, all in an attempt to forestall the evil day when the whole house of cards would come crumbling down. It is sad to say that the Government allowed itself to be sucked in by that.
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The Minister of Finance (Mr. Wilson) and the then Minister of State for Finance were not perceptive enough to ask a few of the questions that should have been asked by the Governor of the Bank of Canada and by the Inspector General of Banks about the real picture beneath this Potemkin village of finance which had been created to indicate Government support should continue. Of course, it eventually collapsed and at great expense.
The reform in Bill C-42 is a consequence of, among other things, a very rapid change which has taken place in finance, not just in Canada but elsewhere as well. It is also clearly a consequence of the concerns I and many others have been raising about institutional solvency and about the fact that the standard of behaviour for people involved in the financial services industry is changing to the point where we can no longer trust the unwritten gentleman's code that ensured financial institutions remain solvent without pushing to the limit whatever powers they have. That is one of the reasons why the loosening of the statutory restraints is rather difficult to accept. The loosening of those restraints will leave more options available to press to the limit the powers which are being given to the banks, trust companies, insurance companies and the investment industry.
The Government has come up with a legislative compromise in which it is trying to both deregulate and re-regulate the system. This involves a dramatic change in the rules, the most dramatic change we have seen since the collapse of the Home Bank when the Government tried to legislate the four pillar system with which we have become familiar. The fact is that those pillars have become more and more blurred and will be even more blurred now that the Government's proposals are coming into force.
The limitations on commercial lending by trust companies will almost entirely disappear on the one hand and on the other hand, as the Minister said, the banks and other financial institutions will have the power to deal directly in the investment industry. One might argue that that is happening none too soon, given the degree to which, at another level, foreign ownership is being allowed into the investment industry.
One of the unsettling characteristics of what is happening is the emergence of a number of financial conglomerates to bring together under one corporate grouping several different financial institutions. The percentage share of closely held conglomerates with strong commercial links has been steadily advancing over the course of a few short years, and deregulation is likely to encourage this trend.
I recall in the late sixties and early seventies the degree to which the banks were able to move into consumer credit, an area which had previously been controlled by the instalment finance companies that have now effectively fallen back into being a role of minor players in this particular area. The chartered banks still control something like 70 per cent of all deposits. However, clearly their share of the deposit taking market is likely to decrease and decrease quite rapidly over a short period of time.

May 4, 1987
Financial Institutions
I recognize that this is occurring elsewhere. Great Britain has had a big bang in which London has been encouraged to abandon most of the restraints on its financial institutions. Similar liberalization has already taken place in the United States. They have opted for deregulation, and the pressure of that deregulation is being felt here. Just a week or two ago we had contact with Dennis Elealey, a former Chancellor of the Exchequer in a Labour Government in Britain. His response was: "Watch out, Canada; be very careful about what you are doing".
Since the big bang we have seen enormous six-figure salaries, which in Britain are very big, being paid to teenage gurus and whiz kids. Well, they are not teenagers; they are only in their twenties. There has been an enormous escalation of exactly the kinds of practices of which we in Canada should be very wary.
The fact that there is a move toward globalization in financial transactions should not lead us to go willy-nilly along the directions carved by the United States and by Great Britain.
Just in the time since the White Paper appeared there has been a series of financial scandals on Wall Street in the United States which involved many of the same institutions and transactions that are intended to be governed here. The investment industry and the deposit-taking industry there have emerged with a very serious blot on their reputation. Major investment bankers like Shearson and Lehman have found themselves directly implicated. Hundreds of millions of dollars worth of frauds have been demonstrated to have occurred.
One must ask: "Is this what we are to get in Canada?" If we do so, will the Government of Canada, through the Canada Deposit Insurance Corporation, once again rush to the rescue of deposit-taking institutions? Once again are we to bail out institutions in which foreign depositors invested, presumably in an unregulated way, and then came with their begging cups in hand and saying: "If you do not pay us off, the reputation of the financial industry in Canada will be severely impaired"?
We bought that argument to the tune of $400 million or $500 million of payments to uninsured institutional depositors who had every reason to know better and to have expected that they should not have been compensated if they happened to have made a bad decision.
The concern about deregulation at least has had the impact of persuading the Government not to move to a total big bang. Bank failures pointed to a wide number of problems related to the regulation and supervision of institutions. It became clear that financial difficulty was frequently related to severe errors on the part of managers, to excessive risk-taking, to selfdealing, to conflict of interest, and to the mismatching of assets and liabilities.
Another area to which the Estey Commission report pointed is the failure of directors to exercise due diligence in terms of their role as the directors of banks like the Northland and the
CCB. These guys-and gals, I suppose, although they were mainly men-were being waltzed into a view of the world which bore no resemblance to reality at all. They failed to insist that management kept them adequately informed. It is my conviction that many of the directors did not even know the degree to which difficult situations had been put together with cloud-cuckoo-land financial forecasts or the degree to which those two banks, in particular, had basically papered over their deficiencies and therefore demonstrated to the directors that they were solvent at the time the two institutions were essentially bankrupt. It was not until those institutions could no longer raise capital or funds in the market that they were finally brought to book and had to be shut down.
As the Hon. Member for Trinity (Miss Nicholson) pointed out, we have had a surfeit of public policy studies of regulation of financial institutions. We have had the Wyman report on the CDIC. We have had the Dupray task force in Ontario. We have had the reports of the Senate and Commons finance committees. The ECC has reported, and many of the recommendations we have now flow from the Estey Commission report.
All these reports concluded-and as 1 stated earlier we did not need all these reports in order to reach that conclusion- that there was a major systemic weakness in terms of the Government's ability to spot and to identify problems in unhealthy institutions and, further, to do something about those problems once they began to be identified.
I welcome the fact that many of those deficiencies are being addressed in Bill C-42. When it goes to the finance committee we will have a chance to look at them in more detail to establish whether the a's, b's, p's and q's are adequate to the kinds of needs. It is a bit difficult to comment on those right now.
However, I want to comment on one of the elements which the Government has left until later, that is, the question of the domestic ownership policy. The Minister will know that we take grave issue with the Government's decision that it will interfere in no way with the ownership of financial institutions up to the point where they reach an asset base of $15 billion, in the case of chartered banks, and something similar in the case of trust companies and insurance companies. Even then the Government will give five years for the companies to introduce an element of wider spread ownership. That element is to be limited to only 35 per cent.
In other words, an institution which is approaching the $15 billion point now will have a lengthy period of time in which it can get onside. As well it is not clear exactly what the Government would intend to do in terms of policy if an institution did not get onside by the end of five years. We know the kinds of excuses which can be made by an institution to explain why it is not prepared to do it yet.
May 4, 1987



For example one might suggest that this is not the right time, that the financial markets are not in a good position for the issue of shares to meet the objective of having 35 per cent of the shares of a trust company or a bank in the hands of the owners, except those who have control.
Indeed, Mr. Speaker, I do not think that the Government's proposed legislation imposes the idea that our banks and the other financial institutions be under very diversified ownership. As a matter of fact, 15 to 20 years might elapse before a new bank will establish itself and reach the level of $15 billion in assets. After that, will the regulations change? If I were responsible for the strategic planning of one such institution I would say that things change. Pressure may be brought to bear on this Minister and this Government, but for us it is not limited to this particular time.

Effectively a $15 billion rule, with the permission to continue to grow, would mean that a bank could reach $20 billion in assets and only then be subjected to a 35 per cent ownership rule. The idea that we would step in, in order to put some restraint on the large families which control so much of our trust company industry, is simply not there. They will laugh at this particular measure, indicating that it is not particularly effective.
If there is a minority shareholding, it is no guarantee that these large pools of capital will not continue to be used in the abusive way which we have seen before. When I use the word "abusive", I do so in a fairly broad context.
We had a very lengthy debate in the House last week over the plight of Canada's farmers and the problems they are experiencing. What I find unsettling is the double standard which seems to prevail when the banks come to making their loans. If a farmer tries to extend the loan because crop conditions are not good-and it is difficult to make even an operating profit in farming today-then all hell breaks loose. That farmer may well be driven to the wall and beyond, forced to have his equipment auctioned off at a pittance, the livestock sold at far less than market value, winding up with nothing after a lifetime and, in certain cases, many lifetimes in farming the same farm within the same family.
What happens in the financial sector, Mr. Speaker? What happens when Conrad Black or someone of that ilk wants to engage in some kind of corporate takeover? He calls a few friends. In no time at all a line of credit, over half a billion dollars or a billion dollars, is arranged. It is as easy as going to sign for a loan for a new car when you deal in that kind of rarefied atmosphere.
There is something wrong when people get hundreds of millions of dollars in paper entrepreneurship for this kind of paper pushing which, in many cases, is of absolutely no benefit at all to the Canadian economy or which, as we have seen now with the sorry plight of Dome, can have an extremely negative impact on our economy.
Financial Institutions
These situations create bids that go far beyond the underlying values of the assets being acquired. People can do that, making arguments about synergy and how they are going to recover the full value which the previous owners had failed to recognize, et cetera, et cetera. A lot of that is hogwash, but the banks have bought it again and again, and it is not going to end.
It will not end partially because the Government is not prepared to see widely spread ownership as the rule for any large financial institution. The Government instead is going to see a certain amount of minority holdings as a requirement. It will still leave in place the situation where the directors of these financial institutions will be drawn from a small corporate elite in Canada. The Hon. Member is shaking his head. But that is what we have right now, a small corporate elite who lunch together, perhaps at Winston's, who meet each other, who play together, who winter together in the Caribbean and who feel a commonality of interest and who are ever too ready to help a friend when a few hundreds of millions of dollars is needed to finance some kind of corporate paperpushing exercise.
On the one hand, you have the emergence in Canada of a situation where many people cannot even go to a bank because they do not have any money to open up a bank account. That is real. You have a situation where increasing numbers of Canadians are homeless and virtually destitute, where poverty is increasing. While some changes which may be useful are being made in this area, not enough is being done to break the degree to which corporate power will continue to direct the financial institutions of Canada, according to the reforms which are being put in place by a Conservative Government.
Perhaps that is not surprising. It is a Conservative Government. It has inherited a mess which was created by the Liberals but, as my leader pointed out during the course of the 1984 election campaign, comparing Liberals and Tories is like comparing Tweedledum and Tweedledee. It is like comparing Visa and MasterCharge.
When it comes to the question of whether or not the Government of Canada should be prepared to try to break up some of these pools of corporate economic power in our financial institutions, the answer we would have had from the Liberals is very similar that which we are getting now from the Progressive Conservatives, namely, they are not prepared to break up those pools of corporate power.
The Minister is waiting anxiously to find out what our opposition is to this Bill. 1 have told him what our position is likely to be on the Bill with respect to corporate ownership. We have real reservations. This Bill on its own is obviously not enough to deal with problems that also relate to powers, to self-dealing and to ownership. We will come to those later. Yes, we will support this Bill, with a number of reservations along the lines I have been putting forward, because it is clear that we need to have better Governments and better regulation than we have had.

May 4, 1987
Financial Institutions
I still remain somewhat skeptical, and I hope the Superintendent of Financial Institutions will impose a sense of public responsibility right through his organization. I regret to say, that sense was not there before. I get angry when I see some of the abuses that have occurred in the area of financial institutions. I get so angry that I want to weep over what has taken place.
I get angry when I find out that a person, a regulator, who had a responsibility for asking questions that go underneath the bland assurances that well-fed corporate executives were giving from the banks and financial institutions, failed to do his or her job. Perhaps it is unfair to pick on regulators. They are civil servants. They are not particularly well paid perhaps compared to some of the people whose activities they are meant to be regulating. They deal in difficult circumstances. Certainly the Inspector General of Banks and his office were grossly underfunded and understaffed in the period of time about which we are talking.
I still cannot help feeling that when these abuses were taking place that surely the regulators should have been kicking and screaming. A whistle-blowing law in Canada would allow regulators to go public with what they know when they find out that inadequate action is taken by the supervisors. Had some whistle-blowing taken place, going back five or six years to Crown Trust, or more recently to the recent failures, I predict that we could have saved the CDIC a large proportion of the very large sums in which it is in deficit right now. We could have saved Canadian depositors, who eventually will pay, and borrowers who will eventually pay, the cost of the premium increases being imposed in this Bill, the great amount they are being asked to pay because of the increases in premiums. Those increases in premiums would not have been necessary. Why? Because the losses would not have occurred in such magnitude. Unfortunately, that did not occur.
I do welcome the fact that under the Bill the powers are to be greatly enlarged. The Bill responds to the Estey Commission report and the office of the Superintendent of Financial Institutions. Between the superintendent and the CDIC there are greater powers for going into the books. They have the power to require that an adverse report on a financial institution shall be put before the directors of that institution within 15 days. If the directors do not act, at least they cannot say "Well, we did not know", which was the case of the CCB and of Northland.
The powers of the Superintendent include the power to temporarily seize assets of a troubled institution to give officials time to respond to specific complaints about the institution's operations, such as a possible inability to handle liabilities or improper accounting of assets on the books.
Before I go conclude, Mr. Speaker, the basic question still remains. Is there the political will and is there the bureaucratic will to use those powers, greatly enhanced, which did not exist before? It is my conviction that, although the powers were limited as far as the Superintendent and the Inspector General were concerned before, in the end, if they did not have the power to act directly, those officers had the power of publicity. They had the power to issue a press release. They should not
say simply that, in our opinion we do not feel these institutions are acting according to the rules of sound financial management and, therefore, we are undertaking whatever measures available to bring those institutions into check. It is quite true that there were time delays in certain cases which would prevent them from acting immediately to safeguard what assets might remain. That is a problem. But if the Superintendent or the Inspector General had gone to the president of the CCB or of the Northland and said, "I want you to look at this draft press release. This is what I believe needs to be said in public about your institution. I happen to lack the powers to shut you down today but I intend to make this release public within a day, two days or seven days unless you take the following corrective actions", is it seriously to be believed that those institutions would seek to call the bluff if the Inspector General had shown that kind of determination? I do not believe so, Mr. Speaker.
One has to ask, what about the political level? Was it informed? Not always. However, when they were, would they have backed up that kind of action by the Inspector General? We were told a year and a half ago that the IG had contact with the then Minister of State for Finance. Unfortunately the Minister herself was unwilling or unable, did not have the competence or the experience-I am not sure what. She has emerged politically unscathed from that experience, but she is partly responsible for what went on. She could have said to the IG, "that is a mess out there, you go and stop it." That could have been done without the extra powers which are being given in this case.
If the Superintendent remains unconvinced about the solvency of an institution there can be a hearing with the Minister of Finance, after which the licence can be restricted, or the Superintendent can be directed to take over the institution for an indefinite period. If the poor practices of the institution do not change at that point the Superintendent can begin winding up procedures. It is a much better articulated system than existed before, but we saw the system fail before, even though there really were powers which could have been used to bring those institutions to account. I fear that could occur now as well.
I just want to speak briefly on the question of deposit insurance. The CDIC deficit right now stands at about SI.5 billion. Most of it is attributable, not to insured deposits but to uninsured deposits in the case of the 1985 bank failures. 1 would like the House to at least consider the question of whether there should not have been and should not now be a certain degree of co-insurance on deposits over a certain amount. 1 think for deposits up to $25,000, or something like that-a certain sum which reflects what might be held by naive and unsophisticated investors-that 100 per cent insurance makes sense. However, we have seen an escalation of insurance to the point where the entire responsibility for the fiscal management and financial rectitude of an institution rests on the regulator. There is no market pressure there at all.
May 4, 1987

My Party has trouble from time to time with people suggesting that the market is everything. 1 have trouble, conversely, as a democratic socialist in a semi-capitalist economy, with suggestions made by the Government which effectively say that there should be no market pressure at all. If you had a 10 per cent or 20 per cent co-insurance feature on deposits over $25,000 or $30,000, let us say up to $100,000 or something like that, and an institution failed, the depositors run the risk of losing up to 10 per cent or 15 per cent of their deposit. It seems to me that that would ensure that high flying financial institutions, behaving the way too many have behaved over the course of the last two years, would have their wings trimmed. People with large sums to invest would be extremely wary about getting an extra half per cent interest from an institution that was not investing prudently, taking unwarranted risks with the money.
In other words, the market itself would prevent those institutions from growing as rapidly as the CCB and the Northland Bank were able to grow. It would prevent the kind of situation where institutions grow like Topsy and where the risk relative to public deposit insurance grows to the levels we have seen.
The Government claimed at the time it had no choice but to bail out those two western banks. It made certain assurances, and I think Governor Bouey may have been partly responsible for that. It may well be that no matter what level of deposits are formally insured, future Governments may also find themselves in that same box. I would hate to see that.
I am lectured to and preached at about the market system from time to time, but when we turn around, as we did at the time of the CCB affair, and say let the market system prevail and make those guys take what they can get when the institution is wound up, we were told no, that is not to be.
I would suggest that if the principle is in place that there be a certain amount of co-insurance on deposits over a modest level, not only will that ensure that depositors whose deposits are 90 per cent insured would look carefully at the quality and character of the institution in which they place their deposits, it will also set a precedent so that uninsured depositors putting commercial deposits into those institutions will also expect that in the event of failure, even if they come with their begging cup, 10 per cent or 15 per cent of their investment will not be returned. They, too, will therefore not abuse the taxpayers of Canada through the CDIC the way those depositors did two years ago with the results we know.
1 could go on for some time, but it is the position of the NDP that the problem of financial institution solvency can be resolved only through a combination of clear and effective regulation and supervision of Canada's financial system along with strict domestic ownership limits which ensure that institutions are widely held. We have supported much of what Mr. Justice Estey advocated with respect to regulatory changes but we note that the best federal supervision available
Financial Institutions
will fail if commercial financial cross-ownership is permitted. Because the Conservatives did not introduce 10 per cent ownership limits for all financial institutions, the new regulatory authority that Bill C-42 introduces may find itself with an increasingly impossible job on its hands in the years ahead.
As I have just suggested, we could also put some of that responsibility in the hands of any investors who have more than modest sums to invest so that they, too, keep an eye on the rectitude and solvency and management practices of the institutions in which they put their funds.


The Acting Speaker (Mr. Paproski):: The Hon. Member for Don Valley East (Mr. Attewell).


Jean-Robert Gauthier: Questions and comments?


The Acting Speaker (Mr. Paproski):: I would just like to bring to the attention of the House that pursuant to Standing Order 55(1), the rest of the speeches will be 20 minutes plus 10 minutes questions and comments.


Jean-Robert Gauthier: Thank you.


The Acting Speaker (Mr. Paproski):: I thank the Hon. Member for Ottawa-Vanier (Mr. Gauthier).


Mr. Bill Attewell (Don Valley East):: Mr. Speaker, it is a pleasure for me to rise and speak on Bill C-42.
Speaking as a member of the Standing Committee on Finance and Economic Affairs, we spent a great deal of time on this subject over the last two to three years. I first want to commend and compliment the Minister of State for Finance (Mr. Hockin). I can recall, a few days after he was appointed, consulting with him and asking if he would be moving quickly on the various studies which had already been done. My thought there was that the last thing we needed was another study. 1 was very impressed with his remarks. He said he would be getting on with the job just as quickly as possible, and he has been true to his word.
I am going to deal with just the supervisory reform and changes to the CDIC. I have full confidence that the other measures concerning ownership and so on will be dealt with shortly. I think it would be useful to refresh our memories a little bit about some of the comments made in the studies. I will just refer to the committee report which begins with supervisory reform.
Recent trends and problems in the Canadian financial system have highlighted the need to improve the federal supervisory system. The failure of seven federally-supervised financial institutions during 1985, two chartered banks, three trust companies and two property and casualty insurance companies raises serious doubts about the adequacy of the supervisory system. Failures of provincial institutions, while not the direct responsibility of federal supervisory authorities, also underline the need for improved supervisory standards across all jurisdictions.

May 4, 1987
Financial Institutions
In his testimony before the committee the Superintendent of Insurance cited the numerous reasons for the failure of seven federal trust and mortgage loan companies and four property and casualty companies. These include inadequate capital, over-exposure in real estate, low quality mortgages with questionable appraisals, mismatching between assets and liabilities, abusive self-dealing, the use of unlicensed reinsurers, and the poor quality of management.
In its study of the circumstances leading up to the support package provided to the CCB in March, 1985, the committee also identified a number of serious shortcomings, such as lax regulatory supervision, questionable accounting practices, inadequate disclosure, inadequate performance by outside auditors, and their lack of communication with the office of the Inspector General of Banks.
Technology accounts for another reason for supervisory reform. Computers and communications technology have enabled the financial institutions to effectively leap over traditional domestic and international supervisory boundaries. No longer is it sufficient to limit supervision to the activities of an institution in a limited geographic area. Technology, coupled with increased product deregulation and the blurring of industry boundaries, requires a new approach to supervision, one which recognizes the national and international dimensions of many financial institutions and the need to utilize up-to-date computer-based technology and modernized supervisory approaches to deal with the dramatically different financial scene of the 1980s.
A third area of reform relates to the adequacy of the supervisor's power to deal with problem situations. There is evidence from recent financial institution failures that federal regulators require additional remedial powers to perform more effectively. Also it would appear that they have not fully utilized their existing powers, or done so in a timely manner. Recent events would indicate that the traditional gentlemen's approach to financial supervision is no longer appropriate in an environment of increased risks, frequent and significant economic shifts, and intense competition. A more assertive supervisory approach is required, together with the requisite enforcement powers to get the job done. The traditional reactive mode of supervision must give way to a pro-active mode.
The supervisory process of Canadian banks has been patterned on the British system which relies heavily on institutional self-regulation and the use of outside auditors. Until 1975 the OIGB had under five employees. In contrast to the American supervisory system which employs hundreds of government examiners to perform detailed on-site examinations, the Canadian approach relies on the work of internal
inspections and external audits and generally limits its own reviews to an examination of the adequacy of bank management and the controls it has introduced to comply with prudential policies and regulations.
In contrast, the supervision of trust and insurance companies involves detailed on-site examination by federal supervisors and is much closer to the American banking scene. Both the adequacy of banks supervisory methods and responsibility of outside advisers to all financial institutions, including auditors, appraisers, actuaries and lawyers, are in need of review and revision.
The internationalization of the Canadian financial system, in particular the growing importance of foreign markets to Canadian chartered banks, life insurance companies, and some of the larger trust companies, points to the need for careful reexamination of the adequacy of present supervisory practices in the international area.
Finally, the increased blurring of differences between financial industries, particularly among the deposit-taking institutions, and the pressure from all financial industry groups for further product deregulation, reinforces the need to reexamine the suitability and effectiveness of two separate federal supervisory bodies and a separate deposit insurance entity. The shortcomings of the present organization structure were recognized in both the Green Paper and the Wyman report.
It is clear that the Minister of Finance (Mr. Wilson) not only read our report in great detail but acted very much along the lines of the recommendations that we made concerning supervision. He also had to contend with and think about other remarks and suggestions, and I would like to quote a couple from the Senate Standing Committee on Finance and Economic Affairs. They were rather cautious in their approach to this subject. For instance, they stressed the following points:
-first, to ensure that primary regulators have adequate technological and human resources to undertake effectively the monitoring and examining role under their existing powers;
-second, to enhance these powers where circumstances warrant; and
-third, to alter their monitoring procedures so that an effective early warning system is put in place and to establish a network of communication and information flow to and from the other partners in the over-all process of regulating consumer protection and institution solvency.
They make further recommendations including No. 16 which says:
To a considerable degree, the recent problems in the financial sector appear to reflect not so much an inadequate range of regulatory powers as an inadequate exercise of existing powers. To the extent that this is the case, it is important that legislators do not react to recent events by endowing regulators with unnecessary and unwarranted powers.
You can see, Mr. Speaker, that the Minister chose not to take that particular advice. I think he was correct in that.
May 4, 1987

Recommendation No. 17 says that increases in regulatory powers should be restricted to those areas where existing powers limit the ability to monitor the soundness and solvency of an institution or to restore problem institutions to financial health. They should not be utilized to supplant management's prerogative to manage and direct as an institution. The most serious weakness of the existing regulatory framework is the lack of procedures or mechanisms to identify problem institutions on a timely basis.
They go on to talk about an early warning system which I believe is a very vital area that is certainly lacking in the existing system.
On a number of occasions we made the point about where these supervisors should be located. We were dismayed to learn that literally all of them are located right here in the capital. The odd financial institution is headquartered here, but most of them are obviously in metropolitan centres like Toronto, Montreal and Vancouver. In order to have an effective early warning system your men and women should be out in the field where they can pick up on rumours about loans and so on.
I will just touch on another very thorough document which was completed by Justice Estey. He outlined five different alternatives for the structure of bank supervision. No. 3 is worded as follows:
Establish a super-regulatory agency with jurisdiction over banks, insurance companies, and trust and loan companies as recommended by the House of Commons Standing Committee on Finance, Trade and Economic Affairs.
The fifth choice which this report puts forth reads as follows:
Combine the Inspector General's supervisory functions with the CD1C, which, as the insurer of the public's deposits, would determine its exposure to risk by its own supervisory activities.
1 believe that the Minister of State for Finance correctly rejected that recommendation with regard to supervisory steps, but it is clear that not only has he consulted widely with the industry, he also did not allow these reports to gather dust. They were read and culled through. I believe he grafted together legislation including the best and brightest ideas from the various studies previously done.
Bill C-42 clearly shows that the Government is committed to strengthening its ability to supervise financial institutions as part of a comprehensive policy of reform in the financial sector. The principal measures in the Bill are the consolidation of the Office of the Inspector General of Banks and the Department of Insurance into a new office of the Superintendent of Financial Institutions and modifications to the Canada Deposit Insurance Corporation. The new office will have full supervisory responsibilities for federal banks and non-bank financial institutions.
I am sure you are aware, Mr. Speaker, of how that sector is growing. In 1967 there were 223 companies. By 1984 that had grown dramatically to 352 institutions.
Financial Institutions
The CDIC will continue to be a separate entity. This will allow the retention of private sector expertise on the CDIC's board of directors. Moreover, it will preserve the CDIC's established relationship with provincial regulators.
This Bill will also provide detailed grounds on which the Government may take control of a financial institution. The existing provisions do not allow regulators to take timely and decisive action to protect the interests of depositors, policyholders, or general creditors.
Bill C-42 also addresses the issue of CDIC funding by permitting a more flexible mechanism for setting premium rates. As a result of the failure of a number of financial institutions, the CDIC had a deficit of $1.2 billion at the end of 1986.
Bill C-42 reflects the measures outlined in the December, 1986 White Paper, New Directions for the Financial Sector. These measures are based on extensive discussion and consultation. They address concerns raised in the Estey report on the Northland and Commercial banks, the Wyman report on the CDIC, and the reports of the finance committees of the House of Commons and the Senate.
Separate legislation introduced as part of the Government's reform of the financial sector will further enhance existing supervisory powers, permit the Government to review and block large transfers of ownership if necessary. It will improve solvency standards, control self-dealing and conflict of interest, and permit financial institutions to offer a wider variety of service to their clients.
Bill C-42 establishes the Office of the Superintendent of Financial Institutions. This office will combine the operations of the Office of the Inspector General of Banks and the Department of Insurance. The office of the Superintendent of Financial Institutions will be treated as a separate employer under the Public Service Employment Act, thus providing more flexibility in setting classification standards and pay scales that would otherwise be impossible. This will facilitate the recruitment and retention of qualified personnel from the private sector.
The office of the Superintendent of Financial Institutions will be funded by assessments levied on the financial institutions under its supervision. The precise assessment formula will be set out in regulations and resemble the formula currently used to fund the Department of Insurance. The office of the Superintendent of Financial Institutions will be able to spend its assessment revenue without the requirement of parliamentary appropriations.
Bill C-42 establishes a committee consisting of the Superintendent of Financial Institutions, the Chairman of the CDIC, the Governor of the Bank of Canada, and the Deputy Minister of Finance. This will enable an adequate flow of information among regulatory agencies. We noted that this was certainly a problem and an issue in some of the failures that were examined.

May 4, 1987
Financial Institutions
Bill C-42 provides detailed grounds on which the Government may take control of a financial institution and will standardize these procedures. This will further protect depositors, policyholders and other creditors when financial institutions appear to be insolvent or fail to comply with regulatory procedures.
Responsibility for major decisions affecting the birth and winding up of financial institutions will be transferred to the Minister of Finance (Mr. Wilson). Some responsibilities, such as issuing letters patent, will be transferred from the Minister of Consumer and Corporate Affairs (Mr. Andre), while others will be transferred from the Governor in Council. Certain responsibilities of an administrative or supervisory nature will be transferred from the Minister of Finance to the new Superintendent of Financial Institutions.
Powers of the Canada Deposit Insurance Corporation will include measures in Bill C-42 that will strengthen the CDIC's ability to protect the interests of depositors and other creditors. The CDIC will have the power to levy premium surcharges on financial institutions which violate CDIC by-laws.
Federally incorporated financial institutions will no longer be automatically insured. They will be required to apply for insurance as is presently the case for provincially-incorporated institutions.
At present, the CDIC may terminate, through a phased process, deposit insurance coverage of a provincial member institution for unsound business or financial practices.
The CDIC will be given the power to initiate a process for termination of insurance coverage for deposits in both federal and provincial institutions. The Minister's authorization will be required before coverage of federally-regulated institutions is terminated. This would apply only to new deposits; existing deposits would continue to be insured.
Let us turn to the financing of the CDIC. This Bill will provide greater flexibility in establishing the premiums that the CDIC charges financial institutions. Effective May 1, 1987, the Governor in Council will be able to charge fees of up to one-sixth of 1 per cent of insured deposits. The rate that is established within this ceiling will reflect the need to reduce the deficit of the Deposit Insurance Fund over a reasonable period of time.
Legislation passed in 1986, which was Bill C-86, temporarily increased premiums from one-thirtieth of 1 per cent to one-tenth of 1 per cent for the period February 1, 1986, to April 30, 1987.
The minimum fee for deposit insurance will be increased from $500 to $5,000. The maximum amount which CDIC may borrow from the Consolidated Revenue Fund will be increased from $1.5 billion to $3 billion.
In closing, I am very supportive of the measures that are contained in Bill C-42. I spent a number of years in the financial services sector before seeking election and I can attest to the soundness of these provisions. They are much needed.
Canadians can be very proud of the record of our financial institutions over the long term. We have a number of world
class banks and life insurance companies and these measures today will help not only the smaller institutions but the larger ones remain sound and competitive in a world that is changing so fast.


Michael Morris Cassidy: Mr. Speaker, I have a question for my friend who is also a colleague on the finance committee. It concerns the interrelationship between regulation and ownership restrictions. I realize that this is not directly part of the Bill, but it is certainly relevant. Does he believe that it is adequate to require only a minority interest in large financial institutions to be widely held, and whether it is adequate to give five years to banks or financial institutions to achieve that wide ownership of 35 per cent? Is it adequate only to require that kind of distribution of share ownership after institutions reach a level of assets of approximately $15 billion? Will this not simply allow continued concentration in financial markets which has been one of the causes of the problem of overconcentration in the Canadian economy and a concentration of economic power in too few hands?


Bill Attewell: Mr. Speaker, I thank the Hon. Member for his question. As he indicated, we are colleagues on the Standing Committee on Finance and Economic Affairs. We are not dealing with a theoretical world, but a financial world which has grown in different ways for decades and we cannot simply apply some theoretical measures.
Certain companies in the trust industry have had problems over the years. Some would not be alive and thriving today if one of the major shareholders had not had the financial resources to help that company through a difficult period.
I think there are conditions by which some of these institutions should enjoy stronger ownership, with a higher percentage of ownership from certain people. However, when indeed they do increase to a certain level, then I believe the ownership level should be decreased.
The Hon. Member will recall that the finance committee suggested a graduated scale on ownership so that when the assets hit a certain level the concentrated ownership would start to diminish. We may want to revisit that particular proposal when we deal with the final legislation.
However, in general, I support the measures that were put forth. As the Member delves into the history of the survival and support of some of our trust companies, particularly regional ones which are important, he will see the virtue in the approach.


Michael Morris Cassidy: Mr. Speaker, perhaps I can pursue this briefly. It seems contradictory that on the one hand the Government ownership proposals will continue to insist that the banks be widely held and impose a limit of 10 per cent on the ownership in any single hand, while at the same time it will permit the trust company to be directed and controlled, not just by one set of interests but by an individual owner. Assets of $15 billion, $20 billion or $25 billion could effectively be under the majority control of only one owner, whether or not 35 per cent of the shares are widely held. Nonetheless, the power of discretion goes into just one set of hands.
May 4, 1987

Because of the pattern of ownership in the trust companies now, we know that is a very real possibility. It seems to me the Government has a choice. It could take the banking model and apply that to the trust industry or it could do that which it has done, which is to simply go with the flow and accept this degree of monopoly ownership of the second major group of financial institutions in the country. Surely it would have been better to have sought-although it might have taken a bit of time-a broad ownership of those trust companies, so that we achieve that, and begin to achieve that now.


Bill Attewell: Well, Mr. Speaker, one of the tragedies the country went through with the financial institutions in 1985 was the collapse of two regional banks. I, for one, was dismayed, not just because of those two particular banks, but that it likely signalled the end, certainly for a while, of the creation of regional banks. We have a very fine banking system in this country. We have five huge banks. However, I sometimes wonder how well some of the regions are being served, particularly small businesses in many regions. Perhaps a future role for some of these smaller trust companies will be to fill that vacuum.
These companies normally require someone with financial resources or partners, and if some of these smaller trust companies are formed to take up that slack, I think that is a worthwhile thing to do.
We are not a Party which puts forth retroactive legislation. As I said in my first reply, there were certain companies in place whose survival was dependent from time to time on large injections of capital. When we look over the whole scene today, I think we have a relatively healthy and vibrant financial service sector and with measures such as the increased supervision and strength of this new office, and with the other measures which are going to be coming on, we will continue to have a sound system and one of which we can be proud.


Mr. de Jong:: Mr. Speaker, my question is also directed to my colleague on the committee on finance. As the Hon. Member knows, during our hearings we had some concern regarding what type of regulations we could put on the institutions and what type of effective mechanisms the regulators could have on the institutions they were regulating. It often seemed to us on the committee that the instrument available to the regulators was either the sledge hammer, taking away the licence, or not being able to do very much about abuses they were seeing. The committee found this to be an unacceptable situation, because it did not allow degrees of punishments and penalties.
I wonder if the Hon. Member would comment on how Bill C-42 would deal with the concern of the committee that the regulators would have various instruments to use with which to enforce the regulations?


Bill Attewell: Mr. Speaker, I am pleased to reply to my colleague on the same committee. We worked side by side for a long time on this issue. I think the main power which will ensue from Bill C-42-and I am speaking of the supervisory area-if I could sum it up in one word, is "knowledge". I understand we are going to have more people in that department. I hope they follow the strategy we suggested, with many of them being in the field where they could avail themselves of the rumours on the street.
It is a fact that people know of an institution turning down a loan for certain reasons, such as the criteria not being met. You would be amazed, Mr. Speaker, how the financial institutions people know a month later which institution booked that deal which could have been a lot less than just marginal-perhaps even a very poor deal. But rumours are out there as to what company or institution actually booked what deal.
Therefore, knowledge is going to be power, in terms of knowing early on that interest is being capitalized, that the accounting procedure is being abused, and the knowledge of the rolling over of loans by a renewal procedure that simply covers up the delinquency of different loans. That is the real power, the talent of the people we are going to have and the knowledge they will gain from the hands-on review, and the whole system, if I could put it that way, of being out there in the field really knowing what is going on and not sitting in some ivory tower here in the capital.


The Acting Speaker (Mr. Paproski):: I will recognize the Hon. Member for Ottawa-Vanier (Mr. Gauthier). However, since it is very close to 1 p.m., and I do not want him to interrupt his speech, do I have unanimous consent to call it 1 p.m.?


Jean-Robert Gauthier: I was going to take the floor and speak very briefly before 1 p.m. with the intention of continuing later. However, I take your suggestion, Mr. Speaker, I think we should adjourn for lunch now.


The Acting Speaker (Mr. Paproski):: It being 1 p.m., I do now leave the chair until 2 p.m. this day.
At 12.57 the House took recess.


[Stage Direction]
AFTER RECESS

The House resumed at 2 p.m.
[Stage Direction]
May 4, 1987

[Stage Direction]
[English\

Hon.   Chas. L. Caccia@Davenport: Mr. Speaker, the Right Hon. Leader of the Official Opposition (Mr. Turner) was right when he expressed last Friday a number of important concerns about the Meech Lake Agreement on the Constitution. For instance, our Leader asked what would happen to a national program should limitations on spending power become a reality. Medicare is one example that comes to mind. Would we have today medicare across the nation in rich and poor provinces alike if we had had in the early sixties limitations on spending power that the Government and the provincial premiers agreed upon so hastily last week?
What will happen to social programs we are now considering for implementation across Canada such as the day care policy? Will some provinces, if non-participation in national shared-cost programs becomes a reality, be saying: "No, thank you, but give us the money"? Will this money once it reaches a provincial treasury be fully used for the purpose it was originally intended? Will we have as a result provinces with low standards of day care services?
These are just a few questions that come to mind on one subject alone when wondering about the reasons why federal spending powers should be limited. Canadians want to know. They also want to be consulted.


FORESTRY
Mr. Jack Scowen (Mackenzie):: Mr. Speaker, most people envisioning Canada's prairie provinces think of vast expanses of wheat fields and herds of cattle. Some think of our black gold, the coal, oil and gas reserves of Alberta and Saskatchewan, or of the hydroelectric potential of Manitoba. Too few recognize the scope and importance of what one might call our green gold, the forest resources of these provinces.
Five pulp or paper mills, and a host of other primary product-producing manufacturing facilities, produce an array of products, including medium-density fibreboard and oriented strand board panels, laminated beams and roofing shingles. Hundreds of wood-based secondary manufacturing plants further contribute to a strong forest-based industry throughout the region.
Nearly 30,000 jobs across the Prairies can be attributed directly or indirectly to this industry. Furthermore, the value of shipments from the three prairie provinces and the Northwest Territories amounts to $1.5 billion annually.
This week marks National Forest Week in Canada. This week is an opportunity to reflect upon the important contribution of our forests to Canada. The forests of the prairie provinces hold one of the keys to the economic diversification of what is sometimes referred to as the bread basket of the nation.


MULTICULTURALISM
Mr. Ernie Epp (Thunder Bay-Nipigon):: Mr. Speaker, the Canadian Parliament adopted a policy of multiculturalism within a bilingual framework 15 years ago last fall. But this policy has never been expressed in an Act such as the Official Languages Act. Successive Ministers responsible for multiculturalism have had pathetically little money to meet the needs of Canada's ethnocultural communities. The Board of Presidents of the Canadian Ethnocultural Council expressed its concern about this and other shortcomings in meetings today with all three Parties.
In this era of the Charter of Rights and Freedoms Canada requires strong leadership to ensure full participation in Canadian society by the members of every ethnocultural community and full participation of each community as a whole. Multicultural policy needs to foster the social and cultural potential of every community and to open Canadian society to the abilities of every member of these communities.
This is a time for action. The Minister needs to do far more than propose a few amendments to the Citizenship Act.


EXTERNAL AID
Mr. Geoff Wilson (Swift Current-Maple Creek):: Mr. Speaker, the Canadian Foodgrains Bank is a philanthropic organization which accepts donations of cash and grain in Canada and distributes grain to needy countries. The organization helps people stay alive through "food for work" programs by paying people grain for working on projects such as road building, reforestation and water storage development.
Through projects such as these people are paid six to eight pounds of grain for a day's work. This not only takes care of their short-term needs; the projects ensure them a better life in the long run.
Not only should the Foodgrains Bank be commended but the farmers of western Canada should be commended as well. In 1986 alone farmers from Manitoba, Saskatchewan and
May 4, 1987

Alberta donated over $850,000 worth of grain. This, in turn, was matched on a three-to-one ratio by the Government of Canada.
The Canadian Foodgrains Bank, the farmers of western Canada and the Government of Canada should be congratulated on this achievement.


EDUCATION
Mr. Gilles Grondin (Saint-Maurice):: Mr. Speaker, the quality of our post-secondary education is worsening and becoming ever less accessible to people from underprivileged circles. The increase in tuition fees as well as in living and accommodation costs, the inadequacy of student aid programs, the massive indebtedness, and high unemployment among students are as many factors which make our system ever less accessible.
Ever more student aid is given in the form of loans rather than grants, with the result that students are getting ever deeper into debt. For many students the high cost of studies is often an excuse to quit school after the secondary level. We all agree that when tuition fees go up students from low-income families must obtain adequate financial assistance to make up for cash shortages. In addition, the rules governing the repayment of fees must be changed and the fees reduced so that more students can be accommodated.
We must also ensure that adults, native people, the handicapped and the poor have fair access to higher education. All these measures must be taken if we really want to give a fair chance to any student anxious to complete higher studies regardless of his or her status or social level.


AWARDS AND DECORATIONS
Mr. Alan Redway (York East):: Mr. Speaker, last week at Rideau Hall, 74 outstanding Canadians were presented with the Order of Canada. Among the scientists, artists, athletes, charitable workers and former provincial premiers was a 92-year-old black Canadian named Harry Gairey.
Born in Jamaica, Harry came to Canada in 1914. He worked along with Lincoln Alexander's father at one of the only jobs available to blacks in Canada until recently, as a railway porter. He helped to organize the Porters' Union, the
Universal Negro Citizenship Association and the Universal Negro Improvement Association. He was a moving force in the development of credit unions and played a significant role in changing Canada's immigration laws.
For many years he has been the official greeter, information centre, compassionate friend and battler against discrimination known to all as the "Black Godfather of Metropolitan Toronto". Last week at Rideau Hall, there was Harry taking his rightful place among the movers and shakers of our society. This is truly what Canada is all about.


Some Hon. Members:: Hear, hear!


CANADIAN HUMAN RIGHTS ACT
Svend Johannes Robinson: Mr. Speaker, today the Board of Presidents of the Canadian Ethnocultural Council is meeting in Ottawa. One of its concerns is the failure of the Conservative Government to bring forward changes promised over a year ago to the Canadian Human Rights Act to include a requirement for reasonable accommodation.
The Supreme Court of Canada decision in Bhinder was described by the head of the Canadian Human Rights Commission as devastating to those with disabilities and to ethnic and religious minorities, including Sikhs. The Commission submitted a unanimous special report to Parliament in February, 1986, calling upon the Government to require employers to accommodate differences where reasonably possible. The UN Human Rights Commission is now examining a complaint against Canada in this area.
I therefore call upon the Government, along with the Ethnocultural Council and the Human Rights Commission, to stop stalling on these important amendments to the Canadian Human Rights Act and to stop betraying its promise to Canada's disabled and ethnic and religious minorities.


AWARDS AND DECORATIONS
Mr. Lawrence I. O'Neil (Cape Breton Highlands-Canso):: Mr. Speaker, last week, Elizabeth LeFort, a Cape Breton artist, was made a member of the Order of Canada. She was born in Point Cross, Nova Scotia, in 1914 and is a descendant of a small group of Acadians who escaped from Grand-Pre, Nova Scotia, in 1755. For more than 21 years she has established and maintained an entire gallery of hand-hooked tapestries. Thousands of tourists from all over have come to see her work.

May 4, 1987
Elizabeth LeFort has been a strong proponent of Acadian culture for many decades. She adapted the famous Acadian rug-hooking into an art form and for many years maintained an entire gallery of hand-hooked tapestries of scenes prominent in North American history, thereby contributing to the preservation of the Acadian culture and heritage.
She also completed portraits of many world leaders. She completed a portrait of Pope Pius XII, and a portrait of President Eisenhower which was presented by her upon invitation to the President in the White House in 1957. She completed a portrait of Queen Elizabeth which was also personally delivered to the Queen. She completed a portrait of President John F. Kennedy which was personally presented to him in Phoenix, Arizona, in 1961, and she completed portraits of Prime Minister Diefenbaker and Prime Minister Trudeau.
She was born on an Acadian farm in Cape Breton, and as a young girl, she learned this famous art form. She continues to teach this art to future generations. All Nova Scotians are proud of this great artist and want to express their congratulations to her.


Some Hon. Members:: Hear, hear!


THE LATE RAYMOND BLAIS
Mr. Raymond Garneau (Laval-des-Rapides):: Over the weekend, Mr. Speaker, we were saddened to hear about the premature death of Mr. Raymond Blais, the long-time president of Quebec's Mouvement des caisses populaires Desjardins. In that capacity Mr. Blais played a leading role in the socio-economic development of Quebec and Canada through the Desjardins co-operative movement. Under his guidance the Desjardins movement made significant progress in the service of millions of Quebecers and Canadians who deal with the caisses populaires and other financial institutions of the Desjardins group.
In my name and on behalf of the Members of my political Party I should like to extend to Mrs. Blais and her immediate relatives our most sincere condolences on the occasion of this deep bereavement which affects both Quebec and the country as a whole.


THE CONSTITUTION
Mr. Dave Nickerson (Western Arctic):: Mr. Speaker, it was welcome news when we heard last Friday that the First Ministers had come to a tentative arrangement for Quebec's participation in the Constitution.
We cannot, however, forget that there are still thousands of Canadians living north of sixty who do not today enjoy the same political rights as their southern neighbours. The Territories must be represented at the forthcoming First Ministers' Constitutional Conference since their goals and desires of becoming equal members of the Canadian partnership are directly affected by the Section 42 amending formula.
With the resolution of the Quebec situation, it is now time to redouble our efforts to bring true provincehood to the Northwest Territories and Yukon Territory.


AGRICULTURE
Mr. Vic Althouse (Humboldt-Lake Centre):: Mr. Speaker, a lifetime of working as a prairie farmer has trained me to look realistically at hard times and difficult situations.
I watched the Government announce grain price declines last year and again this year of 18 per cent to 20 per cent each year, and I know that farm incomes will be woefully inadequate. The Government will not commit itself to further funds at this point but says that the solution to farm price problems lies in international negotiations.
Ultimately that is the solution which Canadian farmers seek, but realistically how long will such action take? About a year ago Canada raised the question of grain pricing at the OECD meeting and apparently has agreement to have the issue on the agenda of the GATT talks. It has set up and become part of the Cairns Group.
In none of these initiatives do we have any commitment by the Americans or the Europeans, the chief people involved, to take part in the talks. They are not even part of the Cairns Group.
What Canadian farmers need is a commitment like the Minister of Agriculture (Mr. Wise) gave to dairy producers to be part of a farm subsidy scheme for five years so that our producers know, as their European and American counterparts know, that the Government is behind them.
May 4, 1987


HISTORIC EVENTS
Mr. Andrew Witer (Parkdale-High Park):: Mr. Speaker, yesterday the Polish community observed the anniversary of the signing and ratification of the Polish Constitution of May 3, 1791, a day which is cherished by freedom-loving Poles throughout the world.
In Poland celebrations of the event were marked by the arrest of 200 Poles, serving as a reminder that the struggle for liberty and justice continues despite the efforts of those who would deny freedom's call.
Fundamental democratic principles, including freedom of expression and association guaranteed under the Constitution of 1791, have yet to be implemented in Poland. The official visit by our Secretary of State for External Affairs (Mr. Clark) will provide an opportunity for the Canadian Government to press Polish officials for much needed reform in the area of human rights.
As a free and democratic people, let us join with Canadians of Polish origin in commemorating and honouring the democratic principles embodied in the Constitution of 1791.


THE CONSTITUTION
Mr. Keith Penner (Cochrane-Superior):: Mr. Speaker, it is remarkable how easily and quickly the First Ministers were able to strike a new constitutional deal on expanding provincial powers. The vague and uncertain concept of Quebec as a distinct society was agreed to. Where were those provincial voices asking what does this really mean? How will this distinctiveness be exercised in practice?
Contrast that, Sir, with the Premiers' reluctance and hesitation on the issue of aboriginal self-government. Here there was precision. Here there were specifics. Nothing was vague or uncertain because the scope of the right to aboriginal self-government was to be achieved through negotiations. Yet a succession of First Ministers' Conferences, held in public, achieved next to nothing.
Contrast that, Sir, with the private tete-a-tete at Meech Lake, which will have the effect of significantly altering the very nature of Canada as we know it today. Thus, there is one approach taken in the name of provincial rights, and there is quite a different one for the recognition of aboriginal rights.



Hon. Bob Layton (Lachine):: Mr. Speaker, last Friday many Members of the House, including the Leader of the Official Opposition (Mr. Turner) and the Leader of the New Democratic Party (Mr. Broadbent), celebrated with the Prime Minister (Mr. Mulroney) his success in having all provincial premiers agree to principles for amending our Constitution and for guaranteeing for Quebec, after years of uncertainty, its rightful place in Canada.
I believe that this Accord will also be welcomed by English speaking Quebecers. The Meech Lake Accord calls for recognition of the existence across Canada of linguistic minorities. It notes that they are a fundamental characteristic of our country, and it calls for Parliament and all provincial legislatures to preserve this national characteristic.

Mr. Speaker, Canada stands prouder.

All Canadians should be celebrating.


EXTERNAL AFFAIRS
Mrs. Sheila Finestone (Mount Royal):: Mr. Speaker, today I join in celebrating Israel's 39th anniversary, a state that represents the fulfilment of an age-old dream of the Jewish people for a homeland. From the time Lester Pearson played such an important role in the formation of Israel to the present, Canadian political leaders have consistently supported Israel's existence as an independent and secure state.
I am pleased that all three of our political Parties remain committed to this basic belief. This support is vital at a time of continued external threats to Israel.
No one needs to be reminded that the situation in the Middle East remains volatile. There are deep divisions and seemingly insurmountable obstacles to lasting peace. We must not despair if people of good will continue to work toward the goal of peace.
It is a shocking statistic that of the 150 or so member states of the United Nations, only about 26 are true democracies. Two of them are Canada and Israel. Democracy, liberty and justice are the foundations for the unshakeable commitment that exists between our two countries. Hag Sameach to Israel.

May 4, 1987
Oral Questions MULTICULTURALISM


NEED TO STRENGTHEN LEGISLATIVE BASE
Mr. Sergio Marchi (York West):: Mr. Speaker, today's meeting with the three political Parties by the Canadian Ethnocultural Council was important from a substantive viewpoint but also from a symbolic one in terms of heightening the awareness and importance of our national multiculturalism policy here in Parliament.
There are many challenges facing the national multiculturalism policy but three stand out. First the need to strengthen the legislative base and the departmental structuring of the Department through a multiculturalism map that was introduced by the former Government and administration, which died on the Order Paper. The present Government has failed to reintroduce it for this Parliament's consideration.
Second, the challenge is for us to define for our younger generation Canadians, the second, third, and fourth generations of various ethnocultural backgrounds, their definition of multiculturalism which will be different from their parents and grandparents' because it must address the social, the economic and the other fabrics that make this country what it is.
Third, we need to keep an open and progressive policy on immigration and refugees. If we can do this as a country, we will be sending a strong signal that Canada is open and has only one class of citizenship, namely, first class citizenship for one and all.



ORAL QUESTION PERIOD

[Stage Direction]
[ Translation]

Right Hon. John N. Turner (Leader of the Opposition):: Mr. Speaker, my question is directed to the Prime Minister.
We on this side of the House are entirely in favour of Quebec becoming a signatory to the Canadian Constitution. However, the Prime Minister knows that setting up national programs like health insurance was possible only because the federal Government had fundamental spending powers.
My question is therefore: Under the new accord concluded by the Prime Minister, would it be possible to have a national day care program guaranteeing equal treatment for all children in both have and have-not provinces?


Right Hon. Brian Mulroney (Prime Minister):: Mr. Speaker, the answer is yes, absolutely.


SENATE REFORM ISSUE
John Napier Turner: Mr. Speaker, we hope we can take some encouragement from that response, Mr. Speaker.
The Prime Minister knows that now, after the Accord which was signed at Meech Lake, the unanimous consent of the provinces and Parliament will be necessary for any change to the Senate. In fact, I would suggest to him that Senate reform has been placed in a constitutional strait-jacket.
Does the Prime Minister agree that he has made an elected Senate, such as requested by some of his provincial homo-logues, particularly Messrs. Getty and Vander Zalm, virtually impossible?


Martin Brian Mulroney: Not unless you want to make the assumption, Mr. Speaker, that the First Ministers are incapable of coming together in good faith to resolve matters of this kind. Premier Getty, the strongest proponent of a Triple-E Senate, felt this was very much in keeping with his desires and not something that would hobble his intentions. It was supported by all other First Ministers.
I suppose the question concerning unanimity might very well be the following. By way of illustration, if you are going to create a new province or series of provinces, is that not important enough to warrant the unanimous approval of all other provinces? Can anyone conceive of new provinces being created without the approval of the Province of Ontario or, in my judgment, the Province of Prince Edward Island? Because it changes the structure of federalism and the kind of country we have, I think it is not unreasonable to ask all existing provinces for their approval. This is very much consistent with everything I set out on behalf of my Party on August 6 in Sept-Iles regarding renewed Canadian federalism.


John Napier Turner: The Prime Minister is not historically correct when it comes to Newfoundland in 1949. Under the present constitutional provisions, seven out of the 10 provinces with 50 per cent of the population and the Parliament of Canada could approve any change in the Senate.


REQUEST THAT GOVERNMENT SUBMIT PROPOSED CONSTITUTIONAL AGREEMENT TO HOUSE OF COMMONS
John Napier Turner: Will the Prime Minister make a commitment to submit the tentative constitutional accord reached at Lake Meech to the House of Commons before he calls a meeting with his provincial conterparts to sign the definitive text? And more specifically, does he intend to schedule parliamentary hearings immediately so that we can remove all obstacles to an accord that we are most anxious to see ratified?
May 4, 1987


Martin Brian Mulroney: Mr. Speaker, are we going to submit the agreement in principle to the House? We certainly are, and I said as much to the Hon. Member for Saint-Denis when he asked the same question last Friday.


Mr. Prud'homme:: Before the final text is put before the House.


Martin Brian Mulroney: As soon as possible . . . absolutely.
I said that too would be done, in answer to a question from the Hon. Member for Saint-Denis. Within the next few days, the Deputy Prime Minister and Government House Leader are to meet with his fellow House Leaders in order to decide when we can first discuss agreement in principle here in the House. I hope all parliamentarians will come to the conclusion that Quebec's agreement with the constitutional accord is an important step in Canada's political evolution, and 1 hope the proposal will meet with the unanimous approval of all Members of Parliament.


CREATION OF NEW PROVINCES-EFFECT OF MEECH LAKE AGREEMENT
B. Keith Penner: Mr. Speaker, my question is directed to the Right Hon. Prime Minister and also concerns the agreement reached at the Meech Lake meeting, a meeting, incidentally, to which the elected leaders of the Governments of the Northwest Territories and Yukon were not invited.
The agreement makes the rule of unanimity necessary for the creation of new provinces in Canada. This has outraged Northerners in both the Yukon and Northwest Territories who see this as a further restriction of their political aspirations. Other provinces such as Saskatchewan, Alberta or Newfoundland were not so created. Is the Prime Minister aware that what he has done is to give veto power over the North to every province in Canada? Does he believe that is right? Does he think that is fair?


Martin Brian Mulroney: Mr. Speaker, is it the position of the Liberal Opposition that new provinces could be created in this federal system without the approval of, for example, the Province of Ontario or the Province of Quebec? This would involve profound structural changes to the Federation. I would like to hear from the Hon. Member whether that is the position of the Liberal Party. If it is, it represents a remarkable change of policy.


REQUEST FOR EXEMPTION FROM MEECH LAKE AGREEMENT
B. Keith Penner: Mr. Speaker, the view of northerners who met on this subject this weekend is that they should be treated the way other provinces were treated. Will the Prime Minister agree to discuss this matter further with the Premiers with a view to exempting the
Oral Questions
creation of new provinces from the Meech Lake amending formula before this agreement is ratified into law?


Martin Brian Mulroney: Mr. Speaker, we have a great deal of understanding of the predicament of our northern Territories and are working very closely with them. We hope that in the fullness of time all Governments in Canada shall attend First Ministers' Conferences on the basis of equality.
My friend is talking about arrangements with regard to possible future provinces. I sympathize with that and assure him that the Government is sensitive to that.
However, the Meech Lake Agreement was not about the future of possible provinces. It was about the absence of one of the founding provinces of Canada, the absence from a constitutional package that reflected the absence, not only of Quebec, but of a very important part of French-speaking Canada. It was vital to the binding together of the nation that, first and foremost on a priority basis, Quebec be brought back into the constitutional family in a way which would find favour with the other Premiers in all regions of the country.
Once that is completed, we hope with the endorsation of the Official Opposition, we can move on, as we have provided for, to tackle as a united country other constitutional problems such as northern development and northern Territories, which we would do with pleasure.


Some Hon. Members:: Hear, hear!
[ Translation]


CONSTITUTIONAL ACCORD-OBLIGATION TO HOLD ANNUAL CONFERENCES ON ABORIGINAL RIGHTS-GOVERNMENT POSITION
Hon. Edward Broadbent (Oshawa):: Mr. Speaker, I have a few questions concerning the constitutional accord. The Prime Minister and the provincial premiers have endorsed the suggestion that economic conferences be held annually pursuant to the constitutional agreement, but they did not include aboriginal rights. My question to the Prime Minister is very simple. Would the Prime Minister agree to include in this accord the commitment to hold annual conferences to discuss aboriginal rights?


Martin Brian Mulroney: Mr. Speaker, I thought it was regrettable that the First Ministers, myself included, missed the opportunity to settle the native issue during the federal-provincial conference held barely a few weeks ago. As far as I am concerned, notwithstanding the fact that this series of constitutional initiatives has come to a close, it does not end our responsibility to seek a fair and equitable settlement to the problem of the aboriginal people in Canada. At the appropriate time I intend to review the process with the Premiers in the hope that, as it should be, we might find a formula which will do justice to the native people of Canada.

May 4, 1987
Oral Questions


NATIONAL PROGRAMS-WORDING OF AGREEMENT
John Edward Broadbent: Mr. Speaker, at the last conference which took place on this subject, the native leaders expressed their apprehension that once the Province of Quebec was included, as we all desire it to be, they would be left out in the cold. They certainly have been left out in terms of requirements for future meetings. I think that is very regrettable indeed.
I would like to ask the Prime Minister a supplementary question on the matter of spending authority and areas within the constitutional jurisdictional authority of the provinces. As the Prime Minister knows, the wording in the proposed agreement says that a province will be permitted to opt out of a new national program if its "own initiative or program is compatible with national objectives". This could have the constructive effect of institutionalizing what was done in Canada with the Quebec Pension Plan and the Canada Pension Plan. If so, it would be very good indeed. However, since another interpretation could be put on the wording that has been proposed to achieve this goal, is the Government of Canada open to specific amendments on the wording in this as well as other clauses?


Martin Brian Mulroney: Mr. Speaker, we have an agreement in principle which, as 1 have already indicated, in no way prevents the establishment of the kinds of national programs that are desired by my hon. friend and myself.
We are talking about future shared-cost programs in areas of exclusive provincial jurisdiction where the compensation takes place provided that the particular province itself erects a program that meets the national objectives that are set out originally. This is a fairly clear-cut statement of purpose that is consistent with strong federal presence and federal leadership at all times, but it is respectful of the rights of the provinces to have slight variations respecting their own requirements.
In responding to the question, Mr. Speaker, may I just take up a comment made by my hon. friend in regard to the aboriginal peoples having been left out in the cold because the Province of Quebec was included. I know the commitment of my hon. friend-


John Edward Broadbent: I didn't say that. I didn't say because Quebec was included.


Martin Brian Mulroney: That is what I took down. If it is in error, I apologize.
The point I want to make, something with which I do not think my hon. friend would disagree, is that the inclusion of the Province of Quebec is a significant guarantee of progress for the aboriginal peoples in terms of seeking justice for them at the constitutional table. The record of the Province of Quebec in regard to aboriginal rights is pretty exemplary visa-vis Canada. I believe that the presence of the Province of Quebec as a full partner around the First Ministers' Conference table called upon to deal with aboriginal questions will be a salutary and positive one and the aboriginal peoples should find encouragement in the progress we have made.


John Edward Broadbent: I entirely agree that the record of the Province of Quebec makes it very desirable that Quebec be there for this occasion. It would have been equally desirable to have institutionalized a requirement of an annual meeting until the aboriginal rights issue has been adequately dealt with.


POSSIBLE CREATION OF NEW PROVINCES
John Edward Broadbent: Mr. Speaker, the Prime Minister did not indicate clearly the Government's attitude on its acceptance of proposed amendments. My supplementary question to the Prime Minister concerns the Yukon and Northwest Territories. It did not require unanimity when other provinces came into Confederation in the past, and the present amending formula does not require unanimity.
Many people in the North are planning to be able to come in one day on terms that are comparable to other provinces joining Confederation. Therefore, will the Prime Minister undertake to bring in an amendment to the clause pertinent to federal institutions that will at least leave the present amending formula in place, which is desirable to Canadians living in the Northwest Territories and Yukon?


Martin Brian Mulroney: Mr. Speaker, if my hon. friend consults the communique in regard to the principles agreed upon, I think he will see that there is an appropriate forum where these matters, particularly the one he just raised, can be properly addressed by First Ministers. It is proposed that we meet on a regular basis to deal with constitutional issues. Those issues pointed out were Senate reform, the fishery, and other matters that were felt appropriate, I believe, in point three.
It is not at all inconceivable that the matter raised by my hon. friend could well be considered at that point in time. It is important that this agenda be set out after all of the partners are back in the fold and that there is a unified constitutional document bringing the country together. I think we could then turn our minds to other matters in a helpful way. I thank my hon. friend for the suggestion.


CONSTITUTIONAL ACCORD-IMPACT ON DAY CARE PROGRAM
Mrs. Lucie Pepin (Outremont):: Mr. Speaker, my question is directed to the Prime Minister.
Like most of the Members of this House, I am delighted to see Quebec become part of our great Canadian family again, and I say three cheers for the Prime Minister! However, Mr. Speaker, you will understand that some of us are concerned about certain national programs.
May 4, 1987

Perhaps the Prime Minister could inform the House what impact this agreement will have on a day care program, for instance. Is the Prime Minister satisfied that a program of this kind is still feasible?


Martin Brian Mulroney: Mr. Speaker, with respect to a national day care program, which comes under shared cost schemes, the federal Government intends to proceed exactly as it is proceeding today.
As for what the Minister for National Health and Welfare is doing, he is-we cannot impose this kind of program unilaterally through the Parliament of Canada.
The Minister of National Health and Welfare is at this very moment consulting with the provinces with a view to setting up an adequate national program with provincial participation.
Under a new formula, any province that should decide to opt out will receive compensation provided its program is compatible with the national objectives set forth by this House. So I think we can say that national programs in line with our objectives will always be feasible and indeed desirable.


QUALITY OF CHILD CARE SERVICES-GOVERNMENT POSITION
Lucie Pépin: Mr. Speaker, I don't doubt the Prime Minister when he says the provinces will have an "adequate" program, but I think we need something better than that.
Could the Prime Minister inform the House whether he has received assurances from the provinces that such a program is feasible, and, as the Prime Minister said himself, if a province should decide to opt out, what will happen to these quality services, what will happen to the services for our children? Could the Prime Minister give the House the assurance that he has received assurances from the provinces that quality services will be available throughout Canada?


Martin Brian Mulroney: Mr. Speaker, the accord says this:
That Canada must provide reasonable compensation to any province that does not participate in a future national shared-cost program in an area of exclusive provincial jurisdiction if that province undertakes its own initiative or program compatible with national objectives.
To receive compensation, the province must have a program that is entirely compatible with national objectives, otherwise, opting out will mean it will have to forego such compensation.


REQUEST THAT TERRITORIAL LEADERS ATTEND FUTURE MEETINGS
Mr. Rod Murphy (Churchill):: Mr. Speaker, my question is directed to the Prime Minister. In response to a question asked by the Leader of the New Democratic Party the Prime Minister left the impression with the House that he would be
Oral Questions
open to future meetings of First Ministers where the future of the Yukon and Northwest Territories would be examined again. Will the Prime Minister assure the House and the people of those two northern Territories that their elected representatives will be at any meeting which affects their future in terms of becoming provinces?


Martin Brian Mulroney: Mr. Speaker, if the Hon. Member's question is about any meeting that involves the rights of the Yukon and Northwest Territories in regard to becoming provinces, I think the answer is clearly in the affirmative. We would not want to have any meeting that involved a change in nationhood that did not involve those people who are affected. I think the answer would be in the affirmative.


REQUEST THAT TERRITORIAL LEADERS ATTEND NEXT CONFERENCE
Rodney Edward Murphy: Mr. Speaker, the people of the Northwest Territories and Yukon feel that they were affected by a decision that was made last week. They were not at that meeting. We are specifically asking that those elected representatives be at the next constitutional meeting and that that topic be on the agenda.


Martin Brian Mulroney: Mr. Speaker, how could the rights of someone be affected-I presume by the tone of the question, in some way negatively, pejoratively-


An Hon. Member:: It is a veto formula.


Martin Brian Mulroney: How could their rights be affected when the object of the exercise on behalf of the Parliament of Canada is to bring together one of the founding elements of the country both in regard to provinces and the founding linguistic cultures of Canada? It is only on this basis, this having been done, that we can then proceed to deal with the questions of other provinces.


John Edward Broadbent: Well, the next meeting.


Martin Brian Mulroney: My friend, the Hon. Leader of the New Democratic Party, says the next meeting-a meeting which would deal with the rights of the Yukon or the Northwest Territories with regard to adhesion as provinces, obviously. However, I think my hon. friends would agree that it is not unreasonable for the federal Government and the provinces to deal with the absence of a founding partner, to bring the country together, to unify the country as strongly as we possible can, and then a unified Canada can turn its attention to working with the Yukon and Northwest Territories.

May 4, 1987
Oral Questions HOUSE OF COMMONS


PRESENCE IN GALLERY OF PARLIAMENTARY DELEGATION FROM PAKISTAN
Mr. Speaker:: May I direct Hon. Members' attention to the presence in the gallery of members of a Parliamentary Delegation from Pakistan led by Sardar Wazir Ahmad Jogezai, Deputy Speaker of the National Assembly of Pakistan.


Some Hon. Members:: Hear, hear!


PRESENCE IN GALLERY OF ICELANDIC AMBASSADOR TO CANADA
Mr. Speaker:: I also wish to draw to the attention of Members the presence in the gallery of His Excellency Ingvi Ingvarrson, Icelandic Ambassador to Canada.


Some Hon. Members:: Hear, hear!


PRESENCE IN GALLERY OF PRESIDENT OF CANADIAN ETHNOCULTURAL COUNCIL
Mr. Speaker:: I wish to bring to Members' attention as well the presence in the gallery of Mr. George Corn, President of the Canadian Ethnocultural Council.


Some Hon. Members:: Hear, hear!


THE CONSTITUTION
Hon. William Rompkey (Grand Falls-White Bay- Labrador):: Mr. Speaker, my question is directed to the Prime Minister. The Government is setting up a national conference on post-secondary education recognizing, quite rightly, that it is a serious national problem which requires a national solution. The Meech Lake Accord allows provinces to opt out of federal programs if they have a program compatible with national objectives.
Will the Prime Minister tell us who determines national objectives and who determines whether provincial programs meet national objectives? And if they do not meet national objectives, how does the Government of Canada ensure equal access to funding for post-secondary education to all Canadians?


Martin Brian Mulroney: First, Mr. Speaker, let me say that compensation for opting out in matters of education and culture is not new. This did not come at Meech Lake. This was available under previous arrangements.
With regard to who would set the national objectives, the Parliament of Canada.


REQUEST THAT FIRST MINISTERS DISCUSS YOUTH PROBLEMS
Bill Rompkey: Mr. Speaker, I thank the Prime Minister for that answer. The Prime Minister has agreed to call the First Ministers together in the future for discussion on a series of topics. Will he give the assurance today that as soon as possible he will call the First Ministers together for a discussion of the serious problems of youth in Canada, including the difficulty they have of getting an education and decent jobs?


Martin Brian Mulroney: Mr. Speaker, there is a national forum which has been devised and organized by the Secretary of State and the Minister of State for Youth in this regard which clearly involves the participation and encouragement of the First Ministers. I have been working on it. I would be happy to discuss it, as we will, at the First Ministers' Conference on the economy which is scheduled for Toronto, having been held in Vancouver last year. I will be happy to raise that matter on behalf of my hon. friend.


WORDING OF MEECH LAKE AGREEMENT
Lorne Edmund Nystrom: My question is directed to the Right Hon. Prime Minister on the Constitution as well.

We are all pleased that Quebec is now a member of the Canadian family and I congratulate the Prime Minister.

I want to ask a question about the Prime Minister's attitude toward constructive changes in the wording, or any amendments to the wording in principle. I realize the agreement is "wording in principle". Is the Prime Minister open to any constructive amendments to the wording of this agreement? There might be some places where we want some clarification so we can indeed have some national programs as they pertain, for example, to the spending power. Is the Prime Minister open to some constructive changes in the wording to clarify some of the principle agreements the provinces came to with the Prime Minister? Is he open to that possibility?


Martin Brian Mulroney: Mr. Speaker, this was a document agreed upon among First Ministers. We, be it the Premier of British Columbia, the Premier of Manitoba, the Premier of Ontario or myself, felt it reflected our understanding. No one contended it was perfect. I have already acknowledged with pleasure that there will be debate in this House and elsewhere. If my hon. friend has some points to raise, I am sure he will do it during that debate.
With regard to the spending power, I can give my hon. friend the assurance that the right, obligation, and authority of the Parliament of Canada to conduct national affairs with respect to spending are uninhibited and unfettered. At all times we can act in the national interest.
May 4, 1987


POSSIBLE CREATION OF NEW PROVINCES
Lorne Edmund Nystrom: Just to clarify the answer, is the Prime Minister in other words saying there is to be no change in wording? Is his mind fairly closed on this? Can he clarify that for us? At the same time, I wonder, in terms of the creation of new provinces, if the Prime Minister himself would be open to going back to the existing amending formula, which is two-thirds of the provinces representing half the Canadian population, and the Parliament of Canada, for the creation of new provinces. Can the Prime Minister answer that double-barrelled question?


Martin Brian Mulroney: Mr. Speaker, with regard to the formula which was agreed upon by the First Ministers, including the First Ministers who were very strong proponents of the notion of Senate reform, quite frankly it was felt by provincial leaders who expressed themselves very forcefully and very well, such as Premier Vander Zalm and Premier Getty, who have a special interest in this regard, that that kind of fundamental change, in their judgment, should really only come about once all provinces are persuaded of its value and merit.
I thought that was an approach of great leadership by those Premiers, and all the others who spoke to it.
In regard to changes in wording, I would have to ask my hon. friend what he has in mind and what they would be? All the Premiers, including Premier Pawley, Premier Peterson and others, felt, and I think said publicly, that this reflected, in their judgment, an excellent commitment to national unity and, as best we could, an improvement on a strengthened federation.
If my friend has some ideas, I will be happy to listen to them but, by and large, this is what we are going to bring forward into the House of Commons and this is what will be ratified by provincial legislatures.


EDUCATION
Mr. Roland de Corneille (Eglinton-Lawrence):: Mr. Speaker, my question is directed to the Secretary of State. In view of the fact that post-secondary education students now have to repay their student loans six short months after they leave school, which is tremendous discouragement in those regions of our country where there is very high unemployment and it is very hard to land a job, will the Minister agree to change the rules immediately so that students will not have to start to repay their loans until they can first land a job?


Hon. David Crombie (Secretary of State of Canada):: Mr. Speaker, let me say to the Hon. Member that the matter he raises is a very important and significant matter, particularly for those who are in debt. I raised that matter with the
Oral Questions
provincial Ministers who, of course, have some responsibility with respect to the matter, generally. We established a committee, from which we will hear, and we will take some action following the meeting in September.


REPAYMENT OF STUDENT LOANS-REQUEST FOR CLARIFICATION
Roland de Corneille: If the
Minister does not want at this time to make any commitment and help students in this way, is he not at least prepared to announce right now that the reimbursement of loans by students will be determined on the direct basis of their income?


David Edward Crombie: Mr. Speaker, as I indicated, the matter is, of course, important and needs to be addressed properly in joint discussion with the provinces. If the matter is to be dealt with properly then it will require the proper type of machinery. It took a long time for the federal Government to establish such machinery. That machinery will be put in place, and I think we should respect it. When it is completed we will have in place, finally, a regime which will be of benefit to students which will not bring them early debt about which the Hon. Member is concerned.
3ft *	*


CITIZENSHIP COURTS
Abram Ernest Epp: Mr. Speaker, my question is for the Secretary of State. Undoubtedly, the Minister is aware of his Government's failure to appoint citizenship judges last fall when appointees of the previous Government reached the end of their terms. Is the Minister aware that thousands of people in such cities as Calgary await processing of their citizenship applications, meanwhile having lost the right to travel using the passports of their countries of origin?


David Edward Crombie: Mr. Speaker, yes, I am aware of the problem. We are trying to address it with existing resources.


APPOINTMENT OF JUDGES
Abram Ernest Epp: Mr. Speaker, the existing resources are stretched very thin. How soon does the Minister expect to appoint enough citizenship judges to ensure that people will not be kept waiting months to receive Canadian citizenship during this fortieth anniversary of the Citizenship Act?

May 4, 1987
Oral Questions


David Edward Crombie: Mr. Speaker, the report from Dr. Sutherland is now available. In fact, I received it on Friday afternoon. I hope to make appointments by mid-May.


VISIBLE MINORITIES
Sergio Marchi: Mr. Speaker, my question is for the Prime Minister. It has been almost three years since the Prime Minister promised that an honourable settlement to the issue of Japanese-Canadian redress would be an urgent consideration of his Government. However, after three Conservative Ministers responsible for multiculturalism who dealt with the issue, not only has the substance not been articulated but there is not even in place a formal process for talks to take shape so that an agreement can be reached. This has caused a growing sense of frustration in the community and in the country.
Therefore, when will the Government initiate a full and official process of talks with the NAJC, not an individual meeting here or there but a series of continuous and comprehensive discussions so that a just and honourable settlement may have the opportunity of crystallizing during the life of this Parliament?


David Edward Crombie: Mr. Speaker, as 1 am sure the Hon. Member is aware, since he was in attendance at the meeting of the standing committee at which I explained this, I began a process of discussion and consultation with members of the Japanese-Canadian community both individually and collectively over a number of weeks to ensure that we would approach the situation properly. Following that process of some three or four weeks ago I sent a letter to the President of the National Association of Japanese-Canadians outlining a proposal from the Government. The National Association of Japanese-Canadians has had the proposal and is considering it with its community. We have in train a meeting over the next 10 days.


GOVERNMENT PROPOSAL
Sergio Marchi: Mr. Speaker, I thank the Minister for his response. Can the Minister clarify for the House whether this proposal considers a possible agreement with the Government or whether it addresses the process that will take place during the next few months to arrive at a solution? Since he took over the responsibilities of Minister responsible for multiculturalism, can the Minister inform the House if the Cabinet discussed and considered possible action on the redress issue? Is this proposal a cabinet proposal or is it one from the Minister responsible for multiculturalism?


David Edward Crombie: Mr. Speaker, with respect to the letter which I sent on behalf of the Government, it contains aspects regarding the elements of an arrangement or an agreement, as well as elements with respect to the process. I might say, by the way, that both the community and I have agreed that we would respect one another's confidence in order to allow the community to carry out its own discussions. Thus I do not want to go any further than saying what I have already said.
Following the meeting that we now have in train I expect I will have more to say publicly.


AGRICULTURE
Mr. Stan J. Hovdebo (Prince Albert):: Mr. Speaker, my question is for the Right Hon. Prime Minister regarding his visit to western Canada this week. In light of the current crisis facing western agriculture about which the Prime Minister is well aware, a crisis caused by very low commodity prices and very high debt load, has the Prime Minister sought, or will he be seeking, a meeting with western farm leaders to discuss his Government's plans with respect to how to resolve the farm crisis when he is in the west this week?


Martin Brian Mulroney: Mr. Speaker, 1 had the honour of spending a great deal of time with farm leaders in western Canada over the last year. I think that I am the Prime Minister, if I may so, who has met most often with leaders of the agricultural community. I say that with pleasure because one comes away from those meetings with a much deeper understanding of the problems.
This trip to western Canada is no different. I will be meeting with them again. We will be working together toward providing solutions for the serious problems confronting agriculture in western Canada.


Some Hon. Members:: Hear, hear!


REQUEST THAT PRIME MINISTER HOLD FORMAL MEETING
Stanley J. Hovdebo: Mr. Speaker, in light of the Prime Minister's commitments during the emergency debate will he give us some assurance that he will meet formally with farm leaders in western Canada and get the benefit of their counsel and advice on how to deal with farm problems during this next week? I am talking about a serious, formal meeting with farm leaders in western Canada.


Martin Brian Mulroney: Mr. Speaker, I have met with representatives from all areas of agricultural life in western Canada in a formalized, structured way, and in an informal way. I will continue to do so.
May 4, 1987

Right now the Minister of State for the Canadian Wheat Board is dealing with the sugar-beet problem in western Canada. We dealt with the transportation problem which will be helpful to western farmers. I look forward to an occasion to meet again with western farmers to devise-


Stanley J. Hovdebo: Then the answer is no? You are not going to meet with them this week.


Martin Brian Mulroney: No, the answer is yes.


NUCLEAR ARMAMENTS
Hon. Lloyd Axworthy (Winnipeg-Fort Garry):: Mr. Speaker, my question is for the Prime Minister who probably knows that at the end of the month the International Physicians for the Prevention of Nuclear War, a group that won the Nobel Peace Prize in 1985, will be holding its seventh world congress. It has paid the country the honour of inviting our Ambassador to the United Nations, Mr. Stephen Lewis, to address that congress. Unfortunately, the Secretary of State for External Affairs rejected the invitation saying that Mr. Lewis' attendance would be considered inappropriate.
Can the Prime Minister tell us why the Canadian Government considers it inappropriate for Ambassador Lewis to attend a prestigious international congress dealing with the crucial issue of nuclear arms control?


Martin Brian Mulroney: Mr. Speaker, last night I spoke with Ambassador Lewis in New York. It was a lengthy conversation. He did not raise this issue with me. However, I would be happy to chat with him again. A far as I am concerned, there was nothing untoward of any kind. We are very active in promoting disarmament. As I said, the Ambassador did not raise it with me in a lengthy conversation last evening, but I will call him again.


REQUEST THAT INVITATION BE ACCEPTED
Lloyd Axworthy: Mr. Speaker, I am encouraged by the offer of the Prime Minister to call Ambassador Lewis again. In his call is the Prime Minister prepared to rescind the decision taken by the Secretary of State for External Affairs to reject Mr. Lewis' attendance and to say to the Ambassador that Canada would be proud and pleased to have him speak on behalf of Canada at one of the most important international conferences on nuclear arms? Is the Prime Minister prepared to reissue the invitation to Ambassador Lewis?


Martin Brian Mulroney: Mr. Speaker, I am not familiar with all of the details. I think my friend can be satisfied that if there was a decision by the Secretary of State for External Affairs, and I am not aware
Oral Questions
that there was, and given the record of the Secretary of State for External Affairs in this area, it would have been extremely well founded. No one has been a stronger and more vigorous fighter for disarmament than the Secretary of State for External Affairs.


Some Hon. Members:: Hear, hear!


Martin Brian Mulroney: I am not acquainted with all of the details raised by my hon. friend. I will be happy to look into the matter and report back to the House.


CULTURAL AFFAIRS
Ms. Lynn McDonald (Broadview-Greenwood):: Mr. Speaker, my question is directed to the Minister of Communications which has just released a White Paper on cultural industries. Why did she merely analyse the problems existing in those industries and restate the analysis already made by groups of artists and by the NDP instead of suggesting concrete steps? What is she going to do to make that industry more accessible to Canadians? What concrete measures is she proposing?


Hon. Flora MacDonald (Minister of Communications):: Mr. Speaker, this document represents a positive effort to appraise present conditions of our cultural industries and the problems they are facing. Following that assessment, the Government has already taken important measures to strengthen those cultural industries and I have a list of our actions. If the Hon. Member so wishes, I could pass on that list to her.


MINISTER'S POSITION
Lynn McDonald: Mr. Speaker, my supplementary question on this report is directed to the specific section where the Minister shows how European countries, even large European countries, have much stronger measures to protect their cultural industries against foreign domination. What will the Minister do for Canada? Is this simply an academic exercise or is she really considering tough new measures designed to give Canadians better control over their own cultural industries?


Flora Isabel MacDonald: Mr. Speaker, as I said, that report was an evaluation of the cultural industries and, in the wake of it, we have already taken a number of measures. I would hope that we would have the support of the Hon. Member in this regard.

May 4, 1987
Oral Questions
For instance, we put $165 million into the development of the Canadian feature film industry. We put $25 million into the development of the Canadian sound recording industry. We put $3 million into the public lending rights program and funds were distributed to some 4,500 authors who had been denied this recognition previously. We will be introducing new copyright legislation later this month and, as well, we are preparing film and video distribution legislation to be introduced shortly. I would hope that the Hon. Member could see her way clear to supporting these initiatives.


Mr. Speaker:: I would like to advise the House that there will be a question from the Hon. Member for Trinity followed by the usual supplementary question, then there will be two government questions and that will end Question Period.


EXTERNAL AFFAIRS
Aideen Nicholson: Mr. Speaker, my question is for the Acting Minister of External Affairs and concerns the construction of the new Canadian Embassy in Washington. Since December, Canadian and American unions have been telling the Government that one subcontractor on this project is paying low wages and doing shoddy work that may endanger the health and safety of future occupants of the building. Will the Government arrange for an independent investigation of these serious allegations?


Hon. Don Mazankowski (Deputy Prime Minister and President of the Privy Council):: Mr. Speaker, in the absence of the Minister, 1 will take the question as notice.


REQUEST FOR EARLY ACTION
Aideen Nicholson: Mr. Speaker, I thank the Deputy Prime Minister for that answer. Will he also impress upon his colleague the need for a prompt and thorough response since, apart from the health and safety aspect of it, Canada's reputation for respecting labour standards is suffering and there have been threats of economic retaliation?


Hon. Pierre Cadieux (Minister of Labour):: Mr. Speaker, 1 am advised that Canada has abided by all existing legislation in the United States concerning the construction of the said embasssy. As for suggestions that the work was botched, meetings were held and indeed all the work has met the standards.


NATIONAL PAROLE BOARD
Alan Redway: Mr. Speaker, I have a question for the Solicitor General. According to a Gallup poll that was released last week, 62 per cent of Canadians believe that our parole system is just too lenient. Would the Minister not agree that many Canadians who are presently calling for a return of the death penalty would not be doing so if the parole system were tightened up? Will the Minister commit himself today to making changes that would tighten up the Canadian parole system?


Hon. James Kelleher (Solicitor General of Canada):: Mr. Speaker, I thank the Hon. Member for the question. I became aware of this problem long before the poll appeared in the paper. I have had a number of discussions with the chairman of the National Parole Board. I have instituted new and improved criteria for the selection of members, new and improved and continuing education of board members, and better communication with the public.
1 can assure the Hon. Member and the House that we are developing tighter policy guidelines so that more consistent decisions will be made by the board members. I want to assure the Hon. Member as well that the protection of the Canadian public is foremost in our minds when rendering our decisions.


SCIENCE AND TECHNOLOGY
Robert E.J. Layton: Mr. Speaker, my question is for the Minister of State for Science and Technology. Last Friday, the Government officially opened the Biotechnology Research Institute in Montreal. This was a major event in our city because it reinforced Montreal's position and reputation as a centre of excellence in this rapidly developing field of science. Is there any evidence that the Minister's new initiatives are reversing Canada's brain drain?


Hon. Frank Oberle (Minister of State for Science and Technology):: 

GOVERNMENT ORDERS


[Stage Direction]
The House resumed consideration of the motion of Mr. Hockin that Bill C-42, an Act respecting financial institutions and the deposit insurance system, be read the second time, and by unanimous consent, referred to the Standing Committee on Finance and Economic Affairs.
Jean-Robert Gauthier: Mr. Speaker, the debate this afternoon has to do with Bill C-42 concerning financial institutions and, more particularly, the deposit insurance system.
Mr. Speaker, this is not the invention of the wheel nor the redevelopment of the nicest mouse trap, it is a long-awaited measure which I should imagine has been the subject of negotiations between the Government and the financial institutions for the past two years. It is one of a series of three Bills, we know that. The purpose of the first one-now under consideration, Bill C-42-is to merge financial institutions, those which are responsible for monitoring, the supervisory agencies for these institutions, namely the Office of the Inspector General of Banks and the Department of Insurance.
The powers of the new monitoring organization, to be called the Office of the Superintendent of Financial Institutions, and those of the Canada Deposit Insurance Corporation will be strengthened. On that point we agree, Mr. Speaker.
Finally, the CDIC-Canada Deposit Insurance Corporation- will be allowed to raise its premium rates and authorized to borrow more from the Consolidated Revenue Fund.
The second Bill to follow, Mr. Speaker, is made up of two Bills that had already been introduced in this House and perhaps will be consolidated. They will give regulatory bodies the authority to issue cease and desist orders, and the Minister will have increased authority, the power to approve the takeover of major interests in financial institutions.
Finally, the third Bill-the third aspect of the matter-that should be tabled before summer, will have to deal with the powers of various types of institutions, the ownership system and the regulatory framework.
So, Mr. Speaker, we now have before us Bill C-42, an Act respecting financial institutions, and I would like to summarize for the House the impact of that legislation and put it into perspective.
Concerning regulatory bodies, Mr. Speaker, Bill C-42 proposes to amalgamate the Office of the Inspector General of Banks which, as we know, supervises chartered banks, and the Department of Insurance which supervises federally chartered loans and trust companies and insurance companies.
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Those bodies are amalgamated into a single one called the Office of the Superintendent of Financial Institutions, the OSFI, and we support that move.
The CIDC, the Canada Deposit Insurance Corporation, will remain independent, but closer coordination will be instituted between all regulatory bodies through the establishment of a new co-ordination committee.
Mr. Speaker, God knows that this House concerned itself with the problems of financial institutions for the past two and half years, since this Government came to power because, should I say in a sudden and dramatic way, major banking institutions were forced either to shut down, join others or even be taken over in order to survive, and in each or almost each of those cases the Canada Deposit Insurance Corporation had to insure the costs either through payments to depositors or the advance of funds in order to secure or encourage foreign institutions-and I am thinking for instance of the Hongkong Bank in the matter of the Bank of British Columbia-to buy those institutions facing financial difficulty. As we know, Mr. Speaker, the Canada Deposit Insurance Corporation is an entity that insures loans by Canadians up to $60,000, and in many cases it is absolutely essential that we go on strengthening if not increasing the guarantee, in order that Canadian depositors enjoy greater security and the corporation may guarantee the deposits of Canadians, something we support.
Under Bill C-42, the new superintendent will have increased authority. It will become much easier for him to take the control of a financial institution facing difficulty. Such control in all cases will be for a period of seven days, or more if needed. Further, the superintendent may make decisions on behalf of the institution. Until now, as we know, he could not veto management decisions.
In the future, concerning the Canada Deposit Insurance Corporation, Bill C-42 proposes to increase from 1/10 of 1 per cent to 1/6 of 1 per cent the ceiling of rates for deposit insurance premiums paid by member institutions. Otherwise, Mr. Speaker, it used to be 1/30 of 1 per cent. We recently changed that to 1/10, and now we are going to increase it to 1/6 of 1 per cent. Currently, premiums are based on the 1/10 rate, as I said, and the Minister of Finance (Mr. Wilson) already announced that rate will be maintained for at least another year.
The CDIC's rates have already been increased in Bill C-86 which was passed in June of last year and I think that such a procedure is consistent with good management practices. In other words, when risks are greater, depositors must assuredly be protected, and since financial institutions have to replenish their coffers, the rates of contribution must be higher. They will therefore amount to one-sixth of 1 per cent in coming years.
Bill C-22 proposes to double the line of credit made available to the CDIC by the Government. This line of credit will increase from $1.5 billion to some $3 billion. The legislation will authorize the Canada Deposit Insurance Corporation to penalize the institutions whose practices are deemed risky or

May 4, 1987
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somewhat unorthodox. It will make it possible for the Canada Deposit Insurance Corporation to decide whether or not to insure federal institutions, just as it does for provincial institutions. Now, federal institutions are automatically insured from the moment the regulatory agency issues their operating licence.
Finally, Bill C-42 will authorize the CDIC to cancel insurances to federal institutions, as it does already for provincial institutions, subject to the minister's authorization.
Mr. Speaker, the new committee responsible for co-ordinating the activities of monetary organizations, to which I referred a while ago, will be made up of the new Superintendent, the Governor of the Bank of Canada, the Deputy Minister of Finance, and the Chairman of the CDIC, meaning the Canada Deposit Insurance Corporation.
The purpose of all of this, Mr. Speaker, is to organize better this major sector of our financial institutions by reinforcing if possible the Canada Deposit Insurance Corporation on the one hand, and strengthening its terms of reference on the other.
Very briefly, Mr. Speaker, in order not to delay unduly the consideration of this Bill which, we hope, will not take too much time, I should like to remind the House that Bill C-42 is the result of events which occurred recently, or at least over the past two years. The House will remember the financial assistance which it had to give to the Canadian Commercial Bank in March 1985.
September 1985: Failures of the CCB and the Northland Bank. The House spent a long time dealing with this issue and even had to pass an emergency measure to bail out the banks and make sure that no investor in Canada would be penalized or suffer a major set-back.
December 1985: Compensation of all uninsured depositors of the Canadian Commercial Bank of Canada and the Northland Bank. The House will remember the billions which had to be paid to compensate those depositors.
End of 1985: The Mercantile Bank, whose financial foundations, at least according to the experts who were advising us, were quite sound, but which experienced cash flow problems because of the confidence crisis in the financial industry. The Mercantile Bank merged with the National Bank. Good initiative. Another banking institution saved.
End of 1985: The Morguard Bank, which again had sound financial foundations, but which experienced cash flow problems, had to merge with the Security Pacific Corporation, an American financial conglomerate. It was the first bank to pass under foreign control because of the lack of confidence in Canadian banks.
October 1985: The Continental Bank, with sound financial foundations, but again with cash flow problems, merged with Lloyds of London. That was the second bank to pass under foreign control.
In April 1986, approval from the Minister of Finance (Mr. Wilson) to the takeover of Canada Trust, a financial institution, by Imasco, a trade corporation, and we know the whole debate which surrounded the takeover of Canada Trust by Imasco. Could an institution, not necessarily a financial one,
take control over an entirely financial one? Need I repeat, Mr. Speaker, that the debate was interesting, but lengthy.
In November 1986, not long ago, the Bank of British Columbia which, according to the experts, was practically bankrupt, merged with the Hongkong Bank and was the third to fall under foreign control. At that time, the Canada Deposit Insurance Corporation offered $200 million to the new buyers to encourage them and maybe sweeten the pill, telling them: "Once more, we, Canadians, must ask you to get us out of the mess." Mr. Speaker, in less than two years, three banks, three financial institutions went under foreign control.
I find that surprising, but what can I say? It has happened, and each time, the CDIC was involved, to help, facilitate or favour the deal. What will happen? Well, of course, as I said earlier in my remarks, the premiums will have to be raised, because there is a limit to giving billions of dollars to banks in difficulty and constantly reaching into general funds.
Therefore, the Government will raise the premium and in so doing, Mr. Speaker, will transfer its own deficit. It is responsible for its own deficit that will be transferred to the Canada Deposit Insurance Corporation. About the deficit, Mr. Speaker, it has sky-rocketed in the last few years. It reached $1.1 billion on December 31, 1986, while on December 31, 1982, the CDIC recorded, I repeat, a $253 million surplus. So, in less that 15 years, we went from a surplus of $253 million to a deficit of $1.1 billion. That is the reason why we have to raise the premiums.
The main reason for the deficit is that the Government asked, or maybe ordered, the CDIC to take initiatives which were beyond its traditional role. I repeat, Mr. Speaker, that the corporation is only supposed to insure deposits up to a maximum of $60,000, but it was asked by the Government to participate actively in the operations to bail out troubled institutions.
For those who might have forgotten, 1 should mention that the CDIC provided $75 million to try and save the CCB, the Canadian Commercial Bank, in March of 1985. I repeat, $75 million in 1985. Then it gave $200 million to the Hongkong Bank so that the bank would buy the Bank of British Columbia in November, 1986. That money was used to refund uninsured depositors and even the shareholders got some of it. Not bad! Again, with the help of all depositors.
In February, 1987, $275 million was poured into the province of Alberta, your province, Mr. Speaker, to restructure the North West Trust Company. This is recent.
In each case, the decision was a political one and the costs should have been borne by the Treasury and the Government. We believe that they should have been added to the deficit. But they were not! The Government told the Canada Deposit Insurance Corporation: You are going to bear the burden of those debts. It is therefore appropriate, Mr. Speaker, to say that the Government is shifting part of the burden of the deficit onto those institutions which are members of the CDIC and ultimately onto the customers of financial institutions.
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I don't have to remind you, Mr. Speaker, that the Senate examined that matter and recommended in May 1986 that the costs of policy decisions should be borne by the Government.
Mr. Speaker, I do not want... I could elaborate at length on this matter, but I believe that the Canada Deposit Insurance Corporation will now be entitled to charge an additional contribution. It is a new right which carries important risks with it. Yet it is vital that the Corporation be entitled to charge those additional contributions to those who put at risk the rest of the institutions involved.
We would have preferred, Mr. Speaker, that the CDIC be allowed to establish separate insurance funds for banks and other financial institutions. The Government has not yet accepted that proposal, but we might decide to elaborate further on that point when we deal with the matter in committee. We therefore do not object to the amalgamation of the office of the Inspector General of Banks and the Department of Insurance. Indeed, we believe it is a worthwhile initiative and, as I said at the outset, I do not think this debate requires too much time or energy as we do agree, Mr. Speaker, on that initiative. It is our opinion that the second and third stages of this project will probably be of a more delicate and contentious nature, and we look forward of expressing our views on those when the Government decides to start that debate.
To summarize, Mr. Speaker, we welcome the additional powers granted to the reviewing agencies. Although it is not a very bold step in our opinion, it is still a first step. In our view, Bill C-42 is a step in the right direction, and we are proud to support this Government's initiative.


Simon Leendert de Jong: Mr. Speaker, I am intrigued by the notion which the Hon. Member for Ottawa Vanier (Mr. Gauthier) had in terms of deposit insurance. Is he suggesting that his Party will bring forth proposals in the committee that would place a different premium for deposit insurance on trust companies as opposed to banks or other financial institutions? Is this what he is suggesting?


Jean-Robert Gauthier: In that respect, Mr. Speaker, we believe that the Government should have allowed the Canada Insurance Deposit Corporation to establish separate insurance funds for the various types of financial institutions. They decided not to follow that route. I think we shall repeat that position in committee and we might suggest amendments or make specific suggestions to the effect that in our opinion, in the case of various financial institutions, since there are different types of risks involved, there should be different insurance funds.


Mr. Blenkarn:: Mr. Speaker, could the Hon. Member tell us whether the Liberal Party has changed its policy?
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The Hon. Member for Ottawa-Vanier (Mr. Gauthier) will recall that the particular provision is part of the House of Commons standing committee report. In that part of the report, certainly Members of the Liberal Party on the standing committee were in favour of making sure there was one kind of premium, that we did not discriminate between banks and trust companies. We realized at that time that if there were separate premiums that, in effect, we would be giving all the advantage to the big banks.
Is it his, or Liberal Party policy to make sure that the big banks have the edge when it comes to lending? They presumably would be the organizations that would pay the smallest premium to CDIC whereas local trust companies and local banks would pay the highest premiums. If that is his policy I am indeed surprised, because that was not the policy that I understood from the Liberal members of the standing committee when we made our report.


Jean-Robert Gauthier: Mr. Speaker, no, this is a policy I am proposing myself, as a Member of this House. I am not speaking on anyone's behalf except my own in this debate, and since at the second reading stage we are discussing the principle of the Bill, I think we do not necessarily have to toe a specific party line.
Personally, I have looked at the statistics, and from what has happened in the past five years, I think we can say there is far more risk involved in the activities of trust companies than in those of banks or insurance companies. Since 1980, about fourteen trust companies have collapsed, compared with two banks and five insurance companies.
Mr. Speaker, I think this confirms there may be a need for separate insurance funds for banks and for other financial institutions. This is a personal opinion. The Hon. Member may not share it, but it happens to be my opinion, and I think that if we look at the risk involved, and if we feel that the risk is greater for certain financial institutions, they should shoulder a larger part of that risk. That is why I have taken this position.


Michael Morris Cassidy: I would like to put a question to the Hon. Member for Ottawa-Vanier (Mr. Gauthier) about the proportion of control, whether an individual or a commercial group should be entitled to have exclusive control over a financial institution or whether proposals made by the Government are adequate. The Government is suggesting that once an institution has total assets worth $15 billion, it must let 35 per cent of its shares be held by another party, which would therefore have a minority interest of 35 per cent. Does the Hon. Member feel that is sufficient or does he believe that the rules that now apply to the big banks, namely that no individual or institution may hold more than 10 per cent of the shares, are a better way to avoid excessive concentration of ownership of these large financial institutions?

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Jean-Robert Gauthier: In that respect, Mr. Speaker, I am one of those who believe that the Bill, the third phase, the last of the three Bills which I mentioned earlier will probably deal directly with the whole question of powers, the different types of institutions, the system of ownership, and the structure of required monitoring regulations. I, for one, believe that 10 per cent ownership in the case of banks is good and adequate. Admittedly I do have a bit of difficulty in the case of a major trust company which would own, say 65 per cent of the trust company shares and which would be the object of a takeover by a bank, for example. I imagine this will create problems if the same trust company held shares, this is possible because there will be a kind of vertical and horizontal mix-up in all financial institutions as a result of the other Bill to be introduced soon. This will create certain problems for me, but when we do get to that stage I intend to spend some time reading and doing research on this to clear up my own ideas on this question. For the time being Bill C-42 does not deal specifically with that and I will wait to see what the Government will do about two other measures, Bills C-8 and C-9, and perhaps once the debate has been launched on the two new Bills I will have an opportunity to take the matter under serious consideration. I am just reserving judgment for the time being, Mr. Speaker.


The Acting Speaker (Mr. Paproski):: Questions and comments are over. Debate. The Hon. Member for Regina East (Mr. de Jong).


Simon Leendert de Jong: Mr. Speaker, it has been some time since the time the Government first promised to bring forward this legislation and the day we first see it. I am sure most Canadians would find this subject that Parliament is debating extremely boring. In many ways the subject of financial institutions is the most boring you could conceivably talk about. It is full of quite complicated terms and concepts. Yet it surely is one of the most important subjects for Canadians and Parliament.
We are talking about the financial institutions where most Canadians invest their money, through savings accounts and other deposits. The fruits of their labour are kept in trust companies, banks and other institutions. We are also talking about insurance companies which carry policies on the average Canadian's life and home so that they can have some protection against the unforeseen. In many ways the well-being of the country is determined by these financial institutions because they can direct the flow of capital, which in many ways is the blood of the nation. It determines where economic activity will occur, how it occurs, in what kind of industry and so forth. Therefore, what we are speaking about this afternoon is really very important.
The Government that was elected in 1984 was very much committed to the notion of less Government and less regulation. It started its mandate with a desire to remove a lot of the regulations dealing with financial institutions. In fact, the
Minister introduced a Green Paper on the deregulation of financial institutions. But, lo and behold, the system was shown not to be over-regulated but under-regulated. As I am sure you will remember, a whole spate of pretty important financial institutions went belly up. Two chartered banks, the Canadian .Commercial Bank and the Northland Bank, both in Alberta, in essence ended up in receivership. In my Province of Saskatchewan Pioneer Trust went bankrupt. A whole slew of other trust companies and insurance companies have gone belly up. In some instances some depositors were hurt, those who had deposits of more than $60,000 in those institutions. In other cases, all the depositors were fully reimbursed despite the fact that deposit insurance covered them up to only $60,000. In fact, in the case of the CCB, millions of dollars were paid by the federal Treasury to other commercial banks because those banks had millions of dollars on short-term deposit at the CCB. That money was there because the CCB was paying a slightly higher interest rate. Those banks, while they knew the risk they were taking, decided to take the risk anyway because it gave them a little bit more of a return. However, it turned out they were not really taking a risk at all because the federal Government was quite prepared to pay them everything they would otherwise have lost.
We ended up in a strange situation. The Canadian Government borrows money from the banks in order to make up its deficit and then pays the bank interest. Here the Canadian Government had to borrow money from the banks at interest to pay back to the banks. Very strange. Somehow or other the banks never seem to lose. Certainly the taxpayers and the public of Canada have lost. Why did we have this situation where all these financial institutions, insurance companies and trust companies were going under? All at once everyone started asking: Where are the regulators? Where are the inspectors?
We thought we had institutions in place to prevent banks, insurance companies and trust companies from going belly up. Where were they? It appeared as though the regulatory agencies were indeed woefully inadequate in dealing with the crisis. You see, our regulators sort of assumed that our banks were controlled by a group of Methodist managers. It wasn't the fear of the Government or the regulators which forced them to be honourable gentlemen in banking, but the fear of God. If they tried to play hanky-panky with the books and other people's deposits, they would answer to God on the day of judgment.
We are now living in a new era. The smart boys on the street do not have the fear of God in them. They run circles around our regulators who do not have the street smarts which some of the financial whiz-kids have. They have found all sorts of loopholes in the regulations and hoodwinked the regulators in many instances.
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It was really the fast boys who brought about the collapse of a fair number of our financial institutions such as Pioneer Trust, the Canadian Commercial Bank and the Northland Bank. In fact, when investigations were made into why these institutions went belly-up it was discovered that they were certainly not practising sound financial management. They were playing loose with other people's money, in some instances even to their own advantage. People have used other people's money for their own interest rather than in the interest of the depositors. It became obvious that some reform was needed. Today we have Bill C-42, with which I do not think too many in this House will have major disagreement. The only problem is that it is a little late. We wish this legislation had been brought forward somewhat earlier. Be that as it may, it is an important step in the right direction.
A new financial world is being created. I talked a moment ago about a time when bankers were Methodist ministers who were afraid of the day of judgment. That is no longer the case. We now have fast wheelers and dealers who play loose with other people's money. This is also an age of tremendous technological change. Money moves around the globe in a matter of minutes. In this day and age tremendously large and powerful national and multinational conglomerates have a tremendous amount of economic power because of the capital they control. They can blow away national interests, the rules of nations, and political jurisdictions because of the tremendous power which they have.
In some ways the Government is willing to play along with that. In some ways I understand why the Canadian Government believes it must play the game in order to attract capital into the country and that it must also go along with many of these changes. I am sympathetic with this. However, at the same time we must maintain a sense of Canadian control. We cannot allow a few large corporations to control the life-blood of the country. We cannot allow so much power in the hands of so few.
Sometimes I believe the Government is sending signals that it will allow that to occur as long as a few of the large and powerful conglomerates are so-called Canadian. I believe the Government is not honest with itself if it believes that simply because one or two of the owners of the conglomerate happen to have Canadian citizenship, it can be controlled by the nation state. In many ways their powers extend beyond the nation state within our borders.
The Government seems to be willing to go along with the collapse of the four pillars to allow one-stop financial shopping centres. In all the shopping malls across the country we will see one place where you can buy your insurance, make your deposits, buy bonds, and buy shares. As our colleague in the Liberal Party said in her address this morning, this change is not being driven by consumers demanding new services, it is being driven by the industry. I think she is so correct in that.
When the four pillars begin to collapse we will run into some problems. We increase the dangers of self-dealing and conflicts of interest. One part of the operation is making decisions
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which affect and influence other parts of the operation. For example, will getting a mortgage on your home be dependent upon getting the insurance which that company is also selling? The potential of abuse increases. The modern technologies, the new type of ethics which exist in financial institutions and out on the street, and the creation of these new one-stop shopping centres all lead to a much greater potential for abuse of other people's moneys.
We need a new regime in terms of regulation. However, there is only so much the Government can regulate. The Government cannot send inspectors to sit beside every desk and watch every transaction. It would be insane for a government to try to do that. You cannot over-regulate the industry. You must hope to put in place some institutional form within which it is not in the interest of those to break the rules and regulations.
That is why we in this Party have been pushing very hard in committee and inside and outside of the House for wide ownership of financial institutions. That would help eliminate some of the causes of abuse. We hasten to add, however, that this is far from the total answer. Pioneer Trust in Regina is an example of a company which was quite widely held and yet experienced abuses in terms of self-dealing. Therefore, we are not saying that wide ownership will wipe out the possibility of self-dealing. We do say, however, that it reduces that possibility. It reduces the opportunity and motivation that some would have to use an institution for their self-interest rather than for the interest of the depositors. That is why we will continue to speak out for wider ownership.
I have another concern which is not directly related to Bill C-42 but is important, that is, the issue of regional financial institutions. Unfortunately, in the 1980s we have seen smaller regional financial institutions being severely weakened and going down the drain. In western Canada we have seen two banks in Alberta and the trust company in Saskatchewan go under. This is sad for us in western Canada as we attempt to get some control over our economic destiny. We need financial institutions in the west that are sensitive to our needs so we will be assured that there will be the necessary capital for the economic development of western Canada.
The unfortunate situation of two banks in Alberta and several trust companies in Alberta, Saskatchewan and Manitoba, as well as the disappearance of the Bank of British Columbia is a severe blow to western Canadians and our dream of economic development in the west. Hopefully, a better regulatory regime will ensure that smaller financial institutions will be more viable and we will no longer see the type of characters who were involved in the Canadian Commercial Bank and Pioneer Trust. They were partly responsible for the demise of those financial institutions, and we hope that better regulations will ensure that such a situation will not occur again.

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It is also true that those in the Maritimes are anxious to develop their own financial institutions that are sensitive to their needs and aspirations.
Therefore, we generally have no objection to Bill C-42 and will support it. There will be an opportunity to examine it more closely in committee where I expect the Government will be open to suggestions for amendments to this legislation by the finance committee. When the Government realized that the Green Paper would not be accepted, it held consultations and sought advice. I believe it is willing to accept some amendments that might improve the Bill and allow for stronger financial institutions in this country.


Donald Alex Blenkarn: Mr. Speaker, bearing in mind that Mr. Michael McKenzie, the designated Superintendent of Financial Institutions, cannot do anything to improve the supervision of financial institutions until this Bill is passed, why are the New Democratic and Liberal Parties continuing to speak to this Bill? We can pass this Bill, get it into committee and act upon it. Is there some other reason for the delay? Surely a Bill that has been approved by all Parties in the House could be moved to committee as quickly as possible. Could the Hon. Member explain why so many Members want to speak?


Simon Leendert de Jong: Mr. Speaker, my friend and colleague on the finance committee surely must realize that the Canadian public has lost some $1.5 billion because of past errors and omissions in our regulatory regimes. This is an important issue that deserves the attention of Parliament. I am not surprised that there are a fair number of Members who wish to speak to this issue. It is important and directly affects our constituents. Canadians must be assured that the money which they deposit in financial institutions, insurance companies and trust companies is safe and that the institutions are properly regulated by some public body. That is why so many Members are interested in discussing this Bill.


Donald Alex Blenkarn: Mr. Speaker, I hesitate to rise in this debate because I believe this Bill has the unanimous consent of the House. It reflects the House of Commons finance committee's report and proposes to create one Office of the Superintendent of Financial Institutions by amalgamating the Office of the Superintendent of Insurance and the Office of the Inspector General of Banks. It will allow for Deputy Superintendents in charge of various areas while making the expertise available in the department to conduct inspections of these institutions that deal in insurance, banking, trusts, securities.
It is difficult to pass Bills through the House of Commons, particularly when there are but 24 days left for government business until the end of June. Bills involving financial institutions and subjects concerning inspector generals and superintendents are not enticing. It is difficult to get them on the Order Paper and proceed with them. If we pass this Bill today we could move ahead with it, hear all the required
evidence, and make all the necessary changes. Indeed, I believe some minor changes should be made to the Bill. We could deal with this Bill expeditiously.
This Bill should not be debated for another day because the House will know that there are urgent matters that require attention. The House will be called to sit in July despite the change in rules, because those urgent matters must be dealt with. I find it very strange that a Bill which should have been passed before noon is still being debated. I say to the House: let us get on with it.


Mr. Langdon:: Mr. Speaker, I was interested in the sermon we heard from the Hon. Member for Mississauga South (Mr. Blenkarn). If he feels so strongly about the speed with which this Bill should go through the House of Commons, why did he feel it necessary to take up the time of the House to put that view on the record? Why did he not simply let the process of debate continue and thereby speed up the passage which he says he wishes to have so quickly achieved?


Donald Alex Blenkarn: Mr. Speaker, it is quite simple. I spoke for three minutes, which is a rather short speech for me. I thought it was important to put that view on the record. This Bill has its genesis in the report of the Standing Committee on Finance and Economic Affairs. It is an important Bill, as all Members who have spoken have said. It should go through the House now so that we can get on to committee to make the refinements it needs.


The Acting Speaker (Mr. Paproski):: Questions and comments have terminated. Debate.


Raymond Garneau: Mr. Speaker, I intend to speak at second reading of Bill C-42. I did not intend to get involved in the type of debate raised by my colleague, the Member for Mississauga South (Mr. Blenkarn). However, I think I will take a few minutes to put his remarks in context.
The Bill we are discussing now was tabled for first reading on March 3, 1987. It is not my fault if the Government House Leader did not ask the Speaker to call second reading of the Bill before today. The opposition Parties are not responsible for that decision, it is the Government's decision.
If the Member for Mississauga South is telling us that it is an urgent matter, I must remind him that the Green Paper was tabled in April, 1985. This is now May 4, 1987 and this is the first day of debate. I do not know how we could be accused of delaying this piece of legislation. The type of remark just made by my colleague may bring us to consider in more detail this legislation because I wonder why the Hon. Member wants us to adopt the legislation so urgently. I suppose I can understand that, but at least the Government could give us a few hours. We have not even spent a day on this Bill. I am the third speaker on my side to address this legislation.
May 4, 1987

Mr. Speaker, as was said earlier, this is an important piece of legislation, and its purpose is to modify the supervisory agencies responsible for the proper functioning of our financial institutions. How does this Bill propose to achieve this objective? First of all, by modifying the structure of the regulatory agencies.
I believe the Hon. Member for Mississauga South (Mr. Blenkarn) made a slight mistake a while ago when he said that the Bill was a direct response to the recommendations in the report of the Standing Committee of the House of Commons on Finance and Economic Affairs. 1 may remind the Hon. Member that the Committee's report was not unanimous, since a minority report was filed by Opposition Members.
Furthermore, in its proposal to restructure the regulatory agency, Bill C-42 did not follow the recommendation to which the Chairman of the House of Commons Standing Committee on Finance and Economic Affairs was alluding. In the Bill, the Office of the Inspector General of Banks and the office of the Superintendent of the Department of Insurance would be merged, but not the office of the Canada Deposit Insurance Corporation, which was supposed to be part of the megaagency proposed by the majority of the Standing Committee on Finance and Economic Affairs.
I recall saying at the time that the proposition made by the Conservative majority of the House Standing Committee on Finance and Economic Affairs was an elephant whose administration would be very cumbersome indeed. I am glad the Minister of Finance (Mr. Wilson) has heeded the remarks of the Official Opposition and drawn a clear line to separate the operations of the Canada Deposit Insurance Corporation, but to regroup under one organization both the Office of the Inspector General of Banks and the Bureau of the Superintendent of Insurance of Canada which has always monitored federal institutions, what we call the federally-chartered trust companies.
Therefore the purpose of this measure is to restructure this control organization very much along the lines recommended by the Liberal Party. Second, this organization will have more powers and for all practical purposes the Superintendent of Financial Institutions, should he see fit and after consulting his council colleagues, will be able to take over the administartion of a financial institution for seven days and impose his instructions and decisions to the institution for reasons which the superintendent would have deemed significant enough to impose the necessary changes and use his right of veto. I think this will improve the controlling organization and I am pleased this has been included.
The second aspect of the Bill on which I will have a few comments, Mr. Speaker, is the Canada Deposit Insurance Corporation. Hon. Members will recall thai amendments were made to that legislation, when this Conservative Government decided to increase from 1/30 to 1/10 of 1 per cent the level of premiums paid by financial institutions on insurable deposits.
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We now see that this Government, not satisfied with trebling the cost of insurance deposits, chose to increase it once more by raising the rate from 1/10 to 1/6 of 1 per cent. The Government however will keep that flexibility to decide, probably by order in council, what he will do with the premium increase.
The Minister indicated, I think last week in a press release, his intention to maintain premiums at the current level. But how long will it remain there? It will be left entirely to the Minister to increase the rate from 1/10 of 1 per cent to 1/6 of 1 per cent. To my mind, this is a tax that will in effect be determined by order in council, and I would have preferred that when that move is made, it could be debated in the House of Commons and the parties involved had a public opportunity to be heard, and Members in this House were informed of the reasons why the Government chose once more to increase that indirect tax which in the long run will be borne by consumers, because certainly financial institutions will pass the cost on to consumers by changing either the cost of financial services or interest rates.
The other purpose of this Bill, Mr. Speaker, is to increase the credit margin of the Canada Deposit Insurance Corporation to $3 billion. This will double its credit margin, and in this case also, I think that considerable power will be given to the Minister under this amendment to the Act. Bill C-42, the legislation we are dealing with, will make it possible for the Canada Deposit Insurance Corporation to penalize the institutions whose practices are deemed risky or unorthodox. It will also allow the Canada Deposit Insurance Corporation to decide whether or not to insure federal institutions, just as it does already for provincial institutions.
Mr. Speaker, it will make it possible for the Corporation to cancel the insurance of federal financial institutions, subject to the Minister's authorization.
Mr. Speaker, those three powers which will be given to the Canada Deposit Insurance Corporation will have indirectly the result which the Govermment did not want to obtain directly, namely to create different pools for different types of corporations. Mr. Speaker, if, with the Minister's authorization, the Canada Deposit Insurance Corporation imposes a surcharge to a financial institution, although we are assured that the information will not be released to the press, information travels so fast nowadays that when the Canada Deposit Insurance Corporation makes such a decision, I am afraid that within a few months or weeks, if not days, the public will learn about it and confidence in the financial institution will be jeopardized, which would mean that the Minister would be signing the death warrant of this financial institution, because to develop, a financial institution requires the confidence of its depositors. We know what happened with the Northland Bank and the Canadian Commercial Bank. When the public became aware of their financial difficulties, depositors withdrew their money. Not only those two banks were directly affected but two other financial institutions that were in a good position in terms of the quality of their assets were also indirectly affected

May 4, 1987
Financial Institutions
and had cash flow problems beyond their control. Those problems, for all practical purposes, forced the Mercantile and Continental Banks to merge with other financial institutions and to reduce competition in that area. Therefore, I have strong reservations as regards the ability of the Canada Deposit Insurance Corporation to collect premium surcharges, in other words to indirectly create separate pools for financial institutions, without running the risk of destroying those institutions.
Finally, in order to ensure co-ordination between the new organization and the Deposit Insurance Corporation, the Minister decided to create a co-ordination committee consisting of the new Superintendant of Financial Institutions, the Governor of the Bank of Canada, the Deputy Minister of Finance and the Chairman of the Board of the Canada Deposit Insurance Corporation. That is a good proposal, Mr. Speaker. In doing that, we institutionalize through legislation a Committee that was anyway probably meeting on an emergency basis. But the establishment of that co-ordination committee and its obligation to sit as well as the fact that the committee members will not be able to be replaced by their assistants will ensure, through consultation between those different groups, namely the Superintendant of Financial Institutions, the new Superintendant, the Governor of the Bank of Canada, the Department of Finance and the Chairman of the CDIC, an exchange of financial information that will facilitate, I think, the good management and control of financial institutions.
Mr. Speaker, the Hon. Member who spoke previously outlined the importance and the urgency of Bill C-42 and we obviously believe that it is important to change as well as to strenghten controls, given the disastrous experience Canada has had over the last couple of years. First, there was the Canadian Commercial Bank bankruptcy, then that of the Northland Bank. Then there were other financially troubled institutions, one of which merged with Security Pacific Corporation. There was also the case of the Continental Bank which merged with an institution called Floyds Bank and, of course, the merger of the Bank of British Columbia with the Hongkong Bank. So many downfalls are due in large part of course, I believe, and I said so at the time, to a lack of foresight on the part of a Government whose main concern it was to solve a serious problem in such a way as to fend off any bad news which might have clouded the economic conference which had been presided by the Prime Minister (Mr. Mul-roney). But we now see what consequences such a hasty and ill advised decision has had on several financial institutions and not only on the Canadian Commercial Bank.
Mr. Speaker, I would also like to say that this bill is not- that it would have been easier to deal with it if we had known how the Government intends to structure other financial institutions, how it intends to deal with the problem of relationships between insurance companies and trusts, banks and real estate companies. It would then have been easier for us to determine whether this new legislation, Bill C-42, is
geared to deal effectively with the new structures and the new implications they will have for the financial sector as a whole.
I have already had the opportunity to voice my concerns publicly with regard to the leeway which our brokerage firms enjoy at present. As of June 30, they are possible candidates for the big bang, as it has been termed in England at the time of deregulation. And this leeway, this possibility of taking over Canadian investment dealers will be open not only to Canadian institutions but to foreign firms as well. And I understand banks have some concerns about it, and the legislation as we understand it, according to the paper tabled by the Hon. Minister of Finance (Mr. Wilson), could lead us into a strange situation where a Canadian bank might buy a brokerage firm and have to close down its brokerage operations in the United States, since the U.S. regulations do not allow a brokerage firm to be the property of a bank such as the Royal Bank, the Bank of Commerce or the Savings Bank, in other words, any bank which buys a brokerage firm.
Thus, there would be no reciprocity in the operations between Canada and the United States.
Secondly, Mr. Speaker, insofar as a Canadian bank would buy a brokerage firm, as I just mentioned, with things standing as they are, it would have to close down this broker's operations in the United States, whereas if a U.S. company buys 100 per cent of this same Canadian brokerage firm, it could operate in Canada and in the United States without any problem whatsoever in terms of legislation and regulations. I feel we have acted very quickly. Once again, the Government has decided to give this possibility to the Americans, whereas no reciprocity exists for Canadians, and all this is done, it seems to me, outside the context of our free trade discussions with the United States.
Mr. Speaker, the reason I have concerns on the matter of our brokerage firms is that brokers act as advisors for their clients, and because they are 100 per cent owned by a bank or a trust company and those banks and trust companies or those insurance companies will apparently have the ability to get into the commercial loans area, We would find ourselves in a situation where a broker-in dealing with an industrialist who wants to issue bonds to repay his medium-term loans to a bank-would be in a bind, in terms of conflict of interests or loyalties between his shareholder, from whom the loan is to be bought, and the issuer who is looking for the best possible terms to refinance his business.
I feel that the potential for conflict of interests is there, and we should look at that in a very particular and special way before we abolish the independence of our brokers.
Others said that if we did not do that, especially as regards the financial industry, if we do not do that, we are preventing our Canadian institutions from playing a role internationally. Yes, well! It is all very well to say that, but as far as I am concerned I find it hard to believe that once the Solomon Brothers, the Merrill Lynches, the Shearson Lehmans and the
May 4, 1987

other big American firms have bought our Dominion Securities and our other brokerage firms, those big American firms who are already established internationally, be it in New York, London, Tokyo or in other European countries, in Paris, that those big international corporations .. . And the same would apply if Nomura bought one of those firms. Certainly those large multinational corporations, I would be very much surprised if they transferred their decision centres from New York or Tokyo or London or Germany to Toronto or Montreal or Vancouver or any other Canadian city to perform the international financing activities involved.
For those reasons, Mr. Speaker, I reserve my final judgment until I see the follow-up on Bill C-42. But I want to express my concerns right now, because it is my feeling that they are destroying a financial system that has served Canadians well and that could lead to difficulties as regards the role of Canadian companies in catering to the financial needs of our businesses and institutions.
They say this kind of deregulation, that Bill C-42 that is part of a three-pronged legislative effort, the two other parts of which are not yet known, will facilitate company integration. My colleague earlier referred to shopping centres as far as financial institutions are concerned. I can visualize that in some cases. I was part of a financial group before coming to this House. We had goals that of course were connected with our operations of that time. But I am asking myself serious questions: Do we do know of anyone in today's world, a Canadian consumer, who one morning rises and tells himself: Today 1 am doing my financial shopping? And that someone goes to the shopping centre, and buys his insurance, his shares, his bonds, and make his deposits? That is not the way things operate in the financial world. You do not shop for financial services the way you shop for groceries. A degree of caution is in order. Furthermore, 1 might add that if we want to develop this kind of financial trading centre, my biggest concern is that the great winner, the institutions it will benefit the most are the major financial institutions, that is to say, the major banks that already enjoy a wide network at every street corner in each of our large cities and towns. It will be awfully hard for other institutions to compete, whether they are life insurance or general insurance companies, because the banks have their own network, and insurance agents do not necessarily have the ability to give the expected financial services. Doing away with the so-called four pillars might have unexpected results, concerning first of all the brokers but also the insurance companies and the banks.
Finally, Mr. Speaker, I would like to deal with the trust companies-
As you are indicating that my time is up, I shall have no time for those final remarks. I suppose that when we study other pieces of legislation, I shall have the opportunity to explain the reasons of my concerns regarding the potential conflicts of interests between trust operations, financial operations in general, insurance, and banking.
Financial Institutions


Steven W. Langdon: Mr. Speaker, I ask my Liberal colleague if he would comment with respect to the question of ownership guidelines within the banking sector. Does he think a Bill such as this would not have provided a regulatory environment which was much more effective in protecting consumers and achieving economic policy goals if it had a much stricter limitation on the share of equity ownership possible within given financial institutions?


Raymond Garneau: Mr. Speaker, first, I would have preferred to study Bill C-42 along with the other legislation. It would have been easier to evaluate. Perhaps the supervision and control in this legislation is enough, but I do not know what the other legislation will provide.
As far as ownership is concerned, my personal view is that it depends on the size of the company or the financial institution. This is why I agreed in general terms with the proposal made by the finance committee concerning what should be taken into account for ownership. While our views differ on whether for example 100 per cent ownership should be for $10 billion or $15 billion worth of assets, that is a point of view I am prepared to discuss. Generally speaking, the approach we suggested is, I believe, appropriate.
If we abolish completely the four pillars and open up the possibility of a bank owning an insurance company or a trust company or vice versa, I would suggest very strongly that there be no interconnection between financial institutions and industrial organizations. I have nothing against a big financial institution getting bigger, but I have a lot of concern even if only 15 per cent or 30 per cent of such an institution is owned by one party. When the rest of the shares are spread out in the public, it does not take 51 per cent to control a board of directors. I would prefer to see a complete distinction between financial institutions and industrial organizations, and we said so in our minority report which was tabled after the report from the finance committee was tabled.


Steven W. Langdon: Mr. Speaker, what perspective would my colleague put on the level of foreign ownership of a banking or near banking institution that might be permitted? Is this something he would be prepared to maintain within narrow limits, or would a relaxation of those rules be acceptable to him?


Raymond Garneau: Mr. Speaker, I said publicly that I accepted the fact that foreign financial institutions can come to Canada. I have nothing against Schedule B foreign banks. On the contrary, it creates more competition and forces Canadian financial institutions to evolve, to become more competitive and to become more creative. I think it has been a positive step and I have nothing against it. However, if we are to suggest that large banks should be open to foreign sales, we should keep a limitation on total ownership. Up until now there has been a maximum, and I think it should be kept. I have no objection to foreign ownership of smaller financial institutions.

May 4, 1987
Financial Institutions
When it comes to investment dealers, I think it is a different game altogether. We should try to keep Canadian control over these institutions and certainly not open the country up as it will be open after June 30. If a foreign organization can buy 50 per cent of a Canadian investment dealer, the foreign company will effectively control the organization and after June 30, 1988, the company will probably buy out the rest of the shares. That is something that has preoccupied me a lot, and I would strongly suggest that the Government look at this possibility before June 30 and give the House a chance to debate it because there is the possibility that we may kill a Canadian financial industry we took so many years to build.


Steven W. Langdon: Mr. Speaker, I would like to express my pleasure in being able to take part in this debate. First I would like to congratulate the Hon. Member for Mississauga South (Mr. Blenkarn). I recall that when the first proposals for reform in financial institutions were brought before the House, a great many of us had serious doubts about exactly what was being proposed. I believe the Hon. Member has succeeded in putting across a powerful point of view which led to significant changes in the approach taken by the Government, and I congratulate him for that. That does not, of course, mean that I now agree with the Bill which is before us in its entirety, but I think that the personal achievement of the Hon. Member deserves to be recognized.
One of the questions the Hon. Member himself raised not too long ago was why there was an interest in speaking in this debate and putting forth the considerations and concerns of our constituents. Frankly, I must say that the last two and a half years have seen the greatest shake-up in confidence in the Canadian banking sector the country has experienced since the 1920s and the continent has experienced since the 1930s. It is a shake-up which we on this side of the House have found unfortunate and especially devastating because of the nature of the bail-outs of the banks which got themselves into trouble.
However, it is important at this stage in the debate that people across the country and those of us in the House of Commons keep very much in mind what one newspaper has called the "chronicle of carelessness and collapse" which affected the Canadian Commercial Bank and the Northland Bank. Certainly it is for that reason that we have before us a Bill which is supposed to establish the solution. Frankly, I am not overly convinced that the solution has been achieved.
This Bill will create a super-bureaucracy. It will tie that super-bureaucracy to a series of inputs from important parts of the financial community. However, I cannot see within it guarantees that give Canadians a greater sense of security in respect of the future of their banking system.
So far we have been fortunate. Our banking system has had two collapses, which of course had not occurred since 1923 when the Home Bank collapsed. These two collapses are combined with the collapses of a number of trust and loan companies. There is a potential for a much more serious crisis in the future banking system because of the tremendous openness which the banking system showed itself to have in
respect of foreign loans to the Third World. A great many of those loans at this stage are highly questionable.
I could take Hon. Members through at least six significant foreign debtors in the Third World which have, within the last year, very significantly changed their approach to repayment of their foreign debts. We could talk of Peru. We could talk of Equador. We could talk of the most recent country which has joined in this protest, namely Zambia.
We must recognize that there is before us something which has been unprecedented in the Canadian banking history. There is a threat to the stability of these banks because of the Third World debt crisis and the incapacity of international institutions such as the IMF to solve the debt crisis of the Third World. The consequent reality is that at least a significant number of our large banks are susceptible to the failure of certain Third World countries to pay back interest and to maintain loans which are considered to be performing loans. That capacity is limited increasingly in the Third World and, as a consequence, our banks feel the chill winds of challenge.
All of us would like to believe that the regulatory agency to be created here would somehow be able to solve the problem. Frankly I do not think that the problem is even touched by the creation of this kind of super-bureaucracy. Therefore, if one had a sense that the Government had some kind of broader strategy regarding the future of our financial institutions, it would be very much easier for those of us on this side of the House to rush through a Bill like this one, with the kind of celerity suggested by the Hon. Member for Mississauga South.
In point of fact, however, that situation does not exist. There are problems with our banking system which have been demonstrated by two catastrophic failures, by very significant expenditure of public funds to bail out the creditors of those two banks, and by the continuing debt crisis in the Third World, which is very much a backdrop threatening our existing banks.
In addition to a lack of strategy in respect of the Third World crisis, there is a lack of strategy in the Government, which I find acceptable, anyway, on the question of ownership in banking. I understand that part of the reason for that lack of strategy is that there is a negotiation taking place with the United States which may open entirely the country to foreign banks from the United States to operate here as if Canada were simply another state of the union. In those circumstances it is extremely difficult for policy makers to shape strategy and to set out what should be future ownership levels within the Canadian banking sector.
Nevertheless, a great deal could be achieved by being quite strict at this stage by putting into effect and carrying forward the 10 per cent limitation on foreign ownership of our large-scale banks. If we were to do that, it would give a great deal more credibility to the capacity of the institution which the Bill aims to create to be able to regulate and control the banking system within the country.
May 4, 1987

If we look down the road five years from now and see before us a tremendous proliferation of all kinds of U.S. banks right across Canada, a super-bureaucracy will be created as this Bill attempts to do. That super-bureaucracy will become absolutely bogged down in the details of simply trying to keep up with the hundreds of important large-scale banks which will be operating within Canada. That is a very serious gap in the legislation before us at the moment.
It is important that there be a counter vision, if you like, to the very narrow vision which essentially sees the continuation of the status quo, a status quo which will have a slightly larger, more powerful bureaucracy in control of it, which is what this legislation really represents. Banking is very much at the heart of economic policy and economic development for any country. Yet I do not see within this legislation, I do not see within the thinking of the Government in so far as one can assess it, any creative, imaginative new approaches to making use of the banking system in Canada as a tool for profound economic development which can reshape the country and give much more fairness to all the different parts of our community and to all the different elements within our society.
There has to be a much wider perspective brought to bear on the question of banking than is present in the Bill before us at this stage. I think of the development banking which exists in the Netherlands, a development banking system which was established by the Government there. It has been used as an instrument to assist broadly right across the economy industries which find themselves in difficulty, sections of the economy which had to be expanded, and parts of the Dutch economy suffering from regional difficulty or from concentrations of unemployment.
The Netherlands Development Bank is 51 per cent government owned and 49 per cent owned by the private sector. It has proved to be an extremely powerful, very effective, very efficient operator, able to move into some of these troubled sectors and into some of the high-tech sectors of the economy to see to it that funds generated by the Dutch are themselves poured back into the building of the Netherlands instead of siphoned out through a host of foreign banks operating within that jurisdiction. We could have taken a look at that as part of the strategy toward more creative use of the banking sector within Canada.
We could look quite usefully at what has happened in France and the capacity of the French Government to use a number of the larger French banks which were under government control after World War II to build up in different parts of the economy important regional concentrations of employment, of opportunities for young people, for small towns, for parts and regions of France which have faced the kinds of declines and reductions in opportunities that have so recently hit western Canada.
Financial Institutions
I think that in a broader vision of Canada's banking future there could be something much more important given as a role to credit unions.


Donald Alex Blenkarn: Get on to the Bill. You are filibustering.


Steven W. Langdon: It is quite related to the Bill.


Donald Alex Blenkarn: You can do better than that.


Steven W. Langdon: I have to stress that it is quite related to the Bill.


Michael Morris Cassidy: Why don't you speak to the Bill instead of interrupting?


Steven W. Langdon: He did, Michael.
One must look at the Bill as an attempt through creation of a super bureaucracy to maintain the existing status quo in banking with the exceptions about which I have spoken. I argue that one has to look at that particular institution which is to be created as simply one part, I would say, of the Government's vision for the banking sector. As I have said, Mr. Speaker, I do not see that vision there. It could be there. It could be there through development banks. It could be there through greater public direction in the banking sector. It could be there through much more creative use of credit unions. I regret that perhaps there are fewer credit unions in Mississauga South than there are in Essex County. I do stress that one has to take an initiative like this and ask whether it makes sense. It only makes sense within the context of a broader economic strategy, which seems very much to me to be missing in this Government.


Michael Morris Cassidy: Mr. Speaker, as a matter of fact I am a bit upset over the comments of the Hon. Member for Mississauga South (Mr. Blenkarn). He seems to think that, after two years of waiting for the Government to bring forward its proposal with respect to its regulation of the banking industry, we should simply push the Bill through in the course of a short space of time.


The Acting Speaker (Mr. Paproski):: I would hope that the Hon. Member would comment on the remarks made by the Hon. Member for Essex-Windsor (Mr. Langdon).


Michael Morris Cassidy: I will provide my friend from Essex-Windsor with an opportunity to comment a bit more fully over that specific question of credit unions which he raised. We have been promised that there will be legislation to accompany this at some point in relation to the field of co-operative banking. The Member who interjected is being quite irrelevant in suggesting that this is purely a provincial matter.
In the Province of Quebec the Desjardins movement, the Caisse Populaire movement, is now a major player in the financial market in Quebec. As we found out in British Columbia where my Party sought to support efforts to ensure that the Vancity Co-op would be able to take over the Bank of British Columbia, an effort which was unfortunately resisted by the Government, Vancity is, if I recall, the second largest deposit-taking institution in all of British Columbia, well ahead of several of the other major chartered banks.

May 4, 1987
Financial Institutions
I ask my colleague whether there is a role for credit unions in going beyond personal lending and lending to, let us say, small farmers, to lending for larger enterprises including cooperatives? Is this one area which Government should now be pursuing as part of an integrated strategy for banking?


Steven W. Langdon: Mr. Speaker, I thank my colleague for his comments. Since I began my speech with some words of praise for the Hon. Member for Mississauga South (Mr. Blenkarn), it is appropriate that the continued role of the Hon. Member be a factor in this debate.
I have to say that the suggestion of the Hon. Member for Ottawa Centre (Mr. Cassidy) is absolutely correct. If one looks not just at Vancity but at a number of credit unions in British Columbia, they have been extremely active and effective in doing what to me seems to be at the heart of the banking system, that is, they take community funds, provide security guarantees, and see to it that those funds go back into development and establishment of enterprises and jobs within the community itself.
I have had occasion to meet with entrepreneurs in Vancouver who were able to obtain from the Vancouver City credit union the kind of support they have simply been unable to get from the large-scale banks. That support should be available. I have seen this happen with even greater success and with a much wider range of beneficial effects on the local economy in Nanaimo. There the credit union succeeded in building a whole set of co-operative enterprises across the whole range of the economy, in forestry, fishing, and food processing. As a result it has created a much more solid base to that community in the face of opposition, quite frankly, from the eastern banks.


Donald Alex Blenkarn: Mr. Speaker, I was wondering if the NDP can advise us whether its policy is to put the credit unions under the superintendent of financial institutions and have them regulated federally? That seems to be the tenor of their remarks thus far. If they can confirm that, I think the provinces and the credit unions would be very interested.


Steven W. Langdon: Mr. Speaker, we have-


Donald Alex Blenkarn: No policy.


Steven W. Langdon: -made it very clear that our policy on this issue is to provide as much support as possible at the federal level to the national component of the credit union system. Therefore, we aim to provide the kind of support offered in this Bill to, for example, a national credit union deposit insurance system but leave the components of the credit union very much under the jurisdiction of their own province. I think that is crucial because credit unions, certainly in my area and I suspect in the area of anyone else in this House, started from the grass roots. They have developed a capacity to serve their community. We want to maintain that capacity.


Michael Morris Cassidy: Mr. Speaker, the Hon. Member for Mississauga South (Mr. Blenkarn) spoke earlier about the Third World debt problem and its impact on Canadian banks, some of which are very heavily committed in their loans to the Third World. They are also gradually beginning to increase their loss provisions for those loans. It is quite clear, however, that those provisions are inadequate. At the same time, countries like Brazil and Argentina, after four or five years of the imposition of IMF policies, which were designed, it was hoped, to see those countries out of the bind they are in, are just as deeply in debt as before. That is a very serious problem which I do not believe our regulators have addressed in their assessment of the state of health of Canadian banks. Perhaps my friend could comment on that.


Steven W. Langdon: Mr. Speaker, it was about a year ago that the joint committee dealing with international relations, in its report, stressed the significance of this issue. It said that it was important for Canada to take some initiative with respect to Third World debt. Yet since that time we have not done anything except stand back and offer mild applause to the Baker proposals in the U.S. To me that is not the exercise of leadership.
I agree with my colleague that this is very much a crisis. I stressed that in my speech and I hope very much that banking strategy does emerge finally from the Government and that it recognizes the centrality of the question and the importance of responding to it.


The Acting Speaker (Mr. Paproski):: Questions and comments are now terminated. Debate.


Lloyd Axworthy: Mr. Speaker, I am more than anxious to engage in this debate but I note it is one minute to five. If you would like to call it five o'clock and go to Private Members' Business, then I would be prepared to resume at eleven o'clock tomorrow.


The Acting Speaker (Mr. Paproski):: Is there unanimous consent to calling it five o'clock?


Donald Alex Blenkarn: No.


Lloyd Axworthy: Mr. Speaker, I am more than happy to fully engage the House in debate for the next 45 seconds. Considering that the Hon. Member for Mississauga South (Mr. Blenkarn) is such a complimentary parliamentarian, I am sure we will be in a position to offer him a similar courtesy at the appropriate time. I guess we have got used to the courtesies we have received from the Hon. Member for Mississauga South.
What we are talking about here is legislation which forms only a small part of what has been heralded as a major thrust towards banking reform. Unfortunately, when one asks about banking reform, one has to ask where the policy is. All we are getting is bits and pieces, small particles which do not add up to a whole.
May 4, 1987

Are you about to get to your feet, Mr. Speaker?


The Acting Speaker (Mr. Paproski):: Yes.


Lloyd Axworthy: Fine. 1 will resume my speech tomorrow. I thank the Elon. Member for Mississauga South (Mr. Blen-karn) for his stupidity.


The Acting Speaker (Mr. Paproski):: It being five o'clock, the House will now proceed to the consideration of Private Members' Business as listed on today's Order Paper.
[DOT] (WOO)


PRIVATE MEMBERS' BUSINESS-MOTIONS   ORGANIZED CRIME ESTABLISHMENT OF ROYAL COMMISSION
[Stage Direction]
The House resumed consideration of the motion of Miss Nicholson:
That, in the opinion of this House, the Government should consider the
advisability of appointing a Royal Commission to investigate organized crime
in Canada and to include in its report observations and recommendations on:
1.	the extent to which organized crime is present and active in Canada, particularly in such activities as drug trafficking and loan-sharking;
2.	the extent to which organized crime is connected to the institutions of Canadian society;
3.	action taken by the governments of other countries to investigate and curtail organized crime activities;
4.	legislation to enable the government to identify and appropriate the proceeds of organized crime;
5.	effective and appropriate punishment in instances of organized crime murder conspiracy; and
6.	possible guidelines for enforcement agencies in dealing with witnesses against organized crime.
The Acting Speaker (Mr. Paproski):: When the motion was last before the House, the Hon. Member for Okanagan North (Mr. Dantzer) had the floor. The Hon. Member for Capilano (Mrs. Collins).


Mrs. Mary Collins (Capilano):: Mr. Speaker, I am pleased to rise today to speak on the matter of legislation which, in part, suggests that the Government consider a royal commission to look into organized crime. Her motion also suggests that we should study the proceeds of organized crime. It is that aspect of the motion which I would like to address today because it is apparent that Canada is presently deficient in its ability to battle the scourge of organized crime by confiscating the fruits of crime.
It is apparent that criminals here are able to establish an opulent life-style through the profits from illegal activity and then laugh at the judicial system if caught. This exists because, once apprehended and sentenced, their financial empire continues unaffected by the judicial process. They serve their
Organized Crime
sentences only to be released to enjoy the benefit of their criminality which remains intact and untouched.
This is unfortunate on two counts. First, it brings the entire administration of justice into disrepute and, second, recognizes that traditional methods of sentencing based on deterrence, both specific and general, are woefully inadequate to deal with the modern phenomena of organized crime.
Police officers with experience in the area of organized crime will advise you of the frustration they feel when they have spent months or years on an investigation which has resulted in a substantial sentence handed down by the court. They know that they and society are laughed at when the criminal is released from the penitentiary to enjoy even increased wealth because of the wise investment of his or her criminal profits. There is a new slogan today: Crime definitely pays.
We should not fool ourselves into believing that this type of activity is limited to the drug trade. Its connections in the area of child pornography, prostitution and illegal gambling are well documented. Extortion and murder are merely the marketing skills of drug traffickers. Any consistent attack on this problem requires legislation against drug profits and other related criminal activity.
Today's modern criminal organization has become a "full service" institution. Anything from insurance fraud to arson is available for a price. It is at that monetary level that legislative initiative must be directed. It is the life-blood of the criminal enterprise. If it is cut off, the body that feeds it will die.
There is another aspect of this problem which bears mentioning as well. It is now becoming apparent that these criminal organizations have an impact that is not limited to police and health concerns. There is an economic and political element which is most disturbing. I refer to the recent newspaper articles which detailed the description of such organizations as the Medellin cartel in Colombia. This group is not only the source of much of the drug trade that is generated in the South American country of Colombia, but it also appears that this group is powerful enough to affect the stability and, therefore, the independence of that democracy. It lives by terror and assassination as a means of retaliation for any arrests of its members.
The Government and the judiciary of Colombia have been victims of these attacks, and it is obvious that this group is powerful enough to be a threat to the very continued existence of the Colombian state. All this terror is financed by the cocaine trade, 80 per cent of which comes from North America. Canada, along with other western nations, is financing the destruction of this democracy by enabling domestic criminal organizations to enjoy and enlarge their financial empires.


Mr. Charles Hamelin (Charlevoix):: Mr. Speaker, the motion presented by the Hon. Member for Trinity (Mrs. Nicholson) which proposes appointing a royal commission of Inquiry on organized crime in Canada is, I think, at least as far as the intent of the motion is concerned, based on the assumption that organized crime exists in Canada and this despite that memorable cliche that crime does not pay. It has been said time and time again, I learned it when I was in school, and I have even heard it on television as a slogan: crime does not pay. Mr. Speaker, if crime did not pay, there would be no crime. When our policemen tell us proudly that 62 per cent or 50 per cent or 45 per cent of the crimes committed in
this country are solved, there are still 50 per cent that are not, and in many cases they have paid very well indeed. The concept that crime does not pay just does not wash, Mr. Speaker.
Of course, when you get caught, it is another story. In any event, what the Hon. Member wanted to point out is that it is absolutely necessary to fight organized crime. Mr. Speaker, it would be nice if the Hon. Member had been here today to defend her Bill, because the Liberal benches are not exactly crowded today. For the last 15 minutes I have not seen a soul. However, Mr. Speaker, the underworld exists-


The Acting Speaker (Mr. Paproski):: I had hoped the Hon. Member would not mention the attendance of anyone in or out of the Chamber. They may be behind the curtain or watching the Hon. Member on television.


Charles-André Hamelin: Mr. Speaker, your attitude to the Opposition is most charitable.
Mr. Speaker, there is an underworld in Canada. There are people who, as we say in Quebec, would kill their mother to go to the orphan's dance. There are people who will stop at nothing. The end justifies the means, however sordid. The concept of gain, of venality is so ingrained that they stop at nothing to get what they want. They will stop at nothing to organize crime, to make it into a regular system, to institutionalize it. Actually, Mr. Speaker, the underworld, however somber and sordid, has become part of our world as well. Mr. Speaker, many people cannot help admiring the way certain criminals or gangsters pull off a particularly successful coup.
Who could resist making a good bargain at a certain point, Mr. Speaker, buying the little gold watch at an absolutely unbeatable price? Of course, when it has been stolen, there is a problem, but we don't even question that.
This is a good time of the year to talk about income tax. Well, Mr. Speaker, we all try to cheat the income tax system a little now and then. Organized crime exists because the seed of crime is present in all of us.
My colleague also asks for a Royal Commission on organized crime in Canada. Organized crime is organized not only in Canada, but in the United States, in South America, and, why not, in Iran, in Thailand, just about everywhere? This Commission should work in every direction, as brilliantly demonstrated by CECO, the Quebec Commission on Organized crime, by catching a few leaders or a few gangs! Organized crime has its roots a bit everywhere in the world. Therefore, what we need is not a Royal Commission on organized crime in Canada but maybe an international commission of inquiry, but at what cost?
May 4, 1987

Furthermore, if we want to know the way organized crime operates, how it works, I think it has been known for a long time to our policemen. I think it is not very useful to explain all the tricks those people use to get what they want. 1 think the problem comes mainly from our Criminal Code, Mr. Speaker.
We live in a society which has a lot of respect for the individual. We have our Charter of Rights. We talk about human rights, but our system that shows enormous respect for those rights treats with the greatest care men and women who are known criminals, underworld figures who come to court dressed up to the nines, who demand the best consideration and have committed a countless and unbelievable number of crimes very difficult to prove. That is a problem. Our policemen have to get almost ironclad evidence confirmed by eyewitnesses. It is extremely difficult to get criminals convicted. Policemen are at their wits' end. They have thick records on some people whose guilt is impossible to prove in court. It is extremely difficult to get a conviction. And our judicial system that is undoubtedly too generous, too permissive, allows those individuals to go scot-free all too easily. Often our whole parole system comes into play, and so on and so forth. Those underworld leaders keep at their job, their line of work. Imagine, we call that a line of work! We say: They work in their field. As you see, it is institutionalized indeed.
Personally, Mr. Speaker, despite my colleague's concerns, I feel the case has been made, it would be a waste of money. What would such a commission cost? Fifteen million dollars? Twenty million dollars? What use would it have? Drafting beautiful and thick reports only to shelve them. For a while, of course, the exercise could upset the underworld and a few heads could roll with additional investigators and endless prosecutions.
I think it would be better for this money to assist our police which, generally speaking, do an excellent work. I wish to commend the Surete du Quebec, and the Royal Canadian Mounted Police well known for their good name. With this money they could set up more specialized teams, increase their communications network, strenghten their international relations and communications, and equip themselves with state of the art tools in an effort to finally capture these underworld kingpins and dismantle organized crime.
Mr. Speaker, we should all work together towards amending our Criminal Code, making it more relevant and seeing that the work of our policemen bring these individuals the sentences they deserve.
I as well as police officers often wonder, Mr. Speaker, about the value of our system which like an huge net, lets bigger fish go through all the time and in greater number. It seems that only the small fish get caught. The sharks are the ones that escape, Mr. Speaker. Such is our system. We compare justice to a huge net where all the fish get trapped but for fear of condemning an innocent we release a few. What I find interesting is the fact that the big sharks manage to go through this net and the small fish, the little guy, the diminutive get caught easily.
Organized Crime
I agree with my colleague that the appropriation of the proceeds of organized crime could help us effectively and actively fight this criminal element of our society by providing us the necessary financial and manpower resources to stand up to it in the most direct way.


Svend Johannes Robinson: Mr. Speaker, that is a tough act to follow, but I will try. I am pleased to participate in the debate on the motion put forward by the Hon. Member for Trinity (Miss Nicholson) that a royal commission be established to investigate organized crime in Canada.
The Hon. Member for Trinity has set out a number of suggested terms of reference for this royal commission into organized crime, and I want to take this opportunity to say a few words about the extent to which we as a society should be examining our system of justice to ensure that, in fact, it reflects the principles of equity and fairness and those principles which should be at the heart of an effective system of justice so that it is not one that primarily targets those who are most vulnerable and weak in our society.
Let me begin by quoting from Jessica Mitford, a well-known author who wrote the following in 1973 in a book entitled Kind and Unusual Punishment:
Envision, if you can, a prison system populated primarily by the white and well-to-do, convicted of crimes that are peculiar to the affluent: price-fixing, product adulteration, industrial pollution, criminal neglect of industrial safety standards-(knowingly selling unsafe automobiles) violation of the minimum wage laws. That this notion seems like the wildest flight of fancy is already a commentary on the class character of the prison system.
It is axiomatic that as long as privileges of class and colour prevail in a society, this state of affairs will be reflected in its prisons and will determine who coerces whom.
I think those words are accurate and well founded just as were the words of the Chief of Police in suburban Saanich, British Columbia, John Post. He said, and I quote:
You see very few privileged people in jail,... The old saying that there is a law for the rich and a law for poor is alive and well.
My colleague, the Hon. Member for Charlevoix (Mr. Hamelin) talked about the big fish and the little fish and the fact that the big fish are very seldom caught by the net. I think on that point, if not on all of the points he made, I am in agreement. I think there are many examples of this.
I recently had the honour of being invited to speak as a graduation speaker at the Matsqui Institution campus of Simon Fraser University in British Columbia. Simon Fraser offers a very excellent program on post-secondary education. As I looked around at that captive audience, as it were, I asked myself how many of those prisoners were there because they had broken Canada's laws with respect to the environment, because they had polluted our waters or poisoned our lakes and streams. How many of those prisoners were there as a result of corporate negligence? How many of them were there as corporate executives who, through their negligence, took actions which resulted in the death or serious injury to workers?

May 4, 1987
Organized Crime
We know that some 700 people in 1984 died in the workplace. So when we talk about organized crime and white-collar crime, I think it is important that we not lose sight of how we as a society define crime. I suspect that not many of the prisoners in that particular institution, or in any other institution in Canada, were responsible for manufacturing unsafe or hazardous products. However, corporate executives, in their desire for profit, manufactured flammable children's night-gowns and automobile executives manufactured automobiles they knew were dangerous and a risk to the safety of society.
Finally, when we talk about organized crime and white-collar crime, I think it is important to note as well that there has been quite a significant increase in the level of this type of crime. As long ago as 1980, it was revealed that the level of white-collar crime in Canada was increasing dramatically. Over $1 billion a year, for example, was lost in insurance fraud alone. In 1972, the RCMP had about 2,500 active files on white-collar offences. At the end of 1978, some six years later, there were in excess of 10,000 files. So when we talk about crime and an increase in the level of crime in our society, we must not lose sight of white-collar crime as well and the extent to which our society is still not prepared to tackle that as a serious problem.
There are many examples of this crime, whether it be security-related fraud, embezzlement, pilferage, insurance fraud, computer assisted crime, commercial counterfeiting of parts or, indeed, of money, arson and a whole range of similar crimes. The offence of pollution is a very serious one, yet our society still does not take it seriously enough. It is ironic that back in 1307 the penalty in England for violating air pollution standards was capital punishment. In 1986 the maximum fine a Canadian court could impose for an offence under the Federal Fisheries Act was $50,000. I have not heard the Hon. Member for Peterborough (Mr. Domm) suggest that we string up corporate executives who are responsible for pollution, for destroying our environment or responsible, through negligence, for the death of workers. No, the Hon. Member is silent on that particular matter.
What about the corporations which are responsible for selling hazardous and unsafe goods? Canada Packers in 1981 pleaded guilty to selling a contaminated drug which was potentially lethal for pregnant women. Did those corporate executives who were responsible go to jail? Of course not. They were fined the maximum fine under the Food and Drugs Act of $5,000. They were fined $5,000 for selling contaminated drugs which were potentially fatal for pregnant women.
Our society has to re-examine the way in which we define crime. We have to examine as well those who are in fact prosecuted for crimes. My colleague, the Hon. Member for Trinity (Miss Nicholson), has put forward a motion with respect to the particular role of organized crime. She has focused on the extent of the involvement of organized crime in
a number of areas, including drugs, loan sharking and other illegal activities.
I see my colleague the Hon. Member for Megantic- Compton-Stanstead (Mr. Gerin) is in the House. I think it is interesting to note that he and some of his colleagues from the Province of Quebec have urged the Government to take action with respect to corporate donations to political Parties in order to eliminate the risk that this may lead to corruption, illegality and wrongdoing, and I congratulate the Hon. Member for bringing forward this proposal. I think it is an excellent one and one we should be looking at it in the context of our discussions on white-collar crime.
Surely, as well, we have to ask ourselves how it is that organized crime makes these massive profits. We know that its profit is something in the order of $10 billion a year and of that $10 billion, drugs are the big money makers at more than $9 billion a year. Surely we should ask ourselves whether our approach to drugs in Canada is one which ultimately results in incredible profits for a small number of people at the highest possible level, and if we should not take another look at our drug laws. Are they effectively serving our community or just serving the interests of a very small number involved in organized crime?
Similarly, organized crime is involved in other activities, including prostitution, pornography, theft, counterfeiting and fraud. As a result of the tabling of recent pornography provisions in this House, I suspect we may even see a greater role for organized crime. This Government has failed miserably to make that fundamental distinction between erotica and pornography which is so essential. In not doing so, the Government will drive it underground right into the hands of organized crime.
I suggest that we as a society must re-examine our priorities with respect to criminal law and recognize that there must not be any longer one system of law for the rich and the powerful and another quite different system of law for those who are poor and powerless.
Recently, three corporate officials in Illinois were convicted of murder as a result of the intentional causing of the cyanide poisoning deaths of employees through unsafe work practices. The corporate boardroom surely cannot be exempt from the reach of criminal law, and I would hope that any royal commission which examines the role of organized crime in our society would look very carefully as well at the whole question of white-collar crime during the course of that much needed examination.


Hon. Bob Kaplan (York Centre):: Mr. Speaker, I am always interested in initiatives proposed by my colleagues here in the House of Commons about criminal matters. I am particularly supportive of the motion which is before us today moved by my colleague, the Hon. Member for Trinity (Miss Nicholson), which deals with a subject of considerable importance in major urban centres as well as in all parts of Canada. It has to do with the fact and presence of organized crime.
May 4, 1987

Organized crime is not a new phenomenon by any stretch of the imagination. However, occasionally, its existence is denied in Canada, and then usually within weeks of such denial by someone in authority there is some concrete evidence of it. I believe that organized crime is present in Canada. It is simply the existence of even as small a group as two or more individuals consorting together on a continuing basis to participate in illegal activity either directly or indirectly for gain.
To my way of thinking these are illegal activities which are not logically or necessarily related to each other. They are different types of activities such as those involving drugs and prostitution, the fencing of property, loan sharking and the importation and distribution of pornographic material. I have that type of activity in mind when I think of organized crime. I know that such activity occurs in our country.
I wish to focus on one particular part of the mandate proposed for the establishment of a royal commission to investigate organized crime, since it is quite broad. It includes an examination of the extent to which organized crime is present and active in Canada, particularly in such activities as drug trafficking and loan sharking; the extent to which organized crime is connected to the institutions of Canadian society; action taken by the Governments of other countries to investigate and curtail organized crime activity; legislation to enable the Government to identify and appropriate the proceeds of organized crime; effective and appropriate punishment in instances of organized crime murder conspiracy; and possible guidelines for enforcement agencies in dealing with witnesses against organized crime.
You might find it interesting, Mr. Speaker, if I offer a couple of my own reflections on the subject of organized crime in Canada. It is a business. One of the interesting things that is found in organized crime in Canada is that it tends to resemble in some ways other businesses in one particular sense. Very often it tends to be a branch plant type of operation, as is the automotive industry or the plastics and chemicals industry. We find that such businesses do not appear before FIRA. They do not seek the permission of the Government to take over an existing business or to establish a new enterprise.
It should not be surprising, and it is a fact, that organized crime has a type of branch plant mentality in a great many cases. While in other areas of life we may want to encourage the development of indigenous Canadian businesses, I think in the case of organized crime we are interested in detection, in arrest and in prosecution of the branch plant nature of such operations. More so than with other crimes in Canada which are indigenous we can work in co-operation with other good, effective police forces in other countries to identify the kingpins and the agents who are involved in the operation to bring them to justice.
I want to express some criticism now of the failure of the Government to deal with the area of developing Criminal Code responses to organized crime in Canada. This is basically
Organized Crime
covered by the third and fourth parts of the Hon. Member's motion, but more particularly in part No. 4. What I think is needed are more tools to fight organized crime. When the Prime Minister of Canada (Mr. Mulroney) identified drugs as an epidemic in Canada, I thought what he might do to validate the expression of such a concern is to bring forward a number of new legislative tools for fighting organized crime. The most obvious example, something that we have in Canada in only a very preliminary and modest way in the Criminal Code, is the RICO legislation which is in effect in the United States. RICO is an acronym for Racketeer Influenced Corrupt Organization.
In the United States when an organized criminal or kingpin in crime is found, new legislation enables prosecutors to go after not only the criminal assets that are used in a criminal business but other assets that have been purchased with the proceeds of such crime, including other businesses. Perhaps we have all read of the American endeavour to take over by law enforcement agencies bakeries, laundries, airplanes, boats and so on used only very peripherally, if at all, in connection with a criminal operation but purchased with the proceeds of organized crime, and to take over, in particular, bank accounts. In Canada, bank accounts have a sanctity which in some ways is larger and more holy than bank accounts in Switzerland or in the West Indies. I know that bankers in this country are good Canadians who want to comply with the laws of the land and who do comply with our laws. However, I think they could benefit, and it would assist them in preventing organized crime from using banks and exploiting their facilities, if there were an easier way than there is at present in the law to seize a bank account when a certain level of evidence can be given that organized crime is responsible for the money in the account, that it is used in crime or derived from it.
I wish to see this debate move forward. I know there are other Hon. Members who wish to speak. Therefore, I would like at this time to move an amendment to the motion by adding at the end thereof the following:
"and that the Royal Commission report back within six months of its
appointment."


The Acting Speaker (Mr. Paproski):: The Hon. Member's amendment is in order.
The Chair recognizes the Hon. Member for Saskatoon East (Mr. Ravis) on debate.


Mr. Don Ravis (Saskatoon East):: Mr. Speaker, the Hon. Member for Trinity (Miss Nicholson) is to be commended for her interest in the extent to which organized criminal conspiracies are at work in Canada today. I am certainly pleased to speak in favour of her motion. The Hon. Member is a Member whom I have come to know over the last two and a half years in the House of Commons through a committee on which we serve. I have a lot of respect for the work that she does here in the House of Commons.

May 4, 1987
Organized Crime
I have considered the remarks and views advanced by Members of the Elouse when the matter was first discussed on March 12 last. Organized crime can be compared to a cancer intruding into the body of Canadian society. As was noted previously, the activities attributed to criminal organizations have taken many forms in the past and can be expected to continue to exploit and prey upon the weak and easily corrupted. I do not believe that any in this Elouse would doubt that the influence of organized criminal activity permeates throughout Canadian society. No part of Canada is immune to its tentacles. The presence of narcotics in the Far North is clear evidence of this. Through such activities as drug trafficking, the leeches of the criminal world are sucking the life-blood from our youth and ruining the lives of their loved ones.
Canadians are a strong and virtuous people. They may be surprised to learn to what extent organized crime has spread through the body of our society. It is indeed unfortunate that so many have been seduced by the lure of wealth and high living as portrayed in such media creations as Miami Vice to believe that they too might consider participating in such endeavours. The glamour is a fantasy. The reality is the suffering of exploited victims, the suffering of families, the suffering of those within the criminal organizations who serve those at the top of the pyramid.
An individual involved in organized crime today is likely to be outfitted in a grey business suit and his or her influence is likely to be as far-reaching as that of an important industrialist. He or she is not likely to be flamboyant and would be largely invisible to his or her fellow Canadian, but that makes his or her power for evil even greater.
The financial cost of organized crime is not limited to the vast illicit profits made through drug trafficking. When these people worm their way into legitimate businesses, the cost is borne by the public. One of the reasons for flourishing criminality is the lack of awareness on the part of the general public. The public is often the innocent accomplice of criminal schemes.
If the purpose of the proposed royal commission would be to highlight the efforts of the police, courts and others dedicated to fighting crime as well as to expose the true dimensions of organized crime so that illegal activities are unmasked, then there might be some positive results from the exercise. It may well be that the general public would learn things that are at present only known by criminal justice officials. Perhaps this information could be relied upon to support the passage of legislation required to combat organized crime in Canada. As well, it might be that a heightened awareness would enable Canadians to do what they can on an individual level to reduce the profitability of organized crime.
I was greatly impressed with what the Hon. Member for Lethbridge-Foothills (Mr. Thacker) said on March 12 of this year with regard to the number and variety of areas in which the present Government is actually moving, both internationally and on the domestic front, to deal effectively with the threat posed to Canada by organized crime. As was stated during the
first reading debate, there is already considerable movement at the federal level with officials of the Department of Justice and the Ministry of the Solicitor General discussing possible initiatives with their provincial counterparts. The task of improving the existing legislation while enhancing the capabilities of law enforcement agencies is well under way, and it is for this reason that I question the need for such a royal commission at this time.
I would like to caution both the Department of Justice and the Ministry of the Solicitor General to waste no time making these changes. I think the Canadian public is growing very impatient. The Archambault report was handed down a matter of four weeks ago and I read it with interest because of the capital punishment debate which is now going on in the House of Commons. The report says in essence that Canadians have lost confidence in the justice and penal systems. The systems have no credibility. Too many people are going to prison for minor crimes but not enough people who commit serious crimes are given sentences that really mean what they say. Too many people are being paroled from prisons when in fact they should probably be receiving longer sentences and serving full sentences. I say in not too light a vein that the justice and penal systems should certainly be reviewed with the greatest of haste.
By way of conclusion, I put forward my belief that all Hon. Members of the House appreciate the great concern over the extent of organized criminal activity in Canada voiced by the Hon. Member for Trinity. Further, we share her desire to see the Canadian criminal justice system rendered into an effective means of addressing this problem. It has been a pleasure for me to speak on today's Private Members' Motion because, as I said a moment ago, I think it relates very much to many other issues we are discussing in the House of Commons at this time and particularly to the whole issue of the justice system which I feel should certainly be reviewed.
[ Translation]


Mr. Francois Gerin (Parliamentary Secretary to Minister of Justice and Attorney General of Canada):: Mr. Speaker, I would suggest that the motion is well intentioned because nobody in Canada is in favour of organized crime. Quite the contrary, all of us would want any kind of crime, not only organized crime but any crime whatever disappear from the life of Canadians, all the more so of course when we are dealing with an organization which implies constant premeditation, therefore a crime we want to fight against with even more dedication. The Hon. Member for Trinity (Miss Nicholson) is sponsoring a motion urging the House and recommending to the Government that a royal commission be appointed to investigate organized crime, a well intentioned motion if I ever heard one. However this raises a number of other problems because speaking of a royal investigation commission, Mr. Speaker, we have had some on other subjects, including at the provincial level. In Quebec, for example, the Commission of Inquiry on Organized Crime or the other one on tainted meat immediately springs to mind, but they did create rather serious problems for society.
May 4, 1987

A royal commission of inquiry is a very expensive tool. Today I note that the Liberal Member who spoke proposed an amendment to the motion of his colleague so that the royal commission of inquiry would complete its work within six months. I can understand why they would amend their own motion, precisely because they know full well that most of the time a royal commission of inquiry moves very slowly and takes years before producing a report. So in that sense one is justified to wonder whether it is the best way to fight against crime or against organized crime.
The process of that royal Commission is extremely costly and time consuming, as well as highly contentious because it ignores in most cases some of the basic rules of evidence which Canadians take pride in, which are traditional rules in our whole legal system and are used to protect people, to uphold the most basic rights of people, namely that anyone is deemed innocent and that no one can be declared guilty unless he has been deemed innocent in the first place. However, when a Royal Commission inquires into organized crime, for instance, it attracts so much public attention that anyone who is summoned to testify before that commission is indicted by the people without being given an opportunity to defend himself, to take advantage of the rules governing evidence which are provided in the Canadian legislation and the Canadian Charter of Rights and Freedoms. I therefore think, Mr. Speaker, that we should have some second thoughts about this before we decide to support the establishment of such a Royal Inquiry commission.
Moreover, and 1 read again paragraphe 5 of the motion, the Royal Enquiry Commission, according to the Liberal member, should include in its report observations and recommendations on:
5. effective and appropriate punishsment in instances of organized crime
murder conspiracy;
As you know, Mr. Speaker, such a statement is totally irrelevant in a motion because if there is evidence that people, whether they belong to organized crime or not-this distinction is irrelevant again-have conspired to commit murders, if such evidence is in the hands of our police departments, there is no need for a Royal commission: Let those people be charged right away under the Criminal Code, without waiting six months, a year, or two years before they are charged and taken into custody. It is not clear what the Liberal member is attempting to do with this Royal commission of Inquiry. If she has evidence that people, whether they belong to organized crime or other associations, have conspired to commit murders, let them be indicted and sentenced, but let that happen now, and not in two years time.
Mr. Speaker, as several members mentioned earlier, organized crime derives its profits mostly from the sale of narcotics. It is everybody's secret, as you know, and it is also a well-known fact that criminals are usually engaged in criminal activities because there is some profit to be derived, and when
Organized Crime
a profit is at hand, criminals get organized to derive even greater profits. However, Mr. Speaker, although we do agree that the problem lies with the sale of narcotics, we should also agree that Canadian police forces have a number of efficient strategies at their disposal to deal with the sale and traffic of narcotics.
Let me just mention off the cuff a few of those instruments that are in the hands of police forces, to show that there is no need for a Royal Inquiry commission to tell us again what is already being done at the present time. Electronic eavesdropping exists and we use it, although it could possibly be used more. All police forces in Canada, even undercover agents, Mr. Speaker can use it. I am a lawyer, and I have seen on many occasions, during proceedings, that entire organizations had been destroyed through the use of undercover RCMP officers! Information obtained from repentant criminals allows also the police to make some good hauls. We could probably improve somewhat the means given to the police. If those who have the legal means to stop drug trafficking had more money, they could increase electronic surveillance, raise the number of officers to be trained as undercover agents and also the number of border guards.
My riding has 200 kilometres of border. Do you know how many RCMP officers there are to cover these 200 kilometres? Only three. How can they be blamed if they let some drug enter Canada! Here is an area where we could act.
One of the things which have been suggested and that the Government will probably propose in the next few weeks or months is to seize the profits from crime. If you do that, you undermine the foundations of organized crime. We could also, Mr. Speaker, and I am in favour of it, increase the sentences. We could raise the minimum prison term to seven years for importation of drugs into Canada, as we have seen that it can be effective.
The importer will know that he will not have a smile from the judge, he will not be given a reprimand, he will not be put on probation, he will not be fined, he will not get a month in jail. If he imports drugs into Canada he will get a seven-year prison term. If we were going to do the same for all drug related crimes, Mr. Speaker, we would see a lowering of the rate of that type of crime.
Mr. Speaker, the Hon. Member for Burnaby (Mr. Robinson) mentioned the efforts I have made to abolish contributions to political parties. I thank him for his kind words, but I do not see the connection with organized crime. But even so I want to take this opportunity, Mr. Speaker, to tell him that I thank him for supporting the efforts that I make. However, I must stress that these efforts were to the effect of preventing not only corporations or associations but unions as well from making contributions to any political group. And God knows how many such contributions the New Democratic Party receives from unions, from labour organizations.

May 4, 1987
Patent Act
So, rather than bringing up that point in a debate that does not concern that, I suggest the Hon. Member should talk his own party into approving the propositions that I have always advocated.
Mr. Speaker, the motion put forward by the member for Trinity is based on a very good intention, but the means that she proposes is certainly not the best, at this time, to fight organized crime.


Jean-Robert Gauthier: Mr. Speaker, I know you would like to change the seconder of the motion before we proceed with the debate.


The Acting Speaker (Mr. Paproski):: That is correct. I notice that the Hon. Member for Ottawa-Vanier (Mr. Gauthier) seconded the main motion, and I recognize that the Hon. Member for Bourassa (Mr. Rossi) is the seconder of the motion of the Hon. Member for York Centre (Mr. Kaplan).


Mr. Gabriel Desjardins (Temiscamingue):: Mr. Speaker, it is with considerable interest that I take part in today's debate. Although I am not a lawyer, a criminologist or a former police officer, I take part with great interest in this debate and I wish to congratulate the Hon. Member for Trinity (Miss Nicholson) for her initiative. I hold this Hon. Member in high esteem, having learned to appreciate her as a member of the public accounts committee of which she is the chairperson and where she does an excellent job.
Moreover, I wish to indicate that as a member of our Standing Committee on Private Members' Business, I received this motion which much interest, just as the other committee members did. There is a wide concensus to allow the House to debate this motion as moved.
Yet, I wish to take this opportunity to indicate that I am against appointing a Royal Commission to investigate organized crime for several reasons, the first of which being that if we held a poll or a referendum from coast to coast to know whether Canadians are in favour of appointing and financing such a Royal commission of Inquiry on organized crime, my impression is that most Canadians would not support it. When we realize the costs . . . the fact is that past Royal commissions have involved enormous costs. Most of the time, these costs amount to several millions of dollars, and for what result, Mr. Speaker? As my friend the Hon. Member for Charlevoix (Mr. Hamelin) said a while ago, they unfortunately end up being shelved without any follow-up.
We can easily imagine the reaction of the Canadian public to such an investigation. We would give them the impression that they are not properly protected against organized crime and that nothing is being done in this country.
In my opinion, there are many Hon. Members who think that there is no evidence that organized crime is more widespread than five or 10 years ago. If one thing is sure, Mr. Speaker, it is that our police forces, whether at the federal, provincial or municipal level, are now better organized and have more sophisticated means to fight against organized crime.
Mr. Speaker, regularly in the headlines and in the newspapers we read about the successful raids of our police force and I think we should now take advantage of this occasion to show them how grateful we really are for fighting against organized crime with such dedication.
Mr. Speaker, the Canadian people could be left with the impression that nothing is being done when in fact it simply is not the case. I believe that our police officers are quite efficient in their fight against organized crime. We will not find the solution there. I see that my time is over. I think that our Criminal Code should be amended and that our courts should come down a lot harder on criminals.


The Acting Speaker (Mr. Paproski):: I am sorry but the hour provided for the consideration of Private Members' business has now expired.

Pursuant to Standing Order 36(2), the Motion is dropped to the bottom of the order of precedence on the Order Paper.




[Stage Direction]
The House resumed from Friday, May 1, consideration of Bill C-22, an Act to amend the Patent Act and to provide for certain matters in relation thereto, as reported (with amendments) from a legislative committee.
Mr. Speaker:: It being six o'clock p.m., pursuant to Standing Order 13(5) the House will now proceed to the taking of the deferred divisions on the report stage motions to Bill C-22, an Act to amend the Patent Act and to provide for certain matters in relation thereof.
Call in the Members.
And the division bells having rung:


Mr. Speaker:: Accordingly, the first question is on Motion No. 2. Mr. Dingwall moved:
Motion No. 2
That Bill C-22, be amended in Clause 15 by adding immediately after line 34 at page 10 the following:
May 4, 1987

""research" is exploratory and innovative work undertaken on a systematic basis towards the acquisition of new knowledge in new ways. New knowledge involves the integration of newly acquired information into existing hypothesis, the formulation and testing of new hypothesis or the reevaluation of existing observations;".


Mr. Speaker:: I declare the motion lost.
Patent Act


Mr. Gray (Windsor West):: Mr. Speaker, you may find, if you inquire, that there will be a disposition by Members of the House to apply this vote to the remaining motions offered by the Official Opposition. This may also be the case with respect to those offered by the New Democratic Party.


Mr. Riis:: After a lot of discussion, and some hesitation since we oppose the Bill and would certainly like to have these amendments passed, to facilitate the business of the House we are prepared to co-operate with my hon. colleague, the Member for Windsor West (Mr. Gray), to ensure that this is dealt with as quickly as possible.


Mr. Speaker:: The Chair can take judicial notice of the fact that there has been a great deal of discussion. Is it agreed that the division just taken, as recorded, apply to the other report stage motions?


Some Hon. Members:: Agreed.


Mr. Speaker:: Accordingly, Motions Nos. 3, 4, 5, 11, 12, 14, 16, 17, 18, 19, 21, 22, 23, 24, 25, 26, 27, 28, 30, 31, 32, 33, 34, 35, 36, 37, 39, 40, 41, 42, 43, 44, 45, 46 and 47 are lost.


Jean-Robert Gauthier: Mr. Speaker, you said they were lost, but they will be recorded in Hansard as having been taken.


Mr. Speaker:: The next question is on Motion No. 3. Mr. Dingwall moved:
Motion No. 3
That Bill C-22, be amended in Clause 15 by striking out lines 13 to 18 at page
11	and substituting the following therefor:
"consumption in Canada".
Motion No. 13
That Bill C-22, be amended in Clause 15 by striking out lines 28 to 32 at page
12	and substituting the following therefor:
"or production of medicine."
Motion No. 15
That Bill C-22, be amended in Clause 15 by striking out lines 3 to 7 at page 13 and substituting the following therefor:
"production of medicine".


Mr. Speaker:: I declare the motions lost. The next question is on Motion No. 4. Mr. Orlikow moved:
Motion No. 4
That Bill C-22, be amended in Clause 15 by striking out lines 18 to 49 at page 11 and lines 1 and 2 at page 12 and substituting the following therefor:
"for sale for consumption in Canada until the expiration of four years after the date of the notice of compliance."


Mr. Speaker:: I declare the motion lost.
The next question is on Motion No. 5. Mr. Dingwall moved:
Motion No. 5
That Bill C-22, be amended in Clause 15 by striking out lines 19 to 49 at page 11 and lines 1 and 2 at page 12 and substituting the following therefor:
May 4, 1987

"(2) The prohibition under Subsection (1) expires in respect of a medicine four years after the date of the notice of compliance that is first issued in respect of a medicine where that notice of compliance is issued after the coming into force of this section."


Mr. Speaker:: I declare the motion lost. The next question is on Motion No. 11. Mr. Dingwall moved:
Motion No. 11
That Bill C-22, be amended in Clause 15 by striking out lines 8 to 14 at page 12 and substituting the following therefor:
''(4) Subsection (1) does not apply in respect of a medicine where
(a)	on the day of coming into force of this section a notice of compliance has been issued to the patentee and a licence has been granted under section 41 in respect of the medicine but no notice of compliance has been issued to the licensee; or
(b)	on the day of coming into force of this section a notice of compliance has been issued to the patentee and a notice of compliance has been issued to a person other than the patentee but no licence has been granted; or
(c)	on the day of coming into force of this section, a notice of compliance has been issued to the patentee but no notice of compliance or licence has been issued to a person other than the patentee."


Mr. Speaker:: I declare the motion lost. The next question is on Motion No. 12. Mr. Orlikow moved:
Motion No. 12
That Bill C-22, be amended in Clause 15 by striking out lines 11 to 14 at page 12 and substituting the following therefor:
"licence has been issued in respect of the medicine or a notice of compliance
in respect of the medicine has been issued to a person other than the Mr. Speaker: I declare the motion lost. The next question is patentee."	on Motion No. 14. Mr. Orlikow moved:
The Elouse divided on the motion (Mr. Orlikow), which was negatived on the following division:
Motion No. 14
That Bill C-22, be amended in Clause 15 by striking out lines 41 to 49 at page 12 and lines 1 to 10 at page 13 and substituting the following therefor:
(Division No. 98)
++YEAS
Members
Althouse	Gauthier	McDonaldBaker	Gray	(Broadview-Benjamin	(Windsor West)	Greenwood)Berger	Grondin	MurphyBlackburn	Hopkins	Nicholson(Brant)	Hovdebo	(Trinity)Broadbent	Isabelle	NystromCassidy	Kaplan	Ouelletde Corneille	Keeper	Pennerde Jong	Langdon	RiisEpp	MacLellan	Robinson(Thunder Bay-	Manly	RompkeyNipigon) Foster Garneau	McCurdy	Rossi Young -35
++NAYS
Members
Andre	Daubney	GirardAttewell	Desjardins	GottseligBernier	Edwards	GrahamBertrand	Ellis	GrayBlenkarn	Epp	(Bonaventure-iles-de-Bourgault	(Provencher)	la-Madeleine)Brightwell	Fennell	GreenawayBrowes	Ferland	GriseCadieux	Fontaine	HamelinClark	Forrestall	Hamilton(Brandon-Souris)	Fraleigh	HardeyCollins	Fretz	HawkesComeau	Gass	HicksCrofton	Gerin	HnatyshynCrosbie (St. John's West)	Gervais	Holtmann
"41.14 (1) Notwithstanding anything in section 41 or in any licence granted under that section, where a patentee of an invention pertaining to a medicine gives notice in the form and manner prescribed to the Commissioner, within six months after
(a)	the date on which this section comes into force, where the notice of compliance that is first issued in respect of the medicine is issued after June 27, 1986 and before the date on which this section comes into force, or
(b)	the date of the notice of compliance that is first issued in respect of the medicine, where the notice of compliance is issued after the date on which this section comes into force, that the patentee intends to make the medicine in Canada for the purposes of completely or substantially supplying the Canadian market for that medicine, the Commissioner shall, by order, declare that this subsection applies in respect of the invention, and in such case, while the order remains in effect, no person shall, under a licence granted under section 41 in respect of a patent for an invention pertaining to the medicine, have or exercise any right,
(c)	where the invention is a process, to use the invention for the preparation or production of medicine, or
(d)	where the invention is other than a process, to make or use the invention for medicine or for the preparation or production of medicine for sale for consumption in Canada, until the expiration of 10 years after the date of the notice of compliance that is first issued in respect of the medicine.
(2)	Every patentee who has given a notice to the Commissioner under subsection (1) shall provide the Commissioner with
(a)	in such form and manner and at such times and subject to such conditions as are prescribed, information and documents concerning the medicine-making activity to which the notice relates; and
(b)	such additional information or documents with respect to the matter referred to in paragraph (a) as the Commissioner may require, within such time as the Commissioner may specify.
(3)	Where, after providing every person against whom an order of the Commissioner under this subsection is proposed to be made with a reasonable opportunity to be heard, the Commissioner finds that a patentee in respect of a medicine
(a) has failed to provide information or documents in accordance with subsection (2),
May 4, 1987

(b)	has not commenced making in Canada the medicine that is the subject of the notice under subsection (1) within two years after the date of the notice of compliance that was first issued in respect of the medicine, or
(c)	after the two years referred to in paragraph
(b), is not making in Canada the medicine that is the subject of the notice under subsection (1) so as to completely or substantially supply the Canadian market for the medicine, the Commissioner may, by order, direct that, effective on the coming into force of the order, the prohibition set out in subsection (1) ceases to apply in respect of the medicine and, in any case where paragraph (b) applies, the Commissioner may also by such order direct that the prohibition set out in subsection 41.11(1) ceases to apply in respect of the medicine effective on the coming into force of the order."


Mr. Speaker:: I declare the motion lost. The next question is on Motion No. 16.


Mr. Orlikow moved:: Motion No. 16
That Bill C-22, be amended in Clause 15 by adding immediately after line 15 at page 13 the following:
"(3) Subsection 41.14(1) does not apply in respect of any licence or application for licence under section 41 where the Commissioner finds that the licence that has been obtained or is sought by a person is necessary to the utilization, for the manufacture and sale of a medicine, of a biological process patented by the person, or for which a patent has been applied, and the process has been invented and developed by the person in Canada to such extent as is prescribed."
The House divided on the motion (Mr. Orlikow), which was negatived on the following division.
(Division No. 100)
++YEAS
Members
Althouse Baker Benjamin Berger Blackburn (Brant) Broadbent Cassidy de Corneille de Jong Epp
(Thunder Bay- Nipigon)
Foster
Garneau
Andre
Attewell
Bernier
Bertrand
Blenkarn
Bourgault
Brightwell
Browes
Cadieux
Clark
(Brandon-Souris) Collins Comeau Crofton Crosbie
(St. John's West) Daubney Desjardins Edwards
Gauthier
Gray
(Windsor West) Grondin Hopkins Hovdebo Isabelle Kaplan Keeper Langdon MacLellan Manly McCurdy
++NAYS
Members
Ellis
Epp
(Provencher)
Fennell
Ferland
Fontaine
Forrestall
Fraleigh
Fretz
Gass
Gerin
Gervais
Girard
Gottselig
Graham
Gray
(Bonaventure-iles-dela-Madeleine)
Greenaway
McDonald (Broadview- Greenwood) Murphy Nicholson (Trinity) Nystrom Ouellet Penner Riis
Robinson
Rompkey
Rossi
Young -35
Grise
Hamelin
Hamilton
Hardey
Hawkes
Hicks
Hnatyshyn
Holtmann
Horner
Hudon
James
Jardine
Johnson
(Bonavista-Trinity-
Conception)
Joncas
Kelleher
Kempling
Kindy

May 4, 1987
King	Patent Act Nickerson	TaylorLadouceur	Oberle	TowersLawrence	O'Neil	TremblayLayton	Paproski	(Lotbiniere)Lesick	Pietz	TupperLewis	Plourde	TurnerMacDonald	Price	(Ottawa-Carleton)(Kingston and	Ravis	Vankoughnetthe Islands)	Redway	VezinaMailly	Ricard	VincentMalone	Schellenberg	WarnerMantha	(Nanaimo-Alberni)	WhiteMartin	Scott	WilsonMayer	(Victoria-Haliburton)	(Swift Current-Mazankowski	Scott	Maple Creek)McKinnon	(Hamilton-Wentworth)	WinegardMcKnight	Scowen	WiseMcMillan	Siddon	Witer-104Minaker	Sparrow	Mitges	Speyer	Moore	Stackhouse	Nicholson	Stevens	(Niagara Falls)	Stewart


Mr. Speaker:: I declare the motion lost.	The next question is
on Motion No. 17. Mr. Dingwall moved:		
Motion No. 17		
That Bill C-22, be amended in Clause 15 by striking out lines 17 to 20 at page		
13 and substituting the following therefor:		
''tion pertaining to a medicine shall provide, every three months, the Board		
with		
(a) in such form and manner and subject to such condi-".		
The Elouse divided on the motion (M		r. Dingwall), which
was negatived on the following division:		
Althouse	{Division No. 101)
 YEAS Members Gauthier	McDonald
Baker	Gray	(Broadview-Benjamin	(Windsor West)	Greenwood)Berger	Grondin	MurphyBlackburn	Hopkins	Nicholson(Brant)	Hovdebo	(Trinity)Broadbent	Isabelle	NystromCassidy	Kaplan	Ouelletde Corneille	Keeper	Pennerde Jong	Langdon	RiisEpp	MacLellan	Robinson(Thunder Bay-	Manly	RompkeyNipigon)	McCurdy	RossiFoster	Young -35Garneau	Andre	NAYS Members Collins	FennellAttewell	Comeau	FerlandBernier	Crofton	FontaineBertrand	Crosbie	ForrestallBlenkarn	(St. John's West)	FraleighBourgault	Daubney	FretzBrightwell	Desjardins	GassBrowes	Edwards	GerinCadieux	Ellis	GervaisClark	Epp	Girard(Brandon-Souris)	(Provencher)	GottseligGraham	MacDonald	ScottGray	(Kingston and	(Hamilton-Wentworth)(Bonaventure-lles-de-	the Islands)	Scowenla-Madeleine)	Mailly	SiddonGreenaway	Malone	SparrowGrise	Mantha	SpeyerHamelin	Martin	StackhouseHamilton	Mayer	StevensHardey	Mazankowski	StewartHawkes	McKinnon	TaylorHicks	McKnight	TowersHnatyshyn	McMillan	TremblayHoltmann	Minaker	(Lotbiniere)Horner	Mitges	TupperHudon	Moore	TurnerJames	Nicholson	(Ottawa-Carleton)Jardine	(Niagara Falls)	VankoughnetJohnson	Nickerson	Vezina(Bonavista-T rinity-	Oberle	VincentConception)	O'Neil	WarnerJoncas	Paproski	WhiteKelleher	Pietz	WilsonKempling	Plourde	(Swift Current-Kindy	Price	Maple Creek)King	Ravis	WinegardLadouceur	Redway	WiseLawrence Layton Lesick Lewis	Ricard Schellenberg (Nanaimo-Alberni) Scott (Victoria-Haliburton)	Witer-104


Mr. Speaker:: I declare the motion lost. The next question is on Motion No. 18. Mr. Dingwall moved:		
Motion No. 18		
That Bill C-22, be amended in Clause 15 by striking out line 28 at page 13 and substituting the following therefor:		
"ing the medicine in Canada and elsewhere, where such informa-".


Mr. Speaker:: I declare the motion lost. The next question is on Motion No. 19. Mr. Dingwall moved:		
Motion No. 19		
That Bill C-22, be amended in Clause 15 by striking out lines 12 to 14 at page 14 and substituting the following therefor:		
"(ii) any other patents of the patentee for inventions pertaining to medicine, whether granted".


Mr. Speaker:: I declare the motion lost. The next question is on Motion No. 21. Mr. Dingwall moved:
Motion No. 21
That Bill C-22, be amended in Clause 15 by striking out lines 17 to 28 at page 14.


Mr. Speaker:: I declare the motion lost. The next question is on Motion No. 22. Mr. Dingwall moved:		
Motion No. 22		
That Bill C-22, be amended in Clause 15 by striking out lines 44 to 46 at page 14 and substituting the following therefor:		
"price that is	excessive, the Board shall take	into consideration the
following".


Mr. Speaker:: I declare the motion lost. The next question is on Motion No. 23. Mr. Orkikow moved:
Motion No. 23
That Bill C-22, be amended in Clause 15 by striking out lines 48 and 49 at page 14 and lines 1 to 29 at page 15 and substituting the following therefor: "(a) the costs of making and marketing the medicine; and (b) the Industry Selling Price as published by Statistics Canada under the authority of the Statistics Act."


Mr. Speaker:: I declare the motion lost. The next question is on Motion No. 24. Mr. Dingwall moved:
Motion No. 24
That Bill C-22, be amended in Clause 15 by striking out lines 12 to 29 at page 15 and substituting the following therefor:
"tion;
(d)	the Consumer Price Index as published by Statistics Canada under the authority of the Statistics Act
(e)	the direct costs of making and marketing the medicine; and
(f)	such other factors as are prescribed or, in the opinion of the board, are revelant in the circumstances."


Mr. Speaker:: I declare the motion lost. The next question is on Motion No. 25. Mr. Dingwall moved:

May 4, 1987
Motion No. 25	Patent Act	Tremblay	Vincent	Wise(Lotbiniere)	Warner	W iter-104That Bill C-22, be amended in Clause 15 by striking out lines 21 to 23 at page	Tupper	White	15 and substituting the following therefor:	Turner	Wilson	"price that is excessive, the Board shall take	into consideration the	(Ottawa-Carleton) Vankoughnet	(Swift Current- Maple Creek)	toiiowing .	Vezina	Winegard


Mr. Speaker:: I declare the motions lost.		The next question is
on Motion No.	28. Mr. Dingwall moved:	
Motion No. 28
That Bill C-22, be amended in Clause 15 by striking out line 5 at page 16 and substituting the following therefor:
"sioner shall forthwith publish the ruling and shall concurrently inform the holder of'.


Mr. Speaker:: I declare the motion lost, on Motion No. 30. Mr. Dingwall moved:		The next question is
Motion No. 30		
That Bill C-22, be amended in Clause 15 by striking out lines 15 to 17 at page 17 and substituting the following therefor: "shall provide every three months the Board with		
(a) in such form and manner and subject to such condi-''.		
	YEAS Members	
Althouse	Gauthier	McDonaldBaker	Gray	(Broadview-Benjamin	(Windsor West)	Greenwood)Berger	Grondin	MurphyBlackburn	Hopkins	Nicholson(Brant)	Hovdebo	(Trinity)Broadbent	Isabelle	NystromCassidy	Kaplan	Ouelletde Corneille	Keeper	Pennerde Jong	Langdon	RiisEpp	MacLellan	Robinson(Thunder Bay-	Manly	RompkeyNipigon)	McCurdy	RossiFoster Garneau	NAYS Members	Young -35Andre	Edwards	GrayAttewell	Ellis	(Bonaventure-Iles-de-Bernier	Epp	la-Madeleine)Bertrand	(Provencher)	GreenawayBlenkarn	Fennell	GriseBourgault	Ferland	HamelinBrightwell	Fontaine	HamiltonBrowes	Forrestall	HardeyCadieux	Fraleigh	HawkesClark	Fretz	Hicks(Brandon-Souris)	Gass	HnatyshynCollins	Gerin	HoltmannComeau	Gervais	HornerCrofton	Girard	HudonCrosbie	Gottselig	James(St. John's West)	Graham	JardineDaubney	Desjardins


Mr. Speaker:: I declare the motion lost. The next question is on motion No. 31. Mr. Dingwall moved:
Motion No. 31
That Bill C-22, be amended in Clause 15 by striking out lines 6 to 17 at page 18.


Mr. Speaker:: 1 declare the motion lost. The next question is on Motion No. 32. Mr. Dingwall moved:
Motion No. 32
That Bill C-22, be amended in Clause 15 by striking out lines 21 to 24 at page 18 and substituting the following therefor:
"the order."


Mr. Speaker:: I declare the motion lost. The next question is on Motion No. 33. Mr. Orlikow moved:
Motion No. 33
That Bill C-22, be amended in Clause 15 by striking out line 27 at page 19 and substituting the following therefor:
"relates, in which case this part of the hearing is deemed private by the Board or Commissioner but the hearing shall resume in public once the information or documentation is dealt with."


Mr. Speaker:: I declare the motion lost. The next question is on Motion No. 34. Mr. Dingwall moved:
Motion No. 34
That Bill C-22, be amended in Clause 15 by adding immediately after line 18 at page 20 the following:
"(4) Notwithstanding anything in subsection (1), all rulings of the Board shall forthwith be made public, in a manner prescribed by regulation."


Mr. Speaker:: I declare the motion lost. The next question is on Motion No. 35. Mr. Dingwall moved:
Motion No. 35
That Bill C-22, be amended in Clause 15 by striking out lines 26 to 28 at page 20 and substituting the following therefor:
"cine Prices Review Board consisting of 5 members to be appointed by the Governor in Council.
(2) A majority of members shall constitute a quorum of the Board."
The House divided on the motion (Mr. Dingwall), which
was negatived on the following division:
(Division No. 116)
++YEAS
Members
Althouse	Gauthier	McDonaldBaker	Gray	(Broadview-Benjamin	(Windsor West)	Greenwood)Berger	Grondin	MurphyBlackburn	Hopkins	Nicholson(Brant)	Hovdebo	(Trinity)Broadbent	Isabelle	NystromCassidy	Kaplan	Ouelletde Corneille	Keeper	Pennerde Jong	Langdon	RiisEpp	MacLellan	Robinson(Thunder Bay-	Manly	RompkeyNipigon)	McCurdy	RossiFoster	Young -35Garneau	NAYS	Members	Andre	Hawkes	PietzAttewell	Hicks	PlourdeBernier	Hnatyshyn	PriceBertrand	Holtmann	RavisBlenkarn	Horner	RedwayBourgault	Hudon	RicardBrightwell	James	SchellenbergBrowes	Jardine	(Nanaimo-Alberni)Cadieux	Johnson	ScottClark	(Bonavista-Trinity-	(Victoria-Haliburton)(Brandon-Souris)	Conception)	ScottCollins	Joncas	(Hamilton-Wentworth)Comeau	Kelleher	ScowenCrofton	Kempling	SiddonCrosbie	Kindy	Sparrow(St. John's West)	King	SpeyerDaubney	Ladouceur	StackhouseDesjardins	Lawrence	StevensEdwards	Layton	StewartEllis	Lesick	TaylorEpp	Lewis	Towers(Provencher)	MacDonald	TremblayFennell	(Kingston and	(Lotbiniere)Ferland	the Islands)	TupperFontaine	Mailly	TurnerForrestall	Malone	(Ottawa-Carleton)Fraleigh	Mantha	VankoughnetFretz	Martin	VezinaGass	Mayer	VincentGerin	Mazankowski	WarnerGervais	McKinnon	WhiteGirard	McKnight	WilsonGottselig	McMillan	(Swift Current-Graham	Minaker	Maple Creek)Gray	Mitges	Winegard(Bonaventure-iles-de-	Moore	Wisela-Madeleine)	Nicholson	Witer-104Greenaway	(Niagara Falls)	Grise	Nickerson	Hamelin	Oberle	Hamilton	O'Neil	Hardey	Paproski


Mr. Speaker:: I declare the motion lost. The next question is on Motion No. 36. Mr. Dingwall moved:
Motion No. 36
That Bill C-22, be amended in Clause 15 by striking out lines 25 to 29 at page
21.
May 4, 1987

Patent Act


Mr. Speaker:: I declare the motion lost. The next question is on Motion No. 37. Mr. Dingwall moved:
(Division No. 118)
Althouse	YEAS Members Gauthier	McDonaldBaker	Gray	(Broadview-Benjamin	(Windsor West)	Greenwood)Berger	Grondin	MurphyBlackburn	Hopkins	Nicholson(Brant)	Hovdebo	(Trinity)Broadbent	Isabelle	NystromCassidy	Kaplan	Ouelletde Corneille	Keeper	Pennerde Jong	Langdon	RiisEpp	MacLellan	Robinson(Thunder Bay-	Manly	RompkeyNipigon)	McCurdy	RossiFoster	Young -35Garneau Andre	NAYS Members Greenaway	McKnightAttewell	Grise	McMillanBernier	Hamelin	MinakerBertrand	Hamilton	MitgesBlenkarn	Hardey	MooreBourgault	Hawkes	NicholsonBrightwell	Hicks	(Niagara Falls)Browes	Hnatyshyn	NickersonCadieux	Holtmann	OberleClark	Horner	O'Neil(Brandon-Souris)	Hudon	PaproskiCollins	James	PietzComeau	Jardine	PlourdeCrofton	Johnson	PriceCrosbie	(Bonavista-T rinity-	Ravis(St. John's West)	Conception)	RedwayDaubney	Joncas	RicardDesjardins	Kelleher	SchellenbergEdwards	Kempling	(Nanaimo-Alberni)Ellis	Kindy	ScottEpp	King	(Victoria-Haliburton)(Provencher)	Ladouceur	ScottFennell	Lawrence	(Hamilton-Wentworth)Ferland	Layton	ScowenFontaine	Lesick	SiddonForrestall	Lewis	SparrowFraleigh	MacDonald	SpeyerFretz	(Kingston and	StackhouseGass	the Islands)	StevensGerin	Mailly	StewartGervais	Malone	TaylorGirard	Mantha	TowersGottselig	Martin	TremblayGraham	Mayer	(Lotbiniere)Gray	Mazankowski	Tupper(Bonaventure-I les-de-	McKinnon	
la-Madeleine)

May 4, 1987
Patent Act
Turner	White
(Ottawa-Carleton)	Wilson
Vankoughnet	(Swift Current-
Vezina	Maple Creek)
Vincent	Winegard
Warner	Wise
Witer-104


Mr. Speaker:: I declare the motion lost. The next question is on Motion No. 39. Mr. Dingwall moved:
Motion No. 39
Redway
Ricard
Schellenberg
(Nanaimo-Alberni) Scott
(Victoria-Haliburton) Scott
(Hamilton-Wentworth) Scowen Siddon Sparrow
Speyer
Stackhouse
Stevens
Stewart
Taylor
Towers
Tremblay
(Lotbiniere)
Tupper
Turner
(Ottawa-Carleton)
Vankoughnet
Vezina
Vincent
Warner
White
Wilson
(Swift Current- Maple Creek) Winegard Wise
Witer-104
That Bill C-22, be amended in Clause 15 by striking out lines 20 and 21 at page 23 and substituting the following therefor:
"tion pertaining to a medicine shall, every three months, in such form and manner and".
The Elouse divided on the motion (Mr. Dingwall), which was negatived on the following division:
(Division No. 119)
++YEAS
Members
Althouse Baker Benjamin Berger Blackburn (Brant) Broadbent Cassidy de Corneille de Jong Epp
(Thunder Bay- Nipigon)
Foster
Garneau
Gauthier
Gray
(Windsor West) Grondin Hopkins Hovdebo Isabelle Kaplan Keeper Langdon MacLellan Manly McCurdy
McDonald (Broadview- Greenwood) Murphy Nicholson (Trinity) Nystrom Ouellet Penner Riis
Robinson
Rompkey
Rossi
Young -35
++NAYS
Members
Andre	Gervais	LawrenceAttewell	Girard	LaytonBernier	Gottselig	LesickBertrand	Graham	LewisBlenkarn	Gray	MacDonaldBourgault	(Bonaventure-Iles-de-	(Kingston arBrightwell	la-Madeleine)	the Islands)Browes	Greenaway	MaillyCadieux	Grise	MaloneClark	Hamelin	Mantha(Brandon-Souris)	Hamilton	MartinCollins	Hardey	MayerComeau	Hawkes	MazankowskiCrofton	Hicks	McKinnonCrosbie	Hnatyshyn	McKnight(St. John's West)	Holtmann	McMillanDaubney	Horner	MinakerDesjardins	Hudon	MitgesEdwards	James	MooreEllis	Jardine	NicholsonEpp	Johnson	(Niagara Fa(Provencher)	(Bonavista-T rinity-	NickersonFennell	Conception)	OberleFerland	Joncas	O'NeilFontaine	Kelleher	PaproskiForrestall	Kempling	PietzFraleigh	Kindy	PlourdeFretz	King	PriceGass	Ladouceur	Ravis


Mr. Speaker:: I declare the motion lost. The next question is on Motion No. 40. Mr. Orlikow moved:
Motion No. 40
That Bill C-22, be amended in Clause 15 by striking out lines 30 to 33 at page 23 and substituting the following therefor:
"medicine;
"(c) expenditures made by the patentee in Canada towards the cost of research and development relating to medicine; and
(d) expenditures to be made by the patentee in Canada towards the cost of research and development relating to medicine to the years 1990 and 1995 respectively."
The Elouse divided on the motion (Mr. Orlikow), which was negatived on the following division:
(Division No. 120)
++YEAS
Members
Althouse	Gauthier	McDonaldBaker	Gray	(Broadview-Benjamin	(Windsor West)	Greenwood)Berger	Grondin	MurphyBlackburn	Hopkins	Nicholson(Brant)	Hovdebo	(Trinity)Broadbent	Isabelle	NystromCassidy	Kaplan	Ouelletde Corneille	Keeper	Pennerde Jong	Langdon	RiisEpp	MacLellan	Robinson(Thunder Bay-	Manly	RompkeyNipigon)	McCurdy	RossiFoster	Young -35
Garneau
++NAYS
Members
Andre
Attewcll
Bernier
Bertrand
Blenkarn
Bourgault
Brightwell
Browes
Cadieux
Clark
(Brandon-Souris) Collins Comeau Crofton Crosbie
(St. John's West) Daubney Desjardins Edwards
Ellis
Epp
(Provencher)
Fennell
Ferland
Fontaine
Forrestall
Fraleigh
Fretz
Gass
Gerin
Gervais
Girard
Gottselig
Graham
Gray
(Bonaventure-Iles-dela-Madeleine)
Greenaway
Grise
Hamelin
Hamilton
Hardey
Hawkes
Hicks
Hnatyshyn
Holtmann
Horner
Hudon
James
Jardine
Johnson
(Bonavista-Trinity-
Conception)
Joncas
Kelleher
Kempling
Kindy
May 4, 1987

King	Nickerson	TaylorLadouceur	Oberle	TowersLawrence	O'Neil	TremblayLayton	Paproski	(Lotbiniere)Lesick	Pietz	TupperLewis	Plourde	TurnerMacDonald	Price	(Ottawa-Carleton)(Kingston and	Ravis	Vankoughnetthe Islands)	Redway	VezinaMailly	Ricard	VincentMalone	Schellenberg	WarnerMantha	(Nanaimo-Alberni)	WhiteMartin	Scott	WilsonMayer	(Victoria-Haliburton)	(Swift Current-Mazankowski	Scott	Maple Creek)McKinnon	(Hamilton-Wentworth)	WinegardMcKnight	Scowen	WiseMcMillan	Siddon	Witer-104Minaker	Sparrow	Mitges	Speyer	Moore	Stackhouse	Nicholson	Stevens	(Niagara Falls)	Stewart


Mr. Speaker:: I declare the motion lost. The next question is on Motion No. 41. Mr. Dingwall moved:
Motion No. 41
That Bill C-22, be amended in Clause 15 by striking out lines 3 to 8 at page 24 and substituting the following therefor:
"subsections (1) and (2) shall be public unless the Board or Commissioner is satisfied upon representations made by the person who supplied the information, that specific, direct and substantial harm would be caused to the person by the disclosure of the information or documentation."


Mr. Speaker:: I declare the motion lost. The next question is on Motion No. 42. Mr. Dingwall moved:
Motion No. 42:
That Bill C-22, be amended in Clause 15 by striking out line 35 at page 24 and
substituting the following therefor:
"shall be set out in such a manner that".


Mr. Speaker:: I declare the motion lost. The next question is on Motion No. 43. Mr. Orlikow moved:
Motion No. 43
That Bill C-22, be amended in Clause 15 by striking out lines 6 to 9 at page 25 and substituting the following therefor:
"(7) The Governor in Council shall make regulations defining, for the purposes of this section, the expression "research and development" which shall include the following criteria:
(a)	all expenditures made under the requirements for a notice of compliance for phase one and phase two of clinical trials;
(b)	all expenditures made for laboratory and preclinical work which lead to a notice of compliance;
but shall not include
(c)	all expenditures made under the requirements for a notice of compliance for phase three of clinical trials; and
(d)	all expenditures associated with the marketing of the medicine including all direct and indirect marketing schemes by patentees."
The Elouse divided on the motion (Mr. Orlikow), which was negatived on the following division:
Althouse
Baker
Benjamin
Berger
(Division No. 123)
++YEAS
Members
Blackburn	de Corneille
(Brant)	de Jong
Broadbent Cassidy


Mr. Speaker:: I declare the motion lost. The next question is on Motion No. 44. Mr. Dingwall moved:
Motion No. 44
That Bill C-22, be amended in Clause 15 by striking out lines 10 to 13 at page 25 and substituting the following therefor:
"41.26(1) The Governor in Council may, at any time but no later than the expiration of four years after section 41.11 comes into force, by order, where he determines".
The House divided on the motion (Mr. Dingwall), which
was negatived on the following division:
May 4, 1987

(Division No. 124)
++YEAS
Members
Althouse	Gauthier	McDonaldBaker	Gray	(Broadview-Benjamin	(Windsor West)	Greenwood)Berger	Grondin	MurphyBlackburn	Hopkins	Nicholson(Brant)	Hovdebo	(Trinity)Broadbent	Isabelle	NystromCassidy	Kaplan	Ouelletde Corneille	Keeper	Pennerde Jong	Langdon	RiisEpp	MacLellan	Robinson(Thunder Bay-	Manly	RompkeyNipigon)	McCurdy	RossiFoster	Young -35
Garneau
++NAYS
Members
Andre	Hawkes	PietzAttewell	Hicks	PlourdeBernier	Hnatyshyn	PriceBertrand	Holtmann	RavisBlenkarn	Horner	RedwayBourgault	Hudon	RicardBrightwell	James	SchellenbergBrowes	Jardine	(Nanaimo-Alberni)Cadieux	Johnson	ScottClark	(Bonavista-Trinity-	(Victoria-Haliburton)(Brandon-Souris)	Conception)	ScottCollins	Joncas	(Hamilton-Wentworth)Comeau	Kelleher	ScowenCrofton	Kempling	SiddonCrosbie	Kindy	Sparrow(St. John's West)	King	SpeyerDaubney	Ladouceur	StackhouseDesjardins	Lawrence	StevensEdwards	Layton	StewartEllis	Lesick	TaylorEpp	Lewis	Towers(Provencher)	MacDonald	TremblayFennell	(Kingston and	(Lotbiniere)Ferland	the Islands)	TupperFontaine	Mailly	TurnerForrestall	Malone	(Ottawa-Carleton)Fraleigh	Mantha	VankoughnetFretz	Martin	VezinaGass	Mayer	VincentGerin	Mazankowski	WarnerGervais	McKinnon	WhiteGirard	McKnight	WilsonGottselig	McMillan	(Swift Current-Graham	Minaker	Maple Creek)Gray	Mitges	Winegard(Bonaventure-Iles-de-	Moore	Wisela-Madeleine)	Nicholson	Witer-104Greenaway	(Niagara Falls)	Grise	Nickerson	Hamelin	Oberle	Hamilton	O'Neil	Hardey	Paproski


Mr. Speaker:: I declare the motion lost. The next question is on Motion No. 45. Mr. Orlikow moved:
Motion No. 45
That Bill C-22, be amended in Clause 15 by adding immediately after line 14 at page 25, the following:
Patent Act
"and shall, if the patentees ratio of sales to research and development expenditures does not reach 8 per cent by 1990 and 10 per cent by 1995".


Mr. Speaker:: I declare the motion lost. The next question is on Motion No. 46. Mr. Dingwall moved:
Motion No. 46
That Bill C-22, be amended in Clause 15 by striking out line 39 at page 25 and substituting the following therefor:
"(3) On the expiration of four years after".


Mr. Speaker:: I declare the motion lost, on Motion No. 47. Mr. Dingwall moved:		The next question is
Motion No. 47		
That Bill C-22, be amended in Clause 33 by striking out lines 3 to 15 at page 35 and substituting the following therefor:		
"31. This Bill shall come into force on a day to be fixed by proclamation but not sooner than January 1, 1991."


Mr. Speaker:: I declare the motion lost.


Hon. Harvie Andre (Minister of Consumer and Corporate Affairs):: moved that the Bill be concurred in.


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


Some Hon. Members:: Agreed.


Some Hon. Members:: No.


Mr. Speaker:: All those in favour of the motion please say yea.


Some Hon. Members:: Yea.


Mr. Speaker:: All those opposed please say nay.


Some Hon. Members:: Nay.


Mr. Speaker:: In my opinion the yeas have it.
And more than five Members having risen:


Mr. Speaker:: I declare the motion carried.
When shall the Bill be read the third time? At the next sitting of the House?


Some Hon. Members:: Agreed.


Mr. Speaker:: It being 6.36 p.m., this House stands adjourned until eleven o'clock a.m. pursuant to Standing Order 3(1).


[Stage Direction]
The House adjourned at 6.36 p.m.
[Stage Direction]

Tuesday, May 5, 1987
[Stage Direction]
Prayers