Bill C-55 (Historical)

Wage Earner Protection Program Act

An Act to establish the Wage Earner Protection Program Act, to amend the Bankruptcy and Insolvency Act and the Companies' Creditors Arrangement Act and to make consequential amendments to other Acts

This enactment establishes the Wage Earner Protection Program Act. That Act provides for the payment of wages to individuals whose employment is terminated and who are owed wages by employers who are bankrupt or subject to receivership. It sets out the conditions of eligibility to receive payments, the maximum amount covered by the Program, the application, review and appeal process of the Program and the administrative arrangements for its implementation, including enforcement mechanisms. The Act provides regulation-making powers for carrying out the purposes of the Act and it provides for a review of the Act five years after its coming into force.
This enactment also contains amendments to the Bankruptcy and Insolvency Act. Those amendments include changes to the appointment and oversight functions of the Superintendent of Bankruptcy, as well as to the obligations and powers of trustees in bankruptcy, interim receivers and receivers. The amendments also expand the Act to cover income trusts. Also, new provisions regarding corporate proposals are created to address, among other things, the treatment of contracts, collective agreements, interim financing and governance arrangements. Changes are made to the priority of charges, including in respect of wages and pension contributions. The scope of application of consumer proposals is expanded. New provisions are introduced to deal with bankrupts with high income tax debts and those with surplus income, to exempt registered retirement savings plans from seizure, and to allow for the automatic discharge of second-time bankrupts. The period of eligibility of discharge of student debts is reduced. There are changes to the treatment of preferences as well as numerous technical changes. The amendments also provide for a review of the Act after five years.
This enactment also contains amendments to the Companies’ Creditors Arrangement Act. Many of the amendments parallel those made to provisions dealing with corporate proposals in the Bankruptcy and Insolvency Act. The amendments also expand the Act to cover income trusts. The scope of application of the initial stay is clarified, notably regarding regulatory measures. New provisions are introduced regarding the treatment of contracts, collective agreements, interim financing and governance arrangements. The appointment and role of the monitor are further clarified and made subject to the oversight of the Superintendent of Bankruptcy. A new Part on cross-border insolvencies is added. The amendments also provide for a review of the Act after five years.

Supply

[Jack Layton, NDP, Toronto—Danforth, ON]

Mr. Speaker, this is a historic day in this Chamber in that a proposal is before the House that could bring all parties together in a spirit of compromise in a minority Parliament to achieve a number of key shared objectives. When that happens it is a salutary moment in this chamber. It is one that we need to consider very seriously. We need to examine the arguments why such a course of action is not only sensible, in the sense of being very much a common sense proposition, but also serves the interests of Canadians which is after all why we are here.

The objective is to get things done for Canadians over the next number of weeks and then move into an election after the holiday season in January for a voting day in the middle of February.

Three parties in the House have indicated that spirit of compromise in coming forward with this proposal. The only party so far that has refused to exercise that spirit of compromise, that sense of working together to find a common sense road ahead in order to achieve important objectives for Canadians, sadly is the very party whose unethical conduct has created the situation that we are in today.

The fact is that nothing, but nothing, prevents the Prime Minister from setting an election date on the advice of Parliament. It is, if I may say so, typical Liberal arrogance that a majority vote of Parliament is seen somehow to be irrelevant or an obstacle.

Just because something has not been done before does not mean that it might not be in fact a very good idea. The Prime Minister promised transformative change and suggested that it was required in order to fix the democratic deficit. We agree. However, now he refuses to compromise even though a majority of the House is going to be voting in favour of this advice. In other words, the Prime Minister will not be respecting the will of Parliament.

That does not sound to me, nor do I believe it will sound to Canadians, as though the democratic deficit is being addressed in a positive way. In fact, what it does is it leaves us with a sense that the democratic deficit is growing. We have a political party that received only 37% of the vote wishing to ignore the views of the House as expressed by parties representing almost two-thirds of Canadians. That, I would submit, is not the appropriate conduct for a Prime Minister of this country or for his political party.

Let us examine some of the issues here. First, we have been told by the Prime Minister and members of his party that what we are talking about is “only eight weeks”. In other words, the difference between the date that the Prime Minister has already set. He has already taken the view that there needs to be an election to determine whether his party can carry on in government as a result of the findings and recommendations of a respected justice who has examined a scandal and reported on it.

The Prime Minister has said that Canadians need to have the opportunity to judge on the findings, the recommendations, and the political party about which the investigation was conducted. We agree. The only question is when.

His proposal is on or about March 1. Our proposal, which will be coming from the majority of members in the chamber when we see the vote next week, suggests the beginning of January. Those are the eight weeks that we are speaking about.

What is to happen in those eight weeks? First, the House is not sitting for five of those weeks. In other words, the democratic process of members rising in the House to propose actions on key issues affecting Canadians, the process of questioning the government on its actions and holding it to account, the idea that we should be considering spending or legislation to correct the many unsolved problems that have been left to fester for 12 long years, is simply unable to be conducted during five of those weeks.

Is the Prime Minister suggesting that somehow those five weeks in particular are irrelevant to Canadians? We submit that by having the election in March those weeks are lost as working weeks for parliamentarians to work for Canadians. Therefore, there is no effective and good argument not to be having an election because during those five weeks we are literally shut out of this place in any event.

Of course, there will be something going on during those five weeks. We can be sure that vehicles such as the Challenger will be regularly booked, that there will be a number of press releases and announcements, probably from coast to coast to coast in this country, all paid for, by the way, by the taxpayer. These announcements and spending decisions will already be made by the House of Commons. As a matter of fact, what will be happening during the five weeks that we are talking about is a public relations campaign, not the actions of anything relevant to this particular House.

We will be having a publicly financed public relations campaign. Then the House will return for three more weeks. What is to take place in those three weeks? A budget will be tabled on which a vote will not be able to happen because the Prime Minister has said there will be an election on or about March 1, a budget which will not precipitate or produce any positive action whatsoever and will dominate the three weeks.

Our proposal is simply that this business of the eight weeks being somehow significant or relevant to addressing the issues of Canadians is false. The work that needs to be done by the House should take place between now and the holidays, and that is what we want to see.

There is a solution to the situation confronting Parliament today. It is a matter of common sense.

In the spring, we managed to keep Parliament going because the Liberals agreed to some of our good ideas. This fall, we submitted proposals, but unfortunately the Liberals chose to not work with us to obtain results beneficial to people.

The Liberal Party cannot decide when it will be judged. The people did not elect a majority government, and all parties must be prepared to make compromises.

I believe there is a reasonable solution. There are options other than an election during the holiday period, which no one wants. In addition, no one wants a Liberal Party that thinks it alone can decide when its comportment should be judged.

With this motion, we are requesting an election be called in early January and the vote held in mid-February. This proposal will thus permit Parliament to pass housekeeping legislation, including some very important bills, and will make it possible for the first meeting between first ministers and native leaders to be held. It will also provide an opportunity for the clean-up in Canadian politics that is needed in order to get back to basics, to produce specific results of benefit to the public.

The difference between last spring and this fall is this. In the spring Liberal corruption created a parliamentary crisis. When the NDP offered good ideas to get things done for people, the Liberals were forced to agree. In the fall, Liberal corruption again created a crisis, but this time the Liberals refused to get things done for people, as the NDP suggested, such as protecting public health care in this country.

This minority Parliament is unusual in that the governing party's unethical conduct has hung over it throughout its life, creating an artificial limit to Parliament's life as established by the Prime Minister. Nothing will happen after the holidays except an expensive taxpayer-funded Liberal pre-election campaign. Let us just formalize when the election will begin. It will be underway, at taxpayer expense, so let us have it conducted under the rules of Elections Canada, with a formal initiation of the electoral process in January.

In the meantime, let us get Bill C-55 passed, a bill to protect workers' wages and pensions when there is a bankruptcy, something our party has urged for many years. It is a bill that three straight Liberal majorities did not produce. It only has come forward in the context of a minority Parliament because the NDP gets things done for working people.

Let us get Bill C-66 passed to get energy rebates to people. Parties from all sides have called for action from the government dealing with the energy price crisis.

Let us let the public transit money and energy efficiency money flow. I remind the House that this money is only there because of the NDP proposals with regard to the budget last spring. That is when we took out the corporate tax cuts and replaced them with precisely these investments that people need.

Let us allow the first ministers meeting with the aboriginal leaders to occur. Twelve years of Liberal government have left aboriginal people often living in third world conditions, and it is about time something was done about it.

The culture of entitlement to which Justice Gomery referred is, unfortunately, alive and well. The Liberal Party thinks that 37% of the support of Canadians entitles it to 100% of the power. There is no sense that there is any need to work with the representatives of Canadians from various other parties who, collectively, have the support of 63% of Canadians.

The common sense compromise that we have proposed would allow people to hear the second Justice Gomery report, which will arrive before voting day. This would enable Canadians to incorporate the recommendations in their thinking and parties would be speaking about those recommendations. In fact, some parties already have advanced proposals for reform. I am very proud of the proposals that have been brought forward by the member for Ottawa Centre, just to name an excellent example of what is before us.

However, the proposal from the Liberal Party to set the date on March 1 essentially establishes a timeline that is in the hands of the Liberal Party to be in charge of pretending to fix its own scandal and then graciously allowing people to vote.

It is true that the common sense compromise is exactly as originally promised by the Prime Minister last spring. He was under the impression at the time that Justice Gomery would deliver his final report on December 15. Our proposal would have an election taking place exactly when the Prime Minister promised Canadians it would.

The Prime Minister is taking advantage of the fact that Justice Gomery has asked for some extra time to prepare his recommendations, and the House will not be sitting during this extra time period. This simply would provide a free opportunity for Liberals and their cabinet ministers to fly all over the country, at public expense, and talk about how terrific they are. There would be no work done in that period because the House would not be sitting.

It is shameful. What we call for is the spirit of compromise.

I ask this simple question, and I have asked it in this House before. Why, when three party leaders of the four in the House are willing to compromise, as one should in a minority Parliament situation where no party has a majority of the support, is the fourth party is withholding that consent and sense of compromise?

It is not that the Prime Minister cannot compromise because of some rule that exists. We hear this spurious notion that somehow the motion is not constitutional. Those who would take a look at it now that it is written and before the House will realize it is. I can cite some sources. Members do not have to take my word for it.

Julius Grey, a prominent constitutional lawyer, says that there is nothing that prevents this from happening.

Here are some quotes from Hugo Cyr, a constitutional law professor at the Université du Québec à Montréal.

I quote:

There is nothing unconstitutional in this motion.

Parliament may be dissolved for a number of reasons following a vote of censure, a vote of non-confidence and a decision by the Governor General, on the advice of the Prime Minister or simply because the end of the five-year period has been reached. In other words, loss of confidence is not the only reason for the dissolution of Parliament.

Since nothing prevents the Prime Minister from announcing ahead of time the date he will ask the Governor General to dissolve Parliament, something the Prime Minister has done on a number of occasions, nothing prevents him from stating ahead of time in a motion put before the House the date on which the request will be made.

Nothing prevents the House from telling the Prime Minister what it considers the appropriate time to ask the Governor General to dissolve Parliament.

I also can quote a law professor from the University of Alberta, one who is also the former attorney general of the country, now the Deputy Prime Minister of our country, who indicated that there was no obstacle to the Prime Minister accepting such advice.

I simply draw the attention of the House to the fact that we have an historic opportunity in a minority Parliament to do what Canadians and the Prime Minister have said that they want to see happen: first, get work done during the fall; second, avoid an election over the holidays; and third, have in the hands of voters the findings and recommendations of Justice Gomery about Liberal corruption. All these things are worthwhile objectives.

There is much work that can be done this fall. It would be better for Canadians not to have to participate or pay attention to electioneering in a season where their children are at home and they are able to spend time with family, thinking about values and about the future in ways that are celebratory and important.

The compromise suggestion respectfully submitted in the House would accomplish those objectives. The only objective that would not be accomplished is one that has never been stated publicly. The government has never referenced or submitted the business it would do in the wintertime. This is period of time when the House would not sit and when no meaningful business could be conducted. The only plan we have had is a plan for the fall. We propose that we work on that plan together. The Liberal Party and its leadership has suggest they do not want to participate. They would rather simply be on their own in January to sell themselves at our expense. We will not have it.

We want this compromise adopted and we call upon Canadians to urge the government to abandon its arrogance of 12 years and to begin to work with the members of Parliament whom they elected.

Wage Earner Protection Program Act

[Larry Bagnell, Liberal, Parliamentary Secretary to the Minister of Natural Resources]

Madam Speaker, I am pleased to speak in support of Bill C-55, an act to establish the wage earner protection program act, to amend the Bankruptcy and Insolvency Act and the Companies' Creditors Arrangement Act and to make consequential amendments to other acts. Many members have already expressed support for the principles of this bill. In my view this clearly demonstrates the need for this piece of legislation.

Bill C-55 will help thousands of Canadians who must rely on a fair and effective insolvency system to deal with the situation of financial distress.

Stakeholders from a broad spectrum of interests, insolvency professionals in the legal and accounting communities, labour groups, associations of creditors, the business and financial community and consumer groups have been demanding improvements in our insolvency system. Bill C-55 will do just that. It will make our system fairer and more attuned to today's marketplace environment as well as help Canadians to overcome problems associated with bankruptcy. The bill will bring about many important changes.

First, the bill significantly enhances the protection of workers when their employer goes bankrupt or undergoes a restructuring process. The creation of the wage earner protection program act is a major breakthrough. Numerous previous attempts to deal with this issue have been made over the past 25 years and they have all failed.

I firmly believe that the solution proposed in Bill C-55 not only greatly expands the protection to workers, but does so in a balanced and reasonable way that mitigates the adverse impact on credit.

Let us not forget that bankruptcy is always about sharing the burden, because by definition bankruptcy means that there are insufficient assets to pay all the creditors. Bill C-55 ensures that the burden is shared in a fair and equitable manner by taxpayers, lenders and other creditors.

Second, the bill further encourages restructuring as an alternative to bankruptcy. The Companies' Creditors Arrangement Act, which governs all major corporate restructuring, has not been substantially modified since it was first enacted in the 1930s. It needs to be modernized to improve the predictability and consistency of the restructuring process.

Many new provisions are proposed in Bill C-55, including the treatment of contract, the provision of interim financing, governance arrangements and transparency and notification procedures. It also introduces clear rules to govern the treatment of collective agreements during a restructuring process, which fully respects labour law principles while recognizing labour costs may need to be dealt with to ensure a successful restructuring.

Third, the bill makes the bankruptcy system fairer while reducing the potential scope for abuse. Many changes proposed in Bill C-55 are directed at redressing inequities. In this regard I want to emphasize the proposal to exempt all RRSPs from seizure in bankruptcy.

Under the current rules, only registered pension plans with employers and some RRSPs held with a life insurance plan are protected. There is no reason for treating retirement savings differently. Bill C-55 will ensure that all Canadians have the same exemption for their retirement savings.

Fourth, the bill contains a number of technical amendments to clarify the law and improve the administration of the insolvency system. Several amendments pertain to clarifying the role and conduct of trustees, receivers, and monitor as well the supervisory functions of the Office of the Superintendent of Bankruptcy. While perhaps very technical, these amendments are clearly needed if we want our system to operate efficiently and with fairness.

Bill C-55 is the result of an extensive consultation process. The Senate committee conducted public hearings in 2003 and received more than 40 submissions. Its report contained detailed recommendations for changes to Canada's insolvency laws. In fact, the committee submitted more than 50 specific recommendations and a vast majority have been translated into the provisions of Bill C-55.

It is quite clear that this legislation is of interest to a very large number of Canadians. I am convinced that Bill C-55 deserves the full support of the House. I urge that the bill proceed expeditiously to the committee review stage.

[Yvon Godin, NDP, Acadie—Bathurst, NB]

Madam Speaker, I appreciate my colleague's question.

We favour having the law apply to everybody. In the past, if a student, two years after finishing their studies, could not pay back their debt, that student had a right, just like anybody else, to file for bankruptcy.

One feels sorry for the student, in a way. Let us take a frequent occurrence in rural areas. People pursue their studies in a university out of their region, they come back home, but they do not find work. They already have to start paying back their debt, even though they do not have a job.

From the start, the student in debt is treated in the same manner as a person who has filed for bankruptcy. The student has no right to file for bankruptcy, but the debt is recorded with collection agencies. They get their first job. They want to buy a car, but have no right to do so, because collection agencies have a file on them. They want to buy a house to get a start in life, but cannot do so because their debt is recorded with collection agencies, and all that even though they have not filed for bankruptcy. In fact, the mistreatment they suffer is twofold. It is discrimination. It is not fair that they be considered second-class citizens.

The government has introduced this measure because too many students were going bankrupt. If this is the case, perhaps we should analyze the cost for the student. What did the government do? It balanced its budget and had a zero deficit, saying that it did not want to transfer the debt to the future generation, but wanted to pay it before the arrival of the future generation. What it did was transfer the debt to the future generation directly through universities. After university, it is now the student who is in debt, not the country. The debt has been transferred to these young students. Who are these students? They are our children. This is what the government has done. It has put our children in dire straits. This is what this Parliament has done. It is not right.

Perhaps several members here already belong to big corporations, represent these and do not have any problem paying for their children. However, there are parents in Canada who cannot pay for their children and these latter are forced to go into debt.

It is quite sad. The government has put into debt many young students in Canada who cannot go back.

Nowadays, a young university student graduates with $40,000 in debt. If they have met someone who has studied at the university level and they decide to live together, that translates into a $80,000 debt. Suppose they do not work at the same place and both buy a small car costing $10,000, the debt soars to $100,000. If they want to buy a $80,000 house—and that is not expensive—the debt reaches $180,000 and they have not had babies yet. That is what the government has done to our children.

Bill C-55 provides an opportunity to adjust the situation so as to help our students. We should grant them the same rights in the area of bankruptcy and help them pay their student debts, not bury them in debt as is the case today.

[Yvon Godin, NDP, Acadie—Bathurst, NB]

Madam Speaker, it is my pleasure to rise to speak to Bill C-55. I particularly want to thank the hon. member for Winnipeg Centre for the battle he has been fighting for workers for many years.

That has been recognized in this House. Earlier, I heard the Conservative member for Kootenay—Columbia allude to the job done by the member for Winnipeg Centre, and the Bloc Québécois member for Chambly—Borduas acknowledged it as well. This goes to show that discussions have been ongoing in the House of Commons for a number of years. Unfortunately, the then majority government consistently denied workers the opportunity to benefit from wage protection and pension protection in the event of a bankruptcy.

We will recall how shameful and outrageous it was in New Brunswick, when Nakawick went bankrupt, to see employees who had worked for the company for 30 years, who were 53 years old and had not reached retirement age, lose their pension fund.

We have to remember that, when a collective agreement is negotiated, that is part of the so-called package. When you negotiate a collective agreement and the employer agrees to a 12% increase over three years, the pension plan is part of that 12% that the employees have obtained.

What message is this sending? I am not talking about now, because I am in favour of Bill C-55. It is a step in the right direction, but I do not think that it goes far enough. Are we sending unions and employees a message, saying, “Do not negotiate private pension funds. Ask for the maximum amount of money instead. You will be much safer if you handle your money yourself”?

The fact is that an agreement has been signed at the negotiating table, providing that the workers would have a pension fund and that the company would be responsible for setting money aside for these workers.

I am suggesting that this may not be the appropriate legislation. Indeed, when we look at pension funds, instead of having a bill, we should say that a company is responsible for setting aside a fund that neither the company nor any creditor that might come back to collect money following a bankruptcy can touch. That money would be set aside and guaranteed to be there. It would be put in a fund for workers.

As I already mentioned, I find it absolutely appalling when we look at the wage issue. It does not make sense that a man and a woman who get up every morning and go to work for a company, who help it make money over a period of 30 or 40 years, would suddenly find themselves in trouble because the company has filed for bankruptcy after spending too much and not closely monitoring its finances. All of a sudden, at the end of a week, it decides to go bankrupt. As for the workers, it is too bad, but they are not getting anything. It is the banks that will get money before anyone else does.

As regards students, for example, the government is telling them, “You will have 10 years to go bankrupt”, as if students were second-class citizens. By contrast, large corporations would be first-class citizens and would be protected. The Liberal government, and also the Conservative government when it was in office, have always protected big companies.

As we can see in the last budget, the government wanted to grant a $4.6 billion tax cut to large corporations. The Conservatives were not happy when the NDP said no to this minority government. Instead of giving this $4.6 billion to large corporations, we want it to go to ordinary Canadians. We want affordable housing and we want money to be set aside for that purpose, to the tune of $1.5 billion. We want this $1.5 billion to be used to reduce the debt of students, children and Canadians.

Nevertheless, the Conservatives complain daily in the House about how the Liberal government has bowed to the demands of the NDP by giving something to ordinary, everyday people. As if it were disgraceful to give students money. As if it were disgraceful to demand affordable housing so that the homeless can find suitable accommodation. That is how the Liberals saw it. Since they are a minority government, they had to give in. Otherwise, they would have had to put up their little election signs.

The Conservatives cannot believe that the money has not gone to big business. They are upset about it. Once again, they are defending the big banks. I am convinced that if any legislation in Canada were to put the workers first, the workers would be protected.

It is the public who votes in an election, not corporations or the great friends of the government. In fact, a company president gets only one vote. Consider Inco in Sudbury. If it has 8,000 employees, then that many people get to vote for politicians. Inco, however, has only one president.

How can this government show such little respect for the workers and try to make us believe all kinds of things? It is incredible. I was listening earlier to one of my Liberal colleagues say that by not paying them, they are protecting them. He said that they should be happy, since they being protected. He is trying to make them believe that if the money were not given to the bank than they might not have had a job. This is what they want people to believe. Furthermore, this government is trying not only to make us believe but also swallow the fact that workers who leave their employment are not entitled to EI. And if they make a mistake in their EI application, they might end up owing the government $10,000.

However, Mr. Dingwall can resign his position and get a $500,000 severance package. The government feels responsible for a former Liberal minister who has resigned his position. So, it gives him a half a million dollars. But when lowly workers leave their job, they are not entitled to EI. This is completely unfair.

I believe it is time we had a bill, one to which amendments could be made, particularly concerning students, so that they can be treated just like any other Canadian. I hope Canadians are aware of how they are treated. Workers are not entitled to their pension money if there is a bankruptcy, but the banks can get their money. A former minister who is working for the government leaves his job for no valid reason—he should perhaps have been sacked—and is entitled to half a million dollars.

An ordinary worker let go for misconduct is not eligible for EI, but Mr. Dingwall, with his $750,000 in expenses and his $274,000 salary, a man who even claimed the cost of a little pack of chewing gum, is entitled to a half million. Unbelievable.

In another case, a person who has stolen $1.5 million from the Government of Canada writes a $1 million cheque to pay it back and avoids going to jail. What is more, that person acquires the job of going around to our universities telling our students how not to get caught. Unbelievable. What kind of world are we living in?

Personally, I hope Canadians are going to wake up and clearly tell the government, or any political party, that they will no longer put up with this. They want protection. Someone who goes to work wants to get the wages he is entitled to according to the number of hours worked. If the company has been able to enjoy all these profits over the years, the worker at the very least deserves his pay at the end. He also deserves payments from the pension fund that was negotiated for him.

He also deserves a respectable life and a respectable retirement.

This is why we support Bill C-55. It does not go far enough, in my opinion. We should work on it and broaden its scope. All colleagues in the House should sincerely support it. It is not enough to express one's support for workers, while the major corporations and the banks are the ones really getting the support.

[Yves Lessard, Bloc, Chambly—Borduas, QC]

Madam Speaker, I am pleased to address this very important bill, which seeks to protect wage earners when their employer goes bankrupt, through amendments to the Bankruptcy and Insolvency Act, to the Companies' Creditors Arrangement Act and, of course, to others acts, as I will explain in my comments.

We are pleased to hear, from the Liberal Party, arguments that reflect those made in the fall of 2003 by both NDP and Bloc Québécois members, who were convinced of the need for such protection. At the time, the NDP had presented a motion to that effect, but the Liberal Party had voted against it.

According to the figures quoted by the hon. member for Guelph, each year, between 10,000 and 15,000 workers suffer losses of wages that are owed to them when their employer goes bankrupt. We knew that in the fall of 2003. I do not want to reflect on the past, but it is rather sad and upsetting that, over the past two years, workers were prevented from enjoying such protection. The Liberal Party was aware of the situation, but it still voted against that motion.

I also want to draw an analogy with another bill that was tabled by the Bloc Québécois just recently, during the spring. This bill was debated and supported by my Bloc Québécois colleagues, including the hon. member for Saint-Bruno—Saint-Hubert, who also took part in the debate on the current legislation, Bill C-55, at second reading. The bill proposed by the Bloc dealt with job protection during labour disputes, and more specifically with replacement workers.

In recent years, this issue has been debated countless times in the House. Again, it is because of the Liberal Party, which defeated it by 12 votes, if that bill was rejected. The Liberal Party, and particularly the ministers, voted against this legislation.

So, I am drawing an analogy between that bill and the one currently before the House. Why did the government wait so long and let workers suffer so much before adopting constructive measures?

We support the principle of Bill C-55. However, a number of amendments to be presented in committee will have to be included in it.

It would be rather useful to review the way the law is currently worded, in order to have a proper understanding of the content and scope of Bill C-55, as well as the necessary amendments.

At the present time, there are two kinds of creditors when there is a bankruptcy: the primary creditors, which are termed secured claims, and the secondary claims. Secured claims include all those secured by mortgage or some tangible form of guarantee. Employers have never had such a security, and all other types of claims have to be satisfied before they get to the workers.

Then there are the non-secured claims. There is a whole series of these, and wages rank only fourth. Higher in the list are funeral expenses, administration costs, and deductions payable to superintendents. Wages come only after all these, so it is a rare occurrence indeed for workers to receive compensation for work done or monies owing to them. Sometimes these amounts make all the difference, and at least provide them with an income and the ability to live in dignity until some other recourse comes along.

There is an expression used in labour law, in fact a statement of principle: “All work deserves pay”. The same thing must apply in this case. It is amazing that there is no protection for workers in the event of bankruptcy in the year 2005. The bill will, of course, remedy that shortcoming. Just how it will do so, we will come back to later.

The responsibilities of trustees in bankruptcy will also be broadened. At the present time, the time period and the amount distributed are governed by law. There is a time limit of six months for wages owed, and a maximum amount of $2,000.

Now, for the Employment Insurance Act. Workers who lose their jobs still use the term “unemployment insurance”. We are all aware of the philosophy that lay behind the Liberal Party's decision to change its name. The connotation was that the insurance was there to ensure people of work, yet we all know very well that it was an insurance in the event of misfortune, of job loss. So it should still be called “unemployment insurance”.

Currently a worker has to use up all of his resources before he can get employment insurance, which is another major shortcoming that needs to be corrected. The whole matter of earnings during a waiting period, a period of unemployment, undeclared earnings during a claim for benefits period, and earnings within the framework of employment benefits or allocation of earnings during a program, are things that further put off when the worker receives employment insurance. The Bloc Québécois called on the government to correct this for a number of years.

As I was saying earlier, other hon. members in this House joined the Bloc in finally correcting this matter in 2005. Better late than never. We will support this bill by providing a number of corrections and changes.

Let us now talk about the very nature of the bill, which is said to create the wage earner protection program. Under this new legislation, the federal government will cover up to a maximum of $3,000 of the wages of wage earners in the event of a bankruptcy. We are quite pleased with this measure. We have no objection to the government becoming the primary guarantor and taking the appropriate measures to seize or recover the money owed by the company. That was the second aspect.

Contrary to the past claims of the current government, it is interesting to discover that the related costs are quite limited. An hon. member from the Liberal party reminded us earlier that there are 10,000 to 15,000 workers a year who will be affected by this measure. That is no small figure.

What would it cost the government should it be unable to recover the money owed to workers? For the first year, it would cost $32 million. In the worst case scenario, it could cost up to $50 million. This is not much at all for this kind of palliative measure, which makes the delay in implementing such a measure even more questionable. It is certainly a cause for joy, and all the more so since these amounts are theoretical in the sense that the government will be able to recover some of that money. In certain situations, it will recover all the money owed, based on the value of the company.

With Bill C-55, the federal government would create a priority higher than secured creditors for workers' claims of unpaid wages and vacation pay. I will take this opportunity to mention something that was raised earlier by another member, and that is the need for more coercive or more direct measures to protect the pension funds of these workers.

Since I seem to have enough time left, I will elaborate on this issue.

Indeed, I have time to deal with the pension protection scheme. The bill also creates a mechanism. Thus, under the bill, a court would be able to authorize a proposal for bankruptcy or for an arrangement only when proof has been made—the interesting thing is that there are three very clear conditions—“that employee and employer contributions to the pension plan that had not been paid at the time of bankruptcy or receivership have been paid or that the court is satisfied that the contributions will be paid under the arrangement, or that the involved parties made an agreement”.

So, this first measure is being taken. And if these obligations were not met, the court could ask that the money in the pension plan be used in priority in the claim payment. In this way, workers would not be penalized by the bankruptcy, because their pension would be protected.

This leads me to an aspect that is not in this bill and that might very well have been. In the advent of a bankruptcy, of course, wage earners will be able to get their salary back. However, this would come to an end at some point. What is due is due. People need money to survive. However, when they do not have any income, they rely first, of course, on employment insurance, which we commonly call “unemployment insurance”. Thus, the amounts payable to wage earners should not delay the receiving of employment insurance benefits. When people have exhausted their employment insurance benefits, if they have worked beyond the age of 55, what will happen to them? They will have nothing. Will they wait for their pension?

It is during debates on this bill, that we need to be concerned about this, as the Bloc has done tirelessly. We have reminded the other parliamentarians that POWA, the program for older worker adjustment, needs to be reinstated. This program assists workers when they no longer have an income, because of their age and the fact that there are no more jobs available in the regions. This is often the case for young people, but it is even worse for older workers. This way, they would receive an income. For now, we believe that EI should be paid out of the consolidated fund. This would allow older workers to receive benefits, and therefore an income, until they are eligible for their Quebec pension, along with an adjustment. This would help them until they are eligible for the old age pension.

This program would not cost more than $50 million in the first year, for individuals who are truly unable to find other employment. At worst, in subsequent years, it would cost $75 million. So, this is peanuts for an EI budget of $16 billion.

We wonder why it is taking the government so long to implement this measure, when we know that thousands of jobs are being cut and that older workers are unable to find employment. They are appealing to programs of last resort, often without receiving anything. As a result, they are being reduced to poverty.

It would be interesting for the government to find out what happens to older workers who are unable to find a job and have no income. People say that a government is judged by how it treats its seniors and its children.

The current government would get a nice taste of reality if it examined the fate it has imposed upon older workers who are unable to find a job now and who have no income.

The last point I want to raise relates to labour unions. There is another measure we welcome. Sometimes, in very specific conditions, even before bankruptcy, it can be established that a company is in a bad situation because of circumstances over which it has no control, like foreign competition on our markets. Here, it would often be competitors from Asia. That could push a company to bankruptcy. The measure would allow the re-opening of collective agreements. In such a case, the court would have to evaluate the situation and if appropriate, there would be discussions with labour unions. Then new measures could be agreed upon and introduced.

In the case where the unions made concessions, for example, where employees would have to accept a salary reduction, as we have seen recently, the employees collectively, through their union, would also become creditors. That is another interesting provision.

Other members will undoubtedly talk about students going bankrupt. After a number of years, they should not be forced to reimburse their loans, even if they go bankrupt. When it has been established that their bankruptcy is real, they should be treated like any other citizen who goes bankrupt and their debt should be completely erased.

I will conclude on that. That is our position. There are surely a lot of other points to raise. I will try to do that while answering questions.

[Jeff Watson, Conservative, Essex, ON]

Madam Speaker, speaking of good ideas, one of the ones that was missing in Bill C-55 of course was any protection for unfunded pension liability.

The truth is that the government rushed through the legislation because it had to keep a commitment, when it had a gun to its head, to the NDP for propping them up to stay in power here. It rushed this legislation through and missed the important component that is a companion to this legislation, which is to protect workers when it comes to unfunded pension liability. Why did it neglect workers? Why did it leave them out of the legislation?

[Yves Lessard, Bloc, Chambly—Borduas, QC]

Madam Speaker, before proceeding with my speech, I would like to put a question to the hon. member who just spoke.

On behalf of the Liberal Party, the government party, she is now applauding Bill C-55. She indicated that she had been in this place for quite a long time. This means that she is familiar with the fundamentals of the House and, I would assume, with older bills, but primarily more recent ones.

Could she tell us why, in October 2003, her party opposed a NDP motion to ensure that, starting in October 2003, wage and income protection measures would be taken to protect workers in the event of a bankruptcy? This has resulted in two years of wage protection in the event of a bankruptcy being lost.

I would like to hear the hon. member on that.

[Brenda Chamberlain, Liberal, Guelph, ON]

Madam Speaker, I really enjoyed a lot of the remarks made by the member for Kootenay—Columbia. I appreciate the support for this legislation. It is important legislation.

I rise in the House today to speak to Bill C-55, an act to establish the wage earner protection program act, to amend the Bankruptcy and Insolvency Act and the Companies' Creditors Arrangement Act and to make amendments to other acts. The House has witnessed much good debate on this legislation already. I know it will continue in committee should the House see fit to send the bill there, and I feel very confident that it will.

I think all in the House would agree that this is a very important piece of legislation. It is the result of extensive consultations with Canadians and stakeholders all across this great country.

The bill's four main objectives are to encourage viable but financially troubled companies to restructure as an alternative to bankruptcy, to better protect workers' claims for unpaid wages and vacation pay, to make the bankruptcy system fairer and reduce abuse, and to improve the administration of that system. These objectives offer positive changes for businesses and employees alike. This will serve to help the continued strength of our economy.

I know full well the difficulty that people experience when a company is in financial difficulty. The turmoil people personally feel is hard on them and their families. They worry about their next paycheque and what will happen if worst comes to worst and their employer shuts down. That alone is very hard on families. Then begins the task of recovering the wages that other people owe them. It is not pleasant and a task many Canadians consider far too difficult. For those who do attempt it, far too often they find, quite frankly, that they are unsuccessful.

That is one of the reasons I support this bill. We are making workers' claims for unpaid wages and vacation pay a higher priority than secured creditors' claims in bankruptcy situations. Workers will benefit from a limited superpriority for unpaid wage claims up to $2,000. The people who need it most will be given increased priority.

This legislation also establishes the wage earner protection program. The responsibility for this program will be housed under the portfolio of my colleague from southwestern Ontario, the Minister of Labour. He is very familiar with the challenges facing hard-working Canadians. Quite frankly, I cannot think of a better minister to administer this program.

The minister has indicated that an estimated 10,000 to 15,000 workers in every workplace across this country in both federal and provincial jurisdictions are left with unpaid wages or reduced pensions due to employer bankruptcies in Canada. The wage earner protection program will for the first time in history provide workers with a guaranteed payment for unpaid wages up to $3,000. This is a good thing and I am proud that the government is acting.

I also like the fact that the government will recover a portion of the cost of this program by making claims against the employer's estate, thereby making it unnecessary for an employee to do so. I know that some of my colleagues in the New Democratic Party have questioned the sufficiency of only being able to draw $3,000 in back wages. I think that is a fair question and one which should be given further consideration in committee.

The minister indicated that the $3,000 figure represented approximately 97% of the usual amount of wages lost. If the committee has a reasonable recommendation of a different amount that members can support, I look forward to giving it every consideration. From the minister's remarks in the House, I would say that he does also.

I also know that my colleagues in the NDP have questions about the limited superpriority for wage claims up to $2,000. Here again I think that the committee has work to do. The minister has indicated that there is evidence to support this figure. I think the committee should see what this evidence is and should give that serious consideration also.

Concern over their pensions is another issue that many Canadians worry about when their employer goes bankrupt. I am glad to note that Bill C-55 addresses this too. Many workers rely on their company pensions for retirement. Faced with the loss of this retirement income, many would be put into severe financial difficulty. It is just not right that the pensions of those workers are sometimes used to pay other creditors instead of being returned to those who have paid into them. The proposed reforms would improve on this situation.

One of my colleagues from the reform alliance Conservative Party was concerned that these initiatives might relocate the burden from employers to government and that these initiatives might encourage companies facing potential bankruptcies to offload responsibilities to government. The government is aware of this possibility and has taken that into account in the legislation.

We are seeking to help those employees who have faced an unfortunate and unexpected event, not to shift the burden to the taxpayer or government. If the provisions within the legislation to this end are not sufficient, I am sure that the committee will come forward with additional recommendations.

[Jim Abbott, Conservative, Kootenay—Columbia, BC]

Madam Speaker, I am very pleased to rise to speak to this bill, primarily because in the 13 years that I have had the privilege of being the member for Kootenay—Columbia, I have always taken very seriously the issue of workers and people in my community who are in the labour market .

This was driven home particularly in 1993, immediately after I was elected. There was a massive bankruptcy of a very major corporation in my constituency. There were wages owed. There were very severe difficulties with pensions. I am proud to say that through the hard work of my staff and my office in Cranbrook we managed to do what was right for the workers, at least to the greatest extent possible.

I have never wavered in my commitment to the workers or to the companies and businesses in my constituency and I try to represent them as aggressively and as well as I possibly can in this chamber, but it was through that massive bankruptcy and the work we had to do on behalf of the people who had been formerly employed by the bankrupt company that I became acutely aware of some of the stories of real hardship.

It was therefore very interesting to me to be working and finding myself in a small degree of agreement with the member for Winnipeg Centre. It is very difficult for me to have any kind of very frequent connection with some of the more socialist thoughts of the NDP. NDP members have a tendency to be a bit pie in the sky; however, the member for Winnipeg Centre and I, although we have had some differences of opinion, have also found some common ground.

Certainly, the way that the NDP was proposing to handle this issue to be able to give greater protection to workers in the event of bankruptcy was not one that was possibly acceptable to my way of thinking and certainly not to my caucus or the leader of our party. So what we did was sit down together, recognizing that there was a common objective. We wanted to arrive at the same place.

We sat down. I am sure that in speeches prior to mine from members of our caucus, members have heard our very competent member of the shadow cabinet stand in his place and describe the fact that we actually formed an ad hoc committee within our caucus, under the leadership and with the direction of the leader of the Conservative Party, to try to take a look at how we could resolve this issue.

We took a look at two things on the basis of the initiative that had been brought forward by the member for Winnipeg Centre. The first was the issue of wages and the second was the issue of pensions in the event of bankruptcy. We decided that those two issues, although they appeared on the surface to be the same, were significantly different, certainly in the way in which bankruptcy could handle them.

Then, when the Minister of Labour and Housing came forward with Bill C-55, I took a very hard, independent look at the bill, along with the other members of our caucus committee, and came to the conclusion that, while the government had approached this from a different angle than we would have approached it, nonetheless there were some real grounds to be able to move forward and the nitpicking and the details could be taken care of at committee.

I note that the majority of bankruptcies occurs in sectors that employ a large number of workers who are low paid, part time, or on temporary contracts, who do not have the protection of a union. This does not mean that this bill will not be applicable to workers who are part of a union or to workers who are part of a larger corporation, but the reality is that 60% of bankruptcies occur in the retail, food and accommodation, personal services, and small manufacturing sectors. The other interesting statistic is that 70% of bankruptcies occur among businesses with fewer than 10 employees, which also tend to offer precarious conditions of employment.

The $3,000 cap ensures that the basic levels of earnings are covered. The $3,000 cap means that the amount eligible under the wage earner protection program, WEPP, would be equivalent to one month's annual industrial wage for full time workers or four weeks' maximum insurable earnings under employment insurance. The $3,000 cap is sufficient to cover virtually all wage claims due to bankruptcy because the current average claim is about $1,500 and 97% of current wage claims are under $3,000.

There will always be exceptions. I can imagine a time when, unfortunately, there may be a bankruptcy which we perhaps cannot even foresee at this particular point and someone is going to try to stuff my words back into my mouth by saying, “See, I was one of those people over $3,000”, or “See, this was a large corporation”.

Those statistics are nonetheless very meaningful statistics and we have to do legislation in the chamber that is reflective of what is going to do the most good for the most people.

I have always cautioned people, whether they are managers or whether they are people in companies that have unions or do not have unions or whatever it is; it does not make any difference. I have said that we have to be very cautious. In a bankruptcy, the reason why there is a bankruptcy is that, by definition, the liabilities exceed the assets that can be liquidated and realized against those liabilities.

In a situation where we have a company that has gone into business in good faith and has basically said that it needs a $10,000 line of credit or a $100,000 line of credit from whatever the lending institution is, the lending institution then takes a look at the covenant, the person and the assets. If the lending institution wants to protect itself against a rather large amount of money, it asks what it can do to legally attach an asset to make sure that it will be repaid. That is simply called security. The money is advanced.

This bill does not affect that money. As I have explained again and again to people who have talked to me about this issue, it is very important to understand that when we say we are going to allow wages to be taken in advance of money that could be realized from a fixed or a secured asset, we depreciate the value of that asset and therefore lower the amount of money that would be available to the company in the first place. That is a very, very important consideration.

I see my friend from the NDP shaking his head. He cannot argue with the reality. If he were a lending institution, which I am sure would be unusual for an NDP member, and he could have a $50,000 asset, he would be prepared to advance up to $30,000 on that $50,000 asset. If someone told him that wages could possibly take $10,000 or $15,000 away from that asset in the event of bankruptcy, he would have to rethink how much he would actually be prepared to advance to the company in the first place. Anything that is done to reduce the value of a security for a potential lender reduces the amount of money the lender will give to the company. There is no way around that.

Therefore, I am a little concerned about the unsecured creditors, the people who would be providing the widgets, the gaskets, the switches, the rods, the clips, the flanges, the paper or the copiers, whatever it is that is being provided to the company on an unsecured basis. For those companies, particularly if this is an ongoing business and they become concerned about the potential of the business going into bankruptcy, in regard to the availability of credit, because there can be a charge with the superpriority that is put into this legislation and the potential for there to be this charge, there is going to be some difficulty and some reticence on the part of unsecured creditors in dealing with existing businesses.

Nothing comes for free. The money has to come from somewhere and it should never come out of general revenue. This is a business venture in which people are deciding that they are going to be working for wages or working for some form of remuneration.

That said, I believe, as does my party, that there is more than sufficient merit in the bill for it to move forward at second reading. When it gets into committee, all of the details that our critics and I are concerned about can be looked at.

I think there is a sufficient spirit of cooperation in this House to see that workers are properly taken care of. We should be able to come back from committee with probably an improved bill.

[Carole Lavallée, Bloc, Saint-Bruno—Saint-Hubert, QC]

Madam Speaker, I listened closely to the speech by the member for Newton—North Delta. I was pleasantly surprised by his remarks on student debt and bankruptcy by former students.

People are often prejudiced against former students. They think that declaring bankruptcy is easier for graduates than for other socio-economic groups. They also believe that students are more eager than others to get rid of their debts by declaring bankruptcy. However, as the member for Newton—North Delta said, it is not easier for graduates than for anyone else. In reality, this must be a very psychologically and emotionally difficult process.

No doubt the member for Newton—North Delta would be willing to support an amendment that the Bloc Québécois intends to move in committee on this particular aspect of Bill C-55. Why make former students wait seven years before they can discharge their student debt when declaring personal bankruptcy? This waiting period is so arbitrary, as was the ten-year waiting period set out in the previous legislation. Why not five, four or three years, or even nothing?

In keeping with its commitments in recent years, particularly those set out in its 2004 election platform, the Bloc Québécois will move an amendment in committee to eliminate this mandatory waiting period before former students can discharge their student debts during a personal bankruptcy.

I want to hear what the member for Newton—North Delta thinks about this.

[Gurmant Grewal, Conservative, Newton—North Delta, BC]

Madam Speaker, yesterday when I was talking about participating in the debate on Bill C-55 I mentioned a few changes this bill was recommending, particularly regarding employees. When an employer goes bankrupt, the wages earned by employees should be paid prior to other creditors.

I also talked about the impact on small businesses, as well as financial institutions. I also talked about locked in RRSPs not being part of the payments during bankruptcy.

Then I talked about the bill's impact on students. As members know and as the report states, the Senate banking committee recommended that student debt be eligible to be erased in a bankruptcy five years after the student completed his or her studies. In the case of hardship, the recommendation was that the court be allowed to discharge student loan debt in a period of time shorter than five years.

Bill C-55 does not go as far as the Senate committee recommendation. Instead, the government proposes amending the law to allow student loans to be eligible to be written off in a bankruptcy if a student has terminated his or her studies seven or more years ago. Also, higher student loan limits and higher tuition fees ensure that the students will continue to graduate with higher debt loads. However, many graduates find few job opportunities. If they end up seeking bankruptcy, it is a decision not taken lightly.

The Liberal government is seeking to doubly punish the students. While the Liberals allow their friends and donors to get away with repaying only 2.4% of grants to loans, they expect young people to pay 100% of the student loans. Who are they trying to punish?

I am disappointed to see that Bill C-55 neglects to offer protection to firms that are suppliers to bankrupt companies. The reality is that the bankruptcy of one company can drag down many others with it, especially when suppliers are small businesses.

The current system is unfair to workers as well as to the students. It must be changed. The Conservative Party generally supports these amendments. We will allow the bill to pass, but we will continue to seek further clarifications.

[Gurmant Grewal, Conservative, Newton—North Delta, BC]

Mr. Speaker, I am pleased to rise on behalf of the constituents of Newton—North Delta to participate in the debate on Bill C-55. I will be splitting my time with the hon. member for Kootenay—Columbia.

The bill makes many changes to the law governing bankruptcy and insolvency. The changes include the creation of the wage earner protection program act to ensure employees of bankrupt companies receive their unpaid wages in a timely manner. There is the reduction from 10 years to 7 years in the period during which a student debt may not be discharged through bankruptcy. Locked in RRSPs would no longer be part of the assets which may be taken in a bankruptcy. There are changes to encourage the restructuring of viable but financially troubled companies. Also, income trusts will now be covered.

Most of the major proposed changes are ones recommended in the report of the Senate banking committee published in November 2003. Many of the committee's recommendations, however, especially regarding consumer debt, have been watered down or not included in the bill.

In Canada every week dozens of companies declare bankruptcy and close down. There is a threat of interest rate hikes in the near future. This is bad news for indebted Canadians. Excessive borrowing by many households over the past few years suggests that they have little freedom to absorb economic shocks with higher interest rates or skyrocketing home heating costs.

A 1% jump in consumer borrowing rates would cost non-mortgage-holding Canadians an average of $35 per month and mortgage holders an average of $130 per month. These seemingly small sums could be catastrophic for today's highly leveraged households. As legislators we must keep all of this in mind as we consider changes to the nation's bankruptcy laws.

The wage earner protection program is the centrepiece of Bill C-55. The program is intended to help protect workers by providing a guaranteed payment of wages owed up to $3,000 should their employer declare bankruptcy. Right now workers' claims for unpaid wages rank after secured creditors' claims. As a result, many employees have to wait from one to three years to get a small portion of the wages owed to them, generally 13¢ per dollar on average. Under the proposed program affected workers could make their wage claim immediately and should receive their money about six weeks later.

The government has made changes to the ranking of who gets paid first to put wages ahead of secured creditors. As a result, employees will get up to $2,000 in back wages before the banks are paid.

Just last week there was a constituent in my office who had lost wages owed to him when his employer went bankrupt. Over the last couple of years with lumber mills closing in British Columbia as a consequence of the softwood lumber dispute and which the government has failed to do anything about, there have been many others who have visited my office with similar complaints.

Workers of bankrupt businesses are often the most vulnerable. They work in low wage jobs and live from paycheque to paycheque to keep a roof over their heads and food on the table. The wage earner protection program is a good idea whose time should have come long ago.

Putting workers ahead of secured creditors, however, may reduce the amount of money banks are willing to lend to businesses. In the short term this could result in an increase in the number of small business bankruptcies. Lending institutions may have to adjust lines of credit or demand loans because they feel they are undersecured. Already it is difficult for small businesses to borrow money in Canada and we know that small businesses are the engine of our economy.

If it becomes more challenging, the small businessman will either falter or they may not get off the ground. This change to the bankruptcy law would also reduce what companies can spend to buy inventory and fill orders which, ultimately, could cost more jobs.

The government estimates that the cost of this WEPP program could reach $50 million per year. Given the government's track record on managing taxpayer dollars, such as the gun registry, the HRDC boondoggle or the sponsorship scandal, it is likely that the cost will be even higher.

In its report, the Senate banking committee recommended that student debt be eligible to be erased in a bankruptcy five years after the student has completed his or her studies. This is very important because many students in Canada depend on loans to further their education. In cases of hardship, the recommendation was that the court be allowed to discharge student loan debt in a period of time shorter than five years.

Bill C-55 does not go as far as recommended by the committee. Instead, the government proposes amending the law to allow student loans to be eligible to be written off in a bankruptcy if a student has terminated his studies seven or more years ago. In cases of undue hardship, a bankrupt may apply to court to obtain a discharge of the student loans after five years.

Most trustees in bankruptcy and insolvency lawyers believe that this proposed amendment should be changed to allow student debt to be erased in the same timeframe as the other dischargeable debt; that is, when the bankrupt is discharged.

The law as it stands and the proposed amendment are discriminatory. It is also in violation of one of the major tenets of Canadian bankruptcy that an honest but unfortunate debtor deserves a fresh financial start.

Half of the students in college and university are borrowing at record levels to finance their education hoping their investment will pay off. Loans are becoming essential for many students, as soaring tuition fees make it necessary and nearly impossible for youth to afford school through summer jobs or part-time work alone.

Last year the average tuition fee in British Columbia was nearly $5,000 but few students make more than $10 an hour. On average, students graduating with bachelor degrees owe more than $20,000 in government debt, not including private loans. This year the Liberals increased student loan limits from $165 to $210 per week. Higher student loan limits and higher tuition costs ensure that students will continue to graduate with higher debt loads.

I am disappointed to see that Bill C-55 neglects to offer protection to firms as well as to students to the extent that it should be needed.

The Conservative Party generally supports some of the amendments. We will be seeking further clarification on the impact these proposed changes will have on Bill C-55 when we review the bill in committee.

[Tom Lukiwski, Conservative, Regina—Lumsden—Lake Centre, SK]

Mr. Speaker, prior to the introduction of Bill C-55 there was going to be, if my memory serves me well, introduction of a private member's bill sponsored by the member for Winnipeg Centre. I think it was Bill C-281. I was prepared to support that bill, as I am prepared to support Bill C-55.

One question I have is on a point of clarification. Before I get to that let me say that I am prepared to support this bill even though there are some questions as to whether the passage of this legislation might tighten up the financing options of some small businesses. Lending institutions may feel that they are getting squeezed out of what might be a situation in which they had to recover money but are dropped in the order of preference. There may be some question as to whether lending institutions are going to be as willing to lend money to small and medium size businesses in the future.

I still think this is an important piece of legislation. It has certainly been my realization that when insolvency and bankruptcy occur, the people who, quite frankly, really get screwed are the workers. This is an important step to ensure that at least the working men and women who perhaps have worked for 25 or 30 years at a company that eventually goes bankrupt have some recompense.

My question is one of clarification and it deals with pensions. Let us assume hypothetically that someone had worked for 35 years for a company and was already receiving a pension. How will this bill deal with that? Let us assume for a moment that the individual who was in a contributory pension plan had over the course of his or her lifetime contributed close to $100,000 into a pension fund and had received, because he or she had retired a number of years earlier, $50,000 in benefits and then the company eventually went bankrupt. What steps, if any, does this legislation take to protect the pension of that individual? Exactly what rights would that person have under this legislation?

[Marlene Jennings, Liberal, Parliamentary Secretary to the Prime Minister (Canada—U.S.)]

Mr. Speaker, I am very pleased to have an opportunity to participate in the debate on this government bill.

I am pleased to speak in support of Bill C-55 which proposes a comprehensive reform to Canada's insolvency system. The bill itself, as was just mentioned, is called the wage earner protection program act.

Insolvency legislation is a critical market place framework law. It influences the assessment of credit risks. It impacts on entrepreneurship and competitiveness. Insolvency legislation also enables resources to remain productive or to be efficiently redeployed. It preserves assets and permits a fair distribution among creditors. Insolvency legislation provides a mechanism for the restructuring of debtors' financial affairs.

In past years, however, insolvency issues have been getting increased public attention. A number of high profile companies, such as Air Canada and Stelco, have used the insolvency system to restructure, attracting considerable media coverage. Stelco, for instance, is the principal owner of a company in my riding which has been affected obviously by the use of the insolvency system that we have in place.

Insolvency stakeholders, including practitioners, labour unions and even judges, have publicly talked about the impact of insolvency legislation on the Canadian economy and keep drawing attention to these issues.

I am a lawyer by training and I can remember one of the courses that I had to take in law school was bankruptcy law and insolvency. While l found it to be quite dry, it ended up being one of the courses where I got some of my best marks, so I remember a little bit of it. I will not claim to remember a lot of it. Precisely because there have been a number of high profile companies that have used the insolvency system that we have here in Canada and because we have had stakeholders who have talked publicly about the impact that this legislation or our existing framework has on the Canadian economy, I have tried to educate myself a little bit more about it and try to remember some of what I learned in law school.

Indeed, business insolvencies have a sizable economic impact. Approximately 12,000 businesses use the Bankruptcy and Insolvency Act annually. This includes bankruptcies and proposals. Another 50 cases proceed under the Companies' Creditors Arrangement Act, CCAA. While smaller in number, the cases under CCAA typically involve large, publicly traded companies. The impact of insolvency proceedings are always significant for those involved whether it be shareholders, business partners, suppliers, customers, lending institutions and of course, the workers, the employees of those very companies that embark on insolvency proceedings.

There have been reforms in 1992 and again in 1997, but despite these reforms there is a broad consensus that another round of reform is required. The government needs to ensure that our insolvency system responds to the needs of the work market place and provides the necessary protection to those who are adversely affected by bankruptcy, namely, the workers.

At the forefront of Bill C-55 is a clear recognition on the part of the government that the present insolvency system lacks an effective way to protect workers whose employers go bankrupt.

The wage earner protection program act established by Bill C-55 would remedy this problem. It would ensure that workers receive compensation for the wages owed and the vacation earned but not paid, up to a maximum of $3,000 per worker. This program would ensure that these amounts are paid in a timely manner and are not dependent on whether or not there are sufficient assets in the bankrupt estate.

Under the current system, Canadian workers have to wait, possibly as long as three years, until the insolvency proceeding is completed and those with secured assets or interests have been fully paid prior to the workers receiving the pay that they have earned and for the vacations that they have earned but had not yet taken, and even then in most cases they wind up being paid only a fraction of the wages owed to them.

In fact, under the current system, three-quarters of workers receive nothing when their employer goes bankrupt. On average, those who do receive something under the insolvency proceedings, once the secured interests have been paid, that is, the creditors who have secured interests under the current law, only 13¢ on the dollar is left to pay the workers. That is it. For every dollar the workers are owed, if they are lucky they receive 13¢, but three-quarters of them receive zip, zero, nada, niente. If there are any other languages that someone in the House knows to say “nothing”, use it, because that is what the workers receive.

Often the most vulnerable workers are adversely affected. They are frequently in low wage jobs in small companies in sales, services and the construction industry. That is simply not fair. If there is one thing that Canadians pride themselves on, and if there is one thing that most if not all members of Parliament in this House pride themselves on, it is trying to be fair. We try to be fair when we review legislation to ensure that it is reasonable, justified, and that it actually does achieve most of the benefits that it is supposed to.

These workers never agreed to be creditors to their employers. They agreed to do a job for x number of hours for a specific amount of pay and to receive certain benefits, and if they maintained their side of the bargain, the employer had a condition and a bargain to pay them. Unfortunately, when companies go bankrupt, three-quarters of the workers receive nothing.

It is not part of the workers' contracts where they agree that if their company or employer goes bankrupt, they will be creditors for whatever wages or vacations they have earned and are owed. They did not sign a contract like that, so it is not fair that they should have to stand at the back of the line in order to get paid. Why should they run the risk of coming up empty-handed? They are not secured creditors. That is not part of the contract that they sign with their employer.

It is precisely for those reasons, among others, that the government has tabled Bill C-55, the establishment of the wage earner protection program act. It is about fairness and about helping Canada's most vulnerable workers. Bill C-55 will ensure that workers get their wages quickly when they most need them.

Under the proposed legislation, affected workers will be able to make their wage claim right away and should receive their money about six weeks later. That will be good news for these workers.

Another important step taken in Bill C-55 is to address the concerns over the lack of predictability and consistency in the application of the insolvency law, specifically the Companies' Creditors Arrangement Act. The CCAA has very few rules and has primarily evolved through judge made law.

I am sure that the Conservatives will be very happy to hear this, because they are always talking about judicial activism and that law making and rule making should be up to the elected officials and the House. I am sure they will be in agreement that there is a pressing need for increased legislative guidance so as to ensure that all players in the insolvency context are equipped to defend their interests.

The international insolvency context has also evolved in the last decade. An increasing number of Canadian companies have U.S. subsidiaries. They have significant assets in the U.S. and important U.S. creditors. More Canadian companies are filing currently under chapter 11 of the U.S. bankruptcy code as cross-border insolvencies are becoming more frequent.

However, there have been some companies that have filed primarily under chapter 11. This raises no policy issue if it is the result of a business decision by the company. The decision to file primarily under chapter 11 of the U.S. bankruptcy code should not be because there are gaps in the Canadian insolvency system. With Bill C-55 the government wishes to ensure that our insolvency system reflects the needs and reality of the Canadian marketplace. It seeks to ensure that our system is equipped to deal effectively with complex cases.

In conclusion, the reform of the Canadian insolvency legislation proposed in Bill C-55 is comprehensive and balanced. I believe it clearly serves Canadian interests. I would urge all members of the House to support Bill C-55 and to allow its reference to committee as quickly as possible.

[Jim Prentice, Conservative, Calgary North Centre, AB]

Mr. Speaker, it is my privilege to rise and speak today to Bill C-55, the wage earner protection program act, which is before the House. I will be speaking generally in favour of the concept underlying the legislation while taking issue with some of the specifics which form part of the government's proposal.

I would like to acknowledge the work of a number of members of the House. First, the member for Winnipeg Centre did a great deal of work in terms of putting Bill C-281 before the House. I have worked with this member very closely. We do not always agree on issues, but I do respect the philosophy with which he has brought this matter forward and the private member's bill that he brought is a precursor to Bill C-55.

I would also like to acknowledge the hard work of the member for Edmonton—Leduc who is our critic in this area. He has worked very diligently, has examined this very complex legislation, and has led the Conservative Party in its very able response to the legislation. The member for Souris—Moose Mountain, our labour critic, has also worked with him and similarly been responsible for the carriage of this legislation.

My comments follow those of the member for Vancouver Island North. It is worth pointing out that he has been a very outspoken advocate on behalf of working Canadians and the protection of working Canadians under this legislation. He served on the subcommittee of the Conservative shadow cabinet which brought this concept to the House earlier this year in May.

There is some unanimity in the House in terms of the spirit which underlies this legislation, but there are important differences between the way the Conservative Party and the government has approached this issue. I wish to draw the attention of the House to the May 3 motion which was put before the House of Commons. It read:

That, in the opinion of the House, immediate steps be taken to amend the Employment Insurance Act to provide for the establishment of a workers' protection fund that is funded and administered under the Employment Insurance Act to protect workers wages, medical and dental premiums, and severance payments to an amount of $5,000 per employee in the event of a business bankruptcy or insolvency.

Herein lies the genesis or the concept behind Bill C-55, but there are important differences between the Conservative position and that of the government which I will underscore in my comments this afternoon.

Generally speaking, I favour the wage earner protection program aspects of Bill C-55 and I will direct my comments exclusively to those provisions of the legislation. There are equally complicated provisions that deal with other aspects of the Bankruptcy Act. I will not be turning my mind to those today. The wage earner protection program features of this legislation are quite important because they provide protection for everyday working Canadians who find themselves caught up in the nightmare of a bankruptcy or an insolvency or a creditor protection scheme.

This is a matter that I have some experience with on a personal basis. In my own family, I recall being a young lawyer many, many years ago and my mother, who was an employee of a company called the Betty Shop, found her employer to be in a state of bankruptcy and insolvency. I remember how difficult it was for her when she discovered that she had absolutely no protection or priority as a wage earner. That company went bankrupt and it was my mother who was out of pocket with her wages because there was no government program to cover the company. She had absolutely no security under the Bankruptcy Act. That was 15 to 20 years ago, so I am pleased to stand here today on behalf of her and other working Canadians who find themselves in similar circumstances.

It is important that the House is drawing together to protect working Canadians, so that they do not suffer those kinds of losses in the event of a bankruptcy.

It is important that the matter proceed to committee and that the committee conduct a very diligent and searching review of the legislation that is in front of the House. Bill C-55 is quite complex and detailed in terms of the priority regime that it creates and the legislative balance that it strikes.

It is important that the committee hear from people in the legal and banking professions and the labour unions to make sure that the appropriate balance is struck with the legislation, because it is a question of balance. It is a question of striking a balance between protecting wage earners on the one hand and making sure on the other that we do not disrupt the balance which is at the heart of creditor relationships in the country. This is something I know in particular the member for Edmonton—Leduc and the member for Souris—Moose Mountain have spoken about but it requires some emphasis.

The priority scheme in the event of a bankruptcy is extremely complicated. It strikes a delicate balance between those who work in businesses and those who finance businesses. We must be very careful with this legislation that we do not disrupt that balance, because the ultimate losers will be working Canadians. It will be working Canadians at the end of the day who will suffer the consequences if it becomes more difficult to finance a business.

No one should think that by according superpriority status to one category of claims, in this case past wage earning claims, somehow it will be simply the secured creditors, the banks, who accept that loss. In fact, the way it works in the law of the business world is that the banks and other secured creditors will make darned sure that they have adequate security ahead of time. They will simply add the wage claims to the security which they seek which will make it harder for people to finance businesses. Essentially it will add to the equity that business people need before they can finance a business, because there will have to be adequate equity ahead of the other business assets to protect the banks. We have to be very careful of the balance which is struck.

There is one thing I am puzzled by. The motion that the Conservative Party put forward linked the employment wage protection, which is so important, and the Conservative Party specified an amount of $5,000 per person, not the $3,000 suggested by the government, but it linked it equally importantly to the Employment Insurance Act by ensuring that those claims would be paid from the employment insurance system. The government in a sense would guarantee wage earner claims in the event of a bankruptcy, up to the amount of $5,000 and it would be covered out of the premiums that had been paid by employers and employees to the employment insurance fund.

What the government is proposing is something that is in fact quite different from that. First, the protection is offered only up to the level of $3,000 per employee, which is much less generous than what had been proposed by the Conservative Party, much less protective of working class Canadians. Second, there is this very puzzling feature such that the money which is paid out under Bill C-55, the $3,000, can then be recovered by the government from the bankrupt estate, yet it can only be recovered in the sum of $2,000. This is very puzzling. I hope that the committee has a look at this.

I do not know why we would put forward a legislated system that compensates wage earners for $3,000, yet allows the government to pursue recompense or security protection only to the tune of $2,000. That simply makes no sense. There is no reason that the Government of Canada, if it is protecting wage earners and being subrogated in its position, should not have the position to step forward and seek full recompense for the amount of $3,000.

There are other features of the legislation which I think are sensible. One concern that we must have in looking at the legislation is whether it puts forward a government system which simply involves more government. I do not find that in the legislation.

I note there are extensive responsibilities in clause 21 which have been imposed on the bankruptcy trustee and receiver. It is their responsibility to police the system, to make sure they have identified the claim, determined the amount of wages, informed the individuals and provided the minister with the report. There is also a sunset provision relating to this aspect of the legislation. From the way it will work, I do not think it will necessarily produce more government in this country, but it will provide protection for working Canadians up to the sum of $3,000 in principal. That is something we support as Conservatives, although we would have sought legislation which provided even greater protection for Canadians.