[Recorded by Electronic Apparatus]
Tuesday, October 8, 1996
.0910 
[English]
The Chairman: We'll call the meeting to order, ladies and gentlemen.
The agenda for today's meeting is the clause-by-clause consideration of Bill C-34, so we will begin that process. I understand the officials do not have any opening statements.
Mr. Pickard, do you have any opening statements this morning?
Mr. Jerry Pickard (Parliamentary Secretary to the Minister of Agriculture and Agri-Food): We don't have an official opening statement.
I do apologize for being late. Circumstances were a bit unavoidable for us to be able to get here for 9 a.m., but I do appreciate your waiting until I arrived. Thank you very much.
The Chairman: We understand you've been busy. We can confirm that your tie is on straight and everything else. We understand your schedule's been tight. We appreciate your being here.
We will start, then, on clause-by-clause.
We will come back to clause 1, it being the short title of the bill.
On clause 2 - Definitions
The Chairman: I will quickly ask if there are any comments from the officials on the clauses as we go through. Since clause 2 is a fairly long one, are there any comments from the officials on clause 2?
What I am going to do, members, is ask the question ``Shall the clause carry?'' Your response will either be yes or that you have questions or comments on them.
Clauses 2 to 4 inclusive agreed to
On clause 5 - Agreements to guarantee repayment of advances
Mr. Hermanson (Kindersley - Lloydminster): I move to amend clause 5 by adding, after line 29 on page 7, the following:
- (6) No regulation made by the Governor in Council under subsection (5) shall come into force
unless it has been approved by the committee of the House of Commons that normally considers
matters relating to agriculture.
Mr. Hermanson: Yes, the clerk has a copy.
The Chairman: We'll have to take a short break, then, unless we stand this clause while that's being done.
If there are other amendments that are to come forward to the committee from any of the members, could you get us copies of them now so that if we're going to send staff out to get them copied, we won't have to do this a number of times during the meeting?
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[Translation]
Mr. Chrétien (Frontenac): Is it in both languages?
[English]
The Chairman: If it is in both languages, yes.
Are there other amendments?
Mr. Hermanson: I have six amendments in total, one of which, if it's carried, would cause me to forego the other amendments. So I have five or six.
The Chairman: Does the clerk have them all?
Mr. Hermanson: The clerk has them all.
The Chairman: Is there any objection to standing clause 5 and coming back to that, Mr. Hermanson, or do you wish us to wait and deal with clause 5 before we proceed?
Mr. Hermanson: Mr. Chairman, I have two amendments to clause 5, so perhaps we should bypass clause 5 while we're photocopying these.
The Chairman: But if the amendments to clause 5 take place, do they have an effect on anything we might do from here on in?
Mr. Easter.
Mr. Easter: That's my question. Do the amendments we bypass have an impact on other clauses of the bill?
The Chairman: So that we don't get caught up in that I would suggest that we take a break and get them printed and circulated.
Relax, everybody.
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The Chairman: We'll call the committee meeting back to order. Thank you for your cooperation, everyone.
Mr. Hermanson, when we received copies of your amendments I believe you had another amendment that should probably be dealt with, because it deals with the lines before the one before us at the present time. It's an amendment that you circulated. Would it not be best if we dealt with that first?
Let's do them in order as we go through the bill.
If I could make a suggestion, that is also in clause 5, so perhaps we could backtrack for a moment. Is it your intention to put that amendment?
Mr. Hermanson: It is, Mr. Chairman.
The Chairman: Would you do so, please?
Mr. Hermanson: Mr. Chairman, I would move that clause 5 of Bill C-34 be amended by replacing lines 27 to 29 on page 7 with the following:
- exceed $1.9 billion.
As you know, Mr. Chairman, there is a budgeted amount of $40 million that can be used in subsidizing interest rates. If the program were to expand considerably at the minister's discretion, there may be some question of whether or not that $40 million would be equitably and fairly used in the interest-free portion of the expenditures. We suggest that this might be a way to ensure some stability to the program in the long term.
The Chairman: I need some clarification for myself. If I follow your amendment correctly, Mr. Hermanson, if the amount of contingent liability was capped, if the interest liability was capped, when that was reached the program would have to stop.
Mr. Hermanson: It couldn't exceed $1.9 billion of liability. That's correct.
The Chairman: How do you suggest, if this was the case, that the equity would be dealt with after this, if it had reached a limit on the amount of contingent liability? It's capped so anybody who applies after that is out of luck.
Mr. Hermanson: If it became apparent that the program was going to expand to the point where the liability would exceed $1.9 billion, then the minister would have to come back to the House of Commons and ask the House to increase the limit of liability.
The Chairman: Mr. Easter, you had some questions or comments.
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Mr. Easter: Mr. Chairman, this is only to say that I would oppose the amendment, because I think it does take away any flexibility in terms of the bill. The intent of the bill certainly is to assist the farm community in terms of marketing. It takes away the flexibility of the act to be able to do what it has to do, and I think it's overly restrictive.
The Chairman: Monsieur Chrétien.
[Translation]
Mr. Chrétien: Mr. Anderson partly answered my question. If we remove "or any greater amount that the Governor in Council may prescribe by regulation", in clause 5, that means in fact that the Minister of Agriculture and Agri-Food will have to go before the House of Commons. If, for example, there was a catastrophe and the principal outstanding was as high as $2 billion, in other words, an extra $100 million, then the minister would have to go the House of Commons.
Is that what you mean, Mr. Hermanson? If that's the case, then there is no more flexibility, as Mr. Easter just pointed out. Obviously, a ceiling has been set at $1.9 billion, but if there were a major problem and if we have to guarantee a higher amount, I think it would only be fair and reasonable that by order in council, the government be able to exceed that amount. You are opposed to exceeding the amount of $1.9 billion unless the House of Commons authorizes that.
[English]
The Chairman: Would you clarify that, Mr. Hermanson, and then I'll go to Mr. Pickard.
Mr. Hermanson: Certainly.
That's right, Mr. Chrétien. If there is a catastrophe, as you say, one of two things usually happens: either production falls dramatically or prices fall dramatically. In either case, the demand for advances doesn't increase in that situation. The demands, then, are on the safety net such as crop insurance, income stabilization...in the past there has been pressure for ad hoc payments.
You would see a demand for greater advances when times are good, when production is higher or prices are higher. So there is not the catastrophic or desperate situation in agriculture where if you need more for this program, it's because times are bad. If you need more for this program, it's because times are good, and that's why we believe there should be a cap.
The Chairman: I have another point for clarification, Mr. Hermanson. If the level of the contingent liability was reaching the $1.9 billion mark, and if there was a request for an emergency advance and the minister deemed it should be interest free, but that interest free would push it over the $1.9 billion - and that was in the month of July - are you suggesting we would want to have it so that the House of Commons has to be called back before this could happen?
Mr. Hermanson: I would think that if the minister and his department are capable and efficient and have the facilities available to them, they would not allow themselves to be put in this type of situation. As I said to Mr. Chrétien, when the demands are there for an increase, times are good. It's not going to be the case that suddenly times are very difficult and farmers are going to need more cash advances because they have a shortfall in income. It's going to be because their incomes are increasing.
We have to think about the mindset here. Really the reason for the cash advance program is to provide cashflow during the period between the harvest of produce and the actual sale of that produce. It is not a safety net. It is not in lieu of crop insurance, and we had discussions with the witnesses on that very fact.
So it's very unlikely that suddenly the minister and his department would be caught short, realizing they were reaching the contingent liability. What that should mean is that if there's been such an expansion in the whole agricultural sector, the program has become too small for agriculture as a whole.
I think this would be a wonderful problem, and it is something that can be forecasted. The minister can come back to the House of Commons and say agriculture has boomed beyond our imagination; the cash advance program now needs to be expanded to match the growth in the sector.
The Chairman: Mr. Pickard.
Mr. Pickard: Mr. Chairman, this was put in as an extreme emergency measure. We would hope we never arrive at a point where it has to be implemented. But if we look at the reality, ten years from today there could be a dramatic change in pricing. There could be a dramatic change in operations. A major disaster could occur.
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In that case, down the line somewhere do we want to leave ourselves wide open not to be able to deal with that emergency but to call Parliament back if we are in that scenario? We do have a safeguard within the program, as Mr. Hermanson has pointed out - that is, the $40-million cap on interest. That in itself would have an effect.
But think of this scenario where we do have a major disaster and interest rates are quite low, and we have to call Parliament back just to go over the $1.9 billion. I think that in itself is putting roadblocks where roadblocks are not required.
As a result, the safety aspect, if you're talking about the liability...the $40 million on interest-free is really a safety mechanism there. At the same time, it doesn't really make a great deal of sense, if we come into a major disaster, to cap it at $1.9 billion because $1.9 billion was the highest rate paid in the past.
So I think there are opportunities in the future where this may occur, but again, as far as the department goes, although we hope it never does, we don't want to hamper the whole system just by saying we'll cap at $1.9 billion when we don't change the $40 million liability we have.
The Chairman: Are there any further questions or comments before I put the question?
Mr. Hermanson: I would like to ask a question of the secretary and his officials.
Is that $40-million cap on interest subsidy entrenched in the legislation, or is that subject to change by regulation as well?
Mr. Pickard: That could be subject to change by regulation.
Mr. Hermanson: I think this amendment is even more applicable in that case.
Amendment negatived
The Chairman: We will now go on to the amendment to clause 5 you had put, Mr. Hermanson, prior to the break. Would you like to speak to that?
Mr. Hermanson: I guess I don't have a lot of hope that this committee is going to carry this amendment, but I do think in light of some of the red book promises to increase the importance of committees, to make the work of the committees more meaningful, that more scrutiny of the department, of appointees by ministers and certainly regulations such as would be forthcoming out of this part of the act would be a very worthwhile endeavour of this committee.
In fact, we think if this was passed it would help the Liberals keep their red book promises. Therefore, we're giving you and your colleagues the opportunity to support this amendment.
[Translation]
The Chairman: Mr. Chrétien.
Mr. Chrétien: If I've understood correctly, if we had to exceed $1.9 billion, then the Committee on Agriculture and Agri-Food would be called back instead of calling the House of Commons back. Is that what your second amendment means, Mr. Hermanson?
[English]
Mr. Hermanson: Mr. Chrétien, where regulations are now being made by Governor in Council under subclause 5(5), we're suggesting that these would not come into force unless they were also approved by the Standing Committee on Agriculture and Agri-Food, the appropriate committee under today's regime.
It may not necessarily be just a cap. It could be any regulations under subclause 5(5). Basically, that is the gist of subclause 5(5).
.0950
The Chairman: Mr. Chrétien's example is an example of what you're saying, but your amendment would also deal with any action taken in regulations, or Governor in Council, for anything outlined anywhere in clause 5.
Mr. Hermanson: Anything in clause 5. Obviously, $1.9 billion is in there. There may be other ramifications that I'm not aware of. That's the obvious one.
The Chairman: But that's subclause 5(5). Your amendment refers to the whole of clause 5.
Mr. Hermanson: No, only subclause 5(5).
The Chairman: I'm sorry; you're right. My apologies.
Mr. Easter.
Mr. Easter: I have a question for the officials, really, or maybe the parliamentary secretary.
What are the implications of that? Under our parliamentary system, basically the legislation outlines the thrust or the principles of the act, and the regulations flow from that. What are the implications of that amendment in terms of being overly restrictive for the minister to be able to do what the principles of the act entail?
Mr. Pickard: The regulations really are those rules that are put in place in order to carry through legislation we have passed in the House. I see this action as saying that in a department, any change within regulations that affect this area, you won't be able to make until you bring it forward to a committee of the House of Commons. But at the same time, an order from the Governor in Council is an order from the cabinet.
So in fact what this would be doing is placing this committee as overseers of the cabinet. I think that in itself would really make the government of the day ineffective. It's going to put a committee over the cabinet. I wonder if that is a workable, feasible or even reasonable idea.
The Chairman: Any further questions or comments before we put the question?
Amendment negatived
Clause 5 agreed to on division
Clauses 6 to 8 inclusive agreed to
On clause 9 - Payment of interest
Mr. Hermanson: Mr. Chairman, I would like to propose an amendment to clause 9, but perhaps I could query the parliamentary secretary and his officials at this point.
There is some question as to whether further royal assent would be needed.
.0955
As you are aware, when we had witnesses appearing before the committee on this bill they suggested that the emergency advance should be interest free because it was part of the existing $50,000 that was interest free. I guess you could argue that if it's a portion that was already interest free then it shouldn't be an additional expenditure. However, the way the act is worded, interest would be charged on the $25,000 emergency advance unless the minister waived that.
I don't want to propose an amendment if it's going to be shot down on a technicality, but perhaps -
The Chairman: Maybe we can do that right away and then have it over with.
Mr. Hermanson: Perhaps I could get some response from the parliamentary secretary and his officials. I'm sure they've reviewed the testimony of the witnesses. Perhaps we can work together on this somehow to incorporate this change into the act.
The Chairman: Maybe I could clarify a little bit first. It's my understanding that the amendment as you've proposed it now -
Mr. Hermanson: I can read for the committee.
The Chairman: I think everybody has a copy, but if you wish to read it, go ahead.
Mr. Hermanson: What I was considering moving was that:
- For greater certainty, the Minister is required to pay the interest for an emergency advance
unless the advance guarantee agreement provides for its payment by a person other than the
Minister.
Mr. Hermanson: It changes the onus from bearing interest to being interest free, unless the minister intervenes. I would appreciate some comment from the parliamentary secretary and his officials as to whether some mechanism can be used to correct this problem and whether the witnesses were incorrect in saying that in fact the interest is being charged on what would normally have been the interest-free portion of the cash advance under this clause.
Mr. Pickard: If we look at the $50,000, it has been put in place interest free. The intention of any emergency advance going as high as $25,000 is that the minister would look at those emergency situations and in most cases it would fall well into the $50,000 and therefore go ahead interest free.
There are those times that the minister needs some flexibility because there may be what appears to be an emergency up front very quickly, but on further investigation those may not in fact really be emergencies as perceived. I think the safeguard of giving it to the minister at some discretion is to leave a safety factor for the government. If this is abused or if it's not used properly year after year, you may have a declared emergency that in fact shouldn't have been of that nature.
So it's a protection; it's not to eliminate real emergencies in the $50,000. They are intended to be incorporated. When there are situations where the minister can't make a really quick decision but where they can look at it more carefully on further investigation, it gives them the flexibility to fit in what is appropriate and what is not appropriate.
Mr. Hermanson: I have another question then. If a producer receives a $25,000 cash advance under the emergency clause, are they then eligible to receive another $50,000 on top of that, interest free, up to $75,000? Would they get the full $50,000 interest free? By receiving some emergency advance, are they then penalized where they can only actually access $25,000 interest free?
Mr. Pickard: You have to realize that the $50,000 is the amount that has been set for interest-free advances. The emergency funding would fit into that.
The problem is created if the intent is to move an emergency plus $50,000. That puts $75,000 into a program. Remember that there is a cap. When we start looking at situations where we may open it up to $75,000 or add another $50,000 because there's an emergency, it may diminish that $40,000 and treat quite unfairly others who are looking at that advance if we are getting near, or exceeding, the cap of $40,000. It could cause a reduction in the interest rate.
.1000
As a result, the cap of $50,000 is the cap that will be maintained with emergencies as well as advances. However, any emergency that is declared...and from my understanding, that $25,000 basically covers a good portion of the emergencies we've had in the past. So it's a real safety net in that case.
But the factor we're discussing, which seems to be uncertain, is that $50,000 clearly is the cap for both together; $25,000 will fit into that $50,000 wherever the minister feels the emergency was a valid emergency. That will go ahead. But he does need the qualification for a protection if there's something invalid that he needs time to correct at a later point.
Mr. Hermanson: Then, Mr. Pickard, wouldn't you feel that this is potentially an unfair situation, where one sector could take their $50,000 interest-free advance and then receive a $25,000 emergency advance after that and have in fact received the $50,000 interest-free advance and then obtained some emergency funds after that?
Mr. Pickard: There wouldn't be $25,000 available. If they have $50,000, they don't get $25,000 on top of that, interest free. That's clear.
Mr. Hermanson: Then let me give you another example. One agriculture sector receives $50,000 interest free because they don't have an emergency. Everything's going along normally, the way it should be. Suddenly we have a sector that is stricken with an emergency and they only receive $25,000 interest free. Does that seem fair?
Mr. Pickard: If they only apply for $25,000, then they would receive $25,000. But what is to prevent them from applying for $25,000 and then $25,000 later on the balance of the interest-free -
Mr. Hermanson: Nothing is preventing them, but they're getting $25,000 interest free and they're paying interest on $25,000, whereas the sector that is not experiencing an emergency is receiving the whole $50,000 interest free. In other words, the sector of agriculture that's not dealing with an emergency is benefiting more from the program than the sector of the industry that's experiencing something that requires emergency withdrawal of advance funds.
Mr. Pickard: If we take that scenario, it's very easy to look at the scenario where you have a farmer that has potential use for $15,000 in an emergency. That is the amount of interest-free advance that would apply to that farm. You have another farm with an interest-free advance for $40,000 - a different operation, or even an emergency at different levels because of the required demands, the size of the farm, and the crop being produced.
There are going to be variables in the amount of pay-out in every one of these programs. What we are looking at isn't what we pay in actual dollars but the caps in the system. We're just saying that in an emergency, $25,000 will be the cap. In advance payments, $50,000 will be the cap.
Mr. Hermanson: Is the cap -
The Chairman: Mr. Hermanson, we're going to move on. You have an amendment here, which I'm going to rule on very quickly, so we're not going to continue the discussion. A couple of other members want to have some input.
Mr. Collins.
Mr. Collins (Souris - Moose Mountain): I find it very interesting that, on the one hand, we just went from an amendment of $1.9 billion and you wanted that cap, and now we get into this and you want it expanded. It seems to me there's a flight of logic.
The $50,000 is in there, and that's what it is. If you think you want to go into another $25,000, that's a whole different program. I won't support that on the basis of what's put forward.
The Chairman: Mr. Easter.
Mr. Easter: I think Mr. Hermanson is wrong in terms of saying this is unfair. The emergency advance, as I see it, is in fact an advance of the advance payment due to crop conditions. Is that not correct?
For example, when we had the PVYn crisis in Prince Edward Island, funds were made available because of the extra expenses, the loss of crop, etc. The advance payment was made available earlier. It wouldn't in this act have anything to do with the limit on $50,000, interest free. What it would mean is that you would get an advance up to $25,000 ahead of the normal time you would qualify for the $50,000. Am I correct in saying that? I think I am.
.1005
So your argument in terms of being unfair, Elwin, has no merit whatsoever. I think it opens up the opportunity, due to certain crop conditions, weather conditions or whatever, to get an advance ahead of the normal time for the advance payment.
The Chairman: I think everybody has had the opportunity to express their concerns. The parliamentary secretary and the officials know the concern Mr. Hermanson has expressed very clearly.
As I stated, and for the reasons I gave earlier, I'm ruling the amendment out of order.
Clause 9 agreed to on division
On clause 10 - Eligibility requirements for producers
The Chairman: I believe there are some amendments. The first motion to amend clause 10 of Bill C-34 is to add, immediately after line 26 on page 10, the following:
- Sharing security
Mr. Easter: I so move.
The Chairman: Is there discussion on the amendment?
Mr. Easter: As I understand this clause - and I would ask the officials to tell me whether I'm right or wrong - say a producer is in some financial difficulty and maybe has a lien against a crop or some such thing. This clause would allow that, say, if that lender and the farmer...the advance would be made jointly.
Is that what you mean here? It would open up the possibility that if you were having some difficulty with a lender, you could still be entitled to the advance -
Mr. Phil Jensen (Acting Director General, Strategic Planning and Regional Operations Directorate, Department of Agriculture and Agri-Food): I suppose theoretically that could be one possible use of it, but its primary purpose was as an alternative to spring advances, which had been proposed by a number of Ontario farm groups and which were not acceptable to some other Ontario farm groups and several other groups across the country.
So what we've come up with, which is now acceptable to these groups, is a security sharing concept where we can roll a provincial program...well, not roll into it, but we can meld the two of them and have the two work well together through this concept of security sharing. I believe a couple of witnesses who've been before the committee, such as OCPA and the Ontario Wheat Producers' Marketing Board, have spoken in favour of this amendment.
So that's what the amendment is directed at.
Mr. Easter: Thank you.
The Chairman: Are there further questions or comments?
Mr. Hermanson: Mr. Chairman, if I remember correctly, this amendment was agreed to by the government in lieu of the request by the Ontario Corn Producers' Association for a spring advance. They had gotten a commitment from the Prime Minister that he would in fact give them a spring advance. The Prime Minister, I guess on second thought, or maybe with some advice from the department, decided a spring advance wasn't such a good idea. We had to reach a compromise and this was the compromise. Is that correct?
.1010
Mr. Pickard: I think I can explain that side of it. When we look at the capping of the program, if we roll spring advances into this program, we defeat the purpose of the program and we change it to a program for cost production financing. In general, that is not the direction this bill is intended to go, even though the corn producers would like to have seen it go in that direction.
We have letters from the corn producers and OFA, which are the two organizations that had concerns. They are very accepting of this amendment, which fulfils their concern about the early advances. In fact, the amendment and the negotiations have come to the point where we have resolved it with the organizations that were concerned.
So it isn't not making the commitment; it is in fact coming to a compromise that was workable and not depleting the revenues in this program to make it somewhat ineffective if we come to a crisis year where we'll come close to that $40 million.
The Chairman: Is there any further discussion?
Mr. Easter: I have a question, Mr. Chairman.
You are talking about another lender. Say as a producer I was going to get my operating capital in the spring. Banks love guarantees. Is there a danger here that as this becomes more well-known, with more widespread use, the lender may see this as a way of asking for an assurance on your advance payment where right now they're really not asking for it? They know it's available, but if I go in and get my operating capital now, it's on the basis of my operating capital. With this clause in there, do you think they are going to be asking for a guarantee? Is there that danger?
Mr. Jensen: No. We've looked at this very closely. We've spent the last 18 months consulting with producer groups on the issue of spring advances. As we went through the country we received 85 submissions from farm groups and we consulted with 160 stakeholders, so we've been through this issue a lot.
When we finally were able to come up with this compromise solution, we did it by putting some fairly tight criteria around when it can be used. They aren't in the act. What is in the act is in our amendment in accordance with the terms and conditions specified in the advance guarantee agreement. The conditions would include a number of things such as equity among farm groups, not establishing a precedent for any other part of the program, etc. It's along that vein, Mr. Easter.
I think the general answer to your question is no. We're quite cognizant that there is a potential for misuse, which has to be balanced against the need to make it easier for farm groups to roll one program into another. We have criteria and we think we can deal with that.
Mr. Easter: That's fine. Thanks.
The Chairman: I'm going to put the question on the amendment to clause 10 before us.
Amendment agreed to
Clause 10 as amended agreed to
Clauses 11 to 14 inclusive agreed to
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On clause 15 - Non-application of certain provisions
Mr. Hermanson: Could I just ask the officials here what cost is incurred by the federal government as a result of clause 15?
Mr. Jensen: Actually it's more of a benefit. Because the Wheat Board is a crown agency, they have a certain borrowing structure in place that allows them to achieve very favourable rates of interest. We want to continue to do that to be able to pass the benefits on to producers. That's what that clause is trying to capture - the ability to maintain the status quo in that regard.
Mr. Hermanson: As a follow-up, if other marketing agencies acquire that same ability, do they somehow not have the same tools and levers available that the Canadian Wheat Board has as a result of clauses 13, 14 and 15 being here?
Mr. Jensen: I think the best chance of that is to say this legislation is dealing with three separate programs, two of them very large. On average, probably about 50-odd producer groups come to us to participate in the program.
There is a range of organizational strength. Some of those organizations are very large and well-funded and are able to negotiate good terms with their bankers. Others are newly established and perhaps not on such a financially sound footing. So the marketplace plays a certain role here in determining exactly what these individual organizations are able to obtain in their guarantees.
This clause is merely allowing us to preserve the status quo for two-thirds of the producers in the program that were covered under the Canadian Wheat Board. It does not affect, in any negative way, the other producer groups. In fact, I would go so far as to say the federal guarantee under this program helps those producer groups significantly in obtaining better lines of credit. But there will be differences. It's simply differences in organizational structure, differences in financial strengths that exist.
Clause 15 agreed to
On clause 16 - Delivery of permit book
The Chairman: On clause 16 there is an amendment that was proposed and presented to us before. It is an amendment that replaces line 31 on page 12 with the following:
- The Board may require an endorsement to be made in the
Mr. McKinnon (Brandon - Souris): I so move.
Mr. Jensen: Mr. Chairman, perhaps I could just refresh everybody's memory on this. If you recall the way the advances are delivered through the Canadian Wheat Board, it's a joint arrangement between the Canadian Wheat Board and the primary grain elevators in the three prairie provinces.
The Wheat Board has asked, in order to ensure that the primary elevators do follow the principles and purposes of the program, that the elevator managers be required to endorse the permit book, which is the mechanism by which the advance is recorded and repayment is made. It's simply an administrative change requiring the program to be more fiscally and administratively responsible.
Amendment agreed to
Clause 16 as amended agreed to
Clauses 17 to 19 inclusive agreed to
On clause 20 - Annual maximum guarantee for each producer
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The Chairman: There is an amendment here, again one we've had before us, that clause 20 be amended by striking out lines 3 and 4 on page 14 and substituting the following:
- of $250,000 and an amount determined by the minister.
Mr. Easter.
Mr. Easter: What's the reasoning for the change to go to the minister from the agreement?
Mr. Jensen: To be honest, this is simply a mistake we made in the department. We worded it incorrectly. We've been advised by our lawyers that the wording we have in there now is more appropriate. The other wording we had was subject to misinterpretation.
Mr. Easter: That's remarkable: admission of a mistake from the department. I like that.
The Chairman: Mr. Easter, did that make your day?
Mr. Easter: It made my day.
Mr. Pickard: Do you notice how quickly that error is corrected as well?
The Chairman: Are there any further comments, other than from Mr. Easter, on this clause?
Amendment agreed to
Clause 20 as amended agreed to
On clause 21 - Circumstances constituting default
Mr. Hermanson: Mr. Chairman, again this seems to be a bit of an open-ended clause that gives the minister a lot of discretionary power. I wonder if the officials or the parliamentary secretary would explain why clause 21 is so open-ended.
Mr. Pickard: We were having a tremendous number of defaults under the Prairie Grain Advance Payments Act and that was causing much difficulty. I think that tightening up to a degree in the whole program is helping us at present. The defaults will be down substantially from where we were before, and the anticipation is that over the next couple of years we will bring those defaults in line to where they should be rather than having a continuously difficult situation.
Mr. Hermanson: Was there a reason you decided to leave this tightening up to the discretion of the minister rather than try to encapsulate it in the legislation? I'm just looking at subclause (2). It says:
- (2) If a default is impending, the Minister may, at the request of the administrator, order the
default to be stayed for a specified period on any terms that the Minister may establish.
Mr. Pickard: You have to realize that this bill is a compilation of four different bills, and with the rules we're trying to bring in consistency across all different commodity groups. If we were dealing with a specific commodity such as wheat, we could probably put in a much tighter line of what we're doing. However, when we're dealing with a very wide variety of products across the country, there would be different circumstances in each one of those productions that have to be looked at. So it gives flexibility in the case of the wider dimension that this bill is supposed to cover.
Mr. Hermanson: I understand your argument, but this would lead to a lot of discrepancy or lack of continuity and consistency within a single industry. It's just so wide open; there are no boundaries around this whatsoever.
Mr. Pickard: The intention here is really to bring into focus a piece of legislation that is going to treat all industry people in a similar fashion. I would disagree from the viewpoint that we are trying to put in a set of rules that do treat the industry in reasonably fair, consistent ways, which was not even close before when we looked at each of the different acts and how they applied.
At the same time, there is some requirement for some individual flexibility within the department to look at each individual case if there are factors that should be looked at. I think that bit of flexibility is required in that case.
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Mr. Easter: Under the current system - and it may be provided for under subclause 21(4), I'm not sure - if a producer has defaulted, maybe due to crop problems or whatever, then they're ineligible for a period of time, even though they have paid back their defaulted moneys. They still remain ineligible for a period of time. Under this bill, once they're paid back will they become eligible or not?
In a former life I dealt with several of those cases. People certainly didn't default willingly, but they were caught in the trap that when they did default and were in tough financial shape, they couldn't get the benefit of the interest-free advance payment because of the previous default. They were really behind the eight ball.
What's the situation under the bill?
Mr. Jensen: Are you referring to subclause 21(4) specifically, Mr. Easter?
Mr. Easter: No, the total bill, really. I'm wondering if the flexibility the parliamentary secretary talks about will allow for, in cases where.... Most of the cases we've had have been cases of PVYn, where they defaulted on their advance, couldn't pay it back, and when they finally did, they were still ineligible for the interest-free section for awhile.
Mr. Jensen: The short answer is yes, we will have a lot of flexibility in the new act. Subclause 21(4) is written the way it is because there were requests from producer organizations to us to put in the flexibility to tighten up on producers who were misusing defaults. There were cases across the country where producers were just defaulting year after year. They were causing the producer organizations tremendous grief in terms of administration, and they wanted the flexibility to have some penalty, if you will, to bring them into line a bit more.
But legitimate cases, yes, there is all sorts of flexibility in the act for the minister to handle those.
Mr. Riddell: Under the stay-of-default provisions, there are a lot more provisions in there for us to deal with situations specifically like the ones you were speaking of. It gives us more flexibility than we had under the old act.
Subclause 21(4) is here because during the consultation phase, the producers who made presentations to us asked that there be some provision in there for the producers who willingly...or think they're one step ahead of other people, that they have some mechanism for dealing with these particular types of producers.
Some organizations said you're given one chance and then you're out for the rest of your period in farming, and others wanted a little more flexibility. But that clause is there simply to help us in those situations.
Mr. Easter: One further question. Say you are a producer, you're dealing with the producer organization and you default twice. In their wisdom with this flexibility, they cut you off for life. Is there any appeal procedure?
Mr. Jensen: That wouldn't happen. The minister is always the ultimate appeal. We aren't going to let any extremes.... Well, I should say, we are not going to advise the minister to cut off any producers for life.
But to pick up on what Bruce and I have both said, a large number of groups told us they want some flexibility to tighten it up a bit on those producers who are continually abusing.
The Chairman: Thanks.
Clause 21 agreed to on division
Clause 22 agreed to
On clause 23 - Payments to be made by Minister
The Chairman: There is a government motion to amend clause 23 by striking out line 39 on page 15 and substituting the following:
- (a) the amounts mentioned in paragraphs 22(a) and (c); and
- (b) the interest at the rate specified in the advance guarantee agreement on the outstanding
amount of the advance, calculated from the date of the advance.
Mr. Reed is the mover of that amendment. Are there comments from the officials?
Mr. Pickard.
Mr. Pickard: Again, this is just a cleaning up of the wording so that there will be no misinterpretation of the direction in which we're going.
The Chairman: So that is an addition of 23(1)(a) and 23(1)(b). Are there any further comments?
Mr. Hermanson: Mr. Chairman, this makes it absolutely clear, then, that if there is a default, interest begins to accrue at the date the advance was taken out as opposed to when it went into default. Is that what this does?
The Chairman: Mr. Riddell.
Mr. Bruce Riddell (Manager, Legislated Marketing Programs Division, Department of Agriculture and Agri-Food): Under the current wording, we're referring to paragraph 22(b) to determine what the interest rate is. When a producer goes into default some organizations charge a higher interest rate, and there might be some confusion there. So the amendment basically says that the interest we will pay to the producer organization - reimburse under the guarantee provisions - is the rate the producer organization paid when they were borrowing the money from a lender.
Mr. Hermanson: Yes, I understand.
Amendment agreed to
Clause 23 as amended agreed to
The Chairman: There are no more amendments that I am aware of between clauses 24 and 40. If you wish to take a look at those, maybe we could do them all at once.
Mr. Hermanson.
Mr. Hermanson: Earlier I asked the question in committee about the department actually being able to buy and sell. It's the government purchases program in clause 31. Am I correct when I say there are no changes made to this program in this act? It's been left exactly as it is and yet this program is used very little. Is it just that you didn't get around to having a good look at this? Or is it that you think it's not important or that you think it's working so well that you've left everything the way it is? I have a little bit of concern about the federal government....
The Chairman: With reference to clause 31, Mr. Jensen, do you have a copy?
Mr. Jensen: Yes, and I have a couple of comments. First, this legislation is exactly the same as it was under the old Agricultural Products Board Act, except there is no longer a board. There used to be a board of commissioners, which decided on the various issues before it. It's been used infrequently over the last 15 or 20 years. It was used more in the 1960s and early 1970s. It's been used occasionally for government-to-government purchases and for sales to centrally planned countries like Russia or China. It's been used to take surpluses off the markets, such as grapes in Ontario, and I believe tobacco was one case. It was used for a pork sale for Russia.
Since the board was abolished in the 1995 budget, together with a number of other boards when the government made the decision to get rid of a number of boards, it was generally felt that the department still needed the authority to do this, because there were still some centrally planned countries around the world where it was occasionally easier to facilitate sales between the federal government and their authorities rather than do it through the private sector.
We do not see it being used very often. It has no budget attached to it and requires Order in Council approval for any transactions. So we feel there is a very tight control on it, but for policy flexibility we felt that we should include it in the legislation to, as I say, permit the government to undertake some of these things if need be. But we do not see it as a major part of the legislation; it's a minor part.
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Mr. Hermanson: It has the phrase ``unusual market conditions'' as a grounds for using this. Can you give us some examples of where that's been used in the last 20 years?
Mr. Jensen: Grapes in Ontario. Going back to I think the mid-1980s, there were big surpluses of grapes in Ontario. The producers in the Niagara Peninsula had not yet replanted their vines with the new vines they have now to produce the VQA wines. Nobody wanted to buy these grapes. When I say that, I mean nobody in the marketplace wanted to buy them. The government bought them up and stored them, and I think they were eventually processed into some product. I'm not quite sure.
But it was a mechanism designed to buy a little time for the industry to allow it to adjust. I believe it was also used for tobacco in Ontario and a couple of other provinces.
The last commercial sale it has been used for is pork to Russia. Before the Soviet Union split up into its countries, there was a pork sale facilitated with the Soviet Union at that time.
Mr. Hermanson: Can the government sell these products at a loss?
Mr. Jensen: The government would have to have a budget to do anything. There has been no budget allocated, so that's the first thing. The budget would have to come from somewhere in the department funds or some other department's funds.
I can tell you categorically there is no allocation in any budget within the department right now for this program.
The second thing that has to happen is OIC approval. You have to have a Treasury Board submission and three ministers approve each application. Obviously, you'd have to have the consensus of those other departments - Finance, Treasury Board and PCO - on side.
What I'm trying to say is that this is not an easy process. This is not an open-ended part of the act. It would have to be a policy objective that was strongly supported by the government and was felt to be a real need.
Mr. Hermanson: But can the government sell at a loss? In other words, under this program can it sell the product for less than they paid the producers for it?
Mr. Jensen: I think I already answered your question by referring to the fact that there's no budget for it.
Mr. Hermanson: No, that doesn't answer my question at all. In next year's budget there could be some money. Budgets are an annual thing.
Mr. Jensen: I guess I find the question too hypothetical to respond to. My speculative answer would be that it would be very difficult to do. Practically speaking, you would have great difficulty getting the concurrence of other federal departments to do that. There is no legislative requirement that you cannot sell at a loss.
Mr. Hermanson: So it's not prohibited under legislation. If it were to occur, what would be the ramifications to Canada under GATT and NAFTA?
Mr. Jensen: That's too wide open a question to respond to very easily. It would depend on what market you were sending it to.
Mr. Pickard: We're getting awfully hypothetical.
Mr. Hermanson: But this is important. It's in the legislation.
Mr. Pickard: There is no intention to purchase products and sell at a loss. There is no budgeting to do that. Certainly any action that would be taken under this clause would be looked at by our legal counsel, and they would determine if it is, within all trade agreements we have, appropriate. So I think there are many safeguards involved here that are very hypothetical, yet no one, I guess, can conclusively say are impossible.
Mr. Hermanson: Mr. Chairman, we can go through some of these clauses quickly, but I would like to be on record as opposing clause 31 for the time being - at this stage.
The Chairman: Okay. Can I put them together, then?
Clauses 24 to 30 inclusive agreed to
Clause 31 agreed to on division
Clauses 32 to 39 inclusive agreed to
On clause 40 - Governor in Council regulations
The Chairman: Mr. Hermanson, I believe you have a motion to amend clause 40 on page 22. Would you address that, please.
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Mr. Hermanson: Mr. Chairman, I have just a short amendment, that Bill C-34 in clause 40 be amended by replacing lines 33 to 35 on page 22 with the following:
- is 0%.
- What this does is basically bring equity to the administrator liability.
The Chairman: Mr. Jensen.
Mr. Jensen: To give you a bit of background, this clause was put in place because we are, as has been stated many times, bringing several acts together in this new legislation.
The producers who use the Canadian Wheat Board advances constitute about two-thirds of the total advances and are spread out, as I say, over those four provinces. They range between 30,000 and 40,000 producers on an annual basis, so it's quite a large group of producers.
The two-year period is there to permit the Canadian Wheat Board time to phase in the changes. At the end of the two-year period, as you said, Mr. Hermanson, everybody will be on the same level playing ground, but what we are doing for the other groups is continuing the status quo, and that's why the difference between the 2% and the 0% shows up.
If we do not continue the status quo, we will face an increased cost to the government. That is what we're trying not to do with this legislation. We had a fixed budget. One of the overriding principles is that we were not to increase costs. We're not to increase liabilities. In fact, we're to try to drive the defaults down.
We recognize that there is an anomaly here for the next couple of years, but an anomaly has existed for thirty years in some cases because of the number of organizations involved. All we're saying is that we need these two years to phase in the change and to get everybody on the same level. If we immediately do it for the other groups, there's going to be a significant cost to the government on that 2%, because we are not going to 0% in two years. What we are going to is a liability for producer groups that depends on their record of performance, and that is not 0%. It will range between 1% and 20%.
So, simply put, we do not have the budget to come up with that 2% at this stage. That's one problem.
Mr. Easter: So the amendment would cost the government considerably more money.
Just so I'm clear here, you're saying that there are really several different practices now in operation -
Mr. Jensen: There have primarily been two.
Mr. Easter: - and the idea is to have a phase-in and bring them all into line.
Mr. Jensen: Exactly, Mr. Easter.
Mr. Easter: It makes sense to me.
Mr. Pickard: But I think there is a significant point here as well. It shows the importance of bringing everyone under the same set of rules, but it also shows how good the legislation is in the end. The fact that you are implementing it earlier suggests very strong support for that legislation from those bodies.
Mr. Hermanson: Mr. Chairman, certainly this amendment was moved to benefit the board. The overriding principle, of course, is fairness and equity to all sectors. What would be the impact if this were to reach 1% or 2%, rather than 0%? If it were 2% across the board, including for the Canadian Wheat Board, would it then not be of any cost to the treasury, and would that satisfy the need to be equitable to all agricultural sectors across the country?
Mr. Jensen: The western grain producers who are being moved into this new act - and as I say, every year there are 30,000 or 40,000 of them - are facing a very large number of changes. Some of them we're phasing in. Some of them we're doing immediately. It was decided that this was one that should be phased in because there are significant computer programs that have to be changed. There are all sorts of trace-backs through the primary elevator systems and so on.
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In going into this with the Canadian Wheat Board and its clients, if our principle was that the change was needed, we had to bring everybody onto the same level, but we were prepared within reason to be a little flexible about it. Where we could change things relatively easily and right away, we have done so - and there are some examples of that, such as the roll-overs that we're getting rid of immediately. Producers will have to go on the same criteria that exist in APCA.
There are other examples like this, but this one is administratively complex. As I say, it's costly because the computer programs have to be changed, among various other things. The decision was taken to phase this one in, and we really think this is the quickest we can do it, that it would take two years to bring it in.
Mr. Hermanson: Do you have any idea what this change will cost the Canadian Wheat Board? Have they told you?
Mr. Jensen: No, they haven't, but in terms of programming costs and so on, I can tell you that their costs have been in the hundreds of thousands of dollars in the last few years just to adapt to some administrative changes that we've forced on them. So I would suspect we're talking about a fairly significant amount of money.
Amendment negatived
The Chairman: Did you basically combine the two of those, Mr. Hermanson, or did you have another one?
Mr. Hermanson: Mr. Chairman, I would move the second if I lost on the last one. Did I really lose it?
The Chairman: You certainly did.
Mr. Hermanson: Then I would move the next amendment, that clause 40 of Bill C-34 be amended by deleting lines 30 to 35 on page 22, which again brings equal treatment to all sectors in the industry.
The Chairman: Following on the comments that we just had, I think it would be the same discussion.
Amendment negatived
Clause 40 agreed to on division
The Chairman: We are obviously not going to get through as much as I would like to today because we are going to have a steering committee report, which we simply had to avoid last time. We will go until 10:50 a.m., unless the committee is prepared to go through the rest in a maximum of five minutes. I'm not suggesting we rush it, but if there is no.... If everybody is happy with that, I will put clauses 41 to 51 together. Are there any questions or comments on anything between clauses 41 and 51?
Mr. Pickard.
Mr. Pickard: We are making an addition to clause 51.
The Chairman: My apologies. I meant clauses 41 to 50.
Clauses 41 to 50 inclusive agreed to
On clause 51 - No guarantees of advances after March 31, 1997
The Chairman: There is an amendment to clause 51. It is moved that clause 51 of Bill C-34 be amended by adding, after line 32 on page 24, the following:
- 51.1 For the purpose of applying paragraph 10(1)(f), a default under a repayment agreement
includes a default in repaying an advance under the Advance Payments for Crops Act.
Mr. Pickard: This is just to bring into line the past defaults that are present today and to make sure they're covered within the act. I might just add that proposed section 52.1 is doing the same thing. It's making certain that those defaults that exist are looked after. As we all know, this is really an obligation that must be done.
Mr. Hermanson: Mr. Chairman, how is that going to be done?
Mr. Pickard: It just brings into scope the defaults that are presently in existence in the system.
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Mr. Hermanson: Then the enforcement abilities -
Mr. Pickard: They will come into the new act.
Mr. Hermanson: - within this act apply for any current difficulties.
Mr. Pickard: Yes, that's correct.
Mr. Hermanson: Okay. I understand.
The Chairman: So you don't escape your default record.
Are members in favour of the amendment?
Amendment agreed to
Clause 51 as amended agreed to
Clause 52 agreed to
The Chairman: There is a government motion to amend Bill C-34 by adding a new clause after line 2 on page 25:
- Defaults
Mr. McKinnon: I so move.
Amendment agreed to
Clauses 53 to 56 inclusive agreed to
The Chairman: Shall the title carry?
Some hon. members: Agreed.
The Chairman: Shall the bill carry, on division?
Some hon. members: Agreed.
The Chairman: There were not a lot of amendments. Is it the wish of the committee to reprint the bill for report stage as amended?
Some hon. members: Agreed.
The Chairman: Shall I report the bill as amended on division to the House?
Some hon. members: Agreed.
The Chairman: Thank you very much to Mr. Pickard and the officials for their cooperation, and to the committee. I'm pleased we got it finished. I don't think we rushed it unduly.
We will now move to the ``Fifth Report of the Sub-committee on Agenda and Procedure'', which you now have. We looked at that very quickly. There was a comment from Mr. Hermanson at the conclusion of a meeting last week.
Since that time, item 7 has been added. It states:
- That, if necessary, the Committee set aside time to review the Western Grain Marketing Panel
Report and the Minister's response to the said report.
Are there any comments on the steering committee report, or is there a motion as such?
Mr. Easter.
Mr. Easter: Yes, Mr. Chairman. On point 1, the examination of Bill C-38, I believe you should also call the National Farmers Union. They had a farm crisis committee set up. They've worked extensively under the Farm Debt Review Board and I think would have views we might find useful.
The Chairman: Would you like the clerk to check with them to see if they wish to come forward?
Mr. Easter: Please do.
The Chairman: Are members agreed?
Some hon. members: Agreed.
The Chairman: I believe there's one change in point 3, which is a meeting that I feel is a very important one, on Thursday of this week. It's televised. It's on new technologies, including biotechnology in agriculture. That's this Thursday, October 10. I would stress that everyone be there, please.
An hon. member: Be there or be square.
The Chairman: Be there and don't be square, I would suggest.
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Dr. McLaughlin is not able to attend, but he is sending someone on his behalf, a person recommended by Dr. McLaughlin. It's not that he didn't want to come; it's simply that the date was a conflict for him. Since the rest of the presenters had been arranged, we really couldn't change.
Mr. Pickard: Mr. Chairman, who is Murray sending?
The Chairman: Maybe the clerk can tell us.
The Clerk of the Committee: The lady's name is Meg Claxton. She's the president of the Signature Group and has been involved in a very significant way in biotechnology issues. I have a biography from her. If you wish, I can make that available to you.
Mr. Pickard: That would be helpful. Thank you very much.
The Chairman: Is there any further discussion on the report?
Mr. Easter: When we were leaving the other day I had asked whether or not it was possible to get a copy of the NAFTA report.
The Chairman: Do you have a response, Mr. Clerk?
The Clerk: I've not received a formal response from the department. I believe they're working on a formal response.
Mr. Easter: It would be nice if they could get it done before Christmas.
The Chairman: You will have the opportunity on Wednesday to ask that of the department officials.
Mr. Easter: My problem now is that I would like the target date to be yesterday. I can't understand why we're so secretive in this country as compared with the U.S.
The Chairman: Is there a motion, in reference to the report before you, that it be accepted - or do you want to stay here all day?
Mr. Easter: I so move.
Motion agreed to
The Chairman: The meeting is adjourned. See you tomorrow.