[Recorded by Electronic Apparatus]

Tuesday, October 21, 1997

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The Chairman (Mr. Joe McGuire (Egmont, Lib.)): We will call the meeting to order. I see a quorum.

Things have happened, and we will have to get at the questioning fairly rapidly because the minister can spend only one hour with us. His deputy, I think, will remain for further questions.

Our order of reference is that Bill C-4, An Act to amend the Canadian Wheat Board Act and to make consequential amendments to other Acts, be referred forthwith to the Standing Committee on Agriculture and Agri-Food.

Of course our witness is the Honourable Ralph Goodale, Minister of Natural Resources and Minister responsible for the Canadian Wheat Board.

Welcome, Mr. Minister. We should get right at it. You're in a rush, so we're in a rush too.

Hon. Ralph Goodale (Minister of Natural Resources and Minister responsible for the Canadian Wheat Board, Lib.): I would introduce for the benefit of the committee Mr. Frank Claydon, the deputy minister of Agriculture and Agri-Food Canada; and Mr. Howard Migie, the director general of the Adaptation and Grain Policy Directorate within Agriculture and Agri-Food Canada. I am sure they are familiar to many members of this committee.

I thank you for the opportunity to meet with the committee with respect to Bill C-4. I do apologize for having to leave at 9 a.m. An urgent item of business arose last evening, and it requires my attention at 9 a.m. I apologize for having to shorten my planned appearance, but I would note that if the committee would like me to return on another occasion to discuss the bill I would be only too happy to do so.

In the House and elsewhere I've had the opportunity already to provide an overview of Bill C-4 and to address a number of issues related to the bill. Therefore, to save the maximum amount of time for questions this morning I will not plough all of that ground again. It's all on the public record, and I'm sure members of the committee are fully aware of those previous comments.

I would simply point out one particular area where the committee's work on Bill C-4 will be especially important.

Members will remember that the predecessor piece of legislation—namely, Bill C-72 in the last Parliament—made provision for an appointed interim board of directors to help manage the transition to a brand new form of democratic governance and accountability. The board was interim in the sense that it would be in office until an election procedure could be undertaken to duly install an ongoing board of directors for the Canadian Wheat Board.

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All of the previous provisions relating to that temporary, interim board of directors have been deleted from Bill C-4. This was done to ensure that the election by farmers of two-thirds of the new and ongoing board of directors could in fact proceed on time, to be completed at the earliest possible date before the end of 1998.

Since the old Bill C-72 was not enacted last spring, as had been originally contemplated, there is now no available time between Parliament's consideration of this new Bill C-4 and the end of 1998 to have an interim transitional board of directors. The urgent and most important thing is to have those elections in which the directors will be elected by farmers, and that election procedure should not be delayed. So we are skipping the interim step of a temporary board.

One of the things we were committed to having the originally proposed interim board do was to consult and advise on the best ways to structure and conduct the elections for the new ongoing board. Since there will be no interim board, there is no built-in consultative mechanism in Bill C-4 for that first election of directors in 1998. This is the area where I would solicit your specific help. Based upon the witnesses you hear and upon your own good judgment, how would this committee advise us to structure and manage the first election of directors in 1998? I have written to all of the major farm organizations to seek their views on this matter. Let me just read into the record the specific questions I have asked.

Question one, geographic distribution. Should directors be elected at large, or should they represent specific areas either among or within provinces?

Question two, staggered terms. Assuming ten elected directors, what is the best length of term and what is the best arrangement for staggering terms to ensure appropriate continuity? For example, if directors are ultimately to serve for terms of three years, we could begin in 1998 with four directors elected for three-year terms, three directors elected for two-year terms, and three directors elected for one-year terms. They would all be eligible to seek re-election for full three-year terms upon the expiration of their initial terms.

As another alternative, what about having four-year terms as a general rule to enhance continuity and to save cost on elections? In this scenario, in 1998 farmers would elect five directors for a term of two years each and five directors for a term of four years each, and they would all be eligible to seek re-election for a full four-year term thereafter, thereby accomplishing the necessary staggering.

Question three, qualification of voters. In addition to voters having to hold valid CWB permit books, are there any other qualifications that you would like to see, having to do with citizenship or residency or any other matters you would

Question four, qualification of candidates. Should candidates possess a valid CWB permit book? It has been suggested that a potential candidate must not be a current or active director, officer, or employee of a company in the private grain trade. Could candidates be retired from private companies, but not producers?

Question five, conflicts of interest. Are there any other conflicts of interest that in your judgment would preclude certain potential candidates?

Question six, conditions of candidacy. It seems obvious that all potential candidates should be at least 18 years of age and Canadian citizens. Given the $6 billion business for which they will be responsible, it may also be reasonable to require bondability and the normal security clearance that would apply to all equivalent GIC appointments. Is place of residence an issue? Are there other criteria you would suggest?

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Question seven, nomination papers. What should be the minimum number of permit-book holders required to sign nomination papers for director candidate nominees?

Question eight, timing of the 1998 election. Keeping in mind, one, we would need to allow an opportunity for campaigning in advance of elections and, two, elected directors would need time to scale up the learning curve before assuming their legal responsibility and liability, what is the most appropriate timing for the director elections in 1998: the February-March window, before spring seeding; or the October-November window, after spring seeding?

Finally, Mr. Chairman, are there any other matters that should be taken into account in the proper structuring of an electoral process for the new board of directors?

I will look forward to hearing what this committee has to say on these points pertaining to elections. I will also of course be very anxious to consider any other advice this committee may care to offer about Bill C-4. I thank you for the opportunity to meet with you this morning.

The Chairman: Thank you, Minister.

We'll go right to questions with Mr. Hill.

Mr. Jay Hill (Prince George—Peace River, Ref.): Thank you, Mr. Chairman. Bearing in mind, Mr. Chairman, that we have only seven minutes, I believe—

The Chairman: That's right.

Mr. Jay Hill:—which is what we have agreed to for this opening round, hopefully I'll keep the questions short and we'll keep the answers short too, so we can fit as many in as possible.

There are three broad areas I would like to address in my questioning, and obviously I can't do that in seven minutes. I appreciate the minister's busy schedule and the fact he has only an hour to spend with us here this morning. The one area I would have liked to have touched on is the whole area of the freedom of choice versus the status quo and the fact, Mr. Minister, I don't see anything in the existing legislation, Bill C-4, that would allow a future board of directors to move the board toward a voluntary board. It's either an all or nothing with the exclusion and inclusion clauses.

The second point I'd like to address is the whole business of a contingency fund, which is viewed by the farmers I've talked to as simply another tax. The board isn't voluntary and therefore the farmers are required to be administered under the Canadian Wheat Board when they sell their wheat and barley. Therefore, the contingency fund is a tax.

The area I'll direct my questions to for this first round, Mr. Minister, is the area of accountability, since that's the area you seem to be focused on when you try to sell this legislation to the farmers.

I'll begin by asking a couple of quick questions that require just a yes or no. Is there anything in Bill C-4 that would require the future Canadian Wheat Board to be accessible under access to information?

Mr. Ralph Goodale: The legislation does not make any changes with respect to the normal access to information rules, Mr. Hill, but I would point out proposed section 3.01 of the legislation, which reads as follows:

In other words, the directors have all the normal powers and authorities of directors essentially in the private sector, and they would have full access to all facts, figures, information, data, sales results, price premiums, costs, sales strategy analyses, and all of that. Accordingly, the directors will be in a complete position to be able to account on behalf of the activities of the board of directors.

Mr. Jay Hill: Thank you, Mr. Minister.

This whole issue of accountability really strikes at section 5 of the Canadian Wheat Board Act, I believe. In a recent court ruling, I believe Judge Huband interpreted section 5 of the Canadian Wheat Board Act as meaning the Canadian Wheat Board was not obliged to obtain or even to seek the highest possible price when selling producers' grain.

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So my understanding, Mr. Minister, is that the producers are required to market their product—wheat and barley—through the Canadian Wheat Board, yet under section 5, or the way it is interpreted by the courts, there is no accountability because the courts have ruled that it is not incumbent upon the Canadian Wheat Board to seek the best possible price for producers. So without changing section 5 of the Canadian Wheat Board Act, how will Bill C-4 bring in accountability?

Mr. Ralph Goodale: I think we're treading on delicate ground. As I understand it, the legal case to which Mr. Hill has referred is subject to an appeal, and a member of this committee is indirectly a party in that particular proceeding before the courts.

Mr. Hill, with the greatest of respect, I think we should be careful about discussing a legal proceeding that is still in the process of being adjudicated. But I would draw your attention to proposed section 3.05 yyy in the legislation, which empowers the directors to enact bylaws for the proper functioning of the business and affairs of the corporation.

One of those bylaw-making powers, which is new in this legislation compared with the old Bill C-72, is proposed paragraph 3.05(b), which essentially says the board of directors:

By that section in the act, the board of directors will themselves be in a position to determine how best they should equip themselves in terms of their accountability to farmers.

Mr. Jay Hill: Mr. Minister, earlier you referred to proposed section 3.01, that “The board of directors shall direct and manage the business and affairs”, and now you're talking about proposed section 3.05, whereby they shall hold annual general meetings, etc.

Could you explain to the committee how it is that the Canadian Wheat Board, which is not open to access to information...even if the board of directors has all the information, how they will be able to report that back to the farmers who elect them if it is supposed to be kept secret by the board?

Mr. Ralph Goodale: Mr. Hill, as with any board of directors, it will be important for the directors themselves to determine what, in the best interests of the operation, should remain within the realm of commercial confidentiality, and what can properly and completely be disclosed in terms of commercial activity.

The Canadian Wheat Board, as you know, is a $6 billion or $7 billion enterprise. It does business in 70 countries around the world, and in competition with international grain companies of enormous size. The business is intensely competitive, and obviously it would be important in the interests of Canadian farmers that the Canadian Wheat Board not be put in a position where it's at a competitive disadvantage.

I think the directors would be in the best position—two-thirds of them are duly elected by farmers themselves—to determine what falls within the realm of commercial confidentiality and thereby safeguarding the board's market position, and what is outside the realm of commercial confidentiality and can be fully disclosed in the ordinary course of doing business. The directors will be in the position to make that judgment. I suspect that they will want to be as open and forthcoming as they possibly can be in order to lay as much information as possible on the table without compromising the sales program.

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The Chairman: Thank you, Mr. Minister.

Mr. Chrétien, seven minutes.


Mr. Jean-Guy Chrétien (Frontenac—Mégantic, BQ): We are prepared to support Bill C-4, just as our party supported Bill C-72 when it was brought in last year.

However, it should be noted that the Canadian Wheat Board is going to be playing in the big leagues, meaning that its sales will be in the neighbourhood of $6 to $7 billion. The Board must run smoothly and very efficiently and be above any suspicion.

Considering the objectives of the Canadian Wheat Board, we can see that grain producers will be dictating its future mandate. No one will deny that the Canadian Wheat Board needs to be more open, more receptive and more efficient. Does this mean that in the past, it was not efficient enough or truly receptive to the problems of grain producers?

If these three objectives are attained, clearly no member, regardless of the region of the country he represents, will object to improvements to the Canadian Wheat Board.

There is, however, one area which could damage the board's reputation, and I'm referring to appointments. I was one of the people who hoped that all appointments would be voted on by the grain producers themselves. However, the minister decided to go ahead and make five appointments himself, including the most important one, that of chief executive officer.

Things do not change very much from one government to the next. The appointments your government has made in recent months and weeks, for example that of Judge Michel Bastarache or the Senate appointments, indicate that nothing is changed. Take the appointment of the Canadian ambassador to Haiti. To free up a seat in the riding of Beauce, the outgoing member was appointed ambassador. I could give you countless similar examples.

Using this approach to appoint persons to important positions on the Canadian Wheat Board could hurt this organization's credibility and hinder the attainment of the objectives that I subscribe to through my support and my party's support of Bill C-4.

I also have a question for the minister. This is somewhat awkward, but I will ask it anyway. Traditionally, the Minister of Agriculture has been responsible for the Canadian Wheat Board since agriculture is directly involved. In the opinion of many people here in Canada, you were a good Minister of Agriculture. You no longer hold this portfolio, but the Prime Minister has nonetheless appointed you the Minister responsible for the Canadian Wheat Board. Should I take this to mean that the current Minister of Agriculture is not up to the job or is it that you absolutely wanted to hold on to this responsibility because you are from the West? Thank you.


Mr. Ralph Goodale: Mr. Chrétien, I'm delighted to respond to those points.

I think it's fair to say that with respect to the past performance or past conduct of the Canadian Wheat Board, which you referred to in the early part of your question, farmers have become increasingly more demanding over the last number of years in terms of their expectations of this marketing institution. They have been used to dealing with the Canadian Wheat Board for the better part of six decades. But like any institution, it's an institution that can always be strengthened and improved.

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The board, in terms of its performance, has an excellent national and international rating. In fact, that rating was assessed internationally by the Western Grain Marketing Panel. They found that in the vast majority of categories of criteria, our customers around the world rate the Canadian Wheat Board as the very best institution or entity in the public or private sectors with which they do business. Our customers have a very high satisfaction level with the Canadian Wheat Board.

Internally, within Canada, farmers simply want more democracy in how the institution functions. They want more accountability given directly to them. They want more flexibility and options in terms of how the Canadian Wheat Board can conduct its business. They want greater control over the Canadian Wheat Board's marketing mandate, and what it can and cannot do.

Those demands with respect to the Canadian Wheat Board are simply a product of a modern, more open, and more intensely competitive international grain marketing system than we've ever seen before in history. Farmers are demanding those things that pertain to democracy, accountability and flexibility. Quite frankly, in this day and age, that kind of a demand is perfectly normal and to be expected.

With respect to the appointments process, there are some appointments, of course, to be undertaken by the government under the terms of Bill C-4. They are the minority. The majority are dealt with through an electoral process.

But in terms of the limited number of appointments that remain in the hands of the government to do, I can assure you that when those decisions with respect to appointments need to be made in the course of the next several months, I will, as it has been my practice, consult broadly throughout the grain industry to ensure that the very best qualified candidates are selected for the positions that fall to the government to fill.

But I would point out—this is really the important thing—that those will be in the minority of positions. The majority of positions on the board of directors, with respect to the position of chairperson, will be filled through a democratic process, not through an appointments process.

On your final point, the selection of a minister responsible for the Canadian Wheat Board, it is, of course, the prerogative of the Prime Minister. I would not presume to comment on the quality and the calibre of the choices he makes. His judgment is just fine with me.

But I would point out that there are ample historical precedents for the minister responsible for the Canadian Wheat Board to be another minister in the cabinet separate and apart from the Minister of Agriculture and Agri-Food. The idea of having a separate minister responsible for the board is a bit of a long-standing Canadian tradition. I presume it does relate to geography in terms of the particular individual in the role at any given moment in time.

But let me say that I am delighted with the Prime Minister's choice with respect to the Minister of Agriculture and Agri-Food. My colleague, Mr. Vanclief, is an exceptional member of Parliament. I'm sure you will be able to say, as you watch him in office, that he will acquit himself with distinction as Canada's Minister of Agriculture.

The Chairman: I'm sure that when you retire, your future in the diplomatic corps would be assured after that.

We'll go now to the government side. Mr. Easter.

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Mr. Wayne Easter (Malpeque, Lib.): Thank you, Mr. Chairman.

Mr. Minister, based on the hearings that the committee held in the last Parliament, I would say that you did a relatively good job of incorporating those areas over which producers had concerns. But both during the hearings and even to date, the greatest fear is that the changes to the act, especially in the area of cash sales, could affect the ability of the Canadian Wheat Board to maximize returns back to producers, which it has been able to do.

Contrary to Mr. Hill's leading question, in which he commented basically on the freedom of choice to seek the best possible price for producers, I'd refer him—and you could comment on this as well, Mr. Minister—to the Kraft-Furtan-Tyrchniewicz study on the performance evaluation of the wheat board. It clearly states that the Canadian Wheat Board marketing averaged an increase to the wheat pool account of $13.35 per tonne, or $265 million per year, for the fourteen-year period over which they would have realized from multiple sellers. That's a pretty good performance, so certainly producers have every right to worry if they're to lose—or if there is any erosion of—the Canadian Wheat Board's ability to achieve that kind of pricing through the single-desk selling approach.

I wonder what your response is to those producers who are concerned about this particular piece of legislation possibly leading to an erosion in that part of the mandate of the Canadian Wheat Board.

Mr. Ralph Goodale: Mr. Easter, there are those who would characterize the farmers to whom you have just referred as sort of timid nervous Nellies who are just worried about facing the real world. I think that characterization is unfair, because I do believe there are a significant number of farmers who hold the same perspective that you have just mentioned. They don't cling to the Canadian Wheat Board as some kind of Linus blanket. They are supportive of the board because they do believe that in an intensely competitive international situation, the board is able to extract the price premiums to which you refer because of its clout, its size, its reach, its expertise and its reputation over the years. So I take your point seriously.

On the other hand, through the work of the Western Grain Marketing Panel and otherwise, there is pretty strong evidence across western Canada that there are farmers who want more flexibility, more options, more and different ways to do their business. The provisions in Bill C-4, including the provision with respect to cash trading, are intended to empower the Canadian Wheat Board to have that additional flexibility.

Now, the manner in which that flexibility is exercised is obviously a judgment call to be made by those who run the board. Under the new state of affairs, that will be a board of directors, and two-thirds of that board of directors will be duly elected by farmers. Accordingly, the judgment as to when, where and how to apply and use the new flexibilities will be a judgment call that farmers themselves will make through the democratic process.

I don't intend this to be an all-inclusive example, but let me give you one illustration of where cash trading could have been very helpful to the Canadian Wheat Board if such trading had existed in the past.

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You will know that about three years ago there was a particular problem in the barley market. The Canadian Wheat Board had an opportunity for some very lucrative sales in Japan at prices that exceeded any that were available in the markets here in North America. But because the Canadian Wheat Board was restricted to acquiring grain only at the initial payment, it was not able to attract enough barley into the system to be able to satisfy those available contracts in Japan.

Accordingly, the sales ended up being lost and some contract cancellation charges were incurred, not because Canada didn't have the barley and the markets weren't there. We had the barley and the markets were there, but the marketing system or the pricing system didn't allow the two to come together.

That's one of the kinds of circumstances where having the ability to cash trade would in fact have enhanced the overall bottom line of the Canadian Wheat Board and the overall throughput of cash to western Canadian farmers.

The Chairman: Mr. Borotsik.

Mr. Rick Borotsik (Brandon—Souris, PC): Thank you very much, Mr. Chairman.

As a political neophyte, I have to say, Mr. Chairman, I appreciate this venue much better than Question Period.

I have a couple of questions in one area that has not been touched on yet, Mr. Minister, which is the inclusion clause. It was not in the initial legislation of Bill C-72 and it has reared its head in Bill C-4.

You indicated in your preamble that you would like to talk to producers and associations of those producers with respect to criteria for election of the board. We're going to hear from a lot of those associations and a lot of those producers, and I'm sure we're going to hear some stories from them. If those associations that represent canola, flax, rye and oats should suggest that inclusion is not a very good suggestion in Bill C-4, would you take that comment very seriously as well?

Mr. Ralph Goodale: Mr. Borotsik, I wouldn't really be in a position to comment on that until the committee has actually done its work, heard the witnesses and done its own analysis of the situation. But obviously I intend to listen very carefully to what the committee's considered advice is on that point, or on any other point in reference to Bill C-4.

The inclusion clause was a concept that came up during the course of the last committee hearings on Bill C-72. A number of witnesses who appeared before that previous committee addressed this issue and made the point that if there was to be a mechanism within the law by which the jurisdiction of the Canadian Wheat Board could be diminished, then as a matter of fairness there should also be a provision in the same law that would provide a mechanism whereby the Canadian Wheat Board's jurisdiction could be increased. The concept of an inclusion clause that emerged was based upon that last set of committee hearings.

If the evidence that comes before this committee is distinctly different from what the previous committee heard, and if it's the considered opinion of members of the committee that this provision should be re-examined, then obviously I would want to hear what the committee has to say on that point.

Mr. Rick Borotsik: But a lot of the associations that spoke during the first committee obviously did not have any understanding that the inclusion clause was being conceived, so I'm sure there will be many comments made with respect to that particular clause.

I have one other question, Mr. Minister, with respect to governance. I have to admit that the change in governance is a very positive step. I understand the governance as it now exists within the Canadian Wheat Board, and I should assure you, an elected board, as well as a change to the CEO, is positive.

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That said, the government still maintains five board members, consisting of four members and the president or the CEO. Why is it that government still requires input into the appointment of five members when in fact the Ontario Wheat Board does not have any appointed members to their governance?

Mr. Ralph Goodale: Mr. Borotsik, I'm happy to answer your second question.

Let me, for the record, make reference to one representation on your earlier question having to do with the inclusion clause. One representation that was made to the government during the course of the work of the Western Grain Marketing Panel is this one:

That representation was made to the government by Mr. Elwin Hermanson, MP, chief agriculture critic for the Reform Party of Canada. So there is suggestion on the record from—

Mr. Rick Borotsik: We don't necessarily agree with Reform on all those issues, Mr. Minister.

Mr. Ralph Goodale: I understand your point, Mr. Borotsik, and I certainly wouldn't want to attribute that recommendation to you.

Mr. Rick Borotsik: Thank you.

Mr. Ralph Goodale: But I think it's useful for the committee to know that former members of Parliament representing other political parties did make such a recommendation—

Mr. Rick Borotsik:—as to the appointed board.

Mr. Ralph Goodale: The linkage with the appointments has to do with the fact that the Canadian taxpayer provides the Canadian Wheat Board with not only a guarantee with respect to initial payments and not only a guarantee with respect to credit grain sales, but also, if you will, with an all-encompassing guarantee with respect to the board's daily transactions in the money markets of the world.

It is a $6 billion or $7 billion enterprise. There are some days in those money markets where, in just the financial transactions that go on in an institution that large, the amount of money involved may in fact be larger than some of the transactions conducted by some of the private sector financial institutions. It's that whole thing that is guaranteed by the Government of Canada, not just the initial payments and not just credit grain sales.

Accordingly, when you have a potential exposure of $6 billion or $7 billion, the taxpayers need some safeguards in the system. That safeguard is provided by the appointment process.

I would point out, however, that those to be appointed to the board of directors are in a minority position. The majority of positions will be held by those who are duly elected by farmers themselves.

The Chairman: Mr. Borotsik, I think your time has expired.

Mr. Rick Borotsik: I do hope the minister does return. I have another five questions.

Mr. Ralph Goodale: I look forward to it, Mr. Borotsik.

The Chairman: Just to follow up on the question of inclusion, I received a call from a Winnipeg man saying that to his knowledge the inclusion clause was not well discussed. I asked your deputy about this before the meeting started. For the record, could you relate how the inclusion clause was discussed in previous hearings?

Mr. Ralph Goodale: Mr. McGuire, I think that question is probably better directed to members of the committee who were on the committee previously. I did not have the privilege to be a member of the committee.

If you go through the transcripts of the previous hearings, you will see that it was an issue raised by a number of the producer representatives who came before that previous committee to make representations.

The point the caller you referred to may have had in mind is that there may have been witnesses before that previous committee who did not anticipate a dialogue on this subject and therefore didn't direct their attention to it when they made representations about the old Bill C-72.

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That deficiency obviously will be corrected this time around, because the issue is squarely on the table. Those who support the idea and those who oppose the idea will have a full opportunity to make their views known to this committee. So if there was a previous defect, it will be corrected now.

Mr. Wayne Easter: A point of information, Mr. Chairman.

The Chairman: Mr. Easter, I think we should go on.

Mr. Wayne Easter: It's a point of information on this matter.

The Chairman: We can come back to this matter.

Mr. Wayne Easter: Okay.

The Chairman: Mr. Proctor, you have seven minutes.

Mr. Dick Proctor (Palliser, NDP): Thank you very much, Mr. Chair.

Welcome, Minister. It's always a pleasure to have a constituent from Palliser, especially when it's a minister of the crown.

As you know, our caucus members have always been strong supporters of the Canadian Wheat Board and single-desk selling and price pooling. Nevertheless, our caucus in the 35th Parliament had some difficulties with Bill C-72. They could not find themselves able to support that particular piece of legislation. Our caucus in this Parliament, however, is on record as supporting Bill C-4—in principle.

There are four specific areas I would like you to address this morning. I'll just run through them. The four are cash buying and pooling; the inclusion clause; the governance structure; and I'd like your views on the near future, the outlook over the next few years on the Canadian Wheat Board.

Let me quickly deal with each of those points, Minister.

On the cash buying and pooling, we feel that price pooling is the bedrock on which the board has been built, but Bill C-4—and I know you've addressed this in part—would allow the board to buy grains from anyone, anywhere, any time. We're concerned that this in effect undermines this whole principle of price pooling. Ultimately, it would diminish and undermine farmers' confidence in the board, and thereby the board's credibility and effectiveness.

So I would like you to address that. Do you see that there might be severe restrictions, when cash buying could occur, to avoid this problem?

On the inclusion clause, we welcome the fact that grains are now included. We know that with Bill C-72 they could be excluded. We do, however, have some concerns about how a new grain would be included. Specifically, how would the process of including a grain be triggered; which farm organizations would have the right to ask for such an inclusion; and what assurances can you give as minister that the inclusion process will be both transparent and fair?

The third area is on governance. We're concerned that the government will retain the ability to choose the president of the board of directors, a person who will also double as the CEO. We believe this gives the government too much control to a board of directors that you're saying is really accountable to farmers. It potentially gives the government too much control over the day-to-day operations of the board.

It's our belief that the board of directors should have the authority to choose the president and the CEO, and we are not at all convinced that they should be one and the same person. So we're wondering if you're flexible and prepared to make some changes along this line to make it crystal clear that this whole new structure will be under the control of the producers.

Finally, in the area of the near term, are the changes being proposed here designed to move the wheat board away from a state-trading enterprise in the hope that this is going to better protect the board in the next round of the WTO? It seems to me that both the Americans and the Europeans have the wheat board in their gun-barrel sights for the next WTO round. Is that the rationale for the changes, to give it clear control to the farmers to help to put this in better odour, if you will, when those negotiations commence in a couple of years?

Those are my questions. Thank you very much.

The Chairman: Minister, I think Mr. Proctor has pretty well used up his time presenting his questions. If you would give it a couple of minutes—

Mr. Dick Proctor: Could I ask, then, that he address the last question, please.

Mr. Ralph Goodale: Mr. Chairman, I'll try to be as brief as possible.

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With respect to the issue of cash trading and pooling, that new flexibility is provided in the legislation. Farmers had been asking for more flexibility with respect to the operations of the Canadian Wheat Board. The safeguard, Mr. Proctor, is a producer-controlled board of directors. It will be their judgment as to when a cash-trading operation is the appropriate thing to do.

On the inclusion clause, if members have specific suggestions for ways in which to improve the steps with respect to the inclusion process I would certainly be interested in hearing what those suggestions might be. The trigger, which you referred to in your question, will be a request from the farm organization that best represents the producers of the commodity under consideration. That is the trigger.

You raised the issue of transparency. It may well be that the legislation, in order to ensure transparency, might require, for example when the minister receives a written request, that the request should be in some way made public. It's not a secret matter. Perhaps the minister should publish a notice in the Canada Gazette, relevant farm newspapers, or whatever, to let all producers know that a request has been made. This might be a valuable improvement to transparency.

On the issue of governance, the point really is one that I made earlier in terms of the appointment process being related to the ongoing government exposure with respect to the various guarantees that are provided to the Canadian Wheat Board.

To complete that point, which was raised originally by Mr. Borotsik, with the comparison to the Ontario Wheat Producers' Marketing Board, the kind of guarantee that's provided in relation to that board is obviously not as extensive as the kind of guarantee that is provided to the Canadian Wheat Board. There is really a fundamental difference in terms of order of magnitude, and accordingly, the need to provide that kind of safeguarding for the taxpayers' position through the appointment process.

With respect to the future outlook, the decisions about changing the Canadian grain marketing system are to be made in Canada by Canadians for our own good, Canadian reasons. They should not be driven by external factors and forces.

That having been said, there are a number of changes in the package here that have been devised domestically within Canada that may help to take some of the steam out of some of the more misguided arguments that we hear from time to time that come from abroad to attack the Canadian Wheat Board.

For example, consider the change we're making with respect to the procedure by which initial payments are guaranteed. I won't go into all the detail of that for reasons of time, but the end result would be to make the Canadian system quite similar to the loan rate system in the United States. Accordingly, the United States should have less of a reason to be critical of the Canadian system after this legislation because in terms of that initial payment guarantee, it won't be all that different from what they do themselves within their own country.

The Chairman: Thank you, Mr. Minister. Mr. Byrne.

Mr. Gerry Byrne (Humber—St. Barbe—Baie Verte, Lib.): Mr. Chair, I think Mr. Easter had a very brief comment that he wanted to make in conclusion to your question.

Is that true, Mr. Easter?

Mr. Ralph Goodale: On a point of order, Mr. Chairman, Mr. Easter never has a brief comment.

Mr. Wayne Easter: This one is.

On your question on an inclusion clause, Mr. Chairman, I'd like to put it to the committee's attention that the inclusion clause was brought up at every location—Winnipeg, Regina, Saskatoon, Calgary and Grande Prairie. In fact, the question was even asked of some of those groups that we felt would be opposed to it, just to get on record what their position was when you tried to put balance into the legislation.

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Those who are opposed to the wheat board—and some of them sit over here—always like to talk about balance and freedom of choice. For the record, that's really what that inclusion clause does.

The Chairman: Thank you, Mr. Easter.

Mr. Gerry Byrne: Mr. Chair, first off, I would just like to say thank you very much to the minister. This is a very good presentation. It's very clear and concise in its format. But the questions that have been raised thus far don't seem to be raising much ire in terms of our opposition.

An hon. member: Not much.

Mr. Gerry Byrne: Mr. Chairman, it's been raised by various groups in the country, such as the National Conspiracy Coalition—sorry, National Citizens' Coalition—

Mr. Larry McCormick (Hastings—Frontenac—Lennox and Addington, Lib.): Same thing.

An hon. member: They're former Reformers.

Mr. Gerry Byrne:—that this bill provides directors of the corporation and, I believe, employees of the corporation, with certain powers and certain protections afforded to secret agents. It has been raised by members of the opposition in the House of Commons, and in what I would suspect to be a fairly expensive advertising campaign, that this bill would actually allow individuals, members of the board of directors, and employees of the agency, to break the law, and to do so with complete indemnity from the Crown; and that upon breaking the law, the Crown would actually pay for all legal costs and would actually protect them fully.

I would just like the minister to comment a little bit about that accusation, sort of in the context of whether or not it is actually true. Also, what are the true circumstances as you understand them?

Mr. Ralph Goodale: Mr. Byrne, although it's sometimes difficult to tell from the meanderings of the National Citizens' Coalition, I presume this issue refers to section 3.12 in the legislation, which is included here as it would appear virtually word for word in the Canada Business Corporations Act, which applies to every federally incorporated entity and private-sector business in Canada.

This is a standard provision in corporate law. It's a standard provision in the bylaws of a great many private sector corporations. It says that the directors and officers of the corporation have a duty to “act honestly and in good faith with a view to the best interests of the Corporation”, and that they have a duty to “exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances”. If they should fail in that duty, they are then exposed to legal liability.

Now the National Citizens' Coalition has taken that provision, which is standard in the bylaws of virtually any private sector company, and standard in the language of the Canada Business Corporations Act—which applies to every federally incorporated private sector business in this country—and has somehow totally turned it on its head and made it some kind of escape clause for lawbreakers. Obviously, that is not the intention. Obviously, that is not the legal effect.

The NCC, to put it gracefully, is attempting some mischief in endeavouring to mislead people about the true meaning and effect of this particular provision. In fact, you will know that one of the sometimes most strident critics of both myself and this legislation is an organization in western Canada called the Western Canadian Wheat Growers Association. Upon investigation, it appears that their employees have the protection of this exact kind of section.

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They have been very clear in saying that they do not object to this kind of provision because they recognize it is normal and ordinary in the course of business law and business conduct for this kind of section to be included, either in the bylaws or in legislation.

I would add, Mr. Byrne, that the National Citizens' Coalition during the last election spent, with their allies and cohorts, tens of thousands of dollars running on this same kind of garbage against me in my own constituency. The end result was that I ended up increasing my share of the popular vote, and I wish them the same result this time.

Some hon. members: Hear, hear.

The Chairman: Mr. Minister, it is 9 a.m. Can you entertain another question before you go?

Mr. Ralph Goodale: One more quick one, Mr. McGuire, and then I'll have to spin away.

Mr. Leon E. Benoit (Lakeland, Ref.): Mr. Chair, I have to make a statement on the inclusion clause. The reason the inclusion clause is in there isn't because there was a great call for it, but because Mr. Easter made an amendment that he brought forth in the last Parliament.

With regard to that, the minister made a statement that was attributed to Mr. Hermanson, which wasn't quite accurate.

Mr. Minister, I know you're a lawyer, but being a lawyer doesn't make it mandatory that you make misleading statements. You know well that Mr. Hermanson's statement was that we could look at the possibility of an inclusion clause if we had a voluntary board or, in other words, if farmers had a choice to either ship through the board or around the board for all grains. That was Mr. Hermanson's statement and that's much different from what you portrayed. It's just not acceptable for that kind of misleading statement to be made here in this committee by the minister for the crown.

Mr. Ralph Goodale: Mr. Benoit, with the greatest of respect, I refer you to Mr. Hermanson's document dated February 23, 1996, Reform Party of Canada's submission to the Western Grain Marketing Panel. On page 5 of that submission—

Mr. Leon Benoit: Did you read the whole report, Mr. Minister? Clearly in the report Mr. Hermanson called for a voluntary board.

Mr. Ralph Goodale: I'd be happy to table it.

Mr. Leon Benoit: Do. It's good stuff.

Mr. Ralph Goodale: He says the first issue was dealing with the election of directors to the Canadian Wheat Board. Once a producer-elected board of directors was in place, it would be given the authority to assess a number of options, which included a list of about four or five. One of the options was permitting the board to market other crops, i.e., oats, canola and rye. It was not conditional upon a voluntary board.

The Chairman: Mr. Minister, thank you for coming. I think there is a desire for you to come back.

Mr. Ralph Goodale: I'd look forward to it, Mr. Chairman.

The Chairman: We'll probably see you then.

Mr. Hoeppner.

Mr. Jake E. Hoeppner (Portage—Lisgar, Ref.): I'd like to see the minister here for at least two days, because I think we have all kinds of questions to discuss.

The Chairman: He agreed to come back once more. We'll allow the minister to leave and we'll continue with our hearing.

The first report has been passed out. I'd like to get your concurrence on the first report. I think there's a mistake in recommendation 1. I'd like to read it for your concurrence:

With that correction, do I have your concurrence in the report? Do I have a motion for acceptance?

Mr. Rick Borotsik: I so move.

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Mr. Jay Hill: I'd like to make the point, Mr. Chairman, that because I put forward a number of options when we were discussing that particular issue, as did other members of the steering committee, it was also agreed that we leave it open to revisit this at some time to see how it's operating.

With all due respect, recognizing it is our first meeting and our very first witness for this new committee today, by my calculations we should have had our second five minutes after 46 minutes. Mr. Benoit basically got one minute or two minutes at 9 o'clock, an hour later. Already we can see that we have some problems with the rotation.

The Chairman: It's taken about an hour to do a round of questions.

Mr. Jay Hill: But it should have been 46 minutes if followed through on.

The Chairman: I gave you two extra minutes. I have to have a little leeway in order for people to finish their statements.

Mr. Jay Hill: My point is that we did agree to revisit it. I want that on the record.

The Chairman: Yes. It is on the record that we will revisit this in the future.

Is it agreed, then, that the first report be accepted?

(Motion agreed to)

The Chairman: We will suspend sitting for five minutes.