[Recorded by Electronic Apparatus]
Thursday, October 3, 1996
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[English]
The Chairman: Good morning, everyone. We'll call the meeting to order. We are now discussing and have witnesses before us today on Bill C-38, the Farm Debt Mediation Act.
Everyone is aware that unfortunately the meeting that was scheduled to take place yesterday, which was the presentation and explanation of the bill by the parliamentary secretary and officials of the department as well as a presentation by the Canadian Federation of Agriculture, could not happen because of actions in the House. The meeting could not take place. That meeting will have to take place at a different time, because we certainly didn't want to change the schedules of the witnesses before us this morning.
I'm just explaining to the witnesses that the members have not had the opportunity to ask some of the clarification questions of the parliamentary secretary and the department officials they might have had if the meeting had taken place yesterday.
We know you're familiar with the bill. We welcome your comments, suggestions, and concerns about the bill as it is before the committee. You're aware it is before the committee after first reading in the House, which is a process different from the usual. It gives the committee a bit more scope in making amendments or suggested amendments to the bill, as long as those amendments have relevance to the bill. We certainly can't change the bill completely. Once we hear all the witnesses, the committee will deal with the bill in that respect.
Mr. Holmes, if you're leading your delegation this morning, maybe you could introduce your colleague and give both of your positions with the Ontario Farm Debt Review Board so it's on the record. Welcome.
Mr. Robert Holmes (President, Ontario Farm Debt Review Board): Thank you,Mr. Chairman.
I'd like to introduce Jack Johnson, from Park Hill, Ontario. He's one of our board members and at present is vice-chairman of the board. It was through his efforts that we heard of the hearings going on at this time and probably through his efforts that I am here. I was not aware the study of the bill had commenced.
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However, let me say, ladies and gentlemen, we are pleased to be here and to have the opportunity to address the committee. We especially look forward to your questions in a few minutes' time. We hope the responses we give will answer some of your concerns and maybe assist us in particular. We are concerned with all parts of Bill C-38 as it applies to all of Canada, but we are here - and I stress this - representing Ontario's interests and wish to concentrate on what will make Bill C-38 work in Ontario.
We want this legislation to be an improvement on Bill C-117 so this government can produce the updated programs needed to serve today's farmers right across Canada, and that includes Ontario. As in the past, the agricultural picture is always changing in Ontario.
I'd like to state who we are. We started in 1986, when Bill C-117 came into being. At that time we had a chairperson and ten board members. For this past year, on recommendations, we were downsized from that size to a chairperson and four board members. We found that was adequate. We had enough people. We did the job very well, we think. It was a good move and a cost-cutting measure to reduce the size of the committees.
We have maintained a steady 75% success rate in Ontario. Just to point out what I said a moment earlier, we came in 10.2% under budget. We had a surplus of 10.2%. That speaks well of a smaller operation.
Although at the beginning, and I refer to the period 1986 to 1992, when we were developing development pains - and by the way, I wasn't part of the system at that time - there were some complaints, I would have to say in the past five years, from 1992 on, and particularly this last year, I think we have had a degree of appreciation in the community being served that's quite enviable. Some of the cases we've had, particularly in Ontario, have been very large, both in dollar amounts and in the number of people involved. I can't believe there are organizations that big in Ontario, but that's the trend. The trend is to bigger organizations, and maybe smaller organizations, with the middle ground giving some way.
I'd like to say that Bill C-38 has to be even better, when it comes into law, and that is why we are here today.
Before I go to my board member, Jack Johnson, let me briefly report on the national scene. We have to do that because we have done some work in the past year.
First, the chairpersons from all the provinces met here in Ottawa last May 2 and 3 for our regular chairpersons and GMs' meeting. This was with the policy branch. We expressed our needs for all the boards being...first, we needed more and better mediation training, and secondly, we thought we required more information on the new bill, Bill C-38. We have received our mediation training and I think it was a good exercise. As late as yesterday we received more really good news on Bill C-38.
Later the same group met in Winnipeg, in coordination with another meeting, and we discussed the bill as it was written and some concerns were voiced. They were mostly regional in nature, but they were voiced and we knew we had some work to do. We thought accountability was one of the things we would like to see addressed. It was well addressed in the old bill, and with the dissolution and removal of the boards we were wondering whether that accountability would still be there.
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Here in Ottawa at our mediation training session we formed a committee of chairpersons from each of the proposed five new regions to be on the ready if there was to be a call before this committee or any other body. So we do have a committee in place that we thought may be speaking for us.
This committee is headed by Alberta's Doug Stevenson, with whom I've communicated twice lately. He had other commitments and could not be here. As well, Jean-Yves Couillard from Quebec was co-chair, in charge of getting the information to the other regions.
This committee hopes to meet with you, but I, for one, received no information prior to Jack contacting me, as I said earlier, that the committee was now gathering information prior to the clause-by-clause study, which I understand starts next week.
Mr. Chairman, I know I've had my time, but I thought I had to make these introductory remarks. I'd like to turn it over to my colleague, Jack. I am eagerly awaiting questions from the members following Jack's presentation.
Thank you.
The Chairman: Go ahead, Mr. Johnson.
Mr. Jack Johnson (Member, Ontario Farm Debt Review Board): To follow up from Bob, first of all I'm certainly anxious to address all the people concerned with Bill C-38, the proposed Farm Debt Mediation Act. I would like to cover a few specific points that are causing us concern.
First of all, from the point of view I'm looking at, I am one of many across Canada who are on the front line representing the old act, which the new act is going to replace. It is from this experience that we have gathered information and experience that tells us what works and what leads to a good arrangement. That's the ultimate aim of this whole act, to bring a client and his creditors together to come up with a good arrangement, one that will work for both people.
As Bob mentioned, we've had some concerns about the act from the beginning. Yesterday we received some good news in that some of the guidelines set down for the regulations do answer some of our concerns, and we are elated that these are starting to come around. However, we do have a few more.
The first one we're most concerned about is construction. The old board, as Bob also mentioned, was ten people and an administrator. Last year we downsized to five people and an administrator. We were a hard-working, unified group of people with one cause in mind: to service our clients, and to do it through mediation. We were efficient, as we have proved. We've been underbudget even with a 25% budget cut.
With the new act, we see that maybe we're losing a little ground. We will be presented with one administrator, five mediators - most likely six - and five appeal board members. We're just a little concerned that this is a lot of people, and a lot of cost. We find that we would prefer that the mediators, of which there would be six, would also make up the appeal board, which would be five.
I know there is an argument about conflict here, but with three required as a quorum to make up the appeal process, then certainly the person or the mediator attached to that specific case could be exempt, and would not be part of the appeal.
I may not have the right mechanics here, but certainly I'm expressing this opinion so that others can draw it up. We just find that the fewer people we have to get the job done, the more efficient we are, and certainly the more unified we are.
As well, with the larger group that's been suggested, I think we're losing a fair amount of continuity among our members. We have become a small group, and very unified in our efforts. If these efforts were fragmented, I'm afraid that possibly some of the incentive may be lost. That is my concern about construction.
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Secondly, I have a concern about the consultation service. It is still in discussion, but I would like to put our opinions forward.
We find that the consultation service should be part of the debt review because so many times we run into cases where possibly a mediation service is asked for when a consultation service would do, and vice versa: a consultation service is asked for, and when we investigate it we immediately realize that the problem is serious enough that they should go to some type of mediation. So I think to divorce the consultation service from the mediation act would be, again, a problem to overcome.
The third request we have is to ask the people who are drawing up the act and the regulations to be flexible. With our experience on the board and with our experience in talking with people from other provinces, we quickly realize that our situation in Ontario is a little different from maybe some other regions. Specifically, I might say that our approach to problems is very much more varied than that of the people out west. What we would like is some type of flexibility to allow us to accommodate some of the changes that would take place within Ontario and not be too rigid.
I'm referring especially to the signing of the arrangement. It is stated in the new act that the arrangement not necessarily be signed at the time of mediation. We have come to be very much used to the fact that the arrangement be signed at mediation. We have trained our consultants and field people to prepare the client to be prepared to present his five-year plan and to be satisfied with it.
Our creditors are busy people and many times come with one intention. But they have become accustomed to the fact that when they appear before us they're prepared to do business. They come to mediate, and they're prepared to do business and to sign. We feel that we would lose incentive if we let them go away without signing and then chase them around the country for days after, trying to get them to bring their thoughts together and sign it.
The fourth concern is this. The old act allowed the debt review office people to present a uniform accounting system, a very simple accounting system that was apprehensible to almost everyone. For quite a number of our cases, it was the first time the client saw his financial situation in front of him. He'd had many other types of financial statements presented to him that he really didn't understand. Our field people have bent over backwards to explain to the people and bring them up to date with the real situation. Therefore, we want to leave that intact; we want it to remain consistent.
The new act allows for a farmer to hire outside people to present their interpretation of his financial situation to us. First of all, the farmer is insolvent; he doesn't have a lot of money. Secondly, I'm afraid it would confuse the issue because we might find it hard to interpret the accountant's interpretation of the client's position and maybe the farmer would too. So if we have one uniform type of presentation, I think we would appreciate that very much.
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The fifth concern is one of promotion. We have a good service here. As a mediator, I find the process really works and I get a great deal of satisfaction out of helping people. But we are finding that a lot of people don't know we exist; they thought we were set aside. So when the new program is launched, I would ask that they do carry out a favourable promotion program to let people know that we are there willing to help, both for the client's sake and for the creditor's sake.
I think those are our main concerns. I would like now for you to ask some questions to satisfy your further concerns.
The Chairman: Thank you very much, gentlemen.
I have a couple of comments to begin with on some of the concerns you raised. I'm not saying they're not legitimate, and we certainly want to hear them and that's the purpose of this, but I don't believe the size of the board, the signing time, and so on, are specified in the act. Those are things that would be specified in the regulations. So that we're all clear on it, there's no specific reference to the number on the board, the number of mediators....
For example, on the signing, the act says in clause 19:
- Where a farmer enters into an arrangement with any creditor as a result of the mediation, the
administrator shall see to its signing by the parties thereto.
Mr. Johnson: Mr. Chairman, just yesterday we received information that the map they're using for the process procedure shows that the signing is not necessarily done at mediation.
The Chairman: But, for example in that case, do you feel that the regulations are going to say that the signing cannot take place at mediation, or does not necessarily have to take place at mediation?
Mr. Johnson: I interpret that they're saying that would not take place at the mediation.
The Chairman: Okay.
Mr. Hoeppner, Mr. Easter, and Mr. Chrétien.
Mr. Hoeppner (Lisgar - Marquette): I wonder, Mr. Holmes, how good is the accounting you receive from the creditor and also from the lender? Do you find that you have problems sometimes in coordinating the accounts, that they don't work properly? I've had a number of experiences where I've seen statements from Farm Credit. They are so vague that all you get, more or less, is the amount of money that's owed. The breakdown of service charges, interest and legal fees is almost non-existent.
I had a gentleman come to me and he suggested later on that before farmers went to one of these debt review boards a forensic accountant should have been hired to look at the accounts and verify that they're accurate and not inflated. What is your experience?
Mr. Holmes: I have the greatest respect for this group of experts we have assembled in Ontario. I'm not aware of any of those things happening. The accounts that are presented by the banks and FCC are usually in great detail and checked first by the expert and then checked by the office, audited there to make sure they're proper and true, and we go into the meeting, I would say, with a good understanding of the case.
In Ontario, we do what we call a prep sheet and a panellist analysation sheet. This is where each of the two panellists we now employ take the case apart and put it together and bring forth recommendations as to their view as to what might solve the situation. They have to have accurate information to count on.
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Sometimes this information changes between the time you do your work-up and the day of the hearing, and that's all brought up to date by our expert at the meeting, prior to the group being assembled.
For your consideration, I've brought the agenda we follow. This works very well, because to start we meet with just the expert and do what I said, and then we meet with the farmer. He updates the expert in case something's happened, like for example a cow dropping dead, which means the inventory is not quite right.
We get together with the farmer and all of the creditors involved and, as Jack says, they present their five-year plan to the creditors, the creditors tear it apart and respond, and then the mediation takes place. We have one group with its concerns - the creditors, who want to get paid - and we have the farmer, who wants to stay in business. It's the duty of the chairperson and the panel to move the people together and at the end of the day hopefully sign an arrangement that takes over from the stay in proceedings.
As I've said, our success rate is 75% plus. There are cases you cannot save. Some are gone before you start. You can't save them, but you can give them the due process of the law.
Mr. Hoeppner: I was very surprised when I went to bat for this one Manitoba farmer in particular and demanded that I get a more detailed accounting of his debt with Farm Credit. We found out that this client had been charged $12,000 in legal fees because they went to court over the issue of the GRIP payments. The farmer won, but was still charged $12,000 in legal fees. That seemed horrendous, and it had not been brought before the debt review board.
Do the boards operate differently from province to province?
Mr. Holmes: Yes, there are a few different wrinkles. We have developed our own procedure in Ontario. We lead in about 200 commodities so we have a great variety of cases.
Mr. Hoeppner: Yes.
Mr. Holmes: In a quick answer to your concern, I'm not saying that mistakes are not made. They are. But as far as complaints similar to that one go, we had none in the last year.
The Chairman: Mr. Easter.
Mr. Easter (Malpeque): Thank you, Mr. Chairman.
As people who sit on the current boards and have had the experience of working through the farm debt review process, how much consultation did you have from the department in terms of the preparation of this bill? I've heard complaints that there wasn't enough. What's your view?
Mr. Holmes: I think we could have had a little more input. Again, it appears as though the desire by the interested parties to have changes to Bill C-117 dates back to about 1992. I think there was a slow period where maybe not a lot was done, and then all of a sudden things picked up. And then, of course, our inexperience, the fact that we'd just been there a year.... I've been there for four years so I did have the benefit of some of the discussions from the previous board and all of the discussions from this board.
Regardless of what comes, I can assure you of the commitment of the people who are with me right now. We are going to make that thing work to the best advantage of the farmers.
The other bill had a few shortcomings too, but basically it was a good, strong bill. We adapted to it and provided a real service to the end of the agricultural picture that nearly everybody wants to say isn't there. It would be nice if everyone was a success, but we're not. There are about three levels. There are people on the bottom level. The middle group is a large group. And we have those super achievers at the top. Hopefully our service is directed to moving at least a portion of the people at this bottom level - and 75% is a good portion - up into the next group.
Mr. Easter: I asked the question because the farm debt review process is a very important one, and, yes, there are some problems with the old bill. My concern relates to whether the emphasis in making the changes to the bill is on the basis of improving the review process for the farm community or on saving money in terms of departmental expense. That's a tricky balance.
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Under section 16 of the previous bill the farm debt review boards did have the ability to deal with farmers in financial difficulty, not insolvent. In this particular bill the mediation board is allowed to deal only with insolvent farmers. I'm concerned the bill may in fact limit the ability of farmers in financial distress to come before a board before they're in trouble.
In your experience as an Ontario board you said you had 75% success. You also said some were gone too far before you could get started. To my mind the time to get people is when they are in financial difficulty, before being insolvent. I'm worried about that, and I'm wondering what your views are on it. Does your 75% success relate to those who are in financial difficulty or insolvent before you start? Do you have any figures on that? Do you have any concerns in principle about the new bill just dealing with insolvent farmers?
Mr. Holmes: There are about three questions there. Let me hit the first question first. The 75% refers to those who have been served notice on, those we have taken through what we call the section 20.
The second question was whether prevention would be a better route for us to get these people who need help, who need to upgrade their skills, to bring their business affairs in line before they are served notice. Yes, that has always been the goal of the administration, ever since I've been there. It's distress prevention.
This last year we were under an advertisement hold. We weren't allowed to advertise. I felt we missed a lot of people who did fall to a section 20, and if we had been allowed to promote we could have got them in under the section 16 and put their affairs in order and put in a blueprint for the next five years that would keep them out trouble.
The Chairman: A point of clarification, Mr. Holmes. Would you explain, in a sentence, section 16 versus section 20, under the old bill? We're probably not all clear, myself included. I hate to interrupt, but you're referring to them, so I think we should be clear.
Mr. Holmes: Section 16 is where a person realizes, I've been farming for five years and I've never made any money, I'm just hanging on; yet my neighbour is doing better - what is he doing that we're not? They can apply to the farm debt review system for an analysis of their business operation.
It's handled very much the same as the one I'm going to talk about later. The expert goes in and does a complete assessment of the operation. A chairperson and a panel go in. The chairperson will be neutral. The panellists will be an expert in that line of endeavour - if it's hogs, he would be a hog expert - and the other person would be a top banker. Together these would find out the holes in this chap's operation and draw him a blueprint for five years. If you follow this, you should do better. Sometimes they do, sometimes they don't.
The section 20 is where the person has been served notice by a major creditor - FCC, a bank, an implement company, somebody of that nature - and they want to realize on their security. So he applies for the section 20, which immediately puts the stay in place so they cannot realize on their security until the due process of the law, Bill C-117, is carried forward.
The Chairman: Thank you.
Mr. Easter, you were still having a discussion there.
Mr. Easter: I don't know if you finished answering that or not. Do you see a concern about the new bill only being able to deal with insolvent farmers? In a former capacity I dealt with the Farm Debt Review Board on a lot of cases. I've always found that, I guess because of the experience they've developed with creditors and the power they have under the law, the Farm Debt Review Board has been able to work out an arrangement - maybe 80¢ on the dollar, whatever it may be - even before they went to insolvency status. It was enough of a break for the farmer to realize, ``I am in trouble, I may have to sell some land, and I'm getting a break from my creditors'' - and have stayed in business as a result.
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I wonder if you could just give me a firm answer on the insolvency business.
Mr. Holmes: I can, but I couldn't the day before yesterday. I just got the updates from policy branch. We like a lot of the things we see in that. We haven't analysed them completely, but I read through them until 11 p.m. last night, and I like what's in there. It appears as though we are going to have this consultation service. While it's not completely spelled out, I think it's a very important part.
I think Jack answered it well in his lead-up to the question period, when he said there were so many that had to have this.... How did you put that again?
Mr. Johnson: I think I stated that the consultation process is very rewarding. We've had very much luck with it. In fact, to date we have not had a person go from a consultation service - and I'm referring to a consultation as 16 - to mediation. We're hoping we can maintain this. We haven't been told directly that we could, but we're asking that it still be a part of our process.
Mr. Holmes: Further to that, Mr. Easter, we would like these services in Ontario's case delivered from the same office because of the intertwining we've had in the past. Some reference has been made that it may be farmed out to another organization. We feel quite strongly, as a matter of fact - I wrote the minister on this very subject just last week - that as far as Ontario is concerned, keep the two programs together. There's a lot to be said for keeping them together.
Mr. Easter: One last point, Mr. Chairman.
I know where you're coming from in terms of the consultation process. I think there's manoeuvrability for the government under some of the management programs in terms of getting to people before they're almost insolvent. But one of the advantages that I see you have under the current board is that in the consultation process you follow, you also have some power in terms of extending the stays of proceedings further than they are under the new act. So you maybe balance the power between the creditors or the banks and the lending institutions and the farmer.
My question really relates to your consultation point. How much weight does the fact that the boards have some power under the law in terms of negotiations with the banks to be able to force the issue have in ensuring that those consultations bear fruit? When I'm in financial trouble and I go into the bank, I don't have much power.
Mr. Holmes: All I can say is that the banks have been very cooperative this last year in agreeing that among this group of farm customers there's a certain percentage that can accept help, and they want to work with them. They want to work through our system. A great many of our referrals for sections 26 and 20 do come from the banks, some from FCC, but the banks....
This past year we have been trying to get the major implement companies to also direct clients that spend too much - you know, if they're ever going to get their money, they have to get a blueprint into the future that's going to make money so that they can pay their bills - to also go to this service.
This service, as Jack says, is very rewarding when you see a young family struggling to put bread on the table, almost, if I could be like that, to go to where they're actually paying these things off. It does happen. I think the system has had a lot of merit in the past, and if we look at what's coming in the new bill...and make provisions for that to continue.
[Translation]
The Chairman: Mr. Chrétien.
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Mr. Chrétien (Frontenac): I'd like a bit more detail on five or six points.
First of all, you said that in 1976 your organization was made up of the chairman and ten members of the board and that after that the number of members on the board was decreased to five, including the chairman. Was that decision made by the board or by the government?
[English]
Mr. Holmes: The decision was made by the government.
[Translation]
Mr. Chrétien: You mentioned a success rate of 75 per cent for Ontario alone. That might seem like a good rate. As you said earlier, you can't get it all back. If you only have very few cases, 75 per cent can be acceptable. The other cases would be the most critical. Could you tell me how many cases you examined, on average, per year, from 1976 to 1995? I imagine that the 75 per cent success rate represents an average over the last ten years.
[English]
Mr. Holmes: Yes. I wouldn't speak for the first three or four years during the development procedure, maybe, but certainly it's been consistent, from 75% to 85%, in the last six years, five years for sure.
I think the decision to downsize, as you mentioned, was a good one. As a matter of fact, most of us were asked by the minister to give what we thought might be improvements. I know I for one did write in to the minister and I said I thought we had too large a board and a smaller board would be more efficient. Somebody must have bought into it, because all the boards were reduced.
About the total number of applications, we run on average about 35 a month throughout the year. This is down from 1986 or 1987 right through until about 1992. There was an improvement in the agricultural community and that was reflected in the numbers. But certainly there are still enough people out there that we are a significant force in keeping a group of farmers, usually younger farmers who maybe got in at the wrong time, on their farms.
[Translation]
Mr. Chrétien: I'd like to ask you about the appointment of the chairman and members of your mediation board. They're appointed by Cabinet. Honestly, do you find that satisfactory? I'm from the Bloc Québécois and I'll never be in power. So I'll never have to deal with appointing the chairman or the members of your board. However, I would like a very honest answer from you. Are you satisfied with the way those appointments are made? My colleagues across the floor are smiling, but I'd still like an honest answer.
[English]
Mr. Holmes: Yes, I do believe for the Minister of Agriculture to make these appointments is a good and proper method. He's responsible for the program, and certainly those of us who are appointed feel, regardless of our political persuasion, responsible to the minister. Most of the people I know are very astute, well-educated farmers, who want to see agriculture in particular prosper, and we work towards that goal.
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It was just brought out at mediation training, where we received somewhere in the neighbourhood of $200 a day for our mediation, that were this contracted out to a private concern that supplies mediation it would be probably double, triple, or much more expensive. A lot of goodwill goes into this, and certainly communication, and I think it's best run through the ministerial office.
[Translation]
Mr. Chrétien: I'm not saying I always agree with you, but I'm asking for the farmers. I'd like you to explain a typical case to me so I can understand it fully and it would also be for the benefit of some of my colleagues. Is it the farmer, the lenders, the neighbours or the co-ops concerned that ask you to get involved and when that is asked for, does it sometimes happen much too late?
[English]
Mr. Holmes: A very good question.
What really happens is that usually a banker, the FCC, or a major creditor, in discussing his account with a farmer, will say maybe you should make an application to the Farm Debt Review Board. It usually comes from the creditor's side. But quite often, as in the matter of the section 16s, the farmer will feel he could get a blueprint into the future that would be better than the one he's following now, and then he will apply. So it comes from both sides. But the more serious cases seem to come from the creditor's recognizing the farmer needs help and sending him that way in order to resolve his situation. The mediation takes place after that.
[Translation]
Mr. Chrétien: I'm a farmer myself and a lot of my farmer friends whom I deal with regularly are part of the infinitely small minority of farmers who even know that your board exists. Of course, the lenders know it but for the farmer there is not much publicity about this sort of thing whether in farming magazines or elsewhere.
[English]
Mr. Holmes: Yes, I agree. But then we have to remember an advertising ban, or a promotion ban, was put on one year ago. I think it was designed to hold things where they were. Again, I'm only speculating. There may not have been a Bill C-38. Maybe the government wanted to phase the program out. I suppose that was one option.
I don't know where that takes it from there, but....
[Translation]
Mr. Chrétien: Thank you for answering my questions.
[English]
The Chairman: Just a comment to Mr. Chrétien. I'm certainly disappointed the farmers he's talked to are not aware of this program that's there. It has certainly been available in Canada since 1986. I would have to assume that farm organizations such as the UPA in Quebec, and certainly the Ontario Federation of Agriculture and all of those, know it's there.
You point out something that needs more work on, without question.
Mrs. Ur.
Mrs. Ur (Lambton - Middlesex): Thank you, Mr. Chairman.
Thank you for your presentation this morning.
About the administrator, I've read that the position is for three years, or there is no accountability for three years, or no responding; the administrator is the overall chairperson of the program and the mediators fall under the administrator. Could you explain who they're accountable to?
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Mr. Holmes: Our positions will be gone. There will be no chairperson and no board members. As I understand it, this work will be assumed by the administrator. He will control receiving the applications, putting the case into the experts' hands, and appointing the mediator and running that show.
As for your idea about accountability for one year, I assume he has accountability on an ongoing basis, but I don't believe he has to report to the minister for a three-year period.
Mrs. Ur: Is that an appropriate timeframe? Do you think it will be better?
Mr. Holmes: Not being there for three years? I don't know whether it's an appropriate timeframe or not. Personally, I like to have someone in charge.
Mr. Johnson: We're concerned, Rose-Marie, that the accountability among the administrator, the board people and the mediators may be lost because of the way they've fragmented it now. The act does say there will not be a review for at least three years and we are quite concerned.
Mrs. Ur: We like to think positively, but in three years there could be certain hurdles that should be approached before the three-year period.
Mr. Johnson: I believe the guidance we had from one another through presenting a good program has been lost.
Mr. Holmes: I agree.
Mrs. Ur: Is there a difference in stays between the old act and the new one?
Mr. Johnson: Basically, no. The stays are put in place until an inquiry has taken place, and then if the case goes on...the basic principle of the stay has not changed a whole lot.
Mrs. Ur: Lyle mentioned during his opening remarks that perhaps some of the regulations as to the size and everything fall under regulations, not so much under the act. Do you feel that the better approach, if the numbers were decreased, would be to have smaller numbers so that they would have more hands-on...more following of cases more often rather than having a case once in a while? They'd be educated more often and would be serving many people, with more ideas coming forth. It wouldn't be a long haul between cases, so they'd have the continuity of the information for many different cases.
Mr. Johnson: I agree with you. We found that the efficiency seemed to pick up in the last year when we were a smaller and more concise group. In other words, we met often, we watched one another more closely, and we became people who would receive some friendly advice more readily - both from the administrator and from our fellow mediators - than we can see happening in the future. Again, it's because of being fragmented.
Mrs. Ur: Do you think this new mediation act is a better approach than the old act, with the farmers versus the creditors? Is it a more amicable approach?
Mr. Johnson: In the beginning the act was not clear on how the appointments would be made. The regulations received yesterday confirmed that they would be more peer-oriented than we thought possible at first. We even heard that the mediation would be hired out.
Unless the new act can bring some accountability back into the connection between the administrator and the mediators, plus the appeal process, I'm afraid the atmosphere may turn a little cold. Possibly we won't have the same influence that we have today because we will not be as closely united in our efforts.
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To expand a little bit on this question, I think education is a part of mediation, part of the process. To bring a person before us in mediation, to solve his problems, and to turn him out into the wilds again sometimes means that we're asking him to come back in two years. If a bit of education is extended to these people through a good joint effort on mediation, through the mediation team, and through the whole process, and they then organize themselves, hopefully we may never see them again. Hopefully that will be the case.
Mrs. Ur: I have one last question.
I realize there has been a basic ban in the last year, what with the change in process. How can we improve educating people that you're there, you're back, you're in business? What can we do differently?
Mr. Holmes: I think there are a number of things we could do. As part of FCC's ad for their service, they could include a blip that says we're in business. We could have open, outright advertising ourselves that says we are in business to provide this service.
There are a lot of things that have happened in the past, and some have worked and some have not. As far as going to something like the fall fair is concerned - it was tried under the previous administrator - it fell flat on its face. Nobody would want to be seen at a booth at a fall fair talking about the fact that I might be in debt.
Mrs. Ur: Exactly. It wouldn't be where you would want to be seen, I'm sure.
Mr. Holmes: No. I think a subtle type of advertising through the farm press, through OMAFRA offices, would be the place to start. Those are the things that were done in the past, and they were successful.
Mrs. Ur: I think an umbrella-type thing, under which you're not seen as going in specifically for that purpose, has much more going for you anyway.
Mr. Holmes: Certainly. There should be no shots in the dark, like fall fairs.
Mr. Johnson: Maybe the federation, which has shown a great deal of concern for the new act, could be -
Mrs. Ur: Promoting.
Mr. Johnson: - promoting for us.
Mrs. Ur: Thanks again.
The Chairman: I don't want to curb discussion, but we do have another presenter. We'll therefore go to Mr. Hermanson and Mr. Calder, and we'll end the questions to these gentlemen there before going on to our next witnesses.
Mr. Hermanson (Kindersley - Lloydminster): Thank you, Mr. Chairman, and thank you, gentlemen, for appearing before our committee.
Mr. Chrétien stole a couple of my questions, but you did mention that your workload has dropped considerably in the last five years, by over 50%. How many people would now be working in Ontario with the Farm Debt Review Board, as compared to five years ago - and that includes your field staff, your experts, your board members, and your appeal board?
Mr. Holmes: There is a board of five - a chairperson and four board members - and they act as panel chairpersons. They are the so-called mediators. Our next level is the office, where we have a general manager, along two people who do all of the work that has to happen in the office - assign, keep records for the board decision, that sort of stuff.
The contractors are all made up of the same group, which at present consists of 32. We contract out our services for panel people and experts, and they are renewed each year. An evaluation is done every November because some people get older, some want to leave, and there's always a list of people who would like to be contractors. We sort them out and choose from the best. So there has been an evolution, and I think we have better people.
To answer the other part of your question, I saw somewhere in my records that about 400 people tried out for these positions in 1986. I'm not sure how many were active, but certainly there was an awfully blanketed approach to get people, which was probably right - choose from a large group and get the best. We now know, specific to commodities and one thing or another, what we require. There's not much sense in hiring another hog expert if we have too many of them. In the last analysis, our fruit person had quit and we needed fruit people, so we hired from that commodity in order to complete our package of people who could offer the service right across the board.
Mr. Hermanson: Are these experts and field staff on an annual salary with expenses paid?
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Mr. Holmes: No. They are paid a flat fee for a case, and that fee can be adjusted up or down depending on the case. The panellists are paid around $150 a day for that role, but a small case would pay less. In a larger case that got very complex and had the guy getting behind, he would put in a supplementary and would be accommodated in that manner.
Mr. Hermanson: The panellists.
Mr. Holmes: Yes, the people who sit with the board member.
Mr. Hermanson: These are not the experts.
Mr. Holmes: No, the experts are under a different system all together. They work on a contract basis.
Mr. Hermanson: You say in your document that you don't see where there will be any savings of money if Bill C-38 is adopted. Why do you make that statement? As I understand it, the mediators will bid for the jobs, and hopefully there will be some kind of performance evaluation to make sure that the taxpayer is getting value for the dollars that are paid. Why do you think there's not going to be a savings?
Mr. Holmes: I'm not sure that we say there won't be a savings. I think we're asking if there will there be a savings. Again, as my colleague Jack here has pointed out, you'll have three little groups that are not responsible to a board, whereas they are right now. There will be three different groups making up the service under the direction of the administrator.
Mr. Johnson: If I could add something, we personally now have six people. The new proposal will move us up to eleven.
Mr. Holmes: We have definitely found out that the busier our people are, the better they perform. And it doesn't matter whether it's the panellist, the expert or the board member.
Mr. Hermanson: I just got notes from Mr. Johnson. They say: ``The new act centralizes power but fragments the approach and will not save money and will not service the farmer or his creditor.'' Actually, it's a copy of a letter from Mr. Calder, and it outlines a discussion with Mr. Johnson.
Mr. Holmes: I agree with that.
Mr. Johnson: Yes, that was a board summation of the new act. We felt we would certainly not save money because we would just have more people involved. More people means more money.
Mr. Hermanson: So you think there would be more people under C-38 than there are right now under the Farm Debt Review Board.
Mr. Johnson: Presently, I'd say we're there with five plus an administrator. The new set-up would have ten plus an administrator, or eleven plus an administrator.
Mr. Hermanson: So there would be more in salary and office support, and more experts.
Mr. Johnson: That's right.
Mr. Hermanson: You comment on a 75% success rate. I think that's a little bit misleading. ``Success rate'' really means that the case has been settled before it has gone to court. So in a case a farmer may lose all his land, but if he voluntarily gives up the land that's considered a success. Is that not right?
Mr. Holmes: We work a little differently than they do out west. I think our success rate is reasonably accurate. I would hope that it is.
Mr. Hermanson: How do you define ``success''?
Mr. Holmes: I define ``success'' as a case in which we come to an arrangement that plots for an individual how he is to run his farm for the next five years. Sometimes it does include downsizing, as you mentioned, but it's better to have a downsized farm that's making money in cooperation with an off-farm job, if you like, rather than trying to run 100% of the operation while losing money. So I think the question to ask, in terms of the overall success rate, is whether or not we have made this individual's living a little better.
Mr. Hermanson: So if a farmer who is farming 1,000 acres goes through the process and ends up farming 500 acres and seems to be viable, you would call that success. That would be your definition.
Mr. Holmes: Yes, if he was paying his bills and was producing a living for his family, I think we would call that a success.
Mr. Hermanson: On the whole issue of Order in Council appointments, you suggested that you feel they have worked well, that the whole patronage aspect has not been a problem. There's a lot of concern in the farm community that these farm debt review positions, and perhaps those of the mediators under the new act, could be a reward for political loyalty rather than positions that have been obtained based on merit. I would like you to respond to that. Also, do you think there could be some measures in Bill C-38 to prevent that feeling or observation or outlook from arising in the field? Should farm organizations maybe have some kind of input on who these mediators should be?
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Mr. Holmes: That's a difficult question. I would like to think we're there on our ability, but the scenario you present does leave some doubt. I would only suggest that if the farm organizations were doing it, it would probably be the same, only a different area. There would still be -
Mr. Hermanson: Is there any way we can get away from that, the patronage component?
Mr. Holmes: I think they should look at the merits of the person. If they can't do the job, they shouldn't get it.
Mr. Hermanson: Who are ``they''? That's the key element. I've seen them come across my desk, so-and-so is appointed to the Farm Debt Review Board, and they were the Liberal campaign manager for the defeated candidate in Swift Current - Maple Creek - Assiniboia.
Mr. Easter: Now I hear Reformers are kicking former Tories out of their offices.
Some hon. members: Oh, oh!
Mr. Holmes: I'm afraid, Mr. Chairman, I have to leave that one alone. I cannot adequately answer.
The Chairman: I think you chose wisely, Mr. Holmes, to leave that one alone. We may not leave that one alone with Mr. Hermanson, but maybe -
Mr. Hermanson: That was a good question, though, Lyle. If the people with experience can't answer it, then who can?
The Chairman: I guess I pose the question to you, Mr. Hermanson: are you saying people on the Farm Debt Review Board who are there today are not capable and qualified to do their job?
Mr. Hermanson: I'm saying some of them were appointed based on their political involvement rather than on their merit.
The Chairman: Mr. Calder, quickly.
Mr. Calder (Wellington - Grey - Dufferin - Simcoe): Thank you, Mr. Chairman, for giving me so much time to ask my important questions.
I do have only one thing, because everything else has been covered. It's just a synopsis of a bunch of questions.
We're dealing here with the process of cost, process, and efficiency; and I want to stress ``efficiency''. Bob and Jack, when you did your presentation you talked about the construction of the board. You thought the board itself could be downsized from one administrator and five people doing both mediation and appeal. Of course we have a mediator pool there we can pull from if there is in fact a conflict with that sort of structure. But in the conversation I've heard here so far, these mediators and experts are being selected through a competitive contracting process. So now we get into the business of cost, process, and efficiency.
My question is very simply this. The person who is the cheapest may not always be the best. How would you address that?
Mr. Holmes: I would agree 100%. I think the administrator has to look first at the case and then see who in the pool can best handle it.
The Chairman: I have a couple of points for clarification. Do you have the numbers before you today for the last year on the cases you dealt with under section 16, which I would refer to as individuals in difficulty, versus those under section 20, which if we compare it to the new bill would be those individual cases deemed to be insolvent? Do you have a breakdown of those, and the success rate in dealing with each of those sections?
Mr. Holmes: Mr. Chairman, I don't have that with me, but I would very much like to make that available to the committee. May I mail that information in?
The Chairman: Would you send that to the clerk, too? Then it will be circulated.
I have one other question. The new bill seems to be fairly clear that it is to deal with cases deemed to be insolvent.
Mr. Holmes: That's the act.
The Chairman: That's the act. If that's the case, I believe the national breakdown has been 68-32: 68% section 36, which is farmers in difficulty, versus 32% of the cases having been what would be defined, I think, as insolvent. That leads me to believe in the future role of the farm debt mediation process the workload would be only 32% the size of what it is at present.
Mr. Holmes: I think we've asked those same questions and we came up with the same numbers.
The Chairman: Now another - and this is a personal comment, not on behalf of the committee.
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I have some difficulty in us saying to an individual you aren't broke enough yet in your business or you aren't deep enough into the swamp yet, so you may not be eligible for assistance, but had we been able to meet with you under the mediation process a year or so ago, you might not have gotten where you are. So I'll find it interesting and I think the committee will find it interesting, the percentage of success rate under section 20 versus the percentage of success rate under section 16 in the past. Overall it's been 75%, and I think that's an excellent rate, but it will be interesting to see that other breakdown.
Unless you have some quick closing comments, I thank you for coming before the committee this morning.
Mr. Holmes: My closing comments would simply be that we appreciate coming before the committee. We hope our answers haven't been too far off base. I do have, in order to help out your information, the names of all the chairpersons and general managers from right across Canada here, in case anyone wants to pick them up. I do have the agenda that we follow in case there are some questions as to how this unfolds. Any other information that any member may require could be obtained as far as Ontario is concerned by contacting our office.
The Chairman: Thank you very much, gentlemen, for spending some time with us today.
Our next witness, committee members, is Mr. Couillard. Mr. Couillard is president of the Quebec Farm Debt Review Board. I don't think anyone is accompanying him.
Welcome to the committee, Mr. Couillard. Bonjour, monsieur Couillard.
Mr. Jean-Yves Couillard (President, Quebec Farm Debt Review Board): Bonjour.
The Chairman: Please go ahead.
[Translation]
Mr. Couillard: Mr. Chairman, it's a pleasure to be here today to present Quebec's position. Like Ontario, we had a meeting at the provincial and national levels. As Mr. Stevenson is not here, we will present each one of the points we discussed during that meeting. We'll let him make whatever presentation he wants for the national level. I think that the matter, as a whole, will be presented either by Ontario or Quebec.
I would like you to feel very comfortable. My name is Jean-Yves Couillard and I am the president of the Quebec Farm Debt Review Board. I am also a farmer. I farm with my wife and my two sons. It's a dairy farm producing 12,000 kilos of butter fat. I also own a grain farm which is becoming more important than the dairy operation because we're farming just about 2,000 acres now. We're growing soya, corn, grain and a bit of wheat for feed.
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We're really in the market because we're also working with Mr. Richardson to export soya and a bit of corn. So that farm has grown, like all the others. We've tried to do things as progressively as possible so we wouldn't have to go to the Farm Debt Review Board.
Of course, unlike the members around the table, we're not concerned with the price of milk. We believe and we're simply saying to you that today's agriculture is of capital importance for Canada and the whole world. Today's farmers must adapt to world competition and this often puts them in financial straights. I wrote the minister myself to try to convince him to maintain and improve those financial services intended to help farmers solve the problems they had to face.
As for the budget, you'll do whatever you want, but I think that in view of the present situation you must not only maintain it, but improve it. You can rest assured we will all work together to try to improve this bill and make it more humane.
As a start, we would like to make a few suggestions. First, we suggest doing away with section 16 of the old legislation. As the new legislation has more stringent eligibility criteria for farmers in financial difficulty, we want the assurance that the new program will be set up to help those farmers obtain financial aid to pay for the cost of hiring an expert specialized in farm management to be able to get their farm going again.
Not so much as a representative of the board, but rather as a farmer, I would like to show you that an ounce of prevention is worth a pound of cure. That's true in all areas. When you feel you're getting weaker, whether mentally or physically, it's time to consult those people who can help you maintain a mind at peace with itself whether it has to do with your business or something else.
So we feel that the absence of section 16 is a handicap that must be dealt with one way or another. The farmer often does not have a general view of his overall operation. He doesn't really know where improvements should be made. It would be interesting to have one or two consultants help with their expertise. Those consultants could be two other farmers who, thanks to their experience, could help him find the weaknesses in his operation and how to correct them. The absence of section 16 becomes a hindrance for helping the farmers in trouble.
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Second, concerning the administrator's responsibility, we know there will be a board of appeal. We think the additional responsibilities given the director general are rather broad.
We suggest setting up a national committee - this comes from the national meeting and not from Quebec - made up of a representative from each one of the provinces or administrative regions that would be responsible for the operations of the different boards. This committee would decide in cases of contentious issues arising from the implementation of the legislation. That was discussed during a meeting of the presidents in Winnipeg and also in Ottawa.
We actually think that the presidents of the appeal boards in each of the administrative regions should make up a national committee responsible for monitoring the orientation and problems of the new legislation. We will limit ourselves to this proposal as we think we should always be closer to the client and the grassroots.
We also believe there should be a provincial responsibility as the province is very, very close to the problems. If there were to be any new orientations, the presidents could meet at the national level to try to find solutions to whatever problems may have surfaced and have the legislation amended consequentially. If you want farming to be strong at the provincial and federal levels, you have to stay close to the grassroots, the stakeholders.
That's why we prefer the provincial level, but the presidents should be able to meet at the national level to examine problems and orientations and bring about necessary changes.
Third, there is the definition of the word "expert" in subclause 4(4) and clause 9. We believe that the financial analysis should be done by financial experts specialized in agriculture. The term "expert" as defined in the new Act is very broad and gives the courts the possibility of interpreting the word "expert" based on the obligation the board has to provide professional services to the farmer. This does not allow the legislation to attain its objectives.
In our view, the experts should be people who really know agriculture, particularly as regards evaluating the operation, the buildings and the machinery. Such an expert could then work with the farmer on beginning to look at a few possible solutions. If the person concerned is an experienced agronomist, an agricultural economist, he would certainly be able to draw up a comprehensive picture of the operation, and the farmer would have a better overall view of his business as regards his assets, liabilities and revenue. He would then see what he owns.
He could also determine what his situation is, because his assets often show a negative balance when he applies to the Farm Debt Review Board. That is unfortunate since by then it is far more difficult to get things back on the right track.
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It is preferable to draw up that picture before the producer finds himself in difficulty. When he has it in front of him, he can see what his operation is worth and, through working with agricultural experts, it is easier to resolve problems.
Therefore, we want a better definition of the term «expert», so as to ensure that the person who evaluates the farm, the buildings and the machinery really understands what is involved. You cannot afford to speculate whether a tractor is worth $65,000, $85,000 or $50,000.
The experts know what all those items are worth. They go to auctions and know what their real market value is. It's easier for them to give an accurate picture of the operation.
Fourth, the imbalance of the parties involved is a very important point for us.
All of you around this table have a level of training a little above the average. Some of you have certainly been to university, and although some farmers have also received a certain level of education, they often lack experience on financial matters. That is why we say there is an imbalance in the parties.
Suppose there is one buyer for 14 sellers. In the case of the sellers, you can see that the situation is not very well balanced. The buyer can run them around as he wishes, by telling them that some other seller is willing to give them such and such. To achieve a balance, the buyer and seller must be able to deal on an equal basis. Such a balance must also exist in mediation.
Our experience in seeing how the current legislation has been applied suggests to us that the new Act will place farmers alone before their creditors, thus creating an imbalance between the parties involved.
Under the old legislation, before the meeting of creditors, the members of the review committees advised the farmer how to approach the issue, and this was done without prejudice to the creditors. When he met with the creditors, the farmer was therefore more comfortable and felt that he was being supported.
A certain trust developed between the farmers and committee members, who were chosen from among the farmer's colleagues. Often, such trust did not exist in a meeting strictly between the creditors and the farmer.
We therefore propose that the new legislation should provide for a sponsor who would be a specialist producer, that is someone who would have the trust of the farmer and could advise him through the mediation stages on each issue.
The specialist farmer would not always be the same person. On the contrary, if a farmer has a problem with orchards, other producers could support him since they would have more experience in this area. That is what I mean when talking about finding someone who could support the farmer, who could help him in negotiations, who could highlight the positive points to be examined in this context.
Although I am the president of the board, it is as a farmer that I spoke to you earlier and tried to explain to you what people are feeling in Quebec.
The legislation should take the human dimension into account. As you all know, when you have serious financial problems they have an impact on the family and all aspects of your life. The same is true of farmers, who with their families have worked for 20, 25, 30 or 35 years to develop the operation and suddenly wake up one day to find they no longer have anything.
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After a certain number of years, members of Parliament are eligible for a pension plan, but we farmers have nothing. After so many years, you can wake up with nothing. That is really very stressful.
Starting your life over after you, your wife and family have worked so hard... Therefore, the new legislation has to take into account the human aspect, enabling the farmer to really understand the problems he is facing and identify the necessary solutions.
I don't see this human aspect in the bill. It refers solely to mediation. That is why I would like to see what other services could be added.
There is no longer any reference to a board. However, this has to be mentioned since the administrator will have to work from some location or other.
In the case of Ontario, they say there is a success rate of 75 per cent. As regards the other 25 per cent, what are the farmer and his family expected to do? Go on welfare? I don't think that approach should be recommended in 1996 or 1997. Rather, I think that provisions should be made to enable him to restructure his life, for example by offering training courses leading to areas with which he is more familiar.
To manage a farm today, you have to have some financial knowledge. You're not talking about a small undertaking of $10,000 or $15,000, but rather a business of $100,000, $200,000, $500,000 or in some cases even more.
I mention that to explain the importance of the human factor. I could give you a small example. The farm could be in a difficult financial situation, and if the farmer and his wife want to purchase a tractor or machinery, they will have to sign the necessary papers. If the wife works outside the farm, what will happen to her salary if the necessary repayments are not made? Do you know what will happen? The wife will simply say "I'm leaving home; I don't want my salary to be seized, etc.". In such situations, you see what happens in human terms. Couples separate. These are very difficult moments in people's lives. That was the aspect I wanted to draw to your attention.
I would like to be able to say to you that the budget issue is your business. I want to say that with the globalization of agriculture, the budget should not be decreased but increased. I am sure that the Minister of Agriculture would be happy, because he could sleep more easily and the government would have less problems.
I will stop there. I went beyond my mandate when I talked to you about the budget. But I did so because my involvement with the board and the UPA goes back a long way.
[English]
The Chairman: We will go to Mr. Chrétien and then Mr. Paradis.
[Translation]
Mr. Chrétien: Mr. Couillard, welcome to the Standing Committee on Agriculture and Agri-Food.
What particularly struck me when listening to your presentation was the fact that you spoke from the heart and that you have such respect for farmers in financial difficulties.
Mr. Couillard, the figures show that from August 5, 1996 to March 31, 1996, that is almost ten years, 68 per cent of applications came from farmers in financial difficulties.
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Under the new legislation, producers in financial difficulty would not be eligible for assistance from your board. You did not talk about that. Mr. Couillard, would you have any suggestions to make regarding farmers in financial difficulties?
They are not up to their necks in trouble, but they could well be so soon. They have one foot on a banana skin. Should we wait until they are completely stuck before coming to help them?
Mr. Couillard: I did mention it when saying that the removal of section 16 was a shortcoming of the new legislation. The new legislation deals only with the curative and not the preventive aspect of the situation.
For agriculture and farmers, it is a situation that will get more and more difficult. It is a lot easier to remedy a difficult financial situation when the person is not in desperate straits.
The Act should enable these farmers to have access to people who are in a position to profile their business so that the situation can be remedied by competent people.
I would like the Act to contain something along those lines.
Mr. Chrétien: I will not go back to the very pointed question regarding appointments. We discussed that in private earlier, and Mr. Anderson also raised the issue. In your presentation, you frequently repeated that the members of the board should have a good understanding of agricultural issues.
Would it be possible for potential nominees to include people who would be called upon to advise farmers even though they have always lived in the city, have never seen a farm up close, have never even seen a cow up close but would meet with a farmer to tell him what to do?
Mr. Couillard: I do not want to speak on behalf of the other provinces. In the beginning, my father and my mother, as in many families, wanted me to become a professional. You had to be a priest, a minister or whatever. That is what they tried to do to me. They sent me to a seminary. The people in charge of the seminary sent me back to the land because they had more trouble with me than I had with them. In other words, I truly am a farmer deep down inside. Farming is my whole life.
In Quebec, we analyze resource people one after the other and we have eliminated the ones who have nothing to contribute.
Mr. Chrétien: Does that mean that in Quebec you have gotten rid of some people?
Mr. Couillard: We got rid of some who were a little too old or who were behind the times. We needed people who were active, who had an in-depth knowledge of agriculture and who had worked very closely in the agricultural field.
Often, they are financial advisors for farm organizations. These are the people that we prefer. People who were older, or who were behind the times, no longer had a role to play.
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Another very important criterion on which the board's credibility is based is confidentiality. Confidentiality is very important for me. If someone is overheard talking about certain files and naming certain people, you can rest assured that he won't remain part of the board.
Mr. Chrétien: Let's look at a typical example. I live in the Thetford Mines region, and looking at the list of witnesses from Quebec, I noticed that there was one woman who was farming in Saint-Adrien-d'Irlande.
Since creditors use your service most of the time, let's suppose that my creditor, the National Bank, calls you and says: "Chrétien, from Garthby, owes us some money. Let's seize his assets and auction them off." What happens then? Do you help the farmer or the creditor? What happens then?
Mr. Couillard: I would like to deal with your file. Normally, Mr. Chrétien would make an application to the Farm Debt Review Board. I would prefer an application under section 16 rather than under section 20. However, under section 20, the Board automatically sends all creditors a notice that they will not be able to realize their loans and opens a file under Mr. Chrétien's name so that it can be dealt with.
The administrator, the director - because they are still called directors - sets up a review panel. The chairman of the panel is always a board director. He sits with two resource persons.
First of all, if the file is complicated, we meet with the person who has put it together. We usually meet with the agricultural expert. In Quebec, agricultural experts always prepare the files. If it is not necessary to proceed this way, the chairman can meet directly with the farmer to review his facilities and his expertise. The resource persons will only be appointed once you have seen the farmer's operation and capabilities.
These resources persons are always people who, among other things, are producers, or fellow farmers, whose farms are similar and who are well aware of the facts. During this meeting a climate of confidence is often established. The farmer usually doesn't know whom to confide in.
This meeting is the most important moment. We try to fully understand the farmer's financial state, his projects, and reexamine potential solutions with the farmer.
Then we often meet with the secured creditors. We make proposals in order to keep the farm up and running.
That also enables creditors to identify solutions. We try to work together to find the best solutions to keep the farm running. Creditors often realize that the best solution is to write down their loans.
At the same time, we have to reassure the farmer; we have to find someone who can help him with his accounting and his production. All of these elements combined help the farmer find a solution to save his farm.
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[English]
The Chairman: Thank you, Mr. Chrétien.
I remind members that we have the room only until 11 a.m. - I wish we had it longer - and we need, I hope, no more than four or five minutes at the end to quickly review the report of the steering committee.
So I go to Mr. Paradis, Mr. Hermanson, and Mr. Landry.
[Translation]
Mr. Paradis (Brome - Missisquoi): I will be brief. I do not know if I should call you Mr. Chairman, Mr. Couillard or Father Couillard.
I must say that alternative conflict resolution measures are a modern process for speeding up resolution to some extent. We should congratulate ourselves for these methods, which are less cumbersome than former systems, like waiting to be heard in traditional courts, etc. Personally, I think that these alternative measures for conflict resolution, like mediation, etc., are a good thing.
However, you highlighted a rather important aspect, the human aspect. Quite often, as a country lawyer, in a previous life, I had to meet with farmers in financial difficulty, and you are right in pointing out that that is perhaps the most important aspect.
At the time, the purpose of my first interview with the farmer was to try and get the husband and wife back together. First of all, the woman thinks her husband is good for nothing. According to her, they are faced with these difficulties because the farm has not been well managed by the farmer, because he doesn't work hard enough, etc. Marital problems are the first things they are faced with.
So I agree with you that the human aspect is very important. There is no way to settle the matter if, from the outset, the premise is that the woman and the man are to go their separate ways. It is very difficult to settle the matter financially or legally - call it what you want - if there are family problems.
So we invite you and encourage you to continue to examine practical solutions that could be adopted to ensure that consideration is given to the human aspect in these matters.
The Business Development Bank of Canada, which was previously the Federal Development Bank, is an example. It set up new systems. The bank has a different vocation and a section for venture capital.
Our Act should perhaps be adjusted in keeping with modern philosophy or the modern world. Competition is gaining ground in agriculture, with new markets and fewer barriers. Our farm protection instruments must be in keeping with these modern trends.
I just wanted to let you know that you had done a good job in highlighting the human aspect and I invite you to make very specific proposals to the committee in this regard.
[English]
The Chairman: Do you have any comments?
[Translation]
Mr. Couillard: The meeting with the farmer would make it possible to touch upon that aspect and to give him some security.
I must tell you about the last case we dealt with. The woman simply said to us: "You know, Mr. Couillard, this is my third burnout, and I may have another one."
She was crying because she had signed the document too. She had a little company in her own name and it was having difficulties. The cheques came in in her name, but the company was paying the expenses. I started by asking one of your young women lawyers, Mr. Paradis, what the best approach would be. But the woman in question said to me; "It goes much beyond this, you know; I am leaving".
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At meetings of this type we have to try to introduce a feeling of security. This is where a relationship of trust is established between the members of the panel and the farm couple. If we had mediation only, we would lose this aspect.
So it would be a good idea to have a sponsor, someone who could help the farm couple to deal with their meeting with the creditors. They are professionals who do nothing but deal with difficult cases.
The problem stems from the securities. Creditors want them, but when they run out, they're prepared to allow the farmer to try to work his way out of the situation.
[English]
The Chairman: A very brief comment from Mr. Paradis and then Mr. Hermanson. We have six minutes left. That's all we have. I'm sorry, but the other committee is outside the door.
[Translation]
Mr. Paradis: I would just like to clarify one point. When Mr. Couillard referred to one of my young women lawyers, he was referring to the time when I was president of the Quebec Bar, nothing more.
[English]
The Chairman: Mr. Hermanson.
Mr. Hermanson: Thank you, Mr. Chairman.
Good morning, Mr. Couillard. You talked a bit about the human aspect of this whole farm debt situation. I think that was an important comment.
Just as a matter of information, you mentioned that perhaps we politicians wouldn't understand some of the pressures at the farm level because of course we have a fairly healthy pension to rely on. That may be true for the Liberals and the Bloc, but Reform MPs have opted out of the pension. So we're in the same boat as the farmers.
Some hon. members: Oh, oh.
Mr. Hermanson: They don't like it when I bring that up, but it's true.
By its very definition, a mediator is someone who doesn't take sides, and is equal to both parties. You talked about an imbalance of the parties. Under the new legislation, the farmer is able to invite his own financial consultants to come with him. Before, it was the Farm Debt Review Board people, the farmer by his or herself, and the bank with perhaps their lawyers and support staff.
Are there some things in Bill C-38 that are an improvement, perhaps more human? I'm not defending the government here; I'm just trying to get your opinion to see whether or not there is a human aspect to Bill C-38 that maybe isn't there under the current legislation.
[Translation]
Mr. Couillard: I don't think that Bill C-38 is more humane. Rather, I think that in order to maintain the balance we have spoken about at the present time, we must keep the mediation process.
The mediator must be quite a bright person who can ask the required questions so that the farmer facing financial difficulties can find some solutions to his problems rather than leaving it all up to the financial institutions and the creditors.
The mediator could - and I say "could", because this would be much more difficult - through his questions help the farmer find some solutions. That is why we would like the farmer to be accompanied by someone in whom he places a great deal of trust.
Difficult times are very stressful. I have some experience in this field. I've often accompanied farmers when they appeared before the Appeal Board. Often, while I was negotiating for the farmer, he was crying. I would take a break to check with him whether I was proceeding correctly. The situation is really extremely stressful. At the moment, we are talking about the mediation, but also about negotiations. That is a little different.
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[English]
The Chairman: Mr. Landry.
[Translation]
Mr. Landry (Lotbinière): Thank you, Mr. Couillard, for appearing before the committee. I have a technical question I would like to ask. If you cannot answer it now, I will leave you my address so that you can send me the information in writing.
Of the total number of applications you've received, how many applicants purchased a farm? Do you have this information?
Mr. Couillard: No.
Mr. Landry: Could you get it for me?
Mr. Couillard: Certainly.
Mr. Landry: Thank you very much.
[English]
The Chairman: Perhaps I could ask Mr. Couillard as well if he could send us the same information. It may be similar to what has just been asked. We did Ontario. How many applications have been under section 16, under section 20? What is the overall success rate? What is the success rate of the applications that came before your board under section 16, and the success rate of those under section 20 of the old bill?
With that, Mr. Couillard, we're sorry we don't have more time. We thank you for coming before the committee this morning.
Members, we do not have time to go over the steering committee report. I'm sorry. The other committee is here.
We have had a change in the meetings. The one scheduled for yesterday we hope to be able to have next Wednesday.
Mr. Chrétien, the update report on the NAFTA panel will happen next Wednesday, we believe.
Mr. Easter: On the NAFTA panel, Mr. Chairman, we have an in camera sitting. Can you ask our people at the trade office for a copy of the NAFTA panel report? It's widely available in the United States. I have a copy, and I'm not allowed to give it out under Canadian law. I got it from American sources. But if it's widely available in the United States, then this committee should have access to that. Can you ask for it?
The Chairman: We can ask for it.
Mr. Easter: It would be useful for the discussion.
The Chairman: Mr. Hermanson, one last point.
Mr. Hermanson: In this report, if we're going to have to approve it later, I thought we had agreed that, should it be necessary, we would reserve time to hold hearings on the result of the panel and the minister's response. That's not reflected in the report.
The Chairman: We did agree to that, so -
Mr. Hermanson: It should be in the report.
The Chairman: Okay.
The meeting is adjourned.