[Recorded by Electronic Apparatus]
Thursday, October 31,1996
.0911 
[English]
The Chairman: I'll call the meeting to order. I apologize for the delay, folks, but there were just some last-minute things we had to discuss.
Maybe what we will do first of all before we have a possibility of losing committee members.... I hope not, but I do know that one or two have some other commitments for a time and will be back.
We have before you the seventh report of the subcommittee on agenda and procedure. If you want to take a quick look at that, I believe under item one.... Since we had the steering committee meeting earlier this week, there has been another request, and they may keep coming. I don't know. Marc, that request was from whom?
The Clerk of the Committee: It was from the Poultry and Egg Processors Council, and there is a possibility that it might make a joint presentation with the Canadian Meat Council. That has yet to be confirmed, but the Poultry and Egg Processors Council is certainly interested in making an appearance on Bill C-60. That would take place next week.
The Chairman: Perhaps you could make a note of that. Unless I hear differently, we will get back to them and tell them we'll add them to the list of those who wish to present on Bill C-60.
Are there any objections to our adding that single or joint presentation to the list?
Mr. Reed (Halton - Peel): No.
The Chairman: In reference to number two, one of the reasons I had spoken to Dennis Kam, just to give an update for all the committee members.... As you know, last week we all got a copy of the supplementary estimates. You people probably understood them, but I didn't. I had a concern that maybe if I didn't understand them I wasn't getting the correct picture of the actual expenditures of main estimates versus supplementary estimates.
When I spoke to Mr. Kam, he said that it really isn't an additional $646 million, because some of those moneys were already in the main estimates. I was totally confused about that, so I asked him whether he would be prepared in the near future to come to committee and quickly go over the numbers in the main estimates, how supplementary estimates work, and what part of, for example, the $646 million was already in the original estimates. I could go on and on.
Even with his brief explanation there, I still didn't understand it, so I've asked him to come before the committee. The steering committee has recommended that we do that. It's not to discuss the actual expenditures. We did that when we went over the estimates earlier. It's just so that we understand how the two work and what they are. That's what the second one is.
The third one has been dealt with. The clerk has spoken to the minister's office, and I have personally spoken to the minister and requested an appearance here before the committee. The letter to the Minister of Transport has gone or it's in the process of going at the present time to follow up on one that went in the not too distant past for an update on the rail car situation.
.0915
Mr. Hermanson (Kindersley - Lloydminster): Mr. Chairman, regarding number three, did the minister indicate whether he would be prepared to appear before the committee soon? Apparently he's already discussing details of his plans for the board and the plebiscite with the media, and I think it would be appropriate that he appear in short order before this committee.
The Chairman: I told him that the committee requested his urgent presence here. He did not say how quickly he could do it, but he said he would come before the committee.
On another matter, those of you who were at steering committee.... Monsieur Chrétien, at steering committee on the hopper car issue you mentioned a situation you were concerned with, and as I said to you there, I did see the minister and asked the minister to touch base with you on that. I hope his staff did.
[Translation]
Mr. Chrétien (Frontenac): Someone from the department phoned me yesterday, Mr. Chairman. Unfortunately, for both of us, we were not able to communicate since he cannot express himself in French and I cannot express myself in English. We agreed to call each other again, but my office has not yet contacted him. Once again, there is a language problem.
[English]
The Chairman: Are there any further comments on the report before the committee? Could I have the direction of the committee? Do you wish to adopt the report?
Some hon. members: Agreed.
The Chairman: Mr. Pickard is before us this morning.
Mr. Pickard, will the officials be joining you at the table or do you have some comments? We did not have time the other day to complete.... Can I back up just for a minute, Mr. Pickard, please?
We have circulated a letter to everyone from the minister in reference to the farm consultation service. You all have that before you. There had been a request for a position and comments from the minister regarding the consultation service. Maybe Mr. Pickard has more comments on that. I don't know.
When we left off the other day, we had had a presentation by Mr. Pomerleau, and the officials were before the committee. I asked Mr. Pickard and the officials whether they could make some further comments on Mr. Pomerleau's points as a viewpoint, because he did certainly go into the bill in an in-depth manner.
Further to that, committee members, I received a letter, which has gone to translation, from the Canadian Bankers Association yesterday morning. It was dated October 30, 1996. It was faxed to me from the Canadian Bankers Association, and it had some points it is concerned about or wants to make on the bill.
I'd like to say at the outset today that with that and some other amendments that the clerk says have come forth, I think it is probably premature today to go into clause-by-clause. It is an important bill, but I don't think the world's going to stop if we don't get it done for another few days. I think in fairness to everyone, we need to have a discussion here today. If it takes the full time of the committee, that's fine. If it doesn't, we will adjourn and set another date so that we can get the letter from the Bankers Association translated. The clerk can get the last-minute amendments in order so that we don't rush through this.
It's an important bill, and unless there's a major objection, that's the way I intend to go. We will not go into clause-by-clause today.
.0920
Mr. Hermanson: Mr. Chairman, I agree with your recommendation. Let me add that just two days ago we received evidence from a witness who said that there should be more amendments. More witnesses are appearing today, and it's not proper to go immediately from witnesses to clause by clause.
In light of the fact that this bill has gone to committee prior to second reading - and even when bills don't - it seems only proper that there should be at least four days between the committee meeting when the last evidence is produced and the beginning of clause-by-clause, simply because as members of the opposition we need time to determine which amendments we would prefer to bring to committee and which amendments we would prefer to bring to the report stage.
We have to work with legislative counsel and we have to communicate with the clerks. As you know, that all takes time. They can't be at your beck and call. I appreciate your decision. I support it and ask that you continue this habit with this committee.
The Chairman: Okay. As I said, it is not my intention to rush it through. Legislation isn't done every year - each piece, of course - and it may be a long time before it's done again, so let's do our very best to address all of the concerns of the different people. We certainly will not satisfy everybody on every concern, but let's do the best job. Certainly let's look at their concerns and comments and deal with them in one way or another. Let's do it as well as we possibly can.
Sorry, Mr. Pickard, I interrupted you. You are back before us this morning with officials, continuing from our last meeting on Bill C-38. I assume you have some opening comments. Then we will go into discussions and questions.
Mr. Jerry Pickard (Parliamentary Secretary to the Minister of Agriculture and Agri-food): Thank you very much, Mr. Chairman. I do appreciate the opportunity to continue. I view this as a continuation of where we started the other day.
On the last day of testimony, Mr. Pomerleau did bring forth several concerns that I think need to be dealt with, and this certainly gives us an opportunity to explore several of those concerns.
It's important to understand who we wish to target under the FDMA. Mr. Pomerleau asked if we wanted to restrict the act to those farmers whose principal activity and principal source of revenue is farming. The answer is no. There are many commercial farmers who have other sources of income, either from employment or self-employment, and they are still legitimate farmers who should be eligible for assistance under the act.
As Mr. Pomerleau stated, if our wish is to include this broader group - which it is - the definition in Bill C-38 is appropriate. The reason for talking about commercial farmers is that we want to exclude the hobby farmer who has no intention of earning income from the farm.
Mr. Pomerleau stated his preference for allowing the stay of proceedings to run its course in all situations. However, the discretionary termination of the stay of proceedings under subclause 14(2) is consistent with the basic philosophy that mediation is a voluntary process. It is also consistent with the purpose of the stay of proceedings, which is to allow a window of time for mediation to take place.
It is clear that the majority of creditors do not want to participate in the mediation process. There is no evidence that having a stay remain in place is of value. In addition, there is the opportunity for farmers to appeal the termination of the stay at an appeal board level, which gives them another area in which they can follow through.
One of the major strengths of the Farm Debt Mediation Act over the Farm Debt Review Act is paragraph 5(1)(b). Many farmers who applied under section 16 of the Farm Debt Review Act for mediation and a financial review were technically insolvent, but they did not want to apply under section 20 of the act because they did not need or want a stay and they did not want to alert the creditors unnecessarily.
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Mr. Pomerleau feels this section will not be used because there is no obligation on the part of creditors to participate in the mediation process. We have evidence to the contrary, by looking at participation under the current section 16 of the Farm Debt Review Act. As was said by the chairperson of the Alberta board last week, virtually all section 16 applicants would qualify to apply under paragraph 5.(1)(b) of the proposed Farm Debt Mediation Act. Other farm debt review boards have also indicated that well over half of their current section 16 applicants are insolvent and could apply under paragraph 5(1)(b) of the proposed Farm Debt Mediation Act.
Mr. Pomerleau made a recommendation that the stay of proceedings should be automatic as soon as a farmer applies for stay. Perhaps Mr. Pomerleau did not fully consider that a farmer has fifteen business days to apply for a stay after he has received notice of intent from a secured creditor. Farmers realize that if they wait until those fifteen days have lapsed before applying for the stay they risk having the creditor at their door, repossessing their securities.
I have one final point of clarification on the issue of confidentiality of information provided by applicants, which was raised by Mr. Pomerleau. It is important to note that under section 48 of the Bankruptcy and Insolvency Act, a farmer cannot be petitioned into bankruptcy. Thus a creditor who receives information on a farmer for purposes of this act cannot then use that information for purposes of petitioning a farmer into bankruptcy.
I would like to close with a few words on the farm consultation service.
The Canadian Federation of Agriculture has requested that the farm consultation service be kept out of the legislation in order to be able to promote the service with a more positive spin than it has had when linked with debt problems under the Farm Debt Review Board. The FCS will encourage farmers to seek help early, thereby preventing more serious problems. Keeping the program separate from the proposed Farm Debt Mediation Act should mean more farmers will use both the pathfinding and financial aspects of the program and the stigma of farm development and insolvency will not be attached.
In other words, if we linked the advisory process or the consultation process to the act, insolvency would also be linked. Therefore it would discourage a lot of people from seeking that support. Under the farm consultation service as it stands and as presented, it would certainly give that farmer an opportunity to seek the pathfinding services and financial advisory services with no stigma and without the creditors being alerted of anything that is going on. So we feel it's very positive to keep the two separate.
I also have some concerns that had come forth. Mr. Hermanson suggested he needed assurances that the farm consultation service would be implemented at the same time as the proposed Farm Debt Mediation Act was implemented. His request was that we table in the House a statement to that effect. The minister has looked at that and said he wants to assure everyone on the committee up front that this will be done. Therefore his response to it, in a letter directly to the committee, is here in front of you today. That is what precipitated this letter to the committee.
I think the minister does try to deal with two issues that are very important here. Within the letter.... I think it's important to consider that there are certain obligations and certain pieces of legislation within the provinces such that we don't want to appear to be taking away provincial responsibility or creating a problem between the provinces. As a result, keeping it out of the act is really keeping better harmony in the relationship between the provinces and the federal government.
.0930
Secondly, he goes on to point out that it is important to use this service, as I've just pointed out, and for it to be as open a consultative process as it can, to encourage more farmers to participate without any stigma. That recommendation came from Jack Wilkinson of the Canadian Federation of Agriculture. It's certainly one that the department supports very much.
Those are the two primary reasons the minister outlines in his letter as to why keeping the consultation service out of the act is important.
With those comments, Mr. Chairman, possibly we can go to questions.
The Chairman: I apologize, I did not bring my sheet, but I know a couple of people had requests for questions and comments. Mr. Hermanson, you were one of them, so I will go to you first. Elwin, you're first, then I'll get indications from others.
Mr. Hermanson: Thank you, Mr. Pickard, for your response in part to the concerns I raised at the last committee meeting. As you remember, in that meeting you were actually reading some of the details that would be implemented in the farm consultation service from your briefing notes, I believe.
I indicated to you that if you've developed this consultation service to this extent, it needed to be tabled in the House so that we would have something a little more concrete to go on other than the promise that there would be a consultation service implemented at the same time as the new mediation act. Your response was:
- If you want a direct answer from me, I see absolutely no problem with outlining very clearly
what the farm consultation service shall be.
- I see absolutely no problem giving you a clear outline of what the farm consultation service will
be, and at the same time a clear outline of the implementation and a parallel time line with the
act.
Mr. Pickard, when you're here we believe that as parliamentary secretary you're acting on behalf of the minister. That's your role on this committee. I said ``good'', there was no further response from you and the chairman then thanked the witness. I believe this letter should be tabled in the House in agreement with the commitment you made.
I would also like to see the extent of the briefing note you were reading from, which indicated what this farm consultation service would provide for farmers. I believe that should also be tabled, and I would appreciate it if that were complied with.
I have another concern. There's a paper here from the department on cost. It looks like it was put together rather hastily. It outlines the cost of the farm debt review boards for the past five years, starting in 1991-1992 at a cost of $11.4 million for handling 3,538 applications, up to a current expenditure of $3.5 million for handling 1,145 applications. Further on, we read:
- Cost savings will be realized under the Farm Debt Mediation Act. Therefore, the net effect will
be that the farm debt mediation service and the FCS could be provided at almost the same cost as
the Farm Debt Review Act - that is, approximately $3.5 million.
The other important thing is that the Saskatchewan Farm Debt Review Board appeared as a witness before us here, and said that they handled half the cases of the Farm Debt Review Board and spent less than a quarter of the budget. So I'm wondering why we have to spend $3 million to $4 million on the Farm Debt Review Board across Canada when half the cases were being handled for $700,000 or so in the province of Saskatchewan alone.
We need a little more information. We need a little more clarity on which way the government is going with this twinning of an act and a consultation service.
.0935
Mr. Pickard: I'd be glad to try to address your questions to this point.
I believe when we had the dialogue back and forth I made it very clear that I see no problem, and I still see no problem, in giving you as much detailed information as we can about the farm consultation service. The department is quite willing to provide the detail we have at this point. That's not a problem.
When you suggested that it be tabled in the House, I said I saw no problem, but I also discussed with you the point, not at that meeting but after.... I suggested I would have to have the authority of the minister. I do not have authority to table a document in the House.
As a result, as I explained here, I did go to the minister and I asked the minister to confirm that this service would be in place. I believe that was the thrust of your question. He then generated the letter, which confirms that this is the case. He confirms the reasoning for going ahead.
I thought that to be the best alternative I could supply you. Obviously when I indicate I don't have a problem with something the assumption is always that any parliamentary secretary must have the endorsement of the minister in order to take certain actions. Quite frankly, in this case the minister thought to come directly back to the committee and give the committee a quick answer was the most appropriate direction to go. That was the choice of the minister.
So I tried to explain that. Certainly we have no problem getting the details.
As far as your second question goes, and it had to do with the costing, it's very clear that in looking at a consultation service we put out a few more dollars, that's correct, than our past budget dollar. We can take $3.5 million and say that's what we used in the proposed Farm Debt Mediation Act. We have reduced that to $2.2 million as far as the mediation process of the act goes. But in order to make certain we move forward and deal with what we feel is the most critical issue, early recognition and early help for farmers who may experience insolvency in the future, getting to them at the earliest stage is an additional step forward which we did not have incorporated in the old act.
Therefore listening to the farm communities, listening to the Canadian Federation of Agriculture, listening to those people who have dealt with the act over time, it was the opinion of the department as well as the opinion of the department that we should make certain that early approach to help was there. Therefore comes in the $1.8 million that is going to the consultation service. That is to give advice, help on pathfinding, give professional support, for farmers who need that support in a business-oriented plan.
Secondly, within that $1.8 million a factor is built in for making certain...and we heard Mr. Pomerleau's major concern that most people aren't aware of the type of programs that are in place. The department realized that was a concern of many people. Therefore $250,000 of that $1.8 million is put in to make certain we have that message across the country where people will be aware that this program is in existence and to give them an opportunity to respond to the program at early stages. That is a built-in factor, a cost factor, which the department feels is absolutely necessary to keep our Canadian farm community informed.
So we feel even though we are spending $4 million, in comparison with $3.5 million, we are doing more for the awareness of the farm community. We're trying to reach out and deal with the farmer earlier.
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The net result is it's hoped that by going in that direction, getting the people through the consultation service earlier, we would then gain benefits down the line on the mediation process side of it. Those won't show up in the first budgets, but we're hopeful if we do resolve problems for farmers at the very early stages it will mean fewer farmers require the mediation service in the long run. Therefore there will be positive benefits back not only to the farm community but also to the creditors and everyone else involved in the whole farm operation. We felt that was a very important aspect of it.
These are the budgeted figures we have. We're not necessarily certain those budgeted figures will come out exactly, but we certainly wanted to make sure enough revenue was there to make this program go ahead.
If the program does come short of that funding, we also have other areas through which we can look at additional funding if required. We all know in certain economic circumstances in this country we see those insolvencies go up and down in accordance with a lot of other financial aspects of the economy of the country. Therefore through the adaptation funding we think we can handle that change if anything does occur.
Mr. Hermanson: Jerry, the current budget for the Farm Debt Review Board is $3.5 million. Right now the Farm Debt Review Board is spending more of its resources on consultation than it is on arbitration. What you're suggesting here is this new Farm Debt Mediation Act, at $2.2 million, is going to be more costly than the current Farm Debt Review Board where they're providing the same service. In other words, the section 20 service of the Farm Debt Review Board is a better bang for your buck right now than the proposed new Farm Debt Mediation Act. The consultation service looks as if it's going to be more expensive than the section 16 component of the current Farm Debt Review Act. What you're putting in place will be more costly in both aspects, and I want to know what we're getting for that. I'm not so sure this is such a great deal. Besides, we don't have the details on the consultation part.
Have you asked the minister whether you could table your proposals for the farm consultation service? You said you can't do that without the minister's permission. Will he give you permission to do that?
Mr. Pickard: I'll turn the question over to my department officials. They have more detail on those precise programs and how the spending is going.
Ms Lois James (Manager, Adaptation Policy, Policy Branch, Agriculture and Agri-Food Canada): One important point to note is the program and the estimates that have been done are very much demand driven. If you look at the sheet you're referring to, you will notice the cost estimates have dropped from a high of $11.4 million down to $3.5 million over the five-year period and along with that the number of applications has dropped. There's a certain overhead cost for maintaining a person or a couple of people in each of our offices across Canada to administer and to be there on the spot when applications come in, but the rest of it is very demand driven. We pay the financial experts or consultants who go out on each case, and it's at a flat rate or for the number of days they are actually working on it. As well, we pay our Farm Debt Review Board members and panel members on a flat rate. On that basis, if there are no or very few cases, very few dollars are expended under the program.
Under the existing program, in 1995-96, if you have noticed, there's $3.5 million for the Farm Debt Review Board, with 1,145 applications. Our estimates under the new program and under the farm consultation service, where we have $1.8 million budgeted...that's budgeted on the basis of assisting somewhere in the range of 1,200 to 1,500 applicants. It would assist that many people with the farm consultation service.
Under the proposed Farm Debt Mediation Act, where $2.2 million is estimated - we say we can only estimate because it's demand driven, depending on the economy, the number of farmers who come forward, and the amount of assistance - again, what we were looking at there was very much in the same range as currently. In other words, where there were 1,145 applications in 1995-96, our estimates are done on basically the same number of applications under the new program, and we would be serving that for $2.2 million.
.0945
We're using roughly what has been occurring under the act, and there would also be the additional number of applicants who would be served under the farm consultation service - and that includes the pathfinding. There will be a lot of people who will, we presume, come forward looking for help. We'll say that the service is not available, that they are not insolvent or don't need the financial assistance, that maybe it's stress counselling that they need, or some legal advice or whatever, so we'll be referring them on. But again, that takes having the people in place to do that.
The Chairman: Do you have a question, Mr. Hermanson?
Mr. Hermanson: I just want a clarification. Are those 1,145 section 20 applications only, or are they sections 20 and 16?
Ms James: They are 16 and 20.
Mr. Hermanson: That's what I thought. That's why I said the new mediation service is far more costly then the Farm Debt Review Board, which was doing both mediation and consultation.
Ms James: But it was doing a more limited number as far as consultation goes. What we see is that under the new service's financial difficulty part or that aspect of it, there will be additional clients being served who currently aren't being served. And there is also the pathfinding aspect, in which we estimate there will be substantially more people.
The Chairman: Mr. Pickard, you didn't answer my question. Does the minister refuse to table those projections in the House?
Mr. Pickard: He has not refused.
Mr. Hermanson, I would say to you very clearly that the numbers the department is putting forth are for a service that is very much broader than the service that we presently have in place. As a result, it's very clear that this is a much more efficient system. There is no question about that.
If you compare the same number of people applying for and receiving service in the Farm Debt Review Board to the Farm Debt Mediation Act, the costs are very substantially lower. However, when you add the extra program that we're putting in place, we have a tremendously larger amount of applicants. As a result, that larger number of applicants is being served at a much earlier stage, resulting in something very positive for the farm community. You can look at it from whatever aspect you wish, but we're providing services through this new act - with the companion program of consultation service - to meet the needs of far more people in the rural community.
The Chairman: Mr. Easter.
Mr. Easter (Malpeque): Thank you, Mr. Chairman. I think, Mr. Chairman, that I'll be needing a second round before I start.
Just on this last area of questioning from Mr. Hermanson on the $2.2 million and $1.8 million, is this $250,000 in advertising annual?
Mr. Pickard: It is the figure that has been built into the estimates at this point in time. I'd go back to the officials to ask them if that would be a continuation for more than, I believe, a four-year period.
Ms James: We had seen that amount in there primarily for the first year because as we are all aware, when a program is first announced and is first up and running, it takes more publicity to make it known. There will be brochures, there will be all sorts of awareness campaigns that have been asked for.
We originally had a lower amount in there. It was through our consultations - particularly those with the CFA, but also those with some other farm organizations as well - that it was emphasized very strongly that if we're going to have a program, we have to make sure it's known and available so that people can come to it. I believe that when Ontario Farm Debt Review Board appeared here, they also brought up this same idea of promotion and awareness as one of the strong points. That's why we increased our estimate, but it would likely not require as much in future years.
Mr. Easter: And that would then free up some more money for use because, although it's sad to say, I really do have a feeling we may be in a low ebb now in terms of the use of these boards as cost recovery starts to sink in.
Jerry, in answer to another question from Mr. Hermanson, you basically left the impression that if we do run short of money here in terms of both the farm consultation service and the Farm Debt Mediation Act, there are other areas to draw money from, probably like adaptation funding. I guess I'm concerned about that.
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Yesterday, in response to a question, I asked the President of the Treasury Board about two concerns - and I'll tie two questions together here.
You're well aware of the concerns that I have in terms of the consultation service not being in the act. In fact I have amendments to put them in the act but I'm debating whether or not to withdraw them. One of my concerns is that there is enough leverage there to do what you want to do in terms of gaining financial settlements without the consultation service being in the act. Is there enough leverage to convince the banks to come up with the best deal possible?
Secondly, as it relates to the President of the Treasury Board, if at some point down the road there is a continuing program review - or whatever - and moneys are cut back, then we have another problem. In response to my question yesterday, the President of the Treasury Board said the department makes the impact analysis, and if it realizes that its user fees have effects that were not foreseen or are negative, then it - meaning the department - is free to change its policies. So what I'm saying is that if, at the moment and on the cost-recovery side - and I think we're finding that exporters of hogs to Mexico have almost been driven out of business by various multiple-impact fees in that area - the department decides to cut back in that area as a result of its analysis, it may take some funds from the consultation service. That's my worry. I mean, we know the juggling that goes on within the department.
Secondly, and related to the same point, you had said that the money would possibly come from within the department, from within the rural adaptation fund. My concern here is that if the overall government policies, and not those of the Department of Agriculture, are impacting an economy for the farmer that puts those of us in the rural areas in financial difficulty, then it's not just from Agriculture Canada that we have to draw those funds, it's from the government in general. Minister Massé said yesterday - and I quote:
- For specific initiative each minister is responsible for their impact analysis. The Treasury Board
then looks at the overall policies and if there is any consequence that appears to be improper it is
then changed and we amend the policy accordingly.
Mr. Pickard: Certainly, I totally agree with what you say. There is clearly an overall government responsibility to make certain that not only the mediation process goes on. If we look back at the figures that we've seen over the last five years, we've seen a horrendous difference in dollar numbers. As I commented, there's no question that this depends upon the economic conditions in the country at the time, whether it's a product sales point having problems, whether it's just high interest rates, or whether it's other factors. We know there are all kinds of factors that have strongly affected the farm community. Estimates are therefore made each year on what these programs will cost, and they take into account all of the factors that are predominantly visualized for that period of time.
What I was trying to assure you of is the fact that we may be looking at a scenario this year of $2.2 million in the mediation fund costs. That's not necessarily what the cost will be two years from today or further down the line, though, so we have to have vehicles by which we can guarantee support. This program is therefore placed under the adaptation funding accounts, and it is important that we make certain the funding for the Farm Debt Mediation Act is there.
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We know that on the consultation side of it - and this is the reason it has been introduced - it will resolve problems at a much earlier stage, it will be less costly, and it will be more supportive to the farm community, to all creditors involved, to the small creditors who are unsecured and who are often the biggest losers in this whole process. If we can resolve some of those concerns early, we can help the community with fewer of the mediation problems we're going to get into later.
Remember that the whole basis of the consultation service is to try to reach people without alerting creditors and without getting into negotiations with creditors by doing pathfinding that will help them and by looking at the economic side of it. So we're trying to build in an extension to what we have today and deal with that more at an early stage. I hope it will benefit us later, but all of the economic problems within the country are still going to come to bear on the number of cases we have coming forward, so we do need flexibility in the budgets year after year.
Mr. Easter: You lead right into my concern, Jerry. I still have a problem in terms of the compartmentalizing of government that we have in this place and the over-dominance of Treasury Board.
I do think, Mr. Chairman, that as an agricultural committee we have to find a way of getting at that, because Treasury Board bureaucrats, in my opinion, have no understanding of the impact our decisions can have on the long-term economic viability of the farm community.
With respect to your point about getting to people early and solving the problem, I look at it differently. It would be great if it were that simple, but I've worked on an endless number of farm financial cases. I'll tell you that in resolving a farm financial case, if it isn't done right the first time, you won't get a second time.
This brings me to my point on leverage. To say that you're not going to alert the creditors.... I can tell you that if a farmer is in financial difficulty and is not insolvent, they're behind 60 or 90 days a year on some accounts. They have unsecured creditors coming out their ying-yang.
You're going to have to go to those creditors. You're going to have to alert them. You're going to have to ask for 50¢ on the dollar in terms of payment. You may have to sell off some equipment, some cattle, or some land in order to achieve a settlement. If you don't have some kind of leverage to get that down to 50¢ on the dollar or thereabouts, depending on the situation....
Put yourself in the farmer's position. You know you need, in order to get a settlement and in order to survive, 50¢ on the dollar, let's say, in terms of your liability situation. But the creditors are coming back at you and saying the best they can do is 70¢. You're fearful that you're going to lose your operation. I'll tell you that pride plays a big part in this. Pride is half the battle.
So you sit there and you say you've got no more leverage. You'll have to accept the 70¢ on the dollar, and maybe by some miracle you'll survive. I'll tell you that I've been through enough of them that unless you get the 50¢ on the dollar, the miracle ain't a-coming. That's where the difficulty lies in terms of whether this farm consultation service can give you the settlement you require to keep you in business. If you went to the creditors and made arrangements and it doesn't work out, when you come back the second time, as some of the witnesses here said, it all comes down to trust and confidence that you can do it. If you blew it the first time around in terms of the arrangement, that trust and confidence is going to be almost impossible to re-establish. That's my fear.
Mr. Pickard: I can certainly accept very much what you say. I don't have an argument with what you say. I'm just going to make a very brief comment, then I'm going to go back to the officials on this.
.1000
The whole purpose of the consultation process is not to try to negotiate with creditors or to try to set up structural agreements with creditors. It is at an earlier stage than the stage you're discussing. We expect the consultation service would happen before the creditors are banging the doors down and the farmer has to cut deals with the creditors. The consultant is not there to do that part of the bargaining. That comes to the mediation process. Once the person is really hard-pressed by all the creditors who are demanding payments, there's another process. It would be the same process we have in the Farm Debt Review Board, only it would be a mediation process.
I'll turn it back to the officials to continue with that.
Ms James: Just to clarify a little more, where we talk about insolvent farmers in the act as it's currently laid out.... Maybe the important key is to look at the definition of ``insolvent farmers''. I think the individuals you're talking about would apply under the Farm Debt Mediation Act. If they didn't apply, they would be directed to do so, because that's where they could best be assisted.
The definition of insolvency is in section 6 of the act. Under that part, there are three criteria listed as far as who is eligible. The first are those individuals who are unable to meet their obligations as they generally become due. You were commenting that people are 30, 60, or 90 days behind, and the unsecured creditors are maybe having to accept 50¢ on the dollar.
Any farmer who is, according to this definition, not able to meet his obligations as they are coming due would certainly be eligible under the Farm Debt Mediation Act. Under that act, he have full access to the financial review, the experts who are there, and the mediation process, and he can bring the creditors to the table.
It's in accordance with paragraph 5(1)(b) of the act that the farmer is not asking for a stay of proceedings. In other words, creditors haven't come forward yet to actually issue a notice of intent and the farmer is saying he is having a problem with a couple of the secured creditors, whether a bank, FCC, or whatever, and he'd like to have the facility of the mediation process to meet one on one with those few secured creditors and not bring in all the unsecured creditors, which could be the local feed dealer, the fertilizer dealer, or whoever. In other words, he doesn't want to alert the trade accounts that there is a problem. But if he sees that there is a greater problem and he does want to bring everybody around the table, particularly for the benefit of the stay of proceedings, he would then apply under paragraph 5(1)(a).
I think if we look at those definitions about ceasing to pay or the evaluation of their assets - the liabilities are greater than the value of the assets or they're not meeting their obligations as they can - those sorts of people really would be assisting them, and that's what's intended.
Mr. Easter: I'll have a couple of more specific questions later.
The Chairman: Mr. Chrétien.
[Translation]
Mr. Chrétien: The way Mr. Pomerleau defines "farmer" implies the exclusion of hobby farmers, an expression that you yourself have used. I know some of these farmers and could name some such as Bobby Hull, the former hockey star, who has a large beef cattle operation.
[English]
The Chairman: That's in my riding, actually. Bobby Hull is my constituent.
Go ahead.
[Translation]
Mr. Chrétien: I think that he now spends a lot more time on his farm. I also know, in the Rimouski area, the owner of a pizzeria who has also started up a beef cattle operation and who only gets to his farm in Sundays.
That being said, however, should we not set a minimum sales figure, otherwise the notion remains very subjective? We say that such a such a person is engaged in farming for commercial purposes. Well, who operates a farming business without, sometime or other, selling what he raises, whether it is cattle or some other agricultural product?
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I would like to remind you that in Quebec, to be considered a farmer, you formerly had to sell at least $3,000 worth of farm produce. That was much too low and so the figure was raised to $10,000. The Quebec government doesn't consider you a farmer unless you can prove that you sold over $10,000 worth of produce. Someone who sells $9,600 worth will not, in Quebec, be able to claim a farmer's benefits. You might say, Mr. Pickard, as I do, that he has had sales and that he has operated his farm for commercial purposes, but, according to our definition, since he has not sold a minimum of $10,000 worth of produce, he doesn't qualify. I think that the notion of "commercial purposes" is a very subjective one since we don't know where it ends or where it begins.
My second question does not concern the present bill as such, but, rather, the notes that we received from the department on more general questions regarding Bill C-38. With respect to mediators, we are talking here of training people who are not quite yet competent to perform the work of a mediator, but we have also broached the idea of drawing up lists of mediators based on a market-type situation. I wonder about this idea of a market situation. Might there be two or three different rates of remuneration for a mediator, though all would do more or less the same work?
In a given area, where there were several mediators based on supply and demand, we could pay our mediators less than in another region where there would only be one. In some cases there would be no mediator at all and we would have to go get one whose name was on an official list but who would not really be commissioned as such. Thus, the mediator might be a lawyer or a accountant who would do freelance work for the department.
Would Mr. Pickard or his colleagues tell us how we will distinguish a farmer who is engaged in farming for commercial purposes, and also tell us something about how the mediators will be named and what we mean by a competitive market in that regard.
[English]
Mr. Pickard: Thank you very much for your question, Mr. Chrétien. I very much appreciate that. It is an area that has to be dealt with.
When we were defining the term ``farmer'' and trying to clarify that, the term that I left you with, ``hobby farmer'', refers to someone who is on a farm but has no intention of making a commercial profit from that farm.
You may also find that there are those who are landowners but have never farmed for any commercial purpose. There have been cases in our experience where people who have owned land and not had a commercial benefit applied under the act have been able to go forward with that application under the act. That, we felt, was unfair to the farm community as such. If a person is not using that farm for commercial purposes, we don't feel that person is entitled to apply under this provision.
As for the second part of that, when we talk about the Bobby Hulls who may have operations that do have a profitable nature to them, they would be eligible. We find that maybe there aren't as many Bobby Hulls as we're talking about, but that there are many farmers who may work in a factory or off the farm or whose spouse works off the farm. And they have incomes that are much higher than the income they derive from the farm. So when someone tries to analyse where their primary income is and finds that it's off the farm, we don't want to exclude them. They may very well be people who are critical within our structure, and we want to make sure they have protection under the act.
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That is why the definition has been structured the way it has. We're pretty well eliminating those people who are just owners who have no commercial venture there from applying under the act, as well those people who have no commercial farming experience even though they have the farm. Yet we want everyone else who has a commercial venture to be able to apply under the act when it is necessary.
The second point that you raised - and I'll let the officials go on with further explanations of this if they feel it's necessary - was about the mediators. The easiest way might be to contract mediators under a process and have them go ahead and do the mediation, but as you and I both know when we look at people carrying out responsibilities, some are very good at the mediation process. They do an excellent job. They are people who everyone has a great deal of trust in.
The structure we have tried to set up here is to have a large number of mediators within each provincial jurisdiction. As a result, if we had five or ten mediators within a province.... The number of mediators isn't necessarily how payments are derived. Mediators will be paid only when they work on a mediation case. They're in reserve and approved up until that time.
If a mediator does not do a good job, the administrator will no longer appoint that mediator to do further mediations. That would be futile. And there would be some concern within the farm community.
Those people who we would have on reserve lists, the people who would be working, are the people who would be good at the mediation job and who would do that job very well. We will have extra back-up. That's why we have longer lists. The purpose is to make certain that good mediators, people with the skills, are the people who are going to be doing the job, and leave it open to that....
Maybe I could get further explanation from the department on either of those points.
Ms James: If I could, I will respond first to your comment about the definition of a farmer. I agree. It's always a difficult definition to look at. I know that under various acts, both federal and provincial, a lot of government have struggled with what the definition should be. In the Farm Debt Review Act, it's a very broad definition. There's really no restriction at all. Really, it defines a farmer as anyone who's engaged in farming. And farming covers virtually everything, even woodlots - maple syrup, tobacco, raising of crops and livestock, that sort of thing. It's currently a very broad definition. There are no restrictions.
The request to narrow it down has come from the experience in dealing with it, particularly in those areas closer to urban centres. I guess sometimes we have what some have referred to as ``some of the Bay Street farmers''. In Ontario in particular, our farm debt review boards found that there were a number of individuals who found that they could utilize the act to let's say prevent a creditor moving in quickly on their other assets as well. So the intent was to somewhat narrow it....
Yes?
The Chairman: Mr. Chrétien.
[Translation]
Mr. Chrétien: Please excuse me, but I must go back to the House. I ask you to continue without me. My colleague, Mr. Landry, will stay to listen to your answer. I do not wish to appear impolite. I asked you a question and yet I'm leaving before receiving your answer. You can be sure I will be reading the reports. Thank you.
[English]
Ms James: Thank you. I understand.
Under the act, we tried to look for some sort of a definition that would narrow it down. Monsieur Pomerleau was suggesting one under the Bankruptcy and Insolvency Act that refers to individuals whose principal occupation and means of livelihood is farming. We and our legal counsel at the time also looked at that definition as well as others close to that.
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Where we saw the problems with restricting it to that sort of definition was that quite often the individuals who are in financial difficulty did not arrive in that situation suddenly. It was an accumulation over a number of years. As a result, with a narrow definition they could in effect be eliminated because of their financial situation. People are very resourceful. They may have found other income: employment income, off-farm income, or whatever it might be. If you look at that sort of definition, they would be eliminated by virtue of the fact that over the last number of years they have been forced to go out and find employment, but in effect their farm operation is in financial difficulty and the reason they're no longer, under a very strict definition, primarily engaged in farming is the insolvency situation of their farm...and the means of providing a livelihood for themselves and their family.
That's really the definition. That's why we wanted to restrict those who could potentially misuse the intent of the bill yet not restrict it from those individuals who you might say in a strict sense are not principally occupied in farming because the income isn't there to allow them to do so.
The Chairman: Mr. Landry, any comments?
Mr. Landry (Lotbinière): No.
The Chairman: Before I go to Mr. Hoeppner, I'd like to follow up on that.
Mr. Pickard: Mr. Chairman, if I could be excused, I have to go to the House.
The Chairman: Okay. Thank you, Jerry.
I will just follow up on that. I must say I have some concern too, and I don't know how we clarify this, because no argument, or no debate, has gone on any longer than who is a farmer, and for a lot of reasons. In the past I've seen some definitions that somebody might be classified as a farmer if they had $5,000 or $6,000 in sales, etc., which doesn't give you much expectation of anything.
I must say to you as officials I have a concern that the definition stating ``engaged in farming for commercial purposes'' is maybe casting a broader net than what I understand is.... And I know this is a concern of the Canadian Bankers Association; and once it's translated, that letter will be circulated to everybody. I'm not speaking on their behalf, but I'm using those same words.
I believe In the present Income Tax Act a farmer is under the definition of ``reasonable expectation of profit''. I guess my question is what's the definition of ``commercial purposes''? I'm sure a hobby farmer - whatever a hobby farmer is - usually is going to do something for commercial purposes. It may be a handful of pure-bred cattle or a stable full of horses or whatever the case and they will be selling some, I would assume, at different times. Does that put them in a category of ``commercial purposes''?
I could even take the other side of the same argument in the same discussion. I would think the administrators should weed some of this stuff out. If a person comes to an administrator and it's apparent they want to cut a deal so they have to pay the marina only 50¢ on the dollar for the purchase they might have made there and have tied up at the dock somewhere, the administrator may very well say, well, it's questionable whether we should put you here. But if that's the case, where does it put that individual if they say, well, I have pure-bred Hereford cattle and I sell some of them and I do that for commercial reasons, therefore I feel I should be able to come under this act?
Ms James: As you have outlined well, there are a lot of difficulties with the definition. If we look at the bill and the intent of the bill, which is really to provide a mediation service, to allow that to occur, a stay-put is in place. If you look at what the benefits of the bill really are for the sorts of individuals we're talking about, those who may not truly be farmers, it appeared the major problem with the current act and the current definition was those individuals who really wanted to take advantage of the stay. From a creditor's point of view, that was really why they were using, or trying to use, this act: for their other purposes, and usually their other business. Really, they only happened to own some property in the country where they had a garden on weekends or they owned some property that maybe they just leased out, but they were not what you would call engaged in farming and commercial activities.
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That's what the real intent is. When you look at abuse, it's not like some other programs, where dollars are attached, which people are getting. The dollars attached under this one would be only as a result of the mediation process. So what they were looking for was somewhat of a narrower definition than in the current act, to allow, as you say, the administrators to weed out some of the geniuses out there who have been able to use this act for what was not intended for.
The Chairman: I think of a situation where I know an individual who has four or five acres of apple orchard. It's a high-value crop. The individual also teaches school, or has taught school. I guess it would be a decision that somebody would have to make: are they involved in agriculture for commercial purposes? I would certainly say they are. If they had three or four trees, no, but it's an operation sizeable enough that I think they may very well be able to put up an argument. Others might say the individual has been teaching school all their life and their primary occupation is school teaching, their secondary occupation is agriculture.
Do they fit under the umbrella of this bill? I guess that's where administrators are going to have to make a decision. It's not an easy one. It's one that might be disputed. There are opportunities, I guess, for that argument.
Diane.
Ms Diane Fillmore (Counsel, Legal Services, Agriculture and Agri-Food Canada): All I wanted to add was that I think there are two safeguards in the bill. First of all, the stay can be terminated if a majority of the creditors don't become involved in the mediation. In that case, if the creditors feel the person isn't a farmer and these aren't bona fide things under the proposed act, presumably they wouldn't cooperate with the mediation and the stay would be terminated. The other thing is that there is the appeal board, which either a farmer or a creditor can go to, to question the determination of whether the person is a farmer. Those sorts of safeguards are built in.
If you try to be too precise in your definition of farmer you are perhaps going to eliminate people you don't want to eliminate. By having those other things you can allow flexibility in who can come, but the process will probably work only for those who are bona fide.
The Chairman: I have just one final comment. You've clarified the appeal...and probably I didn't read it that way. An individual can not only appeal the results of the process, if they had been involved in the process - let's say the results of the mediation - but they can also appeal whether they were allowed into the process at the beginning or not. With that individual I referred to with the apple orchard, if the administrator said no, I don't consider that you're a farmer, or enough of a farmer - let me put it that way - therefore we don't think we need to deal with you, can that individual go to the appeal board and say yes, I think I am and I do come under the umbrella?
Ms Fillmore: That is one of the two things the appeal board does deal with. It deals with the extension or termination of a stay and the eligibility of a farmer to make an application.
Ms James: I could add another point of clarification. The one thing the appeal board does not deal with is the result of the mediation. In other words, if either party is dissatisfied with what has come out of the mediation process, that's not within their parameters on the appeal.
The Chairman: But if we could go.... And here I'm prolonging it. Jake, please bear with me, but I think we need to clear it up.
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If we look at subclause 15.(2), under ``Appeals'', it says:
- (15)(2) A farmer or a creditor may, in accordance with the regulations, appeal to an Appeal
Board a decision of an administrator relating to
- which is the stay.
But can they appeal paragraph 5(1)(b), which, in the situation I'm referring to, would probably be five acres of orchard and a teaching profession? The person would likely request paragraph 5(1)(b) first. And if the administrator said that you didn't qualify under paragraph 5(1)(b) - the first approach, I would think, is to the administrator - that can't be appealed. So if the administrator says no, I don't think you're enough of a farmer, bye-bye -
Ms Fillmore: Then their option is to apply under paragraph 5(1)(a). If the administrator continues to say no, they can appeal.
The Chairman: Okay. Jake.
Mr. Hoeppner (Lisgar - Marquette): Thank you, Mr. Chairman. I'd like to get back to this hobby farmer issue.
I know that in Manitoba they changed the rules somewhat in hobby farming. You can only write off a $5,000 loss against your hobby farm.
Is anybody really hobby farming? The majority of people I know on the small acreages are farming to make their livelihood or to improve their livelihood because taxation is too high in the cities or because their jobs aren't paying enough. Now how will you treat these people? They are classified under the Income Tax Act as hobby farmers.
Ms James: In that situation, where they were actually raising some sort of agricultural product - be it livestock or crops - and selling it and generating some sort of income from it, they would be eligible.
Mr. Hoeppner: Would that coordinate with the definition of hobby farmer in the Income Tax Act?
Ms James: No, it doesn't, and -
Mr. Hoeppner: Because that's a big problem.
Ms James: Again, if we look at the intent of the act and the benefits perceived, we would have to conclude that if they were hobby farmers who were losing their farm or who had the potential of losing their farm to creditors because they were unable to pay their debts, presumably these individuals would also have other income - and maybe even substantial other income - from off-farm sources.
I guess you would look at what benefits they would derive from this and would they indeed.... Not very many hobby farmers ever end up in that situation where they're losing their farm - or you might want to call it their acreage - that they're living on when in effect they have substantial other income.
Particularly in areas close to the urban centres where we've seen the problem with the act, the people who were trying to use it in those circumstances were really trying to prevent some sort of action occurring on their other investments. It wasn't really the farm that was being foreclosed on, per se. It was really some other sort of investment property that they were having a problem with. Or maybe it's the same creditor who happens to hold the farm as security on other things. It was in some of those situations that we saw the real problems. That's what we were trying to eliminate.
Mr. Hoeppner: Thank you. The act now says that ``Minister'' means ``Minister of Agriculture and Agri-food''. Other bills come before us now that say ``Minister specified by Order in Council''. Aren't we putting this bill through with conflicts here, or is this a way of throwing the baby out with the bath water if we don't have an agriculture minister any more?
Ms Fillmore: I would have to look at it, but I think that's provided for in either the Interpretation Act or the transfers of duty. If the department is eliminated or if it's transfers of duty, there are provisions in legislation to deal with those situations. It wouldn't leave a void and make the act just -
Mr. Hoeppner: I want to make very sure that it's protected in there. That could be a real problem if we should run into a downturn in the economy. It would be a way for the government to just offload this.
Ms Fillmore: No. As I say, I would have to find the particular provisions, but I know there are provisions for those kinds of things when departments are reorganized and....
Mr. Hoeppner: Very good. There's another question I want to get into. I have the stats here that were given to us by the clerk of the committee and I'm really astounded.
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I was looking at the 10-year average just for Manitoba and all the totals. I see now that in Manitoba the foreclosures or the people coming before the Farm Debt Review Board have come down by about 75% from 1991 to 1996. If you look at the first page, you see there were 25,034 in total in Manitoba. You flip the page and you see 678 in Manitoba, right at the top. That is the best average decrease of these people.
The Chairman: Just as a point of clarification, Jake, you said 25,000.
Mr. Hoeppner: I meant 2,500.
The Chairman: It's 2,500. I just want it to go on the record right.
Mr. Hoeppner: Yes.
The Chairman: I didn't think farming was so tough in Manitoba that you had 25,000.
Mr. Hoeppner: Well, I'm worried that it can get that tough.
The Chairman: It was 2,500 down to 600. Okay.
Mr. Hoeppner: Yes. What I'm saying here is that I know we had the GRIP program since 1991. This was very beneficial to farmers, and farmers appreciated it, but that has been done away with. With a downturn in grain prices now, do you feel that the averages for the last five years will stay where they are? To me it seems almost impossible. I know what the farm scene is today as far as the net profits are concerned compared to the last five years.
Ms James: That's not a particularly easy one to answer. I guess if we all knew what the prices were going to be, as well as the weather, over the next period of time, we'd better be able to estimate. But as far as the number of applicants that will be coming before the board is concerned, we have based our projections for next year on this year and last year.
That's why I think when Mr. Pickard was responding he had mentioned that this is funded out of the Canadian adaptation and rural development fund. Should demand go up as a result of the farm economy, it's a large fund, and there is the possibility under that fund to ship resources from one initiative to another, depending on where the demand is. That's why we've built it that way, and there is flexibility there if demand does increase.
Mr. Hoeppner: What type of leverage does the Farm Debt Review Board have to increase the fund? I could see quite a hassle developing if you need let's say $7 million instead of $3.5 million. In 1991 it was still $11 million, so there is a tremendous potential for an increased need. If the Farm Debt Review Board panel has to fight like hell, as you say, to get an extra $1 million, does it have a lever to withdraw those funds?
Ms James: Our estimates are done based on their projections. We go to our Farm Debt Review Board people right across the country and ask for the projections as far as they see what the applications are. We also do monitoring on an ongoing basis and watch the flow. I know last spring, I guess, the number of applications had been edging up somewhat, so we were keeping a close eye on that to see what the level was so we would be able to adjust budgets as need be.
The other thing we've found, too, in agriculture - and I think the numbers would show it, if you look at it - is that it's not even across the country. In one area you'll see financial difficulty, whereas in another area it subsides. I guess some of that goes with the cattle and grain prices. Quite often when cattle prices are down, grain prices are up, as we are experiencing right now, and vice versa, or at least the profit levels are, because the livestock and grain sectors are so interdependent.
Also, agriculture is very diverse and different from one part of the country to the other. We have found generally, in the mid-1980s, when the problems were the worst.... They were indeed in Ontario, in Quebec, somewhat in Manitoba, and in eastern Canada, and it then sort of spread west, as you're well aware. In Saskatchewan they peaked in 1991, whereas the stats will show you that eastern Canada had subsided greatly. Budgets are adjusted from area to area to meet whatever the demand is under the act.
Mr. Hoeppner: I have one last question, Mr. Chairman.
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We have the gentleman from Quebec here - the lawyer - who made a very good presentation, I thought. We also have the debt review panel, or the president or manager from Saskatchewan, who gave us very good input on how they had reduced costs. How much effect do they have on the departments? Do they take some of their advice? I know we have made suggestions as a standing committee that were totally ignored by the department, especially when it came to the backtracking. I still can't quite forget that. How much do you take into account of those types of presentations?
Ms James: All I can say is, a great deal. We value their input and their judgment. They're the people who are out there, actually working with all the difficult financial situations. They're the people who best know what the demands are, what the needs are, and that's who we rely on. They're our bread and butter, I guess you'd say, just as they are for a lot of farmers, in helping them out there. They're listened to, and listened to very closely.
Mr. Hoeppner: I hope you imprint those comments on the minister - that he doesn't forget that, because I think it's very important.
Thank you very much, Mr. Chairman.
The Chairman: Mr. Hoeppner, just a point of clarification regarding the figures you used of 2,500 for Manitoba and 600 from those charts. The 2,500 was a total for ten years, and the total for the last five years was 600, so it wasn't on an annual basis. The next sheets, which give the totals for 1987, 1988, etc., do show a real decline.
But I will agree, it shows that in Manitoba there has been a decline, and although I haven't checked all the provinces, I think there has been a decline in all of them.
Mr. Hoeppner: I was just looking at them in comparison to the other two provinces.
We had a very good GRIP program in Manitoba; it worked very well. It didn't work as well in Saskatchewan and Alberta, and I think that is probably the reason you had fewer claimants in Manitoba. Now it's gone. I'm just warning you, Manitoba can increase, and I'm sure people will demand your services.
The Chairman: Okay. Mrs. Ur.
Mrs. Ur (Lambton - Middlesex): Thank you, Mr. Chairman.
My question ties in closely with much of what's been discussed here this morning as to the costing. This major overhaul of the FDR is supposed to be cost-efficient, effective, streamlined, simplified - all those words have been used in various presentations we've had. But I think the only thing I see in the Farm Debt Mediation Act that is different and that may be a new offer to the farmers is the pathfinding. In the brochure from the Farm Debt Review Board, in section 16 they have a really good graph: ``section 16 application - no mediation requested'' and ``section 16 application - mediation requested.''
All this seems to fall into section 16: the financial review, the panel review and the mediation - they have all of that in section 16. So what bang are we getting for our buck with this farm consultation service, compared to this section 16?
When Mr. Pomerleau spoke to us the other day, he felt the same thing - that there seemed to be a better offer to our farmers under section 16 than what was coming forth under the farm consultation.
I keep going over these, and trying to find something positive. The information given to Mr. Vanclief from the minister.... It was perceived by the provinces that section 16 was an infringement on their mandate, that this has been the major change for the department, to go with the consultation and take section 16 out. Was there a real challenge from the provinces, that they felt they were being infringed upon by the federal government?
Ms James: If I could back up a bit, when we were doing the consultations across Canada, and we had them right across and went province to province, all creditors, farmers, Farm Debt Review Board panel members, some of our financial consultants, and people who had been before the process participated. We had a wide range of people at the meetings.
When we were doing those consultations, the question of section 16 and the need for it - at least in its current form - came up. What they found was a number of people were applying for that, when what they were really needing was some of the financial advisory counselling assistance that was available. They really didn't need a formal process with a panel and mediation with their creditors. In other words, they were very early on in their financial difficulties. They were certainly not what you would call insolvent. They were still paying their bills, but they had seen that there might be a problem and they should take some action.
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In looking at the service and in looking at what was available - and I guess it came too from the creditors - what's really needed is something for the insolvent farmers. It's the insolvent position that really needs the mediation aspect. They need to be brought around the table with creditors, and that process was thought to be extremely strong and worth while. So that is why the decision was made to split that out of the act.
In talking with the provinces - and a lot of the provincial governments are also lenders in their own right and have their own lending programs, so they come under this act as well - they all have some sort of farm management program. Some provinces' programs are a lot more in-depth and detailed than those of others and do provide some of this financial type of advice and assistance in some places. By some it can be seen as a provincial responsibility - extension types of activities.
There's been that question about how much of the extension type of activity have provincial governments normally been providing, although under the Canadian farm business management program we do fund a lot of their activities as well, and how much of it has the federal government been providing. That's why the decision was made to split, so that we could provide a program that not only would be a review mediation for people who are in financial difficulty, but would give them the consultation service and, more importantly, the pathfinding to help them find the service they really need, which might not be mediation at all or might not even necessarily be the financial counselling. It might be something else.
Mrs. Ur: I can say, being a constituency assistant for seven years prior to coming to Ottawa, that dividing between the provinces and the federal government on any issue.... When people come to you on a certain issue and you say that it's provincial or that they have to deal with you on this part and then go on to the next body.... I'm not sure whether that's going to be a good working relationship for the people who are coming forth with the problems.
If you're at a particular stage, you should be speaking to someone in the provincial government. If your situation is a little worse, you should go see the feds. I don't know whether that's going to be a good working relationship or whether it's going to be a positive sell. I really don't know.
Ms James: We would hope that it would provide more than just federal and provincial.... In other words, we're people and we do have a lot of cases in which people need some sort of legal advice.
Maybe it's a family situation that has led to some of the difficulties around the farm. Other times it's stress counselling and those sorts of things. Helping them and directing them in the right way can sometimes resolve some of the other difficulties that are being masked as financial problems.
Mrs. Ur: When I spoke with the minister, he said that he is open for discussion should this not be workable, but how far down the road into something that is not workable do we have to get before he'll address it? Is there a kind of flag?
Ms James: We would hope that we get your ongoing input, as well as the input of all of those involved, and that we don't wait until, as you say, the situation is beyond repair or is more difficult and time-consuming to repair. I'm speaking on behalf of the department, and I think the others would likely agree that we do appreciate the feedback, because this is the sort of feedback we need early on.
The Chairman: Mr. Easter.
Mr. Easter: This question really needs to go to the parliamentary secretary, so I'll just put you on alert and you can refer him to it.
In the letter from the minister, as you're well aware.... Some of us have a concern about the farm consultation service's not having legislative authority. Just for the record, I believe Mr. Wilkinson, president of CFA, has somewhat the same concern. When I raised the point that the farm consultation service needs some legislative authority so that the federal government has an absolute obligation to ensure that there will be processes, resources, personnel, and pressure from the department to continue this service, Mr. Mr. Wilkinson said that was a fair comment, so I expect he's on side in terms of believing that we need the legislative authority.
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Sometimes the minister writes letters in such a way that they need to be interpreted. I'll not ask legal counsel to interpret the paragraph in the minister's letter, but could you notify the parliamentary secretary that I want an interpretation of the second-last paragraph of the minister's letter in terms of what he really unequivocally means? You can almost drive a truck through that paragraph. You can notify the parliamentary secretary about that.
As for the appeal boards - and this question is to legal counsel - you have already mentioned that they're only used in terms of the stay and the eligibility of the individual to apply. In fact, one of the shortcomings of the previous act was that there's not.... In terms of the tough cases, the creditor - or the banks in many cases - can just wait out the stay of the proceedings and you're gone. There's no binding arbitration. It was my hope that the appeal would act like a binding arbitration. In fact, it doesn't do that.
In terms of legal counsel looking at the previous act versus this act, do we have as much power in terms of protecting the farmers' interests under this act as we did under the previous act? Or do we have more? Do we have less? Do we have the same? Some of the witnesses before us have said that the only real leverage you have in terms of forcing the creditors to come to agreement is the stay. In fact, I know from experience that the more money you owe, the more useful the stay is, especially if interest rates are high. It's costing them money and they're better off to come to a settlement. Can you answer that for me, Diane?
Ms Fillmore: I must say that I haven't done a lot of work under the old act. I've picked this up from a colleague who's left. Under the old one, the most they got was perhaps the full initial stay. If things weren't progressing and if there wasn't a reason for the extension of the stay, as I understand it, the stay wouldn't have been extended. So in this case the only difference is that if it's clear that mediation.... The purpose of this act is to encourage mediation. And the old act didn't enforce an arrangement between creditors and the farmer either.
I think this act is a bit more realistic: if it's clear that mediation isn't going to work, there's no reason to keep the stay in place. The stay, even under the old act, was to encourage the farmer and the creditor to come together to work out an arrangement between them voluntarily. There was no compulsion on either side. At least in this case the appeal boards do provide for someone who has been refused access to the act or for creditors who feel that somebody who doesn't qualify has been given access. It has given them a right to appeal that.
Also on the stay, I have been involved in a couple of situations where farmers were complaining that their stay wasn't extended. They now have a right to appeal that. So in this case, I think they really have more rights.
Mr. Easter: But the stays in this case are only 30 days at a time, not 120 as -
Ms Fillmore: They were never 120 days under the old act either. They were extensions. I think the timeframes are the same, but the extensions were totally at the determination of the farm debt review boards. There was no right of appeal if they weren't granted.
Mr. Easter: I think it would depend on the board in the area.
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Finally, does subclause 28(1) mean that there's an absolute review of the act in three years, that it'll be brought before a standing committee and reviewed?
Ms Fillmore: It reads ``shall undertake a review'', so it is a compulsory review.
Mr. Easter: And given the fact that one of the difficulties I'm having here is the farm consultation service, will subclause 28(1) include the farm consultation service or not?
Ms Fillmore: Automatically? I don't -
Mr. Easter: Therein lies the problem. It wouldn't automatically.
Ms Fillmore: Not from what's in subclause 28(1).
Mr. Easter: Okay.
Thank you, Mr. Chairman.
The Chairman: If there's nothing further, I thank the ladies for being with us this morning. I think we've moved along in addressing some of the concerns.
It will be a number of days before we get back to this bill, because we have slated all three committee meetings next week for Bill C-60. We won't get back to this until the week after the break. I will await the direction of committee members to see if they wish to.... My guess is that we will likely go into clause-by-clause at that time. We will handle any further discussions or questions of clarification when we do clause-by-clause.
Thank you very much, Lois, Diane and Julie, for being with us this morning.
The meeting is adjourned.