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EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, April 15, 1997

.0912

[English]

The Chairman: (Mr. Lyle Vanclief (Prince Edward - Hastings, Lib.)): Good morning, everyone. We'll call the meeting to order.

Ladies and gentlemen, as I recall, we had stood clause 4. We were then in the midst of a discussion on an amendment that appears on page 22 of the committee clerk's package. It was moved by Ms Ur that proposed subsection 4(2) of Bill C-72 be amended by replacing line 18 on page 7 with the following:

Are there any further comments on that amendment? Mr. Chrétien.

[Translation]

Mr. Jean-Guy Chrétien (Frontenac, B.Q.): Mr. Chairman, I will ask you to give me a few seconds to find the amendments.

[English]

The Chairman: Clause 4 is on page 7, about one-third of the way down, Mr. Chrétien. This amendment amends the proposed subsection to read:

[Translation]

Mr. Jean-Guy Chrétien: If I may, I will put my question directly to Ms Ur since she is the one who moved that motion.

Since the Canadian Wheat Board is not legally and truly a Crown corporation, I would like to know in what way it differs from a true Crown corporation.

.0915

[English]

The Chairman: Go ahead, Ms Ur.

Ms Rose-Marie Ur (Lambton - Middlesex, Lib.): Through you, Mr. Chair, I think the difference is the new position of the board being elected. Because people are being elected to the board, it no longer has a crown affiliation. Therefore, it would not be prudent to carry on in that fashion. Because it's an elected board, the obligation of the government would not be there, which presently isn't the case. That changes the status of the board from that of a crown corporation, where they're appointed through Governor in Council. If we go to an elected board, then the jurisdiction isn't there for the government. Do you understand the difference?

[Translation]

Mr. Jean-Guy Chrétien: Yes.

[English]

The Chairman: Mr. Easter, did you wish to comment as well?

Mr. Wayne Easter (Malpeque, Lib.): Yes. The fact of the matter is, Mr. Chairman, that even without this amendment, once one single member is elected, the Canadian Wheat Board will really, in effect, not be a crown corporation. The idea of the amendment is to try to cut through the confusion out there and make it absolutely clear it is in fact not a crown corporation. Let's cut through the smoke and mirrors.

The Chairman: Mr. Hoeppner had a comment, and then Mr. Benoit.

Mr. Jake E. Hoeppner (Lisgar - Marquette, Ref.): Mr. Chairman, if it's not a crown corporation and it is not administered under the Financial Administration Act, what does that do to protect the interests of the elected members as far as litigation against them is concerned?

The Chairman: That's refers to another area and not exactly to this amendment, but it may pertain a little bit. Do Mr. Migie or Mr. Byer wish to comment?

Mr. Howard Migie (Director General, Adaptation and Grain Policy Directorate, Policy Branch, Department of Agriculture and Agri-Food): You will recall that at the last meetingMr. Hermanson asked that we be able to go back to the part of clause 3 that dealt with the issue of indemnification, and that's where that issue is to be dealt with. At some point the committee would go back to the part of clause 3 that dealt with indemnification of directors. The answer is that the Wheat Board Act as amended would in fact cover the issue of indemnification of directors in the future.

Mr. Jake E. Hoeppner: I think it's very important we are clear on what the indemnification procedure is going to be if there is mismanagement or illegalities. It's not under the Financial Administration Act.

The Chairman: Mr. Benoit.

Mr. Leon E. Benoit (Vegreville, Ref.): Thank you, Mr. Chairman.

I have some questions about this clause of Bill C-72 and how it will change the status of the Wheat Board as a state trading agency under the trade agreements. Certainly one of the arguments I've heard from Mr. Easter and many others in favour of the board is that as a state trading agency it has a certain status in trading with some countries. I don't think that's valid any more, but it may have been at one time. In terms of the trade agreements and so on, now that the Wheat Board is no longer a crown corporation, just how does that affect its status?

The Chairman: Mr. Migie.

Mr. Migie: The issue of whether or not the Wheat Board activities would be covered as state trading is independent of the question of whether it's a crown corporation or a mixed enterprise. We have checked this with Mr. Gifford, and the issue is that if you continue to have a monopoly on exports that government is providing in law, then it would be covered by the state trading provisions of those agreements. It wouldn't matter whether the entity was a crown corporation or a mixed enterprise. It's equally covered in terms of international law as long as the provisions of the legislation provide for single-desk selling or monopoly exports.

Mr. Leon E. Benoit: So the issue is that it's a government-imposed monopoly.

.0920

Mr. Migie: The issue is not whether or not it's a crown corporation under the Financial Administration Act. The issue is whether Parliament has given powers related to controlling exports that would lead it to be treated as state trading.

Mr. Leon E. Benoit: As a mixed enterprise rather than a crown corporation, will the Wheat Board have the same government rate in terms of the consolidated revenue fund and so on? Or will it be like the Export Development Corporation, where it has to borrow from international markets at a higher rate?

Mr. Migie: That is something dealt with very soon in the bill. It is the first part of the clause, which isn't subject to the amendment here although it's part of the clause.

If the Wheat Board is no longer an agent of Her Majesty, this legislation would provide a substitute. The Minister of Finance would provide what's considered to be an equivalent guarantee so the Canadian Wheat Board would be in the marketplace knowing it has the guarantee of the Minister of Finance. This is dealt with later in the bill.

Mr. Leon E. Benoit: Is this equivalent guarantee - I just don't remember this - spelled out clearly, or is this left for regulations to determine?

Mr. Migie: In the legislation - you'll see later - it says it is guaranteed. Once we've gone through the steps, there is no doubt it would be guaranteed by the Minister of Finance in law. When the Wheat Board is out in the marketplace it would have this statement in law so that people would know that it is guaranteed and not maybe guaranteed, which is what it says for some other provisions. In this case, it would say it is guaranteed.

Mr. Leon E. Benoit: Thank you.

The Chairman: Mr. Chrétien.

[Translation]

Mr. Jean-Guy Chrétien: So you confirm the statement of Ms Ur when she said that it would not be a Crown corporation but rather a mixed enterprise. But I suppose the government will still have control over the Canadian Wheat Board since ultimately it is responsible for its debts, if any. When all goes well, there is no problem; if mistakes are made and if a large deficit occurs, sooner or later it will be absorbed by the government.

If the Wheat Board is truly considered to be a mixed enterprise, will the government still be responsible for its potential debts? If so, why not make it a Crown corporation?

[English]

Mr. Migie: The issue is that a shared responsibility between government and producers is part of this legislation. If farmers have one elected director, then under the Financial Administration Act it could no longer be a crown corporation.

The legislation provides for elected directors and as per the amendment passed last time there would be a majority of elected directors with a lot of decision-making authority. At the same time, there is a provision in this bill where in order to have the guarantee of borrowings there are certain steps that must be followed. This is the opportunity the government has to approve the borrowing plan for the Canadian Wheat Board, much as it does now. But it is correct that the government would be responsible because it is guaranteeing the borrowings.

So the Government of Canada will guarantee the borrowings and the board of directors will have a lot of authority to make decisions. However, there are steps in the bill for what is essentially a business plan to be approved and a borrowing plan to be approved.

The borrowing plan is now approved as well, so that is no change. But there is a mix between government having some involvement in some of the appointments and some of the positions on the board of directors. The farmers would be able to elect a majority of directors. As well, there is a responsibility for the government to cover any shortfall if there were a shortfall.

.0925

The Chairman: Mr. Hoeppner, did you have a comment?

Mr. Jake E. Hoeppner: Yes, Mr. Chairman. According to Mr. Migie, the issue here isn't really that it is a crown corporation. The issue is it is a monopoly. When it is a monopoly, then the government must be diligent and must take due care that the participants in this pool or monopoly are protected and their interests are protected as far as financing is concerned.

If a monopoly sells on long-term financing, are you saying then this is really the reason the government is responsible, or is it because it is a crown corporation? To me, you seemed to indicate because it was a monopoly the government is responsible for exercising due care that long-term financing is not a process by which farmers will lose money.

Mr. Migie: Referring to the question from Mr. Benoit earlier, which was really an international question in terms of state trading and how international agreements would view it, it is in this sense the monopoly on exports is the important provision.

In terms of our own internal guarantees, the Canadian Wheat Board is currently a crown corporation and it's also an agent of Her Majesty. It's in this latter capacity as an agent of Her Majesty that the Government of Canada is responsible for the contracts and the borrowings.

The Wheat Board currently provides a borrowing plan to the Minister of Finance and the Minister of Finance approves the Wheat Board borrowings, even though it's a crown corporation.

If it's no longer going to be a crown corporation because there will be elected directors, and there will be a majority of elected directors, then there are provisions in the legislation that provide balance. So the Minister of Finance can have some comfort that the guarantee provided is an appropriate one.

Mr. Jake E. Hoeppner: Internally, does a monopoly not demand the same kind of protection from the government as in an export trade?

Mr. Migie: The international rules on state trading are not so much for protection. There are provisions there with respect to state trading and state trading would continue to apply just as it does now. Internally, there are the provisions in legislation in the Canadian Wheat Board Act.

Mr. Jake E. Hoeppner: My argument would be, Mr. Migie, that then it wouldn't matter whether all the board's members were elected or not. If you have a monopoly, the government would still be responsible for exercising due care and diligence, even internally, to ensure the participants in the pools were not robbed of their financial rewards.

Mr. Migie: In the legislation, to a large extent the board of directors is provided with the management responsibility and the majority will be elected by producers. If you think of a private corporate analog, this board of directors is the one looking after, in one sense, shareholder interests.

In this case, they are operating under law and they have some responsibilities for orderly marketing to achieve the objectives of the law. In this sense, they are looking after interests of producers and the government's interest to the extent it's provided for in the act.

Mr. Jake E. Hoeppner: Thank you, Mr. Chairman.

The Chairman: Okay. I think we've had sufficient discussion on this.

Amendment agreed to

Clause 4 as amended agreed to: yeas 5; nays 3

.0930

The Chairman: Members, we stood clause 3 and said we would come back to it for a discussion on the indemnity portion of that clause, which we will do when we get to the end of the discussions on the bill. However, an amendment to clause 3 was circulated this morning that is a follow-up to amendment number 13 in the clerk's package, which states, ``the majority of the directors shall be elected by producers''. There was some discussion that it would be good idea to clarify numerically what was meant by ``majority'', and there is an amendment before us in that regard. Is there any objection to going back and clarifying the word ``majority'' with a number?

An hon. member: That's not a problem.

The Chairman: Mr. Chrétien.

[Translation]

Mr. Jean-Guy Chrétien: Mr. Chairman, do you plan to intervene often in the discussion on Bill C-72 or is this going to be the first and last time?

[English]

The Chairman: No. Because of the concern everybody had about the amendment we made to clause 3, I was asking if there's any objection just to clarify the word ``majority'' with a number. We will still stand clause 3 because there was a desire to come back at the end of the discussion to talk about the indemnity issues in the bill. I'm just asking if there's any objection to going back and clarifying that now. That's the one that was handed out this morning.

Mr. Pickard and then Mr. Benoit.

Mr. Jerry Pickard (Parliamentary Secretary to Minister of Agriculture and Agri-Food): Mr. Chairman, there were extended discussions with regard to a particular number, and I believeMr. Chrétien made it very clear he wanted to see a certain number. Many of the producers across the west had suggested they would like to see a two-thirds majority. As a result, I believe the Reform Party, the Bloc, and everyone here heard a tremendous amount of testimony that corroborated that. So rather than go with ``majority'', which I think the opposition had suggested was a pretty nebulous thing, we're inserting the number 10. This clearly indicates a two-thirds majority, which is the figure many people brought forward.

The Chairman: Mr. Benoit.

Mr. Leon E. Benoit: One of the concerns that was expressed at the last meeting by the government side was that there shouldn't be a number set at all. That was the argument in response to Mr. Chrétien's amendment of having 12 written into the legislation. So now government has come back and said at the last meeting we said we shouldn't set a particular number at all, but at this meeting we're going to set a particular number but it's just going to be a lower number, 10 instead of 12.

The Chairman: I just want to get this right. We need unanimous consent in order to open up discussion on this clause. Is there any objection to opening up discussion on this clause?Mr. Hoeppner.

Mr. Jake E. Hoeppner: Mr. Chairman, maybe you should clarify the situation. I wasn't here at that meeting, but I was told the Bloc presented an amendment to change it to 12, not 10. Is that wrong?

The Chairman: I don't think there was an amendment to make it 12. Was there an amendment as such?

A voice: Yes.

The Chairman: My apologies, there was a subamendment that mentioned 12, and that subamendment was defeated.

I still have not heard any objection to opening it up. I'd like a show of hands of those in favour of opening up discussion of this clause. And now we'll have a show of hands of those opposed to opening up discussion of this clause. Okay, we will open up discussion on the clause.

Mr. Hoeppner.

.0935

Mr. Jake E. Hoeppner: Thank you, Mr. Chairman.

I would have to support the subamendment by the Bloc that it should be 12 -

The Chairman: The subamendment by the Bloc was defeated, so we're not voting on that.

Mr. Jake E. Hoeppner: I know, Mr. Chairman, but I still like that number and I'll tell you why. The Ontario wheat board is totally elected. They are an entity that I feel are very fair in the way they run their board. They did a very good job, and I think the more farmers we have on this newly elected board, the better the chance it will be run properly and in the interest of farmers. So I'm going to say the number should be 12.

Mr. Wayne Easter: Mr. Chair, I have an amendment.

The Chairman: I'm just getting assistance on the procedure. Before an amendment can be made, we must have unanimous consent that an amendment can be put, no matter what the amendment is, because we have already amended that clause. Is there unanimous consent that a further amendment be made to the clause before you, clause 3?

Some hon. members: Agreed.

The Chairman: Hearing no objection, we will proceed.

Mr. Easter.

Mr. Wayne Easter: Thank you, Mr. Chair. I'm really glad to see that Jake's now supporting marketing institutions.

I would move, Mr. Chairman, that clause 3 of Bill C-72 be amended by replacing lines 28 to 31 on page 4 with the following under ``Election of Directors'':

The Chairman: Is there discussion on the amendment? Mr. Hoeppner and then Mr. Chrétien.

Mr. Jake E. Hoeppner: Mr. Chairman, if Mr. Easter is so supportive of farmer-controlled marketing boards, I can't see why he has trouble with the number 12. That still gives three to be appointed by the government, and I think 20% involvement by the government is sufficient. If you get more than that, you don't know if you can survive their help.

Mr. Wayne Easter: I think, Mr. Chairman, Jake knows full well that personally I am in favour of the commission approach, but I've accepted, based on what I've heard in the hearings, that producers in western Canada want to go to at least a majority elected board. This gives a two-thirds majority, and it is very specific that there be ten directors, meaning there will be five appointed by the government and ten elected by producers. I think that gives the kind of balance we're trying to move towards with the legislation.

The Chairman: Before we go any further, Mr. Chrétien is raising a question. Apparently he didn't understand my previous comments, and that's fine. The question to me was are we going to go back and open up clauses. As a committee, we can go back and open up clauses at any time if there is no objection by the committee members to doing so. It's certainly not our intent, but there has been a request to do so in this case. I asked the committee if there were any objection to going back, and when I asked that specifically, there was no objection voiced on this specific request.

Any reverting back to clauses we have dealt with will have to be dealt with in the same way. If there is a request to do so, we don't do it if there's an objection. If there is no objection, we do it. It's certainly not the intent, but I don't know what the wishes of the committee are going to be as we proceed through this bill.

When I asked about going back and placing an amendment to clause 3, I heard no objection and I asked that very clearly. When I heard no objection, we moved forward. So we now have an amendment before us, and that's what we're discussing at the present time.

Mr. Hoeppner.

.0940

Mr. Jake E. Hoeppner: In response to Mr. Easter's comments, I know that a two-thirds majority is sufficient, but when you realize the political game, it is fairly easy to bring a two-thirds majority down to 50%. I would like to see that preventative medicine in this bill, that the politics cannot change the decisions that farmers want to have made. I think 12 is a very credible number. Ten is too close to the 50% because if the politics does swing it somewhat, we have a stalemate, and I don't think that's what we want to see in an elected board.

Mr. Leon E. Benoit: I want to make it very clear that when the committee travelled throughout the last several years, this was debated. Farmers have made it clear they want a fully elected board. The Reform will be satisfied with nothing less than a fully elected board. On behalf of farmers,Mr. Hoeppner is trying to get every little bit he can from a committee that, quite frankly, isn't very willing to listen to proposed change. I give Mr. Hoeppner credit for that, but I just want it on the record that the Reform isn't satisfied with anything less than a fully elected board.

Mr. Jake E. Hoeppner: Right on.

The Chairman: I take exception to your statement that when the committee travelled all we heard was support for a fully elected board.

Mr. Leon E. Benoit: Well, it's not all we heard.

Mr. Jake E. Hoeppner: There were a few Liberals that were -

The Chairman: I think if you go back and look at the record, by far the majority of the presentations used the number two-thirds.

Monsieur Chrétien.

[Translation]

Mr. Jean-Guy Chrétien: I am happy to see that, during the three days most of you spent in your ridings, you read the papers and met some of the people directly involved with the Canadian Wheat Board who managed to get their point across to some committee members.

I also want to congratulate Mr. Collins who, last Thursday, was totally opposed to having a majority of elected board members but who is coming back today with a proposal to have ten elected members out of 15. I am very happy and I commend you for this. The passing of time gave you wisdom and this is very good. I also note that you are not insensitive to the concerns of your voters. I remind you that the Canadian Wheat Board was not set up 60 years ago for politicians, and even less for consumers or manufacturers of farm machinery, but to ensure a decent income to grain producers.

Consequently, in order to make the involvement of producers even more acceptable, I will move a sub-amendment which, I hope, will be supported by government members. I did not take part in the meetings out West, unfortunately, but I read the transcripts which show an almost unanimous wish for having between one-third and three quarters of board members elected, while our colleagues of the Reform Party even suggested 100 per cent this morning.

If you do a quick calculation, ten out of 15 is 66.66 per cent, while 12 out of 15 would be 75 per cent. So I will move a sub-amendment, Mr. Chairman, to simply substitute the number 11 for the number 10. This would be an intermediate number. I can see that you will agree and I would recommend that you not take too much time thinking about this and try to make a quick decision. You are not working for yourselves but first and foremost for grain producers. So they would have 71 per cent of elected board members. At any rate, if they did not do a good job, they could be dismissed, which we regrettably cannot do with those appointed by the Governor in Council, who are usually people being rewarded or people the government wants to get rid of in order to put another candidate in a riding, as is about to happen to several of my colleagues in the House of Commons. These are well-paid patronage jobs. I look forward, Mr. Chairman, to the discussion on the salary of these board members.

.0945

So, here is my sub-amendment, which is to substitute "11 directors" for "10 directors".

[English]

The Chairman: Mr. Chrétien, I'd like to congratulate you on reaching I think probably the perfect definition of a compromise, and that's halfway between the two numbers that were being discussed before.

We have a subamendment, which I think is quite clear.

Mr. Pickard.

Mr. Pickard: Mr. Chairman, I would like to make a couple of comments with regard to those comments that were made. We did have the word ``majority'' in, and that's very correct. The majority, however, does represent more than 50%, and we thought that latitude was enough when we presented it. Because of the discussions that went on in committee and because of revisiting that and looking at it, we felt there were enough people who really did put forth that two-thirds majority point.

I would like to make it very clear that ``majority'' never meant at any time not to be two-thirds or 60%, somewhere in there. I guess we had not finalized it that closely. We know that testimony coming forward from the Canadian Federation of Agriculture asked for two-thirds. We know that testimony coming forth from the Prairie Pools asked for two-thirds. UGG asked for two-thirds. Keystone asked for two-thirds and SARM asked for two-thirds. That's a pretty broad spectrum of organizations across the prairies, and as a result of their wishes, two-thirds was presented as a subamendment this morning.

The Chairman: I think we're clear on the amendment and what it means.

[Translation]

Mr. Jean-Guy Chrétien: I would like a recorded vote, Mr. Chairman.

[English]

The Chairman: I'm calling the question on the subamendment.

[Translation]

Mr. Jean-Guy Chrétien: I request a recorded vote, Mr. Chairman.

[English]

The Chairman: We'll have a recorded vote, Mr. Clerk.

Subamendment negatived: nays 7; yeas 3

Amendment agreed to

The Chairman: We will leave clause 3 stood, because we said we would come back to that later. We will now move on.

There are no amendments before the committee for clause 5. There are some amendments before us for clause 6. I'd like you to bear with me for a moment here.

.0950

I thank the committee for bringing to my attention that since there were no amendments to clause 5 we just moved on to clause 6, but that I failed to ask you if you're prepared to carry clause 5. There were no amendments.

Clause 5 agreed to

The Chairman: In the next amendment before the committee, which is number 24 - just bear with me and follow me here, because we have to move around here a bit - that amendment refers to a section 33.01. At the present time there is no section 33.01 in the bill. However, amendment number 42 in your package, if passed, would put into the bill proposed section 33.01.

We have to deal with the addition of 33.01, which is discussed in amendment 42, before we can deal with it in amendment 24, or we can deal with them both at the same time. Is everyone clear on the point I'm making?

Mr. Jean-Guy Chrétien: No.

Mr. Leon E. Benoit: Just explain that.

The Chairman: Do you have you amendment 24 in front of you? If everyone has it in front of them, I will explain.

Amendment 24 mentions a section 33.01. If that amendment were to carry, we would be carrying a part of the bill that is not yet part of the bill.

Mr. Leon E. Benoit: How can we do that?

The Chairman: That's the point I'm trying to make very clearly, Mr. Benoit. So before we do that...

I'll go really slowly for you, Leon. I realize I was going pretty fast before, even though I did give you a warning that I was going to try to explain this.

My point is, before we can deal with 33.01 in amendment 24, we need to deal with 33.01 where it would be in the bill if it were passed. In the chronology of doing that, we would therefore have to move to amendment 42.

Mr. Wayne Easter: It's page 42.

The Chairman: Well, the one that's numbered 42 in the amendment package in front of us. Those are the numbers I'm using all along.

I'm suggesting that we first go and deal with number 42 - whether you want to call it the amendment or the page, I don't care. Is that clear as mud?

Is there a mover for number 42 - whatever you want to call it? Mr. Easter, do you have a comment?

Mr. Wayne Easter: I'd like to clear up this confusion, Mr. Chairman.

The Chairman: Go slowly so Mr. Benoit can follow you.

Mr. Wayne Easter: I'll move that Bill C-72 be amended by adding after line 5 on page 15 the following:

(2) Any gains of the Corporation that may result from the operation of this section may be credited to the contingency fund.

(3) Any losses of the Corporation that result from making payments under subsection (1) are paid out of the contingency fund established under paragraph 6(1)(c.3).

.0955

On page 8 of the Wheat Board presentation - and I don't know if anybody has it with them - they talk extensively about the pool cash-out. They say that it would enable the Canadian Wheat Board to make a final payment to producers for potential future payments from the pool prior to the end of the pool period. Producers who applied for and received such payments would waive their rights to future adjustment in interim and final payments from the pool in question. The Canadian Wheat Board in their presentation was pretty strong in terms of wanting that recommendation in order to give them greater operating flexibility as a marketing institution. So therein lie the reasons for it.

I might mention, Mr. Chairman, that in their presentation to us they also stated that the focus groups indicated a desire on the part of many producers to have the ability to receive final payment in advance from the Canadian Wheat Board during the crop year. They also indicated they didn't foresee this being done early in the crop year but that it would be offered late in the crop year. I don't know how you could control that. I would have worries myself about early pay-out, but later in the crop year would probably be all right.

The Chairman: Are there any questions or comments? Mr. Benoit and then Mr. Hermanson.

Mr. Leon E. Benoit: Yes, I have a question for legal counsel.

Mr. Jake E. Hoeppner: I think I'm after Mr. Benoit.

The Chairman: Sorry, Mr. Hoeppner.

Mr. Leon E. Benoit: Elwin has quite a presence, but not from that distance.

The Chairman: I should have known that, because Mr. Hoeppner has more hair.

Mr. Leon E. Benoit: You're making fun of the physical appearance of a Reform member.

The Chairman: No, I'm just making an observation.

Mr. Leon E. Benoit: I do it all the time, but you have no right to do it.

The Chairman: I'm just making an observation.

Some hon. members: Oh, oh!

Mr. Leon E. Benoit: I'd just like an opinion from legal counsel. First of all, is the Canadian Wheat Board covered by the Competition Act?

A witness: Yes.

Mr. Leon E. Benoit: Then it would seem to me that there could be a problem with this and it could be challenged quite easily under the Competition Act. You're giving the board the right to buy these certificates, and at the same time the board issues their price forecasts on a regular basis. They could certainly manipulate the price of these certificates with their forecasts, their PROs. To me, that seems like a clear conflict of interest. I think putting that into this legislation would be very dangerous and could easily be challenged successfully under the Competition Act.

Mr. Migie: There is in the bill a provision for transferable certificates, which is one of the concerns I think you're raising.

Mr. Leon E. Benoit: This is the cash-out.

Mr. Migie: This is the cash-out provision. I think you were referring to the transferable certificates.

Mr. Leon E. Benoit: Yes.

Mr. Migie: That's in a different clause.

Mr. Leon E. Benoit: Okay.

The Chairman: Mr. Hoeppner.

Mr. Jake E. Hoeppner: Mr. Chairman, I'm looking at the possible gains. If I analysed farmers well enough, by this provision they will make money in this pooling system. What happens if this contingency fund is in a deficit situation most of the time? Does the government guarantee that deficit?

Mr. Migie: This program will be treated like cash trading in that it's covered by the contingency fund. It would not be covered by the Government of Canada, as it covers whatMr. Easter calls the initial initial payment. So it would be covered through the contingency fund, which is related to that first amendment that probably we'll get back to next.

Mr. Jake E. Hoeppner: How would you handle a deficit in that fund, then, at the start of a new crop year when farmers still wanted to cash out? You would have no funds in that contingency fund.

Mr. Migie: There is a technical amendment in the package that says the fund doesn't necessarily have to be positive, which is in effect saying that the Wheat Board would have the flexibility of having a very small fund sitting there and have a plan to deal with financing it if it did get into deficit.

.1000

It's their intent to not have any deficit or surplus as they're undertaking these various types of initiatives. However, it's always possible there might be a deficit, and therefore there's provision in here for that. But it would not be the government that would be responsible for that. It would be the contingency fund, and therefore the board of directors and the Canadian Wheat Board would have to be careful in how it sets it out.

Mr. Jake E. Hoeppner: Mr. Chairman, I can really see a problem if we had had this in place in 1996, and people cashed out in April, and then the new fund started at the new crop year in August. You would have been in a deficit situation to a tune you couldn't handle.

Mr. Migie: The Wheat Board does have the protection of a small amount that can cover off the risk factor and potential risk, but they would have to manage it so that it would be as neutral as possible in terms of the finance. There's provision in the earlier amendment that if it turns out there is a deficit, they would be covered. This allows as well for any profits that might occur to be put back into the fund.

The Chairman: Just a point of clarification that might help, Mr. Hoeppner, is that we want to make note of the fact that in this clause it says ``the Corporation may''. This is something the Wheat Board ``may'' offer to producers. If I read it correctly, it's not something whereby a producer can walk in and say he wants an early pay-out. It's a management tool the corporation can use, if they so desire. It won't be 100% covered and there may be a surplus or a deficit in the contingency fund, but it's not something that has to happen. It's something the producer-elected board could decide to use.

Mr. Jake E. Hoeppner: I realize that, Mr. Chairman. But if you get into the position where 5% or 10% of the farmers do it in February or March, and then you see the shift in prices in April, and you're going to abide by the word ``may'' and not do it, you're going to have a fight on your hands like you've never seen before, and it's going to destroy the board instead of help it, I think. If you have it open to some producers, you are almost forced to honour that obligation to all producers.

I just can see a whole pile of problems developing if there isn't some specific legislation on how you're going to cover huge deficits, because that's what farmers are going to use this for, to protect them from price decreases instead of price increases.

The Chairman: Mr. Benoit, you had a comment.

Mr. Leon E. Benoit: Thank you, Mr. Chairman.

I would like one of the gentlemen to explain very slowly -

The Chairman: We'll try to do that for you, Leon.

Mr. Leon E. Benoit: - how this cash-out would work, because there are Liberals here that are listening as well.

A voice: We hope.

Mr. Leon E. Benoit: We hope.

Mr. Victor Jarjour (Director, Grains and Oilseeds Division, International Markets Bureau, Market and Industry Services Branch, Department of Agriculture and Agri-Food): Currently, Mr. Chairman, the Wheat Board pays an initial payment to a producer when the producer delivers the grain. Subsequently, there may be interim and adjustment payments made during the course of the year, but ultimately a producer receives a final payment sometime after the pool period.

This provision would allow a producer to receive a cash settlement prior to the payment of final payments. It allows the producer to receive full settlement from the Canadian Wheat Board prior to the end of the crop year, for example.

Mr. Leon E. Benoit: Again, I think my original comment absolutely stands here. There is a real concern here of a conflict of interest. Here's the Wheat Board acting in secrecy, as it always has. That will continue. There won't be any more openness in its operation. Farmers depend on the PROs, the price forecasts, to try to get a feel for what's happening in the board's marketing. At the same time, they can offer to buy a farmer basically out of the pool early.

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I think there's a clear conflict of interest. I just can't see how this can be allowed in this legislation.

Mr. Migie: But the farmer has the choice. He doesn't have to accept; he can wait for the final payment if he's not satisfied with the price that's offered. Even if it were offered, it would still always be the choice of the individual whether they would wait for the final payment or accept another one.

Mr. Leon E. Benoit: What's the individual going to base his or her decision on? They have to have an idea of how the board's marketing the grain. They can certainly have an idea of world price. Farmers are mostly quite capable of determining what the different world prices are, different types of markets, but they don't know what the board's doing. It's all done in secrecy. It's a closed shop. So they do depend on these PROs, these price forecasts, to try to get an idea of how the board is marketing. That's the only indication farmers have.

Many farmers now have the information they need on the world market, but they don't know what the board's doing. They depend completely on the forecasts made by the board itself to determine whether they should accept this offer made by the board to get out of the pool. I think it's absurd.

Mr. Migie: If it were offered in April, for example, and there were still sales to be made, the individual would be taking a risk and making a judgment based on what's going to happen in the future. But that's the choice the person would have; it's not a requirement.

The Chairman: Mr. Easter.

Mr. Wayne Easter: I think Mr. Benoit is confusing marketing with playing the market. Ever since I've come to Ottawa, I've heard Mr. Benoit talk about wanting choices. This is really enabling legislation to give the board another option of what they may do. But I think we have to understand the reason it's here. It's not for producers to play the market. I think you'll find that in great numbers producers favour the pooling system and the final pool pay-out.

There are other situations. A young farmer who's having difficulty buying equipment or who needs a grain tank early in the year or whatever and needs the option will take a slight loss for having done so. The early pay-out will be discounted somewhat for some risk, as I understand it, but he could use this option to acquire cash earlier than he otherwise would have had it in order to meet certain cashflow needs in his operation at that time. That's really the purpose; it's to provide that kind of flexibility. It's not to give the situation to producers so they can play the open market. That's not what it's there for. It's there for what I've just outlined.

Mr. Leon E. Benoit: Again, the only way to give farmers real choice is to remove the board monopoly so they can just market completely on their own around the board if they want. That's the only way. Then they have the market signals that do come from various sources. Farmers have access to that now.

That isn't what's happening here. Just imagine a situation where you have the PROs from the board dropping month after month after month and that is the only indication farmers have of what their marketing program is and what they see in their marketing program. It doesn't necessarily match up very well with world prices or anything else. This can certainly be used to free up some grain at a lower price than the board really expects and they can start jacking the PROs up if they get a significant amount of grain in. It'll sure make the pool look better for those who stay in the pool.

I can see it being used as a political tool by the board. We've seen a board that's so political that it's almost unimaginable, so why couldn't this be used as a political tool as well?

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The Chairman: Once the producers elect the majority of the board, Mr. Benoit, I'm sure all politics will disappear from the Wheat Board.

Monsieur Chrétien.

[Translation]

Mr. Jean-Guy Chrétien: I come back to what Mr. Easter said about young farmers making use of the cash-out. If I understood correctly, if there is a price increase at a later date, they will be paid the difference. Am I right?

[English]

Mr. Wayne Easter: No. I just used the example of a young farmer who may have certain cashflow needs in his operation. Either the advance payment doesn't provide him with enough funds to do what he wants to do or he might be having credit difficulty with the bank and can't wait for the final payment at the end of the year. He would take the pool cash-out option as an option to provide him with the kind of cashflow that might get him through whatever financial difficulty he might have at that period in his life. That doesn't necessarily have to be a young farmer; it could be anyone.

That is what I see this being in here for. It enables the board, if they so decide, to use the pool cash-out program to meet specific needs of individuals. It's not designed to play the market, as obviously Mr. Benoit sees that some people want to do. They can do that on the stock exchange any day of the week.

[Translation]

Mr. Jean-Guy Chrétien: Mr. Chairman, please, I would like to ask a supplementary just to make sure I have it right. The producer, whatever his age, could request an early payment from the Canadian Wheat Board. If the board expects to make $300,000 from the sale of his grain, it would provide an early payment of $200,000. Once the final price has been established, it would pay the difference to the farmer.

[English]

The Chairman: Mr. Chrétien, that is not what this does.

[Translation]

Mr. Jean-Guy Chrétien: That is not how it works! Come on!

[English]

The Chairman: This does not allow a producer to ask for an advance from the Canadian Wheat Board. This clause would give the Wheat Board the opportunity, if the board so decided, to offer an early pay-out for the complete amount of wheat the individual has sold or put forward to the Wheat Board. It's not an early advance.

If they offer this program on a particular year or whatever the case may be, then the individual producer has the choice to wait until the pool price is established at the end of the crop year or to go to the Wheat Board if they wish to participate in an early pay-out system and ask what the board would pay per tonne of wheat today. Then they're out of the system, out of the pool for this year. It's not an advance; it's cashing out in advance.

[Translation]

Mr. Jean-Guy Chrétien: If I got this right, the board will never pay the high price. It will pay the lowest possible price. So, the farmer who accepts literally puts a rope around his neck. I do not think the board will ever aim to lose money, it will rather seek to make a profit. If it expects to sell the grain for $300,000, it will offer maybe $275,000. And if prices increase substantially, the poor fellow will lose money. If prices drop significantly, it is the board who will lose money. Is that how it works?

[English]

The Chairman: Mr. Chrétien, it would be the farmer's choice. The farmer does not have to do it. It would be the market price that day or however the Wheat Board determines the price. It's the farmer's choice.

I'll just give numbers. If the farmer thinks that by staying in the pool price the pay-out at the end of the pool will be $300 and two or three months before the end of the crop year or some time he or she is pressed for cash, they can say to the Wheat Board, if I were to cash out my wheat today, what would you pay me? If the Wheat Board said it looks like we could pay you $280, then the farmer makes the choice to take $280 now or wait and hope for $300. Or if the Wheat Board says they'll pay you $220, then the farmer has to make his intelligent decision based on the market information that we know is out there for everyone today, and decide whether he wants to cash out today or wait for something better. It's a choice.

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[Translation]

Mr. Jean-Guy Chrétien: Now it is clear. Thank you.

[English]

The Chairman: Mr. Hoeppner - and I think we'll have had sufficient discussion afterMr. Hoeppner's comments, and we'll deal with this amendment.

Mr. Jake E. Hoeppner: Mr. Chairman, what really scares me about this clause is the other issue of the cash purchasing of wheat by the Canadian Wheat Board, because they will tie it together.

What I see happening here is that the financially disadvantaged farmer will be forced to take whatever the Wheat Board offers for the buyout. If the Wheat Board makes a bad decision - probably that they've paid out too much - they can then go on the open market, purchase wheat for cash, and deflate the price to the Wheat Board producers who are still in the pool.

I think the two go hand in hand. I think it's dynamite when you put these two clauses together. It's going to take the advantage away from pooling, and it will give the Wheat Board the advantage of going on the open market and setting the price, where farmers have no control at all, then.

It will be a disadvantage to the young farmer who can't go and borrow money in spring to operate his farm, who will take the price that the Wheat Board offers, and take that and probably be in more financial difficulty. That's not what this whole system is set up for.

My objection is that the cash buy and this clause will affect each other. If we can't somehow put machinery in place to somewhat segregate these so they can't affect each other, we are really looking for destruction of the Canadian Wheat Board.

The Chairman: I guess I'm talking personally here. I find it contradictory, Mr. Hoeppner, that one day you'll say that you want producers to have a choice in how they market the grain, and now you're saying that you don't want them to have the choice.

Mr. Jake E. Hoeppner: No, Mr. Chairman, I'm saying this. If the Wheat Board has the right to go and buy grain on the open market from a commodity exchange or a grain company, the farmer should have the right to deliver his grain against that contract. Otherwise there's no competition, because you take the competition away internally, while the Wheat Board can do what it wants in providing or setting the price for Canadian farmers, and then we're in worse shape than we are right now.

The Chairman: I want clarification from Mr. Migie. Following on what Mr. Hoeppner says, does the farmer lose the right to offer wheat if there is a cash purchase program put in place by the board? He says they will lose the right to use that type of program if there's one offered.

Mr. Jake E. Hoeppner: No, Mr. Chairman, I want to correct that. They're not losing that right. It's that the Wheat Board is not designated to buy it from the farmers. They can go an buy it from a grain company or a commodity exchange. They do not have to buy the farmers' grain. That is what worries me - that they will automatically force the price down by doing that, because farmers can't then deliver their grain against that open market where the Wheat Board is buying it. If the cash buying were only from farmers it would be a lot more effective.

The Chairman: Mr. Jarjour.

Mr. Jarjour: Thank you, Mr. Chairman.

The objective of these provisions is effectively to provide a more flexible option to producers. How they are in fact operated will be determined essentially by the board of directors. The objective here is to have enabling provisions in the bill that would allow the board to offer these flexibilities that would improve - if the producer chooses, in this case, the early payment - their cashflow. How it operates will ultimately be a decision of the board of directors.

The Chairman: Mr. McKinnon and then Mr. Benoit, and then we're going to call the question.

Mr. Glen McKinnon (Brandon - Souris, Lib.): Do the officials see any scenario by which the integrity of the pool or pooling process could be impacted? I'm just asking for a general comment.

Mr. Pickard: This is enabling legislation again, and it was intended to give larger flexibility in the purchase of grains where someone is hard pressed. I believe Mr. Easter clearly pointed that out, and I think the example he used was the example we looked at as critical. No, I don't believe it would cause a problem. I think it offers more flexibility.

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The Chairman: Mr. Benoit, one final comment.

Mr. Leon E. Benoit: I just have to clarify the statement that this gives more flexibility to farmers. Let's make it clear; the board holds all the cards here. They can choose not to offer that at all. In terms of the certificates, they set the price. If farmers had the option to market their grain directly themselves, then the system would work. But the board holds all the cards. Why pretend here? There's no more flexibility in this for farmers. The board decides what they'll offer, when they'll offer it in all cases, and let's not try to say that it's any different from that.

The Chairman: It's a majority producer-elected board.

I'm going to call the question on the amendment that deals with line 5 on page 15. It's an additional subclause in the bill, subclause 18.(1).

At the present time the act is amended by adding the following after section 33...so it's new section 33.01.

Amendment agreed to [See Minutes of Proceedings]

The Chairman: Now we can go back, because that amendment is referred to in amendment 24 in our package.

Is there a mover for that amendment? Mr. Easter.

Mr. Wayne Easter: Mr. Chairman, I would move that Bill C-72 in clause 6 be amended by replacing line 22 on page 8 with the following:

It inserts that section into the act that we just talked about. What it really does is provide for what this clause does. It provides for potential losses from operations under those two sections of the act, section 33.01, which is the pool cash-out, and section 39.1, which is the cash purchase. It adds one more item to the list of uses for the contingency fund providing for potential losses with the use of that fund under section 33.01.

Amendment agreed to

The Chairman: There is a further amendment before us on clause 6. It's a technical amendment. I believe Mr. Pickard wished to deal with this one.

Mr. Pickard, are you moving this amendment?

Mr. Pickard: Yes, I am. Mr. Chairman, I would move that clause 6 in Bill C-72 be amended by adding after line 40 on page 8 the following:

(4) For greater certainty, the balance at any particular time of the contingency fund be established under paragraph (1)(c.3) need not be positive.

The balance of any fund, albeit it a contingency fund, could from time to time under certain circumstances be a negative balance. As a result, we have no vehicle or means by which to deal with that. Therefore this technical amendment allows that contingency fund either to be in a positive or a negative balance scenario, depending upon the circumstances at the immediate time.

The Chairman: Mr. Hoeppner.

Mr. Jake E. Hoeppner: Thank you, Mr. Chairman.

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I'm wondering, Mr. Pickard, whether this... To me it looks more or less like a regulation. It can be either negative or positive. Could the amount of the deficit or the amount of the fund be regulated by an Order in Council?

Mr. Pickard: I think putting it in the bill clearly places the financial responsibility within the purview of the board itself in its operations with regard to that contingency fund. I believe it is better to give that responsibility to them. We don't perceive - or I hope we don't - getting into the circumstances in which this would become a negative fund whereby we would draw upon the resources, but it still has to be viewed as a possibility under certain circumstances.

Mr. Jake E. Hoeppner: My view, Mr. Chairman, is that the board should have the authority to regulate this fund, either positively or negatively, instead of having the government set a regulation by Order in Council.

Mr. Pickard: That leaves the flexibility in the board. That was the determination of putting it here.

Mr. Jake E. Hoeppner: So you're guaranteeing that the board will look after that clause, not that it will be done by Order in Council.

Mr. Pickard: The contingency fund. Yes.

Mr. Jake E. Hoeppner: Thank you, Mr. Chairman.

The Chairman: Mr. Migie.

Mr. Migie: There is one area in which there is a role for government, and that is to determine at one time that there's an adequate contingency fund to proceed with the government's decision to no longer guarantee adjustments. That is one provision in which the government does have a role. But once that is done, it's really up to the board of directors to make the decisions as to whether or not they need a fund to cover these contingencies and how large the fund might be.

Mr. Jake E. Hoeppner: Mr. Migie, are you saying that the government will put up the fund originally?

Mr. Migie: No, definitely not. What I was saying is that there is one point in the bill that the minister publishes in the Canada Gazette, and that is the date on which there is, in the judgment of the government, an adequate fund. That suggests that the government would, after that date, no longer be guaranteeing the adjustment phase.

Mr. Jake E. Hoeppner: So the government really does set the standard of the fund.

Mr. Migie: No. It does it once at the beginning, and it's then up to the board of directors. It's not in relation to cash trading or the early payment. It's in relation only to the issue of when the government stops handling the guarantees related to adjustments to initial payments and when it becomes the responsibility of the board of directors.

Mr. Jake E. Hoeppner: It worries me a bit, because the amount of that fund is not definite enough, I think, to make it a viable fund. Where will you argue that this is the right amount and this is the wrong amount?

Mr. Migie: It's left to the board of directors to make that determination. They will have a plan for handling any deficits if they do occur.

The Chairman: Mr. Benoit, then Mr. Easter.

Mr. Leon E. Benoit: I'd like someone to explain the circumstances that would require a negative balance. In other words, why do we need this change? What circumstances might lead to a negative balance in the fund, and...?

Mr. Jarjour: Mr. Chairman, in many respects this is more of a definitional type of clause. The intent of the contingency fund is to backstop potential losses from adjustments to the initial payment, from cash trading, or from the early payment provision.

Mr. Leon E. Benoit: That's what my concern is.

Mr. Jarjour: There was some concern that by using the term ``contingency fund'' it would imply that it could be in only the positive. Because of its nature as a backstop to losses, it could obviously go into a negative position. So it was felt that, for certainty, it should be clearer that the contingency fund can operate effectively in the red.

The Chairman: Mr. Easter.

Mr. Wayne Easter: Thank you, Mr. Chairman.

Let's understand what this... During the discussions we had in western Canada, there was a lot of concern raised about the contingency fund. I don't think there's any question about that, and I can understand that. But for those who are asking for greater flexibility of the board and for it to put itself at greater risk, you would naturally have to have the contingency fund set up, because the old game is gone.

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For those who want flexibility, the old game is gone in which the government basically has backstopped and guaranteed everything. What this does is it establishes the contingency fund for basically three areas: to guarantee the initial initials, which Howard talked about; and to provide for the potential losses on the cash purchasing and on the early pool-out.

I think the positive part of this particular amendment is that it doesn't have to be a positive balance, so the Canadian Wheat Board would not necessarily have to carry a multi-million-dollar contingency fund. If it could carry a negative balance, that would mean that if a loss occurs the board could sit down within its own body and figure out how these losses would be paid back over time. With this kind of amendment, you can have a greater degree of planning in terms of how to handle losses should they occur in the future.

The Chairman: Mr. Chrétien.

[Translation]

Mr. Jean-Guy Chrétien: If I understand correctly, Mr. Easter, the contingency fund does not have to be always positive but it should not be always negative either. If you had to choose, according to the spirit of the bill you are in charge of, Mr. Pickard, would you be in favour of a fund more often in the black or more often in the red?

[English]

Mr. Wayne Easter: To date, in providing the majority - hopefully - with good management, the kind of good management we've always had with the Canadian Wheat Board, there haven't been losses. But you have to have these kinds of sections in the act when you're giving this kind of flexibility and taking on new risks; there must be provision for a contingency fund. One of the reasons for this amendment is that when this legislation becomes law, you don't immediately start building a multi-million-dollar contingency fund. You have the ability to have one that's not necessarily positive, and in the future if there is a loss you can use the planning to cover those losses over time.

[Translation]

Mr. Jean-Guy Chrétien: Maybe I could put my question to Mr. Pickard or to one of his officials. The goal of the Canadian Wheat Board is to be financially self-sufficient. Over the last ten years - let's not talk about the last 60 years, only the last ten years - how much money did the government need to contribute to the operations of the board?

[English]

Mr. Pickard: I'll have to check with the officials to see what that number is, Monsieur Chrétien.

Mr. Migie: In terms of the issues we're speaking of, adjustments, there haven't been deficits with respect to adjustments. As you know, there was one very large deficit, which was also in Ontario and the Canadian Wheat Board, of several hundred million dollars when the export subsidies increased dramatically during the crop year.

That is still going to be covered by the federal government in this legislation. The Government of Canada will be responsible for the initial payment guarantee when it's set on August 1 or at the beginning of the crop year. In the same way, the Government of Canada is responsible for the initial payment guarantee for the Ontario Wheat Board. There was a very large deficit when, after the initial payment had been set, the United States had a major increase in export subsidies along with Europe and the prices plunged.

In general, finance and government are extremely happy with the way the Canadian Wheat Board currently handles its financial matters with respect to borrowing and with respect to various risks associated with initial payments.

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The Chairman: I'm going to put the question. The question is on the amendment to clause 6, after line 40 on page 8 of the bill, dealing with the contingency fund balance. The wording is:

(4) For greater certainty, the balance at any particular time of the contingency fund established under paragraph (1)(c.3) need not be positive.

Amendment agreed to

The Chairman: Shall clause 6 as amended carry?

Mr. Leon E. Benoit: I have more comments on clause 6.

It's the same concern I brought up earlier; this clause provides for negotiable producer certificates and the price of those certificates will again be influenced greatly by the PROs, the price forecasts that the board itself puts out. Here we have one organization holding all of the marketing information, completely unavailable to farmers whose grain the board is selling and completely at the mercy of the board in terms of what they offer to pay for these certificates. It's a conflict of interest situation, the same as I explained before. I just can't see how this government could pass a piece of legislation that would allow that to happen.

The Chairman: Mr. Reed.

Mr. Julian Reed, Lib. (Halton - Peel): Mr. Chairman, when business of this nature is being done, remember that when information is revealed, it's not just revealed to farmers. It's revealed to Cargill, it's revealed to all of the competitors who are around North America. If there is certain information that should be kept commercially confidential for the benefit of farmers, then it should be kept confidential.

Clause 6 as amended agreed to

Mr. Leon E. Benoit: I'd like a recorded vote, please.

The Chairman: I'm sorry, you're going to have to request it earlier than that if you want a recorded vote next time. We'll do it then, but request it earlier please, Leon.

There is another amendment; I believe it's number 28 in the package. Mr. Pickard, do you wish to move this amendment?

Mr. Pickard: Yes, I'll put this amendment forward. I move that Bill C-72, in clause 7, be amended by replacing lines 41 to 46 on page 8 and lines 1 and 2 on page 9 with the following:

7. Subsections 7(2) and (3) of the act are replaced by the following:

(2) Profits realized by the Corporation from its operations in wheat under this Act during any crop year, other than profits from its operations under Part III and profits that are credited to the contingency fund, with respect to the disposition of which no provision is made elsewhere in this Act, shall be paid to the Receiver General for the Consolidated Revenue Fund.

(3) Losses sustained by the Corporation, other than losses that are charged to the contingency fund,

(a) as a result of the payment of the sum certain per tonne fixed under subparagraph 32(1)(b)(i) at the beginning of any pool period fixed under Part III, or

(b) from its operations under Parts I, II, IV and VI of this Act during any crop year,

This amendment really ensures that the Canadian Wheat Board losses charged for the contingency fund are not paid into the consolidated revenue fund and that any profits credited would not be paid into the consolidated revenue fund.

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We realize that this fund would actually operate year after year. If this technical clause was not there, everything would go into the consolidated revenue fund payments and the contingency fund would drop down to zero at the end of each year.

The whole intent is that if there are profits, those profits would be carried on to the next year. If there are debts in the fund, they would be carried on so that the contingency fund would operate without having to go to a zero balance and all profits would be turned into the consolidated revenue fund at the end.

So we're trying to keep a consistent year-after-year flow without coming to a zero balance at the end of each year.

The Chairman: Comments? Mr. Benoit and then Mr. Chrétien.

Mr. Leon E. Benoit: I believe in the Wheat Board presentation and in any of the comments from the government side on this clause they're saying that this will cover only initial payment, not cash trading or an early cash-out option. Isn't the board -

The Chairman: Just for clarification, it doesn't cover initial payment, Leon. You might have misunderstood. The contingency fund has nothing to do with initial payment.

Mr. Leon E. Benoit: We're talking here about clause 7. Clause 7 deals with -

The Chairman: It does not deal with this particular amendment, nor does the contingency fund deal with initial payment.

Mr. Leon E. Benoit: I understand that.

I have some other comments to make later on clause 7 that don't really relate directly to this amendment.

The Chairman: Okay. Mr. Chrétien.

[Translation]

Mr. Jean-Guy Chrétien: Let us take an example. One should not try to manage the Canadian Wheat Board like the city of Toronto. If you borrow money or create a deficit in order to build a bridge, future generations who will make use of the bridge can also pay for it. You can spread out the payment for this bridge over several decades.

As for the Canadian Wheat Board, if a producer buys a farm in 1998 and sells it in the year 2000 and works in the grain industry for only two years, I cannot see why he should be made to pay debts contracted before he came into the system and, conversely, why he should benefit from any surplus carried over from a previous year.

Therefore, the fund should be managed maybe not on a weekly basis but at least on a yearly basis. If there ever were a surplus, it should be minimal, a very small percentage in the range of less than 1 per cent. As for deficits, there should practically never be any. If there are any, it should be the government's responsibility to pay them so that the following year new entrants to the industry would not have to bear that burden.

It is not because a farmer comes in at a bad time that he should pay for the mistakes made by the board or resulting from a bad market the year before. Or, conversely, if he comes in at a good time, he should not benefit from the good work done by the Canadian Wheat Board or from the fact that the market the year before or in the last two years was exceptionally good.

[English]

Mr. Pickard: Mr. Chrétien, your points are well put forward. I have no question that your concern is one that had to be dealt with. One of the reasons why we passed Mr. Easter's amendment, which allowed for some movement within the board, and why we had a discussion on negative balances was to maintain a small contingency fund.

That low number in the contingency fund is the direction that we are attempting to go in. As a result, we don't need to try to build up a huge amount that transfers year after year. We have some flexibility in decision-making. Certainly the board members would have to sit down, as was discussed. If they are going to go to a negative balance in that contingency fund, they have to look very carefully at how they're going to handle that negative balance at the time they're dealing with it.

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So the real goal here is to keep a reasonably small contingency fund in place. In dealing with that as well this amendment tries to say: All right, let's not say at the end of the year that the Wheat Board comes up with a profit so that it will go into the consolidated revenue fund. That would be totally unacceptable to the farmers involved.

This really gives them the management of looking at what they're doing with the profit line and maintaining that year after year. At the same time it gives them the flexibility to make sure they can keep their expenditures within reason. If they set up a plan to go to a negative balance on some particular occasion because of a problem they're having, they can enforce that plan and continue it into the next year rather than limit it to the end of the year.

The Chairman: Mr. Hoeppner.

Mr. Jake E. Hoeppner: Mr. Pickard, I wonder if you could give us an example of in what other operation the Wheat Board would make a profit that would go into the consolidated revenue fund. The pool takes care of the profits generated by the sales. In what other areas do they make profits?

Mr. Pickard: Both cash trading and early payments could result in a small profit or a small loss.

Mr. Jake E. Hoeppner: Does that go into the contingency fund though?

Mr. Pickard: That goes into the contingency fund. This motion is saying that the contingency fund would remain year after year. So it's saying that the moneys from the contingency fund at the end of the year will not go into the consolidated revenue fund; they will remain in the contingency fund.

Mr. Jake E. Hoeppner: It says in this amendment that it ``shall be paid to the Receiver General for the Consolidated Revenue Fund''. Is that a mistake then?

Mr. Migie: Mr. Chairman, may I verify this? The key thing is that ``other than profits... that are credited to the contingency fund''. This is viewed as a technical amendment, because unfortunately the contingency fund was set up in part I of the act. Part I of the act requires that any profits go to the consolidated revenue fund. It was always the intention that the contingency fund would continue on from one year to the other.

There was some doubt among the lawyers that because this fund was set up under part I it would ordinarily be turned over to the consolidated revenue fund if it had a balance at the end of the year. We wanted to correct that. So it takes what's currently there in the act and just specifies ``other than profits...that are credited to the contingency fund'' or ``other than losses that are charged to the contingency fund''. Those are the new components. So it clarifies that the contingency fund itself, whether it's positive, negative, or zero, continues on from year to year.

The Chairman: So are you saying that there's no other entity in the board that makes a profit except the contingency fund, Mr. Migie?

The contingency fund itself doesn't make a profit, Mr. Hoeppner.

Mr. Jake E. Hoeppner: No, but it could. It says any other fund...

The Chairman: A contingency fund is a contingency fund; it's not there to make a profit or make a loss.

Mr. Jake E. Hoeppner: Yes, but it's still in the wrong direction here.

The Chairman: A contingency fund may have a positive figure or the contingency fund, according to what's in this, may have a negative figure. Whether that contingency fund needs to be drawn upon or not is because of actions that the Wheat Board takes in particular areas where the contingency fund can be used as a backstop. That's clear in the bill.

I would like Mr. Migie to clarify something. In this it says that ``Profits realized by the Corporation from its operations in the wheat'' other than these profits... Where else does the Wheat Board or can the Wheat Board make a profit? My understanding was that any profits the Wheat Board made were put into the pool. The farmers benefited from that. The Wheat Board comes out with a balance every year. What's being referred to as possible profits of the Wheat Board?

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Mr. Migie: I'm not aware of the board actually having profits that went to the consolidated revenue fund, but there is a provision under part III that everything in the pool gets paid out through its operations or goes to the contingency fund. If there is anything else, and I'm not aware that there ever has been, it would go to the consolidated revenue fund; that's what's in the legislation.

The Chairman: If the Wheat Board does what it has always done and what it's there to do, which is to maximize returns to the producers, any profits or gain on sales from the initial payments are shared and put back into the pool to the benefit of the producer. Therefore, there should never be any money paid back into the consolidated revenue fund.

Mr. Jake E. Hoeppner: That's what I mean, Mr. Chairman. Why is it included as other profits? It sets up the idea that other profits can be made, and I don't think that's the intent of the Wheat Board.

Mr. Migie: The provision is that it goes to either the pool or the contingency fund. If there's anything else, it's to go to the consolidated revenue fund. Sometimes there might be uncashed cheques. Also, the Wheat Board has that special account, which it has used for other purposes.

The Chairman: There's also this provision that allows them to take it out of the pool accounts and put it into the contingency fund, but those are covered by...

Mr. Wayne Easter: There are a couple of other areas. For uncashed cheques they've set up a special fund - CIGI, scholarships, etc. Can you be unequivocal in telling us those areas that could be assumed to be profits, I guess, will not go to consolidated revenue? Second, what about interest on borrowings? That's a big factor. This clause will not affect its current operations in any way, will it?

Mr. Migie: This clause doesn't change anything other than specify that profits and losses related to the contingency fund will not go to the consolidated revenue fund.

Mr. Jake E. Hoeppner: Mr. Chairman, I don't know why it has to be in the clause that there are no other profits. It just sets up a loophole for lawyers to use when there is a dispute. I can see issues such as who is paying for the physical therapist who exercises their employees everyday. I think you're dealing with a real can of worms if you put that clause in there.

Mr. Migie: In the act itself it states:

That's in there now.

Mr. Wayne Easter: What page is it on? I've got the Wheat Board Act, but what page is it on?

Mr. Migie: It's in section 7.

What the amendment is doing is in fact making it clear that whatever balance there is, whether it's profits or losses, in the consolidated revenue fund will not be captured by this clause. The full intent of that fund was so that it could continue from year to year. There was some doubt about it, because it was set up in part I; the drafter therefore suggested we make it clear.

The Chairman: I think we've had sufficient discussion.

Mr. Wayne Easter: The way this is worded worries me somewhat, but -

Mr. Jake E. Hoeppner: [Inaudible - Editor].

Mr. Wayne Easter: No, but if you do go back I want to make it absolutely clear what Mr. Migie said. If you go back to the original act, the same wording is there. It worked extremely well under the original act, so I except it should be all right this time too.

The Chairman: Mr. Benoit, you may have one final comment and then we'll call the question.

Mr. Leon E. Benoit: The question I started to ask before, which the chair thought really didn't apply to this amendment but it does, has to do with the words that are used in the Wheat Board's own brief or presentation to the committee, I believe, and in the government's documentation. They talk about cash trading and early cash-out options. Is it legal currently for the Wheat Board to trade in futures markets, to use futures markets as a...? I know it's happening, but is it legal? Does this legislation change the status?

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A voice: They're doing it, but it isn't legal.

Mr. Leon E. Benoit: Does it make futures trading legal?

Mr. Migie: The legislation certainly clarifies in clause 6, which was just approved...it does list transactions necessary for risk management purposes, including options, futures contracts, and forward contracts. That makes it clear.

As for the current legislation, I'd have to ask the Wheat Board lawyer. There are provisions that appear to allow it, but I know in their presentation to the panel the Wheat Board said they would like it clearer in law that they do have that authority. I would assume there are some provisions that allow for it, but not specifically, except for clause 6, which was just passed.

Mr. Leon E. Benoit: So it's not really just losses in cash trading that can affect this contingency fund, it's also losses in futures trading, is it not?

Mr. Migie: The contingency fund covers three things only. It would cover any loss from an adjustment, which we haven't had historically, cash trading losses. Cash trading losses potentially can involve, in terms of handling cash trading, hedging, which the Wheat Board might take on in order to handle cash trading appropriately. That would be part of cash trading.

Mr. Leon E. Benoit: Is the Wheat Board specifically limited to using futures markets for hedging, or can it also speculate?

Mr. Migie: The legislation noted in the previous paragraph doesn't limit it in that way. It specifically says options, futures contracts, forward contracts, interest rate swaps - anything for risk management purposes, and it would have to be for that purpose.

Mr. Leon E. Benoit: Of course, if the Wheat Board gets into futures trading on the Canadian market, futures trading is so thin they could control the market completely. Even on the American market, they could certainly have an impact over a short term on the market.

As you know, one of the main reasons the board was established in 1935 was to bail out the pools, which had gotten involved in double speculation. They had speculated on the cash commodity and were also speculating on the futures market, trying to influence the market. It was to bail them out of the cash problem; that's why the Wheat Board was put into place. I can see the board itself now getting into the same situation the pools got into.

I understand why the board should use the futures market to hedge at times, but with no restriction I think it gives them too much control on the Canadian market.

It should be pointed out that in this clause I don't understand why futures trading isn't... Futures trading is not normally considered to be a part of cash trading. It's certainly not the normal market lingo. Cash trading is dealing with the actual commodity, futures trading is dealing with futures contracts.

The Chairman: May I put the question on the amendment to clause 7?

Amendment agreed to

Clause 7 as amended agreed to

Clauses 8 and 9 agreed to

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On clause 10

The Chairman: There are no amendments before us on clause 10. Shall clause 10 carry?

Mr. Leon E. Benoit: No, just a minute. I have some comments on this clause, Mr. Chair.

The Chairman: We're on clause 10.

Mr. Leon E. Benoit: The concern with this clause, Mr. Chair, is this. The talk is that we have a partially elected board of directors now, but the reality is that the federal government still has control in certain areas - complete control over decisions made by the directors. So why pretend that farmers are getting more control over the board? This is exactly the type of thing that makes this a charade. Farmers are very limited as to what they really do, what parts of the operations of the board... Certainly, in the area of changing the board, they have a very limited say and the government has an awful lot of control. That's why this clause shouldn't be passed, Mr. Chair.

Mr. Wayne Easter: I can't over-stress this point. What Mr. Benoit is saying is malarkey. He's basically trying to say something here that just is not the case at all. Some of us do have concerns about moving from a commission approach to a board, and in this bill we are moving to a board of directors. We've already conceded that ten of those directors will be elected, which is a clear, two-thirds majority on the board. The board will be able to elect the president from amongst itself. Even in terms of the chief executive officer, they're setting the enumeration. And proposed subsection 3.92(1) of the bill says:

The president is the chief executive officer of the Corporation and has, on behalf of the board, responsibility for the direction and management of the business and day-to-day operations of the Corporation with authority to act, subject to resolution of the board, in all matters that are not by this Act or the by-laws specifically reserved to be done by the board or the chairperson.

This establishes clear control and authority for elected producers to the board. Maybe one of your problems is you don't like to accept the responsibility that goes with it, but the fact of the matter is what you've been trying to say and express are nothing but malarkey.

The Chairman: Mr. Benoit.

Mr. Leon E. Benoit: Mr. Chair, I would like to say that it's the member who's just spoken who is trying to spread malarkey here. Why did United Grain Growers, the wheat growers, and several other groups say during committee travel that they would like this clause thrown out? I think the member should acknowledge that, and there's a very good reason for it. The reason is that this elected board really doesn't have and isn't given the power it should be given. This clause should be thrown out.

The Chairman: Is there any further discussion on clause 10?

Mr. Leon E. Benoit: No, but I would like a recorded vote.

Clause 10 agreed to: yeas 7; nays 2

On clause 11

The Chairman: There are no amendments before us on clause 11. Shall clause 11 carry?

Mr. Leon E. Benoit: No.

The Chairman: Mr. Benoit.

Mr. Leon E. Benoit: Mr. Chairman, I need a minute. I have some debate here. I need a minute to have a look at this.

Mr. Jake E. Hoeppner: Mr. Easter, can you explain the word or define the word?

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The Chairman: Mr. Benoit, do you wish to comment on clause 11?

Mr. Leon E. Benoit: Yes, just a minute, Mr. Chairman.

The Chairman: I'm going to move quickly on clause 11, Mr. Benoit.

Mr. Jake E. Hoeppner: Mr. Chairman, why don't you read clause 11? I didn't bring my book along.

The Chairman: You have it right in your hand.

Mr. Jake E. Hoeppner: No, it doesn't say clause 11.

The Chairman: It does so. On page 9, about 60% of the way down the page on the left-hand side, it says clause 11.

Mr. Leon E. Benoit: Mr. Chairman, I would like the experts to explain why this clause is in there.

The Chairman: It states clause 11, and that's what we're debating. It's the heavy print.

Mr. Migie.

Mr. Migie: This clause would only kick in once we have an elected board of directors. The Canadian Wheat Board would no longer be a crown corporation. It would no longer be an agent of Her Majesty. The borrowing guarantee, which I would now call automatic because of the Wheat Board's status as an agent of Her Majesty, would now have to follow through a series of steps before it is guaranteed by the Minister of Finance.

This clause outlines the steps that would need to be followed. One step is a corporate plan to be presented to the minister. In this case it's the minister designated under the act. Then there's the borrowing plan, and that borrowing plan is submitted annually. So there is a series of steps involved in approving the borrowings. Once that is done, as it says at the end of proposed subsection 19(5), it then ``is guaranteed by the Minister of Finance on behalf of Her Majesty.'' That's the last part of that proposed subsection.

Proposed subsection 19(6), which deals with credit grains and others, states that it may be guaranteed. Because the Wheat Board could not be a crown corporation if it had elected directors, it was felt to be necessary that we have a substitute provision that provides, as closely as we can get, the type of automatic guarantee that the Wheat Board has as an agent of Her Majesty. That's what this provision does.

Mr. Leon E. Benoit: So the purpose of the clause, to paraphrase, is to reduce the liability of the federal government, while at the same time the federal government really, in all practical terms, maintains control over the board.

Mr. Migie: No, the clause -

Mr. Leon E. Benoit: When you look at the information, I think that's the reality of the case.

The Chairman: Speak slowly, Mr. Migie.

Mr. Migie: What the clause does is provide the guarantee that the federal government, through the Minister of Finance, will in fact be guaranteeing all of the borrowings in the Canadian Wheat Board, and that once the steps are followed it is provided for in the law. The reason it was necessary to do this is that with the election of the board of directors, in which the government doesn't appoint all of the directors, it wasn't really possible to have an agent of Her Majesty's status for a body that was borrowing several billions of dollars.

The Chairman: Shall clause 11 carry?

Mr. Jake E. Hoeppner: Mr. Chairman, did you forget me?

The Chairman: I'm sorry, Mr. Hoeppner.

Mr. Jake E. Hoeppner: Thank you, Mr. Chairman.

I'd just like to have assurance here. The last part of that clause reads: ``The Minister of Finance, on behalf of Her Majesty, may, on such terms...''. That tells me that once we have an elected board and the government feels like throwing a few coals into the fire to heat up the situation, they could refuse the guarantees to foreign sales. They could also regulate to whom this board would be selling grain and on what terms. Right?

Mr. Migie: That provision is currently in the legislation to cover the credit grain sales and advances. There was no need to change that, because that is still a ``may''. The Minister of Finance may provide that, as the Minister of Finance may do it right now.

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Provisions one to five above are the ones that we changed, and this is for the guarantee of borrowings. The guarantee of borrowings is guaranteed, but it is the case that the credit grain sales programs and the loans or advances that the government may make in addition to the guarantee of borrowings would be at the discretion of the Minister of Finance, as it is now and as it always has been, to our knowledge.

Mr. Jake E. Hoeppner: Mr. Migie, if you have appointed directors of the Wheat Board, it's very hard to believe that the government would not go along with its own appointees. But once you have farmers running the board, this ``may'' becomes a much bigger ``may'' and I think a much bigger lever. I don't think farmers are going to have much control over their board if that ``may'' is exercised because of politics.

Mr. Migie: But there's no change from what's currently the situation.

Mr. Jake E. Hoeppner: I see that, but the political ramifications are much greater once you have an elected board and the government does not like the direction in which it's going. That ``may'' becomes ``probably not''.

Mr. Migie: There is currently a need for discretion, and it is expected to be needed in the future with respect to a program like credit grain sales, in which there are various risks and in which certain countries would not always be covered. There has to be that kind of flexibility. It's there now, and it's envisioned that it will continue on the same basis.

The Chairman: You might see this, as well, as a safety, because if for some reason a board wished to make a sale to a country that was not a good credit risk, it would certainly be a backstop for the benefit of the producer to be able to have the attention drawn to the board that they might be participating in a risky situation, that they would be doing so on their own hook, and that they would have to answer to the producers themselves for doing so.

Mr. Collins, you had a comment?

Mr. Bernie Collins (Souris - Moose Mountain, Lib.): Well, Mr. Chairman, I fail to see the rationale behind Mr. Hoeppner's thought pattern here. In one instance he was suggesting that we go to a full elected board. We're now at ten. They're going to represent producers. Why would they steer away from their commitment to the producers?

As was said by Mr. Migie, this is in the legislation now. I think your point that it's a mechanism that's there is very significant. This process of electing those people will not change it one bit other than the fact that they will be responsible.

Mr. Jake E. Hoeppner: Mr. Chair, I think this relates very much to the point I made to the Americans when they were here talking to this committee a couple of weeks ago. We can agree on the political terms of fighting a gulf war, and we can agree on the terms of sending peacekeepers into Yugoslavia, but when it comes to grain marketing, the politics of it are such that farmers have very little control over it. I'd hate to see the government get more leverage in this type of situation, because I think once the board becomes farmer oriented and farmer run, the government loses some of that political clout. In my opinion, food production and grain marketing has been used in politics far too often, and I want to avoid it.

The Chairman: Are there any further comments on clause 11? Mr. Easter.

Mr. Wayne Easter: Yes, Mr. Chairman. I just want to point out that this proposed section of the act, when we were doing our hearings out west, was I think widely accepted by producers, because it does provide the provisions for government guarantees in three areas: the initial payments; the credit sales programs; and the guarantees and borrowings, on which no other agency has that kind of guarantee. What we're trying to ensure by this provision of the bill - because it is changing a crown corporation - is that those guarantees do remain. There's certainly commitment on this side to see that it happens. I don't know what would happen if you fellows were ever in.

Clause 11 agreed to

On clause 12

The Chairman: We have a couple of amendments to clause 12. We'll start with number 30 in your package. Is there a mover for that amendment? Mr. Easter.

Mr. Wayne Easter: Mr. Chairman, although this looks like a simple little amendment, it has rather complicated wording.

I would move, Mr. Chairman, that clause 12 of Bill C-72 be amended by replacing lines 26 and 27 on page 10 with the following:

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I'd like to read the way that subsection 24(1) would read, Mr. Chairman. It's on page 10 and it would read:

24.(1) Notwithstanding anything in the Canada Grain Act, and except with the permission of the Corporation, no person shall deliver grain to an elevator, and no manager or operator of an elevator shall receive delivery of the grain unless

The purpose really is to remove the reference in subsection 24(1) to contacts established under section 39.1 of the Canadian Wheat Board Act. Therefore, it pertains to grain delivered to elevators. The original wording of Bill C-72 exempted such contracts from all of section 24 of the Canadian Wheat Board Act, but in fact they should only be exempted from paragraphs (c), (d), and (e) of section 24(1).

The reason that cash purchases made under section 39.1 of the Canadian Wheat Board Act need to be subject to paragraphs 24(1)(a) and (b) of the act relates to the cash advance program, which is administered by the Wheat Board. Any time the Wheat Board purchases grain from producers, it needs to have access to the producers' permit book, which contains records pertaining to the cash advances.

Elevator managers need to be able to make any necessary deductions from producers in order to repay the outstanding cash advances, whether the grain is delivered to the pool or sold under a contract established under section 39.1.

So therein lies the rationale.

The Chairman: Mr. Benoit.

Mr. Leon E. Benoit: Mr. Chairman, this was amended by government in this bill and this amendment is now being reversed. Where is the research on this? Why wasn't that done ahead of time? There are so many things about this bill that just weren't thought out. I guess this is another one. The government first made the amendment and now they're just reversing it with this. What's the reasoning behind that?

Mr. Jake E. Hoeppner: That's Liberal procedure.

Mr. Wayne Easter: You're dealing with the corporation in that part of it.

Mr. Leon E. Benoit: But the Liberal government -

Mr. Wayne Easter: As we go along, we listen to what industry is saying and we want to avoid any pitfalls, Leon. That's what we're doing.

The Chairman: Mr. Jarjour.

Mr. Jarjour: Mr. Chairman, I'd like to clarify that clearly we had amended it originally to provide for what we thought was an exemption for cash purchases. However, in doing so, we were effectively creating the possibility of a significant loophole with respect to the management and administration of the cash advance program. So as a result of that we are suggesting some changes here.

I believe some changes that follow provide for the appropriate exemptions for cash trading.

Amendment agreed to

The Chairman: There's a further amendment before us on clause 12, number 32 in the package.

Mr. Wayne Easter: I would move that Bill C-72 in clause 12 be amended by replacing lines 6 to 8 with ``the Corporation, to''. The new subsection would read as follows:

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Basically that's how it would read, Mr. Chairman. It really places control over the delivery of grain to producer-owned or producer-leased elevator spaces.

Also during the hearings we talked a lot about condominium storage under the Wheat Board. Where Corporation is inserted there now, it used to say Canadian Grain Commission. So it applies to the condominium storage facilities, the same reason really as the previous amendment.

The Chairman: Mr. Benoit.

Mr. Leon E. Benoit: Mr. Chairman, there were concerns expressed about condominium storage, and I think rightfully so. But all this amendment does is take the determination of which condominium storage is acceptable for the exemption away from the grain commission and put it in the hands of the Wheat Board.

The only group I heard recommend that that happen is the board itself. I'm just amazed at how this committee is so willing to accept a proposal put forth by the board unquestioned. The proposals put forth by farmers across the country are neglected.

Mr. Wayne Easter: Are you saying you want appointed commissioners to the Canadian Grain Commission to be in control rather than a majority elected board of producers? That's what we're doing here. We're giving producers greater control.

Mr. Leon E. Benoit: Yes. But as you know, they're really not getting as much control -

Mr. Wayne Easter: You're talking both sides.

Mr. Leon E. Benoit: - at all, Wayne, with the changes that are being made here. Look at the package. They're not given control. There's very little control. I'm not suggesting the grain commission should have that power either. Absolutely not.

Amendment agreed to

The Chairman: Is there any further discussion on clause 12?

Mr. Leon E. Benoit: I have some further comments on clause 12.

The Chairman: Go ahead, Mr. Benoit.

Mr. Leon E. Benoit: It's okay, Mr. Chairman. It doesn't matter.

Clause 12 as amended agreed to

On clause 13 - Conditions for delivery of grain to railway car

The Chairman: We now have some amendments before us on clause 13. Number 34 in the package is the first one. Is there a mover for the amendment number 34 in the package?

Mr. Wayne Easter: Yes, I have it here, Mr. Chairman. I would move that Bill C-72 in clause 13 be amended by replacing lines 16 and 17 on page 11 with the following:

The new section 25 would read as follows:

25.(1) Notwithstanding anything in the Canadian Grain Act, and except with the permission of the Corporation, no person shall deliver to a railway car grain that has not previously been delivered to an elevator under a permit book in accordance with subsection 24(1) unless

The amendment really removes the reference to contracts established under section 39.1 of the Canadian Wheat Board Act and pertains to grain loaded in railway cars. It's basically the same rationale I raised earlier with respect to grain delivered to elevators. So I'll not go through the rationale other than to say it does apply to having access to the producers' permit books on cash advances.

The Chairman: Mr. Benoit.

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Mr. Leon E. Benoit: I'd just like legal counsel to clarify whether this could have an impact on farmers delivering producer cars, or dealer cars, where they load the cars themselves. As a result of this change, is there any possible restriction being put on farmers that isn't there now?

Mr. Migie: The provision right now deals with elevators. The same provision appears a little later. The only difference has to do with delivery of cars. It doesn't have any implications for producer cars.

It's a question of presenting a permit for delivery to the Wheat Board. For the Wheat Board to handle its advance payments program, they wanted that information provided, even if it were for a cash trade by the farmers so that they could check. Therefore this provision was put in to match the one for the elevator.

Mr. Leon E. Benoit: Thank you.

Amendment agreed to

The Chairman: We have a new clause 13.1 in the package before us. Is there a mover for that clause?

Mr. Wayne Easter: Yes, Mr. Chair. I would move that Bill C-72 be amended by adding after line 21 on page 11 the following:

13.1 The Act is amended by adding the following after section 25:

25.1 Paragraphs 24(1)(c), (d) and (e) and 25(1)(c), (d) and (e) do not apply to deliveries made pursuant to a contract under section 39.1.

Mr. Chairman, this has much the same rationale as was presented on the previous two amendments. Only in this case it would apply so that grain purchased under the Canadian Wheat Board cash trading authority should not be subject to quotas, need not be produced on the producers' own land, and need not be delivered at the delivery point named in the producers' permit book. Hence, the Canadian Wheat Board cash purchases are exempted from those particular conditions.

Mr. Leon E. Benoit: So really, in practical terms, this clause allows the board to buy cash grain anywhere, not just from grain companies, or from...? Well, it really opens it up, in terms of where they can buy cash grain.

Mr. Wayne Easter: Correct.

Mr. Leon E. Benoit: As an example, if they want, they can go into the American market and buy cash grain. There's nothing that would restrict them from doing that in this clause, or in any other clause.

The Chairman: Mr. Migie, or Mr. Jarjour, for clarification, as Mr. Benoit has said, does this allow the Canadian Wheat Board, for example, to go into the United States market to buy cash grain, if they so desire?

Mr. Wayne Easter: They could issue an import permit themselves.

Mr. Jarjour: No, sir, this clause... As I mentioned previously, we had earlier exempted cash purchasing from the conditions for delivery to both an elevator and to a railway car.

The previous amendments removed that blanket exemption for cash trading. They make cash trading specifically exempt from paragraphs (c), (d) and (e) of the existing Canadian Wheat Board Act. These paragraphs provide that under cash trade, the delivery need not be subject to a quota, need not be produced on the producer's own land, and need not be delivered at the delivery point named.

The actual provision establishing cash trading is really an enabling piece that would allow the board to purchase grain other than from the designated area, for example.

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Mr. Leon E. Benoit: This could then allow the board to choose to buy cash grain from an individual farmer. It may allow that farmer to sell all their grain to the board, while others are held back by quotas or contracts. Is that something that could happen under...?

Mr. Migie: Clause 20 defines cash trading and refers to subsection 39.1. That's really where it spells out the extent to which the board can buy from different sources, including producers. All this particular clause does is relate to the situation where you have cash trading, however it operates, and when you need to provide between quotas. It's the same provision.

It's really the reference to subsection 39(1) in clause 20 of this bill that deals with the question of the extent to which, in operating cash trading, the board can purchase anywhere it wishes.

Mr. Leon E. Benoit: Yes, I understand that. It's that in the use of their permit books, it's a real change here for farmers.

I understand that it comes from another part of this legislation, but it certainly could allow for some farmers to sell all their grain to the board, while others are being restricted, as they are this year by contracts that aren't being filled.

Mr. Wayne Easter: But this year it's due to the lack of performance of the railways.

Mr. Leon E. Benoit: Blame the railway.

Mr. Wayne Easter: Don't try to lay the blame on the Wheat Board.

Mr. Leon E. Benoit: What's happened, Mr. Easter, is that the board has been getting wrong grain to the coast.

Mr. Wayne Easter: The railways are the problem.

Mr. Leon E. Benoit: Yes, that's a big part of the problem.

Mr. Wayne Easter: Leon's Reform Party.

The Chairman: Any further comments pertaining to the amendment before us?Mr. Hoeppner?

Mr. Jake E. Hoeppner: Yes, Mr. Chairman. I think we heard testimony from the millers a week ago that they have the option of bringing in U.S. grain for their milling needs. Now, how does this clause affect that privilege the millers have?

The Chairman: Can the officials clarify that? The question is that we heard testimony from the millers last week that they have the option of bringing in U.S. grain. Does this clause affect that option of the millers?

Mr. Migie: No, it does not.

The Chairman: It doesn't, okay.

Are there any further comments on the amendment before us? Mr. Hoeppner.

Mr. Jake E. Hoeppner: I'm just wondering, for clarification, does that mean that these millers operate outside the board's jurisdiction?

Mr. Migie: They're not buying Canadian grain in this instance, so they're buying it from the United States. The board doesn't control that.

Mr. Jake E. Hoeppner: To me that's very dangerous. Why will we allow that to happen when we have a sufficient supply of grain in our own country that's of a better quality? Is this a gimmick to force down our own prices?

Mr. Migie: No, it's really a provision we have where there's no tariff from the United States, and there's no import quota from the United States for importation of wheat. So the millers generally choose to buy Canadian wheat because of the quality, the arrangements they have, and the price is pretty close.

Mr. Jake E. Hoeppner: You're dead on, Mr. Migie, and this is why I object to this whole cash-trading business. You're making farmers second-class citizens.

The millers have the right to do it. The farmers do not have the right to go and compete on the American market. And I object to that kind of treatment as far as the Wheat Board is concerned. I want that put on the record.

Amendment agreed to

Clause 13 as amended agreed to

The Chairman: There is a new subclause 14.1 before us, amendment 38 in the package. Is there a mover for that amendment? Go ahead, Mr. Calder.

Mr. Murray Calder, Lib. (Wellington - Grey - Dufferin - Simcoe): I move that Bill C-72 be amended by adding after line 27 on page 11 the following:

14.1 Section 28 of the Act is amended by adding the following after paragraph (h):

(h.1) exempt any elevator from the provisions of this Part, in whole or in part, either generally or for any specified period or otherwise;

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This amendment authorizes the Canadian Wheat Board to issue orders that exempt condominium storage facilities from certain requirements, as per subsection 24(3). The rationale is that in order for the Canadian Wheat Board to issue exemptions for condominium storage facilities provided in subsection 24(3) of the act, it needs the necessary authority to make the orders. This amendment provides the necessary authority. In short, Mr. Chairman, it separates workhouse from condo storage.

The Chairman: Thank you very much.

Are there any comments on this new clause?

Mr. Leon E. Benoit: I have a question, Mr. Chairman. Is it not possible that in designating, the board is actually telling farmers who own condominium space at the elevator what they can do with their space?

The Chairman: I don't think that's the point here.

Mr. Leon E. Benoit: But I believe -

The Chairman: Mr. Migie, do you wish to comment?

Mr. Migie: It doesn't deal with how they can use their space, except to the extent that the board would have to have the regulation-making authority in fact to give the exemptions, not to give the exemptions, or exempt that space. So it's really that question.

So the Wheat Board felt, and the grain commission agreed, that it was probably more appropriate for the Wheat Board than the grain commission to have this authority, because it's part and parcel of the wheat board control of the inflow into the system for deliveries.

Mr. Leon E. Benoit: Yes, and I don't think the point is, who has the control? The thing is that either body has the control over designating farmer-owned...their own grain storage, and really limiting how they can use it. It has the ability to designate in a way that really limits the way farmers can use their own storage space.

Mr. Migie: But they can provide exemptions, which they now do on a case-by-case basis. They have found this to be quite onerous, and this would give them authority to just do it more efficiently. It's in the section of the act that deals with administration, so it's just meant to be a simplifying way to handle condos.

Mr. Leon E. Benoit: My concern is the fact that the Wheat Board has control over the farmers' own storage space, the space they've purchased and want to use. I mean, that's going a step further than when this was put in place in the Canadian Wheat Board Act. It's going a step further than they ever did before.

Mr. Migie: But it's limited to exemption. I mean, the only influence they can have is exempting it.

Mr. Leon E. Benoit: Well, that's a huge influence, isn't it? If they don't exempt -

Mr. Migie: But they have it now.

Mr. Leon E. Benoit: - farmers are limited in how they can use that space.

Mr. Migie: But they have it now, and it's on a case-by-case basis.

Mr. Leon E. Benoit: Well, my point is that it isn't acceptable now.

The Chairman: Are there any further comments on the amendment? It's a new clause 14.1.

Amendment agreed to

Clause 14 as amended agreed to

Clauses 15 and 16 agreed to

The Chairman: There's a technical amendment before us on clause 17. Could I have a mover for the technical amendment?

Mr. Murray Calder: Yes, Mr. Chairman. I move that Bill C-72 in clause 17 be amended by replacing lines 31 and 32 on page 12 with the following:

(2) Paragraphs 32(1)(c) and (d) of the Act are replaced by the following:

(c) where pursuant to paragraph (b), the sum certain payable to producers in respect of wheat of any grade is increased during a pool period, pay to the holder of a certificate that is referred to in paragraph (d) the amount of the increase in respect of each tonne of wheat of that grade produced in the designated area and sold and delivered to the Corporation during the pool period prior to the day on which the increase becomes effective; and

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This amendment makes a change overlooked at the time the bill was drafted to ensure that the recipient of the Canada Wheat Board final payments is the holder of the certificate issued at the time of delivery. The rationale is basically that given the possibility of negotiable producer certificates in the future, the producer to whom a Canada Wheat Board certificate is issued at the time of delivery may not necessarily be the holder of the certificate at the time the final payments are issued.

The Chairman: Any questions? Mr. Benoit.

Mr. Leon E. Benoit: I would like an explanation of how these certificates will be handled, the mechanics of how they'll work in negotiable certificates.

The Chairman: Mr. Jarjour.

Mr. Jarjour: Mr. Chairman, at this point the board really hasn't developed the mechanics for the issuance of negotiable certificates. They've proposed that this would be a mechanism, an option that would be provided to producers. The Western Grain Marketing Panel supported that proposal and indeed it was one of their recommendations that the Canadian Wheat Board Act provide in an enabling way for the issuance of negotiable certificates.

Mr. Leon E. Benoit: How on earth can we be passing a clause here when we have no idea of how it'll work? Will there be a futures contract set up to handle these negotiable certificates? Will the board just have complete control, once again, with the farmer having no bargaining power even on what the value of these certificates should be? Will they be traded on an open market or not? How do we know?

Mr. Jarjour: No. Clearly, the board was working on the details of how negotiable producer certificates would be handled. Certainly the intent is that the board of directors in implementing this new enabling provision would be very much involved in how the program would be handled.

Mr. Leon E. Benoit: Except as we know, this board isn't going to have an awful lot of say... They certainly won't have complete power to make that decision. If they would, I'd feel an awful lot better about it, of course.

The Chairman: I would have to assume that since there's a board, the actions of the board will be voted on by the members of the board. The majority of the members of the board will be producer elected, so they'll have an obligation to represent those who elected them.

Mr. Leon E. Benoit: Of course, as we know, those decisions can be overridden by the Grain Commission and then by the government, so it's...

The Chairman: Mr. Hoeppner.

Mr. Jake E. Hoeppner: For clarification, is it possible that these certificates could be owned by another farmer or a grain company before they're finally paid out in the pool system?

Mr. Jarjour: That would be possible.

The Chairman: Since this program was to be put in place by the Wheat Board, it would be the personal choice of the producer if they wish to sell their certificate and at what price they wish to sell it, if I understand it correctly.

Mr. Benoit.

Mr. Leon E. Benoit: Mr. Chairman, who would set the price then if it's a transaction between the farmer and the farmer?

The Chairman: The seller.

Mr. Leon E. Benoit: So then the board would have no influence on them.

The Chairman: Right. I understand the price would be set between the buyer and the seller.

Mr. Leon E. Benoit: How?

The Chairman: If I owned the certificate and you wanted to buy it, we'd have to come to terms, Mr. Benoit. How we did that would be between you and me.

Mr. Leon E. Benoit: What kinds of restrictions might be on the trading of these certificates?

The Chairman: If you want to pay me a premium for what I think I might get for a certificate in the end, I'd gladly take your money.

Mr. Leon E. Benoit: Where does it say that in the legislation?

The Chairman: It doesn't say it can; it doesn't say it. The word ``negotiable'' would cover that.

Mr. Jake E. Hoeppner: Mr. Chairman, I thought when we were discussing this issue before it was only the Wheat Board that was going to be in control because they set the price according to the Crow.

The Chairman: No, I don't believe... Mr. Jarjour.

Mr. Jarjour: No, the certificate would be negotiable. Once the producer was issued a certificate they could buy and sell or trade the certificates.

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The Chairman: Correct me if I'm wrong. The certificate is the property of the owner of that certificate. There would be nothing saying that the owner of that certificate would have to sell it or trade it. There would be nothing saying that they didn't have to. That would be another producer choice available to the owner of the certificate.

Is there any further discussion on this amendment to clause 17? Mr. Benoit.

Mr. Leon E. Benoit: Mr. Chairman, I move that we suspend this committee hearing until we get some further explanation on this clause.

The Chairman: We have to deal with the amendment first before we take a motion. We have an amendment on the table.

Yes, Mr. Easter?

Mr. Wayne Easter: The closer we get to the market that the Reform Party talks about so much, the less they want it. It's strange.

A voice: I don't think they understand it.

The Chairman: I would like some clarification, Mr. Benoit. What's your motion, specifically, again?

Mr. Leon E. Benoit: I move that we suspend the committee hearings until we get clarification on this clause.

The Chairman: Is there a seconder for the motion?

Mr. Jake E. Hoeppner: I'll second that.

Mr. Leon E. Benoit: I'm sure it'll pass, too.

Motion negatived

The Chairman: We'll go back to the amendment before us. Mr. Jarjour, do you have a comment on the amendment to clause 17 before the committee?

Mr. Jarjour: I have a point of clarification, Mr. Chairman. The authority for the Wheat Board to issue negotiable certificates was included in clause 6. That authority already exists in clause 6. What this was doing was making some minor technical changes to the holder of the certificate.

Amendment agreed to

Clause 17 as amended agreed to

The Chairman: The next amendment that is referred to is the one we adopted earlier, proposed section 33.01 in clause 18. It's amendment 42 in the package.

Shall clause 18 carry as amended?

Clause 18 as amended agreed to

The Chairman: I think we've carried that one twice, to be honest with you. So it's well done.

Clause 19 agreed to

On clause 20

The Chairman: There are no amendments before us on clause 20. Shall clause 20 carry?

Mr. Benoit.

Mr. Leon E. Benoit: Mr. Chairman, my question has to do with the discussion on cash purchases. Did the government consider the possible impact on the feed grain market?

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Giving the Wheat Board the power to buy on the cash market when farmers don't have the freedom to export freely could really give the Wheat Board an incredible amount of control over the market. They can drive prices for feed grain down dramatically over a period of time, or possibly up. That's a real concern to feeders. This was expressed right across the west during the hearings.

I just don't see in practical terms how this can work without having an undue impact on the feed grain market. I'd just like some comments on whether the government even considered this possible impact.

Mr. Migie: Originally the Canadian Wheat Board was one of the proponents of having the power to cash trade. They were raising it in the context of situations where they felt they could not raise the initial payments to attract barley for an export market because of the risk of deficit.

Yet there were clearly good opportunities that Canadian farmers could benefit from abroad. If they had the power at that time to use cash trading, they would have been able to solve that particular problem, which is to satisfy a market opportunity without creating any undue risk in terms of the whole initial payment. They wanted that added flexibility.

In addition, you had the Western Grain Marketing Panel that looked at that option, that power. It also had other ideas of how cash trading could be used. They had proposed, as you recall, that there be at least a minimum of a certain amount of cash trading. We've seen some experience in Australia where cash trading is used quite heavily for their domestic market sales.

To have the power there was felt to be something that would be a useful tool for the Canadian Wheat Board to have. At the time of the panel there was a fair bit of debate about how this power should be used and whether it should be used frequently in some situations or strictly as an adjunct to the pool.

The bill here leaves it up to the Wheat Board board of directors and the legislation, which guides its use in terms of orderly marketing as the primary objective that's stated in the act. Then it would be up to the board of directors to determine whether it's used in a small way as periodically an adjunct to the pooling or in a larger way for certain types of products. It will be up to the board to decide.

Mr. Leon E. Benoit: Mr. Migie, I can't believe you would do that twice. When I brought this issue up before, you went so far as to say the panel had recommended this change. The panel recommended this change, Mr. Migie, with an open market where farmers had direct access to the export market in barley.

This is entirely a different situation, so is it a different situation that the Australian Wheat Board operates under. Farmers have far more options. So I think it's dishonest to say that comparison is a valid comparison.

Mr. Migie: What I said, and it's accurate, is that the panel did recommend cash trading, the Australian Wheat Board using cash trading, the Canadian Wheat Board -

Mr. Leon E. Benoit: But under completely different circumstances.

Mr. Migie: They were all variations on it. What the bill does is give the power to cash trade but leave it up to the board of directors to decide how they will use that power within the limits of this legislation, which covers off the primary goals of orderly marketing.

I didn't say we're applying it the same way Australia is, or the same way the panel is, or the same way that might have been forward by the Canadian Wheat Board before the panel. What I'm saying is the legislation would give that power to the board of directors. It will be up to the board of directors within the ambit of this law to decide how it's used or how frequently it's used.

Mr. Leon E. Benoit: Again, I think the cash trading would be a really good option for the board to have if farmers had access to export markets. There's no problem there. They could manipulate the market. Farmers can just ship around them in a case like that.

Under this circumstance it's an absolute disaster to the feed grain market, to farmers selling feed grain and to feeders buying to have this kind of potential impact from the board. It's absurd putting this clause in without ending the monopoly.

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The Chairman: Mr. Easter, then Mr. Hoeppner.

Mr. Wayne Easter: Of course it's not ending the monopoly, because as we were clearly told by the majority of producers - and it showed through in the barley vote as well - the majority of producers support single-desk selling through the Canadian Wheat Board as a marketing agency. The two can't work in parallel. You can't have a dual market and a single-desk selling agency operating together. Give your head a shake.

What this is, as I think Howard explained, is enabling legislation. It puts producers in control of their own destiny if they want to use it or not.

One point I want to clarify is that we constantly hear Mr. Benoit bringing up the Australian Wheat Board. There's a big difference between Australia and where it's situated in terms of marketing and the export industry and where we're situated. We have the United States right next door, ten times our size. So there are altogether different implications on marketing with the U.S. next door and the export market versus what Australia does. You're talking about apples and oranges. That's not unusual.

The Chairman: Mr. Hoeppner.

Mr. Jake E. Hoeppner: Mr. Chairman, I think Mr. Migie should realize the Western Grain Marketing Panel's recommendation, especially on wheat, suggested farmers designate or could designate up to 25% of their wheat. I can see that would be a lot more workable situation than where one farmer can designate everything to the board or even have the board purchase his grain from outside of the Canadian market. To me, that is the big difference. I don't think the Wheat Board can survive if you're going to implement those provisions and not give farmers access to the market where the Wheat Board goes and buys its grain.

Mr. Migie: They actually did both. They recommended the power be there for cash trading and in the section on wheat and barley marketing they had a series of recommendations, one of which was that as a minimum the Wheat Board for western red spring should use at least 25% cash trading. That is not in the bill. It's left strictly to the Canadian Wheat Board board of directors to determine.

Mr. Jake E. Hoeppner: I was under the impression, Mr. Chairman, that the panel's recommendation was that the cash buying that would be going on by the Wheat Board had to be of Canadian grain and that it could not go outside the Canadian market.

The Chairman: Are there any further comments?

Mr. Jake E. Hoeppner: Am I right or wrong?

Mr. Migie: I don't recall seeing that specific wording or intent in the panel's recommendation, Mr. Chairman.

The Chairman: Are there no further comments on clause 20?

Mr. Leon E. Benoit: I just have one quick one, Mr. Chairman. I'd just like to make it very clear for the record that I would support this change if the Wheat Board monopoly on export sales wasn't in place and farmers had a choice. If they had a dual market, it would work. But it cannot work under the terms that this is being put in place. It cannot work. It'll be a disaster.

Clause 20 agreed to

The Chairman: There are no amendments before us on clause 21.

Clause 21 agreed to

On clause 22 - Exclusion

The Chairman: There's amendment before us on clause 22. Is there a mover for the amendment, number 44, in the package?

Mr. Wayne Easter: Can we hold that for the report stage?

The Chairman: Okay.

Clause 22 agreed to

On clause 23

The Chairman: There's a technical amendment before us on clause 23.

Mr. Leon E. Benoit: Just a moment, please.

The Chairman: I'm sorry, it's carried.

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Mr. Leon E. Benoit: Mr. Chairman, why is this government, after three and a half years of not acting on the board, all of a sudden trying to ram this thing through here?

The Chairman: Mr. Benoit, I'm not ramming it through. I said there were no amendments. Hearing no comments, I asked for the motion to carry, and we did.

Mr. Leon E. Benoit: I had my hand up, Mr. Chairman.

The Chairman: No, you didn't have your hand up.

Mr. Leon E. Benoit: Yes, I did, Mr. Chairman.

The Chairman: No, you didn't.

We have an amendment before us on clause 23. Is there a mover for that amendment?

Mr. Pickard, we're on the technical amendment numbered 46 in the package. It's amendment G-4. It's a technical amendment.

Mr. Pickard: Mr. Chairman, I had another issue that I had to deal with for a few minutes.

The Chairman: That's understandable.

Mr. Pickard: I move that clause 23 of Bill C-72 be amended by replacing lines 17 and 18 on page 17 with the following:

(c.1) granting permission to transport wheat or barley that is not described by a grade name or by reference to a sample taken pursuant to the Canada Grain Act, or any wheat products or barley products, under any circumstances or conditions that may be prescribed by regulation;

(c.2) granting permission to transport, sell or buy, in Canada, feed grain, as that term is defined in the regulations, or wheat products or barley products for consumption by livestock or poultry, under any circumstances or conditions that may be prescribed by regulation.

The new wording basically is to incorporate feed grain into the legislation. This amendment will clarify the regulations giving the authority to do that. The rationale is that some concern was expressed when Bill C-72 was tabled on the legality of open domestic feed grain market and, more particularly, on the legality of regulation SOR/DORS/93-486, under which the domestic feed grain market was established. Although no specific proposals to rectify the situation have been put forward, the issue did arise on several occasions during the hearing process.

It's unlikely that SOR/DORS/93-486 would ever be changed in a court of law. Even if it were, it's unclear what the outcome would be in a challenge. Nevertheless, in light of the doubt that was smouldering around that issue, they decided to make this amendment.

The Chairman: Thank you very much, Mr. Pickard. Mr. Benoit.

Mr. Leon E. Benoit: It's interesting that this amendment has come forth, because Mr. Goodale, in a press conference, said that the farmers' concern and Reform's concern on this clause was a red herring. That's the term he used. He said they were just raising a concern that really isn't there.

I would suggest that because this amendment, which seems to clarify this, is in fact being made, the government is recognizing that farmers were absolutely right and that Reform was absolutely right in expressing a concern. My question is whether the minister will apologize for making fun and making light of farmers' concerns on this issue. Why didn't he just say up front that if it isn't clear, he would fix it?

I'll certainly support this amendment, because according to the advice we've got, it does fix it. But why didn't he just take that approach? Why didn't the minister just say up front that he's heard this concern enough now to know that there's a problem and that he'll change it and clarify it?

Mr. Pickard: Mr. Benoit, neither I nor the officials here can speak for Mr. Goodale's interpretation or Mr. Goodale's feeling towards it.

I think the important thing here is that an amendment was brought forward to rectify any concerns that were there. I think that shows something. We've all day been listening to many amendments that the government brought forward. We said in this process we will listen to people, we will deal with those concerns. There's absolutely no question that every amendment that comes forward is coming forward because concerns have been raised, and the minister has tried to rectify those concerns.

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Mr. Leon E. Benoit: That means this government is prepared to act on red herrings, as well, Mr. Chairman. It sounds like the government's willing to do pretty well anything to make it look like they're doing something, and acting on a red herring would seem to me to be -

Mr. Pickard: Maybe I could just point out exactly what the minister said, as well. I have the comment here. He said:

He said that he would listen to the comments, act upon them to make it clear. He didn't say it was a red herring. You only put in your version. The wording here is from the minister's comment.

The Chairman: Thanks, Mr. Pickard. Mr. Hoeppner.

Mr. Jake E. Hoeppner: Thank you, Mr. Chairman.

I'm just wondering whether the government officials could explain the rationale for giving permission to transport wheat or barley not described by a grade name or by reference to a sample taken pursuant to the Canada Grain Act. What are you accomplishing here? Why is that loophole there? Is it so that you can move grain out of the province or out of country without, first of all, distinguishing the grade?

Mr. Migie: No specific proposals came forward as to how to amend the act, there was just a concern. So we went to the regulations, which have existed now for the domestic feed grain market, took the words as they were in the regulations, and said if there's any doubt they could be gone, let's put them into the bill itself. Those are the same words that are in the bill that covers feed grain.

Mr. Jake E. Hoeppner: To me this really opens the loophole for moving number one high protein wheat out of the province, or even out of the country, without its being designated as such and the people claiming it is feed or non-board grain. How are you going to protect that from happening?

Mr. Migie: The words ``not described by a grade name'' are currently in the regulations now.

Mr. Jake E. Hoeppner: But does that make it right?

Mr. Migie: The advice we have is that it does work and that it is the proper way to phrase it.

Victor.

Mr. Jarjour: It also clarifies that wheat may be transported interprovincially prior to having been through the grading system - having been delivered to an elevator and subsequently having received a grade. That's the only intent here.

Mr. Jake E. Hoeppner: To me it really undermines our superiority in the grades or quality grains by allowing this to happen. Your chance of mixing up your different grade samples and getting illegally grown grains into the system are going to be a lot more severe when this is allowed to happen, when you don't have to identify the grade, value, or whatever of that grain. How can you keep track of where it's moving?

The Chairman: Are there any other comments on the amendment?

Mr. Jake E. Hoeppner: I'd like to have that explained. To me it's an important issue. We want to maintain our high quality standards. We heard that time and time again during the hearings.

The Chairman: Mr. Pickard, can you or the officials comment?

Mr. Jarjour.

Mr. Jarjour: This section deals with the permission to transport interprovincially. It's not to market, it's simply to transport, and therefore it allows -

Mr. Jake E. Hoeppner: But what do you do with it?

Mr. Jarjour: You have permission to transport from one province to another, deliver it to an elevator, and subsequently have the grain graded.

The Chairman: Mr. McKinnon.

Mr. Glen McKinnon: Does this apply to millers and their products as well, gentlemen?

Mr. Migie: If it's for feed grain.

Mr. Glen McKinnon: Just feeds.

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Mr. Pickard: I believe it does apply to others. We'll get a clarification on it, Glen. That was a good question.

Mr. Glen McKinnon: Okay.

Mr. Leon E. Benoit: I have a question in that area, as well. I wonder whether it would change things so that a farmer would have the right to sell his milling wheat to a miller down the road without getting a permit from the board to do it. Does this change that?

Mr. Jarjour: No, it makes no change in mandate at all. The first, (c.1), deals specifically and only with the transportation of wheat interprovincially and does apply to any grade, because it has not yet been graded.

Mr. Leon E. Benoit: So under the Wheat Board Act a farmer still can't legally transport his grain to a neighbour who might have a flour mill and sell his grain directly to that neighbour, without going through the board?

Mr. Jarjour: This makes no change to the Wheat Board's marketing mandate.

Mr. Leon E. Benoit: I know. I just wanted to get the absurdity on the record.

Amendment agreed to

Clause 23 as amended agreed to

Clauses 24 to 30 inclusive agreed to

On clause 31 - Termination of Commissioner appointments

The Chairman: There are no amendments before the committee on clause 31. Shall clause 31 carry? Mr. Benoit.

Mr. Leon E. Benoit: Mr. Chairman, is there anything in this legislation that will determine the type of severance package and other possible pay-outs to these commissioners when their job is terminated?

Mr. Pickard: It is my understand that the remuneration will be set by the board not only in pay but in other benefits as well.

Mr. Leon E. Benoit: Are you saying -

Mr. Pickard: I'm sorry. Howard.

Mr. Migie: Was your question regarding the current commissioners?

Mr. Leon E. Benoit: Exactly.

Mr. Migie: The legislation itself doesn't spell that out. They have current arrangements, and governments of course will honour any current arrangements that commissioners have.

Mr. Leon E. Benoit: Is there anything in this clause that will require that any packages or any other remuneration be made public or available to all board members? Is there anything in here that does that?

Mr. Migie: There's nothing within this legislation that deals with it. It's more that the current commissioners have contractual arrangements, if I can use that term. They will be honoured. Whether or not there are any payments, I wouldn't know. There's nothing right now required under the act or left up to the current arrangements. They're Order-in-Council appointments.

Mr. Leon E. Benoit: Just for clarification, under the current arrangements exactly who does know what these payments are?

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Mr. Migie: It's not a question of knowledge. It's more that the legislation itself doesn't change any arrangement that they would have had as a result of their current appointment.

Mr. Leon E. Benoit: No, it's exactly a question of knowledge. I'm just asking you under the current legislation who is required to know what a commissioner who is terminated from a position is going to be paid, all the various payments the commissioner will receive.

Mr. Migie: I know this is something they would know, because they would have had to sign something.

Mr. Leon E. Benoit: The commissioners themselves would know.

Mr. Migie: I suspect Treasury Board and the Privy Council are others that have access to that kind of personal information.

Mr. Leon E. Benoit: You're basically saying that the partially elected board put in place still won't have access to this, and it'll be as secretive as ever. The termination of these commissioners will be done in secret just as the pay-outs even on commissioners voluntarily leaving have been in the past.

Mr. Migie: There's no change in the termination arrangements that they have, other than spelling it out in the law. Clearly once the section comes into force those positions are terminated and then they have whatever their own personal arrangements they would have as Order-in-Council appointees.

The Chairman: The question that Mr. Benoit is raising is that yes, we all know they're Order-in-Council appointees. Are the contracts and agreements they have as Order-in-Council appointees... When they're appointed their salary range is stated, etc. Is that knowledge available to the public?

Mr. David Byer (Legal Counsel, Department of Agriculture and Agri-Food): I can't speak to the internal practices of the PMO. When a commissioner is appointed he is appointed under part III of the existing act, and that appointment certificate would have been gazetted. Those are the conditions of his appointment.

Mr. Leon E. Benoit: Yes, but I'm talking about the conditions of his release, the termination of services here.

Mr. Byer: The termination that you see is what -

Mr. Leon E. Benoit: That isn't laid out in anything I've ever seen. The only place I've seen a figure on that was as a result of a document leaked from the secrecy of the board a couple of years ago. We saw under this that even a commissioner voluntarily leaving can in fact get up to $290,000 in termination fees. The public farmers who pay this bill have no ability to see what is being paid out. Once again, they won't have that under this legislation either. Nothing is going to change that secrecy.

Mr. Migie: The only thing I can add is that there is a restriction on the ability of commissioners to work in the grain industry for a period of time. That has some limitations on their ability to earn funds and it's part of their termination package. I don't know the details of it.

Mr. Leon E. Benoit: Nobody does, and that's my point.

Mr. Byer: Once the new board of directors is elected it would have access to all those records.

Mr. Leon E. Benoit: The new board of directors will have access to those records. Okay, I want you to be very clear on that now. You're saying that the new board of directors, once elected, will have access to all of the documentation on the pay and severance and so on of past commissioners.

Mr. Byer: They would be controlling the corporation.

Mr. Leon E. Benoit: So they will have access to all of the documents regarding, for example... Who was the last commissioner? Ken Beswick. What he was paid out in severance, or any past commissioner, will absolutely be made available to the directors. It has to be under every act except this act.

Mr. Wayne Easter: I suspect you have to sign a confidentiality agreement. They can't go around putting this stuff on the front page.

Mr. Jake E. Hoeppner: We might have to get the shredders out before we get this bill passed.

Mr. Wayne Easter: That's right. You never know. Just imagine what it'll be like in the Reform offices.

Mr. Leon E. Benoit: Get them from the defence minister. He knows where they are.

Some hon. members: Oh, oh.

Clause 31 agreed to

On clause 32

The Chairman: We have a number of amendments before us on clause 32. Is there a mover for the first amendment before us, which is number 48 in the package circulated by the clerk?

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Mr. Bernie Collins: I move that Bill C-72, in clause 32, be amended by adding after line 42 on page 19 the following:

(1.1) Subsection 3.6(1) of the Canadian Wheat Board Act, as enacted by section 3 of this Act, comes into force on the earlier of December 31, 1998 and the day fixed by order of the Governor in Council.

The new section would read as follows...and the rationale before it:

Most witnesses appearing before the committee expressed a desire to have the bill be explicit as to the date on which a majority of the directors will be elected by producers. This amendment addresses this concern. What it does is set dates for the start.

The Chairman: Are there any comments on the amendment?

Mr. Wayne Easter: It should be noted that majority now is two-thirds. It's 10 of the 15, based on the previous resolution to that.

The Chairman: That's not in the amendment, but that was done earlier today.

Mr. Wayne Easter: Just so that it's clear.

Mr. Jake E. Hoeppner: Mr. Chairman, for clarification - we know we're in election mood - does this date really become important if this bill does not go through the Senate? Isn't it a bad bill?

The Chairman: Mr. Hoeppner, the way the place works around here is that if this bill goes through the Senate and gets royal assent, yes. If it doesn't go through, then none of the bill takes place. Since it's part of the bill, it obviously wouldn't happen.

Mr. Jake E. Hoeppner: That's what I'm wondering, whether we're fighting over something I don't think the Liberal government will want to go to an election into western Canada with, and that's this bill. I think we're wasting our time discussing this.

Amendment agreed to

The Chairman: There is another amendment before the committee for clause 32. Mr. Collins.

Mr. Bernie Collins: With regard to clause 32, I move that it be amended by replacing line 1 on page 20 with the following:

The new subsection would read as follows - and I have submitted it:

(2) Sections 4, 11, 24 and 28 of this Act, subsection 3.3(1) and 3.9(1) of the Canadian Wheat Board Act, as enacted by section 3 of this Act, and paragraph 6(1)(c) and (c.01) of the Canadian Wheat Board Act, as enacted by subsection 6(2) of this Act, come into force on the date referred to in section 3.8 of the Canadian Wheat Board Act, as enacted by section 3 of this Act.

As long as the Canadian Wheat Board continues to be a crown corporation, the Governor in Council will continue to set the remuneration of directors and the president as is done with all crown corporations. After the Canadian Wheat Board becomes a mixed enterprise, the board will fix remuneration of directors and the president as was suggested by most witnesses before the committee.

The Chairman: Mr. Benoit.

Mr. Leon E. Benoit: I have a question for the mover, Mr. Chairman. I'd just like to ask the mover who set the interim board's remuneration.

Mr. Bernie Collins: The interim board.

The Chairman: He just said the Governor in Council. He just gave that to you when he made his comment.

Mr. Leon E. Benoit: For the interim board?

The Chairman: It's still a crown corporation until the first person is elected.

Mr. Leon E. Benoit: Okay. I have one more question. It's on the phase-out period for the advisory committee. It seems an awfully long phase-out period. I'm just wondering what the reasoning for that is.

Mr. Migie: There were a couple of considerations. One had to do with the timing of the next election, which ordinarily for the advisory committee would be late next year.

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While there is an interim board and no elected producers, they felt there should be a need for the advisory committee elected by producers to provide their input. Otherwise you could have a period of a year where no direct advice would be given. The advisory committee may have some very useful suggestions to make as the board is going through this transition from a fully appointed, through an election process, to a fully elected board.

Mr. Leon E. Benoit: Certainly another way to handle that would be to move the date that we move to a fully elected board, which isn't in this legislation, to move that ahead and to extend the period of the current advisory committee rather than go to the expense of another election, which really doesn't mean much anyway.

The Chairman: Mr. Hoeppner.

Mr. Jake E. Hoeppner: Thank you, Mr. Chairman.

I'd like to bring forward one proposal I made to the minister about two and half years ago, that we could speed up things a lot by just firing the commissioners and allowing the advisory board to run the board until the elections are held. I think they could probably do a better job for us than we've had so far. I don't know whether this will make me a point with the advisory board or not, but I might get a Christmas card again from these people.

Amendment agreed to

The Chairman: We have another amendment for clause 32, number 52 in the package before the committee.

Mr. Bernie Collins: Mr. Chairman, I move that clause 32 be amended by adding after line 7 on page 20 the following:

(2.1) On the date refered to in section 3.8 of the Canadian Wheat Board Act, as enacted by section 3 of this Act, section 3.4 of the Canadian Wheat Board Act, as enacted by section 3 of this Act, is replaced by the following:

3.4(1) The board shall designate one director to be the chairperson and may fix the remuneration of the chairperson.

(2) The chairperson shall perform the duties conferred on the chairperson by the by-laws, shall call and preside at the meetings of the board and shall determine the agenda at those meetings.

(3) If the chairperson is absent or unable to act, the board may designate one of the directors to act as chairperson.

With regard to the rationale, the bill currently reads that the Governor in Council may designate the chairperson and fix remuneration for the chairperson. This would continue to be the case as long as the Canadian Wheat Board remains a crown corporation. However, this amendment provides that after the Canadian Wheat Board becomes a mixed enterprise, the board of directors would select its own chairperson and fix remuneration of the chairperson. So noted, Mr. Chairman.

The Chairman: Are there any comments on the amendment? Mr. Hoeppner.

Mr. Jake E. Hoeppner: Mr. Chairman, I'm just wondering if they could explain the regulation as far as duties of the chairperson are concerned. Does he have the authority to cast a vote to break a tie when the board is in dispute or when it's a very close vote? Some boards have that duty and others don't.

The Chairman: I would think that would be the parliamentary procedure that the board itself would choose to set in place to follow. Mr. Byer may wish to comment.

Mr. Byer: Through the by-laws.

Mr. Jake E. Hoeppner: Okay.

Amendment agreed to

The Chairman: We have a 15-minute bell. We can still continue, as we don't have very far to go to get to the House today.

We have another amendment before us, number 54 in your package - a technical amendment. Mr. Pickard, do you wish to speak to that amendment?

Mr. Pickard: I would move that Bill C-72 in clause 32 be amended by replacing line 18 on page 20 with the following:

.1230

This amendment makes a change to the coming into force provisions of Bill C-72 to bring into force, immediately upon passage of the bill, the change to subsection 33(2) of the Canadian Wheat Board Act, which enables the Canadian Wheat Board to issue final payments at any time following the closing of the pool, no later than January 1.

When drafting the bill, the coming into force of change of subsection 33(2) was inadvertently linked to the sufficiency of the contingency fund. This amendment rectifies this situation and ensures that the Canadian Wheat Board will be able to issue more prompt final payments immediately upon passage, so it really gives them the opportunity to issue those final payments more quickly.

The Chairman: Are there any further comments? Mr. Benoit.

Mr. Leon E. Benoit: Yes. Just by way of clarification, then, what this amendment is meant to do is to fix up some shabby drafting. It's just another demonstration that this legislation has not been well thought out. I'm not putting any blame on the draftspeople. It is the government's responsibility to make sure this is done right and it's clearly the government that has put forth this legislation, which has been drawn up very shabbily.

The Chairman: The government listens to people's concerns.

Amendment agreed to

The Chairman: There's one further amendment before the committee, number 56. Is there a mover for the amendment? No mover? It's withdrawn.

Clause 32 as amended agreed to

The Chairman: We have to go back. We stood clause 3. Are there any further comments on clause 3?

Mr. Leon E. Benoit: Mr. Chairman, I do have some comments, but I would like to get to the vote now. We can come back and deal with this after the vote. I have quite a few comments and questions on this. We're not going to get it done before the vote.

The Chairman: We will adjourn and we'll reconvene at 3:30 p.m.

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