[Recorded by Electronic Apparatus]
Wednesday, October 9, 1996
.1657 
[English]
The Chairman: I call the meeting to order.
Mr. Pickard, you have officials with you from the department to go over Bill C-38, the Farm Debt Mediation Act. I turn it over to you.
So that everyone is clear, there will be bells at 5:45 p.m. for a 6 p.m. vote. So we have until about 5:52 or 5:53, because we just have to go down the hall.
The officials have already indicated that they'd love to come back after the vote - no, they haven't indicated that at all.
Proceed, Mr. Pickard.
Mr. Jerry Pickard (Parliamentary Secretary to the Minister of Agriculture and Agri-Food): Thank you very much, Mr. Chairman. I think the officials did smile when you suggested that.
The Chairman: Yes, they did.
Mr. Pickard: That smile was not necessarily a vote of confidence.
I have with me Lois James, manager of adaptation policy for the department; Julie Mercantini, senior policy development officer; and Diane Fillmore, our legal services counsel.
I'm pleased to have the opportunity to come to you on Bill C-38, the Farm Debt Mediation Act. This new legislation will repeal the existing Farm Debt Review Act and replace it with a simplified mediation service for insolvent farmers, to meet the current and future needs of that industry. Ten years ago the Farm Debt Review Act was proclaimed as a response to the debt problems in the farm sector at that time. The act established Farm Debt Review Boards in every province to assist farmers and their creditors in reaching mutually satisfactory arrangements.
That act, which is still in place, has two sections: section 16 provides a financial review by Farm Debt Review Board panels for farmers in financial difficulties, and also allows farmers to apply for help in mediating with selected creditors; section 20 provides a stay of proceedings for up to 120 days and a review by the panel with farmers' creditors.
The act is currently administered by public servants in the board offices. There are also 10 chairpersons and approximately 20 board members, who are all Order in Council appointees and who provide review service. There are also field experts on contract who do financial assessments.
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The proposed Farm Debt Mediation Act is the result of cross-Canada consultations with farmers and their creditors, as well as provincial governments. It became apparent through these consultations that although there are many changes that should be made to provide the efficiency of the act, there is still a need to help farmers in insolvent situations. Bill C-38 will therefore provide the same benefits for insolvent farmers; that is, a stay of proceedings, a review, and mediation.
Under the act, a secured creditor who intends to realize on the security of the farmer who is not meeting his or her financial obligations must send the farmer a notice of intent 15 days before taking any action to realize that security. The insolvent farmer may then apply under the act for a 30-day stay of proceedings. During those 30 days, the farmer's creditors cannot seize his or her assets or take legal proceedings against the farmer. During the stay of proceedings, a financial review of the farmer's situation will be performed and the farmer's creditors will be invited to participate in a mediation process to achieve a mutually satisfactory debt resolution.
That arrangement will take, I guess, 30 days. If more than 30 days are required for resolution to that process, there may be granted three further extensions of 30 days each, which will bring it to 120 days.
Those details surrounding the notice of intent and the stay of proceedings have not changed, because the farmers and creditors alike are generally comfortable with the current stay process. It allows farmers time to undergo mediation and work out with their creditors a way to resolve the debt situation. However, a number of administrative changes were recommended to the way the current legislation works. In order to accommodate these changes it was necessary to completely re-do the act, whereby the old act would be repealed. I would like to go over a few of those changes quite quickly.
Mediation, which is a foundation of the administrative process of the act, will be embedded in the new legislation. The word ``mediation'' was not used even once in the current Farm Debt Review Act. Having it embedded in legislation will ensure that the mediator is not advising the farmer or negotiating on behalf of the farmer or creditor, but rather that a true impartial mediation process is used in all cases.
By targeting Bill C-38 for farmers who are insolvent, we're once again focusing the intent of the act on mediation. If a farmer is in financial difficulty but not insolvent and is still able to pay his or her debts, there may be a need for financial advice to get the farm operation back on track, but the farmer will not need mediation.
There are other federal and provincial programs to help farmers in financial difficulty. In fact we will be implementing the new farm consultation service for farmers in financial difficulty to provide the same type of financial review and one-on-one counselling that is currently provided under section 16 of the existing act. We will also be improving it to provide a pathfinding service for referring farmers to the other related public and private programs and services. The farm consultation service, which does not require legislation, will be up and running at the same time as the old act is repealed.
There will be no Order in Council appointments boards under the new Farm Debt Mediation Act. Currently there are 32 board members, and we've had as many as 100 Order in Council board members at one time. Rather, the mediators will be individuals with training in mediation, with experience in agriculture and finance. They will be under contract to provide mediation as needed in individual cases. It is expected that many of the existing board members will continue as mediators under the new act.
Another major difference that will help to streamline the process is that we are doing away with the legislative requirement for a three-person panel in every mediation meeting. Under the current Farm Debt Review Act, there must be a chairperson and two other experts at every meeting. In many cases, two experts are not needed. That is an unwarranted expense.
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Under Bill C-38, experts may be brought in, if needed, in more complicated cases, or if a peer panel is wanted in special situations. Decisions to grant, extend or terminate a stay of proceeding will be made by the administrator of the service in a province.
Farmers and creditors who might disagree with the decision regarding the stay can now appeal the decision to an appeal board. This was a strong recommendation from the industry and we have managed to accommodate that request. It will be an informal appeal process where three or four board members would be required to review the case and make a decision within a couple of days. The board members will be appointed by the minister and will have agricultural and financial experience. Some of our existing board members have indicated they would be interested in becoming appeal board members under the new legislation.
You have been provided this week with a number of documents. There is an overview of the proposed farm consultation service, which will be implemented at the same time as the farm debt mediation service. There's an overview of the Farm Debt Mediation Act that better describes how it will operate. There is also a discussion paper on the proposed regulations and guidelines. These documents have also been provided to the Farm Debt Review Boards, the Canadian Federation of Agriculture, Farm Credit Corporation and the Canadian Bankers Association.
Recommendations on the regulations will be reflected, as much as possible, in subsequent revisions prior to the final drafting of the regulations by PCO and Justice. The proposed Farm Debt Mediation Act will help the government provide a more smoothly run and inexpensive service. Funding for the new act, for the farm consultation service, will come from the Canadian adaptation and rural development fund - CARD - announced in the 1995 budget to help the sector make the transition to a more efficient and competitive marketing economy.
The estimated cost of this activity is $4 million annually for the new farm debt mediation service and farm consultation service. Bill C-38, and the companion farm consultation service, have been developed based on extensive consultations over the last 18 months with farm organizations, leading institutions, Farm Debt Review Boards, panel members, financial experts, provincial government officials and the Canadian Farm Business Management Council.
I am pleased that during these consultations many organizations and individuals came forward with suggestions to streamline the current act and make it a more efficient and user-friendly service. This concept of mediation or alternate dispute resolution, as it is frequently referred to, has become the accepted approach in helping individuals reach mutually satisfactory arrangements. Bill C-38 embeds this concept and a single mediator model into the legislation.
Under Bill C-38, along with the farm consultation service, Canadian farmers who are insolvent or facing financial difficulty will continue to receive the protection of the existing act and will have a more efficient approach to helping them reach a satisfactory arrangement with creditors with the services of a financial expert to help them develop financial recovery options and a pathfinding service to help them access more programs and services.
I look forward to answering the questions you may have with regard to Bill C-38. Thank you, Mr. Chairman.
The Chairman: Thank you, Mr. Pickard. Mr. Easter.
Mr. Easter (Malpeque): Mr. Chairman, I think the parliamentary secretary knows I have very, very serious concerns about this piece of legislation. In fact I spoke against it in the House. My serious concerns relate to two or three points.
I think the chairman asked the chairs of the Quebec and Ontario boards, when they were here the other day, to give us the breakdown in terms of cases involving insolvent farmers versus those in financial trouble. We'd also certainly appreciate any information you have in that area.
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In his remarks in the Commons on June 17, the parliamentary secretary said:
- Those changes and the limiting of the new proposed act to insolvent farmers could reduce the
program costs by more than $1 million per year, from an estimated $3.5 million in 1995-96 to
$2.2 million per year.
I know the department has proposed the farm consultation service. I look at this proposal and it looks and sounds great, as though it should do the job. But I've been in financial trouble. I've dealt with farmers and farm crisis committees in terms of the difficulties they face. From my own experience, this won't do it. Being in financial difficulty on the farm is something that you can't explain unless you've experienced it. It changes your mentality. You don't even think correctly as you're in that financial trouble. You do some stupid things that you normally wouldn't do.
I found that under section 16 of the previous act, the fact that you applied was a shock treatment in and of itself. The fact that you were talking to your peers and others in the farm community in terms of possibly having to sell a piece of land in order to retain the whole was very effective. So,Mr. Chairman, I'm extremely concerned about that section of the act being removed.
If you can give them to me, I want some answers in terms of what you may have saved in the economy by saving farms in the past, and let's be careful not to just look at this as an expense item.
I don't know whether you can answer that now or not, but I do have one other question.
Mr. Pickard: Sure, I'd be glad to.
You can focus on the number of dollars saved by the government, and there are certainly mechanisms built in to make the system more economically sound. I think those mechanisms very much relate back to the size of the board that was normally held before. We had a chairperson and two other board members and they would travel to different areas and make certain decisions, which did help the farmer in a way. Our whole focus, though, is to bring that farmer who is either insolvent or in a great deal of difficulty into a process of mediation.
If the farmer is insolvent, that means he cannot pay the bills that he has in front of him and he needs some mediation service. We will have people who will sit down with the creditors as soon as the application comes in - and the application would come from banks or people who hold that debt. There would be a 15-day period when that debt is applied for. The farmer then has a 30-day time limit to request a stay of that work. In other words, under the bill he can request action that would provide a mediator for him.
In that case, the mediator will ask for an expert to do a complete financial analysis of that request. They'll go to the farmer and they'll look at complete financial statements. They'll also look at the banking and will complete financial statements, and then they will report back to the mediator. The mediator is then empowered to work with the farmer and the financial institutions to develop longer-range plans that will help will the insolvency; to find a way to work around the credit that cannot be paid; to try to set up new plans so that this farmer can in fact move forward with very solid financial advice from the expert and very solid mediation work between the farmer and the financial institutions that have claimed there's a problem.
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That's on the insolvent side of it. Then there are 30-day allotments that go ahead, much the same as the Farm Debt Review Board acts today. But the process here is mediation.
Now we go back to the person who is not insolvent, which you have referred to as a protection under clause 16. Those very protections that exist today are built into the mediation act under the consultation process, where a mediator can come in and work with the farmer to look at.... It wouldn't be a mediator. Excuse me. It would be someone who comes in and develops five-year plans, develops financial directions, looks at the whole operation, tries to give the farmer some advice and also to tie him into agencies that could be helpful for his business to continue on-line with any programs that may be available to help him. So we do have, built into the system, the same protections and rights under this legislation as exist under section 16 of the Farm Debt Review Act.
Mr. Easter: That's where we differ, and differ substantially. Anyone who has negotiated with the banks under the previous act knows full well that if you're negotiating for people in financial trouble, because you have the power of the act rather than a suggestion - a bit of power under the act - the banks are willing to sit down and negotiate more fairly. We know very well the banks have a lot of power in this country.
In negotiations with the banks the insolvent cases are not usually a problem, because the banks already know they're in trouble in those cases and they're going to take a loss in any event. But for the ones in trouble the assets usually are equal to liabilities, and they're making a move and they're saying they're going to seize these assets now because this individual is in trouble. If you have no backstop to prevent them from doing that - which the consultation service will not give us, Jerry - you have no power under the act to force them to the wall. That's my concern.
Mr. Pickard: You have to realize two mechanisms are in place, and these are very separate mechanisms. There's the mediation mechanism and the consultation mechanism. The mediation mechanism kicks in when the banks do try to seize property or take action on their behalf. Under the bill the farmer has fifteen days to make an appeal. That appeal, being put in, will allow the first thirty-day operation to go ahead. As a result, someone would be appointed as a guardian for the farmer to make certain the banks cannot take any action. The farm and the mediator group together can reapply that thirty-day principle three more times.
Under the Farm Debt Review Act, we have a structure of 120 days where this can go ahead and be worked out. Under the mediation bill we have 120 days where the same process can come about. That's what we're talking about in the mediation process.
In the consultation process, it's a process to help the farmer and give him advice. That is not at a point where the farmer is insolvent. It doesn't say, though - and clearly this will happen - if it goes from a consultation process, where we're trying to give that farmer advice, structure things, and get him heading on the right course, but he's still able to pay his debts.... If he needs mediation service - the banks are then moving in on him - he goes to a totally different part of the bill. He goes into the mediation side of it, where he will have all the protections there are today in the Farm Debt Review Act. So those protections are built in any time we get to the mediation process, where the banks are trying to take action.
During the consultation process, we're trying to get to that farmer ahead of the banks and to help him get things straightened out and on a better course, looking at potential long-term financial arrangements, looking at five-year plans, looking at all different aspects of the bill. So we are, I believe, trying to work out both of those issues.
.1720
This has an added benefit, though, to the farm community in that we add tremendously more professional advice to help develop the financial arrangements that are needed. At the same time, we can look at it as beneficial for smaller companies too, because the smaller companies are the ones that may not be in the same position as the banks. The banks can act and take back whatever they have, but the fertilizer dealers, farm equipment owners and others may not get back their funding.
In this particular case we can look to get consultation among everybody available. We may keep more farmers solvent, and therefore we may create better circumstances in rural communities with regard to other businesses as well.
The Chairman: Mr. Chrétien.
[Translation]
Mr. Chrétien (Frontenac): Mr. Chairman, I would like to congratulate Jerry who knows Bill C-38 very well and with whom we're happy to work in this committee.
I'd also like to congratulate Wayne for his competence in agriculture. He's telling us he's personally had financial problems and that he's working with farmers who also have financial problems. So I think they're both quite well qualified to work here, this afternoon, on Bill C-38.
Mr. Pickard, I've listened closely to what you've said. That doesn't mean that I am entirely in agreement with Bill C-38. I have seven or eight questions for you and I'd like to get brief answers.
First of all, could an unsecured creditor ask for a file to be opened for a farmer?
[English]
Mr. Pickard: I think I'll have to go back to our officials for details. It would very much depend upon the status of this whole process. If we're talking about the consultation process, we have no mediation at that point, so during the consultation process, that's a person who is not insolvent but is finding financial difficulty. Somebody would come in and give them a lot of financial advice. I don't believe that at any stage of that process, any files would be open to anyone.
Coming to the mediation process, the experts would look at the total scenario of what is happening in that farm operation. All the creditors in that situation would be involved in discussions with the mediator to try to resolve the problems.
I am going to ask some departmental officials to fill us in on the extent to which a creditor could have access to the whole amount of information. I'm not certain about that.
Ms Lois James (Manager, Adaptation Policy, Agriculture and Agri-Food Canada): Could I ask a point of clarification? My apologies - it might be because of the translation that I missed something. You were asking if a non-secured creditor could open a file for a farmer. I was not completely clear on whether the translation meant if they could initiate foreclosure action and therefore apply under the act, or if they could look at the actual file that the administrator under the farm debt review service is holding. Some clarification would help.
[Translation]
Mr. Chrétien: This week or last week, during a committee meeting on C-38, I asked whether it was usually the farmer himself or the creditors who asked to have access to that aid and I was answered that, most of the time, it was usually the creditors who asked for the implementation of Bill C-38 that we're soon going to be passing.
So I wonder if an unsecured creditor having problems to get paid back could ask the government or the committee implementing C-38 to intervene.
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The committee is not asked to check with the other creditors but to intervene in order to have the debt paid up or, if need be, to foreclose on the farmer if he doesn't pay.
[English]
Ms Julie Mercantini (Senior Policy Development Officer, Adaptation Division, Department of Agriculture and Agri-Food): If we go back a bit to the notice of intent to realize on security, the notice of intent applies to secured creditors. A secured creditor would send a notice of intent and normally the farmer would then apply to the process. We wouldn't normally expect a creditor to come to the board on behalf of a farmer under the act. We wouldn't normally expect an unsecured creditor to come and tell the administrator of the program that he is having problems with a farmer, because it's a voluntary mediation.
Mr. Pickard: Maybe I could go a little further with that. When a financial institution or creditors want to take action against a farmer in this case, they will file notice of intent. That notice of intent is filed and the farmer is protected for a 15-day period. In that 15-day period the farmer has a right to look at his options and make application for protection under Bill C-38. That's the first action of the farmer, and the only one who can apply under Bill C-38 is the farmer.
As a result, he makes application to the administrator in the area. The administrator then assigns a financial expert to look at all financial aspects of the case. He also assigns a mediator to mediate, after they have the financial information together, between the farmer and all the creditors to set up a new plan. That process is 120 days in 30-day allotments as required.
[Translation]
Mr. Chrétien: I find this very enlightening.
I would also like to bring up what Mr. Pickard said before that the committee would be made up of a chairman and two experts and that, later on, the two experts would be unnecessary and the chairman could sit alone. Is that true?
[English]
Mr. Pickard: That is not accurate. Maybe I'll go over the whole structure so that everyone understands.
There is an administrator in each province, and he or she would be the final person in charge of that province and would make the final decisions. There will be a number of mediators. They will be chosen on their knowledge, their ability to mediate and their ability to look at financial situations. There will also be some experts put in place. Within a provincial structure there might be 10 mediators and 10 or 20 experts, up to that number, anyway. They will not be paid any money until they actually work on a case.
When the administrator receives the application and approves it, he immediately assigns an expert to look at the financial books and a mediator to deal with the case. That process will go through and the mediator will try to work out arrangements between the farmer and the creditors. If that can be done within the 30-day period, that report will then go back to the administrator...and the administrator, case closed. If arrangements cannot be made but they feel they need more time, they'll apply for additional time up to the 120 days.
When a final decision is made, if it's a resolution through mediation, no further action will be taken. But if no resolution can come about and the farmer or the financial institution feels the work of the mediator has been fruitless and they need further actions taken, there is an appeal panel put in place for the protection of the farmer or the financial institution. In other words, if the farmer doesn't agree with the decision that has been finally made by the administrator, he can come back and request an appeal.
.1730
This was very important to the industry. The industry wanted an appeal process put in place.
At that point we will have people who can listen to all the pertinent information that has gone through the system, from the expert and from the mediator, and any new information that develops over the interim and make a final decision. But there is a right to appeal in the process.
That is where three or more people are involved in the appeal board. We don't expect the appeal board will be set up in many cases, but where it is, there will be more than a mediator and a financial expert involved.
So that appeal board will eventually be able to make the final decision based on the information that's there, if the farmer is not satisfied with the administrator's decision.
Does that help you?
[Translation]
Mr. Chrétien: I still have a couple of little questions and I would ask you to answer more briefly because we're going to run out of time and the chairman is going to interrupt us.
During your presentation, you put a lot of emphasis on mediation. In going through the clerk's volume of notes, I noticed that you were going to give 40 hours of mediation courses to the people who are going to be appointed. And I have a problem with those appointments. I looked at the list of the people sitting on the Quebec board. I know a few who are very competent. As for some of the others, if I was in a delicate financial situation myself, I'd be very doubtful of their efficacity. Is it actually sincerely and honestly believed that these people, after a 40 hour course, which is hardly one and one third of a credit, could actually become skilled negotiators?
[English]
Mr. Pickard: Our first approach is to look for people who have professional training in mediation. There's absolutely no question; people are going to be put in as mediators on the basis of ability and skills in mediation.
If we have no one with abilities and skills, we will have to go through a training process, but the training process is not, up front, the number one issue. It's the ability and skills people have coming into the system.
Secondly, for the protection, we have 10 mediators in the province. Obviously we have 10 for a very clear reason. Some are very good at mediating and some may not be very good at mediating, and if we have 10, they're hired on the basis of need. We're going to put those who are the best mediators in the place of doing the mediations for the farm community. As a result, we have that second roadblock in there where people could be mediators, but if they're not effective mediators, we'll be looking at those who are effective to carry out the mediation process.
[Translation]
Mr. Chrétien: I have one last question. At departmental level, do you have any problems in finding people who know agriculture very well, who are good at mediation and very close to the Liberal Party at this time? Do you have any problems in finding any, in Quebec, for example?
[English]
Mr. Pickard: I would suggest to you that we have had a great deal of criticism about the people on the boards up to this point being Order in Council appointees.
This is taken out of that aspect. We are now looking at skills and abilities in mediation. Liberal Party membership is not required on the application, and the decision will be made on the expert skill requirement.
Although there are some who might like Liberal Party qualifications to be there, they are not part of it.
[Translation]
Mr. Chrétien: In wrapping this up, Mr. Chairman, I would like to say that I have just seen the recent appointment lists before the Employment Insurance Mediation Bureau as well as the name of the returning officer in my riding.
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If we continue in the same vein for these mediators or even for the chairman appointed in Quebec under C-38, as I know him very well, you once again run the risk of being criticized for the appointments.
[English]
Mr. Pickard: Appointments are made, but there is that risk of criticism. I think that's something that will never be avoided when you appoint people. You could get very serious complaints on 50% of the appointments.
It's interesting that any form of government usually has a very high percentage of the vote, which means a high percentage of the people in an area vote for a government. So if somebody happens to be a Liberal there's criticism, but there's also criticism if that person happens to be a high-ranking Tory.
I can remember an appointment to California that really upset a lot of people. I can think of Ed Broadbent upsetting a lot of people. So where you make appointments and orders in council, there's no getting around it. Hopefully, you will see that the people who are being appointed are expert, professional people. That's really what we're after. Credentials and party lines don't count here.
Mr. Hoeppner (Lisgar - Marquette): I don't know why I sometimes have to agree withMr. Easter, but I have to kind of give him some credit for the few statements he made.
Jerry, I think the intentions are very good with your bill, but I have dealt with some issues and I think you're going to waste a lot of money. If I were the government, I would take this part out of the bill completely and direct all those funds to number 16, to the farmers who are having financial problems. My experience in this has been that once you get to the point where you're insolvent, you can't negotiate by yourself; your thinking isn't straight. You should have good legal advice to negotiate for you.
I have seen situations where the family negotiates a fairly decent settlement, but afterwards the blame starts flowing from husband to wife and from wife to husband or kids. It separates the family instead of pulling it together. Once you're at the point of insolvency, I think the only way to go is with good legal counsel to do it on your behalf, because, as Mr. Easter said, those people do not think straight most of the time. That's why I'm saying I think you're going in the wrong direction.
If you want to spend this money, direct it to the people who are having financial problems and try to make them viable. But once you have to become insolvent, there's the hurt these people are feeling. Also, they don't know how much money they will get to put food on their tables and they have to deal with rent and all kinds of other things.
I have seen people who were having real financial problems - were insolvent - get good legal advice and it kept the family together at least. That's what I think the major issue is here. When you start negotiating on insolvency, you have one of the most severe situations in a family's life. I don't think these funds should be directed to get professional mediators. I don't think they are professional enough that the farmers will be happy after mediation. I think you have to have legal expertise to mediate on your behalf. Those are my viewpoints.
I think, as Mr. Easter said, you'll get the most returns if you can save more farmers from going into insolvency and get them financially sound and viable again. That's why I would say to scrap the bill and direct it to the other part, because when you get to insolvency you have to have legal help anyhow. There's no way you can do it without legal expertise. When you start liquidating assets, disposing of the home quarter and all these kinds of things, you have to have legal advice.
Mr. Pickard: Your point is very well taken. Perhaps I can go back and suggest a little bit about the bill, which may help your viewpoint on this.
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If a farmer is in a state of insolvency, he certainly does and is able to use all the advice he can get from legal counsel or from anyone else. A mediator is only a go-between between the farmer and the creditor. The mediator will be given a complete expert financial assessment of that operation. The mediator will then be able to take that assessment and work with the farmer, the farmer's legal counsel, the rest of the family and other consultants from the farmer's side. He can have all of that package working for him. He will try to strike a deal with all of those people who hold debt on the property. He will try to set up new terms and arrangements so they can be paid.
The process is therefore a process to put a mediator in place who can reach out and try to change some of those things that are creating barriers for that farmer in paying his bills. It's a process to set out new plans, to make long-term arrangements and different types of payments...all of those aspects. It's not up to the mediator to do anything except take advice from the farmer and work for the interests of the farmer and the creditor in making this operation solvent.
We have that part in place. We're trying to give that farmer a vehicle through which we can reach across that gap and work with the financial institutions, but he still has that package of resources you refer to as ``critically important'' to use at all times. That is the case.
So at this point in time we know the banks are ready to close in on him. We also are appointing a guardian for him. That guardian will stop the financial institutions from taking any of those actions until this whole mediation process is complete. So he has 120-day protection with a guardian in place to make sure the creditors can't take the property from him. We have a mediator who will work back and forth to solve the problem. And the mediator has the ability to get whatever financial or legal advice he wants from anyone he wishes. All of those concepts are together within this bill and they all will work together.
The Chairman: You're going to have to shorten your answers, Mr. Pickard, or you're going to have to answer to the officials as to why you're having them come back again.
Some hon. members: Oh, oh!
Mr. Pickard: I think they'll support me.
The Chairman: It won't be my fault.
Make it short, Mr. Hoeppner. We have three other people after this.
Mr. Hoeppner: I know that Mr. Pickard has his heart in the right place, but you don't realize how much pressure farmers have already been under when they get into this insolvency situation. And at that time more pressure is put on them by the negotiating - and I've seen this happen - and people will eventually commit suicide. They just can't take the big shock.
That's why I'm saying it's so necessary for them to get good professional help and to get somebody to negotiate on their behalf. The pressure is unbelievable. You can talk to farmers who are still viable, and you can negotiate with the creditors, but I've seen creditors talk to people who are in insolvency and have some natural resources, gravel or something, and say ``We'll sit and wait for another twenty years, but we'll get our money.''
And hey, we don't need that type of negotiating. The banks and the machinery companies are very powerful. They have the best legal advice and they know time is of no essence to them. They can sit if they want to.
That's my warning for you. I appreciate your intentions, but if I were the government, I'd put all those funds in there and make sure that these people get good legal advice and that they clean up the mess and have a decent life afterwards.
Mr. Pickard: I think the thrust - and I appreciate what you've said, Jake - is that those are in place. Let me just emphasize the fact that we are trying to move it to a mediation process that will go forward and help, rather than a board that makes a decision without that back-and-forth interaction, which may, in this case, in mediation, help a lot of insolvent farmers get back on their feet. We're hopeful that will occur in this case.
The Chairman: Mr. McKinnon, briefly.
Mr. McKinnon (Brandon - Souris): Jerry, I like the thrust of what you had to say today, and I know that Jake probably raises some legitimate human concerns.
Western Manitoba - or for that matter a lot of Manitoba - has had almost depression-like circumstances for a good portion of the last decade or so. What he's telling you is generally pretty accurate throughout the entire southwest.
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My concern would be along these lines. We've had financial institutions that have changed their arrangements with a client, for example, in a line of credit. A cattle buyer may have bought high, prices fall, and he's stuck with a product that doesn't meet the costs of his loan. Really, what we need to do is wait until that cycle comes back again where the opposite happens. Given enough time, it will occur. If he's in too deep, it won't.
I guess what I'm looking at here is whether there is such a thing as pre-mediation counselling. If there is absolutely no chance this client is going to get out, what about the post-mediation? When it's all over and he's still lost it all, what do we do for the client?
Mr. Pickard: When you look at the total process, there is the pre-consultation, and that's moving away from the mediation and back into the consultation process. When a farmer asks for help in consultation there's no need for mediation at that point, because he's not insolvent. He can pay his bills. But he may have problems, and if he sees problems two years, one year, six months, five years down the line we will have a consultant come in to look at the financial arrangements and make recommendations on setting up five-year plans, talking to financial institutions to reorganize the finances of the property. All of that is in place; but it's not through the mediation, because he doesn't need mediation in that case.
The Chairman: Mr. Collins.
Mr. Collins (Souris - Moose Mountain): I like what you've said, but the problem is we're waiting until a disaster appears before we start surgery. It seems to me if I was an educator I would want to spend more time on the consultative process so I didn't get into the disaster arrangement.
I understand what Wayne and Jake are saying, because it really does apply in western Canada. You take a look. There are a hell of a lot of farmers who commit suicide; and it isn't because they're getting rich.
I do like what you say about one rather than three. I don't think you need three. I think if you get the right person you can do it. What I'm concerned about is when we get down to the bottom line.... I would really stress, let's see what we can do. I think there's a responsibility on all of us that.... You know, if we set up the mechanism and they don't want to take advantage of it, then who the hell is to blame? I can only take it so far along the way. If they don't want to access it, that's their problem. But they have to have some assurance that once they've accessed it they're getting good information. Nothing ticks a person off as much as to go through the process and then come away so bitter they never want to come back.
When you go through this, there's just one thing.... You mentioned this appeal board process. I have a little problem there. We did the 120 days. You did the 38 blocks. Now you get to the appeal process. It's a three-member board. Is that binding?
Mr. Pickard: It is. When we come to the final decision, the way everything has been structured you don't have a board that makes a decision. You have a mediator, who has looked at everything and done a report. That report goes back to the administrator. The administrator then gives his decision.
If the farmer is not happy with that decision, there's still an extra outlet. That extra outlet is the appeal board. He can then present all the information that has come about to this appeal group, and the appeal group can take that information, along with any new information, and overrule any decision that has been made by the administrator. So it's an extra opportunity for that farmer to have.... That's a built-in extra beyond what we have now.
The Chairman: Is the decision of the appeal board binding?
Mr. Pickard: The decisions in the proposed act will be binding, yes.
Mr. Collins: Binding on both parties?
Mr. Pickard: Yes.
Mr. Collins: Can the lender use that same mechanism? If he's not happy -
Mr. Pickard: He could make an appeal.
Mr. Collins: That's what I need to know.
Mr. Pickard: He can make an appeal. But the point here really is putting mechanisms in place to work out a positive rather than to make a judgment.
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I'll go back to the preventative side of the question, which had to do with the consultant operation earlier. We have now gone beyond where the Farm Debt Review Act was and we're providing consultation at an earlier process to hope we don't get into the mediation process. So there is preventative medicine in this one as well.
Mrs. Ur (Lambton - Middlesex): You stated earlier in your opening remarks, Jerry, that you wanted it streamlined, simplified, etc. When we had our presenters before us, they felt combining the appeal board and the mediation would be streamlining and just as cost-effective in the process. The cost of this does not appear to be diminishing under this new act. The old act was the peer approach. The new act appears to be the bureaucratic approach. I think the peer approach was working. And from their summation of their presentation, that is the way it appeared they wanted it to go. That is what they presented to us last week.
My time's limited, but one thing they did say was that the secret of success is the process itself. Keeping active and more cases for each person would keep the numbers down so that these mediators would have constantly revolving cases they could be continually updated on as to what is happening. If you had a large contingent, you would have all kinds of people there and they wouldn't be educated in the process because there would be timeframes in which they wouldn't be working on cases. So they felt the numbers could be a lot lower. It doesn't seem to be the downsizing that we're supposed to be looking at.
Mr. Pickard: If I really go back to the peer question and the efficiencies we're talking about here, under the board that we presently have, the Farm Debt Review Board, three members listen to the information that's coming forward and usually a chairperson makes a decision. The two other support people most of the time are not required within that structure. This has been changed so that we have a professionally trained person go out and do the financial analysis. That would be called an expert in the financial field. They bring all that information back. Then we have a professionally trained mediator to work with the farmer and work with the creditors to work out a deal, something that would be satisfactory to make this process go along. So it's really an active, professionally trained person to work out a deal.
At that point, if that's resolved, the report goes back to the administrator and the administrator answers. Now, those professional mediators could well be the same people who are sitting on our boards today. If they have those skills, they could be part of it. We have had some of the people who are sitting on our Farm Debt Review Board ask to be mediators. So it is the same group of people, peers working with peers. I believe that to be very true.
There may be others who require specific training. If there are some people sitting on boards who don't have the mediation skills but we can train them to bring the mediation skills to them, we will have them as well on that list. So that is there.
Then when we go down the line -
The Chairman: Briefly, Mr. Pickard, we have to get to the vote.
Mr. Pickard: The last point there is that appeal board at the end, which does give an added.... If you really got kicked and you don't agree with it, you can go to the appeal board, which gives another out.
The Chairman: Ladies and gentlemen, we're going to have to conclude the meeting.
I want to thank Jerry and the officials for coming before the committee today. I think we've pretty well answered a lot of the concerns and expressed them. I know that if we need you to come back at some time you will be available to do so.
The meeting is adjourned.