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EVIDENCE

[Recorded by Electronic Apparatus]

Thursday, April 10, 1997

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[English]

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

As we adjourned yesterday, we allowed clause 3 to stand. We were discussing an amendment that had been moved by Mr. McKinnon that would amend proposed subsection 3.1(2) to read in its entirety, rather than the way it is in the bill at the present time:

Is there any further discussion on that amendment?

Mr. Elwin Hermanson (Kindersley - Lloydminster, Ref.): I would request a recorded vote.

[Translation]

Mr. Jean-Guy Chrétien (Frontenac, B.Q.): Mr. Chairman, I would like to ask one question, if you don't mind.

[English]

The Chairman: We have a call for a recorded vote. We'll have to go to the vote, but I will allow you to raise one point, Mr. Chrétien.

[Translation]

Mr. Jean-Guy Chrétien: Before we vote on the Liberal Party's first motion, which states that the number of directors shall be 15, I would like either the chair or Jerry to answer one question for me: in the event one or two of the 15 directors decide to withdraw, is there a specific period within which they must be replaced? And what is the process?

[English]

The Chairman: Mr. Chrétien, I'll point out what the amendment says: ``The board shall consist of 15 directors''. We're not talking about it consisting of 3, 9, 11, 12, 13 or 14. It says it shall consist of 15 directors.

[Translation]

Mr. Jean-Guy Chrétien: I understand, Mr. Chairman. But take the House of Commons: it has 295 seats. Occasionally, a member dies or resigns. The government has a certain number of months before initiating the process to have a new member elected for the riding. What provisions does Bill C-72 contain to deal with the death of a director, for example?

[English]

The Chairman: I believe that will be addressed in the by-laws that will be put forward by the board of directors, as it is in any organization, but maybe Mr. Pickard and Mr. Migie will clarify this. Then we are going to go to the vote, because the vote had been called.

Mr. Jerry Pickard (Parliamentary Secretary to the Minister of Agriculture and Agri-Food): Mr. Vanclief, I think you've put your finger right on it. There will be by-laws that will operate, and the group that is there deciding the directions of this board needs to have the flexibility of making decisions on how by-elections may be held and other activities for replacement of board members who pass away or resign or whatever. So that's a process giving the larger voice, again, back to the industry and those people sitting on the board.

[Translation]

Mr. Jean-Guy Chrétien: I see. Such provisions would come in the regulations formulated later, not in the bill as such.

[English]

The Chairman: As a point of clarification, will it be in the regulations of the bill, or will it be in the by-laws of the Canadian Wheat Board?

Mr. Jerry Pickard: I assume it'll be put into the regulations once the structure is set.

The Chairman: Once the board of directors of the Wheat Board has the discussion and makes the decision, then it would be moved over into regulations - just so everyone is clear.

Mr. Jerry Pickard: That's right.

The Chairman: The question has been called. I'll ask the clerk to call the names for the vote on this amendment.

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The Clerk of the Committee: The question is on amendment L-1 at pages 1 and 2 of the package. Those in favour of the amendment, please signify.

Amendment agreed to: yeas 7; nays 1

The Chairman: The next amendment we have is amendment R-1, with a big numeral 3 on it, in your package circulated by the clerk. Do we have a...?

Mr. Elwin Hermanson: I am moving it.

The Chairman: It is moved by Mr. Hermanson.

Mr. Hermanson, would you then like to explain where this applies - it's in clause 3, as we know; we're still on clause 3 - and what this amendment does.

Mr. Elwin Hermanson: Certainly. Thank you, Mr. Chairman.

I mentioned yesterday that there were considerable and broad arguments from witnesses, farm organizations, that the president or CEO of the new Canadian Wheat Board not be a member of that board.

What the amendment does is delete the president as being one of the members of the board. It leaves the chairperson on the board. In proposed subsection 3.1(2), line 7 on page 3, we stop at the word ``chairperson'', and then we replace lines 12 and 13 on page 3 with the following:

Really, all we're doing in the amendment is deleting the president from serving on the board. There is strong support for that in the agriculture community.

[Translation]

Mr. Jean-Guy Chrétien: Do you have a more recent version than the one dated December 3?

[English]

The Chairman: No.

Elwin, you've done a good job there, but just so that I can clarify, what this amendment does is take out all reference in proposed section 3 to the president being a member of the board of directors as such. Is that what it does in the bottom line of this?

Mr. Elwin Hermanson: I'm just checking, because I think I may be one step behind here.

I'm sorry, Mr. Chairman, I was on the wrong clause. I was one clause too far. We're in proposed subsection 3.1(2), and all it does is delete ``and a president.'' Therefore:

The rationale is that we heard very good evidence that the president should not be a member of the board. It puts him in a bit of a conflict of interest. He's trying to serve two masters, which we feel is improper for an employee of the board.

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Maybe I can add just a very heartfelt comment. If we were serious about bringing this bill to committee prior to second reading, because we could actually implement the recommendations we heard from witnesses throughout the prairies, and if the recommendations were broadly accepted by organizations that often have differing views, if this committee is wise at all it will heed that advice.

As I mentioned yesterday, it is not just Reform that's suggesting this, it's everyone from UGG, Saskatchewan Wheat Pool, Manitoba Pool Elevators, National Farmers Union and the Alberta Grain Commission. This is broad, and these are experienced, knowledgeable people in the agricultural sector.

I heard the officials' explanation yesterday - I don't want to be too cruel - that more or less in this type of organization...these cooperatives out in the prairies don't really understand how the corporate world works. I think the Saskatchewan Wheat Pool, for instance, knows exactly what it's doing when it has an elected board of directors and a CEO who is not a sitting member of the board. You can't tell me it doesn't know what it's doing, it isn't successful, it doesn't do it well, and it doesn't recognize that farmers who would elect directors could put people in place who were competent enough to give direction to a CEO or president who is not a member of the board.

So I would strongly encourage members of this committee to consider this amendment and pass it.

The Chairman: Mr. Easter, you want to speak, and then Mr. Chrétien.

Mr. Wayne Easter (Malpeque, Lib.): Thank you, Mr. Chairman. I'm speak in opposition to this motion. I recognize Mr. Hermanson's intent, but if you go further through the government amendments, you can see what we're intending to do by having the 15 directors and the CEO as one of them. Yes, there was an explanation yesterday by the representatives from the government in terms of why the CEO should be on the board.

Beyond that, I have talked to Canadian Wheat Board advisory committee members, who have always found it extremely beneficial at any of their meetings to have the chief commissioner there, who would be equivalent, as I understand it, in new structure to the CEO in terms of direct communication, continuity, the board and the management working in unison with one another. I don't see it as a conflict at all. I see it as a way of moving ahead in unity.

Yes, it is correct that the board sets the remuneration for the CEO as well for itself, but I certainly believe it's very important to have the CEO as part of the board. Your resolution goes against that, and that's why I'll oppose it.

The Chairman: Mr. Chrétien and then Mr. Pickard.

[Translation]

Mr. Jean-Guy Chrétien: Could the legal counsel please join the witnesses at the table? I have a question for him.

[English]

The Chairman: Mr. Byer, would you come to the table again, please?

Go ahead, Mr. Chrétien.

[Translation]

Mr. Jean-Guy Chrétien: Could the legal counsel please explain the difference between the chairman of the board and the president? Some of us do not clearly understand the distinction between the two. Could you please explain the difference between them?

[English]

Mr. David Byer (Legal Counsel, Department of Justice): The chairman of the board, of course, is responsible for managing the board of directors, in terms of calling meetings and determining the order in which directors speak, and generally running the meetings of boards of directors.

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I would refer you to the bill at page 3, proposed subsection 3.4(2), which indicates generally that:

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

The president, on the other hand, is responsible for the day-to-day operations of the corporation. His duties are indicated in proposed section 3.92 of the bill, at page 5, where it states that he is the chief executive officer of the company:

So the president is in effect the official member of the corporation who can bind the corporation. His authority is complete. However, it can be carved out somewhat by the by-laws or resolution of the board of directors and specific duties given to the chairperson to be performed.

[Translation]

Mr. Jean-Guy Chrétien: So, if I understand correctly, the chairperson holds a full-time position, and is responsible for chairing and calling meetings and for preparing notices of meetings, as well as meeting agendas and minutes. And the CEO also holds a full-time position.

[English]

The Chairman: Go ahead, Howard.

Mr. Howard Migie (Director General, Adaptation and Grain Policy Directorate, Policy Branch, Department of Agriculture and Agri-Food): In the bill, on page 3, in proposed subsection 3.2(3), it says:

So the intention is that the chair would ordinarily be a part-time position while the president, as it later points out, would be a full-time position. But if for a time there's a need for the chair to be full-time because of intense workload, it's possible for the Governor in Council to make the chair a full-time position. In general the intention is that the chair and all the other directors are part-time and the CEO or president would be the only full-time position.

[Translation]

Mr. Jean-Guy Chrétien: The interpretation of your remarks is not clear at all. Could you please answer this with just a no or a yes? Are the chairman of the board and the CEO full-time positions?

[English]

The Chairman: No, Mr. Chrétien, the chairman of the board, like all directors of the board, unless otherwise designated by the Governor in Council, will be a part-time position. The CEO/president is a full-time position.

[Translation]

Mr. Jean-Guy Chrétien: So, the CEO... I just want to understand this correctly,Mr. Hermanson. Can you confirm that the board would have 15 directors, including the chairman of the board, while the president would constitute a 16th person?

[English]

The Chairman: No, Mr. Chrétien, the previous amendment read:

Mr. Pickard.

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Mr. Jerry Pickard: Thank you very much, Mr. Chairman.

In looking at this problem, I believe it's important to really understand what the role of the board of directors is: it is to set the business, the direction and the future of how this operation will go in wheat sales in Canada. As a result, that is the charge that would be there for the board of directors. It does make a great deal of sense that the CEO is very much a part of that direction and movement of the board, and therefore, having the CEO as a member of the board is consistent with most corporations in this country. And it's very clear that 83% of the corporations in this country have the CEO as a member of the board.

I might correct the interpretation yesterday - if there was a misinterpretation - of the cooperative side of the issue. What the department said about the cooperatives is that in order to be on a board that has a cooperative scenario in Canada you must be an elected person. Our structure is not the same as that. Therefore, in the cooperatives the requirement to be elected would automatically exclude a full-time employee or a CEO through the nature of the structure of the cooperative.

However, that is not to say that they don't have a great operating system. The government never talked about the merits or lack of merits of it; they just pointed out that, clearly, to be on the board of directors in this cooperative scenario you must be elected. That has to be clear.

However, coming back to the structure and the direction of most organizations, 83% of the corporations have the CEO as part of the board of directors. We have appointed positions, which really just fits hand in glove with the structure of most corporations in Canada today.

The Chairman: Elwin.

Mr. Elwin Hermanson: Mr. Chairman, I can hardly believe that representatives of the government side could either be so dumb or so power hungry as to be trying to push this through.

If the board wants the chairman of the board to be full-time, the board should have the power to do that. It should not be a Governor in Council decision as to whether or not the chair of this board could be full-time. The producers and their board should make these decisions.

Prairie Pools, in their presentation, said that they agree:

They added:

And United Grain Growers made more or less the same observation. They said:

Mr. Chairman, anybody who understands how corporate governance or faculty... When I sat on the board of a charity, Revenue Canada sent a directive to this board saying that it should not have paid employees sitting on the board because it's a conflict of interest: you're on the board that's setting salary and making policy for employees and you're an employee yourself; it's not good governance. If Revenue Canada recognizes that there's a problem, why can't the Liberal government recognize that there's a big problem?

We have a committee here. We have administrative help on this committee and they're excellent. We have a clerk of the committee. He's sitting at the table and he is there at the service of this committee. Certainly, any competent board of directors is going to have the CEO sitting at the board table. That's just common practice. We're not talking about shutting the CEO out of the decision-making process. We're talking about making the CEO a servant of the board, as is proper and as is normal practice in corporate structure right around the world. I don't see what the problem is here. Why in the world don't we make the CEO a CEO who is not in a conflict of interest position?

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The Chairman: Are there any further comments? I think everybody has made their views clear.

Yes, Glen.

Mr. Glen McKinnon (Brandon - Souris, Lib.): There was a fair amount of discussion on this point, Elwin.

Mr. Elwin Hermanson: I alluded to that in my report.

Mr. Glen McKinnon: Yes. There was a lot of concern that there may have been too much pressure put on the president if he was a member of the board, or part of.

In my view...I'm concerned about the method by which this person receives his direction, whether it's coming from the minister or his officials, whether it's coming from the elected and the appointed members of the board. I have come to the conclusion that we'll have the best mechanism of communication if he is part of the board. I would support the government's position on this for that reason, for the record.

The Chairman: I think everybody has made their points very clearly and they've expressed their views. I'll call the question on the amendment that's before us at the present time.

All those in favour of the amendment so signify. I see three. All those opposed?

Mr. Elwin Hermanson: A recorded vote, please.

The Chairman: If you want a record vote, you're going to have to ask for it when I call for the vote, Elwin. I'm sorry. We had a show of hands. I'll do recorded votes if you call for them earlier. I saw three, and I saw seven on this one. We'll record that one this way, if that's okay. If you want a recorded vote in the future -

Mr. Elwin Hermanson: Can it be recorded, at least, that all government members voted against this amendment?

The Chairman: It probably is now, because you just said it into the record.

Amendment negatived

The Chairman: The next amendment before the committee is in the package as number 4, a Reform Party amendment. Mr. Hermanson, would you introduce this please?

Mr. Elwin Hermanson: Mr. Chairman, in light of what happened with the last amendment, and the fact that I can't think of an amendment that had broader support in the industry and made more common sense, and also given the fact that this amendment is a consequential amendment to amendment R-1, I'm afraid I have lost confidence in this process. I don't think the government is open to constructive amendments in committee, in spite of all the rhetoric about the value of this process. I'm extremely disappointed. Therefore, I will withdraw amendment R-2 and ask that it not be debated or voted upon at this time.

The Chairman: Okay, it's withdrawn.

Mr. Glen McKinnon: We can bring it forward at third reading if we choose.

Mr. Elwin Hermanson: At report stage but not at third reading.

The Chairman: You're just not going to move -

Mr. Elwin Hermanson: I'm not moving it at this stage.

The Chairman: Okay, thank you.

The next amendment before us is number 5 in the package, a government amendment.Mr. Calder.

Mr. Murray Calder (Wellington - Grey - Dufferin - Simcoe, Lib.): Thank you,Mr. Chairman.

I would like to amend clause 3 at line 13 on page 3 as follows:

Proposed subsection 3.2(2) would then read:

Basically, the reason for this is that when we were out west we heard a lot of concern about the statement within that clause, ``at the pleasure''. This amendment would provide for the board of directors to make by-laws that specify the conditions under which an elected director could be removed by the board.

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The Chairman: Is that clear? Elwin.

Mr. Elwin Hermanson: I'd like clarification. If these by-laws are put in place in this legislation in order to determine circumstances under or grounds on which a director could be removed from office, does the minister have the power to ratify or to in fact veto any decisions made or any by-laws proposed by the board in this regard?

Mr. Jerry Pickard: You're certainly setting up a hypothesis that is questionable. What was heard by the witnesses and what needed to be done ``at the pleasure'' left questionable what was occurring. As a result, since it did leave a question in everyone's mind as to what ``at the pleasure'' meant, it was removed so that the board could go ahead and structure its own direction with discussion. As we look at it, I guess it's best to give that democratic right to the group that is going to be responsible so that it can come forward with recommendations to the government. That's what we would be looking for.

Mr. Elwin Hermanson: That's not quite the answer I was looking for, Mr. Pickard. There were several suggestions put to us in replacing the phrase ``at the pleasure of''. One was ``on good behaviour''. One was ``for just cause''. The by-laws could say a two-thirds vote of the board of directors was required. What I'm asking is whether or not the minister, under Bill C-72, has the power to say he will accept ``on good behaviour'' as a definition but will not accept a two-thirds vote of the board as the by-law.

Does the minister have the power to determine the grounds on which he will accept or will reject in light of a proposal from the board or a by-law presented by the board?

Mr. Jerry Pickard: I am assuming the recommendations coming forth from the board would be there, but I'll extend this over to legal counsel or Mr. Migie to give us further clarification.

Mr. Elwin Hermanson: I'd appreciate that.

Mr. Migie: There is an amendment later that deals specifically with saying that the by-laws can include provision for the board of directors to make conditions under which elected directors may be removed from office. There's no provision that says it's a recommendation to the minister or that the by-laws would be approved by the minister. There's nothing in the bill that gives the minister that role with respect to the board of directors.

There is a section in the current act that is very general as it relates to directions from the Governor in Council - that's cabinet. As I mentioned when I appeared, that was used twice, a long time ago. It's a very general section in order that it is possible that a direction from cabinet can take place to possibly deal with that. But in terms of their own particular decisions in areas in which they have the right to make by-laws, there's nothing in this bill by which the board of directors will bring anything forth for approval. The initial board of directors will be making recommendations under this bill that deal with things like the election process the first time around, but those are specific recommendations.

Mr. Elwin Hermanson: Let me present two propositions. One is that the board drafts a by-law that says a director cannot be dismissed without a two-thirds vote of the board of directors in favour of that dismissal. Can the minister say he doesn't accept that by-law? Can he use the ministerial powers - the ones that you said have only been used twice - to say he will not accept that by-law?

The second scenario is that this by-law is passed and it's a two-thirds vote or whatever they decide. If they actually dismiss a director, can the minister reverse that decision with the powers that he has in this act?

Mr. Migie: There's nothing that the minister has that deals with -

Mr. Elwin Hermanson: Or Governor in Council.

Mr. Migie: There is a general section in the current act by which the Governor in Council can give directions, and the board of directors would be responsible for carrying out those directions. And then, as I mentioned, the board would not be accountable for those particular decisions if they came from the Governor in Council.

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Mr. Elwin Hermanson: So the Governor in Council can override any by-law passed by the board, or can override any decision that it has authorized from a by-law that it has passed.

Mr. Migie: There is a provision in the bill for Governor in Council to give directions to the Canadian Wheat Board right now or the board of directors of the Canadian Wheat Board in future. As I mentioned, that has meant for some broad policy purpose and it's all that has ever been used. But there's no link here between the board of directors getting approval for by-laws or getting decisions from a minister.

Mr. Elwin Hermanson: So you're saying the Governor in Council can only give direction, not orders.

Mr. Migie: No, there's a process for Governor in Council to give directions to the Canadian Wheat Board. As mentioned, that is meant for some type of overriding policy purpose. There is no provision in the legislation under which the board of directors, in its by-laws, needs to seek or get approval from a minister, or for the minister to give them a direction to change anything.

Mr. Elwin Hermanson: I can foresee the minister or the Governor in Council saying that unless ``at the pleasure of the minister'' is put in the by-laws, the board can just take a hike. That's possible, right? The minister can give that direction.

Mr. Migie: No.

Mr. Elwin Hermanson: Even though it's not in here at this stage, it could be the wording of the by-law because the minister says he won't accept what the board is doing unless the by-law is worded this way.

Mr. Migie: Well, they can word it... It's legal if they pass it, because it's one of their by-laws.

The Chairman: If you want a clarification, I think the only cases in which the Governor in Council has given direction to the Wheat Board, over the many decades that it has been there, have both involved trade. I believe there were only two cases in which ministers have ever done that type of thing in the past.

Mr. Elwin Hermanson: But in the past, the Governor in Council has appointed the commissioners who have run the board. Now we're talking about farmers electing the directors, and that's a different scenario.

The Chairman: And that's what farmers have asked for.

Mr. Elwin Hermanson: The minister may want to take a more hands-on role. I'm trying to find out how much power the minister and the Governor in Council actually have within their ability to give direction.

Mr. Jerry Pickard: I think it has been made very clear from the statements that have come forward. The minister does not have that power.

The Chairman: Okay, I'll move on. Monsieur Chrétien, and then Mr. Easter.

[Translation]

Mr. Jean-Guy Chrétien: Mr. Pickard, yesterday we were told that, as of December 1998, all board members would be democratically elected and grain producers would control the Canadian Wheat Board. And if directors and the chairperson are indeed democratically elected, it is quite appropriate for us to delete the words "at pleasure"; it would be regrettable if the Governor in Council removed a director who had been democratically elected by his peers. Is that a good reflection of the spirit of the bill?

[English]

Mr. Jerry Pickard: The direction you mentioned is the exact direction in which we wish to go. The elected group can make decisions under which they would look at a member functioning there and doing the appropriate job for the corporation that we're talking about. So yes, your interpretation is very correct.

[Translation]

Mr. Jean-Guy Chrétien: Jerry, if one of the 15 directors were considered as the black sheep of the board, could the other 14 have him removed?

[English]

Mr. Jerry Pickard: There's absolutely no question that there would have to be just cause and some structure under which they board has set out the rules and regulations by which someone could be removed from the board. But you must realize that in any corporation or structure like this, there are certainly areas of confidentiality, such as when they're talking about trade deals or other options. They have to have some protection for the corporation itself. If they were to look at any type of severe measure, I'm assuming it would come under that type of consideration.

If somebody is a black sheep and is just not going along with the policies, I don't believe that would have any tenure in the types of decisions this board would make if it was making decisions that are severe. But I do believe there are business practices that are very crucial to the board and that require cooperation, particularly when you're talking about trade deals, different option sales, and those types of things that can have a tremendous bearing on whether or not this board can actually function and sell.

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[Translation]

Mr. Howard Migie (Director General, Adaptation and Grain Policy Directorate, Policy Branch, Department of Agriculture and Agri-Food): In the bill, on page 3, in proposed subsection 3.2(3), it says:

Mr. Jean-Guy Chrétien: You are quite right, of course, but if there is only one black sheep among the 15, the other 14 board members obviously maintain control.

One last point, Jerry: the president - whom I call the CEO - is hired, not democratically elected. He is hired by the Board. Does the board - do those 15 democratically elected directors - freely choose the CEO they want, or do they have to take whomever the Governor in Council imposes on the Canadian Wheat Board?

[English]

Mr. Jerry Pickard: I would have to clarify one point you just raised. Of the 15, there will be some elected members and there will be some appointed members. In any discussion that I have heard and in information coming forward, the CEO would be one of the appointed members of that board.

[Translation]

Mr. Jean-Guy Chrétien: I am not too happy with your answer, which is extremely hypothetical. I would ask Mr. Hermanson to listen carefully to our remarks. Jerry, are you saying that, on the basis of your knowledge and the discussions you have heard, he is appointed. Is that true, false, or possible?

[English]

Mr. Jerry Pickard: The CEO would be a full-time person, giving direction to the board and doing the daily management. What he would do is clearly outlined. He would be appointed in order to make sure that such a member is there. Otherwise you'd face the possibility of losing your chief executive officer every time an election comes along.

[Translation]

Mr. Jean-Guy Chrétien: Is he appointed by the Governor in Council, or hired by the Board of directors?

[English]

The Chairman: Maybe I can clarify it. If you read the clause of the bill that pertains to the president, Mr. Chrétien, proposed subclause 3.9(1) says:

Mr. Jerry Pickard: I can go on a little bit more on that as well. I think it's important to note that the board would make a recommendation as to who the CEO would be. The board could therefore make recommendations as to replacement of a CEO as well. All of these things centre around the board having control. The final appointment is from the Governor in Council, though. The board makes all of the decisions as to salary, as to job, as to those types of things, along with the recommendation of who should be there.

The Chairman: Mr. Easter.

Mr. Wayne Easter: Mr. Hermanson and Mr. Chrétien, I think you have to go forward and look at some of the other amendments that the government is putting forward. They are based on the views that we heard during the hearings. I know Elwin is accusing us of not listening to those hearings, but by looking at the amendments, you can see that we certainly did.

I think Liberal amendment 11 in the package clearly outlines some of Elwin's concerns about the conditions under which the board is elected. It would really clarify the conditions under which elected directors would be removed from office. It specifies that there be a periodic review of the performance of the president by the board and the manner in which the board may recommend to the minister the removal of the president. That is clearly putting the board in control.

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I want to come also to the other point Mr. Hermanson was making, which I believe is trying to raise false fears about the power of the government in Bill C-72. I do have a question for the legal counsel or other representatives from the department here. In governing for all the people of the country, a government has to have certain overriding powers in times of war or in international trade matters or whatever. You'll find there are clauses in many pieces of legislation that give the Governor in Council those powers in exceptional circumstances. I don't believe it's different in this bill from in others.

About commodity boards, I don't have an act with me, but do any of the witnesses before us have any idea about the power under commodity boards? I do know in some of the provincial acts the provincial government has the power to override a commodity board in certain circumstances. It's just part of governance, and an important part of governance.

Mr. Chairman, I'm trying to show this fear-mongering on the part of Mr. Hermanson for what it is. There's nothing extraordinary here with the government having overriding power.

Mr. Byer: One such example would be the Farm Products Agencies Act. Under that legislation Parliament in its wisdom determined that in order to manage national agencies properly, agencies such as the Canadian Egg Marketing Agency and the Canadian Chicken Marketing Agency, a supervisory council would be established under the act for the purpose of reviewing the operations of those agencies and for giving approval to any marketing regulations or levy orders those agencies might seek to enact. The supervisory council is known as the National Farm Products Council. Its members are all appointed by Governor in Council on the recommendation of the minister. It is the arm through which the minister works to influence the operation of those agencies.

The Chairman: Mr. Culbert.

Mr. Harold Culbert (Carleton - Charlotte, Lib.): Thank you, Mr. Chairman.

On the topic now under discussion, I would address this to the solicitor. I'm not a lawyer, but it would seem to me Bill C-72 establishes, or in this case re-establishes, the corporation and the guidelines and it would be up to the board of directors of that corporation to establish the by-laws under which the corporation operates. Those would be meetings and the things Mr. Hermanson brought up, which would be of concern to everyone.

Most of us would be aware of many corporations. Some bodies use a variety of controls in their by-laws. As most of you would know, in a number of them - and I suggest this only as an example - if you are a director and miss three board meetings without just cause, sickness or reason, the board may want to put a prerequisite in their by-laws for consideration.

I use that as an an example. But on the point Mr. Hermanson was concerned about, should a number of the board members gang up on an individual - I think that was the point that was being brought up between him and Mr. Chrétien - I would think civil law would come into place on the fairness as it met the by-laws that had been established. I would like the solicitor perhaps to comment on that, because that seems the norm. We're mixing the establishment under Bill C-72, I think, with the bylaws under which the board would operate their meetings and so on.

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Mr. Jerry Pickard: Mr. Chairman, I'm not trying to get away from the topic we're discussing, because I do think it has relevance later in the bill, but we're really talking about the clause and the removal of three words ``at the pleasure''. I think we've totally lost sight of Murray's amendment in broadening the discussion to the role of the chair and CEO and all of the other things we've been discussing. Maybe we could focus on this other problem at a later point.

The Chairman: Mr. Hermanson.

Mr. Elwin Hermanson: I disagree with Mr. Pickard's response, because what we've done is to take away a definition and we haven't put anything in there. That makes all of this questioning very relevant indeed.

As far as Mr. Chrétien's question is concerned, it was a good question, and maybe I would just quickly respond to Mr. Chrétien and say that what this act is doing is very similar to the way the Liberal Party selects candidates: they'll let the constituency do it unless they don't like it, and they have the power to override the constituency and appoint the candidate if they so choose. They're giving the minister the power to choose a president they want, who will then sit on the board and be part of the decision-making process.

In the clause and with regard to the amendment that we're making here - and I'll get right down to the nuts and bolts here - we're taking out the phrase ``at the pleasure of'', and as I said, we're not defining what the terms or what the conditions of removal of directors or conditions of their ongoing service to the board is. If you look farther down -

The Chairman: Mr. Hermanson, just to clarify, if you read through the amendment package, which you've had since yesterday, that is definitely explained later in the package. That's the point. Those words are being removed here and they are going to be dealt with. How that would happen is going to be dealt with later in the package, so I'm not going to take debate much longer -

Mr. Elwin Hermanson: No, not later in the package. It simply dealt with by-laws.

The Chairman: Yes, it is. It's in the amendments.

Mr. Elwin Hermanson: It simply dealt with by-laws and we're trying to determine -

The Chairman: Which allows it to happen, quite frankly, by a majority board that is elected by producers.

Mr. Elwin Hermanson: Let me get to my point, Mr. Chairman. If we take out that phrase and don't put anything else in there, and then we move on to paragraph 3.93(1)(a), the directors, officers and employees of the corporation are to ``act honestly and in good faith with a view to the best interests of the Corporation'', then on the next page, paragraph 3.94(a) again, ``acted honestly and in good faith with a view to the best interests of the Corporation'', without any definition in the clause that we're currently reviewing, who makes the subjective decision as to whether or not these directors have acted honestly and in good faith? Who decides that?

Mr. Wayne Easter: The board of directors.

Mr. Elwin Hermanson: How do you determine that it's the board of directors? Where does it say it's the board of directors?

The Chairman: Because the board of directors, Mr. Hermanson, by another amendment is going to have a by-law that can allow it to make that determination, to specify what that determination is, in the by-laws.

Mr. Wayne Easter: I just read it to you. It's amendment number 11.

Mr. Elwin Hermanson: I don't think so.

The Chairman: You'll have to deal with it when we get there.

Mr. Collins, do you have a brief comment?

Mr. Harold Culbert: Mr. Chairman, before you go there, can I get an answer to the position that I posed to the solicitor?

The Chairman: I'm sorry, I thought we did. My apologies.

Mr. Harold Culbert: No, we did not get a response.

The Chairman: Mr. Byer.

Mr. Byer: If I could rephrase that question to make certain I understand it correctly, are you asking if there are civil law remedies in the event of a president or a director being dismissed by the board and feeling that he was unjustly dismissed?

Mr. Harold Culbert: Exactly.

Mr. Byer: The quick answer is yes. He would have all the remedies for unjust dismissal that any other employee or person would have.

Mr. Harold Culbert: Thank you.

The Chairman: Mr. Collins.

Mr. Bernie Collins (Souris - Moose Mountain, Lib.): I have a question, Mr. Chairman, and maybe our legal counsel can clarify it. Of those 15 people, is it possible that both the chairman and the president/CEO could come from the elected portion?

.1130

The Chairman: No. The CEO, Mr. Collins, is appointed.

Mr. Bernie Collins: I know it says appointed, but what I'm saying is, does it say in there - and I'm not trying to...I want some clarification - that they automatically will come out of the appointed? It says he will ``appoint'', but it doesn't say where they come from.

That's what I need to know.

Mr. Jerry Pickard: Theoretically, that could happen.

Mr. Bernie Collins: Absolutely. That's the point I'm raising. It could very well come from the elected portion, because that's not in here.

I would like to know from the legal counsel if my interpretation is correct.

Mr. Byer: I would agree with that. There is no prohibition in the bill or the act that would prevent the board from recommending one of its own elected members from being appointed as the president.

Mr. Bernie Collins: That's all, Mr. Chairman.

The Chairman: Mr. Chrétien, you had a final point.

[Translation]

Mr. Jean-Guy Chrétien: No, that's fine.

[English]

The Chairman: We have before us amendment 5 -

Mr. Elwin Hermanson: Mr. Chairman, Mr. Easter refers to page 11. It says there:

Obviously, the minister has the power to remove the president. I would think from this that the minister could remove the president without a recommendation from the board. This just says what the board can do, but from this amendment, it looks as though the minister has the overall power and would be able to remove the president even if they didn't get a recommendation from the board.

There's too much here that's not defined.

Mr. Wayne Easter: The purpose of the amendment on page 11 is basically to set up a process whereby the board of directors would set up how the removal of the president, and if necessary, the removal of directors, from their positions would be done.

Mr. Elwin Hermanson: But it looks as though the minister can override any decision the board makes.

Mr. Wayne Easter: I would say not.

Mr. Elwin Hermanson: It's kind of like with kids: they can make a request to their parents, but of course the parents have the ultimate decision on what is done.

Mr. Wayne Easter: You wouldn't want it any other way, would you, as a parent?

Mr. Elwin Hermanson: No, but I don't think farmers should be the little kids here. I think they should be treated as adults.

Mr. Chairman, just for the record, I want to make it clear that I'm not opposed to the removal of ``during pleasure'' from this clause. That's not the argument I'm making. The argument I'm making is that we've left a void here, and I believe it may give too much discretion to either the minister or the Governor in Council unless we clearly redefine what the minister's powers are.

The Chairman: We're going to call the question on amendment 5 in the package.

Mr. Elwin Hermanson: I'm supporting the amendment to take out ``during pleasure''. I just want to make that clear.

Amendment agreed to [See Minutes of Proceedings]

The Chairman: The next amendment in your package, 7, also applies to clause 3.

Is there a mover for this amendment?

Mr. Elwin Hermanson: In light of the failure of the committee to pass R-1 and in light of the fact that we have now taken away a definition that may impact yet on the government's L-4 motion, I will withdraw R-3 for later consideration at report stage.

The Chairman: Okay. It's not moved.

.1135

The next amendment before us is number 8 in the package. Mr. McKinnon.

Mr. Glen McKinnon: Yes, Mr. Chair. It is moved that Bill C-72, in clause 3, be amended by replacing lines 20 to 22 on page 3 with the following, and it does concern remuneration:

3.3 (1) The directors shall be paid such remuneration as is fixed by resolution of the board.

Again, there was some concern by our witnesses recently that the provision currently in the bill as it was originally structured reads that the Governor in Council may fix the remuneration of the directors. This provision will be triggered when the CWB becomes a mixed enterprise, and of course that's what we're dealing with at this time.

The Chairman: Are there any questions on the amendment? Mr. Hermanson.

Mr. Elwin Hermanson: Mr. Chairman, of course it's moving in the right direction to take this power away from the Governor in Council and pass it on to the board, but it's not clear here - are there going to be any guidelines? Again, will this be determined by by-laws that the board itself passes? Is this going to be a little bit like the MPs setting their own salary and pension plan? What kind of safeguards can we put in here to make sure the board can be held accountable to farmers for the remuneration they have given themselves or fixed for themselves?

Mr. Jerry Pickard: To answer that question, Mr. Chairman, very clearly it is a board functionally responsible to all of the growers and all of the industry itself. As a result, there is an election process in place, and if they make decisions that are not acceptable to the industry, the industry does have the right to not support them in the upcoming election. That responsibility exists, which comes back to the democratic process wherein those they are representing have the final say as to whether they continue that job or not.

Mr. Elwin Hermanson: But of course there's a problem in that only a majority of directors are going to be elected, so you may have two elected directors and the appointed directors forming a majority vote on the board and increasing their salary, when in fact the majority of elected directors have opposed the amount that they have been remunerated. It's gets pretty tricky.

The other thing is this. Are these decisions going to be made public? Are we going to know how these decisions were arrived at?

The Chairman: Elwin, can you run that by me again?

Mr. Elwin Hermanson: Well, if a majority of the elected directors could vote to set their salary at, say, $30,000 a year for part-time, but two or three elected directors could say let's make it twice that, and they have the support of the appointed directors who aren't accountable to the farmers and therefore they set the higher figure rather than the lower figure, and if in fact the majority of the people representing the farmers did what the farmers wanted, what I'm saying is that's the kind of problem you run into when you put this oil-and-water body together - partly appointed and partly elected.

Mr. Jerry Pickard: I wonder if what Mr. Hermanson is suggesting is whether or not the government should set the salaries of this board. I, quite frankly, don't think so. I don't believe the department thinks so. But really, the committee has a right to support this amendment or not.

The reasoning, the logic here very clearly is that we expect this board to be responsible to the people it represents, and we expect the decisions - which are million- if not billion-dollar decisions - being made about what is happening with that industry... Certainly we can trust them with their remuneration.

Mr. Elwin Hermanson: Well, Mr. Pickard, it was your original draft that in fact gave the power to the government to set their own remuneration. It was a response from out in the field that said this isn't correct. You've brought an amendment that I said moves in the right direction. I was not suggesting that the government set the salaries. But there are no guidelines as to whether or not this would be reviewed by this committee or be subject to Treasury Board guidelines for similar corporations. This is kind of a blank cheque, Mr. Pickard. That's what I'm concerned about.

Mr. Jerry Pickard: Mr. Hermanson, the viewpoint coming from industry strongly suggested that the board should set the remuneration. If you have a committee overlook what their decision is, or if you have the minister overlook what the decision is, what you're saying is you're going to take it away from them. Now, you either allow them to have it, or you have somebody else make the decision. It's my opinion, after listening to the industry, after listening to testimony coming forward, that they are responsible people and can make a responsible decision of this nature. If they are not responsible, the industry has the right to make a judgment at election time.

.1140

[Translation]

The Chairman: Mr. Chrétien.

Mr. Jean-Guy Chrétien: Mr. Chairman, before giving my opinion on this amendment submitted by the party in power, I would like an answer to the following question.

Mr. Pickard, Board members' salaries are currently established by the Governor in Council. The Board has a maximum of five members, including the president. Could you please tell me what the current salaries of the president and other Board members are?

[English]

Mr. Jerry Pickard: I am not able to tell you that. Quite frankly, I'm only not able to tell you that because I don't know what the current payment is.

Mr. Elwin Hermanson: Nobody knows. It's a secret.

Mr. Jerry Pickard: At that point, all I can say is that -

An hon. member: It's public. The range is public.

An hon. member: Do you have a range?

[Translation]

Mr. Jean-Guy Chrétien: That is not confidential. That is public information.

[English]

The Chairman: No. No, it isn't. No, it is not confidential.

Mr. Wayne Easter: Mr. Chairman, there's a range.

The Chairman: There's a range that it's in, the same as always.

Mr. Jerry Pickard: I don't know it, but I can try to get those range figures for you. I have no problem with that.

The Chairman: You can get the range figures for us?

Mr. Jerry Pickard: I'm saying I don't have it, and people at this table do not have that range figure, but we will get it for you.

[Translation]

Mr. Jean-Guy Chrétien: Could you please undertake to provide committee members with the information by next Tuesday?

[English]

Mr. Jerry Pickard: Oh, I'm assuming that, yes, we can definitely get it to you -

[Translation]

Mr. Jean-Guy Chrétien: Agreed.

I see a real risk if we fail to establish limits. Let's say that we are the 15 on the Canadian Wheat Board. We may reach a minority decision that our services are worth much more, and establish exorbitantly high salaries for ourselves. We could hike our salaries way up, and this would seriously undermine our credibility as directors with grain producers as a whole. Do you consider my concerns justified?

[English]

Mr. Jerry Pickard: Very clearly, the guidelines of salary are going to be commensurate with what those people feel the responsibility is. Certainly the public - those people who elect them - is going to have a tremendous input, just as those who elect people in this place or elect people anywhere have a strong opinion of what a salary should be.

In my opinion the fundamental question is, do you impose over these people what you do in salary, or do you give them the responsibility to deal with that in the appropriate manner, and let the public that elects them decide?

We have listened to industry, and the recommendation has come forward by those who will be paying the salary. It is the producer who will be paying the salary. It is the pools organizations and others.

We have gone in the direction such that they will have the final say whether those people repeat their jobs. I think it's a choice. It's not something where you can simply say, well, we can control it if we want to control it, because then we have somebody making the final decision who is not the board.

[Translation]

Mr. Jean-Guy Chrétien: But you know very well that one group will be appointed while another is elected. We have just removed the words "at pleasure". Take the Senate, for example. Some senators do not deserve their salaries, but they cannot be removed. They are appointed for life. Since we have removed the words "at pleasure", we will be stuck with any members who may end up not deserving their salaries.

.1145

[English]

The Chairman: No. As clarification, they can only be... Mr. Chrétien.

Mr. Jerry Pickard: I am not in a position to judge what other elected officials do. I think we're kind of drifting away from the point that there's a fundamental choice between responsibility to those you represent and responsibility to someone above who makes a final assessment of your judgment. We have chosen, after listening to people, to say those whom they represent will be the judges through the election process.

The Chairman: I want a clarification from Mr. Chrétien, so it's on the record, that it shows very clearly that all directors will be elected for three years, with a maximum three-year renewal.

Mr. Jerry Pickard: I would like to point out one other fact that is critical and of this nature, too. It doesn't matter where you are, there are elected people and there are appointed people in every corporate structure. When we look at the elected people, or the people who are running the board, they make the determination as to what the salaries are and they control that. They certainly have the ability to set the salary of the CEO. If they make a huge mistake that is not publicly popular, the electorate will deal with that.

The salaries, in general, of the whole operation are going to be important, not just the salaries of those sitting on the board. I think we look at it as a business. They're operating a business and we're kind of knit-picking if we look at too small an area without looking at the global structure. They have many important decisions to make on sales, operations, people they have internationally, and all of those aspects. So there's a wide range of decisions they're going to make apart from the board of directors' salaries.

The Chairman: We'll hear from Mr. Easter, then Mr. Hermanson, and then we're going to end the discussion on this amendment.

Mr. Wayne Easter: I was just wondering if somebody might be able to tell me how the remuneration is set for the directors, president, chief executive officer, etc., of the boards of UGG, Saskatchewan Wheat Pool, Alberta Wheat Pool and Manitoba Pool Elevators, for example. Can anybody answer that? I believe you'll find it's mostly set by the board, and in some cases ratified by convention.

So what we're asking for here is really no different from how the cooperative system operates. Is that correct?

Mr. Jerry Pickard: Our officials confirm what you said, Mr. Easter, as the process.

Mr. Wayne Easter: Thank you. I have no further questions.

The Chairman: Mr. Hermanson.

Mr. Elwin Hermanson: Because we're trying to make the Canadian Wheat Board more accountable to farmers, if the remuneration is set by the board, what is in this bill that would require the board to make its remuneration public? I'm a member of Parliament. All my constituents know, if they want to know, that I make $64,400 a year. It's public information. I'm a public servant and they have a right to know.

I am afraid this board will be able to set its remuneration and it will remain a secret. You have placed a CEO on the board. We know that CEOs often have exorbitantly high salaries. If the CEO is going to be a voting member on this board, it's extremely important that the CEO's salary be made public to the farmers as well.

So what provisions are in this bill so I, as a farmer, will know what salaries my board members are receiving, and particularly what salary this CEO is receiving who is a voting member of the board and in a conflict of interest position?

Mr. Wayne Easter: I thought you Reformers gave 10% back. Are you keeping it now?

Mr. Elwin Hermanson: Yes, I do.

Mr. Jerry Pickard: To my knowledge, Mr. Hermanson, and through experience - and many of us around this table have had different experiences - I saw nothing in the municipal act that stated the salaries of the corporation I represented had to be made public. However, if I told the people who elected me I wasn't going to tell them what we make, what the CEO makes or what anybody in the system makes, I should look for another job very quickly. Because it's an elected position and they're responsible to the producers, that process sets in place a normal process where exchange of information is vital for the operation of that type of system.

.1150

I have no question that whether it's in the act or not, if I couldn't walk up to you and ask you how much you make, in that scenario the producers would make certain you wouldn't be there again.

Mr. Elwin Hermanson: That's not true. This friction often occurs. It has occurred in cooperatives, where people want to know what the CEO of the cooperative is making and the board is hesitant to reveal it. They say it is private and confidential information. Members of cooperatives have been extremely upset at the difficulty they've had in acquiring what they feel is very relevant information that they have a right to know.

So, Mr. Pickard, history doesn't substantiate the argument you just made. I think there should be something in this bill that requires a fact like this to be made public, if farmers who want a more accountable board are going to have confidence in this outfit.

Mr. Jerry Pickard: That's your viewpoint. I think that's -

Mr. Elwin Hermanson: It's a good viewpoint.

Mr. Jerry Pickard: It's a viewpoint.

The Chairman: We'll hear from Mr. McKinnon, and then we're going to call the question.

Mr. Glen McKinnon: I suspect this could be covered in the by-laws of the duly presented corporation, if it chooses to include it.

Mr. Elwin Hermanson: If it chooses.

Mr. Glen McKinnon: Why not? It has the power to do it.

The Chairman: Mr. Hermanson, I would be surprised if a majority-elected board, composed of producers, was so naive as to not answer to its own colleagues and fellow producers what its members were getting for remuneration on the board. I think it would do so at its own peril.

I'm going to call the question on this amendment, which is amendment 8 in the package:

Mr. Elwin Hermanson: Recorded vote.

The Chairman: Okay.

Mr. Jerry Pickard: Are we voting on amendments 8 and 9?

The Chairman: Yes, we are. I said at the beginning that we were dealing with amendment 8, and amendment 9 is the French translation.

Amendment agreed to: yeas, 7; nays, 2

The Chairman: There is some lunch at the back. Since we're talking at pleasure, I suggested to the clerk he should order some lunch at pleasure, and if he didn't it would be because he didn't want to do so. I would suggest members find their way back to the back sporadically to pick some up. Please don't take it all before the chairman gets there.

Mr. Jerry Pickard: You are a real Liberal when you call Pizza-Pizza at pleasure.

The Chairman: I didn't do it. The clerk did it, and I'm sure there's some good Canadian wheat in the pizza dough - probably lots of it.

Mr. Jerry Pickard: I'm sure.

Mr. Elwin Hermanson: It could be Italian pasta flour, you never know.

The Chairman: So the lunch is on and it's hot.

The next amendment before the committee also deals with clause 3. It's amendment 10 in the package.

[Translation]

Mr. Jean-Guy Chrétien: Point of order, Mr. Chairman.

[English]

The Chairman: Just a minute.

[Translation]

Mr. Jean-Guy Chrétien: Thank you, Mr. Chairman. I will appeal to you as a well-known humanitarian, and as a staunch upholder of democratic principles...

[English]

The Chairman: You're buttering me up.

[Translation]

Mr. Jean-Guy Chrétien: The notice I received indicated that the meeting would last from 10:30 a.m. until 12:30 p.m. I have just heard it will go on until 1:30 p.m.

.1155

I made other commitments, as have most of you here. If I had known the rules of the game were to be changed half way through, if I had known that at least 24 hours in advance...

Mr. Chairman, in giving me only a few hours' notice, you are infringing on my rights as a member of the Official Opposition. I know you are listening very carefully now, Mr. Chairman, and I thank you for that. However, I would like you to adjourn the meeting at 12:30 p.m. This is a very important bill, and the Official Opposition should be present - but I will have to leave at 1 o'clock.

[English]

The Chairman: The original notice said 10:30 a.m. to 12:30 p.m. I believe if you check the record for yesterday I said we would sit through until 1:30 p.m. I asked the clerk so to notify your offices. I believe that notification was put into circulation this morning. Whether everybody had it before they came to the meeting this morning I'm not exactly sure. We will sit until 12:30 p.m., at which time I will respect that and ask for a vote of the members present to continue until 1:30 p.m.

In the same light, I have also asked the clerk - and they will be circulated today - that we commit ourselves to all day next Tuesday and the evening, next Wednesday afternoon and the evening, and next Thursday and the evening, in order to continue moving on this bill.

Mr. Chrétien has just... I'll put this on the table just for the record; the matter of the ranges for the commissioner, chief commissioner, assistant chief commissioner, and commissioner to the Canadian Wheat Board. For the chief commissioner the range is between $115,5000 and $144,200. For the assistant chief commissioner the range is $110,100 to $129,700. The range for the commissioners is the very same as for the assistant chief commissioner. The chief is in one range, the assistant chief commissioner and the commissioners are in the second range.

The amendment before the committee now is number 10. Is there a mover of amendment 10? Go ahead.

Mr. Elwin Hermanson: I move my first amendment. I have withheld moving the second and third amendments for the time being, but I will move the amendment labelled R-4 in your package.

It moves that Bill C-72 be amended in clause 3 by replacing lines 28 and 31 on page 3 with the following:

3.4(1) The chairperson shall be a member of the board and shall be elected by the board.

Again, Mr. Chairman, as you and those members who travelled through Manitoba, Saskatchewan, Alberta, and the Peace River country very well know, there was another recurring theme, just as strong as the support, that the president or CEO not be a member of the board and that the CEO president not be selected by Governor in Council. Equally as important was the fact that the chair of the board should not be a Governor in Council appointment but in fact should be elected by the board itself.

I believe the legislation does call for the chairperson to be a member of the board. So the Liberal government is in agreement there. As you know, the bill as it was presented does not call for the chair to be elected by the board. This amendment would remedy that situation and make it clear in the proper place in the bill that the chair of the board would be elected from members on the board.

The Chairman: Mr. Easter.

.1200

Mr. Wayne Easter: Mr. Chair, I agree with the intent of Mr. Hermanson's motion, but it doesn't spell out as specifically as government amendment L-21 does...in which we're basically -

A voice: What number is it in the package?

Mr. Wayne Easter: It's number 52 in the package.

Therefore I would oppose this amendment on the basis of moving to the other, the reason being that the government amendment ties a few more specifics to the responsibilities and to the appointment. But the intent is proper.

Mr. Jerry Pickard: Mr. Chairman, we are running up one year where we're going to have an appointed board. Therefore, the wording and structure is different to accommodate the differences in going from an appointed board, through the transition, to an elected board. Those issues are covered in amendment number 52 with regard to the chairperson.

Right now we have to function -

The Chairman: Mr. Pickard, proposed section 3.4 deals with the transition board, if I could use that term.

Mr. Jerry Pickard: Yes.

The Chairman: Amendment number 52 in the package deals with how the chairperson is selected once there is an elected board. Is that right?

Mr. Jerry Pickard: And the process between now and then.

The Chairman: Yes.

Mr. Chrétien.

[Translation]

Mr. Jean-Guy Chrétien: Before I comment on that, Mr. Chairman, could Jerry answer my previous question? At the end of 1988 - that is, in December 1988 - how many of the 15 will be elected and how many will be appointed?

[English]

Mr. Jerry Pickard: I couldn't give you those numbers at this point.

The Chairman: A majority will be elected.

Mr. Jerry Pickard: Yes.

[Translation]

Mr. Jean-Guy Chrétien: That does not help me very much. I find the Reform Party's motion very intelligent - it states that the chairman of the board shall be elected by the board of directors, that is, by the 15 directors themselves.

We have always said that the board of directors would be dominated by grain producers. At the time, I understood this to mean that most of the directors would be chosen - that is, elected - by the producers.

So here is the question I would like you to answer first: how many of the 15 will be elected? And if we don't know that figure today, am I to understand it will not be stipulated in the bill?

[English]

Mr. Jerry Pickard: There is an amendment coming forward that suggests directly that the majority of the board will be elected. That's consistent with the policy that has been discussed on that issue.

With regard the viewpoint, then, you're exactly right; the majority of the board will be elected. When you ask me for a specific number, I don't have that specific number. I know it's going to be a majority of the board.

With regard to the process, I think you can rest assured that your concern is there. But I must point out as well, we're not in disagreement with what the Reform Party has put forth. Our proposed amendment deals with the same principle in a little different wording. We do really support the same principle.

The Chairman: Mr. Hermanson.

Mr. Elwin Hermanson: Thank you, Mr. Chairman.

Mr. Pickard, you said that proposed section 3.4 is a transitional; it just deals with the transition. Nowhere here does it say this is a transition.

What I understand, in light of Mr. Easter's comment regarding amendment number 52, is that initially or right away we have an appointed board. The elections aren't going to take place right away; it's going to be delayed. So the minister or the Governor in Council will appoint the chairman of the board.

.1205

Somewhere down the road, then, the board will designate... How can you do that? How can the board designate? Why are you putting this in clause 32 and amending proposed section 3.4 from clause 32? I don't understand how that has an impact on the transition? Please explain that to me.

Mr. Jerry Pickard: It is clear that the bill itself sets no later than December of next year as the beginning point for the elected board. There is an interim period in which we will be dealing with a chairperson as well.

So there are two different mechanisms with regard to the chairperson: one year plus some time, whatever it would be, up to December 1998; and after December 1998, the election process of the chair by the board is in place.

Mr. Elwin Hermanson: Okay, walk me through this.

The Chairman: As a point of clarification, I think it might help if you look at proposed section 3.8, Elwin. It says:

I think that clarifies - and officials could help me - that section 3.4 we're talking about here is tied in and will only be in effect until the election takes place, and then it changes.

Mr. Elwin Hermanson: Once Bill C-72 is passed, when do the commissioners cease to exist as commissioners? When does the fully appointed board by the minister come into play? At what point before or after this board is announced is the chair of the board determined? - I presume that's by the minister. Then I understand that by no later than December 1998 there will be elected members on the board and the chair will then be selected by this board.

Can you walk me through that? It's a little fuzzy.

Mr. Migie: With respect to determination of commissioner appointments, clause 31 on page 19 of the bill deals with that. It's really when clause 3, which is all of these governance clauses we're doing, comes into force. At that point, those commissioner appointments are terminated.

Mr. Elwin Hermanson: So would it come into force at the beginning of the 1997-98 crop year if this bill received royal assent before that crop year?

Mr. Migie: That would be the intent. Many of the other provisions kick in or come into force when you've had at least one director position that has been elected. It could be earlier than December 1998, but according to the amendments it would come no later than December 1998. If that were to come at some earlier date, then this new section that would define the chairperson's role of being elected from amongst the members, which was in amendment 52, would come into play.

Mr. Elwin Hermanson: It looks like we're going to run out of time and this bill may never be passed, but of course that's speculation. We have to presume it is going to be passed.

A voice: That's right.

Mr. Elwin Hermanson: If this bill were passed and received royal assent in June, Mr. Goodale could then appoint 15 people between the date of royal assent in June and the beginning of the crop year on August 1. It could be that of these, Mr. Hehn and the other two, Mr. Machej and Mr. Klassen, could be appointed directors, and he might pick a few others. He might even select one of those to be the CEO. Is that within the realm of possibility?

Mr. Migie: It's the Governor in Council who actually would be responsible for it.

Mr. Elwin Hermanson: Yes.

Mr. Migie: The Governor in Council could make those types of appointments following the procedure about part-time and full-time, but, yes.

.1210

Mr. Elwin Hermanson: The board then would have up to a year and three months to put in place its by-laws and to set in place the election apparatus to elect a majority of directors, at which time they would then be responsible for the selection of the chairman, and not the Governor in Council. Is that correct?

Mr. Migie: There's a period that the election would have to take place - on or before December 1998 - and that this interim board, as some people refer to it, would in fact still be passing by-laws and be responsible for the Wheat Board operations. That responsibility would be there for a period that could go as long as a year and a half.

Mr. Elwin Hermanson: So there's another date prior to December that's important, and that the elections have to be completed by.

Mr. Migie: The provision is that the elections could take place before December but no later than. If the interim board makes recommendations and the elections were to take place in September, and everything could be in place by October, that clause then would kick in earlier. Beginning in October you'd have a new board of directors, at least one elected, so we presume a majority would be elected -

Mr. Elwin Hermanson: Even better, it could be the beginning of the 1998 crop year, August 1, 1998. Is that possible?

Mr. Migie: Yes.

Mr. Elwin Hermanson: Okay.

My other question is that if my amendment is passed, it would not be in conflict with the government amendment. The government would just reword proposed subsection 3.4(1). There shouldn't be a problem there. So I can still put this amendment forward. It would just mean that the government would have to accept my amendment rather than me having to accept the government's amendment. Of course, since I'm outnumbered here, that won't happen.

Mr. Wayne Easter: I figured you'd withdraw yours and go with ours. I'll give you credit for it.

Mr. Elwin Hermanson: I like the fact that I talk about ``elected'' and the government talks about ``designated''. I think that's a more democratic term. So I would like to stay with my amendment.

Mr. Wayne Easter: I was wondering, though, Elwin, if you were recommending to the minister those appointments you talked about.

Mr. Elwin Hermanson: No. I was just wondering if some of my nightmares might come true.

Mr. Wayne Easter: I see. You do dream sometimes, we know that.

The Chairman: We have amendment 10 before us. I'll call the vote.

Amendment negatived: nays, 6; yeas, 3

The Chairman: We now move on to amendment 11. Do we have a mover?

Mr. Glen McKinnon: I move to amend Bill C-72 in clause 3 by adding, after line 22 on page 4, the following:

As rationale, again, the witnesses this committee heard from indicated that directors should only be removed for cause rather than serving during pleasure, which was addressed in previous amendments.

The first by-law-making power in this amendment indicates that the board should consider specifying conditions under which directors may be removed. Further, the amended by-law-making power, when taken with motion 003.13A, which removes the reference to holding office during pleasure, would respond to the concern that elected directors only be removed by the board and only for cause.

.1215

Many witnesses were concerned about the influence that the board would have over the president. There were two references to making specific by-laws to provide greater clarity as to the responsibilities the board will have for reviewing the performance of the president and their power to recommend to the government that a particular president be removed from office if the board is dissatisfied with the president's performance.

So it does address some concerns in terms of evaluation of directors and evaluation of the president/CEO.

The Chairman: Any questions or comments on the amendment?

Mr. Hermanson.

Mr. Elwin Hermanson: Mr. Chairman, I've made it fairly clear - and I know I have the support of the majority of farmers in the prairies - that the president should not be a Governor in Council appointment. Since the government seems to be determined to go ahead with that, I would like to move a subamendment to the amendment.

In proposed subparagraph 3.5(b.3) I would like to strike out, after the word ``may'', the words ``recommend to the Minister the removal of'' and replace them with the word ``remove''.

The subamendment would thus read:

The rationale for this is that if farmers, through their elected directors, can't select their president, at least they'd have the power to get rid of their president CEO. That would certainly make the minister a little more cautious and considerate of their wishes when appointing the president CEO of the board.

The Chairman: So there is a subamendment to the amendment. I will have discussion on that amendment, if there is discussion. If not, I'll call the question on the amendment. I'm not going to ask Mr. Hermanson to write that one out. I think it's quite clear.

Okay. Hearing no discussion -

Mr. Elwin Hermanson: I wonder if legal counsel would give a comment as to whether this would somehow cause some conflict somewhere else in the bill. It may mean that we need to look at something at report stage. I'd like his expertise in that regard.

Mr. Byer: It's not that it would cause a conflict somewhere else in the bill, it's just that the general rule is that Governor in Council appointees can be removed, or usually are removed, by the Governor in Council. I've never seen a provision where someone appointed by the Governor in Council can then be removed by someone else, or by some other body.

Mr. Jerry Pickard: If I might, Mr. Chairman, the board has several tools and vehicles by which they can work. If they recommend the removal of a CEO, they're saying to the Governor in Council that they don't have faith in the CEO any longer. Obviously, the government would have to react to that.

At the same time, I would point out that if the board were setting the remuneration for a CEO, the CEO's salary could be $1 a year. There's no question that they have vehicles by which they can deal in those matters. I'm not recommending how they deal, or setting out the parameters in which they deal. What we're saying is that it is a Governor in Council appointment, so it would be a removal in that respect.

The Chairman: Mr. Easter and then Mr. McKinnon.

Mr. Wayne Easter: Mr. Chairman, I want to put this whole section into context in terms of the president. The board, as Mr. Pickard has already mentioned, has several avenues in terms of their control over the president.

Proposed section 3.92 says clearly that the president is:

.1220

Mr. Chairman, we did hear witnesses on this and we have moved now from what the original legislation said, with the amendments that are yet to come forward, to the election of the chair from amongst the board by the board, which is a considerable compromise. We're looking at a new instrument, a mixed enterprise, moving away from a crown corporation.

I think you have to keep in mind the significant government involvement here in terms of financial commitment. Certainly I raised the question pretty nearly everywhere I went: if the government were to forgo the appointment of the chief executive officer, and given all the safeguards there, were people willing to forgo the guarantees the government has in this system financially, which is not guaranteed to any other corporation in the country - the initial initial, the borrowing guarantees and the export credit guarantees? Most of them said no, they don't want to forgo those.

What this bill is trying to do with these recommendations here is to find a balance where the board does have control yet the government can be committed to the kinds of guarantees we've given the Canadian Wheat Board in the past.

Mr. Glen McKinnon: Mr. Chairman, I would suggest - Mr. Pickard touched on this - it would be highly unusual if an individual who is appointed by one body were removed from his office by another body, or other individuals within that corporation.

Mr. Elwin Hermanson: Mr. Chairman, in response to Mr. Easter's comments, he partially recollects what the witnesses said. They didn't want to give up the government guarantees; but they also said, with near unanimity, that the fact that the board has to present a financial plan to the minister was certainly more than adequate to cover accountability to the government for the initial price guarantee, the borrowing guarantees. He knows that is the truth. They said there's absolutely no need for the government to appoint the CEO when they have that requirement in legislation.

Some felt it was far too extensive that the complete financial plan of the board had to be submitted to the minister on an annual basis. Certainly, seeing the books, which is more than farmers have been able to see in the past, should be enough for the minister to decide whether he can guarantee the initial price.

Mr. Wayne Easter: If you recall the past, Mr. Hermanson, I would ask you this question. Would you allow me to present you with a business plan and then you give me your credit card and allow me to do whatever? That's basically what you've been asking for.

Mr. Elwin Hermanson: No, Mr. Easter. I've never yet seen a bank that said the only way they will give you a loan is if they can put members on your board and run your business. They want to know you have a sound plan. If you have a sound plan and security, they will give you the money. They don't want to be involved in managing your business.

The Chairman: I will bet you they take a little collateral on the way through, though.

Mr. Elwin Hermanson: That's right, they do.

The Chairman: It wouldn't surprise me if they did.

Mr. Elwin Hermanson: And so does the government with our grain.

The Chairman: We'll call the question on the subamendment, which would read:

Mr. Elwin Hermanson: Recorded vote.

Subamendment negatived: yeas 2; nays 7

The Chairman: I call the question on the amendment, on (b.1), (b.2), and (b.3).

Mr. Elwin Hermanson: Recorded vote.

Amendment agreed to: yeas 8; nays 1

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The Chairman: The next amendment also applies to clause 3. The amendment is number 13 in English and number 14 in French in your package. Is there a mover for that amendment?

Mr. Wayne Easter: Yes. I move that Bill C-72 in clause 3 be amended by replacing lines 28 to 31 on page 4 with the following:

The rationale behind this is obvious. It's been mentioned a number of times. Clearly, wherever we went both Canadian Wheat Board supporters and some of those somewhat opposed wanted the election of directors to represent a strong majority of producers. There was certainly some concern expressed over the geographic distribution, especially for the elected directors, and concern was also expressed about what I guess I could call the weighting of producers from provinces. But we've already put forward an amendment that there will be 15, and I expect that the appointed board will offer advice on how best to get the most appropriate representation across those regions.

The Chairman: Thank you.

Are there any questions? Mr. Chrétien.

[Translation]

Mr. Jean-Guy Chrétien: In many places, the bill seems extremely vague to me. I find this lack of precision very unfortunate, and I would like one of our witnesses to comment on it. The majority of directors are elected by the producers. Let's do a quick calculation here: with 15 directors, the smallest possible majority is 8. But what will that number actually be set at - 8, 9, 14? We can play around with all the numbers between 8 and 14. What I would like to see is a number in the bill, for example 12. I think 12 is a good number. If we take 12 as an adequate majority - well, it may be a majority, but it doesn't take much to turn it into a minority.

Let's not forget that we were in the middle of an economic crisis when the Canadian government established the Canadian Wheat Board. The Board was set up to protect wheat producers. So it only makes sense for them to have control of the board, through a democratic process of course. I am convinced all parties will agree with this approach. But it seems that the government, or at least the Liberal Party, wants to keep the upper hand. Obviously, the majority of the board will be elected, but if that majority is just 8, that's not difficult to control. But if the majority is 12 - three-quarters of the board - I will be much happier. Don't you have the courage to put a concrete number in the bill?

[English]

Mr. Jerry Pickard: The movement to put a majority in this case is to give a clear guarantee that the elected people would control the majority of seats on that board. I would ask you go back to just a few moments ago when you were asking if the majority will be elected. We affirmed that. Clearly, we want to affirm right now that the elected people will have controlling votes on that board.

[Translation]

Mr. Jean-Guy Chrétien: Although I will not be moving a subamendment, I will put the following question to Mr. Pickard: would you agree to specify that 12 directors will be elected by the producers, rather than just saying it will be the majority?

[English]

Mr. Jerry Pickard: It is this committee that is looking at whether a majority guarantee is there or whether a specific number is better at this point. And I guess that is at the committee's discretion.

.1230

[Translation]

Mr. Jean-Guy Chrétien: Mr. Pickard, we have been voting since this morning. You know quite well, as I do, that the party on my right is always unanimous, while the party on this side is always a little more flexible. Sometimes we say yes, sometimes we say no. I have on several occasions voted with the majority, the Liberal Party. If you were to say, "Okay, Jean-Guy, let's not waste time, just move an amendment specifying that a majority means 12 directors", I would just do it. But if you don't tell me to go ahead, I won't, because I know I'll be voted down. It's a fact.

[English]

Mr. Jerry Pickard: At this point, I want to make very certain that the majority of people are elected. Beyond that point at this time, I have chosen not to comment.

The committee here would have, for the number of people, 15 different viewpoints if 15 members sit on the committee. Each person is entitled to share each viewpoint and make recommendations from the committee.

[Translation]

Mr. Jean-Guy Chrétien: I move a subamendment to amendment L-5, which would then read as follows: "12 of the directors shall be elected by producers".

[English]

The Chairman: We have a subamendment. I think it's clear on that. I'll call the question on the subamendment.

Mr. Hermanson.

Mr. Elwin Hermanson: I just want to bring something to the committee's attention, because we have members here who weren't on the trip across the prairies. A lot of different viewpoints were expressed by witnesses who appeared before our committee. Several said there should be a majority. United Grain Growers said that it should be 66% plus. The Saskatchewan Wheat Pool said that it should be two-thirds. Keystone said it should be two-thirds. The professor from the University of Saskatchewan said it should be 75%.

The Catholic Rural Life Committee said that they should all be elected, which of course is my preference. I think that's what farmers would prefer.

Obviously, I think I can support my colleague's amendment, because it's certainly better than a majority. We still have the oil and water: elected directors with appointed ones.

I've seen some of the results of this at first hand. The Government of Saskatchewan decided to reconstitute health boards in the province. They followed this path whereby they would let rural ratepayers elect part of their rural health boards while they would appoint the rest.

It caused some frustration. If your elected people want to move one way and your appointed people want to move another way, somebody is speaking on behalf of the people and somebody is speaking on behalf of the government, and you have to decide whether the chair is going to be from the appointed or from the elected side. Is the CEO going to be from the appointed or the elected side? Of course, when the minister is involved, it even further complicates it.

That's why I think that 100% elected directors is preferable. I want it to be on the record that I would have preferred the word ``all'' instead of the word ``twelve'', but I can certainly support my colleague's subamendment because it's moving in the right direction. It's moving significantly far enough that it's worthy of support.

Mr. Glen McKinnon: Very briefly, Mr. Chairman, I think it's recognized with the word ``majority'' that there's still a need besides the elected personnel for some expertise. For instance, some industries may feel they need to have some input on the decision-making. So by having ``majority'', we can play with numbers, such as eight, seven, and so on. But I think the rule of thumb will be that if it's ten and five, or nine and six, etc., this will still recognize the thrust that the government wants to put forward in terms of elected, official control.

Mr. Wayne Easter: I think, Mr. Chairman, I will have to speak against the amendment. This is an area on which there hasn't been a lot of discussion in terms of what the numbers ought to be. I think Elwin has mentioned it.

.1235

Personally, when I went on this tour with the committee I was still of the opinion that appointed commissioners were the way to go. But clearly the witnesses have said they want a majority of producers on the board, and that's why it's put forward.

I certainly believe the government is committing itself to a strong majority of producers. That can be outlined in the regulations or further clarification could come forward at report stage, but certainly what the government is doing here is giving a commitment to a strong majority of producers.

Mr. Jerry Pickard: Mr. Chairman, may I make just one comment? I want to help Mr. Chrétien a touch. He suggested he would like representation from Quebec. I think with the number of people he has recommended to be elected it's highly unlikely - a lot more unlikely - there would be a representative from the Quebec area, when we start looking at the numbers we're talking about with the amendment he is proposing. It would eliminate representation from the rest of Canada, or limit it quite severely.

Mr. Wayne Easter: There might not be an opening after the next election.

The Chairman: Mr. Calder.

Mr. Murray Calder: Thank you, Mr. Chairman.

I think another thing here, and I want to put this on the record too, is the fact that we went out west and we listened to the fact that the farmers want more say on the Canadian Wheat Board. We're proposing a partnership between the government and the farmers here. Quite frankly, if these elected directors are not going to be smart enough - and that's basically what Mr. Hermanson is saying right now - to decide what a majority is going to be and we as a government have to tell them, then it flies in the face of Elwin's argument all the way through, that the farmers know better than the government.

Quite frankly, we've stated here that the majority of the directors shall be elected and we're letting the directors decide what the numbers are. That's the way I see it.

Mr. Elwin Hermanson: But these by-laws are going to be set up by a totally appointed board. The initial board that sets up the by-laws is going to be totally appointed by the minister. You've missed that fact. So it may be years before we get these by-laws corrected and end up having a majority.

Once the appointed directors are in place, appointed by the minister, it's in their best interest to secure their position on the board to have as few opportunities for new elections as possible, so once they were initially appointed they could remain appointed members of the board of directors. That's with this transition period. That's where some of the problem is, and you've missed that point.

Mr. Murray Calder: The thing is there's no way in the world we're going to appoint directors who are going to go against the wishes of the farmers. That's what this whole thing is about, to work together in a partnership. You're very blatantly saying you don't trust the government.

Mr. Elwin Hermanson: That's true. I am saying that. If Mr. Goodale through Governor in Council appoints fifteen directors initially and they set up the by-laws and they say, look, if we actually go to the farmers a bunch of us aren't going to get re-elected, so let's set the majority at eight rather than twelve, and that way most of us will still be around once the election takes place, because farmers can fill only eight positions, so seven of us are safe... Have a look.

Mr. Murray Calder: Quite frankly, Elwin, I would say you're taking a very pessimistic view of how this is supposed to work its way out eventually.

Mr. Elwin Hermanson: I think it's a very realistic view.

Mr. Murray Calder: No.

The Chairman: Okay, that's it. Mr. Chrétien, it's your amendment. You have the final say.

[Translation]

Mr. Jean-Guy Chrétien: Yes, of course, Mr. Chairman - you are being a good democrat again. Jerry, it is not quite accurate to say that Quebec would have difficulty to put representatives on the Canadian Wheat Board, since 12 of the directors would be elected. I would remind you, Jerry, that Quebec has vast numbers of very capable people. The proof is that, over the past 30 years - except for a nine-month period - we have given Canada nine prime ministers. And, in many other fields, there are many Quebeckers who'd have no difficulty in sitting on the Canadian Wheat Board. You have to trust Quebec man and women, Jerry.

[English]

Mr. Jerry Pickard: I have confidence in Quebeckers, absolutely.

.1240

The Chairman: Long may you be part of Canada.

We'll now call the question on the subamendment. If I read the subamendment correctly, it reads that 12 of the directors be elected by producers.

[Translation]

Mr. Jean-Guy Chrétien: Yes, I would like a recorded division.

[English]

The Chairman: Recorded vote, please, Mr. Clerk.

Subamendment negatived: nays 6; yeas 2

The Chairman: We will now vote on the amendment, which says that the majority of the directors shall be elected by producers.

Some hon. members: Agreed.

Mr. Elwin Hermanson: Could we have a recorded vote?

The Chairman: I'm sorry, you're too late on that one. The hands were up, Elwin.

Amendment agreed to

The Chairman: The next amendments are amendments by the Reform Party.

The clerk informs me that now that we have just adopted amendment 14, amendment 15 is out of order.

The Clerk: You can't move it the way it is now.

Mr. Elwin Hermanson: Mr. Chairman, I will not move this amendment at this time, but I want to make it clear that we're not opposed to the term ``majority''. But we think that wording is not strong enough for this legislation. We will be bringing a stronger amendment forward at report stage.

The Chairman: Okay.

The next amendment is number 16. That also applies to clause 3. Is there a mover for amendment 16?

Mr. Elwin Hermanson: Mr. Chairman, I will not move this motion at this time.

The Chairman: Okay. The next amendment is number 17 in the package. Is there a mover for that amendment?

Mr. Bernie Collins: Yes, Mr. Chairman. I move that Bill C-72 in clause 3 be amended by replacing lines 35 to 37 on page 4 with the following:

Mr. Chairman, the removal of the authority to make the regulations respecting removal of elected directors would be replaced by a provision for the board to make by-laws concerning the removal of those elected directors and would be consistent with the desire expressed by producers appearing before the committee to make the elected directors fully accountable to producers, not the government.

An hon. member: Hear, hear!

The Chairman: Mr. Hermanson.

Mr. Elwin Hermanson: Mr. Chairman, all along I've been saying that in fact the board doesn't have the power to make by-laws and regulations as it sees fit. We've had arguments fromMr. Pickard and his officials to the contrary, but once again, we see here that the board is powerless to do anything more than consult with the minister. In fact, the minister is the one who recommends or sets the regulations with regard to the election process for directors. It's the recommendation of the minister that counts. It's not the decision of the board. The minister will consult with the board, and the minister will then make the decision.

.1245

I have a feeling that throughout the setting and establishing of by-laws for the newly constructed board of directors, this is certainly going to become, if not the letter of the law, the tradition of the operation of the board. This is certainly not going to dismiss concerns in the farming community that the board is not accountable to farmers. This will accentuate that problem. Therefore, while I understand that an apparatus has to be put in place to elect the directors, I cannot support the mode that the government has chosen to follow.

The Chairman: Any further comments on the amendment?

Mr. Glen McKinnon: Mr. Chairman, just in passing, there has to be a mechanism for an elected directorate.

Mr. Elwin Hermanson: I said that.

Mr. Glen McKinnon: You can't go so purely on that hypothesis, in my view. We have to have some mechanism put in place in order for the operation to logically proceed.

[Translation]

The Chairman: Mr. Chrétien.

Mr. Jean-Guy Chrétien: Jerry, could you please put the phrase "geographical representation of the board" into simpler language? That is in amendment L-6.

Yesterday, we adopted section 1, which stipulates that all provinces would be represented. Here, I imagine you are talking about healthy geographical representation, just like your prime minister tries to achieve in his Cabinet. He doesn't just choose Ontarians, but tries to make sure that all provinces are represented. That is very democratic.

[English]

Mr. Jerry Pickard: I think the first critical point here is the amendment that Mr. McKinnon is putting forward. I have had a chance to talk with Mr. McKinnon, and like many others, it is his view that we need to have regional distribution of representation. Otherwise, we might end up with all of the people on that board representing only one area.

I probably could make this kind of assessment if you had a vote across Quebec and every person had one vote for someone on a board. Those people in Montreal, people who are better known, may get a lot more votes. If we translate that into this system, if we don't take into account geographical areas - and this is what I understand Mr. McKinnon to be bringing forward - we won't get a cross-section of all the provinces that are producers. We'll just get the most well-known from probably the densest growing areas. So some geographical consideration has to be looked at.

Glen, do you want to go further than that?

Mr. Glen McKinnon: There was some discussion out west about what would be a balanced regional, geographical representation, but there were no hard, fast and fixed positions on it. If I might proceed, Mr. Chairman, there was a suggestion that half of the elected people should possibly come from Saskatchewan - and that came from the Minister of Agriculture of that province.

Anyway, I think there clearly has to be some definition of regionalism put forward, and I see it as a consultation process between the appointed board, perhaps some MPs, and perhaps departmental officials as well. Perhaps that's what will get this thing started.

The Chairman: Mr. Hermanson.

[Translation]

Mr. Jean-Guy Chrétien: I haven't finished, Mr. Chairman.

[English]

The Chairman: You have some more on the same comment? Okay.

[Translation]

Mr. Jean-Guy Chrétien: On the same point, Mr. Chairman. Given that clause 1 included Quebec without its consent, and in view of the fact that Quebec is different from all other provinces, something that has been accepted both by the Liberal Party and the prime minister at least during the referendum, we are moving a subamendment.

.1250

We move that motion L-6, which begins as follows:

(2) Recommendation of the Minister after consultation with the Board including consultation with respect to geographical representation on the board...

be amended by adding the words

[English]

The Chairman: I think the subamendment is clear.

Mr. Easter.

Mr. Wayne Easter: This is just a question for Mr. Chrétien, Mr. Chairman.

Were you anticipating that there will be a number of Bloc MPs with national agriculture experience available for these positions after the next election, or what?

Some hon. members: Oh, oh!

The Chairman: You don't have to answer that, although you might want to.

You had better give him a light so that he can have a little go at Wayne here.

[Translation]

Mr. Jean-Guy Chrétien: Careful, Wayne. You know what happened to the Liberal Party on your island.

[English]

Some hon. members: Oh, oh!

The Chairman: Mr. Easter, I think you set yourself up for that one.

[Translation]

Mr. Jean-Guy Chrétien: You could be the first to be appointed.

[English]

The Chairman: Are there any further comments on the subamendment, Mr. Pickard?

Mr. Jerry Pickard: I'll make a very quick comment, but I don't want to go too far. I may understand that there's political motivation to have a higher number of representatives from Quebec. However, look at the logical thinking in that recommendation. Taking Alberta, Saskatchewan and Manitoba as the main producers, if each of the designated-area provinces had the same representation as Mr. Chrétien is suggesting for Quebec - and then we have I don't know how many other provinces - it would leave three people in total, including all appointed people, if it was based strictly on regional distribution. That would put in a tremendous number of appointed people, and it would go against some of the recommendations that have come forward. At the same time, it would leave all of the rest of Canada with a very poor number.

The point is that we have a designated area. We're looking at the election in that area, and we want the majority to come from that area. Clearly, in light of that, I don't know how the amendment would be serious. I'll just leave that comment there.

The Chairman: Elwin.

Mr. Elwin Hermanson: I want to wait until after the vote to speak to the amendment itself. Other than that, I'll just say that if you pass this thing, I'll excuse myself and go out to start campaigning.

Some hon. members: Oh, oh!

.1255

The Chairman: I'm going to give you the chance to vote right now, because I'm going to call the question on the subamendment by Mr. Chrétien. If I read it correctly, then, it's that after the word ``board'' we would insert ``within which a minimum of three directors would be from Quebec''. Then the rest would be the same as in the present amendment.

[Translation]

Mr. Jean-Guy Chrétien: I request a recorded division.

[English]

Subamendment negatived: nays 8; yeas 1

The Chairman: Do you want to make a comment on the main amendment, Mr. Hermanson?

Mr. Elwin Hermanson: Yes, I do, Mr. Chairman.

This is creating a big problem because we didn't specify the number of elected directors; we left it with the loose term ``majority''. Yet we've asked this new board - totally appointed, mind you; this is not the elected board that's going to make this decision - to set the by-laws for the election based on geographic representation and the staggering of terms. The staggering of terms is probably not a major problem. I can't see that being much of a problem, since they are limited to three-year terms. They can't put themselves in for life. But as far as geographic representation -

The Chairman: The purpose of that, Mr. Hermanson, is to ensure everybody doesn't get elected in the same year, just to start it off.

Mr. Elwin Hermanson: Yes, and I agree with that. That's common sense. I don't think that's the problem. The problem is the geographic representation. Obviously if Mr. Goodale puts in place an appointed board of fifteen, they are in a conflict of interest position. What they are going to do is look at themselves and ask, where are we from and how can we set up these by-laws so we have a good chance of staying here?

There is no consultation with producers on this issue. A great number of farmers want to have a kind of delegate system for selecting their director, similar to that of the Ontario Wheat Producers' Marketing Board, similar to the way the Saskatchewan Wheat Pool select their directors.

Then there are others who want to see industry represented. We heard from the maltsters and the bakers and the millers, and they want to have some appointed people from there.

Some people out in the prairie region think the producers should maybe be electing some from their farm organizations or with some specific interests.

There is the position in Saskatchewan that half the directors be elected from Saskatchewan. Obviously the easiest way to do that is to say let's make the majority eight. Then we simply have four from Saskatchewan, two from Alberta, and two from Manitoba. That really simplifies things, doesn't it, and we have the minimum number of elected directors we possibly can. If you work with the number nine, suddenly you have a problem. Are you going to have four from Saskatchewan or five from Saskatchewan? If you have five, then Saskatchewan has a majority of the elected directors. If you go to ten, you have some new problems between Manitoba and Alberta.

What we are doing here by being so vague and leaving it at a majority is putting this board of appointed directors, who have to make the rules for subsequent boards, in a position of conflict. Maybe they don't want to go to the delegate system, but maybe the majority of producers do. Do you see what I'm saying? Of course the minister has put them there, so they are all friends with the minister. They become a cushy little club that may not accurately reflect the wishes of producers to have a more accountable and responsible and democratic board.

The Chairman: Just to clarify some things, Mr. Hermanson, I'm getting a bit of a contradiction in what you're saying. On one side you say you want a definite number in there. On another side you say you're not suggesting how that decision should be made. You don't like the word ``majority'', but you don't want to pick another number. If you pick another number you don't know how they are being distributed. You're not being too consistent in your argument.

Mr. Elwin Hermanson: One of the reasons I could support Mr. Chrétien's amendment was that he picked the number twelve. Obviously we could then have six elected members from Saskatchewan, three from Alberta and the Peace River, and three from Manitoba. That works. At least we know down the road that we're going to have that kind of geographic representation.

The Chairman: That works unless you want the number fifteen. Then if fifteen doesn't work you want the number nine.

Mr. Elwin Hermanson: Six, three, and three are twelve. That works, right?

The Chairman: Very good.

Mr. Elwin Hermanson: I thought I was being challenged on my numbers. Then you have three appointed members.

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The Chairman: Thank you. I think you stated your thoughts.

Mr. Elwin Hermanson: The government is putting this initial appointed board of directors in a conflict of interest position in many instances, and this is one of them.

Amendment agreed to [See Minutes of Proceedings]

The Chairman: We have another amendment, number 19 in your package. It pertains to clause 3.

Mr. Elwin Hermanson: I believe this is amendment R-7, which is in my name. In light of the success I've had in committee, I will not move this motion at this time because I would like to consider it for report stage.

The Chairman: The next amendment is still pertaining to clause 3 - numbers 20 and 21 in English and French in our package. Mr. Collins.

Mr. Bernie Collins: I move that clause 3 be amended by replacing lines 28 to 30 on page 5 with the following:

The current position is that the Governor in Council may fix this. A number of witnesses observed that in private corporations the board fixes the remuneration of the president, and this provision would be triggered when the Canadian Wheat Board becomes a mixed enterprise.

The Chairman: Mr. Hermanson.

Mr. Elwin Hermanson: I'd just like to know what the rationale of the government is. Why was it impossible for the minister to appoint the president and wrong for the board to be able to dismiss him, when it's okay for the government to appoint the president and for the board to set the president's salary? How did this government decide that the board has the power to hold the president accountable or legislate, through by-laws, conditions under which the president works, and in other instances not be allowed to do that?

Mr. Jerry Pickard: I would have to say that, point by point, the legitimacy of the premise you based this question on is very questionable. The recommendation here is clearly that the board shall determine the remuneration of the president. That's giving a democratic power. We've already gone through this discussion with regard to salaries of the directors. We've talked about it before. I don't see that there's anything new to add. I heard all of the discussion on this very point not 25 minutes ago.

Mr. Elwin Hermanson: You didn't answer my question.

Mr. Jerry Pickard: What's your question?

Mr. Elwin Hermanson: My question is, why shouldn't the board be able to dismiss the president - someone it didn't appoint in the first place - when it can set the president's salary?

Mr. Jerry Pickard: We've already gone through that debate. You're back to what the discussions were 20 minutes ago. I did answer your question. We talked about one body appointing positions and another body acting. We talked about the recommendation of the board. We talked about somebody losing confidence in the structure. All those discussions have already gone on, Elwin, and you know that.

Mr. Elwin Hermanson: Where in this bill does it preclude the president from being involved in the vote on the board that sets his own salary?

The Chairman: I think that would be seen as a conflict of interest, as it would on any board. Legally, the president would have to remove himself or herself from any of that type of discussion.

Mr. Jerry Pickard: That's normally in most oaths of office people take.

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Mr. Elwin Hermanson: So is there an act that would be in force to prevent the president from voting on his own salary?

Mr. Jerry Pickard: He'd be in a conflict of interest on that board.

Mr. Elwin Hermanson: He's in a conflict of interest throughout this piece of legislation. He's voting on all kinds of things. He's a voting member of the board, for Pete's sake!

Mr. Jerry Pickard: I believe the legal counsel can give you the definitive answer.

The Chairman: Mr. Byer.

Mr. Byer: If a president were to vote on his own salary that would be a conflict of interest. And the way this statute operates, it would also constitute a basis for a recommendation for dismissal.

Mr. Elwin Hermanson: On what basis?

Mr. Byer: On the basis that he was committing a conflict of interest by voting on his own salary while on the board.

Mr. Elwin Hermanson: Is that from a clause within the Wheat Board Act that you -

Mr. Byer: It's not from a clause, but it is from commercial law principles and conflict of interest principles that are generally accepted in normal commercial practice for a member of the board of directors. The proper conduct for any director would be to abstain from voting on any matter in which he may have a personal pecuniary interest.

Mr. Elwin Hermanson: But it's also very odd for a CEO to be a voting member of a board when they're accountable through a democratic process like this.

Mr. Byer: I don't think there are too many mixed enterprises that have been created in Canada.

Mr. Elwin Hermanson: No, there aren't. I'm not sure it's a good idea.

Some hon. members: Oh, oh!

Mr. Byer: I can't judge -

The Chairman: Mr. Easter.

Mr. Wayne Easter: I really think that what this amendment is responding to, Mr. Chairman, is one of the concerns heard when we were holding hearings. There was concern about the president and CEO and the amount of control that the board would have over that individual.

As I said earlier, under proposed section 3.92 the act is fairly specific in terms of the powers and the resolutions of the board. What this really does is allay another fear that producers had in terms of their control over that CEO, in that they're able to fix the remuneration by resolution of the board. I think that's a pretty strong power. In a hypothetical case, if the board was at odds with the minister in terms of this appointment and they set the salary at $10 per annum, I don't think too many people would be interested in taking the job.

This does give the board more control and that's what witnesses wanted.

The Chairman: Mr. Culbert.

Mr. Harold Culbert: Mr. Chair, I was just going to make the point that I think Mr. Easter made. A short time ago, Mr. Hermanson was concerned that the board had that authority to control the president, not the other way around. I think that's been reflected here in many of the comments that have been made. And it's the direction that we want to see the board take in the future.

The point Mr. Easter made was the point that I was going to make, Mr. Chair.

Hypothetically, to enforce your concern that you expressed a few moments ago,Mr. Hermanson, I would think that if in fact this amendment is passed and if there is a problem, the board could in fact reduce the president's salary to $1 a year. That may not cause him or her to remove himself or herself, but at the same time I think it would certainly give a hint of the displeasure of the board with certain actions. I think that was the point you were getting at earlier. It does give the board a tremendous amount of leverage in being able to say what direction they want to take and to tell the president that he or she has to adhere to it.

Mr. Elwin Hermanson: Mr. Chairman.

The Chairman: Mr. Hermanson, final comments.

Mr. Elwin Hermanson: I hear what the members are saying. Again, for the record I want to make it clear...in fact, I think I probably will vote for this amendment -

An hon. member: Hear, hear!

Mr. Elwin Hermanson: - even though I'm very displeased about having the president as a member of the board. I am strongly convinced that it's wrong.

However, I am equally strongly convinced that it must be the board that sets the president's salary. I believe that must be public as well. The act doesn't adequately handle these things. We'll be looking at amendments at report stage. I guess it's more under protest that I'm supporting it, simply because what was there before was so onerous.

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Amendment agreed to

The Chairman: Committee members, I believe that completes... Yes.

Mr. Elwin Hermanson: On a point of order, Mr. Chairman, when the department officials were before us we had requested some clarification on clause 3. The reason I bring this point of order up now is because this is the last amendment that deals with clause 3. We were promised some written responses to our question. It had to do with the indemnification process contained in clause 3.

We have not received the written response we were promised when officials appeared before the committee, and I would suspect they are diligently working on the request and just haven't been able to complete it.

In light of that, I have a request that we would adjourn now when we come to the break between clause 3 and clause 4. If that is not possible and you are determined to go another 15 minutes to1:30 p.m. -

The Chairman: As a point of clarification, you have received that. It has been circulated to all the members.

Mr. Elwin Hermanson: I don't think I've received it.

The Chairman: If it's the material I'm thinking of, Mr. Migie, I believe it referred to the Canada Corporations Act and the Financial Administration Act. There were several sheets that had that information on it.

Mr. Migie: That's right.

Mr. Elwin Hermanson: I don't believe I received a copy of that.

The Chairman: The staff tell me it was sent out on March 12.

Mr. Elwin Hermanson: Could I receive a copy of that now? Is it possible? None of the members of our caucus on the committee received a copy of that, to the best of our knowledge.

The Chairman: The clerk tells me it was also on the table outside all the public hearings out west. The indemnity acceptor is addressed in that document. Mr. Hermanson, it was circulated to every member.

Mr. Elwin Hermanson: Mr. Chairman, we have not seen this document previously. I'm not going to say it's not our fault, but we just haven't seen it.

In light of the fact that we haven't seen it, I would request from you, Mr. Chairman, that we would be able to come back to this particular part of clause 3 at a later date, before we conclude clause-by-clause discussion of Bill C-72.

The Chairman: That's what, proposed section 3.94?

Mr. Elwin Hermanson: It's proposed sections 3.93 and 3.94.

The Chairman: Okay, in the spirit of cooperation, we'll stand clause 3 at this time. I'll ask the staff to remind me, and we'll go back to that immediately at the next meeting.

Clause 3 allowed to stand

On clause 4

The Chairman: The next amendment we have is number 22 in the package that has been circulated - numbers 22 and 23, the English and French. It applies to clause 4.

So that we're all up to date, clause 4 starts about a third of the way down page 7 of the bill. I repeat, it's an incredibly hard bill to read with all the numbers and so on, but we'll stick with it here.

Is there a mover? Mrs. Ur.

Mrs. Rose-Marie Ur (Lambton - Middlesex, Lib.): We move that clause 4 be amended by replacing, as you say, line 18 on page 7 with the following:

That basically clarifies that the CWB will no longer be an agent of the Crown, nor a crown corporation, upon the election of board members. It was certainly a major topic and concern when we were travelling on the hearings on the CWB, and I think it's an important clarification as to the status of the CWB upon the election of the board with producers.

The Chairman: Mr. Hermanson.

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Mr. Elwin Hermanson: Mr. Chairman, you're correct that this is fairly complicated. Because this has now become a mixed agency and is not an agency of the Crown, I wonder if Mr. Pickard and his officials could outline for us what protection or authority is lost under the Financial Administration Act, and what remains because it falls under an umbrella of another piece of legislation, or because of clauses within Bill C-72 itself.

I think the committee would be done a service if you were to paint us a picture of how the board is covered by the Financial Administration Act. What has changed? What are we losing and gaining, and how is this going to be different?

Mr. Jerry Pickard: That's a good question.

Mr. Byer: As the board is presently constituted it would, as with any crown corporation, ordinarily come under part X of the Financial Administration Act, which is a section that deals with crown corporations. There is, however, a specific exclusion in the preamble to part X that excludes divisions I to IV of that part from applying to The Canadian Wheat Board.

Division V, however, does apply to the Canadian Wheat Board. That division basically includes a statement that the board has to comply with NAFTA and with any instructions from the Governor in Council to comply with NAFTA.

The way the bill was constituted before these amendments were made, there was a real question as to whether the proportion of elected directors on the board would remain. An amendment has now been passed that says a majority must be elected, but before that was the case there was a concern that at some time all of the members might revert to being appointed. You could have a board that at one time would have a majority of elected directors, or even one elected director, while at other times it would have no elected directors.

Under subsection 83(2) of the Financial Administration Act, there is a definition of when a corporation is deemed to be a crown corporation. The important part of the definition is when it is wholly owned by the Crown. There are two requirements under that definition - one if all the shares of the corporation are owned by the Crown, and the other if all of the directors of the corporation are appointed by the Crown. If even one director was elected, the Canadian Wheat Board would not have qualified any longer as a crown corporation, so there was this inconsistency where it could move in and out.

With the requirement now that a majority must be elected as of December 31, 1998, it becomes clear the board would no longer qualify as a crown corporation and could not return to qualifying as a crown corporation under part X.

We have another provision in the bill that therefore preserves the provision relating to division V of part X by recreating it within this bill - the NAFTA provision. We wanted to be certain the status of the board was firmly established one way or the other - it was either going to be a crown corporation or not. The government made the decision that it would not continue as a crown corporation because of the elected nature of the board, and this clause clarifies that.

In terms of what is lost, basically nothing is really changing. The board today is not subject to divisions I to IV of part X. Under this, it won't be subject to any part of part X, and division V has been preserved in the bill. The only thing that changes is that the board is no longer a crown corporation.

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Mr. Elwin Hermanson: And is that all that clause 4 accomplishes? We're not going to be surprised, are we, when this all passes? We're not going to end up saying, oh yes, by the way, because it's no longer under the Financial Administration Act this happens or that happens. Are we? And on the other hand, there's absolutely no change as far as the board is concerned with its relationship under NAFTA pre- the passing of Bill C-72, post-Bill C-72 or post-December 1998.

Mr. Migie: Can I just add one thing?

You referred a minute ago to the entire clause 4. This particular amendment, which just deals with not being a crown corporation or adding that...David has covered that fully. But the earlier part of that clause, ``the Corporation is not an agent of Her Majesty'', does have significant implications, and the reason for the other parts of the bill whereby the guarantees of borrowings will occur by the Minister of Finance...and the reason why it's spelled out is that if it remained an agent of Her Majesty that wouldn't have been necessary. David Byer was covering this particular amendment related to a crown corporation along with the significance of this amendment.

But the earlier part of clause 4...that is something that has been dealt with in the bill in total and does have implications. It means that anything the Wheat Board does now it is doing as an agent of Her Majesty. And that could be whether it's sued or any huge losses or...I can think of all kinds of examples. If the bill is passed and it weren't an agent of Her Majesty any longer, then it would be covered by the specific guarantee of borrowings, which is different from being an agent of Her Majesty.

Mr. Elwin Hermanson: Okay. If a corporation, then, is no longer an agent of Her Majesty, does that impact, for instance, on the contract between the board and its employees? What is involved in this shift from being a crown agency to a mixed enterprise, and is clause 4 the place where the committee talks about that? This is one thing I'm not clear about. I know a lot about this bill, but that's one area I've never made up my mind on.

Mr. Byer: Basically, the board would no longer be acting as an agent of Her Majesty when it enters into any contracts.

And I do apologize. I was just responding to your question about the Financial Administration Act, not the clause in general.

Mr. Elwin Hermanson: That's fair.

Mr. Byer: The concept of agency...there are crown corporations that are not agents of Her Majesty and there are agents of Her Majesty that are not crown corporations -

Mr. Elwin Hermanson: Don't confuse me too much now!

Mr. Byer: - so you have all the different spectra of the rainbow.

Mr. Elwin Hermanson: That sounds like something Mackenzie King said.

Mr. Byer: In this case it's been determined that the liability exposure of the Crown should be limited because of the fact that the board is moving to what people are referring to as a mixed enterprise.

Mr. Elwin Hermanson: I know that the government guarantees are still in Bill C-72 -

Mr. Byer: I wasn't talking about guarantees. I was talking about the overall liability of the Crown.

Mr. Elwin Hermanson: Right.

Mr. Byer: Today the Crown is liable for anything the board does.

Mr. Elwin Hermanson: Is it still liable, with the passage of Bill C-72, for anything the board does?

Mr. Byer: No.

Mr. Elwin Hermanson: Where is it now not liable where it was before?

Mr. Byer: It is this change of status, the fact that the board would now be contracting in its own name as a corporation and would not be acting as an agent of Her Majesty -

Mr. Elwin Hermanson: So if a customer of the board defaults on payment - we make a big sale to China, for example - does the fact that it's now a mixed enterprise rather than an agency of the Crown impact on how those funds might be collected or where the debt is attributed to and so on and so forth?

Mr. Migie: That will be covered by the credit grain sales program. We have a separate program for that.

But you could think of some lawsuits that might occur for other reasons, or maybe a rogue trader, if I can put it that way...now, as an agent of Her Majesty, everything is acting with the backing of Her Majesty. In future it would be a guarantee of borrowings, the initial payment guarantee, and third, the credit grain sales program would continue. Beyond that, it's at the risk of the corporation.

Mr. Elwin Hermanson: What protection do farmers lose?

The Chairman: This is the final question so we can get to the vote.

Mr. Elwin Hermanson: Is there a vote?

The Chairman: That's what that bell means.

Mr. Elwin Hermanson: Oh, I heard somebody say it was quorum.

The Chairman: It's a double bell, so it must be a vote.

Mr. Elwin Hermanson: Okay.

So what protection are farmers losing, then, in the areas of liability and legal challenges and so on and so forth?

Mr. Migie: Nothing specific has occurred in the past that we could identify, but right now the government would back any legal challenge and would be accountable for the results. It may not be in the future.

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Mr. Elwin Hermanson: If the Alberta Wheat Pool sues the new board, is it any different from their suing them under the -

Mr. Byer: Sure. It depends on what it's for.

Mr. Migie: It would depend on the grounds, whereas now it doesn't.

Mr. Byer: What the Crown is doing once it becomes a corporation is limiting its liability to the guarantees, whereas today the liability is open-ended.

Mr. Elwin Hermanson: Would the board then be required to take out liability insurance to cover new areas of liability?

Mr. Byer: It could.

Mr. Elwin Hermanson: That's very interesting.

The Chairman: Thank you.

Committee members, I thank you. There is a bell. We will stand clause 4 and reconvene Tuesday morning at 9 a.m. in room 209, West Block.

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