Mr. Stan J. Hovdebo (Prince Albert):

Mr. Speaker, I understand that under the rules, I have unlimited time to speak.

Hear, hear!

Mr. Hovdebo:

I am very pleased to speak on-

Oh, oh!

Mr. Shields:

Take all night, Stan.

Mr. Hovdebo:

I have lots of time. I will wait until it gets quiet. I can wait, I have unlimited time.

Mr. Deputy Speaker:

Order, please. We will give some time for those Hon. Members who wish to clear the House to do so. On debate, the Hon. Member for Prince Albert.

Mr. Hovdebo:

Mr. Speaker, the Mint was established in 1908, and since then-

Hear, hear!

Mr. Hovdebo:

At that time, it was developed to produce coins. In 1969, it was made a Crown corporation. In the past, the Government sold Crown corporations which were making money. Regardless of its ideology, this is one Crown corporation the Government does not intend to sell, even if it is making money.

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The Government sold Canadian Arsenals a year or so ago because it made money. I hope the new company will make shells that shoot straight. The Auditor General's report suggests that it is no longer making shells which the Department of Defence can use to fight a war.

The Government also sold Teleglobe which made money as well. The ideology of the Government is that if a Crown corporation makes money we should get rid of it because if we do not get rid of it it may contribute to the profits of the Government and help get rid of the deficit.

Consequently, it was surprising to us that this Bill was not part of the Government's privatization policy. Instead of that, the Government included in this Bill a number of provisions which do a lot to tidy up the operations of the Mint. This is an adequate Bill in that it allows the Crown corporation to operate as a Crown corporation should. I suppose that once the Government has this model of a Crown corporation in place it will not have to privatize any others because all the Crown corporations will be making money and eliminating the deficit.

The Mint operates almost entirely without direction from the Government, although it reports to Parliament through the Minister of Supply and Services (Mr. Cote). The responsibility of the Mint is to produce the coins which we use every day. The production of money in Canada is presently controlled by two Acts, the Royal Canadian Mint Act and the Currency Act. This Bill tidies up the operation of the Mint to a certain extent. The Government is putting almost all of the control into the Royal Canadian Mint Act.

In addition to producing the coins which we use in Canada, the Mint produces coins for overseas. These coins are produced for profit, and through their production the Mint has made a considerable amount of profit over the years. The changes in the Act will give the Mint more scope to mint coins for special occasions and for other countries.

Over the years the Canadian Mint has developed a reputation as a major coin producer in the world. It has contracted with many countries to produce their official coins. In addition to that, the Mint makes coins for Klondike Days and other special occasions around the world. Recently, of course, the Mint has produced a series of coins which is being sold to help finance the Olympics.

Under the present structure the Mint has a certain amount of corporate power to control the currency used in Canada. The main mandate of the Mint is to produce and arrange for the production and supply of the currency of Canada. It is also empowered to produce coins for other countries, which has become a major portion of its operation.

Until a few years ago, only the Mint was able to melt and refine gold, silver and some other metals. This has changed considerably over the years, but that is still part of the corporate responsibility of the Mint. Under the Act the Mint

has the authority to buy and sell gold. It can refine, store, and deal with gold, silver, and other metals. The buying and selling of these precious metals is handled by the Mint for the Government of Canada.

One of the concerns of the Mint over the years has been that if it needed more metals to produce coins it had to go through a rather involved procedure to obtain them. The new Act will shorten that process considerably by giving the Mint more power in that area. The Mint prepares, stores, and ships coins of gold, silver and other metals. It makes medals, plaques and other articles. These products are of such high quality that they are sought after by collectors around the world. The sale of those articles has increased the contributions of the Mint to the government coffers.

There is a catch-all clause in the mandate of the Mint which allows it to do all other things which are incidental and conducive to attaining the objectives and exercising of the powers of the Mint.

Over the years the Mint has developed a world-wide reputation and its coins have been very much sought after by collectors.

Bill C-46 is basically a housekeeping Bill which makes a few language changes and technical amendments to the Mint Act and Currency Act. This includes the transfer of a number of sections from the Currency Act into the Mint Act and vice-versa.

While certain portions of the Act were unexplained during the committee proceedings, we have allowed them to stand without amendment because they seem to pose no harm. One such clause in the Bill allows the capitalization of the Mint at $40 million, with 4,000 shares at $10,000 each, which will be held in the name of the Minister.

Some may suggest that this provision is unnecessary if there is no intention to privatize the Mint at some point, and there is no doubt that this process of capitalization proposed by the Government would facilitate the possible future privatization of the Mint. While further amendments to the Mint Act would be required if privatization were the aim of the Government, this capitalization structure certainly makes it possible to sell shares in the Royal Canadian Mint.

I find it hard to believe that even the present Government, with its ideological approach to the privatization of Crown corporations, would allow a private corporation to produce our currency.

As I said, this corporation may be the model the Government can use as a Crown corporation that can be profitable and help to decrease the deficit which gets larger every year. As such, the Government would not have to lean so heavily on its ideological approach to privatization.

October 28, 1987

The Bill states that the selling of shares is to be done in such a way that the Minister would purchase all the shares and then may ask for them to be redeemed. This was somewhat confusing, and not explained adequately by officials of the Mint or Members of the Government in the committee. The clause remains in the Bill as it was written.

It is difficult to understand why the Government would capitalize the corporation to this level and then state in clause 3.1(3):

The shares of the Mint are not transferable-

Therefore, no one else can have them:

-and when issued to the Minister in accordance with this Act shall be registered in the books of the Mint in the name of the Minister and held by him in trust for Her Majesty in right of Canada.

That is a rather logical approach. Clause 3.1(4) states:

No shares of the Mint may be issued otherwise than as expressly authorized by this Act.

Clause 3.2(1) then states:

The Mint shall, at the request of the Minister after consultation with the Board, redeem such number of shares issued to the Minister in accordance with this Act as the Minister may direct.

(2) The price to be paid for each share redeemed by the Mint pursuant to subsection (1) is the issue price of the share.

It is a very confusing capitalization structure. The Mint is capitalized up to $40 million, the shares are sold to the Minister and may be redeemed. It appears that the Government believes the Mint may not be worth the $40 million in the future and allows the Minister to seek funds to replace the shares.

It seems as though the shares would disappear, since there is no suggestion that the Mint should be able to hold shares in its own right because it is a Crown corporation.

While the process set out in this clause seems very confusing, it does not make much difference to the Bill and it is not worth trying to amend.

The second major amendment included in the Bill concerns the board of directors. This is another reflection of the ideological philosophy of the Government, because it is suggested that public servants should be dropped from the board, and the board increased from seven to eleven members.

There have been occasions when the board of directors has been dominated by civil servants. If those officials are too closely connected to the Minister, the Minister appears to have direct control over the Crown corporation, which contradicts the policy of the previous Government, as well as this Government, of an arm's length relationship between Crown corporations and government.

The idea that a Crown corporation should operate without direction from the government has caused problems with many Governments. It caused the previous Government considerable trouble in the case of Canadair. We had the Minister offering letters of comfort which allowed the Canadair Corporation to

Mint and Currency

borrow almost unlimited funds without any reference to Parliament. As the Hon. Member for Simcoe North (Mr. Lewis) will know because he was a member of the Public Accounts Committee at the time, a corporation such as Canadair could borrow funds which eventually had to be paid by the Government of Canada. It was a form of expenditure which did not have to pass through Parliament.

I must say that I and other members of the Public Accounts Committee at that time were pleased, after kicking up enough of a fuss, that the Government did remove letters of comfort from the procedures which it had been using to finance Crown corporations. The other side is that if we do not have a close enough connection between the corporation and the Government, we may still have this kind of thing happening because we give executive power to the board of directors of the Crown corporation so it can go out and borrow money, which is money the Government of Canada would have to repay if there was any forfeit. Consequently there is some concern about the fact that public servants will not be asked nor expected to be members of the board of directors, although this Bill does not suggest it is impossible to have a member who is a civil servant.

Why the board has been increased from seven to 11 members is unclear. The suggestion I received from my research and investigation into this area is that the Mint has operated very well, very thoroughly and effectively with seven members for a long time. I really would like to believe that this has nothing to do with having another place where the Government can put one of its particularly favourite citizens, although it is a possibility, and the board has not really needed that increase in the past. Perhaps because of the expansion which the Mint suggests it may do in the future it will need a larger board. We will give them the benefit of the doubt.

The third area of operation, as far as this Bill is concerned, is the precious metal coins. Gold and subsidiary coins are presently authorized under the Currency Act. The change made is to switch that authority from the Currency Act and put it under the Mint Act. The base metal coins are also moved from the Currency Act to the Mint Act, which is a very logical move because it will mean one operation instead of two.

The control of the size, weight, standard and margins of tolerance will be set by the Cabinet after this Act is passed. At present the requirement is that a change in the size and weight of a coin, even the make-up of a coin, is to come before Parliament. This Bill gives the authority to the Governor in Council, and consequently saves some time as far as the production of the Mint is concerned.

One of the problems one could see with respect to the Mint was the fact that under the present Act, the provision for the production of gold coins, such as the gold coin that has been so popular lately, bringing in a considerable amount of income to the Mint and consequently to the Government of Canada, had

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a sunset clause. After a certain date, it could no longer be produced. One could see what would happen in a situation like that. The Mint would set up the production of these coins, and if they were selling as well as they are today and as they have been for the last number of years, it would know that at some date it would no longer be able to produce those coins. This would make it impossible for the Mint to plan because when the sunset clause came into effect it would no longer be in business. Consequently, the Mint would lose a certain amount of its income and it would also be in a situation where it could not plan for production over a long period of time. What this Bill does is to take off that sunset clause. It makes the production and sale of gold coins a continued and secure business.

Again, I have to say I am glad to see that the Government is putting in place the kind of business structure for these Crown corporations which makes them accountable but still productive and income producing. I can think of no better way of getting rid of the deficit than by having Crown corporations continuing to make money over a long period of time.

One of the things we have learned by being in government in Saskatchewan and other provinces is that the democratic socialist approach is to recognize that there are some areas where Crown corporations are necessary, and if we operate them well, they will help to pay for the social services required in the province. That was the basis of operation of Saskatchewan Crown corporations up until 1982 when we, unfortunately, changed the Government of that province, which started to sell off those corporations, and its credit rating, which was based on those Crown corporations, went from a triple A to a single A. The effect is that as long as the lending powers of New York and the financial world figured that we had enough assets to pay our debts in Saskatchewan, even if those assets were in Crown corporations, they had no hesitation in lending money to us. Now that the Crown corporations and the buildings are disappearing from the assets of the Province of Saskatchewan, the province is losing the power to borrow money.

Mr. Althouse:

It did not run deficits either.

Mr. Hovdebo:

As my colleague suggests, during the time of the New Democratic Party Government in Saskatchewan we did not have any deficits either. Of course, that pleases the people who lend money.

Some have suggested that this is a very capitalistic approach or statement. There are no better free enterprisers in the country than New Democrats.

Oh, oh!

Mr. Hovdebo:

Many of us are free enterprisers. We recognize that an individual who owns his company, his farm, his store or whatever makes a great contribution and in so doing probably operates a business very well. It is the large

multinational corporations that do not operate in the best interests of the country that are of concern to us. The people who exploit the resources of Canada are not the type of people that we think should be given full rein to do so. They must use part of the proceeds from that exploitation to help pay for the social services of the country. Consequently, among those who support New Democrats are a great many farmers, small businesses, and those who recognize that their real support is from the New Democratic Party which allows them to operate and which assists them to operate. It does not give unlimited action to the large corporations which have only one bottom line. That bottom line is profit for themselves and no particular concern for the Government. If the Mint were to be privatized, that is exactly what would happen. We would find ourselves being exploited in one more area by the private sector if it decided that that was the best way it could make a profit in this area.

I have a number of other concerns that I wish to put on the record with regard to this Bill. There are a number of areas in which the Government has not taken any action. One of them is that, traditionally, the Mint has used Canadian metals to make the coins of Canada whenever it can. However, with respect to coins that are made by the Mint but which are not used in Canada there is no provision in the Act or in the regulations which suggests that there must be Canadian content in the manufacture of those coins or, for that matter, with regard to any coins made for Canada.

I would like to see such a provision in the regulations. I accept that traditionally that has been the case and that most likely it may not be done any other way. However, as of late I have come to doubt that. There might be some need to put such a provision in place.

I say that because we have before us at the moment a free trade agreement which suggests that coins, metals or any resource can be brought into Canada without the use of quotas or barriers of any kind. In fact, if I read the free trade agreement properly, it appears to me that if we were to suggest that all our coins must be made from Canadian metal then that would abrogate the agreement. If we said that Canadian products must be used then that would prevent the use of American metals which that country might want to send us. Perhaps it wishes to rid itself of some of the gold it has in Fort Knox and send it to Canada in order to make coins since we are making more money on our coins than that country is on its coins.

We would not be able to say, "We will only use Canadian gold to make the coins under the free trade agreement". At some time it might be in order to include in the regulations and in the Act a provision which suggests that any coins which are to be used in circulation in Canada be made from Canadian metals and that any coins sold as the product of Canada be made from Canadian metals.

At the moment gold can be brought in from South Africa or from the United States, Canadian coins can be made from it

October 28, 1987

and they can be sold on the world market. There is nothing in the Act or in the regulations relative to the Act which suggests anything different. Consequently, particularly under the stresses of a possible future ban on Canada being able to do that, it would be worth-while to put in place such a provision to tell our American friends that this is one area in which we will use Canadian inputs as far as possible.

Most of the other clauses in the Bill are straightforward. When the Bill was first introduced, the Parliamentary Secretary gave us a very straightforward outline with respect to the main changes that were to be made. However, at that time he did not seem to be able to give us the real reasons behind the changes, nor was he able to do that later in committee. In the regulations we will be looking to some very specific definition with respect to what the Mint can and cannot do in the future.

I must say that I have no quarrel with the main objectives of the Bill and what it is intended to do. The points I have made with respect to Canadian content, the board of directors and capitalization are issues which I think the Government could explain to us at the third reading stage. In order that the people of Canada and Members of Parliament understand

Mint and Currency

exactly why it has done the things it has done the Government should explain them to us.

It is interesting to note that in the past in the process of making coins the Mint had to borrow or lease metals and then go to the Department of Finance for authorization to purchase metals which it would use in coins to be offered for sale. To some extent the process made sense in that this meant that the Mint did not need a large amount of capital to operate. There is no understanding in this Bill that, although this will be changed, or may be changed, the capitalization will be used to allow the Minister of Finance (Mr. Wilson) to lend money so that it means something.

It being 6.12 p.m., I will move on from here the next time I speak.

Mr. Deputy Speaker:

The Hon. Member will continue on unlimited time the next time that this matter is debated.

It being 6.12 p.m., the House stands adjourned until tomorrow, at 11 a.m., pursuant to Standing Order 3(1).