Insolvency bill never got proper scrutiny
by Jacob Ziegel
This commentary was first published in the Financial Post on December 18, 2007.
On December 12, the Senate approved Bill C-12, a very lengthy bill amending the omnibus bankruptcy amending legislation, known as C-47, approved by Parliament in November, 2005. On the face of it, approval of C-12 seems good news. Attempts to implement the third phase in the overhaul of Canada's bankruptcy legislation have been underway since at least 2002, so any prospect of finally seeing light at the end of the tunnel must surely be welcomed.
The trouble is that the light is a very murky one. The mammoth 2005 bill was never scrutinized in detail by Parliament and it was rushed through in the dying days of the Martin administration. However, the responsible federal ministers gave the Senate an undertaking that C-47 would not be proclaimed before June 30, 2007 and not before the Senate banking, trade and commerce committee had had an opportunity to study the amendments in detail.
That scrutiny never took place, but not for lack of willingness on the Senate's part. The reasons for the delay were the Harper's government's decision to introduce amending legislation to C-47, so that the Senate could consider both sets of provisions at the same time. The concept was sound, but its execution was flawed. The government was unable to secure quick passage of C-12 because of opposition by Bloc Quebecois and, curiously, Saskatchewan MPs seeking to protect special interests in their provinces involving the treatment of retirement savings plans. As a result, the government had to make significant concessions before C-12 was approved by the House of Commons in June, 2007.
Bills C-47 and C-12 were not, in fact, referred to the Senate for study and approval till October of this year. The delay was due to the long parliamentary summer recess and the government's decision to start the new session of Parliament with a Speech from the Throne. The Senate's initial intention was to hold hearings on both sets of provisions before issuing its report. Some hearings actually took place at the beginning of December.
Then political turbulence swept across the parliamentary scene. Rumours were circulating that an election might be called early in 2008. Fearful this might happen, leaving Canada again with unenacted or unproclaimed and important insolvency legislation, the Senate decided to approve C-12 without subjecting it to detailed scrutiny, in fact, no serious scrutiny at all. The senators were particularly concerned that unpaid workers, whose employers had gone bankrupt, would continue to be deprived of the benefits of the wage earners' protection program enshrined in Part I of the 2005 legislation.
The net result, then, of these tortured developments is that two major sets of amendments to Canada's framework insolvency law have been approved by both houses of Parliament without careful examination in either house. This surely raises serious questions about Parliament's role as a watchdog of the public interest and the meaning of responsible government under the Canadian Constitution.
Some observers of these developments have argued that C-12 has corrected many of the defects in C-47, and so no harm has been done by the Senate's swift approval. This is specious reasoning. If no public hearings have been held and the Senate has not issued its report, how can political expediency relieve Parliament of its constitutional obligations and how do we know that C-12 has done an effective job?
There is one small consolation in this sorry tale of delays and reversals. In approving C-12, the Senate reaffirmed its intention to hold hearings on C-12 and C-47 in the new year. The senators hope that their conclusions will inform a future government about any flaws in the enacted legislation and the need for further improvements in Canada's insolvency law. Let us hope future events will support the senators' optimism.
