Honourable senators, I wish to speak briefly in support of Bill C-228 sponsored by Senator Wells, with friendly criticism by Senator Yussuff. I do so with a small amount of trepidation.

An earlier speaker this afternoon, whom I won’t name now, highlighted the risk of using the word “fairness” in our speeches. I raced through my own, and I see that there are five such occasions. I haven’t had the time to remove them, but this is a “fairness” warning.

I will limit my remarks to statements of principle on the topic of Bill C-228 and a second, related topic that I will address in the remarks.

I would like to begin by just observing that I think the central question at the core of this bill is how we value, respect and balance the respective contributions of capital and labour to a business enterprise. Before I do that, I would like to share with you what I think is a metaphor for this theme.

Last Friday, I had the honour of attending a speech delivered by President Biden in the other place, as well as an outstanding speech delivered by Speaker Furey that honoured him, our Senate and each of us individually, and I want to acknowledge that publicly.

The metaphor begins in the back row of where the senators were seated in the other place. Seven of us were more or less at the back, and one of the senators — I can’t mention their name, but let me just say I was seated directly behind and near a distinguished psychiatrist from Nova Scotia. This senator, I think in an attempt to honour Senator Wells’ early work sponsoring a private member’s bill on single sport event betting, proposed that we conduct a round of betting on how long President Biden’s speech would be. I think we each contributed about a million dollars to the betting, and we asked the most trusted member of our little group of seven, Senator Clement, to hold the money. To give you an idea of how much trust we had, we insisted on not one but two timekeepers to keep the honesty more or less intact. It was a close call, but the winner was Senator Loffreda.

On reflection, I thought this was a metaphor for life, particularly for this topic. With apologies to Senator Loffreda, the metaphor is, “The bankers always win.”

If I might return more seriously to my remarks, the issue of this balance between capital and labour in both business enterprises and their contribution to a productive society is a challenge in circumstances where enterprises fail, and there are not sufficient assets to compensate the various contributors to the enterprise.

The way in which we answer this question is largely articulated by markets forces, moderated from time to time by government legislation to ensure that forms of — dare I say it — fairness are achieved based on our values. The tension in this conversation is essentially between the respect we show for capital contributions to an enterprise and the contributions made by workers.

I’m not opposed to those who invest capital seeking to protect their investments. Indeed, so much of what we need in our society is the support capital provides that would otherwise not be accessible, but unabated and unmoderated markets forces will always favour the prioritization of capital over labour. The best example — clearly relevant here — is the way in which capital investments are commonly securitized. By comparison, contributions made by workers almost never receive the same level of security.

I’m more comforted that Senator Wells is here so I can refer to him by name, in a good way.

This has enormous consequences in the context of insolvencies and bankruptcies, and here is the simplest way to understand this. I have a friend who, after university, moved to Vancouver and was keen to buy a sailboat. He had a good job, but little money. He described to me his acquisition in this way, “The Royal Bank is now the proud owner of yet another sailboat.”

His point, which I eventually came to understand, is that the bank had taken a security interest — an ownership interest — in the sailboat. The significance of this in bankruptcies and insolvencies is that the assets subject to these security interests, such as mortgages and other kinds of claims and the like, are, to the extent of the security in law, not the assets of the business itself but the assets of the secured lender to the extent of the business’s indebtedness, leaving in so many cases little or nothing for other creditors who lacked the market power to have their interests protected by any kind of security interest. The shortfall in employer contributions in relation to pensions is one such example. Legislation can intervene to moderate situations where market power creates what society generally regards as a form of economic unfairness in these kinds of circumstances.

That is what this bill does. Under the present legislative regime, pension contributions by workers and contracted promises by employers to contribute to worker pensions have lost out when the assets of the failed business are insufficient to cover the pension shortfall because, in law, they belong to the secured creditors. Senator Wells and Senator Yussuff have spoken to the consequences for workers who have legitimately counted on workplace pensions in their senior years, only to discover and suffer the consequences of uncompensated pension shortfalls. The message in this bill is that it is a societally unfair distribution of the assets of the failed business.

As well, there’s a strong argument based on the distribution of risk. Those who invest capital have a range of mechanisms to guard against risk. Risk can be priced in. Risk can be distributed. Risk can itself be refinanced. But for workers, even if they think of the need to protect the value of their pensions, they have no such options. For these reasons, the creation of a super-priority for unfunded defined benefit pensions is compelling. Though I recognize there may be some knock-on consequences, nevertheless, I applaud the sponsor of the bill in the other place — MP Marilyn Gladu — and all members of Parliament, the sponsor of the bill here, the critic and, I hope, all of us for supporting this rebalancing. I applaud those who have fought for so long to achieve this result, often not for themselves but for today’s and tomorrow’s workers.

Briefly on my second topic, the very same societal balance and risk have existed for nearly all employed workers in our society in another context. I want you to think about this question: How many of you are creditors of the Government of Canada? Now, you are probably wondering, when will I get reimbursed for last week’s or last month’s expenses? Or how good is my government pension? But I want to bring it a bit closer to home. You might think yes in all those respects, but the fact of the matter is that for 29 or 30 days every month, you are a creditor of the Government of Canada as you await your pay at the end of the month. We only get paid at the end of the month. Hardly any of us have had the courage to say to our employer, “I’m going to work the month of February, but I would like to be paid on the first instead of the twenty-eighth.” Try that, and I think you wouldn’t get the job.

We are all creditors, then, throughout the month, until we are paid. So is virtually every other employee in this country. Now, fortunately, we do get paid, and probably never think about the risk of not getting paid. But for many thousands of Canadian workers every year, who have done honourable work for their employers — and have also earned contracted benefits like vacation pay — the risk of not getting paid becomes, regrettably, a reality. They are low on the totem pole of compensation for the same reasons — the priority of secured creditors — that have had the pride of place in employer bankruptcies and insolvencies.

I wrote my Master of Laws thesis on this topic of employees’ recovery of pay. It was later incorporated into a chapter of the leading text on employment law in Canada authored by Innis Christie, a distinguished labour and employment lawyer. In fact, some editions were Christie and Cotter — eventually, they got rid of my name.

I wanted to name the chapter one of two versions, and the first is a bit of a riff on the Cool Hand Luke movie. If you remember the movie, you may recall the warden speaking to Paul Newman in one of those southern accents that I can’t do very well. I wanted this phrase to be the chapter title: “What we have here is a failure to remunerate.” I apologize for the weakness of the joke. The second alternative that I wanted to have the chapter called, which didn’t succeed, was “Employees’ Recovery of Pay: Secured Creditors Always Win.”

The fact of the matter is that in every province of the country, and I think in most territories, efforts have been made by provincial governments to try to provide better protection for workers’ unpaid pay. All kinds of imaginative tools have been used such as deemed mortgages and trusts to try to capture the challenge that workers face in cases of bankruptcy and insolvency. Virtually all of them have failed: partly because of these rules about who owns the property; partly because they were thought of as colourable attempts to interfere with insolvency and bankruptcy, which are constitutionally the authority of the federal government.

More recently, a degree of progress has been made, with the support of the federal government through the Wage Earner Protection Program and a small super priority which provides a backstop, to some degree, in cases of bankruptcy and insolvency.

Parenthetically, when it comes to almost any one of these progressive initiatives in favour of bankers, Senator Yussuff’s fingerprints are on it, to his credit.

In this area, even by the Government of Canada’s own assessment, perhaps as much as half of employees’ promised and earned compensation is never recovered.

These claims are invariably smaller than the pension shortfalls that we’re talking about, but I would like you to think about many of these workers. They’re often the last to know that their employer is in financial trouble. They’re living from paycheque to paycheque and suddenly discover that they have lost their jobs and, for the owed wage or salary that they have earned they will have to jump through hoops to collect, in many cases, at best, half of that money. In the meantime, their own creditors — landlords, mortgage holders, grocers, car payments, Visa bills, and so on — are knocking at the door expecting to be paid.

An amendment to better protect these unpaid wages, severance and vacation pay and address this urgent societal unfairness was widely supported in the other place but was ultimately rejected there. It is tempting for me to press forward with an amendment to this bill to address a continuing anomaly and unfairness — a passionate concern of mine for over 40 years — but getting private members’ bills across the finish line is a bit like pushing a snowball up a hill.

This bill is being ably pushed up that hill by perhaps our fittest senator, Senator Wells, ably assisted by Senator Yussuff. I discussed this contemplated amendment with both of them and with Senator Plett, who advised against it. Now, Senator Plett and I don’t agree on every topic, but on this one I have taken his advice — wisely, I think. I think Senator Plett’s message, though he didn’t put it quite like this, was that more weight on this bill and even Senator Wells might not be able to get it to the top of the hill.

We are near the finish line on this nearly 40-year effort, and I did not want to risk the potential consequences that a delay in the passage of the bill might generate. Out of respect for the champions of this initiative, here and elsewhere and well outside of Parliament, I have put my amendment in my back pocket. But I do want to signal my intention to develop a separate bill in the near future that will address this remaining unfairness. I hope it will garner your support. Thank you.

I’ll request it, yes.