Bill S-5 (Historical)

Financial System Review Act

An Act to amend the law governing financial institutions and to provide for related and consequential matters

This enactment amends a number of Acts governing financial institutions. It also amends legislation related to the regulation of financial institutions. Notable among the amendments are the following:
(a) amendments to the Bank Act, the Cooperative Credit Associations Act, the Insurance Companies Act and the Trust and Loan Companies Act aimed at reinforcing stability and fine-tuning the consumer-protection framework; and
(b) technical amendments to the Bank Act, the Cooperative Credit Associations Act, the Insurance Companies Act, the Trust and Loan Companies Act, the Bank of Canada Act, the Canada Deposit Insurance Corporation Act, the Canadian Payments Act, the Winding-up and Restructuring Act, the Office of the Superintendent of Financial Institutions Act, the Payment Clearing and Settlement Act and the Financial Consumer Agency of Canada Act.

Financial System Review Act

[Vic Toews, Conservative, Provencher, MB]

moved that Bill S-5, An Act to amend the law governing financial institutions and to provide for related and consequential matters, be read the second time and referred to a committee.

[Shelly Glover, Conservative, Parliamentary Secretary to the Minister of Finance]

Madam Speaker, I welcome the opportunity to open debate at second reading of Bill S-5, the financial system review act.

This proposed legislation matters to Canadians because it concerns one of the most fundamental drivers of our economy, the financial services sector.

Before I go any further I would like to note that the proposed legislation is in fact mandatory. Every five years, the government is bound to review the statutes that govern federally regulated financial institutions to maintain the safety and the soundness of the sector, while ensuring that Canada remains a global leader in financial services.

The Canadian Bankers Association has remarked that its members “believe strongly in the importance of ensuring that the legislative and regulatory framework is reviewed regularly”. As the last review was conducted in 2007, the Bank Act requires that this be completed this year.

For the information of members and Canadians watching at home, the current five year review was launched on September 20, 2010 when the Minister of Finance initiated an open public consultation process on how to improve our financial system.

Here in Canada, the financial sector plays a key role in fostering financial stability, safeguarding Canadians' savings and fuelling economic growth and productivity. Aside from the fact that these institutions offer essential services worldwide, the industry employs over 750,000 Canadians. It represents about 7% of Canada's GDP and is known for its use of information technology.

Not only are our banks the foundation of our economy, but their strength and stability are a model for the entire world. Unlike the United States, the United Kingdom and other European countries, we did not have to nationalize, bail out or buy stock in our banks. In fact, for the fourth year in a row, the World Economic Forum has stated that Canada has the soundest banks in the world. The Financial System Review Act will help to ensure that our banks remain strong and effective and that they adapt to the new realities of an evolving global marketplace.

As the Canadian Life and Health Insurance Association has noted, the act represents a welcome fine tuning of the various financial institution statutes.

To effectively describe the benefits of this proposed legislation to the House it is worth revisiting our government's response to recent financial volatility.

Beginning in 2007 and through 2008, turmoil in global markets revealed serious weakness in the international financial system. Around the world many major financial institutions failed and needed to be bailed out by governments at the expense of taxpayers, but not here in Canada. Thanks to sound regulation by our Conservative government, not one single bank failed and not a single bailout was necessary, making Canada a model for the world.

Listen for example to the words of U.K. Prime Minister David Cameron who praised our banking system on a recent visit to Canada:

In the last few years, Canada has got every major decision right. Look at the facts. Not a single Canadian bank fell or faltered during the global banking crisis... Your economic leadership has helped the Canadian economy to weather the global storms far better than many of your international competitors.

The Irish Times also declared that Canada's “strict banking supervision was a reason why it was one of the world's strongest performers during the recession”.

The International Monetary Fund also said it “commended Canada's strong financial regulation and supervision. This has resulted in a stable and resilient banking sector, which has resisted the international financial crisis well and remains well prepared to deal with most adverse scenarios”.

A U.S. Congressional Research Service report added that “Canada's financial system in particular is garnering attention, because it seemed to be more resistant to the failures and bailouts that have marked banks in the United States and Europe”.

Even so, we have responded to the crisis with quick action to ensure the long-term stability of our financial system.

First, in budget 2008, the government ensured that the Bank of Canada had modern, appropriate tools to enhance the stability of the financial system when necessary. In fact, the Bank of Canada used these improved tools to protect our financial system, particularly by redistributing liquid assets to financial institutions, which was key to preserving the flow of credit to Canadians and businesses during the so-called credit crunch.

In budget 2009, the Conservative government also strengthened the authority of the Canada Deposit Insurance Corporation, or CDIC. This enhancement gave CDIC a broader range of tools to provide financial assistance to troubled financial institutions, thus promoting stability and protecting Canadian's deposits.

We also took steps to protect our mortgage market. The American sub-prime mortgage crisis, and the recession which followed, illustrate the importance of a stable and well functioning housing market.

In Canada, our system of mortgage insurance ensures that real estate remains stable. In order to protect it from the dangerous excesses experienced by other countries, our government has acted three times to adjust the mortgage guarantee framework. These adjustments included reducing the maximum amortization period to 30 years from 35 years for government-backed insured mortgages with loan-to-value ratios of more than 80%. We also reduced borrowing limits for refinancing and withdrew government insurance from home equity lines of credit.

In budget 2011, our government announced that we would give the current rules on the mortgage insurance framework a basis in legislation. This would further promote financial stability. We are actively developing this framework.

As you can see, the government has not been idle since the last financial institutions legislative review in 2006. We have renewed many key elements of our financial system and bolstered it by adding new tools to ensure its stability. It is perhaps because of these changes that, during the consultations conducted during the 2011 review, we found that only a few minor adjustments are now necessary.

Numerous detailed and thoughtful submissions were received from various stakeholders, including industry associations, financial institutions, consumer groups and individual Canadians. I am pleased to announce that the participants were satisfied with the process.

The Canadian Life and Health Insurance Association stated at the Senate committee on banking, trade and commerce, which completed its study of this bill late last year, that:

The consultation process was very positive and reflected the technical nature of this review.

From these consultations, we received a number of excellent proposals for fine-tuning, clarifying, harmonizing and modernizing the existing framework. Our government has listened and is committed to doing just that with the proposals contained in the bill before the House today.

The current framework works well. Canada's financial system continues to be recognized as one of the soundest in the world. With that in mind, I will outline the key measures contained in Bill S-5 for members and Canadians watching at home. I remind them that this is very technical in nature. I hope that they will be able to understand the measures I will outline.

The proposed legislative package includes measures that will: respond to changes in the sector; ensure access to banking services for all Canadians; level the playing field by promoting co-operation among our financial institutions; improve the efficiency of our system; and, finally, clarify the intent of existing legislation.

Among the examples, to better respond to changes in the sector, our government is improving the ability of regulators to share information efficiently with their international counterparts.

Also, to keep pace with the growing global financial sector we are increasing the widely held ownership threshold for large banks from $8 billion to $12 billion.

To ensure universal access to banking services, the legislation clarifies that all Canadians, including bank customers, are able to cash government cheques under $1,500 free of charge at any bank in Canada.

To better protect consumers, we will enhance the supervisory powers of the Financial Consumer Agency of Canada by increasing the maximum penalty for a violation of a consumer provision, consistent with penalties for other violations under financial institutions statutes. To improve efficiency, the Superintendent of Financial Institutions will have the authority to issue a certificate to assist financial institutions in documenting incorporation information.

I am especially pleased with the responsiveness of S-5's measures to promote co-operation among our financial institutions. I would like to highlight them now.

For instance, federal credit unions will vote with the co-operatives class in the governance of the Canadian Payments Association. Competition and innovation will be promoted by enabling co-operative credit associations to provide technology services to a broader market. We have heard time and time again from stakeholders about the importance of these changes to the Canadian Payments Act.

The Credit Union Central of Canada stated:

Placing the federal credit union in the cooperatives class will preserve and strengthen the credit union system representation at the CPA. It will ensure that a federal credit union will be represented by a director, who speaks for the interests of cooperative financial institutions in CPA matters. A strong advocate at the CPA is important for the credit union system's ability to advocate on behalf of credit unions and to continue to operate payments facility efficiently and cost effectively, which has a direct impact on overall credit union system competitiveness.

Furthermore, the legislation reduces red tape and lessens the administrative burden for federally regulated insurance companies offering adjustable policies in foreign jurisdictions by removing duplicative disclosure requirements.

Here are some of the other technical changes included in Bill S-5 to improve the efficiency of the financial sector. Mutual funds controlled by insurance companies through investments made from segregated funds will be permitted to hold market-indexed shares in managing life insurance companies. Greater flexibility will be provided in adjusting to new terminology under the international financial reporting standards in order to continue to promote prudential objectives.

Future adjustments on the limits on transfers to shareholders from participating policy accounts will be facilitated by adding regulatory flexibility. The Canada Deposit Insurance Corporation Act will be fine-tuned to enhance the corporation’s ability to protect insured depositors and manage the resolution of a member institution. Limited testimonial immunity will be provided to the Superintendent of Financial Institutions and the Commissioner of the Financial Consumer Agency of Canada, as well as their employees and agents, to enhance operational efficiencies and protect the confidentiality of information.

Finally, the bill before us includes a number of technical changes to clarify intent. For example, the bill clarifies the order of priorities where multiple security interests, including those taken under the Bank Act and under provincial legislation, are taken on the same collateral. It clarifies that derivatives can be cleared by a clearing and settlement system. It also confirms that banks can have an asset manager who also acts as a trustee of a mutual fund trust.

Many of the financial sector solutions now being promoted and adopted around the globe are based on the Canadian system that has served us so very well. For the fourth year in a row, the World Economic Forum rated Canada's banking system as the soundest in the world and as noted, Toronto Sun columnist, Peter Worthington, observed, “Canada's banking system is now widely recognized as arguably the world’s best. No Canadians fear for their deposits as many Americans do”.

The measures proposed in the financial system review act will further strengthen our system by reinforcing stability in the financial sector, fine tuning the consumer protection framework and adjusting the regulatory framework to better adapt to new developments.

As I have mentioned, the statutes which govern federally regulated financial institutions are subject to a five-year review cycle to ensure that Canada remains a global leader in financial services. It is imperative that this legislation be renewed by April 20 to allow financial institutions to stay in business.

Today's act would provide for a framework that would benefit Canadians by ensuring that we would have a safe and secure financial system that we could rely on by maintaining the long-standing practice of ensuring reviews of the regulatory framework for financial institutions, a unique practice that sets Canada apart from almost every other country in the world.

Our Conservative government recognizes that it must constantly evaluate what regulatory changes are needed to foster competitiveness and ensure the safety and soundness of our financial system for the benefit of all Canadians, and we have done exactly that with the measures contained in the legislation.

As the Canadian Life and Health Insurance Association noted during the Senate committee stage consideration, “prompt passage of the bill will ensure the legislative stability and continuity that are so important to the financial services sector”.

I therefore urge all members in the House to give the financial system review act careful consideration. I hope that opposition members will allow us to ensure that this moves quickly and prepares Canadians for more good things to come.

[Robert Chisholm, NDP, Dartmouth—Cole Harbour, NS]

Madam Speaker, I appreciate the intervention by the parliamentary secretary. She has indicated that this is an extremely important matter that will affect hundreds of thousands of Canadians and that we need to take a thorough review of exactly what the act intends to do.

Could she explain to the House why she and her government decided to introduce this through the Senate first and can we expect that the government will invoke time limits on this bill, like it has on every other important bill that we have tried to debate in the House on behalf of Canadians?

[Shelly Glover, Conservative, Saint Boniface, MB]

Madam Speaker, I congratulate my colleague across the way on being newly appointed to our finance committee. I look forward to many future studies and discussions with him on the financial status of our country.

With regard to the bill, I acknowledge, as my colleague mentioned, that this will affect hundreds of thousands of Canadians. In fact, it will affect all Canadians. Financial systems affect not only the people who are working, but those who are benefiting from other forms of income. For example, it benefits our children. Therefore, it is very important that we continue to evaluate and ensure we get this right for all Canadians.

With regard to the Senate, we have some wonderful senators who work very hard to help move these kinds of very important legislation forward. The legislation has to go through both Houses before a decision can finally be implemented. We have a number of agenda items that affect the financial system and Canadians, including the pooled registered pension plan that we introduced recently and a number of other bills that are coming forward.

Since we have such a charged agenda, it is important that we also move Bill S-5 because of the sunset date. In our opinion, it is prudent to ensure we get this through as quickly as possible and use the expertise and the senators in a way that would help us do that.

I assure the member that the senators took great care in looking at the bill, as we will in the House. We have had a number of reviews already and I look forward to that member voting in favour to pass the bill in a timely manner.

[Ted Hsu, Liberal, Kingston and the Islands, ON]

Madam Speaker, while I listened to the hon. parliamentary secretary, I could not help but be struck by what I would consider taking undue credit for the strength of the Canadian financial system. I am glad the legislation has some renewals on sunset clauses and technical amendments because, in the past, Conservatives urged deregulation of Canada's financial system. I believe the strength of Canada's financial system really is due to the resistance by previous Liberal governments to deregulate.

After the 2006 election, we had proof of the Conservative's desire to deregulate when the finance minister brought in 40-year mortgages with no down payment. Over the years, they realized that was a mistake because it encouraged consumers to take on too much risk. We know that the allowance of these mortgages was amended over the years. A couple of years later it was changed so that only 35 years was allowed for the period of a mortgage, requiring a down payment of 5%. Just last year they said that was maybe a little too risky. They had to back off some more and changed it to 30 years, with a 5% down payment.

The bill is worth supporting because the renewal of the sunset clauses is needed as well as some of the technical amendments, which could be tweaked. However, I want to counter what the parliamentary secretary has said in taking credit for the strength of Canada's financial system, which is recognized by the rest of the world. Having heard—

[The Deputy Speaker, NDP, Denise Savoie]

I would like to give the hon. parliamentary secretary an opportunity to respond.

[Shelly Glover, Conservative, Saint Boniface, MB]

Madam Speaker, unfortunately, I did not hear a question from my colleague as he ran out of time.

I will talk about some of the things that Canadians might be wondering about regarding what the hon. member and his party have said.

Our record has been very clear. Our government has taken measures time and time again to strengthen the financial system and our ability to stay in a fiscally advantaged position. The IMF and OECD have both said that Canada is a place to do business because it has such a strong and sound banking system. It is because it has a tremendous regulatory system that it allows for this kind of thing to go on.

I disagree wholeheartedly with the member's assertions about the Liberal record. In fact, I remind the member that it was the Liberals who stole $57 billion out of the EI account when it was in a surplus and put it toward their pet projects. In fact, it was our government that took a $38 billion sum and put it onto our debt so that it would save Canadians money and strengthen our system so we could weather things like the economic crisis much better than other countries. It is this government that has a record of doing good things for our fiscal system and not the government of Liberals and that colleague.

[Scott Armstrong, Conservative, Cumberland—Colchester—Musquodoboit Valley, NS]

Madam Speaker, it is great to speak today and ask the member questions about Bill S-5, which I think is a tremendous bill for our country.

As the member travelled across the country during the break, conducting many consultations with people from the business and financial communities and discussing the aspects that are contained in the bill, what were the results of those consultations, what did she hear about the bill and what did Canadians have to say about the financial institutions and the way the government operates them in Canada?

[Shelly Glover, Conservative, Saint Boniface, MB]

Madam Speaker, I thank my colleague for caring so much about what his constituents and Canadians are saying about prebudget consultations and about consultations on things like this bill because we do things to protect the interests of Canadians.

Canadians clearly told us during consultations that they liked the fact that this government looked ahead, that it was visionary and looked at the long-term status of our country to ensure that we were protected against threats like financial crises. That is why they really appreciated this government making changes to the mortgage in the housing industry three times to ensure we were protected, that we did not suffer the same consequences we saw in other countries.

Canadians also said that they appreciated the low tax agenda by the government and that they increasingly appreciated our push for trade. Unfortunately, they did comment that they were not happy with the $10 billion hike suggested by the NDP and its anti-trade position or the votes against their well-being that were voted upon by the Liberals.

[Elizabeth May, Green, Saanich—Gulf Islands, BC]

Madam Speaker, I hate to trespass into partisan debates between the Conservatives and the Liberals, but on the banking sector, in fairness, we are very fortunate that Paul Martin turned down the banks when they wanted to go global. It is just a historical reality.

This legislation is encouraging. It is good to see a government that is willing, although it tends to be very anti-regulation, to say that more regulations are needed, particularly over the Canadian banking sector going into more foreign territories.

Could the hon. parliamentary secretary expand on whether there could be more robust consumer protections still added to the legislation when it goes to committee?

[Shelly Glover, Conservative, Saint Boniface, MB]

Madam Speaker, I welcome my colleague back to the House following the Christmas break.

Consumer protection is part of the platform within the bill and we look continually to ensure that consumers are protected. As we move forward with the bill through the House and through committee, we will be open to listening to all suggestions. We will take those suggestions into consideration and will essentially come forward with a bill that will protect the interests of consumers.

This is a good start, but, again, we will continue to evaluate as we move forward. There will continually be a review every five years. This government is committed to ensuring that we look at these things in the future to prevent anything that might be coming up the pipes that could negatively affect Canadians.

If the member has any particular suggestions, I would be happy to listen to those and pass them on.

[Robert Chisholm, NDP, Dartmouth—Cole Harbour, NS]

Madam Speaker, I am pleased to have the opportunity to participate in the debate on Bill S-5. I thank the parliamentary secretary for her kind words with respect to my addition to the finance committee. I look forward to working with her and other members of that committee in the weeks and months ahead.

I want to make it clear that the official opposition will support Bill S-5 at second reading in principle. As she herself has said, it is a very technical bill. It has not received a lot of public discussion. As is the case with a bill of this nature, the devil is sometimes in the details. It will be incumbent upon us in the chamber and certainly members of the finance committee to bring witnesses forward and discuss those details to make sure there is not something untoward that causes concern. Assuming we do not find anything, we will support the bill at third reading, but we will see.

There is no question the financial services industry is a major financial force in this country. It employs hundreds of thousands of Canadian women and men and deals with trillions of dollars in assets. We also know that the banking industry is not an ordinary sector of the economy. Banks have the power to shape and influence the livelihoods of Canadians. They have the power to create currency through credit. Therefore, it is extremely important that we pay attention to the practices and procedures of these financial institutions. We only have to look at what has been happening around the world over the past couple of years to see how important that is.

While I want to go through the bill to some degree, I want to say at the outset that it makes me chuckle how the Conservatives like to take credit for the Canadian banking system that has relied on a strong regulatory and supervisory tradition and framework. Unlike our American neighbours, the Canadian government, but more importantly Canadians, have recognized how important it is that we not allow our financial institutions to run amok and do what it is they do. We therefore have been slower in deregulating our financial system.

I suggest that had there not been a minority government from 2005 onward and given what we have seen over the past number of months since the Conservatives have been in a majority situation, they may have moved before 2008 to remove some of the important regulations that saved our system in 2008. Luckily we got through that time. Even they recognize the value of maintaining regulations and supervisory control over the industry and we are continuing in that direction.

We saw with the financial meltdown that we in this country are not immune to what happens in foreign countries. It was the single largest default by a foreign financial institution which created a domino effect. It affected us and financial markets around the world.

It is important to recognize, which I know the government has failed to do on a number of occasions, that the Bank of Canada back in 2008 had to advance $75 billion through the Canada Mortgage and Housing Corporation to buy back $75 billion in mortgages from Canadian chartered banks to stem a liquidity crisis.

While the Conservatives want to try to take credit, it is important to recognize it is an established tradition that Canadians have followed. I am glad that we are going to continue along those lines for the foreseeable future.

We have a few concerns with respect to the process by which Bill S-5 reached the House. The government made a commitment in the last budget that it was going to initiate a review at that time. There is a statutory sunset clause that comes into effect on April 20 this year. The government recognized that we have to conduct this review. Unfortunately, what it did was post a request for submissions on the website. It was very quietly done, and it did not seek permission from the groups and individuals who were submitting that those presentations would be allowed to be public. Only 3 of the 30 submissions that were made have been made public and that was by those organizations themselves that posted the information on the government's website.

This idea gets to what the parliamentary secretary said in her debate. She said to Canadians who were watching that this is a very technical bill and that she would talk about very technical issues which they might not understand. That is an issue which goes to the heart of the whole question of consultation around such important matters. We need to demystify these issues. We need to present them in common language so that Canadians do understand.

One problem we are facing, which has been cited by the Governor of the Bank of Canada, Mark Carney, is that Canadians are overly indebted. Household debt has reached very problematic levels. Part of the reason we run into these situations is that we do not have a sufficiently clear and honest discussion about matters such as those contained in the bill. The questions that have been dealt with by the bill deal with consumer protection. Those are matters in which Canadians should be involved. Canadians are continuing to be gouged, in that hundreds of millions of dollars in fees and taxes are being imposed by the banks on every type of financial activity. Canadians need to play a role in discussions on the regulations that the government permits and the legislation that goes through.

It is a concern to us that the government decided to introduce this legislation in the unelected chamber. It did not start such an important bill before the members of this House who are duly elected by Canadians. The government took another route. Some would say the bill came in through the back door. It came in through the Senate. Even some august senators said that there was not sufficient time given to them to have a proper review of it. They raised concerns about it. I also asked that question of the minister.

Members of this caucus hope that the government will not bring in closure number 14 on this bill to limit debate by elected members of the House. This is far too important. It is important that Canadians understand what is going on. We need to take every opportunity to explain what it is that is being proposed by Bill S-5, to ask questions of government, to listen to the answers, and to have a general debate about what it is contained in the bill and how it will affect Canadians. That is what we are going to do.

It has been suggested that there are a multitude of housekeeping changes. However, there are a few things within the bill that I would like to speak to directly.

We welcome the broadening of the supervisory and enforcement powers of the Financial Consumer Agency of Canada and the broadening of the jurisdictional scope of the Superintendent of Financial Institutions.

We heard this morning that the Office of the Superintendent of Financial Institutions is watching closely the practices of banks, which appear to be loosening up credit, in some instances. That it is paying attention is a good thing. It is a good thing that the banks and financial institutions are not going to go down the road of predatory lending practices, which would have an impact. We have seen they have had an impact in other countries. We would not want to see that happen here. We welcome the broadening of the jurisdictional scope of the superintendent that is contained in the bill. However, we would say there was an opportunity in the bill for the government to go further to protect Canadian citizens from the predatory monopolistic practices of the banks.

I said that we have concerns that Canadians continue to be gouged by the banks in the form of service charges, user fees, and abusive credit card rates. That is one of the reasons we need to have a fulsome debate with Canadians about issues regarding our financial institutions and borrowing and lending practices.

It is also a fact that we need to provide in the bill and in regulation further protection for consumers because they are continuing to be gouged. The former leader of the opposition, Mr. Layton, was an outspoken advocate for a reduction in the credit card interest rates and the predatory practices of the banks and financial institutions as they dealt with credit cards. That is something we believe needs to happen. It is particularly galling at a time when these extra charges on Canadians are allowing banks to recognize record profits, which last year amounted to $25.5 billion, at a time when Canadian wages are declining. It is just wrong and we need to deal with that.

The responsibility for consumer protection unfortunately is not dealt with in this legislation. It is dispersed among multiple jurisdictions, departments and agencies. Again, it raises doubts as to whether the government is truly committed to the robust protection of consumers.

The modest changes that are brought about for consumer protection in the bill have yet to be tested by consumer advocates and users. We certainly hope we have the opportunity at the finance committee to bring representatives forward to deal with these issues.

We are concerned by increasingly risky lending practices in terms of mortgages and home equity credit lines by banks and other lending institutions. That concern is well-founded. It is something we heard about today and is shared by the Office of the Superintendent of Financial Institutions. Members of this House and members of the finance committee need to pay attention to that when we are discussing this bill.

Again let me say that it was through greater regulation that Canada avoided the mortgage-induced crisis, such as the one that occurred in the United States in 2007-08. We have a strong tradition in this country of supervisory and regulatory protections over our banking system, and we need to ensure that we are vigilant going forward.

This bill is missing an important step in creating a stronger economy, the regulation of financial speculation and derivatives. Billions of dollars continue to be gambled on a regular basis, destabilizing the economy and providing no benefit to everyday citizens. The government should use this opportunity to work in concert with other governments to halt the destructive speculation in Canada and abroad. We are also concerned that under this bill, large foreign acquisitions by financial institutions would be subject to ministerial approval rather than simply the approval of the Superintendent of Financial Institutions. We think this will unnecessarily politicize important decisions. These decisions should not be made in a partisan manner because there is the potential for political influence being exerted.

While I talk about the fact that the banking system in Canada has a tradition of regulation and supervision that has helped us avoid the kind of problems we have seen in other jurisdictions, there is a darker side to our stronger banking system. Canadian chartered banks have dominated the domestic market for decades. Their dominance and the fact that both Liberal and Conservative governments have only paid lip service to this issue have allowed them to continue to extract abusive fees, taxing Canadian consumers. These fees have created $25 billion in profits for the banking system. They provide the banks with enough net revenue to offset eventual speculative losses on the international capital markets and from overseas ventures, and allow them to pay out generous seven-figure bonuses to their CEOs and dividends to shareholders.

In addition, Canadian banks have been benefiting for years from tax-arbitered schemes such as the dividend gross-up mechanism that has allowed them to reduce their effective tax rates by acquiring Canadian dividend-paying stocks while hedging away the economic risk of those stocks by the use of derivatives. Banks sometimes share those tax savings with non-taxable entities, such as pension funds. This amounts to an effective tax subsidy that costs Canadian taxpayers sums that could well be in the billions of dollars. In addition to the tax effects, dividend gross-up mechanisms tie up bank capital for years and trump bank lending to small businesses and entrepreneurs. This is a complex issue that deserves much more scrutiny.

The changes being brought forward by Bill S-5 are modest. They could be greater as they relate to consumer protection. There is much work to be done and we cannot be complacent. We have seen turmoil and the damage that can be done by over-speculation and risky lending by financial institutions around the world, and we need to be constantly vigilant. However, I again say to the members opposite that we need to have this conversation about lending, borrowing and spending openly with Canadians. We need to deal with the problems created by the lack of financial literacy in this country.

We recognize that the increasing indebtedness of ordinary Canadians is a serious problem. The economy continues to be flat and has not been growing to expectations. Recently, we heard announcements indicating that the job creation figures continue to be weak.

The government is moving in directions that are having a detrimental impact on Canadians. We need to have important and respectful conversations about matters as important as to how we are managing our financial system in this country.

As I said earlier, we will be supporting the bill as it moves forward from second reading to committee. I look forward as a member of that committee to engaging with witnesses and starting to deal with some of the details so we can find out exactly what is in this legislation and make sure that it is as strong as possible for Canadians.

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Madam Speaker, I take exception to the government taking credit, when it introduced this legislation, for the banking industry being able to survive over the last number of years in Canada.

I want the government to recognize the fact that as the world economy was going into a downward spiral, Canada stood out on top. Other economies in the world recognized how strong and healthy Canada's financial markets were. They did that because of inspirational leaders like Paul Martin and Jean Chrétien and Liberal administrations that believed in having a regulated industry. Those individuals did more than anything the Conservative government has ever done to protect the integrity of the financial institutions we have in Canada today. The government needs to be aware of that fact.

When the Conservatives talk about financial responsibilities, they need to be aware of the fact that when they took office there was a $60 billion surplus handed to them. The Conservatives need to recognize that they are the ones who are messing up priorities, and we need only look at what they are doing to seniors in this wealthy country of Canada.

I would ask my colleague about the potential role of credit unions in this regard. Over the last five to ten years our credit unions have been expanding in places where banks have been withdrawing. They have been making it more affordable for the average consumer to do more banking, whether online or offline or going to the counter for services. I believe there is a good role for credit unions in the Canadian financial market in the future.

I wonder if the member would comment on how important our credit unions are in Canada today.

[Robert Chisholm, NDP, Dartmouth—Cole Harbour, NS]

Madam Speaker, credit unions began 100 years ago in places like New Waterford, Nova Scotia. They help support working people in their communities and families. They are the backbone of this country. Credit unions continue to thrive and provide important financial services for many families in small and large communities throughout this country. They should be commended for the work they do.

I will also respond in part to the member's quibble with the Conservative government for trying to take credit for the banking system. That member wants the Liberals to have the credit for the banking system. The traditions of our banking system are well established. They were established by members of the House, by Canadians from one end of this country to the other, who worked hard to make sure that we have a viable, respected and trusted banking system in this country. We should be thanking Canadians for responsible financial management rather than trying to break our arms by patting ourselves on the back.

[Matthew Dubé, NDP, Chambly—Borduas, QC]

Madam Speaker, I have a very important question for my colleague.

I know that he is going to join the Standing Committee on Finance; perhaps he already has. I would like him to comment on the importance of studying this bill carefully. We all, particularly the members on this side of the House, know how important it is to have strict laws for our banking system. We also know that these are very complicated issues.

I would like my colleague to comment further on the importance of studying this bill carefully to ensure that we understand all of its complexities and are able to develop appropriate regulations.

[Robert Chisholm, NDP, Dartmouth—Cole Harbour, NS]

Madam Speaker, the member said that it was a relevant question. I agree with him and just hope that I can provide a reasonably relevant answer.

The role of the finance committee is very important and always has been. I have not sat on that particular committee before, but I have certainly been involved at other levels of government on a committee such as the Standing Committee on Finance. I am very excited about participating on it, particularly as it relates to Bill S-5, because that committee needs to bring forward experts to talk to us about the consumer protections advertised in the bill. I say so because I do not think the way the government has gone about its consultations to date has given consumer protection advocates the opportunity to have input into this process.

At our committee, as we go through the bill item by item, we will have an opportunity to invite those experts who are out there in the field, from credit unions and consumer advocacy groups, to come in and share with us information that will help us make the bill the best piece of legislation it can be in order to get the support of members of the House.

[John Carmichael, Conservative, Don Valley West, ON]

Madam Speaker, as we hear from the parties opposite, everyone wants to take credit for our current success with our banking system and financial institutions. Certainly, the Canadian system is sound and strong and has survived the last several years of difficult economic times in a way that organizations around the world have recognized.

I commend the member for his appointment to the finance committee, and I wonder if he could speak to some of concerns about regulation, which he recognized were technical in nature and needed to be simplified, but specifically in terms of consumer protection. I wonder if he could go a little deeper and address some specific issues that are of concern to him.

[Robert Chisholm, NDP, Dartmouth—Cole Harbour, NS]

Madam Speaker, in my remarks I tried to address where we needed to focus some attention, and that was in regard to consumer protection.

I underlined how financial institutions are continuing to gouge their clients with increases in user fees and banking charges. We pay a charge for putting money in, we pay a charge for pulling it out, and we pay a charge for thinking about doing either of the two. I think I pay a charge every time I take my credit card out of my wallet, without even using it. It is that kind of foolishness we have to get a handle on.

We have talked about the need to address fees and interest rates that are being charged on credit cards. There is an opportunity to do that in this bill, an opportunity that the government has so far avoided. We will work at committee to try to deal with that so we can finally bring in some protection of credit card holders to stop the abuse they are receiving from financial institutions.

The House resumed consideration of the motion that Bill S-5, An Act to amend the law governing financial institutions and to provide for related and consequential matters, be read the second time and referred to a committee.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Madam Speaker, before beginning, I seek unanimous consent to split my time with the member for Wascana.

I have the honour to rise in the House to debate Bill S-5, An Act to amend the law governing financial institutions and to provide for related and consequential matters. On the surface, this bill does not seem particularly controversial to me. However, as usual, the Conservative government's way of doing things, its approach and its attitude leave much to be desired. Once again, the government has introduced a bill that it says must be passed immediately. In other words, this government sees no need to consult Canadians or experts. The government would probably tell people that, since it is in power, it can make any decision it likes. It does not matter what anyone else thinks; this bill must be passed right away.

We have known since April 2007 that this act would have to be reviewed. Despite having five years to work on it, the government appears to have been taken completely by surprise. Now it is in a big hurry to get this bill passed in just two months. This bill has to be passed by April 20 because the Bank Act has to be reviewed every five years. Today is February 3.

This government does not even have enough respect for Parliament, the Standing Committee on Finance or the institutions that will be directly and indirectly affected by this review to have introduced this bill with sufficient time to—

[The Deputy Speaker, NDP, Denise Savoie]

Order. I apologize for interrupting the hon. member, but I just realized that he sought unanimous consent to share his time. I would like to put that to the House.

The hon. member has asked for unanimous consent to share his time. Does the House give its consent?

[Some hon. members]

Agreed.

[The Deputy Speaker, NDP, Denise Savoie]

The hon. member for Saint-Léonard—Saint-Michel.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Madam Speaker, I was trying to save time. I thought I had received unanimous consent.

On the surface, this bill does not seem to have any major points of contention, as I have already said, but we cannot assume that everyone sees it that way. Financial institutions are a pillar of our economy and have to be treated with more respect. Allowing the Minister of Finance to have veto power over the acquisition of foreign entities by Canadian banks is something that should be analyzed further. The government tells us that this is to allow us to prevent crises like the one in 2008, but is this really necessary? No Canadian bank had problems similar to the ones experienced by the American or European banks and there is nothing to suggest that this could happen in the near future.

Why are the Conservatives imposing this condition in the bill? Do they have a hidden agenda? We do not know. Do they have any studies to support the fact that this necessary? Why do they not leave this responsibility to the real professionals? Representatives from the Office of the Superintendent of Financial Institutions, who have always done excellent work, would be better qualified for this responsibility. Perhaps we are giving this veto power to the minister simply because the Prime Minister, as we all know, always likes to be in control of everything.

All these questions make us realize one thing: the Conservatives do not like studies. They believe they have the answers to all the problems and they pass legislation without any consultation or debate. In 1995, former finance minister Paul Martin introduced the Bank Act and saw it passed. That legislation was not sloppy or passed at the last minute. We spent a year preparing it before passing it. The Liberal government at the time held many consultations and put a committee in charge of the matter. Public consultations were held, and the Liberals listened to expert advice in order to ensure that the legislation was drafted properly.

The Liberal government of the day had a majority, as the Conservatives do today. Yet it did not impose legislation at the last minute or limit debate; instead, it listened to what parliamentarians and all Canadians had to say. This Liberal legislation saved our banks from the financial collapse of 2008. Now, we have barely two months to pass this bill. The problem is that parliamentarians are not necessarily experts in banking. We use banking services, but we are not experts. Consultations with people in the industry are needed, for instance, with people who receive and provide services, managers and others. And that takes time.

As I said earlier, is it really necessary to give the finance minister more power? Would another person or institution have been in a better position to make these decisions? Is there really a problem?

Since we are taking the time to tackle the question of banks, are there other aspects that we should also focus on, as we heard this morning? Is this the best solution for the problem? These are some of the basic questions that could have been answered with an in-depth study. The last time we reviewed the legislation on financial institutions, in 2006 and 2007, I was chair of the Standing Committee on Finance and we examined Bill C-37. Thanks to the hard work of the Liberal members on the committee, we led consultations that lasted over three months. That diligent work allowed us to find several flaws in the Conservative bill. It is hard to do the same work today.

As I said earlier, the main problem with this bill is not so much its content as the uncertainty surrounding its review, given that the government does not intend to consult the players involved. This problem could have easily been avoided had the government introduced this bill in October rather than in February since, I repeat, the bill must be passed before April 20. The House of Commons simply does not have the time to seriously consider this bill. Even in the Senate, Senator Hervieux-Payette stated that they simply did not have time to thoroughly examine the issue.

What were the Conservatives thinking when they introduced this bill in the Senate on November 23, 2011? The bill was read for the second time on December 6, 2011, just before the long Christmas break. Today, it is February 3 and the government is only now presenting the bill for second reading. Rather than wasting their time abolishing the firearms registry and rushing to pass regressive legislation to imprison our youth, why did the Conservatives not begin seriously reviewing the Bank Act? This is an urgent situation that needs to be resolved because, as I mentioned, the act must be revised before April 20. This should have been a priority but the Conservatives would rather invent threats than take care of real problems.

Another problematic aspect of this bill is the fact that the changes to this legislation would allow a foreign government to own shares in a Canadian bank and thus have voting rights. How does this help Canadian banks? We do not know. Taxpayers who have pension plans with banks do not even have the right to vote, so why should a foreign government? What will the effects of this be? I doubt that we will have an answer before this reformed legislation is passed because we do not have enough time to consider the consequences.

In summary, I am not against this bill but there are still some unresolved issues because this government took its time and did not adequately plan for this review of the Bank Act. A competent government, like the one that existed when the Liberals were in power, would have conducted many studies and allowed parliamentarians to carefully consider this bill. Now, there is not enough time and we will not know all the effects this bill will have until after it is passed.

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

Madam Speaker, after listening to the speech by the Liberal Party member and my friend, I believe that we do not live on the same planet. The problems in the financial sector did not start with the Conservative Party, far from it.

Could you explain why, when you were in power, you did not regulate the quality of services provided to consumers by the financial sector with respect to credit cards, interest rates and holds preventing people from cashing their cheques right away? You were very critical of the Conservatives but, when you were in power, you did not take action and you did nothing to protect consumers and people who had mortgages with exorbitant interest rates.

[The Deputy Speaker, NDP, Denise Savoie]

I would remind all members that they must direct their comments to the Speaker.

The hon. member for Saint-Léonard-Saint-Michel.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Madam Speaker, I thank the member for his question and I welcome him to this country.

As in other areas, matters that affect consumers are usually a provincial responsibility. But I will not use that excuse.

The banking sector is evolving. We had the courage to make changes and introduce regulations. In addition, we introduced into the bill a provision requiring the legislation to be reviewed every five years. Every time a change is made to tighten up the financial sector, new products become available. The financial sector is evolving and that is quite acceptable. Yes, there are always problems. That is why we are prepared to undertake consultations. We have amended the legislation every time the opportunity has presented itself.

I would like to correct the hon. member. He said that we did nothing for consumers. We established the Financial Consumer Agency of Canada, which accepts complaints. The sector is always evolving and I hope that we can solve the credit card problem.

[Ralph Goodale, Liberal, Wascana, SK]

Madam Speaker, the strength of the banking and financial system in Canada is that its legal framework is perpetually sunsetted every five years. It has to be re-enacted or it expires. Some might think this is a source of uncertainty or weakness, but the opposite is really true. By requiring Parliament to re-examine Canada's banking laws every five years, we are forced to pay attention and to keep them strong and up to date.

Bill S-5 is a product of this five-year review process. It certainly has the questions that have just been referred to by my colleague, but hopefully Parliament will be able to address those questions in a satisfactory manner in the time that remains before the bill needs to be passed. It has to be enacted before April 20, 2012, to keep our whole system intact.

In that sense, this proposed legislation is rather routine. It renews and extends Canada's basic financial laws for another five years. That is important, but beyond that, Bill S-5, quite frankly, is not very ambitious.

It does not, for example, address the chronic problem that small businesses have in getting fairness from the big banks on their debit and credit card arrangements. It does not address the problem that will soon arise from another piece of legislation that was before the House this week, and that is the bill creating the new pooled registered pension plans.

Experience in other countries has demonstrated that a key issue will be the management fees and the other charges enacted by big financial institutions to operate these new pension plans.

A report from Australia shows that its PRPP system generated handsome profits for banks and insurance companies, but the average pensioner would actually have been better off simply buying a government bond.

There is nothing in legislation from the government to ensure a level of return on PRPPs equivalent to the extraordinary performance of the Canada pension plan, or to prevent fee gouging by the banks, insurance companies and other companies that run these new plans. Bill S-5 is probably most noteworthy for what it does not do.

The last significant work on the overall framework governing our financial sector was undertaken some 15 years ago by the Task Force on the Future of the Canadian Financial Services Sector. It was chaired for Canada by an eminent Saskatchewanian, Mr. Harold MacKay. His report was a powerful piece of work. He laid out those principles and values that have given this country the strongest financial services sector in the world.

The current Prime Minister likes to travel the world bragging about the success of Canadian banks and financial institutions. He did so in his recent alpine speech to the rich and famous in Davos, Switzerland. Before he launched his attack on low and middle income future seniors, he spent some time taking credit for the strength of Canadian banks as well as for the Canada pension plan.

There is more than a little irony here; some would say hypocrisy. In the mid-1990s, when Mr. MacKay was doing his work, there was huge pressure on the Liberal government of the day to go in the opposite direction. The big banks and the political right in Canada, including the predecessors of the Conservative government, were pushing hard for what they called a more American-like system. They wanted weaker prudential standards. They wanted less regulatory oversight. They wanted big banks to merge, so the biggest five or six could become the big two or three, and they could better take on the American competition, like Lehman Brothers, for example. That was their Conservative line back then.

All that right-wing advice turned out to be really bad advice. Lehman Brothers and other U.S. banks have gone the way of the dodo bird, and Canadian banks have turned out to be the most successful and the most respected.

In opposition back in the 1990s, the current Prime Minister and his Reform-Alliance colleagues also gave very bad advice about pensions. They went on the attack against the CPP, the Canada pension plan. They called it a huge boondoggle. They called it a big, European-style socialist welfare scheme. They said it should be scrapped altogether, that Canadians should just fend for themselves with private savings. The rich, of course, would do very well under a scheme like that, and as for all the rest, well, who cares. That was the right-wing line back in the 1990s.

We can hear echoes of that sort of thing today in the current debate about old age security and the old age pension. Never mind that 75% of those who receive the old age pension have incomes below $40,000. Never mind that many are elderly widows living alone. Never mind that without the old age pension, poverty among seniors would rise by as much as one-third. “Never mind all that”, the right-wingers say, “just cut them back and let provincial welfare programs pick up the slack”.

There is only one taxpayer, federal or provincial. Cutting down the OAS would not make the human needs go away. It would just download the burden onto the provinces, like health care downloading and prison cost downloading. It is false economy. That is true today, just as it was 10 or 15 years ago, when the current Prime Minister and his colleagues attacked the CPP.

He went to Davos and bragged about how the CPP is so actuarially sound, which it is, but no thanks to him. It was refurbished for the future despite the Conservatives, not because of them. The CPP has a superlative investment and return record and the plan is assured for at least another 75 years.

Once in government, the incompetence of the party across the way has continued. The Conservatives increased federal spending by three times the rate of inflation. They eliminated contingency reserves and prudence factors from federal budget making and they put Canada back into deficit again, all before there was any recession, not because of the recession, but before it. Then during the recession they dug their deficit hole deeper and deeper, $50 billion or more per year, with no coherent rules or objectives. Millions of dollars were siphoned into useless pork-barrel projects like the G8 and G20 fiasco, with all its fake lakes, ornamental gazebos, and sidewalks to nowhere. The Auditor General called it unprecedented and very wrong.

Now, while earmarking billions to be squandered on bigger jails and wildly expensive fighter jets, the Prime Minister says his government can no longer afford pillars of Canadian life like universal health care and old age pensions for middle- and low-income seniors.

The fiscal pressure on the Conservatives is entirely self-concocted and they are rather happy about that. I can hear them chuckling across the way right now. They want an excuse to pull away from medicare and pensions, and they really could care less who suffers.

It is important to keep Bill S-5 in context. It will be passed before April 20 to maintain Canada's banking success. However, for so many Canadians beyond the big banks the story is not very rosy. Economic growth stalled in October; it turned negative in November. Household debt is at an all-time record high, at 153% of disposable income. Unemployment went up again last month and it worsened again just today, with another 450 jobs lost at the Electro-Motive plant in London.

Strong banks are a must, but they are certainly not all by themselves sufficient to achieve a strong, successful country overall with growing and shared prosperity for all Canadians. It is that last element that the government seems to care very little about. It does not care if growth is sustainable. It certainly does not care if it is shared.

We will continue to battle the Conservatives on that fundamental principle: prosperity. We have proven we know the formula for making the economy grow. We did that through 12 very successful years of economic prosperity in this country. We also must work together on the sharing and the sustainability of that prosperity.

[Paul Calandra, Conservative, Parliamentary Secretary to the Minister of Canadian Heritage]

Madam Speaker, I listened to the hon. member's speech. I noticed that he did not seem to gather much support from his Liberal colleagues for his words. However, it is true that when the Liberals were in government, they did download quite a bit onto the provinces. That is how they balanced their budget.

He talked about health care. He might have been the then finance minister who cut $25 billion from the health and social transfers to the provinces unilaterally, as well as from students and seniors. The Liberals took the money that was destined for people who were unemployed and put it into general revenue. Those people had contributed to the employment insurance program. That member, who was probably the then minister of finance, stole that money from the workers and used it for other means.

As well, there was the sponsorship scandal. The Liberals actually stole money from Canadian taxpayers to help them win elections. Yet they get up in the House and pretend to care about Canadians, when the history of that party and that individual as finance minister is just the opposite. It is one of deceit and not caring about Canadians, seniors or people who are unemployed.

[Ralph Goodale, Liberal, Wascana, SK]

Madam Speaker, the hon. gentleman's comments are in fact laughable. The Conservative Party has a very selective memory about history.

The approach that our government took with respect to EI—

[Royal Galipeau]

Where is the $40 million?

[The Deputy Speaker, NDP, Denise Savoie]

Order, please. I would like the hon. members to respect the time that the hon. member has to speak. When there is time for more questions other members can raise them. However, for now the hon. member for Wascana has the floor.

[Ralph Goodale, Liberal, Wascana, SK]

Madam Speaker, it is obvious that the truth aggravates the government across the way, but we will keep working on it nonetheless.

With respect to the financing of EI, during the period of time that the hon. gentleman referred to in his question, the structure was examined by the Auditor General of Canada. She recommended a certain approach to the management of those funds. We implemented that approach as recommended by the Auditor General of Canada. I will take her advice over the government's advice any day of the week.

As far as reinvestment in health care is concerned, the fact is I had the pleasure of negotiating the 10-year health care accord with the prime minister of the day, the Right Hon. Paul Martin, with the 10 provinces and the territories. It was agreed to unanimously. We invested $41 billion over 10 years, to which the government has not added one penny.

[Kennedy Stewart, NDP, Burnaby—Douglas, BC]

Madam Speaker, on a number of occasions I have taken the opportunity to ask the government about a statistic that is frequently reported by the U.S. federal reserve. It regards the natural rate of unemployment.

Former prime minister Paul Martin used to quote a number of around 7% as a natural rate of unemployment. I wonder if perhaps I could get an answer from the member about what he believes the natural rate of unemployment would be. It does seem directly related to the bill we are debating.

[Ralph Goodale, Liberal, Wascana, SK]

Madam Speaker, the definition of that term depends on a number of the factors used to consider what is natural or unnatural. In the United States I believe that number is guesstimated to be in the neighbourhood of 4%. In Canada it would be somewhat higher.

Since the time that Mr. Martin was the minister of finance, 10 or 15 years ago, I suspect that the number has come down a bit below the 7% figure. The most profound influence on that calculation today is the aging of the baby boomer generation. It may well be, before the 7% moderates very much, that we will have to get past the retirement rate of the baby boomers, which is a very significant economic factor.

[John Carmichael, Conservative, Don Valley West, ON]

Madam Speaker, I am thankful for the opportunity to speak to Bill S-5, Financial System Review Act. Bill S-5 is important legislation because it provides a framework to regulate financial products and services, helping to ensure the continued safety and security of our financial system that Canadians and their families depend on every day.

Before continuing, by way of background, I would note for the benefit of the House that today's legislation is the result of a mandated review. In Canada financial sector legislation is subject to a full review on a five-year cycle to ensure the stability of the sector, with the latest review completed in 2007.

The current review began with a public and open consultation process in September 2010, when all Canadians were invited to share their views on how to improve and strengthen our financial system. This practice sets Canada apart from almost every other country in the world and ensures that laws and regulations by which our financial systems are governed remain the safest and most secure anywhere.

As a recent Ottawa Citizen editorial proclaimed:

—our banking and financial system is the envy of the world. While the great money edifices of countries such as the U.S., Britain and Switzerland cracked at the beginning of the recession, Canadian banks stood firm.

Listen to what Forbes magazine stated:

—Canada has avoided many of the problems that currently bedevil the U.S.—mountains of public debt, a banking system in crisis...With no bailouts, it is the soundest [financial] system in the world, marked by a steady and responsible continuation of lending and profits.

Indeed, for the fourth year in a row, the World Economic Forum recently rated Canada's banking system the best in the world. Only days ago, an independent global organization, known as the Financial Stability Board, praised Canada's financial system, calling it a model for all countries. The Financial Stability Board stated:

The strength of the economy and of the financial system at the onset of the crisis meant that no Canadian financial institution failed or required government support in the form of a capital injection or debt guarantees.

As the past few years have shown, international praise for our system is well-founded. While the global financial crisis resulted in nearly $2 trillion in losses for banks and insurance companies, Canada's banks stood solid, bolstered by sound risk management and supported by an effective regulatory and supervisory framework. In fact, Canada was the only country in the G7 that did not have to bail out its major banks with taxpayer money in the aftermath of the 2008 financial crisis.

I neglected to announce that I am splitting my time today with the member for Etobicoke—Lakeshore.

This Canadian resilience matters. A strong financial sector plays a fundamental role in supporting a strong economy, and not just in times of crisis. Families, workers, retirees and pensioners count on it for the security and growth of their deposits and investments and to maintain the standard of living that they worked hard to build. Consumers rely on it for competitive financial products to keep their mortgages and other household financing affordable. Businesses, large and small, also depend on it for access to competitive financing to allow them to invest and grow.

The financial crisis highlighted the importance of evaluating the overall size of financial institutions, their global linkages and the impact of these factors on the best interests of Canada's financial system.

The crisis also resulted in extensive changes in the regulatory framework, which continues to ensure that Canada is home to one of the safest and soundest financial sectors anywhere in the world. The financial system review act would build on these reforms and fine-tune the efficiency and effectiveness of this framework. It would improve the ability of regulators to share information efficiently with their international counterparts. This would help to fulfill our G20 commitments at a time when financial institutions increasingly operate on a global scale and would ensure effective supervision and regulation across borders.

The bill also recognizes the implications of global reform on Canadian banks. Since 2001, Canadian banks and their holdings have grown significantly. The new Basel III capital standards in 2013 will further increase capital levels. Based on projections until 2017, the threshold defining a large bank will be raised to maintain the current policy. Today's bill would increase the large bank ownership threshold from $8 billion to $12 billion.

Bill S-5 would also strengthen consumer protection for the financial sector, most notably by enhancing the supervisory powers of the Financial Consumer Agency of Canada also known as the FCAC. The agency is mandated to ensure that federally regulated financial institutions adhere to the consumer provisions of the legislation governing financial institutions and their public commitments. FCAC is also the government's lead agency on financial education and literacy and has moved forward with an array of excellent initiatives in recent years.

The agency has developed innovative tools to help Canadians plan their financial future, like a mortgage calculator that quickly determines payments as well as the potential savings which can be realized by paying early. It also publishes valuable information online to help consumers choose credit card and banking packages best suited to their own needs.

Bill S-5 also proposes to increase the maximum fine that can be levied by the agency for consumer protection violations to better protect Canadians.

Finally, the financial system review act would build on this government's ongoing actions to cut red tape by proposing to reduce the administrative burden on financial institutions and increase regulatory flexibility. This includes eliminating duplicative disclosure requirements and allowing limited testimonial immunity for federal officials to enhance operational efficiencies. These measures would contribute to a well-functioning financial system that meets the needs of Canadians and supports our future economic prosperity.

Today's legislation is important because it concerns one of the key foundations of the global economy. Canada's financial sector plays a pivotal role in fostering financial stability in safeguarding the savings of Canadians and in fuelling the economic growth that is essential to our standard of living.

We also recognize that Canada's financial sector is a critical component of the Canadian economy, employing over three-quarters of a million Canadians in well-paying jobs. What is more, the sector represents about 7% of Canada's GDP.

As the Canadian Life and Health Insurance Association declared during the Senate's consideration of this important legislation, “prompt passage of the bill will ensure the legislative stability and continuity that are so important to the financial services sector”. Updates to the financial legislative framework will continue to ensure that Canada's financial institutions operate in a competitive, efficient and stable environment and will help Canada maintain its well-earned reputation as a global leader in financial services.

[Anne-Marie Day, NDP, Charlesbourg—Haute-Saint-Charles, QC]

Mr. Speaker, we know that our financial system weathered the last crisis, at least people here did not lose their homes, as was the case south of the border. We also know that our savings are secure and even protected. It is great that families can count on a banking system that protects small investors. For example, we know that if a bank is in trouble, the CDIC protects our investments up to $50,000. That is great.

We on this side of the House—and I am directing the question to the hon. member—are wondering why not take this further. In our election platform, the NDP calls for a limit on credit cards. Why not include that sort of thing in order to help families even more?

[John Carmichael, Conservative, Don Valley West, ON]

Mr. Speaker, at the root of today's discussion and debate is the foundational principle that Canada's banking system and financial institutions are the strongest in the world, as recognized by those I identified in my presentation.

Earlier today in debate the parliamentary secretary was asked whether there would be an opportunity when the bill got committee for members to bring recommendations on consumer protection and to deal with issues such as credit cards and the like. She responded at that time that that was the case and she encouraged open debate and discussion on ways we might strengthen what is already a very good system.

[Michelle Rempel, Conservative, Parliamentary Secretary to the Minister of the Environment]

Mr. Speaker, I am pleased to hear my colleague talk about the bill because it recognizes the fact that Canada does have one of the soundest banking systems in the world. This has been recognized by the World Economic Forum for four years in a row.

What we often hear from our colleagues opposite is that they want to raise taxes on job-creating companies. Our government has implemented a low tax plan to create jobs and economic growth, but also to ensure that we have a sound financial system. I am hoping my colleague opposite could tell us a bit more about how the bill enhances the work our government has done to ensure a sound financial system.

[John Carmichael, Conservative, Don Valley West, ON]

Mr. Speaker, foundational to everything we do as a government is job creation and economic growth. At the root of that is certainly our financial system, one of the strongest in the world, as we heard today, and it will continue to be.

With this debate we expect to take the bill forward for fine tuning and take what is already a very strong financial system, with good governance and good regulations, and make it even stronger.

[Bernard Trottier, Conservative, Etobicoke—Lakeshore, ON]

Mr. Speaker, thank you for the opportunity to contribute at second reading of Bill S-5, the Financial System Review Act.

This bill is important because it seeks to regulate one of the most important sectors in the country: financial services.

Today's act is significant because it regulates one of the most important sectors of the Canadian economy, financial services. In fact, this sector is a key foundation our economy depends on. It is also a cornerstone of the economy of the city I represent in Parliament, Toronto.

The act would also help ensure that Canada's financial system remains strong and secure, a system that has been made a model for countries all over the world in a period of global economic turmoil. In fact, for four consecutive years Canadian banks have been ranked the soundest in the world by the independent World Economic Forum. This has been further acknowledged by other independent observers, both in Canada and internationally.

Here is what a few are saying. Noted Toronto Sun columnist Peter Worthington has said:

Canada's banking system is now widely recognized as arguably the world's best. No Canadians fear for their deposits as many Americans do.

The influential Economist magazine has proclaimed:

CANADA has had an easier time than most during the recent global recession, in part because of a conservative and well-regulated banking system.

Finally, U.K. Prime Minister, David Cameron, has praised our system in this very House:

In the last few years, Canada has got every major decision right. Look at the facts. Not a single Canadian bank fell or faltered during the global banking crisis. Canada got to grips with its deficit and was running surpluses and paying down the debt before the recession, fixing the roof while the sun was still shining. Your economic leadership has helped the Canadian economy to weather the global storms far better than many of your international competitors.

On a broader scale, the financial services sector plays a significant part in the daily lives of Canadians, from a child making his or her first deposit in a bank account to a young family taking on a mortgage to buy their first house. Businesses in my riding of Etobicoke--Lakeshore rely on the liquidity of Canada's banking system to finance their day to day operations and their expansion plans.

Beyond relying on the financial services industry for everyday products and services, its businesses are an important economic driver. As my colleague mentioned earlier, it employs over 750,000 Canadians in well-paying jobs. Moreover, the sector represents about 7% of Canada's overall GDP.

Finally, Canada's banks are playing an increasingly large role on the world stage via their expansion in the United States, Central and South America, and in other emerging markets.

Accordingly, there is no doubt about the importance of ensuring that the legislative governance of this critical sector is effective and current.

Accordingly, today's act supports the ongoing stability of Canada's financial sector, fine-tunes consumer protection provisions and adjusts the regulatory framework to better reflect new economic developments.

Specifically, today's act includes measures to update legislation to promote financial stability and ensure that Canada's financial institutions continue to operate in a competitive, efficient and stable environment; adjust the consumer protection framework, including enhancing the supervisory powers of the Financial Consumer Agency of Canada; and improve efficiency by reducing the administrative burden on financial institutions and by adding regulatory flexibility.

Furthermore, the act will improve the ability of regulators to share information efficiently with their international counterparts; change the priority status of segregated fund policies in insolvency situations to facilitate timely transfer; clarify that Canadians, including bank customers, are able to cash government cheques under $1,500 free of charge at any bank in Canada; promote competition and innovation by enabling co-operative credit associations to provide technology services to a broader market; and reduce the administrative burden for federally regulated insurance companies offering adjustable policies in foreign jurisdictions by removing duplicative disclosure requirements.

I will quickly expand on a few of these points.

Effective and competitive financial institutions are essential for creating an environment favouring savings and investments in Canada and for improving our standard of living.

The regular review of the financial sector statutes allows the government to amend the framework as necessary so that financial sector legislation and regulations continue to be effective and efficient. Indeed, today's act is mandatory legislation. The government has a long established practice of reviewing the statutes governing federally regulated financial institutions every five years to maintain the safety and soundness of the sector for Canadians.

For the information of the House, the latest legislative review and subsequent legislation were completed in the 39th Parliament through Bill C-37. The present five-year review began in September 2010 when the finance minister launched an open consultation process with Canadians on how to improve our financial system. The financial system review act addresses a number of key areas that were identified in the review and consultation process to achieve increased legislative and regulatory efficiency.

Currently, financial institution statutes have a built-in sunset clause that causes them to lapse five years after they come into force. The proposed common sense amendments in Bill S-5 modify the statutes to lengthen the automatic extension period of the sunset date, triggered by the dissolution of Parliament, from three months to six months. This will allow greater flexibility and more security for consumers and Canadian institutions.

We all know that consumers have the ability to manage their finances. In properly managing financial affairs, we know that knowledge is critical. That is why the government is moving forward to implement the recommendations of the task force on financial literacy aimed at improving financial literacy for all Canadians.

At the same time, the government is responding to concerns about the terms and conditions associated with network branded pre-paid cards by developing measures to enhance the consumer protection framework.

Changes in today's legislation fine-tune the consumer protection framework and enhances the supervisory power of the Financial Consumer Agency of Canada by confirming that all Canadians are able to cash government cheques in amounts of less than $1,500 free of charge at any bank in Canada; and increasing the maximum penalty for violation of a consumer provision, consistent with penalties for other violations under financial institution statutes. These are all important measures that will protect consumers when dealing with financial institutions.

As members know, the rate of change in the financial services sector has only increased in recent years. Another objective of today's act is to allow financial institutions to respond to change by allowing them to better adapt to new developments in the industry. In other words, financial institutions must be able to effectively respond to developing trends such as globalization, convergence, consolidation and technological innovation.

To summarize, the measures proposed in the financial system review act would reinforce stability in the financial sector, fine-tune the consumer protection framework and adjust the regulatory framework to new developments.

Renewing Canadian financial institution legislation on a regular basis has resulted in a robust and effective financial system that is aligned with and more responsive to developments in the financial markets and the broader economy. Today's act provides framework that would benefit all participants in the financial services sector, financial institutions as well as all Canadians. It maintains the longstanding practice of ensuring regular reviews of the regulatory framework for financial institutions, a unique practice that sets Canada apart from almost every other country in the world.

Therefore, I urge all members to support the proposed financial system review act.

[Hoang Mai, NDP, Brossard—La Prairie, QC]

Madam Speaker, I want to thank the member opposite for his presentation.

As he said, this bill affects many Canadians and an entire industry. I would like to know why, in his opinion, such an important bill was introduced in the upper chamber instead of here, in the House of Commons. That would have shown the type of respect such an important bill deserves.

[Bernard Trottier, Conservative, Etobicoke—Lakeshore, ON]

Madam Speaker, I thank my colleague opposite for the question.

As the member knows, in our Parliament, bills can be introduced in either chamber. The Senate committee responsible for examining the financial system and its regulations studied this bill thoroughly. One of the Senate's mandates is to propose and analyze such bills. It began the process in 2010 and we are very pleased with the excellent job it did. That is why we are proposing that the bill be enacted.

[Lynne Yelich, Conservative, Minister of State (Western Economic Diversification)]

Madam Speaker, the member referred to the financial literacy bill that was brought forward by the member for Edmonton—Leduc. For the benefit of those listening to the debate, I would like the member to expand on the bill to emphasize how important it is and what its mandate is.

[Bernard Trottier, Conservative, Etobicoke—Lakeshore, ON]

Madam Speaker, financial literacy is one of those key foundational elements to having a successful life in this country, along with health and civics. We really believe that all Canadians should have strong financial literacy so that they can be successful in their lives, not just taking care of their own financial future but also those of their families, and sharing that financial knowledge with their friends and becoming literate to function effectively in today's society.

Therefore, we proposed legislation to increase financial literacy. We are working with educational practitioners as well as financial institutions to make sure that this kind of program is expanded throughout the country.

[Hoang Mai, NDP, Brossard—La Prairie, QC]

Madam Speaker, I would like to continue along the same lines.

When it comes to studying such an important bill—the upper chamber studied it for three weeks—they missed an important opportunity to examine the fundamentals of the banking system and financial institutions. Several aspects were studied, particularly technical aspects, but much more could have been done to protect consumers, as my colleague mentioned. Why were further steps not taken to protect consumers?

[Bernard Trottier, Conservative, Etobicoke—Lakeshore, ON]

Madam Speaker, I thank my colleague for the question.

This bill has a rather specific mandate: to examine measures related to financial products. However, some financial products are not regulated by this bill. Therefore, they are not part of this bill's core mandate.

[Kellie Leitch, Conservative, Parliamentary Secretary to the Minister of Human Resources and Skills Development and to the Minister of Labour]

Madam Speaker, as we know, the financial institutions in our country have been the rock bed ensuring that Canada has a sound, stable economy, especially through these tough economic times.

Could my colleague from Etobicoke—Lakeshore expand on his previous comments on the need for this bill to be brought forward at this point in time, both its mandatory component and its timing implications?

[Bernard Trottier, Conservative, Etobicoke—Lakeshore, ON]

Madam Speaker, it is really important right now that we have a very stable financial system to ensure there is liquidity. Many companies are in precarious situations when it comes to growing their businesses and plans. Also, consumers need to have financial institutions they can rely on when it comes to their mortgages.

We have not had the problem that the United States and other places have had, and we can thank the leadership of this government for making sure of that.

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

Madam Speaker, I would like to inform you that I will be sharing my speaking time with the member for Brossard—La Prairie.

Mr. Hollande, who is the Socialist Party candidate in the next French election, said that his enemy was faceless; that enemy would never be a candidate, was not a member of a political party and had no political platform, but nevertheless was in control. He was talking about the financial sector.

At present, this bill certainly reflects his words. Here we have a bill that is remarkable not for what it says, but for what it does not say and what it does not do. It should be protecting the Canadian economy; it should be protecting Canadians; it should be protecting the economic aspirations of the Canadian public; but it does not do that. It is utterly and completely silent on that.

There is probably good reason why this bill was introduced in the Senate. The bill was introduced to do nothing. It was introduced in haste. It contains only technical points and items that are hardly essential to the growth of the Canadian economy.

It does not talk about supporting industrial capital and investment in job creation, which our financial sector could be ordered to do. No, that is not what it talks about; it speaks only about purely technical items. We will see, later, that these technical items are essentially going to allow the financial sector to do more of the same: more money and more bonuses, but certainly no more services for the Canadian economy.

We have been talking about service charges and use of the banking sector for a long time, and this relates directly to the Bank Act. Those charges are excessive. They mean that consumers are not just the people who supply the banks with the money so they can lend it out again, but also the customers who have to pay truly excessive charges to use their own money. They have enabled the banking system to increase its profits to the $25 billion point, an impressive number indeed.

At the same time, the financial sector’s budget for bonuses has climbed to $9 billion. That was the fastest-growing item in the financial sector. As in the United States, France and England, the financial sector is motivated by bonuses, and in that sector the board members have little to gain by defending the interests of the shareholders, their customers and the economy of their country. They are motivated solely by bonuses. In this regard, just like all the other laws in the other countries, the government of Canada is modelling its approach directly on the worst elements of the banking laws of the other countries. We could talk about excessive credit card interest rates. That is something that is directly connected with too many bankruptcies experienced by Canadians. They are not talking about that. They do not want to talk about it. There are a lot more things missing as well.

Let us talk about the waiting time that allows banking institutions to hold a cheque for a certain number of days. People deposit their cheques and cannot withdraw their money immediately. That means that an entire parallel service is created: a new financial sector, the cheque-depositing sector, where the cheque is paid out immediately in return for a charge that may range from 5% to 20%. But that is not a problem. We will not talk about that.

Nor is a compensation fund for victims of fraud being created by players in the financial industry, something that is considerably more serious. People are told to go ahead: the financial sector is safe and is there for them, but if it does not work out, no one will be there to support them anymore.

There will be no one to reimburse them and protect them, but in exchange, they will be allowed easier access to financial literacy. That was very useful to Nortel's shareholders and the people who invested in Norbourg, when those two companies were praised to the skies by the financial world. There were countless articles in the economic press praising the management of those two companies and encouraging Canadians to participate actively in financing them. And yet once again they decide it is not necessary to protect consumers and investors.

Even investors now have to take on the task of managing their own RRSPs. They alone will be responsible for losses in their RRSPs. That is impressive. Obviously, we are going to use the time for examining this bill in the Standing Committee on Finance to give it a few more teeth. In spite of the short time the government is giving us, we will be fighting hard to make this bill better suited to defending the interests of modern Canada.

The bill talks about foreign acquisitions, an important point, particularly in Canada; we have been visited by the Union de banques suisses, the UBS. We could call them “itinerant bankers” or carpetbaggers. These people represent a foreign financial institution— the UBS—and they send people to meet with the wealthiest Canadians and ask them to invest in their discreet, secret, numbered bank accounts and they will not have to pay Canadian income taxes. That is marvellous. And that is what they have done. The problem is that it is not really legal. It is called tax evasion. It is flat out illegal. And yet no lasting changes are being made to Canada’s Bank Act to prevent activities like that.

There should be a power of life or death over a Canadian institution owned by foreign entities, to prohibit it from ever doing anything inside Canada. They could be much more stringent, and yet they are not. They are raising the ceiling on shareholder equity. They already raised it in 2007. At the time, it was $5 billion. Now we are told it has to be $12 billion. This is an opening for what is called leverage. It is going to be much easier to make speculative investments. That is the most obvious opening for speculation in the financial sector.

In other words, this bill is not an instrument to strengthen the regulatory framework that protects Canada, as it did in the last recession. The entire financial sector was unscathed. What we are really looking at is deregulation of all the intervening new economic factors. They are regulating only the old financial sector. The new one can do as it wishes.

On that last point, there is an important item to note: pooled registered pension plans, this government’s most recent invention. These plans will allow financial institutions to take money. All the Canadian workers who contribute to the plans will know exactly how much they will pay every week—$25 or $50 or $60—but they will never know exactly how much they will get when they retire. This is what is called a defined contribution plan. However, people will not know what their benefit rate will be when they reach the age of 65—or 67—depending on the whim of the people opposite. That will be largely determined by the management fees. That is why it is important to talk about this and to regulate this sector.

[Michelle Rempel, Conservative, Parliamentary Secretary to the Minister of the Environment]

Madam Speaker, my colleague opposite started his speech by quoting a socialist, which I thought was very telling. The policy of the party opposite would see us contract our economic growth. Those members want to raise taxes on job-creating companies and raise taxes for families. They want to kill jobs in our energy sector. Moreover, they refuse to support any budgetary measures which would promote jobs and economic growth.

Why is my colleague opposite an advocate for socialist, growth stifling policy when our government is working hard to strengthen our country's world-class banking system through this bill in a time of economic fragility?

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

Madam Speaker, with all due respect for the member from Calgary Centre-North, she is obviously contradicting herself. She says openly that the last recession was caused by the financial sector, that it was catastrophic in the United States and resulted in major spending to support a financial sector that had not been prudent and honest enough. Now, when we say the global financial sector is an enemy, that it is solely responsible for the last economic recession, we are told we should not talk about it that way. We are not blind; we have memories. What we remember and what we see are the reasons we say that the financial sector has to be regulated and not left to go its own way, as the government seems to prefer.

[Mathieu Ravignat, NDP, Pontiac, QC]

Madam Speaker, I would like to congratulate my esteemed colleague on his very interesting speech. Like him, I condemn the fact that we have forgotten who was really responsible for this situation, that they have not been punished severely enough, and that workers and taxpayers ended up paying the price. What does my esteemed colleague think we can do to minimize that burden?

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

Madam Speaker, the first thing we have to do is make sure that the financial sector answers to Canada, not the other way around. That is critical. Once we have established that, we will be able to tell the financial sector to stop taking advantage of Canadians with usurious credit card interest rates and freezing people's funds for no reason to apply new administrative charges. Most importantly, we have to ensure that the emerging economic sector is as well regulated as the old one so that people who invest in pooled registered pension plans can count on better protection than Canadians had during the latest economic recession.

[Hoang Mai, NDP, Brossard—La Prairie, QC]

Madam Speaker, I would like to congratulate my colleague on his speech and on his work as a member of the Standing Committee on Finance. He was a tax lawyer before becoming an MP, and I know that he has extensive knowledge and experience. This bill does nothing to prevent speculation. It does not deal with that problem. What does my colleague think should be done about that?

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

Madam Speaker, Canada's industrial sector has lost 400,000 jobs. When that sector is in need of investments, there are none to be found. Yet right now in Canada, there is $500 billion tied up in the financial sector that is used only for takeovers, speculation and other purely financial purposes, not investment.

[Hoang Mai, NDP, Brossard—La Prairie, QC]

Madam Speaker, I am pleased to rise to speak to Bill S-5, the Financial System Review Act. However, before I begin, I would like to express my displeasure at the fact that this bill was examined by the other place before being studied here. I think it shows a complete lack of respect for this House, especially since the other place studied it for only three weeks. I will come back to all the procedures involved in that.

On the other hand, we do support this bill, the Financial System Review Act. We know that the financial services industry employs many Canadians. This sector is very important to the NDP. However, it is not necessarily straightforward. It is rather complex; it is not an ordinary sector for the economy. Banks and financial institutions have several ways of influencing politicians—this is more obvious if one looks at the other side of the House—and the economy. This very important sector forms part of the foundation of our country and our economy.

We know that the legislation must be reviewed every five years. The last review was in 2007. We find it deplorable that, when the opportunity arises to review such legislation, the review is done so quickly, without giving members the opportunity to closely examine the bill and without consulting the public.

With regard to procedures, we know that the bill was examined by the unelected members of the Senate for three weeks. Moreover, after hearing Senator Boisvenu's comments, we are of the opinion that the Senate's judgment may sometimes leave something to be desired. Why not examine a bill as important as this one here in the House of Commons? Why not discuss it and find real solutions?

On this side of the House, we would like to abolish the Senate. Thus, we do not necessarily agree that this bill should have been examined there. This is an important bill since financial institutions really have an impact. We also find it deplorable that there were only 30 Internet submissions, 27 of which were anonymous. That was the basis for the study. Only three people dared to say where they were from and what their suggestions were. We do not feel as though the study was very thorough. We would definitely like to examine this bill more closely when it is sent to the Standing Committee on Finance. We must take the time to examine it.

No public consultations were held. We do not know what the procedures were and who was able to discuss them. The government did not really look at what consumers and the public had to say. That is why we think that the members opposite are lacking courage when it comes to this bill. They should have looked at how to protect the public and consumers. The banks are making record profits. And what is the government doing? It is giving them tax breaks. The public has to pay increasingly high bank fees. Banks are increasing customer fees. People have to pay more to withdraw their own money. It is completely unacceptable. We think that the members opposite lack courage because they did not consider all the options and did not look at how to protect consumers. It was—

[The Deputy Speaker, NDP, Denise Savoie]

I regret to interrupt the hon. member, but it is 1:30 p.m. He will have about five minutes when the bill returns on the order paper.

It being 1:30 p.m., the House will now proceed to the consideration of private members' business as listed on today's order paper.

Bill S-5—Time Allocation Motion

[Peter Van Loan, Conservative, Leader of the Government in the House of Commons]

moved:

That in relation to Bill S-5, An Act to amend the law governing financial institutions and to provide for related and consequential matters, not more than one further sitting day shall be allotted to the consideration at second reading stage of the said bill; and

At fifteen minutes before the expiry of the time provided for government business on the day designated for the consideration of the said stage of the said bill, any proceedings before the House shall be interrupted, if required for the purpose of this order, and in turn every question necessary for the disposal of the said stage of the bill shall be put forthwith and successively without further debate or amendment.

[The Speaker, Conservative, Andrew Scheer]

Pursuant to Standing Order 67.1, there will now be a 30 minute question period. I would invite members to keep their questions to one minute and their responses to a similar length of time so that we can accommodate as many members as possible. As we have been doing in the past, preference in the rotation will be given to members of the opposition, although government members will be recognized during the time as well.

The hon. member for Windsor—Tecumseh.

[Joe Comartin, NDP, Windsor—Tecumseh, ON]

Mr. Speaker, here we are again. This is the 16th time allocation motion since the 41st Parliament convened. There have been four in the last two weeks.

I want to mention the preposterous statement that was made last week when the government House leader moved another one of these time allocation motions. He was trying to justify his anti-democratic, abusive conduct in this House. As is so typical of people who abuse their power, he blamed the opposition parties, specifically the official opposition.

I practised family law for a good deal of my professional career as a lawyer. I did a lot of work on domestic abuse cases, both between spouses and partners and with regard to children. The same story was heard. The abuser would always say to the recipient of the abuse, “I am doing this because of what you did”. The abuser would not accept any responsibility.

There is a real victim here. I ask the government House leader if he recognizes the abuse he is perpetrating on the victims, who are the Canadian people, with this attack by the Conservative government on the democratic process.

[Peter Van Loan, Conservative, York—Simcoe, ON]

Mr. Speaker, the past few weeks have given us an opportunity to see exactly what the strategy of the official opposition is. It is one of seeking to simply run up the score by compelling the government to resort to time allocation in order to advance any proposition.

We had to resort to time allocation with respect to the pooled registered pension plan bill. That bill is broadly supported by every province and generally is seen as non-controversial. However, it was impossible to get any agreement from the official opposition on the length of time for debate.

We saw it with the copyright bill. The identical bill in the previous Parliament went to committee after seven hours of debate. After 75 speeches here in the House, the official opposition simply had not shown any willingness to come to any agreement on the number of speakers it would require before sending the bill to committee where the detailed study could actually occur and it could advance. That is an important bill for the economy, the high tech sector and for job creation. Again, it was impossible to get that bill to advance without resorting to time allocation.

We see the same thing with Bill S-5. A highly technical bill comes along every five years. The last two times it has come along all the parties have agreed to send it to committee after one day of debate. We could not get any agreement out of the NDP. Those members would not ever provide us with a single list of the number of speakers they had, the number of days they wanted for debate. The Liberals, in fairness, did. They were in agreement with approaches to move this matter forward. The only way to move this legislation forward is to resort to time allocation again because the NDP simply will not co-operate.

[Joe Comartin, NDP, Windsor—Tecumseh, ON]

There we go again, Madam Speaker. In how many other Parliaments in Canadian history has this happened? Have official opposition parties ever taken the proper role of the official opposition in saying it has the right and the responsibility to debate in the House, to bring an alternate voice to this chamber and to the Canadian people as to what they are hearing from the government? That is a fundamental principle of our democracy.

As I said in my opening comment, the use of time allocation is not a response to the normal process that the official opposition has used since this Parliament started. This process is being used by the government to curtail debate, to eliminate that alternative voice which the official opposition is responsible for bringing.

Again I ask the government House leader, does he realize how much he is undermining the democracy of this country by the repeated use of this process?

[Peter Van Loan, Conservative, York—Simcoe, ON]

Madam Speaker, this really demonstrates the extent to which the New Democratic Party is not interested in advancing or discussing issues. That party is interested in merely debating them.

We have already had debate on this legislation, but members were not talking about the bill. Most of the debate took place on the question of the Canada pension plan, things like old age security. People talked about pooled registered pension plans, which was a separate bill before the House. There was a debate on the national rate of unemployment. There was a lot of talk about the health accords apparently. Somebody even talked about French socialist party leaders. We had a great debate on who should take credit for the soundness of the banking system, whether it should be the current government or the previous Liberal government. There was actually no debate on the bill itself.

After a day of that, we still could not get any agreement from the NDP on how many further days to allocate for debate on a routine bill that comes up every five years. The bill has to be passed by April 20 or it will sunset and then our banking system will have to function without any law in place. It cannot do that. We have the soundest banking system in the world and we have to keep it that way. That is why we have to proceed forward with this legislation.

The NDP would not co-operate, even after we made several offers even in public here in the House. There was nothing forthcoming from the official opposition.

It is clear that the NDP strategy laid bare is to run up the score, compel the use of time allocation on every occasion. It makes all of those words from the opposition House leader ring entirely hollow.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Madam Speaker, I am going to try to stay focused on this particular bill. We have seen time allocation almost 50 times since this new government. I think it is something that everyone here is uncomfortable with. We already know that the government does not like the democratic process and is using its majority.

The bill is non-controversial. It was tabled in the Senate mid or late November. It went through the Senate the second week of December. It was put before the House the last week of January. The government House leader knows it has to get out by April 20. The government knows that the day after the last bill is reviewed we have five years before we have to review this bill. It is non-controversial, but we have to hold hearings and we have to have a debate. I do not understand where the planning is.

The government House leader knew all along that he was just going to ram this through Parliament. I do not understand the attitude that we cannot get bills through without time allocation, whether they are controversial or non-controversial.

My question is, at what point will the government House leader go to the Prime Minister and say he cannot handle the job because he cannot have the bills funnelled through Parliament like they should be? At what point will he say he cannot do this any more?

[Peter Van Loan, Conservative, York—Simcoe, ON]

Madam Speaker, the hon. member's party, the Liberal Party, has been quite practical about its approach to the bill. Liberals were at the Senate where it was dealt with in an appropriate fashion, similar to that in the past. It took 23 days from introduction to final passage. The proposals that we put forward in this chamber took about three times that for consideration of the entire bill, even though the Senate is the chamber that is traditionally most engaged in banking. In fact the Senate has a banking committee. It was able to consider the bill in 23 days. Here in this House, his party has shown a willingness to engage in discussions and to agree to a reasonable approach in dealing with the bill. Liberals know this is the appropriate way to do it. It has been done in the past: one day of debate at second reading, each of the last two times it came up. Let us have the focus happen at committee. Let us get it to committee where they can discuss it.

The review has been going on since September 20, 2010. That is when the Department of Finance launched the review. It began seeking submissions from Canadians, requesting their interest. That was the input that produced the bill. The bills come forward in the exact same sequence, with roughly the same timeframes as in the past. In fact, with the amount of time consumed for debate, on the previous occasions when it came up, there was more than ample opportunity for review.

We are happy to have the constructive support of the Liberal Party, both in substance and in process, as it has expressed in the House. In fact, the NDP critic has even expressed support for the substance of the bill. He has said the NDP will support the bill at second reading and probably even at third reading. So that leaves the question: Why are we forced to resort to this? It is because the NDP House leader has an agenda. It does not matter what his critic says. It does not matter what the caucus says. It does not matter what public policy interests are. He wants to run up the score so he has a stat to quote in the next election. Well, so be it. We will continue to run this House in an orderly, productive, hard-working fashion, in the best interests of Canadians.

[Joe Comartin, NDP, Windsor—Tecumseh, ON]

Madam Speaker, I am just amazed that the House leader of the Conservative party thinks I have that kind of control or sway over my caucus. The reality is I have a number of members of our caucus who want to speak on this bill. Madam Speaker, you have the list in front of you today. They want to address this bill. Part of the reality is, we have a large new caucus here. Maybe the Conservatives could have asked us why we have that large new caucus, rather than spending $16,000 on it. Caucus members want to communicate to their ridings what their positions are on any number of bills, including S-5.

I want to go back to the point that my colleague from the Liberals raised. This really is about the incompetence of the government House leader. The government knew the April 20 deadline was there since Parliament came back. It is there. It is the reality. By moving the bill at a much earlier stage, the government House leader could have accomplished what he needed to accomplish in order to meet that deadline. Therefore, why do we see this bill at the last minute, forcing us to be confronted with a time allocation motion? That is not the way to be the general manager in the House. The fact that we are faced with this is his responsibility, not that of the opposition. Not at all.

[Peter Van Loan, Conservative, York—Simcoe, ON]

Madam Speaker, the bill was introduced in this Parliament on November 23, 2011. That is not at the last minute. I appreciate that the hon. member does not believe in the Senate. However, the Senate is still a constitutionally important part of our parliamentary system. The fact that we introduced it in the Senate first instead of in the House does not mean that we have cut short the time. In fact, it means that we have had ample time. It would still have to go through the Senate to become law.

It is important that we have the bill in place. We are very fortunate in Canada to have what has been voted the world's soundest banking system the past four years by the World Economic Forum. That is a testament to the oversight provided by this government and the institutions that are established by it. The laws and rules we have in place are very strong. This review has revealed that indeed they are strong. We do not need dramatic change, although there are a lot of technical changes that need to occur.

I hope we will not have a debate like we have in the past, where people thought it was about old age security, or what French socialist political leaders say, or the Canada pension plan, or natural rates of unemployment. I hope that all those people who the member said want to speak this time will actually speak about the bill instead of what we heard the last time.

This is an important bill that would ensure that our banking system continues, stays sound and continues to function in the best interests of Canada. The strength of our banking system has been a bulwark of our economic success during a very challenging time globally. Other countries look at our system with envy. We should look at it with pride. This is our opportunity to endorse that.

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Madam Speaker, I have been a house leader. I have gone through majority and minority governments. I have dealt with government House leaders, both Conservative and New Democrat. I can honestly say that I have never yet experienced a government trying to incorporate time allocation as a standard procedure. That is actually what the government is doing.

It does not matter how long a bill has been debated for, it is standard procedure. That is what I see this government House leader moving toward, if he is not already there. Canadians need to be aware that it is not democratic. The government needs to sit down and start working with opposition House leaders in order to negotiate matters.

In the past, numerous government House leaders provided all the bills that they wanted to talk about. They worked with the opposition as to when they would like to see which bills go through. Some are dated, like Bill S-5, which is relatively non-controversial and should be able to pass through relatively quickly. For other bills, such as the Canadian Wheat Board or the pooled pension plan, time allocation should be put off until well after the opposition has been afforded the opportunity to legitimately debate the issue.

I ask the government House leader with all sincerity if he does not see the merit of working with opposition House leaders to have better, more functional House proceedings that would allow for adequate debate on those bills that are important to Canadians.

As I say, we do not have a problem with Bill S-5 going through. Where we have a problem is that this particular government House leader is so focused on making time allocation standard procedure. This is not healthy for the House of Commons.

[Peter Van Loan, Conservative, York—Simcoe, ON]

Madam Speaker, I am a bit challenged on how to answer the question. It is not my practice to discuss what happens in our private House leaders' meetings. However, the member is asking me to do exactly what I did at previous House leaders' meetings, including one at which he was present. Therefore, I am very perplexed.

We do lay out for the other parties the bills that we have and ask them how long they would like to debate them. We seek that kind of agreement. That has been reflected in the motions that we brought forward in the House over the past couple of days seeking unanimous consent. The member's own party has actually been somewhat co-operative in that process, including on this bill. Therefore, I find his question very puzzling. He is asking me to do what we have been doing so that his party could do what he said it would do, which it did in fact do.

Our problem is there is another party whose sole objective is to run up the score and compel time allocation in every case. It is good that its members take that position, that this is a routine bill and a technical bill that should be dealt with quickly. I am glad that the Liberals take that position because in fact it is. However, it is also a critical bill because it is time limited.

The existing act that regulates our banking sector sunsets in April. It is designed to sunset every five years. Some people might think that is extraordinary, but it has actually been praised by world financial authorities as a system that ensures that we are not stuck with old rules, that when we see problems we are compelled to correct them. It has helped to make Canada's banking system the strongest banking system in the world.

However, it means there is an obligation on each and every one of us here in this Parliament to ensure that we do our work, that we do a review, that we send it to committee, and that we do pass legislation before that deadline.

[Joe Comartin, NDP, Windsor—Tecumseh, ON]

Madam Speaker, on the point of the government praising the banking system, the reality is that before the 2008 great recession started, it was about to undertake some major deregulation processes and was stopped only because of what happened at that time.

I want to go back to the point that the government House leader is raising. He is beginning to breach the confidentiality that we are supposed to be abiding by with regard to House leaders' meetings. His characterization of those meetings is not at all accurate. I want to say that and will not say anything further because I do not want to breach confidentiality.

I want to go back to the point about the regular process. This is the 16th time the government has put closure and time allocation on bills. This is an all-time record. No other government in the entire history of this country has used it that often in such a short period of time. Is he saying the NDP is the only official opposition party that has ever demanded its right to speak in the House?

[Peter Van Loan, Conservative, York—Simcoe, ON]

Madam Speaker, my focus today is on this bill. This bill is very important for the protection of consumers. It ensures that they have a banking system that treats them fairly. It is important for our economy, for jobs and growth, so we can continue to have the soundest financial system in the world. Thus, it is important that this bill pass, as everybody knows, by April 20, 2012. Failing that, the existing law will sunset. Some may not like the fact that there is a review built into the legislation that compels a requirement to come back to the House every five years. Some think that is a good thing. However, there is an obligation on us to review it.

There are some important changes happening. We are increasing the threshold for schedule I banks to reflect the fact that times have changed, and to ensure that the system is modern and responsive. It is an important change, one that is supported broadly and will continue to keep our financial sector strong and competitive.

[John McCallum, Liberal, Markham—Unionville, ON]

Madam Speaker, this is a bill about banking and banking is obviously extremely important. I suspect the Conservatives want to avoid prolonged debate on this matter because, should we have that debate, it would make clear that the Conservatives were part of the problem in terms of having a solid banking system rather than a part of the solution. Back in the 1990s, they were in favour of bank mergers and deregulation.

My question to the government House leader is this: He knew for many months and weeks that this was a time-sensitive bill—

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Years, years. Five years.

[John McCallum, Liberal, Markham—Unionville, ON]

Years. Is he putting it forward at the last minute in order to avoid debate on banking, which would put the Conservative Party in a very bad light? Is that his motivation?

[Peter Van Loan, Conservative, York—Simcoe, ON]

Madam Speaker, on the contrary. The bill was introduced in Parliament on November 23, 2011. The Liberal and Conservative senators were able to deal with the bill at all stages, three readings in 23 days. It was introduced in Parliament the second day after our return. We dealt with it since. There is ample time for review in committee. In fact, our objective is to have as much time as possible at committee so that those who are deeply interested in it can actually ask questions about the bill.

I note that, once again, we are more than halfway into this question period and I have yet to receive any questions on the actual substance of the bill or concerns about it. The bill contains important points, for example, that would protect consumers, consumer interest and their ability to cash government cheques of up to $1,500 at any bank. That is important particularly for those who are facing poverty and not traditional users of banks, who do not have bank accounts or large portfolios. For them, that is an important right. Many of them depend on government cheques in order to live. They need the ability to cash them. This would preserve and protect that right in statute. Let us get it into law.

[Kevin Sorenson, Conservative, Crowfoot, AB]

Madam Speaker, we know that this bill has been put forward to help improve the security of our financial systems and to strengthen consumer protection. We also know that any government that has had to govern recognizes that this is more of a housekeeping bill. It is a bill that is needed. It is a bill that talks about modernization and keeps consumer confidence there.

However, it seems to me, if I am not mistaken, that the New Democratic Party, more specifically the official opposition, as the government House leader has already mentioned, comes forward with many different topics. I do not think it is that it wants to stall this bill but maybe it is every other bill that could be worked on in this House that it wants to see stalled.

The official opposition may not want to stall this bill but am I correct in asking the government House leader if it is all our other bills, our bills on justice, agriculture, the environment, all the bills that it would like to see stalled?

[Peter Van Loan, Conservative, York—Simcoe, ON]

Madam Speaker, my conclusion is that the official opposition's motive is simply to run up the score. It is a statistical exercise, compelling the government to use time allocation at every turn.

We need to look at what would happen if we did not resort to this. We would face the difficulties that we have seen in places like Europe where they are unable to come to decisions, and the political gridlock we have seen in the United States. We would see a kind of financial crisis because, if the bill does not pass, there will be no law to govern our financial sector. If we wish s an invitation to chaos, that is it right there.

If the NDP had its way, it would create political paralysis. It would love to see an economic crisis in this country because it thinks that is its key to electoral success.

We happen to think jobs and economic growth are the keys and that part of a strong economy is a strong banking sector. That is why it is important that we continue to have a stable, successful banking sector with certainty of rules that are there to protect the interests of consumers.

[Pat Martin, NDP, Winnipeg Centre, MB]

Madam Speaker, the Conservative House leader would have us believe that should democracy break out in this place the country will descend into chaos and it will collapse around our ears like some failed state.

I do not want anybody here to think, in the little time that I have, that this past practice of the government is in any way normal, nor should it be encouraged nor should it be tolerated by the Canadian people. It is pulling at the very fragile thread of our entire democratic parliamentary system by continuously undermining and sabotaging the most integral aspect of our system, which is the right to free and fulsome debate on the issues of the day so their merits can be tested, the strength of debate and the official opposition. That is what we are debating here today.

We are not talking about the merits of some innocuous bill that originated in the unelected Senate, although that warrants debate in this House. We are talking about the undemocratic practices of the government of sabotaging democracy. It may never get the toothpaste back in the tube if it continues—

[The Deputy Speaker, NDP, Denise Savoie]

Order, please. The hon. government House leader.

[Peter Van Loan, Conservative, York—Simcoe, ON]

Madam Speaker, I thank the hon. member for his stirring words about the need for debate on a bill that he and his party say they support and his desire to prevent them having an opportunity to vote and express that support. We would like them to be able to vote and express that support. We would like to be able to study the bill at committee.

Canadians are very fortunate that they have had the soundest banking system in the world. We have not had a single bank failure or a single bank bailout during what was the most dramatic global economic downturn of my lifetime.

When we look at the world, at the countries throughout Europe and in the United States, there are bank failures everywhere. Who lost? It was not the rich. Ordinary citizens lost their savings in banks that they were counting on. They were affected by housing crises that saw the value of their homes plummet and the value of their savings evaporate.

We do not want to see that happen in Canada. We do not want to allow that kind of chaos to happen here. That is why this banking bill is such a good metaphor for the difference in perspective between our government and the opposition.

[André Bellavance, Bloc, Richmond—Arthabaska, QC]

Madam Speaker, the Leader of the Government in the House of Commons should be ashamed of himself for saying such things in the House. He says that economic chaos will ensue because opposition members want to talk about bills. Honestly.

Time allocation motions are not a new thing. I did some research and found an essay written by Yves Yvon J. Pelletier of the Institute on Governance in 2000 entitled “Time Allocation in the House of Commons: Silencing Parliamentary Democracy or Effective Time Management?” Of course this is the subject of some debate. Nowhere in the essay did the author talk about any other government using time allocation nearly as frequently as the current Conservative government is using it, which is virtually weekly.

I have an interesting quotation from 1956. A Conservative member said: “The...House of Commons has been gagged and fettered in this debate by a despotic government.” That was a Conservative member talking about the Liberal government in 1956. Those dark days have come again. It is a disgrace.

[Peter Van Loan, Conservative, York—Simcoe, ON]

Madam Speaker, I beg to differ. Our effort is to ensure that Parliament is run in an orderly, productive and hard-working fashion with ample debate. However, on the bill in front of us, I did not hear any comment from the hon. member. I know members of that party have a different view of the use of taxpayer money. I know they have a different view of the role of Parliament and they have different objectives than us. They do not have the objective of a strong, sound Canadian economy because they are committed to the break-up of the country, and an economic crisis would aid them in that objective.

We are looking to ensure the strength and soundness of the Canadian economy, which is exactly what this bill would do. The banking system is the cornerstone of our economy. Canada has been fortunate to have, under our government, the world's soundest banking system as expressed and identified by the World Economic Forum for four years running. That is something we must strengthen and ensure that it continues to be in place because that will benefit every Canadian who participates in our economy, who has savings in banks and who is depending on us to do our work here.

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

Madam Speaker, this bill was introduced in the Senate, where the millions of Canadians who voted for the NDP have absolutely no representation. That is the first problem. We are being presented with a solution about which the NDP and everyone who voted for us have had absolutely no say.

Second, this bill is very important not only because of what it contains, but also because of what is missing. It does not have any regulations concerning the whole new financial sector and all the new speculative products. There is no mention of all the new commercial paper. There is nothing on any of that.

Can we not talk about a bill before voting on it?

[Peter Van Loan, Conservative, York—Simcoe, ON]

Madam Speaker, the member has ideas for things that should be in the bill. We would like him to have the opportunity to present those amendments at committee. We look forward to getting the bill to committee so he can do that.

We hope that in the debate that follows today people will actually talk about the substance of the bill, not about the great speeches of French socialist leaders, not about the old age security or the Canada pension plan or other issues that have nothing to do with it, but actually about the bill. It is a routine and simple bill and one that has gone to the House—

[The Deputy Speaker, NDP, Denise Savoie]

Order, please. it is my duty to interrupt the proceedings at this time and put forthwith the question on the motion now before the House.

The question is on the motion. Is it the pleasure of the House to adopt the motion?

[Some hon. members]

Agreed.

No.

[The Deputy Speaker, NDP, Denise Savoie]

All those in favour of the motion will please say yea.

[Some hon. members]

Yea.

[The Deputy Speaker, NDP, Denise Savoie]

All those opposed will please say nay.

[Some hon. members]

Nay.

[The Deputy Speaker, NDP, Denise Savoie]

In my opinion nays have it.

And five or more members having risen:

Call in the members.

(The House divided on the Motion, which was agreed to on the following division:)

Vote #127

Financial System Review Act

[The Speaker, Conservative, Andrew Scheer]

I declare the motion carried.

I wish to inform the House that because of the proceedings on the time allocation motion, government orders will be extended by 30 minutes.

The House resumed from February 3 consideration of the motion that Bill S-5, An Act to amend the law governing financial institutions and to provide for related and consequential matters, be read the second time and referred to a committee.

Second Reading

[The Speaker, Conservative, Andrew Scheer]

The hon. member for Brossard—La Prairie has five minutes to continue his remarks.

[Hoang Mai, NDP, Brossard—La Prairie, QC]

Mr. Speaker, first of all, I am appalled to see that we are debating a bill here today that has to do with important institutions, yet this government is muzzling us once again. This is a very important bill and the government knows this. First of all, it introduced this bill in the Senate, where senators are unelected and where the NDP has no voice. What the government is doing is completely unacceptable. It is appalling. It is repulsive. I am at a loss for words.

[An hon. member]

It is disgusting.

[Hoang Mai, NDP, Brossard—La Prairie, QC]

Yes, it is disgusting. That is an excellent word.

To be more specific, we want to debate this bill because it concerns financial institutions. I would remind the government that we are supposed to examine this issue every five years. The mandate that has been given is very limited. We are examining some technical aspects, which are certainly important, but why not take this opportunity to review the entire financial system?

I would remind the government that in 2008, a crisis originated in the United States, and it came from the financial system, the banks. This bill does not address that issue. Why not address it? We are not even having any public hearings on this. Ostensibly as a study, 30 submissions will be tabled and 27 of them are not even public. There really is a problem with transparency—

[The Deputy Speaker, NDP, Denise Savoie]

I am sorry to interrupt the hon. member.

I would like to ask members to take their conversations to the lobby while members are speaking. Thank you.

The hon. member for Brossard—La Prairie.

[Hoang Mai, NDP, Brossard—La Prairie, QC]

Madam Speaker, I was saying that this was an opportunity for us to study the financial system and address our current problems, including problems facing consumers. In terms of the financial institutions, we see that the banks are making billions of dollars in profit, while consumer and household debt is at a record high. What is more, banks have a hold on consumers and impose as many fees on consumers as they want. We would have had the opportunity to explore ways to truly protect consumers. In that sense, this government has dropped the ball.

There is also speculation. We saw what happened in the United States. Why not study this issue more at length? Why muzzle the House? Now is the time to study this bill. Obviously it is going to be referred to the Standing Committee on Finance, but now is the time for us to talk about it and debate it for consumers and the people we represent, those whose voices were not heard in the Senate. The government is scared and does not want to talk. It does not even want its own members of Parliament to talk about something so very important. Our economy depends heavily on the banks and financial institutions. Why not talk about cooperatives? That movement exists. Why is it not addressed in this bill?

We are saying that the government lacks confidence and courage, and now, it is demonstrating a lack of democracy. This government is preventing its members and the opposition from talking about really important issues. Instead of allowing debate, the government is relying on 30 submissions that were received and examined in three weeks. They may have been debated in the Senate, but not here in the House. Why will the government not give us the opportunity to discuss such an important bill?

We know that consumer bank fees are ever increasing, and people are now in need of our support. This bill could be used to offer such support. I am certain that the Conservatives' constituents are also experiencing the same problem with bank fees. Why not have a real debate on this issue here in the House and find real solutions? Instead, the Conservatives are limiting the debate, pushing the bill through and refusing to talk about it.

This behaviour demonstrates a lack of respect for this institution. I am a new member but I find what the Conservatives are doing to be completely unacceptable. They are attacking democracy. They are saying that an agreement was reached with regard to the bill, but we did not agree on the way the bill was examined or on the public consultation, and we did not agree on the mandate to study what to do about financial institutions.

This was the time to do it. The government lacked courage, and I am ashamed of its behaviour.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Madam Speaker, I thank my hon. colleague for his speech on these issues.

He mentioned that the Conservatives are invoking closure on this bill. Yes, they are shutting down debate. It is true that the Conservatives have absolutely nothing to offer and always say the same thing.

We, on the other hand, have done an analysis, as the member did in his first speech and again here today. We discussed the issue and examined all the legislation, including increasing the equity threshold that indicates the degree of control over financial institutions up to $12 billion, which is not desirable in the current context.

So, I have a few questions for my hon. colleague from Brossard—La Prairie. First of all, what does he think of the Conservatives imposing this closure once again, even though they have nothing to bring to the debate? The NDP, on the other hand, has a great deal to offer. Also, what does he think of increasing financial institutions' equity threshold to $12 billion? What does he think of that? Does he think—

[The Deputy Speaker, NDP, Denise Savoie]

Order. The hon. member for Brossard—La Prairie.

[Hoang Mai, NDP, Brossard—La Prairie, QC]

Madam Speaker, I would like to thank my colleague for the question. With respect to the first part of his question, I admit that the government's latest gag order leaves me speechless. Closure has become systematic and that proves that the government is making things up as it goes along. The government says that the bill has to be adopted quickly, so why did they not introduce it sooner? Why did they wait so long? Why use closure to move the bill forward rather than take the time to discuss it? This is about financial institutions and a system that is very important, not only for consumers, but also for the country's economic system. During the global crisis in the United States, we saw that the financial system can affect the whole world. Canada weathered the crisis fairly well because we have a good system, but we still have to study it.

With respect to my colleague's second question, the threshold was raised from $5 billion to $8 billion after the events of 2007. The matter should be studied. There is a problem. The holdings have increased, and a certain level of participation is being granted—

[The Deputy Speaker, NDP, Denise Savoie]

The hon. member for Marc-Aurèle-Fortin.

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

Madam Speaker, Bill S-5 contains new elements that nobody is talking about. The government talks about stabilizing the financial system. Bill S-5 fails to address a number of new products such as commercial paper, derivatives, aggressive tax planning and offshore accounts—an invitation to tax evasion. What does that mean for stability? What about the holds on cheques and the credit card interest rates that consumers are concerned about? My question is for my distinguished colleague, the member for Brossard—La Prairie. Should these issues not be thoroughly debated?

[Hoang Mai, NDP, Brossard—La Prairie, QC]

Madam Speaker, I want to thank the hon. member for the question. My colleague, who is also a member of the Standing Committee on Finance, knows full well that these issues are very important. The government is losing billions of dollars in revenue. Speculation is allowed in certain transactions and that is a problem. We have to study the situation more at length. It has a profound impact on our economy, and on the money that taxpayers are losing. What is more, it destabilizes our system. There are certain ways to do things and to work. We must study the bill, but unfortunately the government is closing the door yet again.

[James Rajotte, Conservative, Edmonton—Leduc, AB]

Madam Speaker, I want to ask my colleague a question. He is the vice-chair of the finance committee and works very hard in that role.

He said there were groups or organizations that were excluded from the discussion on this bill in the Senate. Could he identify those individuals and organizations that were excluded and that he would want to be part of the discussion at the House of Commons finance committee?

[Hoang Mai, NDP, Brossard—La Prairie, QC]

Madam Speaker, I want to thank my colleague, who does excellent work as the chair of the Standing Committee on Finance. He is one of the rare Conservatives to do good work.

The official opposition is not in the Senate. That is why we are criticizing the fact that the bill is coming from the Senate instead of from the House of Commons. The Conservatives say there were debates and discussions in the Senate. Were we there? No. Were there public discussions on this issue? No. Submissions were sent, but there was no general consultation. The Senate's mandate was very limited. There were consultations on the technical aspects, but there has been no debate in the House on the big ideas. This is where we should discuss the direction we want to take with a bill.

[Ben Lobb, Conservative, Huron—Bruce, ON]

Madam Speaker, I will be sharing my time with the parliamentary secretary, the hon. member for Kamloops—Thompson—Cariboo. I am pleased to have the opportunity to speak in support of Bill S-5, the financial system review act.

I note from the outset that while this is mandatory and routine legislation, it is vital to the continued strength and security of the financial system that Canadians depend on daily.

By way of background, the government reviews all legislation governing federally-regulated financial institutions every five years to ensure the stability of the Canadian financial services sector. Indeed, the last review was completed in 2007.

I should also mention that it is imperative that today's act be renewed by April 20, the legislated sunset date to allow the continued functioning of Canada's financial institutions.

The current five year review began with an open and public consultation, a process that began in September 2010, when the Minister of Finance invited the views of all Canadians on how to improve our financial system. During that consultation, a diverse group of Canadians engaged in the process and provided their thoughts to help further strengthen Canada's financial system.

Much of that feedback is reflected within today's bill. Indeed the financial system review act takes into account the feedback from consumer groups, industry groups and other Canadians to make targeted, many large and technical alterations to strengthen Canada's regulatory framework. Furthermore, I would also note that the bill has already been reviewed by the Senate and, in particular, the Senate Banking Trade and Commerce Committee.

The committee engaged in a detailed and timely review of the act, hearing from groups ranging from the Credit Union Central of Canada, the Canadian Life and Health Insurance Association, the Financial Consumer Agency of Canada, the Office of the Superintendent of Financial Institutions Canada, the Canadian Bankers Association and the Canadian Payments Association. We thank all the witnesses who appeared before the committee and shared their thoughts on the financial systems review act.

The witnesses, while keeping in mind its technical nature, were very supportive of the act overall. For instance, the Canadian Life and Health Insurance Association said, “Bill S-5 represents a welcome fine tuning of the various financial institution statutes”.

I will briefly outline some of the measures taken in the act at this time. Again, while the majority are largely technical, they are necessary to ensure continued stability and security of Canada's financial system. That is why the act will make changes to the following: update legislation to promote financial stability and ensure that Canada's financial institutions continue to operate in a competitive, efficient and stable environment; and fine tune the consumer protection framework, including enhancing the powers of the Financial Consumer Agency of Canada, to protect Canadian consumers and improve efficiency by reducing the red tape and regulatory burden on financial institutions.

Other measures contained in the act include reducing the administrative red tape burden for federally-regulated insurance companies and offering adjustable policies in foreign jurisdictions by removing duplicative disclosure requirements. We certainly know, with the growth in the insurance industry, especially our Canadian insurance companies, that around the globe these are vitally important. I would also clarify that Canadians, including bank customers, would be able to cash government cheques under $1,500 free of charge at any bank in Canada, which is another key point, It would improve the ability of regulators to share information efficiently with international counterparts, while respecting the privacy of clients. It would also promote competition and innovation by enabling co-operative credit associations to provide technological services to broader markets.

The importance of the legislation and the need to keep Canada's financial system safe and secure has been made very clear with the recent global economic crisis and the demise of some of the world's most well-known banks.

Canadians recognize how fortunate we have been in recent years, due in large part to our sound financial system. Without a doubt, Canada's system has been a model for countries around the world. We did not have to nationalize, bail out or buy equity stakes in banks like the U.S., the U.K. and around the rest of the EU. In fact, for the fourth consecutive year, Canada is ranked number one for having the soundest banks in the world by the World Economic Forum.

The prominent business magazine, Forbes, recently stated, “With no bailouts, [Canada's financial system] is the soundest system in the world, marked by a steady and responsible continuation of lending and profits”.

As recently reported by the Toronto Star, a new report from the United States Congressional Research Service underlined how well Canada's system was regarded. It said:

—Canada’s supervisory system and regulatory structure have proven less susceptible to the bank failures that have loomed in the United States and Europe and may offer insight for U.S. policymakers.

Our safe and secure financial system is envied around the world. As the Consumer's Council of Canada has declared, “we have been identified internationally as having the best banking regulations in the world”. Canadians are no doubt aware of the troubled financial systems that have recently crippled other countries, leaving significant instability in the financial sector, housing market and economic marketplace. Many of the financial sector solutions now being promoted and adopted around the globe are modelled on the Canadian system that serves us so well.

Through today's bill, Canada's financial system would continue to be a fundamental source of strength for our economy and would remain secure for Canadians who rely on it daily. Today's legislation is also significant because it would support one of the most important drivers of our economy and jobs, the financial services sector.

Our financial sector plays a vital role in financial stability, safeguarding savings and fuelling the growth that is essential to the success of our Canadian economy, representing about 7% of Canada's GDP. Even more, this sector employs over 750,000 Canadians in good, well-paying jobs. Our financial sector provides stability to the housing market and other markets requiring significant borrowing. In that respect, the financial services sector also plays a significant part in the daily lives of Canadians.

The measures in the financial systems review act would provide for a framework that would benefit all participants in the financial services sector, financial institutions, as well as Canadians. The long-standing practice of assuring regular reviews of the regulatory framework for financial institutions is a distinctive practice that sets Canada apart from almost any other country in the world, a positive practice that is vital to the stability of this sector.

All Canadians should recognize the importance of regularly considering how we can better ensure the safety and soundness of our financial system. Today's legislation does just that. I encourage all members to support this important legislation and see that it progresses to the finance committee in a timely manner.

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

Madam Speaker, in his speech, the hon. member spoke a lot about how Canada's financial system is setting an example for the entire world and how it is completely effective. That is wonderful, but it is not because of the Conservatives. They have always supported deregulation. And that is what they are doing now: they are deciding not to regulate certain elements.

With regard to derivatives, a Montreal exchange handles only derivatives. How does the hon. member define derivatives? Does he even know what a derivative is? What does he think about aggressive tax planning that opens the door to tax evasion? How is it that we cannot regulate all this, and that Bill S-5 does not address these issues?

[Ben Lobb, Conservative, Huron—Bruce, ON]

Madam Speaker, I am not surprised to hear about the NDP's desire to over-regulate Canadians. I live in the province of Ontario and for five years in the early 1990s, we saw a vast increase in regulation.

However, I would like to talk about the bill. One of the pieces of that is to look at the five year review, which is very important. No one needs to take credit for having a review every five years. It is a practical piece inside the bill. It is similar to what I looked at in the new veterans charter. It is a living document and it has to reflect the changes of the day and the business climate of the day. Having the five year review inside the bill is positive, and it was supported by the Senate committee.

[John McCallum, Liberal, Markham—Unionville, ON]

Madam Speaker, as someone who used to work for the Royal Bank, I can agree that the Canadian banks do very well and are the envy of the world, as I think the member said.

The point I would make is that this favourable position of our banks is not because of the Conservative Party. It is in spite of actions by the Conservative Party. For example, in the nineties the Liberal government prevented banks from going down the path of deregulation. The Conservatives wanted to take that path. The Liberal government said no to bank mergers. The Conservatives wanted the banks to merge. Under the Liberals, people could have a mortgage for 25 years with 5% down. In 2006 the Conservatives made that 40 years and 0% down.

Does the member agree that the favourable situation of Canadian banks is in spite of positions taken by the members of his party rather than because of them?

[Ben Lobb, Conservative, Huron—Bruce, ON]

Madam Speaker, the hon. member might note that in my speech I never talked about who should take credit. Our government is not looking to take credit for anything. We are looking to ensure that all businesses succeed and that they take credit for the work they do.

With respect to his point about reliving the past, I liken the Liberal Party to retired hockey players who are has-beens, rehashing all of the things they did—

[The Deputy Speaker, NDP, Denise Savoie]

Order, please. I regret to interrupt the hon. member. I would ask for a little order from members while the member for Huron—Bruce is answer questions.

The hon. member for Huron—Bruce.

[Ben Lobb, Conservative, Huron—Bruce, ON]

Madam Speaker, getting back to my point about the parallel I was drawing between has-been hockey players and the members of the has-been party down there who are reliving the past. They are talking about things that were done in the early and mid-nineties. I mean we are 15, 16, 17 years on now. It is time to move forward.

We are looking forward to the success of all companies in Canada.

[Joyce Bateman, Conservative, Winnipeg South Centre, MB]

Madam Speaker, I appreciate my colleague for Huron—Bruce's comments. There were two notions in particular. I understand this is legislation, but the red tape reduction is of particular interest to me as it impacts the insurance industry. In fact, the president of the independent insurance brokers lives just down the street from me. I would love to be able to report how this legislation would assist him and so many other small business people in Winnipeg South Centre.

[Ben Lobb, Conservative, Huron—Bruce, ON]

Madam Speaker, just briefly on red tape, one piece the member might look at in the bill is the Canadian acquisition of foreign entities and the ministerial review process that will take place with purchases over 10% of their assets value. That is important. We need to ensure, when there is an acquisition of a foreign bank or a position taken within a foreign entity, that there is a quick and timely review by the minister and the department. That would be part of cutting the red tape so a Canadian bank or institution does not have to wait for a prolonged period of time for approval.

[Cathy McLeod, Conservative, Parliamentary Secretary to the Minister of National Revenue]

Madam Speaker, it is a privilege to rise today in support of Bill S-5, the financial system review act.

While Bill S-5 is albeit largely a technical bill, it represents an important piece of legislation as it will help guarantee the ongoing security and strength of Canada's financial system, a vital sector of our economy. Today's bill would accomplish this by making a series of alterations to the various pieces of legislation governing Canada's financial system, including the Canadian Payments Act, which I will speak to in greater detail a little later.

Before doing that, I want to underline that today's legislation is mandatory and routine. This is as result of a long-established practice in Canada of engaging in mandatory five year reviews of our financial sector legislation. I will note that this latest five year review process began formally in September 2010 when our Conservative government launched a public consultation process open to all Canadians. Such mandatory five year reviews have helped to ensure that Canada has a well-regulated financial system. Indeed, it is the safest and most secure in the world.

As most members know, for four straight years Canada has been ranked by the World Economic Forum as having the soundest banks in the world. What is more, our well-regulated financial system is widely admired throughout the world.

In the words of a recent Ottawa Citizen editorial:

Our banking and financial system is the envy of the world. While the great money edifices of countries such as the U.S., Britain and Switzerland cracked at the beginning of the recession, Canadian banks stood firm.

As I mentioned earlier in my remarks, I would like to speak to elements of the financial system review act that address Canada's payment system, something Canadians interact with each and every day. Indeed, every year Canadians make 24 billion payments, worth more than $44 trillion. These payments allow us to run our businesses, sustain our household and allow governments to fund essential programs.

Canadians use various payment instruments to purchase goods and services, to make financial investments and to transfer funds from one person to another. These instruments include cash, cheques and debit and credit cards. Except for cash, payment instruments have traditionally involved the claim on a financial institution, such as a bank, credit union or caisses populaire.

Financial institutions, therefore, needed arrangements to transfer funds among themselves, either on their own or on behalf of that or their customers. A payment system is a set of instruments, procedures and rules used to transfer these funds. In Canada, our national system for the clearing and settlement of payments is run by the Canadian Payments Association, or the CPA, a not for profit organization of federally regulated financial institutions.

Clearly, no economy can properly function without a reliable and secure system of payments. However, the payments landscape is changing. For example, experiences in Canada and abroad since the 1990s demonstrate that clearing and settlement systems do not always include banks as direct participants. That is why Bill S-5 proposes to amend the Payment Clearing and Settlement Act to remove the requirement that there must be at least one bank involved. The new definition would allow more flexibility in establishing systems to clear such complex financial instruments as over-the-counter derivatives, or OTCs. This change would allow the Bank of Canada to oversee such systems that could pose systemic risk to the financial system.

Canada's leadership in reforming the global financial system through mechanisms, such as the G20, is well-known and a source of great pride for Canadians. One important Canadian commitment to our G20 partners is that all OTCs be cleared through central counterparties by 2012. This is an important step to ensure the resilience and stability of our financial system.

To meet our G20 commitments, it is imperative that Canadian prudential and market conduct regulators have the authority, tools and information necessary to monitor and regulate the Canadian OTC derivatives market on an ongoing basis. This means coordinating activities across current federal and provincial jurisdictions, as well as foreign regulators.

Bill S-5 proposes a change to the Payment Clearing and Settlement Act to make it clearer that the Bank of Canada can dispose information to other regulators, the payments clearing and settlement systems. This information sharing would help all parties understand the risks inherent in these link systems. Furthermore, failing to form such links could delay our ability to link to foreign systems and impinge on our ability to meet our G20 commitments.

This is the kind of evolutionary change that demonstrates the importance of regular reviews of our legislative framework to maintain Canada's leadership in financial services.

Bill S-5 would make another important and much needed change to the payments landscape. As hon. members know, Canada's credit unions are an important provider of financial services. More than five million Canadians and business owners are grassroots shareholders of co-operative financial services in Canada. One in three Canadians is a member of a credit union or caisse populaire.

In recent years, our Conservative government has shown its support for credit unions by supporting a federal credit union charter to accommodate growth and expansion of the Canadian credit union system. This would enable those credit unions that so choose to reach beyond provincial boundaries and pursue business strategies that are not constrained by provincial incorporation. It would also give credit unions a means to diversify their source of funding and spread their geographic risk exposure.

In that vein, in order to give federal credit unions a more effective voice in the Canadian Payments Association, today's bill would amend the Canadian Payments Act so that credit unions would fall within the co-operative class in the act rather than the bank class. At the same time, credit unions would still employ the long-standing, well-understood and robust governance, liquidity and clearing and settlement framework in use today. While it may sound like a simple technical change, it is an important one. This change would continue to promote a level playing field within the financial sector which would foster competition among players and ensure a stronger, more stable system overall.

The Credit Union Central of Canada, the national association for credit unions in Canada, said:

...we want to note our support for the proposed amendments....

Placing the federal credit union in the cooperatives class will preserve and strengthen the credit union system representation at the CPA. It will ensure that a federal credit union will be represented by a director, who speaks for the interests of cooperative financial institutions in CPA matters. A strong advocate at the CPA is important for the credit union system's ability to advocate on behalf of credit unions and to continue to operate payments facility efficiently and cost effectively, which has a direct impact on overall credit union system competitiveness.

I think all members would agree that a strengthened credit union is good for all Canadians.

For those reasons, I urge members to support the passage of this largely technical but important act which would ensure the smooth functioning of Canada's payment systems.

The House resumed consideration of the motion that Bill S-5, An Act to amend the law governing financial institutions and to provide for related and consequential matters, be read the second time and referred to a committee.

Financial System Review Act

[Anne Minh-Thu Quach, NDP, Beauharnois—Salaberry, QC]

Mr. Speaker, I would just like to say that a gag order has been imposed once again, and that this bill originated in the Senate. The members of the House have not debated this bill. This once again demonstrates the Conservatives' lack of democracy and transparency. The changes that this bill proposes have not been tested by users or by the ombudsman's office.

Is there not a need to add regulations regarding the fees consumers must pay to use automatic teller machines, for example? These fees are excessive and are not in the interest of the public, consumers, the average Canadian or families.

[Cathy McLeod, Conservative, Kamloops—Thompson—Cariboo, BC]

Mr. Speaker, I would again point out that this legislation is mandatory and routine and it needs to be passed in this House by April 20. It really speaks to the unwillingness of the opposition to co-operate with the government in terms of even the most routine piece of legislation where we should be able to move it into committee in a relatively rapid fashion.

This is important legislation that is mandatory and routine, and the NDP continues to stall even the most routine of legislation from moving through this House in a timely way.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Mr. Speaker, I need to follow up on the parliamentary secretary's comments. It is absolutely absurd. In this House in the last few weeks we have seen closure moved, in some cases, after 14 minutes of debate. Fourteen minutes of debate and the Conservatives say that it is not in their talking notes, that they got it from the Prime Minister's Office. They cannot stand having too much information, so they close the whole thing down. That is what they do systematically.

We have been raising important points and we have been asking questions in the House but we have not received any responses from the PMO's talking points.

The parliamentary secretary should know better about the use of closure. Why is the government moving the complete and exclusive control that can happen to Canadian financial institutions with $12 billion of assets or less? It is a simple question but we have not been given an answer.

[Cathy McLeod, Conservative, Kamloops—Thompson—Cariboo, BC]

Mr. Speaker, we want to talk about the large bank ownerships and the thresholds. In 2001, we had a largely wide held bank requirement. In 2007, it was raised from $5 billion to $8 billion to reflect the growth in banks. Since then, the sector has continued to grow. Accordingly, the large bank threshold would be increased from $8 billion to $12 billion to reflect the growth in the sector.

Again, this is mandatory and routine legislation that needs to move forward. The member across the way is one of my colleagues on the finance committee, and we will have the opportunity to look into some of the details that he is wondering about.

[Jean Rousseau, NDP, Compton—Stanstead, QC]

Mr. Speaker, I would like to know why the Senate, an unelected chamber, was given the responsibility of examining and developing an extremely complex bill when 60% of Canadians voted against this government. We deserve answers and we deserve to be able to debate this extremely complex subject. This morning, we heard the Leader of the Government in the House of Commons refer to the chaos that would ensue if we do not examine this bill. It does not make any sense.

Why was this bill introduced in the Senate rather than in the House?

[Cathy McLeod, Conservative, Kamloops—Thompson—Cariboo, BC]

Mr. Speaker, although the member is new to this House, I think he does recognize that legislation goes through the House into the Senate or from the Senate into the House. It is part of our Constitution, it is part of how we move legislation forward and it is how we make progress in terms of ensuring both Houses are kept focused on important legislation.

At this point, although new, I think the member should recognize how our Constitution works and how we move legislation through Parliament.

[Glenn Thibeault, NDP, Sudbury, ON]

Mr. Speaker, I will be splitting my time with the fine gentleman and MP for Burnaby—New Westminster, who does a fantastic job on this file and many others.

I rise today to speak to Bill S-5, which looks to update the legislation relating to banking and financial institutions in Canada. Anyone who follows my interventions in the House will know that these issues are very close to my heart as the NDP consumer protection critic. I think it is very important for parliamentarians to have an opportunity to review legislation that relates to the banking sector.

Banks are vital to the Canadian economy. Canadian banks directly employ a quarter of a million people across the country and pay almost $1 billion in payroll taxes each year. They also spend around $15 billion on services and goods within the economy, thereby indirectly supporting even more jobs. Moreover, banks and other financial institutions provide a vital service to the economy as a whole. They provide lending services for individuals to buy homes and for businesses to invest and expand.

It is important to ensure that Canada has a world-leading system of banking regulation to allow our banks to stay strong and support the economy as we continue through a time of global financial uncertainty. Therefore, I will be supporting the bill at second reading to ensure that this important legislation gets the attention it deserves at committee.

Unfortunately, as has so often been the case since last year's election, the government is more interested in ramming through legislation than in the process of debate, which is the hallmark of Canadian democracy.

First, we again find ourselves limited in the amount of debate we can have on an issue before the House. By my understanding, the government has now shut down debate 16 times in just 80 sitting days and 4 times in the last 12 days. The bill would amend 13 pieces of existing legislation, including the Bank Act, all of which relate to the direct functioning of our economy, and yet the government is trying to push this review through without the dedicated analysis that these changes warrant.

Debate in this chamber is not just for show and it is not just some inconvenience for the government. It is fundamental to the proper functioning of our democracy. It allows various points of view representing the geographic, cultural, linguistic and social diversity of our great country. Being part of this legislative process is too important for us to continually have time allocation imposed.

Second, the bill was introduced in the Senate rather than here in the House of Commons before democratically elected representatives. Then, just as the case here, the bill was pushed through the Senate's legislative process without proper review. In fact, the whole process took just three weeks.

This is the second major economic issue the government has pushed to the Senate in order to marginalize the ability of democratically elected parliamentarians to take part in important debates. The other was the study of price differentials between the U.S. and Canada.

It also worries me that the government failed to widely consult on these changes before introducing this review. Given the important role of the banking sector in our economy, I find it disturbing that there were no coordinated national public consultations with consumer groups and small businesses to try to understand how the banking system could be improved from their perspective. In fact, the government's little publicized online review solicited only 30 submissions and 27 of those respondents opted to remain anonymous. While there may well be some important details to be drawn from these submissions, I find it highly doubtful that we can hope to understand the full range of opinions and debate on how to update our banking legislation from such a small sample size.

I will talk in detail about some of the issues addressed in this legislation, specifically those relating to my own area of focus, consumer protection.

As our consumer protection framework currently works, various government departments are responsible for consumer protection for specific issues. This makes it very difficult for consumers to know where to go when they are confronted with a consumer problem. Depending on the type of issue to be resolved, a consumer may be required to work with Industry Canada, Health Canada, or Transport Canada, or even with the Financial Consumer Agency of Canada, FCAC, if the issues relate directly to banks and financial institutions.

Ending this confusing framework would have gone a long way to ensuring that Canadians have more confidence in their day-to-day dealings with financial institutions. However, the government refuses to move in this direction, and so what is it offering consumers? First, this bill would extend the definition of consumer provisions in regard to financial institutions to include agents and affiliates of banks that offer financial products. This would extend the scope of entities that come under FCAC's consumer protection provisions, which I support. It would also increase the ability of the government to introduce regulations and deferred legislation, giving the government the opportunity to introduce further consumer protection measures in the financial sphere. Furthermore, the bill would increase the maximum fine that FCAC can levy on financial institutions from $200,000 to $500,000.

All of these changes should be welcomed, but with some caveats. The increased ability to introduce consumer regulation is only noteworthy if the government utilizes that ability; otherwise, it is simply a nice talking point. The same can be said for increasing the maximum fine the FCAC can levy. When this bill was first introduced in the Senate, various stakeholder pointed out that FCAC very rarely levied its current lower maximum penalty. Given this fact, increasing the maximum penalty seems to be somewhat of a toothless change. In effect, these changes, while welcome, seem much more powerful in theory than in practice.

This bill is missing a change that would have incurred no cost for the government and massively increased the clout of both the consumer and small business protection regimes in Canada, namely, mandating that banks must be part of the Ombudsman for Banking Services and Investments complaints resolution process. OBSI offers a fair method for consumers and small businesses to address complaints to banks that cannot be dealt with by a bank's in-house complaint mechanism.

However, under the government's watch, both RBC and TD have been allowed to leave the OBSI system and instead use a Bay Street law firm to settle complaints. That law firm has been hired by the banks, and as the banks' customer its first priority is to please its clients, not to offer a proper method of redress for consumers and small businesses. This is simply unacceptable and the government should step in and mandate that banks use an impartial investigative process.

Moreover, there is nothing in this bill to look at the fees and charges levied by banks. I have heard from hundreds, if not thousands, of Canadians regarding ATM fees, credit card interest rates and current account charges. Banks obviously need to make a profit and be viable, but when we compare this bill to, say, the amendments tabled by Illinois senator Dick Durbin in the U.S., we can see there is room for discussion and debate on these issues.

In terms consumer or non-consumer related issues, this bill has some changes requiring some vigorous debate. For example, this bill would require Canadian banks to gain ministerial approval if they wished to purchase foreign entities. It would also increase the value a bank must reach before it is required to have its shares widely held, and it would allow Canadian financial institutions to sell their shares to foreign institutions ultimately owned by foreign governments.

I could go on and on about the importance of this subject and the debate that we need to continue to have, but I know my time is running out. In summary, if the government refuses to listen to these groups and insists on passing this bill in its current form, then at best this bill will have little positive change and, at worst, could end up doing more damage than good.

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

Mr. Speaker, earlier today we had a motion limiting discussion on this particular legislation. We have observed how the Conservatives are controlling their own MPs, and now they are attempting to control other MPs in the House, which is unfortunate.

Does the member think that the review was broad enough? Did it take in enough? If not, there should probably be further commentary coming forward in this place on it, but that is going to be restricted now.

[Glenn Thibeault, NDP, Sudbury, ON]

Mr. Speaker, I thank my colleague for all the great work he has been doing on pensions, a very important subject in my riding of Sudbury and right across the country.

As for the time allocation motion, the limiting of debate on such an important subject is truly worrisome because so many groups out there will be affected, from small businesses to consumer groups to consumers in general. They need to have their voices expressed in the House. That is our job as the opposition. We are here to make sure that the government is held accountable for its legislation and to make sure that businesses and consumers' voices are heard. Their online survey of 30 respondents, 27 of whom were anonymous, is just one aspect on how time allocation on this bill is wrong.

We need to ensure that we have debate. I would like to see the government allow us that.

[François Choquette, NDP, Drummond, QC]

Mr. Speaker, I would like to ask my colleague a question about an issue that worries me. This bill does not address one element that is very important to the creation of a more stable economy: regulation of financial speculation and derivatives. I would like to know what my hon. colleague thinks about the billions of dollars that are regularly gambled on the stock markets. These transactions destabilize the economy and do not benefit the people at all.

Why is the Conservative government preventing us from talking about issues that would make for an interesting debate today?

[Glenn Thibeault, NDP, Sudbury, ON]

Mr. Speaker, that is the thing that makes me scratch my head.

We here in the House have the opportunity and duty to discuss important subjects like the member mentioned, including the costs that would affect Canadians, including businesses; and what this legislation would do, how it would protect them and how it would continue to spur our development. Unfortunately, the door is continually being slammed shut on the voices of Canadians.

Imagine the individuals who need protection, who look to us to express their voices in the House. Unfortunately, not everyone who has the opportunity to speak in the House can speak because of time allocation. Simply put, it is very bad if a member cannot speak on behalf of his or her constituents because of time allocation. We need to ensure that all voices are heard.

[Lynne Yelich, Conservative, Minister of State (Western Economic Diversification)]

Mr. Speaker, I would like to ask the member how the legislation would affect consumers of financial products and services. The government is making a number of changes to financial institutions that would enhance the protection of consumers. Could the member expand on how this legislation would affect consumers of financial products?

[Glenn Thibeault, NDP, Sudbury, ON]

Mr. Speaker, I find it interesting when I hear the government claim that it knows best and then puts time allocation on the bill and does not allow debate on this subject. The Conservatives did not even speak to consumer groups but they will make the necessary changes they think are best without letting the members opposite comment on them or without letting the public speak to them.

I find the question ridiculous in the sense that the government is making changes even without speaking to those groups.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Mr. Speaker, I would like to begin by talking about the farcical process that the Conservatives have set up. After a long wait, they finally introduced this bill a few days ago. After a day and a half of debate, the government says that it does not want to hear anything more from members, it does not want any more discussion, and it is invoking closure. That is out-and-out contempt of Parliament. Given the importance of this bill and all of the other bills, invoking closure time after time indicates a total lack of respect for Parliament.

Members of the Conservative Party will say that this is routine. That is what they have been saying over the last day and a half and the last few hours of debate. They have been saying that it is a routine bill and not to worry about it, that there is no need to examine it, just pass it. Given that Conservative members of Parliament routinely read from speaking notes handed out by the Prime Minister's Office, I simply feel that is not doing the required due diligence to look at legislation, particularly legislation as profound as the legislation before us.

As the member for Sudbury mentioned a few minutes ago, we are talking about legislation that amends 14 different pieces of current law. The legislation is 105 pages in length and has an impact on our banking system. Yet the government says that we are not going to have a debate on this legislation. It is not going to listen to concerns that have been raised about this; it is just going to impose closure for the 16th time, the 5th time in a matter of a few weeks, because it wants to get the legislation through.

The problem is that the government has not done its due diligence. There has not been due process. This is when problems occur. We have seen it before with the Conservative government. We saw it with the prisons agenda. We saw a bloated bill of $19 billion because there was no homework or due diligence done. We see that as well with the pensions and the concerns that so many Canadians have because due diligence has not been done. The government is just throwing out ideas to cut into pensions.

There all these problems that have occurred with government legislation because due diligence was not performed. For the government to say there is nothing to see in the 105 pages, nothing to debate, that it is not concerned about this bill and to just ram it through, particularly in light of the process which the government has adopted on this legislation, is something that the NDP, the official opposition, simply cannot accept.

The bill was introduced in the Senate. The Senate paid lip service to providing due diligence. There was, as the member for Sudbury mentioned, a secretive little website announcement to say there was legislation coming and looked for a few replies from stakeholders and interested parties. In the Senate, there was no due regard for consumer protection, which is fundamental. There was no due regard for the changes and limitations around control of the banking institutions. There was no due diligence at all. It was brought to the House where, finally, light could be shone on these 105 pages and what each clause and paragraph would mean for ordinary Canadian families. The government says no, it simply will ram it through. That is absolutely unacceptable.

I think Canadians can see what is happening very clearly and systematically is the government is not doing its homework. It is not doing its due diligence. It is relying on its parliamentary majority to ram through often what is very problematic legislation. It is Canadian families that pay the cost of that.

What is in the bill? The government has said it will only allow a few more hours of debate. The member for Sudbury had to cut in half his declarations around consumer protection. Every other speaker will have to do the same. There are many members on this side of the House who want to speak to this 105-page bill but who will not get a chance to do so.

There are components in the legislation that we support. As the member for Sudbury mentioned earlier, the FCAC component, broadening the supervisory enforcement powers, is a component that we do support. We also support some of the changes that have been brought in. However, the reality is, the devil is in the details, and the government has not responded on some of the key components that we raised already in the House in the first few hours of debate.

One example is the increase in the maximum fine from $200,000 to $500,000. Increasing that fine only works if the regulatory powers are actually being exercised. We have been raising concerns about the fact that the FCAC has not been using the existing supervisory powers. It has not been using the powers it has already to raise those minimums in terms of fines. To raise that amount means nothing if we are still having regulatory problems with how consumers are being protected.

The other components that the member for Sudbury mentioned are important to note. Other speakers from the NDP have noted those as well. What we are not seeing is the kind of protection Canadians want to see built into the acts that cover our financial institutions.

For example, we look at clauses 446 and 447 and the whole concern about user fees and bank charges, something our former leader, Jack Layton, and the NDP caucus raised repeatedly over the last few years. Consumers are being gouged by financial institutions. There is little or no oversight over the scale and scope of those user fees and transaction fees that are imposed on Canadians. Often Canadians pay hundreds of dollars a year because there is not that oversight. Yet there is no regulatory authority that actually allows in some way for consumers' concerns around transaction fees and user fees to be addressed.

In fact, all that clauses 446 and 447 say is that the banks can increase and add those charges, but they only have to disclose the charges. That is not consumer protection. All that is doing is saying to consumers that they have to accept whatever the banks push on them. The banks just have to disclose that they are doing it. They are gouging consumers, but the banks have to tell consumers they are gouging them. For the Conservatives that is the solution. On this side of the House it surely is not.

Another concern we have raised repeatedly is the threshold provisions around complete control. Clause 883 says:

No person shall, without the approval of the Minister, acquire control, within the meaning of paragraph 3(1)(d), of a bank holding company with equity of less than twelve billion dollars.

That puts in the hands of the minister a blank cheque to approve any control over what are medium-size banks. Twelve billion dollars is a lot of assets. To our minds that raises concerns about how that amount was arrived at and why we have seen over the last few years a more than doubling of the threshold to allow more and more banks to be under that potential cloud of a takeover.

On this side of the House we have steadfastly, since our foundation, the previous CCF and the NDP, said very clearly and repeatedly that we do not believe having total control in one person is in any way helping to support our financial institutions and our banking industry.

We know the importance of the banking industry to the country. The member for Sudbury said it has a quarter of a million employees, and about $15 billion in purchases of goods and services in Canada. We are talking about a very important industry.

However, the government has not responded on the raising of that threshold and why it has done it twice now in the space of a few years and what the consequences are.

We wanted to raise these issues in the House. We believe firmly that this process has been completely the opposite of what is required for the due diligence on a bill that is so extensive in nature and has such an impact over so many pieces of legislation that govern our financial institutions and our banks.

That is what we have raised in the House. What we have been told by the government is that it does not want any debate. It does not want to have due diligence. It does not want to do its homework. It just wants to ram the whole damned thing through.

On this side of the House we say no to that. We believe there should be due diligence on a piece of legislation of this nature.

[Lynne Yelich, Conservative, Minister of State (Western Economic Diversification)]

Mr. Speaker, I wonder if the member would like to expand on how he would suggest the bank threshold be increased.

In 2001 the government established a large, widely held bank requirement, and then in 2007, it was increased from $5 billion to $8 billion to reflect growth in large banks and continues with the sector and its continued growth.

I wonder if the member has a solution as to how he would have the threshold increased.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Mr. Speaker, that is the question we have been raising with the government. It raised it from $5 billion to $12 billion in the space of a few years without due regard for the consequences, without any examination of what exactly all of this entails and what it means for our financial institutions. I would put the ball right back in the government's court. At this point, it has not adequately explained why it is raising it from $8 billion to $12 billion. It says that the banks have grown.

The reality is we all recall that the government wanted to cut our bank regulations a few years ago, in 2008, at a time when everything was rosy and the government did not believe we were going into a recession. We remember that. We were in this House raising these concerns and the government was pushing ahead and speculating about bank deregulation. We thought it was irresponsible at the time and held the government to it. Time has proven the NDP right on that account.

Now we are asking the Conservatives to prove themselves and explain why they are raising the threshold. Let us have a debate on that issue. That is all we are asking for.

[Jean Rousseau, NDP, Compton—Stanstead, QC]

Mr. Speaker, I would like to congratulate my colleague from Burnaby—New Westminster. He knows a great deal about finance, unlike many of us. That is why I would like to ask his opinion.

How should we interpret the fact that the government wants to change extremely complex rules, laws and legal provisions? The government is changing five or six laws governing financial institutions and banks, laws that are 300 to 400 pages long. And the government says that we cannot even debate these changes. I would also like to know why the minister will now have the power to authorize things that were previously within the purview of objective organizations. Now it will be subjective. These things will be subjectively interpreted however the Minister of Finance wants to interpret them.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Mr. Speaker, I thank my hon. colleague for his question, because it is particularly relevant. We have already witnessed this government's decisions many times and in many different areas: we have seen fake lakes and we have seen departments being mismanaged. Now things are changing: the decision-making power that once belonged largely to independent agencies is going directly to the minister's office.

Even in the best-case scenario, is it a good idea to ask the government to decide certain questions that should go to an independent agency? Considering the government's actions in recent months, since the Conservatives won a majority on May 2, it has become clear that we cannot trust this government to make decisions in the interest of Canadians.

In these 105 pages, the minister is given veto powers several times, and that worries us. I am very pleased that the hon. member for Compton—Stanstead asked me this question. This is a very important point that demonstrates why we need more debate in this House.

[James Lunney, Conservative, Nanaimo—Alberni, BC]

Mr. Speaker, I would first like to advise you that I will be sharing my time with the hon. member for Palliser. I am pleased to enter the debate today and speak to Bill S-5, the financial system review act.

Today's act is important to Canadians because it would ensure the continued strength and stability of our financial system. That is a system that we all depend on every day, whether we are making a deposit at our bank, making at a purchase a store with a credit card or using a mortgage to buy a family home. Specifically today's act, while largely technical in nature, would reinforce stability in the financial sector. It would fine-tune the consumer protection framework and adjust the regulatory framework to adapt to new developments.

Bill S-5 would provide for a well-regulated framework that would allow Canadians to rest assured that our country's financial system will remain the safest and most secure in the world. Indeed, as many Canadians may know, for the fourth year in a row, Canada was recently ranked as having the soundest banks in the world, by the World Economic Forum.

Most Canadians are aware of this, and are justifiably proud. They are pleased that Canada did not go through the kinds of crises that many other developed democracies in the western G7 countries did, many of which had to nationalize banks and make huge taxpayer investments. Many consumers in other nations went through financial chaos because of a collapse in the financial system.

We are very fortunate to have the sound regulatory regime we have here in Canada. Before continuing, I would like to provide a bit of background on today's act and how it came before us today in the House.

In Canada our financial sector legislation is subject to a full review on a five year cycle. It covers all federally regulated financial institutions, including domestic and foreign banks, trust and loan companies, insurance companies and cooperative credit associations. This five year review practice sets Canada apart from almost every other nation in the world. It ensures that the laws and regulations by which our financial systems are governed remain at the forefront of the global financial system.

We are especially fortunate in Canada to have a well-regulated financial system, something that has been widely observed in recent years. The world itself has recognized Canada as a leader, as our banking system has been ranked the soundest in the world.

As the American magazine Newsweek wrote recently:

Guess which country, alone in the industrialized world, has not faced a single bank failure, calls for bailouts or government intervention in the financial or mortgage sectors. Yup, it's Canada.

Similarly, the Brookings Institution, a well-known American think tank, recently declared:

....the Canadian banking system has long been regarded by the IMF as a paragon of international best practices. The World Economic Forum recently ranked it the soundest in the world. And it looks better with every passing day....the overall system has remained solvent and solid amid the current global crisis.

I think this is something most Canadians are justifiably proud of, or at least pleased with. Even though we have gone through our challenges in Canada, we have not faced the crises that other nations have.

Even the president of the World Bank has noted that our strength is a model for the world, saying:

Canada's experience offers lessons to others, especially its strong financial and regulatory environment that is helping it manage the shocks of the downturn, particularly in the banking sector.

As the past few years have shown, international praise for our system is well founded. While Canada's financial system was not immune to the impacts of the global financial crisis, Canada's banks stood firm, bolstered by sound risk management and supported by an effective regulatory and supervisory framework.

In fact, Canada was the only country in the G7 that did not step in to bail out its major banks in the aftermath of the 2008 financial crisis. This Canadian resilience matters.

A strong financial sector plays a fundamental role in supporting a strong economy, and not just in times of crisis. As members know, and I think Canadians understand, the focus of our government is jobs and the economy. It is protecting Canada's prosperity and future employment environment that will maintain the tax base that we depend on and provide the services that Canadians look to us for.

Workers, retirees and pensioners count on a strong financial sector for the security and the growth of their deposits and investments and to maintain the standard of living that they worked so hard to build. Financial consumers rely upon it for competitive financial products to keep their mortgages or other household financing affordable. Business, large and small, also depend upon it for access to competitive financing to help them to invest and to grow.

The financial crisis highlighted the importance of evaluating the overall size of financial institutions, the intricacy of global linkages, and the impact those factors have on stability and the best interests of our financial system. The crisis also led to extensive changes in the regulatory framework, ensuring that Canada's financial sector remains the soundest in the world.

The financial system review act will build on these reforms and fine-tune the efficiency and effectiveness of the framework. It will improve the ability of regulators to share information efficiently with their international counterparts. This will help fulfill our G20 commitments at a time when financial institutions increasingly operate on a global scale. It would ensure effective supervision and regulation across borders.

Today's act also proposes to better protect consumers, chiefly by enhancing the supervisory powers of the Financial Consumer Agency of Canada, FCAC. The agency is mandated to ensure that federally regulated financial institutions adhere to the consumer provisions of the legislation governing financial institutions and their public commitments. It is also the government's lead agency on financial education and literacy. It has advanced an array of excellent initiatives in recent years.

I think, in terms of financial literacy, Canadians are starting to pay attention to something they more or less took for granted for many years. I think we have all had a wake-up call as to how important it is that our institutions are on a solid basis and that they are managed in a very secure way.

It has developed innovative tools to help Canadians, such as a mortgage calculator that quickly determines mortgage payments and the potential savings resulting from early payments.

I know that our government is concerned about the consumer debt in Canada, as well as in the U.S. We are advising Canadians to get a handle on debt and live within their means. Sound financial management is as important for our families as it is for our institutions. The innovative tools developed by the Financial Consumer Agency of Canada, such as a mortgage calculator, help Canadians accomplish those objectives.

The FCAC has also created innovative online information to help consumers shop for the most suitable credit card and banking package for their needs. There is a competitive marketplace out there. We hear a lot of talk from our colleagues opposite about the government telling the banks what fees to charge for services. However, there is competition between the institutions. This is a tool developed to help Canadians determine where they would get the services that fit their own needs best.

The financial system review act proposes to improve consumer protection by increasing the maximum fine that could be levied by the FCAC for violations of a consumer provision of the act. It would increase the maximum penalty to $500,000, from $200,000.

Finally, the financial system review act would build on the government's ongoing actions to cut red tape by reducing the administrative burden on financial institutions and adding regulatory flexibility. This would include scrapping duplicative disclosure requirements.

These measures will support a well-functioning financial system, meeting the needs of Canadians and supporting our future economic prosperity.

Today's legislation is extremely important because it concerns one of the key foundations of the global economy. Canadian's financial sector plays a pivotal role in fostering financial stability, safeguarding the savings of Canadians and fuelling the economic growth that is essential to our standard of living.

Mr. Speaker, I appreciate the opportunity to speak to this important piece of legislation. I hope all members will support it.

[Sylvain Chicoine, NDP, Châteauguay—Saint-Constant, QC]

Mr. Speaker, I listened very carefully to the speech given by the hon. member across the floor, and I congratulate him on at least having recognized the importance of providing a good legislative and regulatory framework for banks. It is precisely because our banks are so well regulated that, here in Canada, we fared better than most countries when the global banking crisis occurred.

So, yes, it is important to properly legislate and regulate our banks, but a lot more products have become available in recent years, some of them somewhat toxic, poorly defined and poorly regulated, such as commercial paper.

Is the member not worried about the lack of regulation regarding commercial paper and that kind of products, which have increased in number recently?

[James Lunney, Conservative, Nanaimo—Alberni, BC]

Mr. Speaker, I must have missed something in that member's question. I am not sure how it relates to the banking bill that we are discussing today, Bill S-5. We know that this particular piece of legislation covers a whole range of issues that are important to our financial regulation. It would respond to changes to the financial sector and a rapidly changing global market, it would ensure access to banking, it would level the playing field and promote co-operation, it would enhance the supervisory powers of the Financial Consumer Agency of Canada and it would improve efficiency.

So I am not sure where the member opposite was coming from with that particular question.

[John McCallum, Liberal, Markham—Unionville, ON]

Mr. Speaker, as a former banker, I can certainly agree with the hon. member that our banks are in good shape, although I may take a bit of exception to his somewhat triumphalist tone.

However, my main point is to suggest that to the extent our banks are in good shape it has everything to do with previous Liberal governments and nothing at all to do with the Conservative Party. For one thing, it was the Liberal government that resisted the trend to bank deregulation which was evident in the U.S. and the U.K. It was the Liberal government that said no to bank merges which the Conservatives favoured. And it was the Conservatives who introduced zero down payment, 40 year mortgages in 2006.

Would the member agree that while our banks are in good shape, it really has nothing to do with his party, which has been more a cause of the problem than a solution?

[James Lunney, Conservative, Nanaimo—Alberni, BC]

Mr. Speaker, the member for Markham—Unionville also has a selective memory. We do appreciate things that were done properly in banking regulation. What Canadians have not forgotten is the whole range of things that the government did not do well that got us into a lot of problems.

For example, when we went through a financial crisis under the previous administration, it managed to balance the books and was credited for doing so. However, it did so by cutting transfers to the provinces for health care and education. The Liberals promised to get rid of the GST, an unpopular tax, and somehow they forgot about that. Those are things that Canadians have not forgotten about.

[Pierre Poilievre, Conservative, Parliamentary Secretary to the Minister of Transport]

Mr. Speaker, despite the opposition commentary today, the U.S. financial and mortgage crisis was caused by massive government intervention in the mortgage and banking business. According to a 2010 World Bank report on the U.S. financial crisis, Freddie Mac and Fannie Mae, both government-sponsored enterprises, bought an estimated 47% of the toxic mortgages that ultimately led to the collapse between 1980 and 2007, and backed debt that went from $200 million to $4 trillion. If I could quote that World Bank report, it states:

In the mid-1990s, the government changed the way the Community Reinvestment Act was enforced and effectively compelled banks to initiate risky mortgages.

So it is important for us to remember when we are debating banking regulation that it was massive government intervention that led to the problems that occurred in the U.S. system.

[James Lunney, Conservative, Nanaimo—Alberni, BC]

Mr. Speaker, I thank the parliamentary secretary for that important reminder. Of course, he has been a point man in addressing many of these concerns. He rightly points out the excesses that happened in the United States, of government intervention, that contributed to the failure of institutions that people relied on and made unstable commitments to mortgages that were not sustainable and were not backed by real assets.

The changes that are being introduced in Bill S-5 are ones that would improve our system. They would make a very good system better.

[Ray Boughen, Conservative, Palliser, SK]

Mr. Speaker, I am pleased to have the chance to address the House in support of Bill S-5, the financial system review act. For the information of Canadians and members of the House, the financial system review act is a mandatory and routine piece of legislation.

To ensure the stability of the financial sector in Canada, the statutes that govern federally regulated financial institutions must be reviewed every five years, a long-standing practice that has carried over from previous governments. As I mentioned previously, it deals with federally regulated financial institutions and, for clarity, those include domestic and foreign banks, trust and loan companies, insurance companies and co-operative credit associations.

The last similar legislative review was completed through Bill C-37 in the 39th Parliament. Prior to that, a similar review was completed in 2001 through Bill C-8 in the 37th Parliament. As with the previous five year reviews, there is a timeline for the process to be completed, as the sunset date for the financial institutions statutes is April 20, 2012. The present five year review, which has led to today's bill, commenced in September 2010 when the finance minister launched an open and public consultation process that asked all Canadians to submit their thoughts and ideas on how we could best improve Canada's financial system to make it even more stable and secure.

During the consultation process, I understand that many Canadians provided their feedback and much of that is seen in today's bill. Moreover, the public consultation process itself has been praised. For example, the Canadian Life and Health Insurance Association told the Senate banking, trade and commerce committee during its study of the bill, “The consultation process was very positive and reflected the technical nature of this review”.

The financial system review act, while largely technical, would take important steps to help guarantee that Canada's fiscal system is securely regulated and remains strong and stable for the sake of our economy. Among the bill's highlights are measures to: First, bring up to date financial institutions' legislation to support financial stability and ensure that Canada's financial institutions continue to operate in a competitive, well-regulated and secure environment; second, better protected consumers with an improved protection framework, including reinforcing the powers of the Financial Consumer Agency of Canada; and third, improve effectiveness by reducing unnecessary administrative red tape on financial institutions and adding prudently regulated flexibility.

Again, today's bill is tremendously important in supporting the continued strength of our economy, the main priority of our Conservative government and an area where we are getting results. Indeed, while there are challenges ahead, Canada's performance during the recent global downturn has been strong when compared to other industrialized countries. First and foremost, since our government introduced the economic action plan to respond to the global recession, Canada has recovered more than all of the output and all of the jobs lost during the recession. Some 610,000 more Canadians are working today than when the recession ended, resulting in the strongest rate of employment growth by far among all G7 countries.

Furthermore, about 9 out of 10 positions that have been created since July 2009 have been full time and more than three-quarters of the jobs created over this period have been in the private sector. Fortunately, Canada has fared far better than the U.S. in this regard. Indeed, Canada's unemployment rate has been lower than that of the U.S. since October 2008, a phenomenon not seen in nearly three decades.

On top of Canada's solid performance on jobs, the real gross domestic product is now significantly above pre-recession levels, the best performance among the G7 nations. It is clear that Canada has weathered the economic storm relatively well. It is also clear that this resilient performance in a climate of global uncertainty has not gone unnoticed.

Both the International Monetary Fund and the Organisation for Economic Co-operation and Development forecast that we will be among the strongest economic growth in the G7 over this year and next. Forbes magazine has ranked Canada number one in its annual review of the best countries in which to do business. Three credit agencies, Moody's, Fitch, and Standard & Poor's, have reaffirmed their top ranking for Canada. Most significant, for the fourth year in a row, the World Economic Forum rated Canada's banking system as the soundest in the world. That is something we would reinforce with today's bill.

Clearly, this is a solid performance in volatile times and it will serve this country well. Indeed, in the recent words of Scotia Bank's chief economist, Warren Jestin, “When you look at what exists in Canada, this is still the best country in the world to be in.

To truly understand the strength behind this performance, we need to consider the hard work that took place through the actions that our Conservative government took to pay down debt, lower taxes, reduce red tape, promote free trade and innovation and ensure a stable financial system.

To start with, our government paid down significant amounts of debt when times were good and kept our debt to GDP ratio well below our G7 counterparts. As a result, when trouble hit, we had the ability to respond.

The International Monetary Fund projects that Canada's net debt to GDP ratio for the last year will come in at just under 35%. A net debt to GDP ratio of under 35% is excellent considering that these rates for other G7 nations are much higher. In contrast, Germany is projected to be over 57%, the United States and the United Kingdom at over 72%, France at 81%, Italy at 100% and Japan just over 130%.

Along with this strong fiscal performance, we introduced the tax relief required to create jobs and growth in all economic conditions. In 2007, prior to the impact of the financial crisis, Canada passed a bold low tax plan that helped to brand Canada as a low tax destination for business investment. This low tax plan, along with our sound and safe financial system, plays and will continue to play a crucial role in supporting economic growth and jobs.

Our Conservative government is under no illusions that our work is finished. Major challenges remain both here and around the world. As we know, the global economic outlook remains highly uncertain and the situation in Europe is still very fragile. The changes facing our global economy are far from over and Canada will not be immune.

Despite solid job creation since July 2009, too many Canadians remain unemployed. That is why our Conservative government's main focus will be the continued implementation of the next phase of Canada's economic action plan to support jobs and growth as we prepare for budget 2012. That includes today's bill, which would help to ensure the continued strength and security of our financial systems.

Once more, we will continue to focus on improving the well-being of Canadians by sustaining the economic recovery, eliminating the deficit and making investments that will fuel long-time growth. I strongly urge all members to support and vote in favour of this important legislation and help it progress in a timely manner to passage.

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

Mr. Speaker, with all due respect for my distinguished Conservative colleagues who just spoke, if I were to compare their economic reasoning I would say they are like a herd of cows watching a train go by. They are about as intelligent as that. I would not go so far as to say that they are ready to be put out to pasture, but pretty close.

How can they compare themselves to the most mediocre of the G9, the G7, to countries that have gone completely bankrupt through ultraliberalism? They should not be comparing themselves to the lesser countries, but to the best countries. Let them compare themselves to Norway, Sweden or even Germany, but not to the most mediocre countries that followed exactly the same policy they are following.

I will wrap up quickly. How can they say that their hero, George W. Bush, was anything short of a moron?

[Ray Boughen, Conservative, Palliser, SK]

Mr. Speaker, I am not sure I heard what the hon. member had to say. He was kind of going in two directions from the middle and then ended up sinking.

We are not comparing ourselves to the lowest. We are comparing ourselves to the whole spectrum. We are saying that we are number one on that spectrum, ahead of all other countries. Unless we have data and numbers to validate that, as we had in the speech, then we cannot say that.

We are saying it like it is. You may not like it but it is what it is.

[The Acting Speaker, Conservative, Bruce Stanton]

I would just remind hon. members to direct their comments and questions through the Chair.

Questions and comments, the hon. member for Brossard--La Prairie.

[Hoang Mai, NDP, Brossard—La Prairie, QC]

Mr. Speaker, my colleague spoke about the fact that there was some issue with what happened in the U.S. with the banking sector. Some argue that some Canadian banks were bailed out in Canada. Obviously, it was not done directly. It was not a failure. However, the federal government, through the Canada Mortgage and Housing Corporation, offered to trade the banks up to $125 billion in mortgage debt for safety in T-bills during the height of the financial crisis.

What is my colleague's position regarding that?

[Ray Boughen, Conservative, Palliser, SK]

Mr. Speaker, it was a banking situation and the banks dealt with it in a manner that all people did not like. Nevertheless, that was the financial institutions' prerogative to deal with it as long as they fell within the regulations of the Bank Act, and they did.

Again, we may not like everything we see with banking but the banking program is in place, is regulated and is what we have to rely on.

[Lynne Yelich, Conservative, Minister of State (Western Economic Diversification)]

Mr. Speaker, there were some comments this morning about the consultation process and that there was not a sufficient response. Would the member care to expand on the consultation process that was made available for comments?

[Ray Boughen, Conservative, Palliser, SK]

Mr. Speaker, we know that the finance minister and finance in general consulted with over 30 different groups that submitted positions around the Bank Act when that was done back in 2007. From that input, the new bill is on the table here this morning. As to whether the bill was it well-consulted, it was indeed. Many groups presented their positions on it and we that here with the new bill.

[Jinny Sims, NDP, Newton—North Delta, BC]

Mr. Speaker, there is no doubt that for every Canadian across the country the health of the banking sector is critical. The banking sector plays a critical role in all our lives, whether we are buying a house or applying for a credit card. Also, many of us get paid through our banks. Many people, not just those with a lot of money, have a vested interest in ensuring our banking sector is stable.

Knowing that a five year sunset clause was included in the legislation and knowing that the deadline for that review was April 20 this year, it interesting that my colleagues across the aisle would wait this long to table such critical legislation. Not only did they wait so long, but at the same time they tabled the legislation, they moved time allocation on it. Out of one side of their mouths they are telling us that this is critical and timely legislation and we must get it through the House. Out of the other side of their mouths they are telling us that they will not have open and transparent debate, where the opposition gets to take a look at the bill and could, and probably would, make some useful amendments.

I sat here for half an hour this morning and listened to the debate on the critical nature of the need to move time allocation. Once again, I would argue that time allocation is not needed. The bill requires thoughtful consideration because it would impact many Canadians. It would impact their savings as well as the homes in which they live.

Instead of us being given a reasonable amount of time to debate the legislation, the majority in the House once again used the duct tape approach of muzzling the voice of the opposition. Let me assure my colleagues that they might be able to move time allocation in the House, but we will send a message to our communities that we were not allowed to debate the bill in the thoughtful way we would have liked.

I am a new MP so the House will have to beg my forgiveness for saying this, but I was really taken aback this morning when a speaker on the government side said that the NDP opposing time allocation was like us bringing chaos into people's lives.

I am beginning to wonder what my colleagues across the way want. Do they want the opposition to just support any legislation they bring in? I am sure they would like that, but that is not the role of the opposition. If members of the opposition have things to say, we are immediately labelled, and some language is used that I find disturbing.

I am not a supporter of chaos, either in Parliament, in my personal life or back in my community. When I want to debate a legitimate piece of legislation, it is not because I want chaos. It is because I want to give thoughtful input as the representative of my community.

The government shows a lack of respect toward members of the opposition. I should not be puzzled by that; I should expect that. The legislation had its first unveiling in the Senate. It is a bill that would impact so many Canadians. I find it really disturbing that it was first put before an unelected, unrepresentative Senate. Why? What prevented that bill from being in the House first?

It also interesting to note that despite the patronage appointments and the payola that has gone into many of the appointments to the Senate, even that house commented that it had to look at a significant piece of legislation, with many technical components, and had concerns that with three weeks it did not have enough time and that the government was trying to rush the bill through.

We have until April 12, What is the rush? If the government knew it had until April 12 as the sunset clause, why did we not start talking about this last May, or June, or October, or November or December? Instead, we are today looking at this significant piece of legislation.

Despite all of those things, the NDP welcomes the review of the financial systems review act. We should be very proud of the banking regulations that are in place. It is because of those regulations that Canada was buffered from the worst aspects of the economic meltdown.

I also think there is an irony that has to be pointed out. We have a majority in the House that is absolutely committed to deregulation. When we look at almost everything else, like the gun registry, the Wheat Board and many of the other issues that have come before the House, they have all been for deregulation. Yet when it suits the Conservatives, they wax eloquent about the existing banking regulations. However, those regulations exist because of the work of some other governments. It was the opposition that prevented my colleagues across the way from deregulating our banking system at a certain time in our history.

When I look at the need to review the area of banking and banking regulation, I am also hit by what is missing from the legislation. I am not sure if members have read some of the newspaper articles and emails. There is nothing in the bill to limit and regulate user fees charged by banks.

Recently a senior citizen came to my constituency office. I have many of them coming in these days because they are getting very disturbed. This is what the senior citizen told me. She put her money in the bank, and when the bank wanted to automate and introduce the ATM machine, she started to use that thinking it would save the bank and her money. Remember, bank profits are very high now, yet there is always a threat of new user fees or increased user fees. This senior citizen is so puzzled because she believes she has saved so much money for the bank by it not needing the personnel in place, which I think is a huge mistake, and it being so automated. However, her fees keep going up.

This was an opportunity, with this legislation, for the government to start looking at regulating user fees that banks are gouging their customers. Some banks are even beginning to introduce fees for people to get their own money out of their bank accounts. At one time, it was only if they went to a different ATM. Now one of the banks has put out the idea that there could be user fees even if customers uses their own bank's ATM machines. That makes no sense. Canadians look to us to regulate things like that.

The other concern I have is the interest rates on credit cards. It is time the government put regulations in place that are tighter and more closely regulated to ensure banks do not charge the kinds of rates they are. People who put their money in banks are lucky to get 1% interest. With that money, the banks get to play with it and make money on it. On the other hand, if people use their credit cards, which are banking credit cards, banks charge interest rates from 12% up to 22%. If that is not gouging, I do not know what is. As far as I am concerned, a critical component that is missing in this is tackling the area of user fees for citizens who are being hurt by them. We also have to look at the rates banks charge for people who use those credit cards.

I know some people will say that people should not use credit cards. However, in today's reality some people live from paycheque to paycheque. They often end up having to spend on their credit card, hoping they can pay part of it back if they get some money coming in within the following month. I am talking about just a few people. A lot of people survive like that and not because they go out to buy some big fancy toys or go on big holidays. They are trying to make ends meet from month to month.

I would be the first one to argue that if we are getting into luxury items, then we are looking at choices. I am talking about credit cards people are using because they have no other choice. They need that flexibility to survive. Because of that, I feel the scope of this bill is really limited and needs to be widened.

I was also interested in finding out what kind of consultation occurred. I heard that 30 groups were consulted. For a country the size of Canada, only 30 groups were consulted, and 27 of those were anonymous. What kind of consultation is that? Was this consultation open and transparent?

One thing I do not like about anonymous submissions, or whatever, is people get to say whatever they want and they are never held accountable. I have a primary rule that if I get something that is not signed, I put it aside. The government has had consultations with three groups, three groups for a country the size of Canada on an issue as important as banking.

The other area we do not often talk about is the co-operative banks in our communities and how we need to support them and find ways to do that. The co-operative banks in my area do an amazing job of giving back to the community in many different ways. I am a bit saddened that this is not being addressed in the bill.

Once again, Bill S-5 is being used by the government as a prop to hold up the banks. It is being rushed through the House. From what I have read, the profits of banks has increased incredibly. It has not really gone down. We should take a look at the consumer debt, which is at a record level of 151% of disposable income. I want every one of us in the House to take a second to comprehend that. Consumer debt is at record levels of 151%, which is so high.

It is because this debt level is so high that we are becoming increasingly concerned about some risky mortgage lending practices and home equity credit lines by banks and other lending institutions.

Currently, if I go through websites or look at some of the mail that comes through my door, it is clear that a person can actually get his or her house financed fairly easily for up to 90%. That is an advantage for some, but in the long term it is also the basis for potential instability. Right now our interest rates are fairly reasonable and low, as many would say, but if they were to go up by even half of 1%, that would put many of these people in jeopardy.

To avoid the kind of housing slump that happened in the United States, surely we should be taking the time with this legislation to put protections in place. When we take a look at our regulations, we absolutely must take our time.

Mr. Speaker, how much longer do I have?

[The Acting Speaker, Conservative, Bruce Stanton]

There are three and a half minutes remaining.

[Jinny Sims, NDP, Newton—North Delta, BC]

Mr. Speaker, I am appealing to my colleagues across the way. Not often is there much love in this House, but this is Valentine's Day, so I am pleading with them to let us take the time to fix this legislation in a way that would give Canadians more security and assurances about their financial houses, so they can keep their places straight and so that seniors, for example, who come into my office and are being gouged through credit cards or user fees will not have all of those complaints. Remember the banks involved are the same ones that get incredible tax breaks from us as well.

Mr. Speaker, it is Valentine's Day, so with the indulgence of everyone in the House, I will wish the constituents in my riding a wonderful day with their loved ones, their families, their friends and their neighbours.

I would also like to say that I am thinking a lot about my three wonderful grandchildren, Jacob, Jessica and Emily, and that I wish them a happy Valentine's Day. I wish I were there to eat the cupcakes they have made, because when they phoned me this morning, they told me they had made me a cupcake. It is going in the freezer for when I go home, and I will enjoy it at that time.

As I was saying earlier, there are a number of problems with this piece of legislation, including in the process or way it is being rushed through this House with unseemly haste, and substantively with some problems with it. I believe this is our opportunity as parliamentarians to address issues like the very high interest rates and to have some regulations around those, and to address issues around user fees and issues around foreign takeover of some Canadian assets.

With that in mind, Mr. Speaker, I want to thank you.

[Lynne Yelich, Conservative, Minister of State (Western Economic Diversification)]

Mr. Speaker, I would like the member to clarify that the purpose of the bill derives from the government having to review the statutes governing federally regulated financial institutions every five years and that the bill will ensure that Canada remains a global leader in financial services and will maintain the safety and soundness of the sector.

It is the government's commitment and need to look at the bill, particularly its implications and timing, which is important. I would like the member to recognize that the timing of the legislation is very important. It is not a time to review domestic policy as much as policy that makes us global leaders, so that the financial sector does indeed remain a stable sector globally and so that we do not confuse the debate with day-to-day regulations involving credit cards and financing.

I just want to see if the member really understands the legislation she is talking about today.

[Jinny Sims, NDP, Newton—North Delta, BC]

Mr. Speaker, I absolutely understand that this piece of legislation has a sunset clause of April 12. The government has known for five years that this legislation has a sunset clause, and since May 2, when this newly constituted Parliament was put in place, the government has had the opportunity to introduce this bill and discuss it in a thoughtful manner. However, once again the government has used bullying tactics to shut down debate, to push through a piece of legislation using the argument of the sunset clause to do so. I would argue that it is doing this so that we do not have time for a detailed debate.

[Carol Hughes, NDP, Algoma—Manitoulin—Kapuskasing, ON]

Mr. Speaker, my colleague talked about the fact this bill was actually introduced in the Senate. Here, the question of transparency is something that we on this side of the House and members of the general public are always asking ourselves about. Was this important bill tabled in the House via the Senate because the Conservative government was trying to avoid transparency?

Even more, the Conservatives have tried to tell us that they had heard from plenty of witnesses on this. Instead, the government conducted online consultations and collected about 30 submissions, which it cannot make public because it did not acquire the necessary permissions. Of the 30 submissions, 27 respondents remained anonymous and only 3 identified themselves.

Could my colleague talk about the transparency aspect? How can we accept such testimony without being able to tell the public where we got it from?

[Jinny Sims, NDP, Newton—North Delta, BC]

Mr. Speaker, we hear a lot from the other side of the House about the need for transparency and accountability. When we look at the online consultation, I know that in this age of technology we think that everyone is online, but I would argue that they are not.

There were 30 submissions and we did not get permission to share them, not even with parliamentarians. That causes me concern. Out of those 30 submissions, 27 are anonymous. As far as I am concerned, these should be set aside, because no one should be able to have that kind of an input and be given that kind of weight when they are not willing to put their names to the submissions they are making. How can we hold people accountable for these?

Once again, this is an example of the lack of accountability and transparency by the government, and a real push by it to rush legislation through with the pretext of it having held consultations already. However, when we look underneath the layers, very little consultation has taken place.

[Jean Rousseau, NDP, Compton—Stanstead, QC]

Mr. Speaker, I would like to congratulate my colleague on her speech.

What does she think about the fact that the middle class has been forgotten once again? As she put it so well, a slight increase in the interest rate in Canada could have a disastrous impact on the middle class. The middle class has also been affected by the financial scandals of the past few years and, yet again, we are not talking about including these sorts of crimes or monitoring the banks. What does my colleague think about that?

[Jinny Sims, NDP, Newton—North Delta, BC]

Mr. Speaker, I think if I were not a parliamentarian today and were instead sitting at home in my riding listening to this debate and looking at the significant piece of legislation we are debating, I would be shaking my head and saying, these are the problems I am facing day to day.

We know that the ratio of consumer debt to disposable income is a critical factor in the stability of a nation's well-being, and we can see that is very high now. We can also look at the kinds of practices out there for granting mortgages, which are actually resulting in a play on the housing market, a market that has not slowed down at all. In this regard I would point out that most young people in my community cannot even afford to buy a house because house prices are so high.

When I look at all of these things, I keep thinking, why do my colleagues across the aisle not want to take the time to do a comprehensive and meaningful review but just deal with technicalities instead, and why do we not want to hold the banks more accountable for their actions?

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, we recognize the importance of the legislation and how critically important it is that it pass by April. It is in the industry's best interests for that to occur. Just as the member stated in her comments, we expressed disappointment at the government taking so long to bring the bill forward and now at it bringing in time allocation.

However, I want to pick up on one of the points the member made, that being the other alternatives such as credit unions. I want to take the opportunity to at least acknowledge that in Winnipeg North, the Assiniboine Credit Union has really filled a significant need in the north end, in providing alternative banking opportunities for people. I think this industry has great potential in communities throughout Canada.

Perhaps the member might want to comment on how important our credit unions are to the population as a whole.

[Jinny Sims, NDP, Newton—North Delta, BC]

Mr. Speaker, when I look at the credit unions I have had experience in dealing with, as well as other credit unions in my riding and province, I am so impressed with the incredible amount of work they do in their communities. I call them the heart and soul of my community because of the way they support not only programs for seniors but also for youth by way of scholarships. They also give their members a real say in the operations of the credit union. I have looked at, for example, the Vancity Credit Union and the many others in my riding that do an amazing job.

We absolutely need to support credit unions right across the country.

[Costas Menegakis, Conservative, Richmond Hill, ON]

Mr. Speaker, I will be splitting my time with the hon. member for Yellowhead.

I stand today to speak in favour of Bill S-5, the financial system review act, at second reading. The bill, while largely technical in nature, is nonetheless a very important development as it is fundamental to ensuring the security and strength of the Canadian financial system. This is important not only because we depend on our financial system for day-to-day transactions like purchasing something from a store with a debit card or making a deposit in one's savings account, but because of the tremendous economic impact the financial sector has on the Canadian economy.

Indeed, Canada's financial sector is a key jobs driver providing employment to over 750,000 Canadians. This is especially important in my home province of Ontario and my riding of Richmond Hill where the financial services industry is a crucial part of the provincial economy.

The financial services sector employs nearly 400,000 people in Ontario directly. In addition, as noted by the Ontario minister of finance, the sector “supports an estimated 280,000 ancillary jobs, including in high-paying business service jobs, such as software design”. Its positive impact is especially important in the greater Toronto area where I live.

As stated by the Toronto Financial Services Alliance:

Toronto is the business and financial capital of Canada. It is the hub of Canadian commerce with a financial services infrastructure that has a reputation for safety, soundness and stability.

Toronto is home to the vast majority of Canada's largest financial services companies...and makes one of the largest contributions to the local economy.

In fact, according to Invest Toronto, the city's financial services sector contributes 13.2% directly and 7.9% indirectly to the GDP of the entire Toronto region. What is more, between 1999 and 2009 alone, the financial services sector added almost 70,000 jobs in the greater Toronto area, a cumulative growth rate of 42% or 4.2% per year on average.

Clearly, a strong and secure financial sector is vital to the economy and good, well-paying jobs in the greater Toronto area. The financial system review act would help to ensure the continued stability of the sector and the significant jobs and economic growth that depend on its health. It would accomplish this by undertaking a series of chiefly technical but very important modifications to the framework governing our already well-regulated financial system to further guarantee its stability.

I want to emphasize that these modifications and indeed this bill are the result of a mandatory process. Specifically, it is a direct product of Canada's long-established practice of undertaking mandatory five-year reviews of Canada's financial sector legislation. This review started in September 2010 when the finance minister initiated a public consultation process, open to all, where he sought the views of Canadians about our financial system. The regular review of the financial sector statutes allows the government to amend the framework so that the financial sector legislation and regulations continue to be as effective and efficient as possible.

Canada's practice of conducting such mandatory five-year examinations has been one of the key reasons we have maintained our reputation of having the safest and most secure financial system on the planet. Indeed, as we all recall, for four straight years the World Economic Forum has declared our country's banking system to be the soundest in the world. This has been a tremendous advantage for Canada and Canadians, especially during the recent global economic turbulence. While the United States, the United Kingdom and Europe has had to nationalize or bail out many of their banks, Canada's financial system has remained strong and secure.

Because of our resilience, Canada's financial system continues to be singled out as a model for other countries. As noted Toronto Sun columnist Peter Worthington remarked:

Canada's banking system is now widely recognized as arguably the world's best. No Canadians fear for their deposits as many Americans do.

This is what the Irish newspaper, The Independent, had to say:

[Ireland's] financial regulatory system is in line for a radical overhaul, with the Canadian system being held up as a model.

The Canadian system is undoubtedly an excellent model....

Even U.S. President Barack Obama has admitted that Canada's system is far superior, noting:

Canada has shown itself to be a pretty good manager of the financial system in the economy in ways that we haven't always been here in the United States.

Finally, this is what Great Britain's Prime Minister David Cameron declared when he addressed Parliament last year:

In the last few years, Canada has got every major decision right. Look at the facts. Not a single Canadian bank fell or faltered during the global economic crisis....Your economic leadership has helped the Canadian economy to weather the global storms far better than many of your international competitors.

Indeed, the financial system review act would build on and further reinforce Canada's sound and safe financial system with a range of important modifications. Specifically, the legislation would: modernize financial institution legislation to further assure financial stability and ensure that Canada's institutions continue to operate in a competitive, efficient and stable environment; provide important protection to consumers by boosting the powers of the Financial Consumer Agency of Canada; improve effectiveness both by cutting down on duplicative administrative red tape burdens on financial institutions and adding much needed regulatory flexibility.

The financial system review act contains numerous important measures that would make our financial system stronger which I would like to briefly highlight. They include: improving the ability of regulators to share information efficiently with international counterparts while respecting the privacy of Canadians; ensuring that Canadians, especially those who may be disadvantaged, are able to cash government cheques under $1,500 free of charge at any bank in Canada; promoting competition and innovation by enabling co-operative credit associations to provide technology services to a broader market; reducing the administrative burden for federally regulated insurance companies; and, offering adjustable policies in foreign jurisdictions by removing duplicative disclosure requirements.

In summary, the financial system review act would further strengthen our already world-leading financial system by reinforcing stability in the financial sector, fine-tuning the consumer protection framework and modernizing the regulatory framework to adapt to new developments.

As I mentioned earlier, the financial services sector is of critical importance to the economic health and jobs in the greater Toronto area and indeed for all of Canada. That is why I strongly urge all members of the House from all parties to vote in favour of this bill, in favour of a strong financial sector, and in favour of the jobs it supports for Canadians.

I have appreciated the opportunity to speak to an issue important to my riding and to the economic well-being of all Canadians.

[Carol Hughes, NDP, Algoma—Manitoulin—Kapuskasing, ON]

Mr. Speaker, I listened intently to my colleague who spoke about the importance this will have for jobs, but the government is actually reducing jobs at Service Canada, the department that helps Canadians who find themselves unemployed at this time.

We have known for quite some time about the sunset clause, so why is it that the government took so long to send this bill to committee? Why did the government send it to the Senate as opposed to the House of Commons committee, where it should have been? There was only a three-week window of opportunity for the Senate to study this, and the Senate also said it was not enough time.

Why is the government in such a rush to pass a piece of legislation without really taking into consideration the impact it will have and without further debate on the issue?

[Costas Menegakis, Conservative, Richmond Hill, ON]

Mr. Speaker, I would like to remind the hon. member that this review is mandated by law. It is legislation that we need to do. It must be renewed by April 20, 2012 to allow the financial institutions to carry on business.

Indeed, the consultation process began in 2010. The government invited the views of all Canadians on to how to improve our financial system. Approximately 30 submissions were received from a wide range of stakeholders. The proposed bill takes into account the concerns of major interest groups, including consumer groups, stakeholders, policyholder groups and financial industry associations.

I would urge the hon. member to consider how important it is to have a strong financial system in our country. By supporting this bill—

[The Acting Speaker, Conservative, Bruce Stanton]

Order. There may be other hon. members who wish to put a question. The hon. member for Winnipeg North.

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, there has been a great deal of concern in terms of the government's management of this particular file and why it has chosen to bring in time allocation. I understand that the deadline is April 20 of this year. That is when the legislation has to have passed.

Given the member's background and what he has commented on, why is it that the government waited so long before bringing forward this legislation? In fact, with respect to many of the points the member referred to, we probably could have better legislation had the government been more co-operative in bringing forward the legislation, thereby allowing for more input and debate inside the House, as opposed to it being brought forward at the last minute.

Why did the government wait so long before it brought the legislation to the House?

[Costas Menegakis, Conservative, Richmond Hill, ON]

Mr. Speaker, I would like to thank the hon. member for the good work he does on the committee. I certainly appreciate his input.

The government wanted to allow enough time for the consultation process to take place. In fact, today we are debating the bill at second reading. Once this bill is passed, and I hope it will be passed unanimously by this House later today, it will go to committee for further study. There will be plenty of opportunity for the bill to be studied further in committee.

It is very important that we understand our role as parliamentarians. We must put partisan politics aside and support important legislation like this that keeps our financial system and our financial sector strong and stable for Canadians.

[Lynne Yelich, Conservative, Minister of State (Western Economic Diversification)]

Mr. Speaker, I would just like clarification. Some of the questions the opposition is asking I believe are outside the scope of the bill. I understand that the statutes that govern the financial sector are reviewed every five years. It appears that some of the opposition to this bill is outside the scope of the bill.

I wonder if the member would clarify that for the benefit of those listening.

[Costas Menegakis, Conservative, Richmond Hill, ON]

Mr. Speaker, the only response I can offer is that the opposition has voted down every significant piece of legislation the government has brought forward in this Parliament. This is the first time I have been elected. I am sure that is their goal and their objective. That is the only answer I can offer as to why the questions are outside the scope of what it is we are actually discussing today.

[Rob Merrifield, Conservative, Yellowhead, AB]

Mr. Speaker, it is a privilege to speak to Bill S-5, the financial system review act.

The bill has cleared the Senate and is now in the House. Some of my colleagues on the other side are asking why now and why so fast. It is not really fast. The consultation process started in September. We had to use that process to be able to get it to this place. Then we need to get it to committee and move it through so that it can actually be implemented by April of this year. That is very simple to understand.

We have a very strong and stable financial system in Canada. In fact, we came through the financial crisis with flying colours as a country, as did our financial institutions. Why? It is because we do these regular reviews. We ensured we made changes as we moved along and that nothing would be left on the back burner. We are actually moving forward and doing something with it to accommodate Canadians and their interests in the changing world in which we live.

Bill S-5 would make a number of improvements to key areas in the Canadian economy. The financial sector is very stable, and there are reasons for that. It is stable because of these mandatory reviews we are doing. It is also very big. We must realize that 750,000 people work in the system, all in well-paying jobs. It makes up about 7% of the GDP of this country. A lot is made up of the oil sands in my province, being 6% of the GDP in this country, and yet the financial institutions are larger than that and is doing very well.

The bill is not only big but also good. Why would it not be good when we have the number one Minister of Finance in all of the world? That is something that has never happened before to Canada. In fact, we are rated number one in the world in many different areas, especially in the field of financial management. In fact, the World Economic Forum has ranked Canada as having the soundest banking system in the world. Forbes magazine has ranked Canada number one in its annual review as the best country to do business with as we move forward. Bloomberg has recently listed our five big banking institutions in Canada as the world's strongest banks, more so than in any other country in the world.

There is a competitive environment in this place and opposition members do what opposition members do, they oppose.

I have a quote here from a past Liberal finance minister, the now president of the Canadian Council of Chief Executives, John Manley, who said:

Our financial system and institutions were tested during the financial crisis and have proved sound. Canada’s banking system is now widely viewed as the most stable and efficient in the world.

That is high praise from a former opposition individual who knows the financial system very well.

Last month, an independent financial stability board appeal review praised the government's swift and effective response to the global financial crisis. We did come through it quite well. In its review, it highlighted the resilience of the financial system that we have as a model for other countries to follow. As Canadians, we should be proud of that.

We must realize that as we went through the financial crisis in Europe there were many problems with a lot of the banks there, as well as south of the border in the United States. If we compare ourselves to our number one trading partner, there was a meltdown of the financial systems. Not one of the financial institutions in Canada failed. Not one failed or required direct government support in the form of cash injections or debt guarantees during the global financial crisis. That is something that did not and does not happen by accident. It happened because there was good management of the Canadian financial systems and it is directly related to what we are doing here today with this legislation.

In fact, the report stated:

This resilience, which was achieved in spite of Canada’s relatively complex regulatory structure, highlights a number of key lessons for other jurisdictions.

What are those lessons that Canada can teach other jurisdictions? The first is to be proactive with targeted macroeconomic policies supported by adequate fiscal space and flexible exchange rates that will help absorb the external shocks.

The second is a prudent banking system management so that we do not become over-leveraged, as has happened in Europe, the United States and other banking systems and sectors. This is particularly important if we are to go through a crisis, such as what is happening around the world. We hope that we are through it now and that we will not revisit it, although what is happening around the world should make us a bit cautious, particularly the debt crisis in Europe and perhaps some overspending in the United States that could impact us in years to come.

The third thing is the comprehensive regulatory supervisory framework that effectively addresses the domestic prudent concerns including, when necessary, adopting regulatory policies that go beyond the international minimum standards.

Those are three lessons that other jurisdictions can learn from.

As the board noted, since 2008, the Conservative government has taken significant steps to make our financial system more stable and to reduce systematic risk to Canadians and to the system. In fact, the first thing we did in the 2008 budget was to modernize the authorities of the Bank of Canada to support the stability of the financial system.

We came through it in glowing fashion, as far as our financial institutions, but in budget 2009 we suggested other changes. Just in case we were to run into problems with our banking system, we wanted to ensure we were able to capitalize our banks so that they would not go into receivership. This is very important. What it really allowed for was, if there was an injection needed into our banking system to sustain it, the Canadian Deposit Insurance Corporation would have the flexibility to do that. That is actually a very wise thing. We did not need it, thankfully, and, hopefully, we never will. A bridging institution was what we needed. In banking terms it is called a bridged bank. Bill S-5 includes a number of technical refinements to ensure that the efficient implementation of those bridged bank tools are there.

Budget 2011 also announced our government's intention to establish a legislative framework for covered bonds, which are debt instruments secured by high quality assets, such as residential mortgages. This bill would make it easier for Canadian financial institutions to assess the low cost sources of funding and help to create a robust market for covered bonds in Canada.

Let us look ahead. We have this five year review. It is very important that we do this review, mainly adding to some of the changes that we have made over the last number of years, chiefly technical. One of the changes that would actually make it a little stronger goes back to one of the changes that was made by Liberals in 2001. It would back that off so that any bank that invests in more than 10%--

[The Speaker, Conservative, Andrew Scheer]

Order please. I will stop the member there. He still has two minutes left to conclude his speech.

The House resumed consideration of the motion that Bill S-5, An Act to amend the law governing financial institutions and to provide for related and consequential matters, be read the second time and referred to a committee.

[The Speaker, Conservative, Andrew Scheer]

The hon. member for Yellowhead has two minutes left to conclude his remarks.

[Rob Merrifield, Conservative, Yellowhead, AB]

Mr. Speaker, this is important legislation that we have before us. As I only have a minute and a half, I will reiterate some of what I have said. I mentioned how important the financial system is to Canada, how well we are actually doing compared to other countries and that some of the changes are a tweaking and of a technical nature of the Financial Systems Act.

One of the issues I was talking about before the question period break was that no financial institution can invest more than 10% of its assets in another international jurisdiction. That is to make certain that the system is protected and Canadians are not overly exposed. In fact, the Canadian Bankers Association, which we would think would be a bit concerned about this kind of imposition, said that it fully supports it.

We do have a great system in Canada. It is the best in the world. We have the greatest finance minister in the world. We have been recognized by international agencies in countries around the world as having done our job and done our job well. We have low taxes, stable finances and great opportunities. I believe that our best years are yet to be realized in this country if we just continue the course.

This legislation should meet with the approval of all members of the House as we move forward. I encourage everyone to consider this bill for what it is worth and the importance of it so that it can be completed in time for the April 20 deadline.

[Scott Brison, Liberal, Kings—Hants, NS]

Mr. Speaker, it is with pleasure that I rise today to speak to this legislation. The legislation does not make extraordinary changes to the Canadian banking system but I would like to speak to some of the changes that it would make.

I will be sharing my time today with the hon. member for Markham--Unionville.

The reality is that the Canadian economy is doing better than some of the other global economies with which we compete. There are three principal reasons for that. One is the fact that we do have a somewhat stronger fiscal situation than other countries, and I will speak to that in a moment. Second, we are riding a global commodity boom as a country that has a remarkable amount of natural resource wealth in oil and gas and minerals. Third is the prudential strength of our banks and our banking system.

I have heard throughout the debate today the Conservatives taking credit for all three. First, in terms of the fiscal situation, when the Conservatives were elected in 2006 they inherited the best fiscal environment of any incoming government in the history of Canada with a $13 billion surplus. The Conservatives spent through that surplus at a rate of three times the rate of inflation and put Canada into a deficit position even before the downturn of 2008.

Second, it is very hard for the Conservatives to take credit for the fact that we are benefiting as a country from an oil and gas and mining boom. The recovery, as it exists in Canada, is largely focused in a couple of provinces. Over 60% of the new jobs created in the last year were created in one province, Alberta. We know that we are hemorrhaging jobs in other parts of the country. We are seeing a bit of a Dutch disease where a commodity boom is shoving our dollar higher and is driving out and crowding out value added jobs in some of the other provinces, like Ontario, Quebec and the Maritimes. However, the Conservatives almost seem to be taking credit for the strength of the overall numbers, which would be a little like saying that they were responsible for putting the oil and gas under the ground or the potash under the ground in Saskatchewan. They cannot take credit for that, obviously, and they cannot take credit for the oil and gas under the water off Newfoundland because everyone knows that was Danny Williams.

The fact is that it gets a bit silly in the House sometimes when the Conservatives go on and on taking credit for where the Canadian economy is when they did not really have a lot to do with the decisions made or the good fortune we have as a country in terms of our natural wealth.

The third area where the Conservatives have been doing this throughout the day is when they take credit for the prudential strength of the Canadian banks. It was, of course, in the nineties when Paul Martin, as finance minister, and Jean Chrétien, as prime minister, fought the global trend of deregulation of the financial services sector. At that time, people in the Reform Party were critical of the Liberal government and said that we were missing out on the global trend of deregulation and that--

[The Speaker, Conservative, Andrew Scheer]

Order, please. Someone has left a phone behind again and it seems to be ringing. It seems to have stopped now. If members hear a phone going off again they can bring it up to the front and we will hold it for whomever it belongs to.

[Scott Brison, Liberal, Kings—Hants, NS]

Mr. Speaker, the reality is that, in opposition, the Reform Party fought vigorously against the decision of the Chrétien government to maintain strong regulations around Canadian banks, the very regulations that kept Canadian banks from following the global trend and off the cliff like the lemmings in Europe, in the U.K. and in the U.S.

What did the Conservatives do in government in terms of the prudential management of banks? One of the first things the Minister of Finance did in 2006 in his first budget was to bring in 40 year mortgages with no down payments. This created the loosest approach to mortgage lending in the history of Canada.

Furthermore, in 2007, the Conservatives went further. Under the Liberal government, Canadians needed mortgage insurance if the down payment on their mortgage was less than 25%. In 2007, the Conservatives changed that and lowered the threshold to 20%.

Those were just some of the changes they made to create looser mortgages, looser regulations, which led to, among other things, what many economists are now referring to in Canada as a housing bubble, certainly a personal debt bubble. We have the highest level of personal debt in Canada today, which is $1.53 of personal debt for every dollar of annual income. That is the highest in our history and it is higher than that of our neighbours to the south in the U.S.

The February 4 edition of The Economist magazine states:

When the United States saw a vast housing bubble inflate and burst during the 2000s, many Canadians felt smug about the purported prudence of their financial and property markets.

It went further and cited the Prime Minister at that time boasting in 2010. It then states:

Today the consensus is growing on Bay Street... that [the Canadian Prime Minister] may have to eat his words.

The Economist then said that Canada's housing prices had doubled since 2002. This has coincided with a massive growth in our personal debt levels. We see a great increase in speculation in the housing markets, particularly in some hot markets, such as Toronto and Vancouver, among others, and we see this growth having occurred, in part, in a response to the deliberate decisions by the Minister of Finance to loosen up debt and mortgage regulations back around 2006 and 2007.

The government must be held to account for those decisions, which actually helped create what we hope is not a housing bubble that ends badly but is certainly a personal debt bubble that needs to be managed.

It is important to realize that the Conservative government cannot take credit for the prudential decisions made by the previous Liberal government, and that the current government must be held to account for some of the foolhardy decisions it made as a government to loosen banking regulations and to loosen mortgage rules early in its term.

I want to note a couple of other things about Bill S-5 because some of the changes would have an impact on Canada's incredibly strong banking sector and its role in the world. One change is requiring the minister, in order to approve foreign acquisitions by a Canadian entity, under certain circumstances, for instance if the foreign entity being acquired has equity of at least $2 billion and if the acquisition of the entity would increase the size of the Canadian entity by at least 10%.

Under those circumstances and conditions in this legislation, it would mean that the Bank Act would require the minister to approve the acquisitions of these foreign financial institutions by Canadian banks. That is a change. The previous rules simply required that the Superintendent of Financial Institutions, OSFI, would approve those within the public service, within the bureaucracy.

Recent deals that would have triggered this mechanism of ministerial approval would have been the Manulife John Hancock deal, the TD Commerce Bancorp deal, the BMO Marshall & Ilsley deal and Sun Life. There are other large acquisitions that have occurred in the last couple of years: Scotia Bank bought Banco Colpatria, Colombia's fifth largest bank, and it also bought the Royal Bank of Scotland's Colombia assets as well 20% of the Bank of Guangzhou.

I want to raise as a concern, that the government consider the politicization of these foreign investments by our Canadian banks and the potential risk to the capacity that we have in doing so. The fact is we now have some of the largest banks in the world that are world leaders in terms of governance and success. With the capacity to significantly increase Canada's influence in the world in terms of a very important financial services sector, this politicization could lead to some highly political and potentially bad decisions in the future which would limit the role of Canadian banks in the world.

I raise that as a concern and I look forward to questions from my colleagues.

[Brian Masse, NDP, Windsor West, ON]

Mr. Speaker, when I listened to my colleague, I was reminded that there seemed to be a chapter missing, and that was the chapter where John Manley tried to deregulate our banks. We heard this for years and years.

I had representatives of the banking association in my office. They talked about how they saved the Canadian financial system. I asked if we should get the deck after deck that I was given year after year, saying that we had to become like the American banks. If the NDP had not pushed back against John Manley at that time, the banking system would have been deregulated. I would like the member to address that time and error.

A big debate took place in the House of Commons. The Conservatives, the Alliance, were in favour of this, cheerleading it all the way through the process. However, a small band of individuals, and I see one of the members now, came into this chamber day after day telling the Liberals and John Manley that they were wrong and that they should not allow the banks to become Americanized.

[Scott Brison, Liberal, Kings—Hants, NS]

Mr. Speaker, at that time there was a Liberal majority government. It was also a Liberal majority government that made the decision not to deregulate Canadian banks and to follow the global trends. It was a Liberal majority government that did have respect for all parties in the House of Commons. Certainly, in the spirit of co-operative and constructive engagement with all parties, the Liberal government would have meaningfully engaged and listened to members of Parliament from all parties.

That is in stark contrast to the current Conservative government. It clearly does not listen to even its own backbenchers, perhaps even some of its ministers, and certainly not members from any other political party in the House of Commons.

[Pat Martin, NDP, Winnipeg Centre, MB]

Mr. Speaker, I thank my colleague for Windsor West for reminding the House of that important piece of Canadian history.

There was a movement afoot from the unofficial prime minister of Canada, Thomas d'Aquino, chief executive and president of the Canadian Council of Chief Executives. He was saying that we must allow the banks to merge so they could be competitive and play on this larger marketplace. They were dying to jump into this sub-prime mortgage fiasco, but they were not really big enough therefore they should be allowed to merge.

There was a national campaign, “Purge the Urge to Merge”. People were crashing the shareholder meetings of the national banks trying to stop this runaway freight train of Canadian banks merging.

Had it not been for the sober second thought of the NDP in exposing this, as the official opposition was all for it, those banks would have merged and dove right into the big leagues in which they wanted to play. They would have brought upon our country the catastrophic outcomes that they exposed other countries to, specifically the United States.

I would ask my colleague to perhaps reflect for a moment on his own party's position on banking as it pertains to Bill S-5.

[Scott Brison, Liberal, Kings—Hants, NS]

Again, Mr. Speaker, it is the practice of the Liberal Party of Canada, both in opposition and in government, to always listen to members of Parliament from all political parties and to consider carefully and respectfully their contribution to the debate. Certainly we would listen and take it seriously.

However, there was a strong group of Liberal caucus members, led by Tony Ianno, a member of Parliament at that time, that mobilized, that did cross-country town halls and round tables on this issue. It met with small business and community organizations, heard from Canadians and made some very strong recommendations to then Prime Minister Chrétien and finance minister Paul Martin. It said that we should not follow the global trend of deregulation.

What the hon. member is describing, however, is the way parliaments ought to work, where members of Parliament from all parties, including the governing party, contribute constructively and meaningfully to public policy debate and decisions ultimately reached by a government. Hon. members have described a Liberal government that listened to all members of Parliament from all parties and its own backbenchers.

There is no such thing as a bad seat in the House of Commons. We are all chosen and given the privilege to serve the people who elect us and have the responsibility to defend our interests. Mature governing parties recognize the importance of enabling that and respecting that Parliament will ensure it happens.

[John McCallum, Liberal, Markham—Unionville, ON]

Mr. Speaker, I will pursue some of the themes pursued by my colleague in a somewhat different way.

One of the things I have noticed in the debate today, and I have listened to Conservatives and New Democrats, is a kind of triumphalist tone, that everything about the Canadian banking system and the economy is not only wonderful, but every job created has to be because of the economic action plan and no job loss has anything to do with the policies of the government.

As my colleague pointed out, this is totally ridiculous. As he pointed out, do the Conservatives really believe they are responsible for the oil and minerals in the ground and the high commodity prices around the world today? Obviously not. Do the Conservatives really believe they are responsible for the strong fiscal position which they inherited and, in large measures, squandered? Evidently not.

The third area, which is where I will focus the rest of my remarks, is the banking system.

I believe I can speak about the banking system because I am a former banker. I was involved in the debate on the proposed bank mergers.

We can say that today's banking system is robust, but that this is not due to measures taken by the Conservative government or the Conservative Party. On the contrary, the banking system remains strong in spite of the Conservatives' actions.

I would like to talk about three areas that prove this point.

The first of these areas is the area of bank regulation. As we know, in the 1990s there was a strong trend toward bank deregulation in the United States. The Liberal government of the day, in the 1990s and early 2000s, resisted the temptation to go the route of deregulation. It may be true, as my colleague from Winnipeg Centre pointed out, that Tom d'Aquino wanted to go that route, but Tom d'Aquino was not the government. The government was a majority Liberal government and the Liberal government of the day decided not to go that route notwithstanding the statements by Tom d'Aquino or by certain Reform Party politicians.

That is the first point because there is a consensus view that the 2008-09 global financial crisis was in large measure the result of this deregulation, this idea that we now know to be false, that if we just allow the banks to regulate themselves, everything will be okay. Canada said no to that under the Liberals. The U.S. and the U.K. said, yes, and that is a big part of the explanation for why we are where we are.

The second area is bank mergers. I must admit that when I was the chief economist at the Royal Bank, I supported the proposed merger. I had to support the merger if I wanted to keep my job.

To be honest, I was also in favour of bank mergers because at that time, in the late 1990s, I had been persuaded that the benefits of bank mergers were greater than the costs. At that point, before I went into politics, I was aligned with the Reform Party, which was pushing for bank mergers with the banks and with Mr. Thomas d'Aquino who was also pushing for bank mergers. Perhaps he was not because he had to play both sides of the banking field. I do not remember that. In any event, that is how it was.

Then fast-forward 10 years and we have the global financial crisis. I realized at that point that I had been wrong. For Mr. Chrétien to say no to bank mergers was the right decision. I only realized that after the world financial crisis. When I think back to when I was at the Royal Bank, the mentality of the day within the bank was that it wanted to grow up fast, kick global butt and grow up to be like Citibank or Citigroup. We saw what happened to them. Having observed the financial crisis, I became completely converted to the view that Mr. Chrétien was right, that bank mergers were bad for Canada and it was in spite of the Reform Party, not because of it, that Canada said no to bank mergers.

If I can admit now that I was wrong and that the government was right about bank mergers, perhaps members representing the government could stand one day and make similar admissions, that they were wrong back then to advocate bank mergers and that what Mr. Chrétien did was the right decision.

Finally, I come to mortgages. We have a more modern and recent example of the current government's tendency to favour deregulation. What did it do in 2006, soon after being elected? Before it was elected, the rules for mortgages under Liberal governments were that they could be no longer than 25 years with a 5% down payment. What did the Conservatives do? They went from 25 years to 40 years with a zero down payment. Imagine, this is like U.S. sub-prime mortgages. That is what they did in 2006.

Essentially, it is like deregulating mortgages, just like they wanted to deregulate banking. Potentially, this is a very bad and risky decision. If we go back to 2006, we find that no less than 60% of first-time home buyers took advantage of these rules and had a 40-year mortgage. Now that we have this high level of debt, now that we have talk of the housing bubble possibly bursting, people who took out those 40-year mortgages with zero down payment, thanks to the actions of the current government in 2006, may be seriously at risk.

We do not know if this housing bubble will burst. We never know if a bubble will burst or whether it is even a bubble until after it has burst. No less a magazine than the The Economist has suggested that Canada is first among the countries eligible to experience that. It has pointed out that Vancouver has the highest housing prices-to-income-ratio of anywhere in the English speaking world.

Then, on the other hand, CMHC comes out with a rosy projection that housing prices will continue to rise over the next two years.

Therefore, we do not know whether this will come to pass, but based on our knowledge of history and what we see in other countries, that there is a risk. If it does come to pass, if the housing bubble does burst, if we see banks having major losses and Canadians suffering because of major foreclosures, then a part of the reason for this will have been that decision taken by the Conservative government in 2006 to allow 40-year mortgages with zero down payment. If that comes to pass, I think Canadians will legitimately lay part of the blame for that at the feet of the government.

In closing, I basically said that Canada is in a relatively strong position, but not a perfect one as they sometimes claim. This relatively strong position has nothing to do with the actions of this government and the Conservative Party. On the contrary, this success is the result of the actions taken by the Liberal governments in the 1990s. The actions of the Conservative government, particularly with regard to mortgages, have created more problems, not solved our problems.

[Joe Preston, Conservative, Elgin—Middlesex—London, ON]

Madam Speaker, to you, my wife Geri, and all members, happy Valentine's Day.

Madam Speaker, I will be splitting my time with the great member for Yukon.

I truly appreciate the opportunity to lend my voice to today's debate in favour of the timely passage of Bill S-5, also known as the financial system review act. While very technical, this is a critically important piece of legislation.

This bill is the right thing for Canadians and the right thing for Canada's economy. It builds upon and complements the range of initiatives our Conservative government has introduced and will continue to introduce to improve the security of our financial system and to strengthen consumer protection for Canadians.

Indeed, Bill S-5 supports those principles in many important areas, including modernizing, strengthening and clarifying the consumer provisions in the Bank Act, the Cooperative Credit Associations Act, the Insurance Companies Act, and the Trust and Loan Companies Act, as well as others.

Members can rest assured that our Conservative government understands the importance of protecting consumers and the importance of protecting the larger financial system. During the global financial crisis, we came to appreciate the very real consequences of poor financial sector regulations around the world, especially in the United States and in Europe.

In particular, we saw that the interconnected structure of global finance demands a comprehensive and effective regulatory regime able to prevent problems in one area from spilling over into others. We also saw that ignoring these problems may bring unpredictable and often catastrophic results to a country's economy.

For this reason, it is important to take into consideration the strength, effectiveness and security of the broader financial sector in the regulatory framework when we discuss the positive attributes of Bill S-5.

Our Conservative government recognizes the importance of a stable and well-functioning financial system to the overall Canadian economy. Indeed, Canada has received high praise for our well-regulated financial system during a time of global economic turmoil. Even the Toronto Star was forced to admit:

Canada has won international accolades after the World Economic Forum ranked its banking system as the soundest in the world....Canadian banks...have largely skirted the worst of the turmoil. Unlike in the United States and Europe, no banks collapsed or had to be rescued in Canada during this financial crisis.

The Irish Times declared:

Canada's policy of fiscal discipline and strict banking supervision was a reason why it was one of the world's strongest performers during the recession.

In my remarks, I would like to highlight the housing market in particular. The housing sector warrants particular attention in light of its role in the 2008 financial crisis and the ongoing pressures arising from the U.S. housing bubble that are still being felt by the American financial system and have slowed that country's economic recovery.

In order to protect our housing market from the worst excesses seen abroad, our Conservative government has acted repeatedly and decisively to ensure its stability, especially with regard to mortgage financing.

Mortgage financing plays a key role in providing a reliable source of funds for prospective Canadian homeowners. Prudent mortgage lending standards and mandatory mortgage insurance for high ratio loans allowed Canada to avoid the housing crisis that occurred in other countries, especially the United States.

Since 2008, our Conservative government has taken prudent and measured steps to ensure that this system remains stable over the long term while maintaining economic growth.

In July 2008, February 2010, and January 2011, we announced a series of sensible adjustments to the rules for government-backed insured mortgages. The measures include: reducing the maximum amortization period for new government-backed insured mortgages to 30 years; requiring a 5% minimum down payment, and a 20% down payment on non-owner occupied premises; lowering the maximum amount lenders can provide when refinancing insured mortgages to 85% of the value of the property; requiring buyers to meet a five year fixed rate mortgage standard; and withdrawing government insurance backing on home equity lines of credit.

These adjustments will significantly reduce the total interest payments Canadians make on their mortgages, promote long-term sustainable home ownership, and limit attempts by banks to repackage consumer debt into mortgages guaranteed by Canadian taxpayers. Taken together, they would go a long way toward strengthening the regulatory oversight of the mortgage insurance industry. Many of these improvements to the mortgage insurance guarantee framework have helped to encourage Canadians to use their homes as a way to save responsibly for their families and their futures.

This would help to ensure that Canada's housing market remains strong. It has been applauded by numerous commentators and economists. Credit Canada's executive director, Laurie Campbell, called the most recent moves a “step in the right direction because it means more money in consumers’ pockets ”.

An editorial in Waterloo's The Record added, “The federal government has done the right thing in tightening up the rules for mortgages in this country”.

In a similar vein, a recent Calgary Herald editorial applauded the government's proactive approach and added, “It's good to see the government continue to be vigilant on this file”.

Furthermore, as the Minister of Finance has said repeatedly, our government will continue to monitor the housing market very closely and take further action if it is necessary.

We all recognize there is always work to be done to ensure the continued stability of the Canadian financial system and that ongoing vigilance is vital. That is why we are pushing for the timely passage of the financial system review act. The bill would provide the framework that would benefit all participants in the financial services sector, not only financial institutions but, more importantly, everyday Canadians. It would maintain the long-standing practice of ensuring regular reviews of the regulatory framework for financial institutions, a unique practice that sets Canada apart from almost every other country in the world.

Bill S-5 would play a key role, together with other strong links we are forging in areas like mortgage insurance, in protecting consumers and building a more efficient, effective, sound and competitive financial system for all Canadians. Renewing the Canadian financial institution legislation on a regular basis has resulted in a robust and effective financial system that is aligned and responsive to developments in financial markets and the broader global economy.

In summary, I would encourage all members to join in our efforts to ensure the strength and stability of Canada's financial system and support the financial system review act.

[Mike Sullivan, NDP, York South—Weston, ON]

Madam Speaker, a number of things are missing from this review. I wonder if the member opposite would like to answer why, for example, there is no review of the fees that are charged to ordinary consumers and the way those fees are promulgated by the banks. Nor is there a review of the ability of the big banks to speculatively invest in such things as sub-prime mortgages which our banks were involved in through the unregulated nature of their ability to invest. Would the member opposite like to comment, please?

[Joe Preston, Conservative, Elgin—Middlesex—London, ON]

Madam Speaker, I thank the member for York South—Weston for his attention today during this debate. He has asked many questions.

The first part of the question was about how simple banking fees affect consumers, whether it is the cost of mortgages, fees on a chequing account or ATM fees. Those are consumer-driven costs and are not covered by this Bank Act review. Consumers have the choice to go from bank to bank to find out what the fees are.

The other part had to do with whether the banks can put mortgages and other lending into one pile. Some of the act does cover how the banks deal with mortgages in that way. It certainly is a reason for review every five years. If new items like this do come up, they could be reviewed.

[Kennedy Stewart, NDP, Burnaby—Douglas, BC]

Madam Speaker, last week I asked a question on this bill to get more of a general answer about the economy. When Paul Martin was finance minister, he declared the natural rate of unemployment in Canada to be about 7%. The U.S. Federal Reserve reports it to be 7% and rising. Last week, the member for Wascana reported that it was only 4% in Canada. I wonder if the member opposite could report what his government believes the natural rate of unemployment in Canada to be.

[Joe Preston, Conservative, Elgin—Middlesex—London, ON]

Madam Speaker, I am not certain I can speak for the whole world as to what I think the natural percentage of unemployment is. I know that in my area of the country, even during the best times when things were really booming, there was unemployment.

However, I will tell members what my personal views are. Any person who is unemployed, looking for work and wants a job, should find it. If that person cannot, then there is one too many people unemployed in our country.

[Brian Masse, NDP, Windsor West, ON]

Madam Speaker, one of the things that Bill S-5 does not address is the patriot act. Canadians' personal information could be accessed in the United States through the patriot act. We need an international treaty to deal with that.

I wonder if the member supports the need for an international treaty. Without it, banking records and information and credit card information could be used by the U.S. government through its patriot act.

[Joe Preston, Conservative, Elgin—Middlesex—London, ON]

Madam Speaker, I know the member works very hard on U.S. issues, being in a border community. I thank him for that work.

My answer to the question is, if it is affecting Canadian consumers, we should look at it. If at all, we should be working as much as we can in a collegial manner with the Americans. We will continue to discuss with them the problems Canadians have and, hopefully, they will bring to us problems Americans have and we can work together on a solution.

[Ryan Leef, Conservative, Yukon, YT]

Madam Speaker, I am pleased for the opportunity to speak at second reading of Bill S-5, the financial systems review act.

I want to begin by noting that this legislation is vital to the stability of Canada's financial sector, and explain how it came before the House today. Every five years the government reviews the policy framework that governs federally regulated financial institutions. The last review was completed in 2007.

Launched on September 20, 2010, the current five year review began with the Minister of Finance inviting Canadians to share their views on how to improve our financial system through an open consultation process. This process has helped to ensure that Canada remains a global leader in financial services. Making sure that Canadians continue to have a strong and secure financial system, one that has been a model for countries around the world during the recent global turmoil, is a key priority for our Conservative government.

This bill would help ensure that our system continues to be recognized.

For the fourth year in a row, Canada was ranked as having the soundest banks in the world by the World Economic Forum. This strength has been widely recognized by independent observers, both here and abroad. An Ottawa Citizen editorial acknowledged that, and I quote:

Our banking and financial system is the envy of the world. While the great money edifices of countries such as the U.S., Britain and Switzerland cracked at the beginning of the recession, Canada's banks stood firm.

In the Toronto Sun columnist Peter Worthington has said:

Canada's banking system is now widely recognized as arguably the world's best. No Canadians fear for their deposits as many Americans do.

We have also been recognized beyond our borders. Indeed, we have heard from voices around the world.

When it recently renewed Canada's top-tier, AAA credit rating, Fitch, the world renowned credit rating agency, pointed out:

Canada's banks proved more resilient than many peers thanks to a conservative regulation and supervision environment.

The influential Economist magazine recently stated that:

Canada has had an easier time than most during the recent global recession, in part because of a conservative and well-regulated banking system.

The Irish Times commented recently that:

Canada's policy of fiscal discipline and strict banking supervision was a reason why it was one of the world's strongest performers during the recession.

U.K. Prime Minister David Cameron praised our system:

In the last few years, Canada has got every major decision right. Look at the facts. Not a single Canadian bank fell or faltered during the global banking crisis...Your economic leadership has helped the Canadian economy to weather the global storms far better than many of your international competitors.

I echo that high praise.

Moreover, I would like to add that the financial services sector is a constant presence in the daily lives of Canadians. The industry employs over 750,000 people in good, well-paying jobs. It represents about 7% of Canada's GDP. The sector is a key pillar of our economy through its role in fostering financial stability, safeguarding savings and fuelling the growth that is essential to Canada's economic success.

Canada is set apart from almost every country in the world through the implementation and practice of the mandatory five year review that produced the bill we are discussing today. This practice ensures that the laws governing our financial institutions are updated and responsive to a constantly changing global marketplace.

I would also add that the recent financial crisis helped us recognize the importance of a stable and well-functioning housing market to the economy and the financial system. While our banks and financial institutions remained sound, well capitalized and less leveraged than their international counterparts during the crisis, in order to ensure stability in our housing market our government proactively moved three times to adjust our mortgage insurance guarantee framework.

These adjustments included reducing the maximum amortization period to 30 years from 35 years for government-backed insured mortgages with loan-to-value ratios of more than 80%. We also reduced borrowing limits in refinancing and withdrew government insurance from home equity lines of credit.

These adjustments have been applauded by observers and economists alike. TD Economics praised the changes highly, stating that “these policy changes were prudent and act to help limit risk in Canadian real estate”.

Our government is committed to renewing the key elements of our financial system and bolstering it with new tools. We are committed to fine-tuning, clarifying, harmonizing and modernizing the existing framework. We are doing just that through the financial systems review act.

Canadians recognize that the current framework functions well. Canada's financial system continues to be recognized as one of the soundest in the world. From that solid foundation, the proposed legislative package includes measures that would modernize financial institutions' legislation to encourage financial stability and ensure Canada's financial institutions continue to operate in a competitive, efficient and stable environment. Measures would fine-tune the consumer protection framework, including enhancing the supervisory powers of the Financial Consumer Agency of Canada and improve efficiency by reducing the administrative burden on financial institutions and adding regulatory flexibility.

Other measures contained in this bill include: improving the ability of regulators to share information efficiently with international counterparts while respecting privacy laws; guaranteeing that all Canadians have the right to cash government cheques under $1,500 free of charge at any bank in Canada; and promoting competition and innovation by enabling cooperative credit associations to provide technology services to a broader market. The bill would reduce the administrative burden for federally regulated insurance companies offering adjustable policies in foreign jurisdictions by removing duplicative disclosure requirements.

I am happy to report that many public interest groups have shown strong support for today's bill. For example, the Canadian Life and Health Insurance Association proclaimed:

It is important that legislation be periodically reviewed so that it keeps up with the changing environment... The industry welcomes a number of measures outlined in [the financial system review act].

In summary, today's act would reinforce financial sector stability, fine-tune consumer protection provisions and adjust the regulatory framework so it can better adapt to new developments. It would provide for a framework that would benefit stakeholders in the financial services sector, financial institutions, as well as all Canadians who rely on our banking system daily. Our Conservative government recognizes that in order to remain an international leader in the area of financial sector stability, we must continually consider what regulatory changes are needed to foster competitiveness and to ensure the safety and soundness of our system.

Today's bill would maintain the long-standing practice of frequently reviewing the regulatory framework for financial institutions, ensuring that Canada remains the leader in this regard. I therefore urge all members to support the financial system review act, along with the sensible regulation of our banking system that has served us so well.

[Mathieu Ravignat, NDP, Pontiac, QC]

Madam Speaker, I share the concerns of many people in my riding and many other Canadians about the power the banks have over our lives, particularly when there is a large concentration of capital. One worry that I have is the process through which this bill came forward. It surprises me that the other place had a greater kick at the can. I wonder why the government decided to restrict the scope of the review of this particular bill to technical issues.

Given the extraordinary nature of the banking industry and its influence on us, it would have been better to go ahead with broader public consultation on this bill. I wonder if the member has any comments as to why the government has taken this approach.

[Ryan Leef, Conservative, Yukon, YT]

Madam Speaker, the consultation started in September 2010. We heard from Canadians about their recommendations for adjustments and input on this bill. We are looking at fine-tuning something that is working quite well right now. The timeframe we have before this regulation sunsets would not necessarily lend us the opportunity to open it up. There are other regulatory regimes where we can adjust consumers' concerns. The finance committee is an area where the opposition would be able to express concerns and suggestions.

[Jamie Nicholls, NDP, Vaudreuil—Soulanges, QC]

Madam Speaker, I would like to talk about the part of the bill that touches on foreign bank subsidiaries in Schedule 1. The changes mean that foreign banks will be subject to the same operating restrictions in Canada as other banks. This measure will eliminate tax evasion, one of our biggest problems.

Therefore, I ask the member what penalties will be imposed for tax evasion, for example, if someone transfers funds to a tax haven such as Switzerland or the Cayman Islands.

[Ryan Leef, Conservative, Yukon, YT]

Madam Speaker, I apologize to my hon. colleague, as I was trying to catch up with the translation. I think the question was: What are the penalties levied on foreign entities under this regulation if they are involved in tax evasion?

Although I do not know the specific penalties in terms of dollars and dimes, there is a host of legislation in our country allowing regulatory enforcement agencies to deal specifically with that. When investigations are conducted, the penalties imposed are going to be dependent on the investigation and the evidence presented of the violations that have come forward.

While we can talk about a range of penalties or maximums and minimums, we know that in any process the actual penalty meted out depends on the weight of the evidence provided by an investigation.

[Mike Sullivan, NDP, York South—Weston, ON]

Madam Speaker, I asked the member who spoke previously a question about speculation in derivatives and other speculative instruments and why the bill does not deal with that. Could the member comment on that, please?

[Ryan Leef, Conservative, Yukon, YT]

Madam Speaker, as has been addressed a few times in the House today, when we get down into things that can be dealt with in a regulatory regime, that is where they belong.

We are looking at a high-level of fine-tuning of something that is working quite effectively. From the consultation process we have heard the adjustments that Canadians want to see made. We know from debate within this House and from what will come forward from committee that we are looking at things that are designed to deal with the fine-tuning of a very technical aspect.

I believe there will be other opportunities and occasions to deal with things that are probably outside the scope of this review and would be a better fit for the regulatory process.

[Pat Martin, NDP, Winnipeg Centre, MB]

Madam Speaker, thank you for the opportunity to enter this debate on this comprehensive and sweeping piece of legislation regarding our financial institutions, both their well-being and their duty and obligation to provide adequate service to Canadians.

I need to preface my remarks by noting that the bill is entitled Bill S-5, the S meaning that it does not originate in the House of Commons, the chamber of the duly elected representatives of the people. It has its origins in the other place, the Senate of Canada. As democrats, each and every one of us should take note, pause and reflect on the significance and meaning of the bill. More and more, we are finding bills originating in the Senate, when in fact all pieces of legislation should find their origins in the duly elected chamber of the House of Commons, not the unelected, undemocratic Senate. I profoundly resent this chamber being seized with a bill that has originated there. I will state that for the record.

The other thing comment I would say before discussing the substance of this legislation is the fact that once again we are faced with a debate on a bill with a gun to our heads, under pressure, under the time limitation placed on our democratic review, scrutiny, analysis, and due diligence of the bill, the very reason we were sent here as representatives of the people. We are being denied that right systematically once again by a government that introduces a closure motion almost on the same day it tables a piece of legislation. This is the 16th time in a row, in this short session of this 41st Parliament, that we are being denied our democratic right to give full study and examination of the bill and to have our comments within this place recorded in Hansard.

I do not want anyone in the country who has been observing the activities of our Canadian Parliament to think for one minute that these are normal circumstances. These are anything but normal. These are extraordinary. This is the most appalling abuse and undermining of the democratic process that anyone has ever seen.

I have been a member of Parliament for six terms. I have sat in majority and minority Liberal governments. I have sat in majority and minority Conservative governments. No one has ever seen anything like this before. This cannot be allowed to continue without condemning it in the strongest possible terms. I hope the people of Canada take note that the Conservative government of the day, and I do not say this lightly, is undermining the integrity of our parliamentary institutions by systematically denying the right of members of Parliament to study bills, per our constitutional parliamentary democracy. It offends the sensibilities of anyone who calls himself or herself a democrat to see this happening systematically.

While I am on the subject, I would also note that I just came from a committee meeting earlier today, where there has been a systematic denial of the public's right to know what its government is doing with its money, in its bills and policy development, by invoking the shroud of secrecy over the otherwise ordinary activities of parliamentary committees that have traditionally been held in public. The government has moved to put these in camera. For any ordinary Canadian watching, this means that the doors will be shut, everyone will be asked to leave, and there will be no cameras and no one will have any right to ever divulge what happened behind those closed doors. That is the in camera rule.

In times gone by, three or four years ago, it used to be the rare exception if the activities of a parliamentary committee were held in camera. It would be in matters of national security, or of profound commercial sensitivity where someone's right to privacy in a commercial setting would otherwise be violated.

Now in camera meetings are being used willy-nilly for any little issue that may be controversial or potentially embarrassing to the government. The government slams down the in-camera rule and shuts down the cameras, ironically. Everyone is kicked out of the room and no one in that meeting is ever allowed to divulge anything that happened behind those closed doors under the rule and penalty of the Speaker of the House of Commons. It is a very serious violation to contradict the in camera rule. There is no justification for this whatsoever. I cannot even divulge the matter we were discussing at today's in camera meeting, because it was in camera.

This has been a systematic undermining of the democratic procedures and the processes that have evolved over time to make our Westminster model of parliamentary democracy the best in the world. However, I caution the members across and anyone listening that our parliamentary democracy is a fragile construct. It exists only by virtue of both sides stipulating that they agree to abide by a set of rules that includes openness to the greatest possible, and respecting the role of the opposition to test the merits of the proposals put forward by the government before they are implemented into legislation.

Again, I caution the government of day. It may in fact be doing irreparable harm to our democratic institutions. I think that if it allows pendulum to swing too far this way, it will never get it back to the norm. The toothpaste might never go back into the tube; the genie might never go back into the bottle. The government has pushed the limits of the integrity of our system. It is like pulling a thread on a sweater: the whole sweater can unravel if we keep yanking on that thing. That is what the government is doing. It is testing not only our patience but also the integrity of our whole fragile, yet precious, parliamentary democracy.

I resent profoundly that we are facing closure once again on this bill for the 16th time since we returned to work after the parliamentary summer recess. It is an absurd situation that we find ourselves in. We are being systematically denied the ability to do our job as agents of the people who elected us here to provide scrutiny, oversight and due diligence and to hold the government to account. That is the very function of Parliament and it is what is being denied to us.

We are talking about banks. If there were any subject in the country that warranted a greater examination by the elected representatives of the people, it is the way banks are, or are not, serving the best interests of Canadians. It warrants enhanced scrutiny. It warrants not only a thorough examination but also a royal commission. The failure of banks to meet the needs of Canadians, and their gouging us in the process, is almost ridiculous. The biggest PR campaign in the country right now is not to sell cars, not to promote the oil sands, but the PR job of banks trying to peddle themselves to Canadians as warm, fuzzy and benign institutions that have our best interests at heart.

I challenge that. I would have welcomed the ability to challenge it in a much more thorough way as we go through the bill to amend the law governing the financial institutions of this country. I say this because in the riding of Winnipeg Centre, which I represent, chartered banks are closing like crazy. They are disappearing. They are going the way of the dodo bird. Whereas we used to have a bank, an accessible institution, on the street corner, they are all shutting down and are being merged into one conglomerate. There were 14 bank closures in my riding alone.

Do members know what is filling the void left behind? It is the fringe banking institutions, the Money Marts and payday loan outfits that are charging not the 60% that the usury laws of this country allow them to charge, but which should have been reviewed in this process, but 1,000% to 1,500%. The Government of Manitoba did an investigation and one example it found was a payday loan charging 10,000% interest.

Do members not think that warrants a bit of debate and analysis and scrutiny by the elected representatives of the people, the fact that people are being gouged because of the unwillingness of our chartered banks to live up to the terms and conditions of their charters to provide reasonable financial services to Canadians no matter where they live?

Because of their failure in that department, they have left a void that is being filled in by these predatory lenders. I do not know what can be done to make a 10,000% profit. Selling cocaine does not even give, I presume, a 10,000% profit. However, they are springing up like mushrooms all over the inner city and preying on poor people and gouging them in the most egregious way. The Parliament of Canada is silent on it because we are being denied the right to even do a thorough analysis of the job that financial institutions are doing to provide basic services.

We need to remind ourselves that we granted the chartered banks their charter and what comes with the charter is the exclusive monopoly for certain very lucrative financial transactions, the credit cards, cheque cashing and all of these things, that are enormously profitable. In exchange for the exclusive monopoly on these lucrative transactions, they were to provide at least the basics that financial consumers might need.

We in the NDP have been trying to rectify this for a decade or more, which is why these rare, once every five years, opportunities are so precious. Myself and the former leader of the NDP actually got some proxy shares and used to crash shareholder meetings of the big chartered banks. We would go to the Royal Bank shareholders meetings, as well as the Bank of Montreal, the Toronto Dominion Bank and the CIBC meetings. We would move motions at those shareholders meetings trying to bring these big institutions to account, to stop the gouging and to make them responsible.

Exactly. I see my colleague gets it. He seems as perturbed as I am about this situation.

I will give an example. This is quite an experience. Everybody here should do this. Members should go to a shareholders meeting of one of the chartered banks, such as the Royal Bank of Canada. My good friend, John Cleghorn, was the CEO of the Royal Bank. I had just enough proxy shares to move some motions. Nine motions were moved that year at the shareholders meeting of 1,500 people and I moved all nine of them. Everybody else just goes there to find out how much money they made. I went there to try to introduce some democratic reform to these appalling undemocratic organizations.

One of the motions I moved even my colleague from Nepean would enjoy. I moved a motion to limit the CEO's salary to 20 times that of the average employee. Now the average employee salary, if anyone did the math, is about $47,000 a year, and 20 times that is almost $1 million year, which is pretty good. Sadly, however, the motion was defeated.

Another motion, however, that we moved was for gender parity on the board of directors. This motion was what scared John Cleghorn. Matthew Barrett was not nearly as amused by all of this but John Cleghorn was a good sport. The motion for gender parity on the board of directors failed by this ratio, the exact same as the last Quebec referendum, 49.4% to 50.6%. We almost got it.

There is a lesson here. The shareholders' democratic movement should be inspired by this. A room of 1,500 people who did not come there to talk about amendments to democratic reform or corporate governance had an appetite for corporate governance. There was an interest.

Again, when we did the same thing with Matthew Barrett, he had a hissy fit and was openly wondering how Alexa McDonough ever got in there with any shares in his bank.

Other people are interested in this and, believe me, on behalf of those people who are being victimized by fringe banking in low income neighbourhoods like mine, we owe it to them to give a far more thorough analysis of our once in five year opportunity to amend the laws governing financial institutions and to provide for related and consequential manners. We should not be having it rammed down our throat by a bunch of unelected senators, hacks, flaks and bagmen in the Senate, many of them recently appointed by the government.

With all due respect for the Senate of Canada, it has no business introducing legislation for the House of Commons to have to deal with. It is supposed to be the other way around.

I have talked briefly about the importance of charter banks. I will talk at length, if given the opportunity, on the importance of charter banks and their obligation to provide basic financial services to ordinary Canadians. They have reneged on that deal systematically over the last many decades, to the point where they are now charging money at an ATM. First, they brought in ATMs, presumably to save money so they could lay off bank tellers. Finally, when they got people used to the idea that they had to use ATMs, they started introducing service fees. So they are not only saving a fortune and posting record profits every quarter, even through the economic downturn, but they are gouging ordinary Canadians for $1.50 each way to take $20 out of their bank account. I would like to see the percentage charge on that, extrapolated over the lending fees associated with the usury provisions. I think in the Criminal Code of Canada, if more than 60% is charged they are guilty of usury.

Therefore, how is it that the Money Marts, the payday lenders and the title loan lenders in my riding are charging 1,000%, 1,500% and, in this one egregious example, 10,000% interest and the government of the day and the enforcement agencies regarding financial institutions are silent on the matter? Clearly something is fundamentally wrong.

I have notes about Bill S-5 but many of the observations and points being made here are so narrow and specific that they miss the big picture. More often than not in this place we do not see the forest for the trees and the fact is that we are not being well served by our financial institutions. We are being gouged by our financial institutions. We should be screaming from the rooftops condemning the treatment of ordinary Canadians by the gouging that is going on.

I have talked about the shareholders' rights efforts that we used to make. We should probably mention that again but I want to talk about one other thing in the global picture of how we view the relationship we have with the financial institutions that seem to have such great influence over this country.

I hear time and time again the government side bragging that we have the best banking regime in the world, that it is due to the wizardry of our Minister of Finance and that somehow everything is rosy in this regard.

I want to remind anyone listening today that were it not for the Herculean efforts of the NDP, not five or seven years ago, the charter banks of Canada would have been allowed to merge into massive institutions, as they wanted to do. They were dying to merge. They were asking permission. They were knocking on the door. The John Manleys and the Paul Martins of the world were eager to receive the message. Do members know why they wanted to merge? It is because they wanted to play in the big leagues in the biggest game in town. The biggest game in town at that time was the sub-prime mortgage industry. Our banks were too small to play a meaningful, realistic role in that industry sector but they were dying to merge so they could dive in there and we would have been in just as much trouble as the big institutions in the United States, crashing and burning in this catastrophic notion of bundling the sub-prime mortgages and marketing them as a financial product.

Fortunately, we managed to prevail and block the urge to merge. I remember the national campaign was purge the urge to merge. It was Lorne Nystrom's campaign, the NDP finance critic of the day, criss-crossing the country. I see he is outside here today. We should recognize and pay tribute to Lorne Nystrom because we owe him a great debt of gratitude. He is a big businessman and he knows something of these things.

It is our job and our obligation to ensure the financial institutions meet the needs of Canadians, not to have it rammed down our throat in a bill put forward by the undemocratic, unelected Senate.

[Pierre Poilievre, Conservative, Parliamentary Secretary to the Minister of Transport]

Madam Speaker, I am pleased to learn that my hon. friend is a believer in shareholders' rights. Shareholders across Canada are our next door neighbours, our moms and dads, and our pension funds. In fact, one of the biggest shareholders of all is the Canada pension plan or the Canada Post pension plan. Blue collar workers, many of them unionized, are shareholders. They can only be paid a return on their shareholding investment on after tax corporate profits. There is literally no other way that a shareholder can get a dividend than for a company to pay that dividend out of the after tax profits.

The member and his party want to raise taxes on those profits, leaving less for the dividend receiving shareholder, meaning that all of the people for whom he purports to fight on behalf of would have less of a return, our pension funds would be less funded and the people who invest in companies to create jobs in the initial stage would receive a smaller return.

As a shareholders' rights advocate, I am curious how the member can advocate raising taxes on those same shareholders.

[Pat Martin, NDP, Winnipeg Centre, MB]

Madam Speaker, as a former trustee of employee benefit plans, I concur that employee benefit funds and union pension plans are one of the largest single investors out there. In fact, over 50% of all of the trading that goes on at the New York Stock Exchange, and, in fact, the TSX, are employee benefit plans and union pension funds being moved around; the buying, selling and representing the beneficiaries of those plans.

One of the biggest things that has backfired in the Conservatives' zeal to keep lowering corporate taxes is that it has become obvious that businesses and corporations that are the beneficiaries of these lower taxes, such as the banks and the oil companies, are not reinvesting the money and are not paying it out as dividends to their shareholders. They are hoarding the money and stockpiling it. It is like Scrooge McDuck rolling around in his bank vault with all of his coins and dollar bills. They seem to be basking in all this dough.

The logic has not really played out. I understand their reasoning that if we allow businesses to make more profits they will reinvest and create more jobs. However, they have not been doing that. Their own analysts have been telling them that. The minister himself has expressed his frustration. They are not putting that money into circulation. It is not having the desired effect and, therefore, is a bit convoluted. It is Conservative pretzel logic that keeps this blind fundamentalist orthodoxy that lower taxes will trickle down to the average consumer. If anything, the companies that need help are not getting it because they are not paying taxes anyway if they are in dire straits.

[Rodger Cuzner, Liberal, Cape Breton—Canso, NS]

Madam Speaker, I always appreciate the interventions by my colleague from Winnipeg. I also appreciate the history lesson. I do not disagree with the fact that maybe John Manley and Paul Martin were leaning toward a merger at the time. That had been discussed. I know we had an admission from my colleague, a former economist himself and a supporter of deregulation at the time, who saw the light.

However, I thought maybe Jean Chrétien and the 161 Liberals who were in the House at the time had something to do with that. I did not realize that the NDP had punched so far over its weight with the 19 members that it had, so I appreciate the history lesson from my colleague.

After the current government took power, it came forward with two changes, one being the extension of mortgages to 40 years and the other being the zero down payment, both of which led to the devastation of the banking industry in the United States. This was the road that the government began to take this country down.

With the implosion of the economy in the United States, does the member believe that maybe this was the first indicator? Those guys were sort of bailed out by the implosion that took place south of the border and perhaps, with further endeavours by the government, we would be in a similar situation as the United States now had the time period they had at the controls been a little bit longer. I ask my colleague for his comments on that.

[Pat Martin, NDP, Winnipeg Centre, MB]

Madam Speaker, as I understand the question of the member for Cape Breton—Canso, I, too, remember the early days of 2008 when the current Minister of Finance was in complete denial that there were any clouds on the horizon. In fact, he was predicting surplus budgets. It was such a head-in-the-sand attitude that it led the opposition parties to come together and form the coalition that almost led to the defeat of that government. It was an irresponsible, reckless attitude.

It is galling to me to hear the endless praise heaped on the Minister of Finance. I do not recognize him as any kind of sorcerer. If anything, I see him as a road-weary magician pulling sedated bunnies out of a tattered top hat and thinking that he is impressing Canadians, when he is not.

[Jamie Nicholls, NDP, Vaudreuil—Soulanges, QC]

Madam Speaker, the House leader earlier today said that this bill had to be passed before April. I seem to remember at the beginning of the session that the first priority of the Prime Minister was to appoint his buddies to the Senate: Fabian Manning, Josée Verner and Larry Smith. Rather than telling the Senate that we needed to pass this important banking legislation, he was putting his buddies into the Senate.

How long does he wait until he finally lights up and says this is important? It was November when he said that we needed to get this through the House. There are important things in this legislation that we have to look at, like tax evasion. Our country loses millions, maybe billions, per year by people who put their money in offshore paradis fiscaux, as we say in French. They are places where people can evade their taxes. This bill starts to address these things, but we have more questions, such as what the enforcement will be like.

We can see that the priority of the government was to put its buddies in places of importance rather than pass important legislation. Now we are stuck with not being allowed to debate. There are 300 ridings in the country. Each MP was elected to speak for his or her constituents. Unfortunately, due to the lack of planning of the government, we are not able to do so.

Would my hon. colleague elaborate on this point?

[Pat Martin, NDP, Winnipeg Centre, MB]

Madam Speaker, I thank my colleague for raising an important aspect of our financial institutions review that will not get the attention it deserves. That is something chartered accountants call tax-motivated expatriation. New Democrats call it a sleazy, tax-cheating loophole when people can put their money offshore so it is out of reach of the taxman. The former prime minister, unfortunately, was the undisputed champion of this when he closed down 11 tax havens with which we had tax treaties. He left one significant one, where the prime minister of the day happened to have 13 shell companies.

There has been an appalling lack of due diligence. We leave money on the table that should rightfully be paid in taxes. It is estimated that as much as $7 billion a year slip through the fingers of Revenue Canada due to these tax-motivated expatriations. Plugging these loopholes should be the simplest first thing that any minister of finance would do when trying to balance the budget. Yet when New Democrats introduced a bill to that effect, we were not allowed to introduce it in the House because, apparently, it would have the effect of increasing a person's taxes. Plugging a tax loophole Conservatives equates to increasing a tax and the bill was thrown out as being deemed non-votable for that reason.

There is a lot of work to do and we are not going to get it done because Conservatives keep ramming through legislation using closure. It is undemocratic and wrong. We should condemn them in the strongest possible terms.

[Deepak Obhrai, Conservative, Parliamentary Secretary to the Minister of Foreign Affairs]

Madam Speaker, it is a great pleasure for me to speak to this bill, especially after my friend for Winnipeg Centre has just given an empty lecture. He is very well known for his flowery words. I was quite pleased to hear my friend from Cape Breton join him in trying to praise what they had been doing. However, if we really look at what has happened, it is no wonder they are a smaller party than before because those members were totally out of touch with Canadians. That is why they find themselves in that corner.

I will correct what the member for Winnipeg Centre has said. He has been using his flowery words and theatrics to say that the bill has come from the Senate and that it is not needed. He forgets why we are debating the bill. To be clear, it is because of the regulations and financial safeguards that the government introduced for the country's financial institutions that have allow them not to be affected as other global institutions have been. It was because of strong regulations.

We have a bill that looks at financial institutions. This bill is a common sense thing. That is what I want to say for the member for Winnipeg Centre who was debating the bill and talking about shareholders.

I will be sharing my time, Madam Speaker, with my colleague for Calgary Northeast

It is natural when we have an act that contains dynamic factors toward financial institutions, that we have a sunset clause so we can come back and review what has happened. Therefore, we would have the best institutions and be able to change to meet the demands of the day.

The previous member talked about being a shareholder. He should be doing very well if he is one. He wants to make money from his investments. Talking about making money and investing by the anti-trade and anti-business party called the NDP, Lorne Nystrom was a strong financial critic. I was in the opposition when he was here. Today he is a big businessman. I met him outside in the corridor and he is doing trade. By the way, we heard all about trade with China. Members can talk to him.

There was talk about going to Shanghai, doing business with China and profiting. This is something I would think should be alien to NDP members. However, when it is time to make money, those members are right there. As the member said, he went to a shareholder meeting of a bank. Then he stands in the House and calls them gougers and all kinds of names. He is as shameless as anyone else when it comes to making money. That he is a shareholder of a bank is even more surprising.

Coming back to the act, after every five years, it has to be reviewed. It has a five-year sunset clause. We can then put the latest changes and address what is happening in the economy for the benefit of Canadians.

I was listening to a member from Winnipeg talk about ATM fees. The ATMs are used by thousands and thousands of Canadians because it is a wise, cheap and convenient alternative to going to the bank tellers. That is why it is so popular. The member did not recognize that.

Coming back to this fact that this has been brought forward, it is because we are now coming to the end of the five year sunset clause. That is why we are debating it in the House. Whether it comes from the Senate or wherever it comes from, it is necessary and it is required by law for us to debate the bill. If we do not debate the bill and review the sunset clause, then the act would die and we would be unable to address the changes in the financial institutions. It is a requirement by law.

That is what we are talking about it, not about the NDP members crying about the Senate and everything else. Their argument is to abolish the Senate. It is a very great argument. I just love their argument. Why is there argument is wrong? Because they know under the Constitution it is not possible to do it. They know that very well. What is so great about a proposal which we know will never pass? That is the NDP, giving a proposal which will never pass.

If we look at other countries, Canada stands as a beacon of financial stability during the recession. We have heard about sub-prime mortgages and what has happened to the banks in America and in the European Union.

All the banks had to be saved, even the German banks, British banks and American banks. Did anything happen to the Canadian banks? No. Why? Not because of the party and not because it took credit, it is because we had sound financial regulations under which the Canadian banks worked. However, as things change, we want Canadian banks to going out and showing the Canadian strength, not what the member opposite calls about gouging and all these things.

If the Canadian banks are making profit in the world market, as the NDP's former finance critic is trying to do now with a business arrangement with China, what is wrong with that? As long as the Canadian banks are making money, they are paying their taxes and at the same time they are employing Canadians. That is a plus for Canada. There are jobs for Canadian. The NDP should understand that corporations make this happen.

We just heard from a member who talked about the teachers' pension plan and investments. Does the member think the teachers' pension plan will invest in a company that is losing? Absolutely not. How many pension plans of unions are invested in the banks, strong banks. We do not want weak banks in which to invest. Therefore, it is important that these financial institutions be accommodated.

The Liberal member mentioned 2008. The Liberals have their heads in the sand. In 2008 there was a recession. Did he not hear about the G20? It is a collective effort by the G20, which agreed to do the stimulus package so the world would not go into recession and that there would be jobs. Any time this government has presented anything, the opposition parties have opposed it. That is why the Liberal Party sitting at the corner.

At the end of the day, what happened? The Canadian economy withstood those shocks because of the sound financial input of this government.

The reduction of the GST, which was promised by the Liberals and has now been fulfilled by this government, gave extra money to companies to get across to consumers to spend money so the economy would move on, something the NDP members should learn and move on from the anti-trade and anti-business agenda so they can move forward.

We have an example with the 2008 recession. Where is Canada today, as it has been said by the Minister of Finance? I am really glad my friend from Winnipeg does not like the finance minister. If he did, I would be worried for the economy of Canada. It is his kind of business idea, so I am glad he made it very clear that he does not like the finance minister.

The Minister of Finance said that this government, since coming into power, and for my friend from Cape Breton—Canso, has created 600,000 full-time jobs for Canadians. Under your government, it would probably have been cutting transfers—

[The Deputy Speaker, NDP, Denise Savoie]

Order. The hon. member's time for debate has expired. I would remind him to address his comments to the Chair and not to members directly.

[Brian Masse, NDP, Windsor West, ON]

Madam Speaker, that was a rather surreal speech by the parliamentary secretary. I would like to return to some real facts that do matter to Canadians.

This is about fairness. That is the balance the Conservatives are missing with regard to their approach to the banking sector. We have seen an incredible increase in bonuses and salaries to CEOs of banking institutions. In 2009, the CEOs of the top five banks received salaries and bonuses of $8.3 billion. This is where Canadians are onside and understand there has to be a redirection of that balance.

I would ask the parliamentary secretary to address the issue of CEO compensation of $8.3 billion. In 2009, the bonuses increased by record amounts. How does that justify the increasing fees Canadians have to pay for services?

[Deepak Obhrai, Conservative, Calgary East, AB]

Madam Speaker, precisely what I want to tell everyone is the difference between that party and this party. Those members would like to interfere with the running of private corporations and put their own stamp on them.

Private corporations are accountable. The member should understand how a private corporation is run. As the member's friend from Winnipeg said, the CEOs are accountable to the shareholders as to how much compensation they receive. They are not accountable to the NDP. The shareholders put money into the banks. The NDP did not put any money into the banks. The shareholders are the owners of the banks. They will decide the amount of compensation for the CEOs.

[Rodger Cuzner, Liberal, Cape Breton—Canso, NS]

Madam Speaker, my friend from Calgary is right with regard to the government seeing the global economic downturn coming in 2008, but the government saw it in the rear view mirror. It certainly did not see it out the windshield. While every economist was telling the Conservatives that it was coming, that it was inevitable, they did not see a problem. They said things were going to be wonderful. At that time the government had a surplus budget and a balanced budget, and we know what happened. Forgive Canadians if they do not have a great deal of confidence in the government's ability.

I will ask my colleague to use some foresight. What does my colleague see as the next big issue the government will fail to recognize?

[Deepak Obhrai, Conservative, Calgary East, AB]

Madam Speaker, let me say in very clear and certain terms that the Canadian public makes the decision because it affects them. Canadians responded in the last election to how we handled things in 2008. Canadians gave us a majority government and those members are sitting in the corner because Canadians did not trust them.

[Brad Butt, Conservative, Mississauga—Streetsville, ON]

Madam Speaker, there has been a lot of revisionist history in the chamber this afternoon over which parties believe in a strong banking system in Canada, which parties want to nationalize the banking system, and which ones want to fully deregulate them.

Maybe the member could give us a bit more history and remind us which party stood up for a strong banking system in Canada.

[Deepak Obhrai, Conservative, Calgary East, AB]

Madam Speaker, it was the proud record of this government under the present Prime Minister. The Canadian people gave this government a majority for that.

[The Deputy Speaker, NDP, Denise Savoie]

Before I recognize the hon. member for Calgary Northeast, it is my duty, pursuant to Standing Order 38, to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the hon. member for Rimouski-Neigette—Témiscouata—Les Basques, Science and Technology; the hon. member for Alfred-Pellan, Pensions; the hon. member for Avalon, Government Loans.

[Devinder Shory, Conservative, Calgary Northeast, AB]

Madam Speaker, I am pleased to have this opportunity to address Bill S-5, the financial system review act. I would like to take a moment to say a few words about how this bill came to be before the House.

This bill is the outcome of the mandatory five year review of the framework that governs federally regulated financial institutions, which began in September 2010. Such regular reviews help to ensure that Canada remains a global leader in financial sector stability.

I would also note that this bill needs to be passed and its supporting legislation renewed by April 20, 2012 to allow financial institutions to carry on with their business and provide the services that Canadians depend on.

I was pleased to hear in some previous speeches in the House that members opposite are willing to send the bill to committee for further study. I hope they will support swift passage of the bill.

I want this piece of legislation, as technical as it is, to be understood by ordinary Canadians so they know how it affects them in real terms. Key measures in the bill are aimed at protecting consumers of financial services, building on important consumer protection actions our Conservative government has taken in recent years.

I will briefly explain the rationale for these initiatives while providing a bit of context. Throughout our time in office, our Conservative government has aggressively focused on helping Canadian consumers identify and take advantage of the best possible financial products and services for their needs. For example, in the next phase of Canada's economic action plan, we will further strengthen Canada's financial system by moving forward on the recommendations of the Task Force on Financial Literacy and announcing the government's intention to appoint a financial literacy leader. We will be enhancing consumer protection by banning unsolicited credit card cheques and developing measures related to network branded prepaid cards. In doing so, we are making a strong system even stronger.

Canada has many advantages that have mitigated the impact of ongoing global economic turbulence. For instance, Canada has a prudent and well-regulated banking system, ensuring that our lenders demonstrate responsibility and restraint. The result is Canada did not suffer a single bank failure or need to bail out any of its financial institutions.

As the Toronto Star said, “Unlike in the United States and Europe, no banks collapsed or had to be rescued in Canada during this financial crisis”. On the contrary, Canada's financial system remains strong, based on effective risk management and supported by a very effective regulatory and supervisory framework.

Some of the remarks I have heard in the House in relation to Bill S-5 allege that Canada's fortunate position during the global financial crisis was in spite of our Conservative government's policies, not because of them. What they say is that as Conservatives we tend to shy away from regulations in favour of competitive markets when it comes to the financial sector. Let me be clear on a couple of points.

First, it is true that we tend to favour less government intervention where possible, but we keep a close eye to ensure the system remains strong, thanks to the work of the hard-working, world's best finance minister that we have.

Second, our Conservative government, under the leadership of the Prime Minister, recognized early on that prudent regulations and supervision were necessary in the financial sector. In fact, we witnessed that other nations had to massively intervene in their markets as a result of under-regulation, and effectively nationalized their financial institutions.

Let me be blunt. Canada has emerged from this financial crisis as the only true free market financial system in the world. Indeed, Canada's strong economic and fiscal fundamentals have been recognized internationally. Today our country has the world's soundest banking system, as ranked for the fourth year in a row by the World Economic Forum. In fact, our five Canadian financial institutions were recently named to Bloomberg's list of the world's strongest banks, more than any other country.

Before I focus on our Conservative government's commitment to consumer protection, I want to address another aspect of the bill.

Bill S-5 gives authority to the minister to approve the acquisition of major foreign entities by federally regulated financial institutions where that acquisition would increase that institution's assets by more than 10%. Some in this House during earlier debates have suggested this could politicize the process. In fact, this is a historical oversight provision that was repealed in 2001. We are merely restoring that authority. There is a good reason for that. We understand that a regulatory and oversight balance is necessary to keep our markets healthy.

Let us say, for example, that a Canadian bank or federally regulated institution acquires a foreign company that increases its assets by more than 10% and that foreign company then succumbs to poor conditions in its market, a collapse of that economy or sector of that economy. That would have a negative impact on a significant portion of a Canadian bank's holdings and our Canadian markets would be affected by extension. That is why we feel it is prudent to have these risky acquisitions reviewed before they go ahead, to ensure that they are in the public interest.

Julie Dickson, the Superintendent of Financial Institutions, had this to say about this decision:

It’s now being moved back to the Minister of Finance, and we fully support that decision. It makes sense for the Minister of Finance to ultimately have the ability to approve. It’s just going back to the way it used to be.

Alec Bruce, a noted Times & Transcript columnist, gave the following insight:

When our banks top up their foreign holdings in this environment they do, in fact, chance importing this contagion to these shores, and injecting it into the arteries of the country’s economy....It’s not too much to ask....

Let me reassure all members that this Conservative government has an ongoing commitment to ensure that consumers are protected in their dealings with our financial institutions. That is why our government has an entire agency working to protect and educate consumers of financial services. It is the Financial Consumer Agency of Canada, FCAC. The agency does its part to help inform financial consumers in Canada by developing plain language educational material on a wide range of financial products and services. It has developed innovative approaches, such as a mortgage calculator that quickly determines mortgage payments and the potential savings resulting from pre-payments. It has also introduced online tools that help consumers shop for the most suitable credit card and banking package for their needs.

The agency has created two new tip sheets to help Canadian consumers looking for ways to save money. One is on choosing the right banking accounts and the other is on keeping service fees low. Recently the agency has been instrumental in lending its support to Financial Literacy Month, that being November, which featured 200 events and outreach initiatives across the country.

We have a steadfast commitment to improve the financial knowledge of Canadians and that commitment includes this bill. The proposed legislative package before us includes measures that would strengthen the consumer protection framework, including increasing the maximum fine the FCAC can levy for violations of a consumer provision from $200,000 to $500,000, and would guarantee that any Canadian has the right to cash government cheques up to $1,500 free of charge at any bank in Canada.

Our Conservative government believes that Canadian consumers deserve accessible and effective financial services that meet the needs of consumers and that operate in the public interest. By enacting the financial services review act, we would further ensure that our financial system remains a competitive Canadian advantage and that consumers receive the highest possible standard of service. It is the level of service that Canadians deserve and have come to expect.

I ask all members of the House to support Bill S-5 to ensure that our financial sector remains strong, stable, secure and a model for other countries to follow.

[Jamie Nicholls, NDP, Vaudreuil—Soulanges, QC]

Madam Speaker, I can understand that the Conservatives want to create legal loopholes for the wealthy through their legislation, but why are they protecting the tax evaders? In this bill they have only touched upon going after tax evaders who use places like the Cayman Islands or Switzerland to hide their money from the Canadian tax man.

My question to the member is this. Why have we not been given sufficient time to discuss this issue in the legislation and to go after tax evaders? Why are they protecting tax evaders and what penalties do they intend to use in their small makeshift measures against tax evasion? What penalties are they going to impose and how are they going to enforce them in places like Cayman Islands and Switzerland?

[Devinder Shory, Conservative, Calgary Northeast, AB]

Madam Speaker, it is a good and fair question, but I want to remind my friend in the opposition that the process was started in September 2010, as far as the time is concerned.

We are asking the opposition today to let this bill go to committee where all of these issues are raised and addressed. That is the place where individual issues should be raised. As my colleague mentioned before, all these issues were in our election platform and Canadians gave us a strong mandate to work for them and to be productive, not to halt any and all legislation.

[Wayne Easter, Liberal, Malpeque, PE]

Madam Speaker, I am amazed at how that member and that party have tried to reinvent history. Yes, we have the soundest banking system in the world, but I can assure everyone it has nothing to do with the current Prime Minister. It goes back to 1995 when the finance minister of the day, Paul Martin, along with the then Prime Minister, was willing to allow mergers with the United States, but a committee of backbench Liberal MPs challenged its own government. I was one of them. We held hearings across this country and made a recommendation that the banks stay within Canada and not be allowed to merge. That is why we have the soundest banking system in the world, because MPs were willing to stand up against the government. It is too bad we do not see some standing up against the government by the backbench on the other side.

I do not really have a question but I am just asking the member to stop trying to reinvent history and to get the facts straight.

[Devinder Shory, Conservative, Calgary Northeast, AB]

Madam Speaker, of course the member opposite is always amazed to see how hard working and productive this government is.

To respond to his comment, he has to admit one more thing, that it was under the leadership of this Prime Minister that Canada weathered the global economic crisis and emerged with the world's strongest banking sector, according to the World Economic Forum, and was given excellent ratings by the World Bank and IMF. It was our Conservative government that took a balanced approach between regulations and free markets that limited our need to intervene in the markets.

[Brad Butt, Conservative, Mississauga—Streetsville, ON]

Madam Speaker, I would like the member to reiterate quickly some of the aspects of the bill. This bill would in fact provide higher standards of accountability. I do not understand why the opposition party would be against a bill that requires greater accountability and more responsibility within the financial sector and in the area of consumer protection. Would the member not agree that is exactly what this bill would do?

[Devinder Shory, Conservative, Calgary Northeast, AB]

Madam Speaker, I absolutely agree with my colleague that the key measures in this act are aimed at protecting consumers of financial services. Of course, this is mandatory legislation. The statutes for federally regulated financial institutions must be reviewed every five years. That is exactly what we are doing.

For a change, I would ask all opposition members to get on board at least once and move forward and provide Canadians with what they deserve and have asked for.

[The Deputy Speaker, NDP, Denise Savoie]

I would just like to advise all members that we have now reached the point where interventions can last no more than 10 minutes, followed by questions and comments of 5 minutes. The hon. member for York South—Weston.

[Mike Sullivan, NDP, York South—Weston, ON]

Madam Speaker, I rise today to speak to Bill S-5, an act to amend the law governing financial institutions and to provide for related and consequential matters, and to express my disappointment about the inadequacies of this bill.

The member opposite suggested that somehow we were against this kind of thing. We are not against it: we are in fact disappointed that it does not go far enough. I think we have heard their mantra over and over again throughout this entire Parliament. We are disappointed that the government does not do enough, that it does not protect seniors and immigrants and does not protect the rights of ordinary Canadians.

Again we are faced with a bill that does not seem to go far enough. It is our hope that these inadequacies can be addressed at committee, as has been suggested. So far we have not had a good track record of changing bills at committee. Unfortunately the government does not like to listen to our advice, does not want to hear debate, and intends through the time allocation motion it introduced yesterday and passed today to have only one further day of debate before going to the standing committee, which will then have about five weeks to go through this very complicated bill.

I say “complicated” because the bill amends the Bank Act, the Cooperative Credit Associations Act, the Insurance Companies Act, the Trust and Loan Companies Act, the Bank of Canada Act, the Canada Deposit Insurance Corporation Act, the Canadian Payments Act, the Winding-up and Restructuring Act, the Office of the Superintendent of Financial Institutions Act, the Payment Clearing and Settlement Act, and the Financial Consumer Agency of Canada Act. Why are we rushing?

This is a pretty important thing. I do not think there is a person in Canada whose relationship with banks and financial institutions is not somehow touched by this bill. There are few in my riding who do not have bank accounts, I will admit, but as the member for Winnipeg Centre reminded us, they are being served by other institutions that are gouging them, the payday loan companies that have sprung up like mushrooms to replace the banks that have left.

It is very unfortunate that we are not going to get enough time to debate this bill, because it is going to deprive Canadians of a really comprehensive and transparent review of our financial system, unlike the cursory and rushed treatment this bill unfortunately received in that other house, the Senate. We are talking about regulating this country's financial service industry, which employs thousands of Canadians and handles trillions of dollars in assets, and the Senate review of this legislation took three weeks from start to finish. The bill was introduced in the Senate on November 23 of last year and adopted at final reading on December 16.

Several questions arise from that. Why did it take so long to get here? We are in the middle of February and are now dealing with this in a rush because we have to meet a time allocation motion. It is almost three months since it was introduced and two months since it was passed in the Senate. Is the banking system therefore less important to Canadians than guns? Is the banking system less important than copyright legislation? Is the banking system less important than the Wheat Board? These are all things that went before it, and the banking system is thus apparently not seen as important, not as important to ordinary Canadians. We disagree.

Why the Senate? Is the government trying to make work over there in the other chamber? Is that really what is going on? To justify its position that the Senate is an effective place of sober second thought, does it have to find ways to introduce actual government bills in the Senate to give that chamber work to do?

If this is so urgent, why did the government wait so long even to introduce it in the Senate? The deadline has been known for years. The deadline was always going to be the middle of April of this year. Why has it taken so long? It baffles us.

We certainly have time to do this correctly, or we should have had the time to do this correctly. However, the government's mismanagement of this file, given that the five-year review was well known, has contributed to this rushed process whereby the government invokes closure for the umpteenth time and limits our job as parliamentarians to do a proper review of this important sector.

It is as if the government were governing on the back of a napkin. Every time we turn around, there is something that it has forgotten, something it has forgotten to do. This is another one. It forgot about this: “Oh, we better do it in a hurry. We have to get it through.”

We owe it to Canadians to address some of the real problems with the financial institutions, such as by protecting consumers from excessive user fees, not only ATM fees but also remittance fees on transfers that many new Canadians in the diaspora send to families they are supporting back home. Those remittance fees are huge and they are charged by banks and other financial corporations alike, and sometimes they amount to as much as 30%, 40% and even 50% of the money they send overseas.

Why do they have to send money overseas? It is because their families cannot be reunified here in Canada. We now have wait times of as long as 106 months between the time an application is made and a parent or a grandparent is permitted to come back to Canada, and it is as long as 33 months for spouses and children. All the while, the people here who have recently immigrated to Canada and are trying to reunite with their families are trying to support their family overseas by working in Canada and sending what little money they can. When the banks, the financial institutions, the payday lenders, whomever, take 30%, 40% or 50% of that money, it is a crime, and it is not something that the government has addressed.

We need to review the treatment of financial derivatives. Nothing in the legislation talks about that. It was speculation, as we saw in the United States, in particular, that provoked the financial crisis from which we are still recovering. These practices do not contribute to the economy but to the financial volatility that threatens to destabilize economies, and yet there is nothing in the bill to deal with that. The housing bubble in the U.S. created by those derivatives has caused ordinary citizens to lose billions of dollars in the value of their properties, in large measure as a result of banks and other institutions trading and speculating. Canadian banks were not immune from this: Canadian banks lost money on these derivatives.

We need to review mortgage lending practices, particularly in light of the comments made by Bank of Canada Governor Mark Carney, who said that record consumer debts are the greatest domestic threat to the country's financial institutions. Right now, consumer debt is 151% of disposable income, partly as a result of aggressive home equity loan marketing that has placed Canadians in vulnerable situations should interest rates rise. If interest rates rise, we are in for a huge collapse in our credit system in Canada. We do not want to see the disastrous practices witnessed in the United States' housing portfolio come here to Canada.

This is an inadequate measure, a missed opportunity to do better for Canadians. The consultation process has been pathetic, to say the least. Apparently, there were some consultations conducted by the government online. Some 30 people found out about it and submitted recommendations. The government cannot release the results of most of those to anyone because it forgot to get the required disclosures from those people for their information to be released. Therefore, we will never know what the feedback to the government was.

On our side, we will support the bill at second reading because we hope that the deficiencies in the bill can be corrected at committee. Some government members have actually said they want to listen and make amendments to the bill, where necessary, at committee. Thus far I cannot remember any bills coming to this House from committee with amendments. Maybe this will be the first. Who knows. I hope my colleagues on the government side will participate in the committee review of the bill in good faith to improve how our financial sector serves Canadians. This will be a challenge, given the time constraints imposed by the government today.

We owe Canadians this effort. I owe this to Canadians in my riding, as does every single member of Parliament here who represents all Canadians, all of whom will be touched by the measures that the government has put forward today in the bill.

[Jamie Nicholls, NDP, Vaudreuil—Soulanges, QC]

Madam Speaker, earlier I mentioned tax evasion. The hon. member said that this bill is inadequate. The government prides itself on the fact that it is protecting Canadians from criminals, except when those criminals are diverting billions of dollars. I would like to read a quote from today's Journal de Montréal:

“Although securities offences may invoke serious harm for individuals, companies and society, the penalties will often be limited to administrative and regulatory sanctions such as fines,” the report states.

Does my colleague believe we will have time to explore the penalties imposed on people who are currently committing tax evasion?

[Mike Sullivan, NDP, York South—Weston, ON]

Madam Speaker, I suspect not. The bill is very weak in terms of dealing with banks that contribute to the harbouring of money overseas. There is a suggestion in the bill that the foreign subsidiaries of banks may now have to comply with Canadian regulations, but it is very sketchy. It is very difficult to read into the bill any kind of system like that being pursued very aggressively in the United States to chase the money and tax evaders. Even ordinary citizens in Canada are being chased by the U.S. government. None of that is happening here and one has to wonder why.

[Brian Masse, NDP, Windsor West, ON]

Madam Speaker, I had asked the parliamentary secretary, who defended the inequity that I believe is taking place, about the bonuses of the banks' CEOs. I understand that compensation is important and will take place. However, in the financial sector, in 2009 the top five banks paid $8.3 billion in bonuses.

I think Canadians want balance. I would ask my hon. friend whether he believes that is balanced. What should be done? Should there be more constraint, especially given the incredible amounts of user fees and costs that Canadians pay for these basic services?

[Mike Sullivan, NDP, York South—Weston, ON]

Madam Speaker, the Conservatives believe that the invisible hand of the marketplace will deal with things like the $8.3 billion in bonuses to executives in the big banks of Canada. That is an obscene amount of money. Not only that, those banks made $25.5 billion in profit, most of which has been squirrelled away for a rainy day.

I cannot remember the last time a bank opened a branch anywhere in Canada that would employ more people. Banks are not a part of the economic recovery, they are not part of the 600,000 supposed jobs that the Conservatives keep talking about. Those banks are making lots of profit. They are using it to pay their executives obscene bonuses and not to create jobs in Canada.

[Dean Allison, Conservative, Niagara West—Glanbrook, ON]

Madam Speaker, I would like to take this opportunity to speak in strong support of Bill S-5, the financial system review act.

In my time here today, I will focus on what our Conservative government has done to enhance protection for consumers of financial service products. This act builds on an already strong record of our government. From the outset, the government's approach to strengthening consumer protection has been straightforward. Canadians who use financial services are entitled to clear and simple information. They deserve to be treated in a fair and transparent manner.

Since forming government in 2006, our Conservative government has had a proven record of strengthening Canada's financial system. For instance, as part of Canada's economic action plan, we took action to better protect Canadians who use credit cards. We all agree that Canadians should not be forced to deal with hidden surprises on their credit card statements. That is why we took landmark action to force credit card providers to provide easily understandable information on credit card application forms and contracts and timely advance notice of changes in rates and fees. We also limited credit business practices that do not benefit consumers.

Specifically, we required credit card issuers to provide consumers with a minimum 21 day interest-free grace period on all new purchases when consumers pay their balance in full by the due date. We also required a minimum 21 day grace period on all new purchases in a billing period, even if the consumer had an outstanding balance. We moved key information, such as interest rates, grace periods and fees, out of the fine print buried in credit applications and contracts and into a prominent summary box so that consumers signing applications know exactly what kind of financial arrangements they are agreeing to without needing a magnifying glass and a legal dictionary. These pro-consumer measures are ensuring that Canadians have a clear picture of what they are signing up for and fully understand their rights and responsibilities.

It is little wonder that our government's measures have been so warmly received by consumer and other public interest groups. For instance, Casey Cosgrove, director of the Social and Enterprise Development Innovations' Canadian Centre for Financial Literacy praised them saying:

Understanding interest rates, fees and increases to monthly payments are key challenges many Canadians face when managing their credit cards. The measures announced by the government today will contribute to financial literacy by bringing clearer and more transparent information to consumers.

Additionally, Bruce Cran, president of the Consumers' Association of Canada, applauded the measures and said that all of the things in there “are actually just what we asked for”.

Laurie Campbell of Credit Canada also spoke highly of our actions. In particular, she highlighted the importance of the summary box I mentioned earlier. She stated:

The idea is that there will be a box somewhere on your statement, and it's going to show okay, this is how much you have outstanding, and this is your minimum payment on that amount outstanding... Any time we're trying to educate the public on how to manage their money better, on how to understand credit better, and how to minimize the amount of interest they're paying, it's a good thing. So this is a great step.

I am happy that our pro-consumer measures are in effect today. They provide Canadian consumers with precisely the kind of financial information that allows them to make the best choices to suit their needs. The reality is that there are more than 200 credit cards available on the market. While having so many choices ensures competition and varying interest rates, decisions about which card is best can be difficult without knowledge.

All consumers can only benefit by increasing their understanding of interest rates and the dangers of compound credit card interest. I am pleased to remind Canadians and members that important information on this very subject is available through the Financial Consumer Agency of Canada's website. The agency provides free comparison tables outlining the rates and features of numerous credit cards offered in Canada by a variety of issuers.

Our Conservative government has done more for small businesses and retailers who raised concerns about certain credit and debit card practices. Our Conservative government shared these concerns. One concern was the unpredictable costs associated with accepting credit and debit card payments, which prevented merchants from reasonably forecasting the monthly costs associated with accepting those payments.

That is why our Conservative government created the landmark code of conduct for the credit and debit card industry to better protect small businesses and retailers. Under the code, small businesses and retailers will be guaranteed clear information regarding fees and rates, as well as advance notice of any new fees and fee increases. They will be able to cancel contracts without penalty, should fees rise or new fees be introduced. There will be new tools to promote competition and the freedom to accept credit payments from a particular network without the obligation to accept debit payments and vice versa.

I am happy to report that small business has welcomed the measures laid out in the code of conduct.

Here is what the Canadian Federation of Independent Business had to say on the first anniversary of the code:

The Code's effectiveness has already been tested several times and CFIB is pleased to report that it has passed on every occasion. CFIB has used the Code to resolve issues on debit cards for e-commerce, disclosure of important merchant fee information, and exit penalties for fee changes in processing agreements. Merchants have new powers under the Code that have helped them achieve tangible results in their dealings with the industry. This simply wouldn't have happened without the Code.

Whether it is a question of saving for retirement, financing a new home or balancing the family cheque book, our government's commitment to improving the financial literacy of Canadians will do even more to ensure the integrity of our financial system. Canada has made the financial literacy of Canadians a priority. It has introduced legislation to create a financial literacy leader to improve financial literacy in Canada.

Bill S-5, the financial system review act, would build on the many pro-consumer measures we have introduced since 2006, including the three that I have already highlighted. The bill would more than double the maximum fine the Financial Consumer Agency of Canada could impose on financial institutions that violate a consumer provision, increasing it from $200,000 to $500,000. The bill would guarantee all Canadians, especially those who are most vulnerable, the right to cash any government cheque under $1,500 free of charge at any bank in Canada.

Informed consumers are the very foundation of a solid financial system. Canada's economic success is ultimately the sum of the financial success of all Canadians. That is why I am proud to support the financial system review act. It would further strengthen our Conservative government's commitment to this crucial objective.

[Jamie Nicholls, NDP, Vaudreuil—Soulanges, QC]

Madam Speaker, if the bill is so important to the member's government, why was it tabled at the end of November and not in June when the Senate first sat?

As the hon. member for York South—Weston said, the government moved with quite alarming speed on other things, such as its crime bills and abolishing the gun registry bill, and yet the health of our financial sector and the health of our banks seemed to be on the back burner. It took the government until November. Why did it take until November for it to table this legislation in the Senate when it could have done it in June?

[Dean Allison, Conservative, Niagara West—Glanbrook, ON]

Madam Speaker, the truth is that the government has had a lot of important legislation come before the House since we were elected. There are a number of priorities that we have been moving forward on.

We appreciate the fact that we have a very sound financial system here in Canada and Bill S-5 would continue to keep Canada's financial system strong and secure. We have a lot to be proud of as Canadians with a great banking system.

[Mike Sullivan, NDP, York South—Weston, ON]

Madam Speaker, does the member opposite believe that this legislation goes far enough in preventing the possible calamities that went on in the more recent past with banks, including banks in Canada, investing in speculative and derivative ventures that lost an awful lot of money for Canadian banks? Does he believe it is necessary to include that in this legislation and, if not, why not?

[Dean Allison, Conservative, Niagara West—Glanbrook, ON]

Madam Speaker, I think we all agree that Canada has probably one of the most stable financial systems in the world. The fact that we have a chance to review the financial system every five years is a good indication. If we look at what happened recently with the challenges around the world and their financial systems, how well Canada did is a testament to how strong Canada's financial system is as we continue to move forward.

[Jamie Nicholls, NDP, Vaudreuil—Soulanges, QC]

Madam Speaker, a government report released under access to information and mentioned in the Journal de Montréal today says that our financial sector is vulnerable to organized crime. This is a government report. The journalist who got the report had to make an access to information claim.

Therefore, how would this bill answer the very serious questions of the involvement of organized crime in the financial sector? Are there any provisions in the bill for protecting ordinary Canadians from the activities of organized crime within the financial sector?

[Dean Allison, Conservative, Niagara West—Glanbrook, ON]

Madam Speaker, the financial system review act, or Bill S-5 , would continue to ensure that our financial system continues to be secure for Canadians and is a fundamental strength for our economy. If we look at some of the things the bill includes, it includes measures to update financial institutions legislation, to promote financial stability and to ensure Canada's financial institutions continue to operate in a competitive, efficient and stable environment.

The bill would also fine-tune the consumer protection framework, including enhancing the supervisory powers of the Financial Consumer Agency of Canada. The bill would also include measures to improve efficiency by reducing the administrative burden on financial institutions and by adding regular flexibility. These are just some of the things that the bill includes.

[Brian Masse, NDP, Windsor West, ON]

Mr. Speaker, it is good to have you here as we enthusiastically finish this part of the House of Commons day. This is an interesting debate that we have had with regard to the banks.

The first thing we want to note is that the bill s not thorough enough in its current form. We will support it to get it to committee but we will be looking for amendments. A lot of things are missing in this, such as an opportunity to address some of the unfairness that is happening in the Canadian financial institutions. I think that is important to recognize because it is actually affecting how we compete as a country. It is not just the individual elements related to user fees, ATM fees, credit rates and all those different things. It is also about how the use of capital is not being spread across this country, and where the priorities of the government are.

I would note that this industry getting this attention right now is rather interesting, coming late in the day, given the amount of profits and excess bonus fees that have gone to CEOs and the institutions, as well as the record tax cuts they have had. It is quite significant because it affects other parts of the Canadian economy. We lose money through our coffers.

This also gives an indication of where the priorities of the government are. It clearly has been to give the banks the upper hand, not only at the consumer level but also an economic advantage versus other industries that are suffering.

I would point out that we have not seen an action plan, for example, in the manufacturing sector. One of the things that is really critical to note is that in 2005, when the government came to power, we had a $16 billion trade deficit when it came to exporting and importing manufactured goods. So, a $16 billion deficit already behind, and now it has climbed to $80 billion. It is because of a number of successive trade deals that have taken place that have cost Canadian manufacturing, and we have not addressed many of the significant issues.

It is unfortunate because, as we were seeing the record tax cuts happening, we were witnessing hundreds of thousands of Canadian jobs being lost across Ontario and Quebec, whether it be in the forestry sector, the auto industry or the textile industry. We saw those industries, which were not profitable because of the downturn that took place and the lack of government policies, actually subsidizing the profits in the corporate tax cuts going to banks and other institutions.

As the corporate tax cut rate was being lowered and lowered, if companies were not making a profit it did not matter. While they were witnessing their opportunities diminish, the banks were getting benefits.

It is interesting that the oil companies and the banks in particular would get corporate tax cut reductions. The way it works in the United States is that it taxes on worldwide corporate profits. Therefore, our tax dollars out of Ottawa that were going to these profitable institutions that were making record profits were actually being taxed in Washington. It was getting our money. We were basically sending cheques from Ottawa to Washington. That is a strange economic way to improve a country. It is a strange way to actually benefit, even when we had the challenge in the United States with buy America.

We need to wonder what the Americans think about us over here, as we are actually handing them cash and, in the meantime, they are telling us that we cannot be involved in the buy America plan despite signing the NAFTA.

I would remind members of something that is very important. In a previous debate in this House, a member actually thought that the auto pact was in existence right now and that it came about because of the NAFTA. No. After we signed the NAFTA , one of the repercussions was that Japan took us to the WTO and the WTO ruled against Canada. We lost the auto pact. We lost all those jobs. We went from number two in the world in automotive manufacturing to number eight now, which is unfortunate. Those are value-added jobs.

When we see what is happening here in this sector, we need to wonder why we did not get certain things into the actual study. Part of it is that there was very little consultation. We note that there were only 30 submissions and 27 respondents with regard to this issue because it was not really promoted. If it does not get out there, people do not notice it.

That was the same type of approach we saw when the government did the deal with regard to the Canada and U.S. enhancement of the border perimeter security stuff that was recently announced. It was thrown up on a web site but there was no dialogue with the people presenting evidence and no expanding of the discussion.

It is the same problem we have had from this initial response. Hopefully, we will see that at committee because that is very important. It all depends upon the committee as whether there will be fairness with regard to witnesses, whether they will be heard and whether it will be done out of camera.

For those who follow the things that are happening on Parliament Hill, again today many committees met in camera, which means in secrecy, in private. Only the members who were at that meeting or another subsequent member sworn in later can go back and listen to that testimony again and get that testimony. Everything that is discussed in camera, unfortunately, never becomes part of the public record. We hope there will not be people in camera as witnesses, which would be unfortunate. However, I do not think it will go that far. We would like to see enough witnesses to ensure we will have proper hearings and a proper analysis.

One of the things I want to touch on is a consumer aspect because I have done a lot of work in the past on consumer issues. It is a good example of what we have addressed with regard to the changing world and our banking industry and financial institutions and privacy. In the United States, the patriot act was enacted and it is structured in such a way that when it goes to a company and asks for information about a person who has done business with that company, the company must provide that information to the U.S. government services and law enforcement. That information is used for whatever purposes. People do not have any ability to know that is happening because it is against the law for that company to disclose it.

Why is that important here today? Many of our financial institutions have data assembled in the United States. Therefore, because they are assembled in the United States, like my CIBC Visa, my Visa is now vulnerable to the patriot act without my knowledge and CIBC does not even know. It is used for whatever purposes. That is a good example of why we need an international treaty on the use of information. I do not think it is fair for Canadians to have their documents spied upon by Americans without a warrant. The way the PIPEDA works in Canada is that a warrant is needed to get that information. There is a check and balance through our justice system here. They can go after the cases where they think there are significant issues to look at but at the same time there is e the balance in review so tat people are not just having fishing expeditions done on them.

Why is that important? We have seen cases in the past, such as the Maher Arar case. He was deported but we did not know what information was assembled about Maher Arar. Some of it could have been his financial records or information. However, we had a lead government agency in the United States and a lead government agency in Canada conspire against a Canadian citizen and send him to a known torture state. We do not know, because of the patriot act, how all that took place and what information, if there was, was actually used. I believe we need an international treaty with the United States on how to share and disclose information because it has never been addressed. That took place in 2004. Our Privacy Commissioner has raised it, as have a number of different other people. It is important to recognize that.

Another important issue is the credit card fees. With regard to the honorary system we have now, it is simply outlandish. We cannot have this proprietary notion and predatory rates on credit cards, especially some of those that are the third party lenders. It is very significant. Some of them are at 25% to 27% and that is just wrong and should not happen. Some of the user fees, whether it be ATM or credit cards, all those are affecting our economy because the banks have not been re-investing that capital back into Canada to the degree where that money, if we stretch somebody's budget, would pay the rent, buy some clothes or send our kids to school, and would expand our purchasing power. We could do so on a more even basis if we were to look at those things because there is an economic opportunity for all of us.

[Mike Sullivan, NDP, York South—Weston, ON]

Mr. Speaker, this failure of the government to deal with credit cards and other bank fees touches more than just consumers. I would like my friend to comment on how this would impact small businesses in this country as they deal with banks. I am aware of one small business owner in my riding who was just advised that the banking fees for a small business with a bank, because there is nowhere else to turn as they cannot just go someplace else to get this done, would go up by 68% in one day. How does that impact a small business' ability to stay healthy in this country?

[Brian Masse, NDP, Windsor West, ON]

Mr. Speaker, we have seen this in my community, in particular, in the auto industry, where they were denying loans. A lot of these companies were paying such high interest rates that they were not profiting, costing good Canadian jobs that were competing.

I did not say it in my speech, but it is important to recognize the history. The Liberal government and John Manley attempted to Americanize our banks. The Liberals said that they had to come together to compete in the global atmosphere to ensure we could compete in America and move some of necessary services and lending systems. The NDP stopped that. A small group of us at that time pushed back and stopped that from happening.

Therefore, when the banks talk about how great they are and what a great system they have for Canada, it is absolutely wrong. It is not true. They were forced to do that. In addition, lending practices still have not been fixed for small businesses, at all.

[Jamie Nicholls, NDP, Vaudreuil—Soulanges, QC]

Mr. Speaker, although the legislation touches upon measures to stop tax evasion, we have said that perhaps we do not have enough time to explore the idea that maybe penalties for tax evaders should be enforced in a greater way or in a more severe way to recoup the money that Canada's economy loses every year because of tax evasion.

Would my hon. colleague address the issue of tax evasion in the legislation?

[Brian Masse, NDP, Windsor West, ON]

Mr. Speaker, tax evasion costs the Canadian economy. It costs us our ability to compete. It is simply nonsense.

We are moving toward more agreements that include tax evaders as part of our international treaties, for example, Panama. We are looking at doing free trade with Panama. Even President Sarkozy was very clear at slapping down Panama recently in terms of it being a tax haven.

Some new information is coming out about tax havens in a book entitled Treasure Island. It is unfortunate. What ends up happening is that if tax cheats are allowed, it costs ordinary citizens because we have to make up the difference.

[Rodger Cuzner, Liberal, Cape Breton—Canso, NS]

Mr. Speaker, I appreciate the comments offered by my colleague from Windsor West. He was not far off in regard to the merger being supported by some members of the government at the time. John Manley was a big advocate. However, to say the NDP stopped the merger, it is a little far off. The NDP had 19 members in the chamber at the time and the Liberals had 161.

Could the member reach back into the NDP playbook to find out what those 19 members did to stop the mergers and perhaps get some advice from them as to how we can stop the government proceeding with things like time allocation?

[Brian Masse, NDP, Windsor West, ON]

Mr. Speaker, we all know that the NDP punches above its weight. It is as simple as that.

[Brad Butt, Conservative, Mississauga—Streetsville, ON]

Mr. Speaker, I want thank all the hon. members for the debate today. I think members have endeavoured to bring some ideas to the floor today. After the bill passes second reading, we will go to committee and we will continue to have more discussion about how we can continue to ensure Canada's sound financial system, which is a model for countries around the world. We are praised by countries around the world for our strong banking and economic and financial system. That needs to continue and get stronger. The financial system review act would ensure our financial system continues to be secure for Canadians and a fundamental strength for our economy.

Let us just quickly remind ourselves what is in the bill.

The bill includes measures to update financial institutions' legislation to promote financial stability and ensure Canada's financial institutions continue to operate in a competitive, efficient and stable environment. It proposes to fine-tune the consumer protection framework, including enhancing the supervisory powers of the Financial Consumer Agency of Canada, and improve efficiency by reducing the administrative burden on financial institutions and adding regulatory flexibility.

This is a good bill. It needs to go to committee and it needs to come back. We need to get on with the statutory review, as required under the law, and continue Canada's strong financial services sector.

[The Acting Speaker, Conservative, Bruce Stanton]

It being 5:45 p.m., pursuant to an order made earlier today, it is my duty to interrupt the proceedings and put forthwith every question necessary to dispose of the second reading stage of the bill now before the House.

The question is on the motion. Is it the pleasure of the House to adopt the motion?

[Some hon. members]

Agreed.

[The Acting Speaker, Conservative, Bruce Stanton]

Accordingly the bill stands referred to the Standing Committee on Finance.

(Motion agreed to, bill read the second time and referred to a committee)

[The Acting Speaker, Conservative, Bruce Stanton]

The House will now proceed to the consideration of private members' business as listed on today's order paper.