House of Commons Hansard #145 of the 35th Parliament, 2nd Session. (The original version is on Parliament's site.) The word of the day was consumers.

Topics

An Act To Amend Certain Laws Relating To Financial Institutions
Government Orders

6 p.m.

St. Paul's
Ontario

Liberal

Barry Campbell Parliamentary Secretary to Minister of Finance

Madam Speaker, I find myself in the rather awkward position of thinking that we had heard the last from the member for Capilano-Howe Sound last week and standing up to thank him on that occasion for his even-handedness in giving credit where credit is due. Now to my great chagrin I see that he will not stay dead and I am going to have to put a stake through his heart once more.

I did mean what I said last week about him doing politics a little differently but today his colleagues seem to have got to him. I think he has been a little unfair in his comments today.

There are two targets that matter, the targets for reducing the deficit and reducing overall program spending. We are on target for both. In fact, we are doing better than we projected for both. There has been no increase in program spending as today's article that the hon. member referred to claims.

Projected program spending would amount to $106 billion in 1997-98 and $105 billion in 1998-99. With program review the 1997 budget forecast program spending was revised downwards, as the member knows. As with our deficit reduction targets we are ahead of our original projections.

I will use this time to say that. It is in the nature of a comment because I care not to ask him a question.

An Act To Amend Certain Laws Relating To Financial Institutions
Government Orders

6:05 p.m.

Reform

Herb Grubel Capilano—Howe Sound, BC

Madam Speaker, this is spin doctoring at its best. However, as I have great respect for the hon. member, I do not think this is the cause of his problem.

There is a difference between program spending and departmental spending. I am not talking about program spending. Sure, the downloading went ahead as expected. The problem I have is with something that is called departmental spending which is part of program spending.

Since this was not stated in the budget, I can only rely on the graph that has been provided here. For example, government services were supposed to have gone from about $6 billion to $4 billion in the 1997-98 fiscal year. Where is it? It is still at $6 billion. This goes on and on. The only department that hit its target is the Department of National Defence.

I would be happy to learn from the hon. parliamentary secretary if he has in his briefing notes a page dealing with this issue. His comments concerned program spending, which I have no problem with. However, the issue that is being discussed this week in the Senate committee deals with departmental spending. I would love to hear why this article is wrong. I would love to be able to tell my people in the next election that the government is really on track but these numbers suggest it is not. I wonder what went wrong.

An Act To Amend Certain Laws Relating To Financial Institutions
Government Orders

6:05 p.m.

Reform

Jim Silye Calgary Centre, AB

Madam Speaker, I always listen with great interest when the member for Capilano-Howe Sound takes the time to make a speech. I especially listen when he goes off any written text because I find then he gives us the benefit of what he is really thinking and it comes out a lot clearer.

I would like to get something straight. I have never read that newspaper article to which he referred. I do not have a clue what he is talking about.

Therefore, as an individual MP sitting here, I am hearing for the first time that the government is behind in its departmental spending cuts. It has not made the size or kind of cuts in departmental spending that it had projected it would when it bragged about how it was going to eliminate the deficit. It did that by downloading 25 per cent or 29 per cent on to the provinces. The member for Capilano-Howe Sound told me that we also had to get our spending under control. We are all going to share this equally.

What the member just said is that the government indicated it would cut departmental spending by 19 per cent, which means $9 billion. It has not done that. Nor does it appear that it is going to be able to achieve that. I just want to get this perfectly straight and clear because I know this member does not say things just to win political brownie points like members on the opposite side do. He does not take cheap, political, partisan shots like members on the other side do.

An Act To Amend Certain Laws Relating To Financial Institutions
Government Orders

6:05 p.m.

Reform

Lee Morrison Swift Current—Maple Creek—Assiniboia, SK

Like you do.

An Act To Amend Certain Laws Relating To Financial Institutions
Government Orders

6:05 p.m.

Reform

Jim Silye Calgary Centre, AB

Like I do sometimes. However, he does think things through. I would like to know, as a taxpayer, will the government be able to achieve what the master of myth, the finance minister, set out in budgets? Where is the government on its $9 billion in spending cuts by departments now? Has it cut anything at all? How much has it cut? What is there left to cut? How much time does he have to get there?

Over a four year period has the government pulled the wool over Canadians' eyes? Has the master of myth led the Canadian taxpayer astray again by not coming clean on where we are on departmental spending?

An Act To Amend Certain Laws Relating To Financial Institutions
Government Orders

6:10 p.m.

Reform

Herb Grubel Capilano—Howe Sound, BC

Madam Speaker, if I may read from an article from the Financial Post , dated March 15-17, authored by John Geddes, it states that according to figures published last month by Treasury Board, with the government's main spending estimates: ``The government projects that its departments will spend about $50 billion in fiscal 1997-98 beginning April 1, compared with the target of just under $42 billion set out in Martin's landmark 1995 budget''. This budget said the spending cut would be 19 per cent. In fact, it will be only 9 per cent. This is a true scandal.

The only department which has met its 1995 target is the defence department. Even the department headed by one of the most effective managers in the government, namely the department of transport, has fallen by a steep 38 per cent, but that still does not equal the 51 per cent cut which was targeted in 1995.

I urge anyone who is interested in this to have a look at this table. It raises serious questions about the integrity of the government. It keeps on talking about how far it has exceeded that one-inch target it set for itself. What really counts is smaller government. What really counts is doing what is right but is politically hard, namely to undertake the cuts in departmental spending.

Why has that not taken place? What is going on? How much more is missing from the 1997 budget as we go into an election?

I hope that the other House in its committee work will make sure that if there are other skeletons in this closet they will be dug out and the government will be held accountable for not carrying through with the grandiose plans it had. We will not be diverted by spin doctors from what is going on in government.

An Act To Amend Certain Laws Relating To Financial Institutions
Government Orders

6:10 p.m.

Reform

Jim Silye Calgary Centre, AB

Madam Speaker, I thank the member for his answer. I guess what he is really saying is that over the last four years the government has cut $7.5 billion in transfers to the provinces and only $1 billion of departmental spending and that the reduction in the deficit has come from increased taxes. Is that correct?

An Act To Amend Certain Laws Relating To Financial Institutions
Government Orders

6:10 p.m.

Reform

Herb Grubel Capilano—Howe Sound, BC

Madam Speaker, that is correct. If I may repeat those numbers, of the $36 billion improvement, $28 billion came from increased taxes through bracket creep.

An Act To Amend Certain Laws Relating To Financial Institutions
Government Orders

6:10 p.m.

Reform

Jim Abbott Kootenay East, BC

Madam Speaker, it has been interesting listening to the debate on Bill C-82. We have had the government interpretation and we have had the Reform interpretation. We have not heard a lot of interpretation by the Bloc.

I thought that it might be of value to read into the record a totally independent interpretation written by the law firm of Gowling, Strathy & Henderson in Ottawa. It is entitled "Financial Institutions Legislation and Foreign Branch Banking". It states:

In mid February the Secretary of State for Finance-tabled legislation to strengthen consumer protection, ease the regulatory burden on financial institutions, and "fine tune" certain provisions in the financial institutions statutes. Bill C-82, an act to amend certain laws relating to financial institutions, responds to proposals set out in the June 1996 consultation paper, the 1997 Review of Financial Sector Legislation: Proposals for Changes, and to comments received during the consultative hearings. The legislation establishes March 31, 2002, as the new "sunset" provision for all federally regulated financial institutions.

The government has given itself expanded authority to make regulations governing privacy and enhanced cost-of-credit disclosure. The Bill also introduces tied-selling safeguards, and provisions to improve dissemination of information about fees.

To update and fine tune financial institutions regulation, banks that do not take retail deposits will be allowed to opt out of the Canada Deposit Insurance Corporation coverage, more flexibility will be provided to financial institutions seeking to enter into joint venture arrangements and access to capital for mutual insurance companies will be enhanced.

Changes to the provisions governing the operations of the foreign banks in Canada include: "near banks" (entities which do not generally take deposits and are not regulated as banks in their home jurisdiction but do provide one or more banking type services) which have received approval under the Bank Act to enter the Canadian market will no longer need to seek further approvals, provided their unregulated activities do not include taking deposits;

Removing the requirement for regulated foreign banks owning Schedule II banks to own their own financial institution subsidiaries through the Schedule II bank; and

Permitting near banks to own non-bank financial institutions.

Mr. Peters also announced that separate legislation will be made public before the end of the year to allow foreign banks to branch directly into Canada. The easing of foreign bank entry was a priority recommendation contained in separate reports released last fall by the Senate Committee on Banking, Trade and Commerce and the House of Commons Committee on Finance.

The government's decision to act in this area prior to receipt of the report of the Task Force on the Future of the Canadian Financial Services Sector was "noted" in the Finance Minister's February 18 budget when he stated: "the increased competition this [foreign branch banking] should produce will increase the financing options-that is, the increased access to capital required by small- and medium-sized Canadian businesses.

Before I go on to conclude this analysis by the law firm I might say that any action that the government, indeed any government, can take which will increase access to capital required by small and medium sized Canadian business surely must be a positive activity. What is stopping so many operations in Canada from being able to survive, let along thrive, is a lack of access to capital. If in the judgment of our industry critic this bill turns out to be a tool that will work in that direction, then if for only that reason I would be inclined to support it.

Carrying on with this analysis:

The main characteristics of the new branching regime would be as follows:

Foreign bank branches would not be allowed to take retail deposits.

The ability to operate branches would generally apply to foreign banks with at least $25 billion in assets on a world-wide basis, a limit that would permit most foreign banks operating in Canada as subsidiaries to operate as branches.

The Superintendent would have the power to require the maintenance of assets in Canada with an unrelated approved financial institution to cover liabilities of the branches.

A capital equivalency deposit of at least 5% of branch liabilities would have to be maintained at all times with a recognized financial institution.

The foreign bank would have to be regulated on a consolidated basis in its home jurisdiction in line with internationally recognized regulatory standards acceptable to the Superintendent, with appropriate co-operative regulatory arrangements in place.

Branches would be subject to appropriate Canadian reporting, auditing and taxation requirements. In cases of branch liquidation all assets in Canada of the foreign bank could be seized to satisfy the obligations of the Canadian branches.

The government will also review all other aspects of foreign bank entry policy. Pending completion of this review, foreign companies offering a limited range of financial services which now operate unregulated in Canada as well as new entrants that meet certain criteria, (i.e., non-deposit taking with a $200 million ceiling on the assets of Canadian operations) will be allowed to carry on their activities without being regulated, but will be required to disclose to creditors and customers that it is not regulated as a financial institution in Canada.

A final decision on the status of those unregulated foreign companies now operating in Canada and of those intending to set up operations during the interim period, will be taken once the branching regime and review of the foreign bank entry policies have been completed. It is expected that once the banking regime is in place a number of these companies will convert their Canadian activities to branch operations.

I wanted to put on the record an independent analysis or evaluation of what is a very technical bill. I recognize that not infrequently members end up in some fairly partisan sparring, and various things are said sometimes in jest and sometimes in the heat of the moment. However, with us having the unfortunate title of politician, sometimes we act like politicians.

The bill is probably one in which each of us would do well to rise above the normal partisan discussion which is going back and forth because it is so key to what ends up impacting Canadians in every day of their lives.

As I understand it from a summary that has been given to me by our industry critic, the bill will provide that more detailed information will be available to the consumer regarding cost of credit disclosure.

I recall that very frequently, almost on an annual basis, there is discussion in the public domain about the cost of credit cards of banks as well as credit cards of the financial institutions. I note that in the current Eaton's difficulty that the credit card section of the Eaton's empire is one of the strongest assets it has. It is reported to be a part of the corporation that does not require support and ends up contributing to the bottom line of the Eaton's group.

We also note that most of the banks issue credit cards with 18, 20 and 24 per cent interest rates on an outstanding balance. While Canadian consumers have a personal responsibility for what they do and must not always be looking to the government to be protected, on the other side of the coin there is a clear understanding that the Canadian consumer who has a piece of plastic, a credit card by which he or she can access all sorts of goods and services, has a responsibility in the way that credit card is used.

Clearly, as the credit card balance goes up and particularly where there is a very high interest rate, it is important that there be detailed information available to the consumer so that he or she may understand what the cost of constantly carrying a balance will be. I wonder how many Canadians are really aware if they have a $2,000, $3,000 or $5,000 balance on their credit card, that as long as they leave it on their credit card, just how much more interest they will actually end up paying for the use of that money? It is the equivalent of a very high cost loan.

A second part of Bill C-82 requires a simplified and improved dissemination of information to consumers about basic financial services, low cost options and fees on products and services.

It works to the the advantage of some of us to pay a $25 monthly fee or whatever the fee is where everything is rolled in whether it is inclusive of a safety deposit box, perhaps a credit card with no further fee, perhaps overdraft protection that is available on the side that simply needs to be activated. But all of these financial services end up costing money.

In a lot of instances when people started to use their bank card, they were drawn into the practice of using that card on the

assumption that their transaction was not going to cost them money. Indeed, some banks actually did that.

I applaud what the government is bringing forward where there is a simplified and improved dissemination of information to consumers about what the services are and what the costs are.

Allowing non-deposit taking institutions to opt out of the Canada Deposit Insurance Corporation and loosen subsidiary requirements makes sense. This becomes a user pay kind of a situation of which the Reform Party is completely in favour. We believe that people who are making use of any service, whatever the service may be, it is their responsibility to make sure that the service is properly and adequately funded.

If non-deposit taking institutions are required to pay into the Canada Deposit Insurance Corporation the danger is much the same as the danger that we have realized with both the Conservatives and now the Liberals leaving people with no option. Both have told people that they have to pay into the unemployment insurance fund, for example. Where there is a mandatory requirement, where there is a sucking in of money we can count on the fact that there is a government somewhere in the background.

In this instance the fact that the Canada Deposit Insurance Corporation will permit non-deposit taking institutions to opt out is only fair, right and proper.

It introduces regulations to allow financial institutions to enter into joint venture arrangements and proposes changes that permit mutual insurance companies to issue participating shares. This gets into a slightly trickery area in my judgment.

On the surface it appears to be a very sound move. Not infrequently people will end up in a business situation where they require someone, some corporation, some financial body, some venture capital. That venture capital has to come from an organization with very deep pockets. Quite frankly, I cannot think of a better description of banks than an institution with deep pockets.

It would allow the bank entering into joint venture arrangements for that bank to be able to get into the boardroom, into the decision making process should it so choose if the venture is going off track. One of the difficulties in my constituency, and I suspect with a lot of businesses all over Canada, is that when they enter into an arrangement with the bank, almost invariably the bank ends up making sure that it is triple secured for any of the money that it actually extends in the form of a loan.

When it is triple secured it ends up falling back on a feeling of comfort. Perhaps they do not have to look over the shoulder of the entrepreneur to the same extent. Not looking over the shoulder of the entrepreneur in itself ends up creating some difficulty or some problem. More often than not, the financial institution, the venture capitalist, having a vested interest, will be able to foresee difficulties.

Madam Speaker, I note that you are giving me the high sign. I will sit down. I know that the House will just be waiting with bated breath for me to continue my intervention the next time this topic comes up.

The House resumed from March 13, 1997, consideration of the motion.

Canada Labour Code
Government Orders

March 17th, 1997 / 6:25 p.m.

The Acting Speaker (Mrs. Ringuette-Maltais)

It being6.30 p.m., pursuant to order made Wednesday, March 12, 1997, the House will now proceed to the taking of the deferred division on the motion for time allocation at third reading stage of Bill C-66.

Call in the members.

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

Canada Labour Code
Government Orders

7 p.m.

The Acting Speaker (Mrs. Ringuette-Maltais)

I declare the motion carried.

Canada Labour Code
Government Orders

7 p.m.

Reform

Jim Gouk Kootenay West—Revelstoke, BC

Madam Speaker, could you confirm that this is in fact the 37th time that the Liberals have invoked closure with this motion?

The House resumed, from March 13, 1997, consideration of Bill C-32, an act to amend the Copyright Act, as reported (with amendments) from a committee.

Copyright Act
Government Orders

7 p.m.

The Acting Speaker (Mrs. Ringuette-Maltais)

The House will now proceed to the taking of the deferred divisions on report stage of Bill C-32.

The question is on Motion No. 1. A vote on Motion No. 1 applies to Motions Nos. 8, 11, 39, 42, 43 and 46.