Debates of Feb. 27th, 2007
House of Commons Hansard #119 of the 39th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was banks.
- Question Period
- Main Estimates, 2007-08
- Government Response to Petitions
- Committees of the House
- National Cemetery of Canada Act
- Points of Order
- Committees of the House
- Questions on the Order Paper
- Bank Act
- CN Rail
- Gasoline Prices
- Gaétan Innes
- Aboriginal Affairs
- Jean-Marie Guay
- Sylvia Lawton and Pauline Fitzpatrick
- Edmonton Oilers
- The Environment
- University of Manitoba
- Anti-terrorism Act
- Hamilton AIDS Network
- Heart Disease
- Anti-terrorism Act
- Quebec Elections
- Government of Canada
- Status of Women
- Fisheries Act, 2007
- Democratic Reform
- Government Programs
- Status of Women
- Softwood Lumber
- Oil and Gas Industry
- Arctic Sovereignty
- Citizenship and Immigration
- Government Programs
- Points of Order
- Bank Act
- Competition Act
- Business of Supply
- Anti-terrorism Act
- Committees of the House
- Criminal Code
Citizenship and Immigration
Diane Finley Minister of Citizenship and Immigration
Mr. Speaker, we have made it very clear that the situation we inherited from the previous government is a serious one. That is why we are taking action by having a dedicated line in our call centre. We have dedicated agents to help these people. We are also working closely with our partners at CBSA and Passport Canada.
Let me say this and put it in context. The hon. member has been saying that Statistics Canada is claiming 50,000 of these people. I have a letter that says, “I would like to clarify an error appearing February 20 in various media articles with regard to the concept of lost citizens—
Citizenship and Immigration
The Speaker Peter Milliken
The hon. member for Dufferin—Caledon.
February 27th, 2007 / 3 p.m.
David Tilson Dufferin—Caledon, ON
Mr. Speaker, Pakistan is increasingly being identified as an important element of a comprehensive strategy to address the security situation in Afghanistan, a point which the Prime Minister emphasized yesterday.
Could the Minister of Foreign Affairs inform the House what action Canada is taking to encourage Pakistan to improve the security situation in Afghanistan?
Peter MacKay Minister of Foreign Affairs and Minister of the Atlantic Canada Opportunities Agency
Mr. Speaker, while Pakistan is indeed an important ally in the fight against terror, Pakistan and Afghanistan need to do more to combat the instability and poverty exploited by the Taliban insurgency.
Canada has offered solutions to help better police the border, a point that I made during my recent visit in January to both countries. A Canadian multi-departmental border security assessment team has just recently returned from surveying that border and meeting with officials in those countries. I look forward to reviewing that work.
These recommendations will be used to jointly develop new effective border management projects. These efforts are important for the safety of Pakistan, Afghanistan and Canadians and the success of the overall mission.
Judy Wasylycia-Leis Winnipeg North, MB
Mr. Speaker, hundreds of Canadians who have purchased weekly bus passes are left waiting at the bus stop when it comes to the Conservative transit tax credit. If someone buys a pass four weeks at a time, the government will give that individual money. However, if they buy four weekly passes, the government says that it does not add up to a month. I think it is only logical that the minister fix the loophole and allow weekly pass holders access to the tax credit.
Does the minister disagree with my logic, or will he support ordinary Canadians and extend the program to weekly pass holders?
Jim Flaherty Minister of Finance
Mr. Speaker, Canadians have had the benefit of the transit credit since July 1 of last year. It amounts to about two months free public transit per year for someone who commutes regularly by public transit.
I hear carefully what the hon. member says about fine tuning the pass system. We have had certain representations about it during the course of the past year. I look forward to consulting with the member about it.
Bill C-257—Canada Labour Code—Speaker's Ruling
Points of Order
The Speaker Peter Milliken
On February 26, 2007, a point of order was raised by the Leader of the Government in the House to the effect that amendments adopted by the Standing Committee on Human Resources, Social Development and the Status of Persons with Disabilities in its consideration of C-257, An Act to amend the Canada Labour Code (replacement workers) and reported to the House on February 21, 2007, are inadmissible.
As the House knows, the Speaker does not intervene on matters upon which committees are competent to take decisions. However, in cases where a committee has exceeded its authority, particularly in relation to bills, the Speaker has been called upon to deal with such matters after a report has been presented to the House.
In terms of amendments adopted by committees on bills, if they were judged to be inadmissible by the Speaker, those amendments would be struck from the bill as amended because the committee did not have the authority to adopt such provisions. As the hon. Member for Roberval—Lac-Saint-Jean reminded us, this is succinctly explained in a ruling of Mr. Speaker Fraser on April 28, 1992 at page 9801 of the Debates:
When a bill is referred to a standing or legislative committee of the House, that committee is only empowered to adopt, amend or negative the clauses found in that piece of legislation and to report the bill to the House with or without amendments. The committee is restricted in its examination in a number of ways. It cannot infringe on the financial initiative of the Crown, it cannot go beyond the scope of the bill as passed at second reading, and it cannot reach back to the parent act to make further amendments not contemplated in the bill no matter how tempting that may be.
This is precisely the kind of case that I am being asked to adjudicate today.
Before getting into the substance of that case, I want to comment briefly on a precedent cited earlier today where the admissibility of an amendment adopted in committee was challenged, though on rather different grounds than the case before us now.
The hon. Member for Roberval—Lac St-Jean referred to the ruling handed down by the Speaker on October 26, 2006 with respect to Bill C-14, An Act to amend the Citizenship Act (adoption). Although the Member for Roberval—Lac St-Jean is right in citing that decision as an example, he gives it his own interpretation. In that particular case, the Speaker carefully examined, one by one, the amendments adopted by the committee and concluded that, as regards strict compliance with procedural rules, the committee had not exceeded its powers in adopting the amendments challenged by the government.
The case before us is rather different. Given the very narrow scope of Bill C-257, any amendment to the bill must stay within the very limited parameters set by the provisions of the Canada Labour Code that are amended by the bill.
I have reviewed with great care the text of Bill C-257 as adopted at second reading, the text of the amendments adopted in committee, the relevant sections of the parent act, the Canada Labour Code and, of course, the arguments presented by the hon. members who intervened on this matter. I am now ready to rule.
In relation to the first amendment, the government House leader contends that an amendment proposed in committee by the hon. member for Davenport to clause 2, subparagraph 2.1, is inadmissible because it attempts to make the bill “subject to section 87.4” of the Canada Labour Code. As the hon. member for Roberval—Lac-Saint-Jean noted, the first reading version of the bill already contained this exact phrase within subparagraph 2.1(c); the amendment simply repositioned it within the same subparagraph.
Therefore, the Chair is of the view that this amendment can be characterized as a reference to section 87.4, rather than as an amendment to the Canada Labour Code dealing with the maintenance of services. As such, this amendment to subparagraph 2.1 does not import matters which are beyond the scope of the bill and is therefore admissible.
The admissibility of two other amendments to clause 2, both proposed by the hon. member for Davenport, is also in dispute. The first is to subparagraph 2.3 and introduces the concept of “essential services”. After hearing ample discussion in committee on the admissibility of this amendment, the committee chair found the amendment to be beyond the scope of the bill and ruled it inadmissible. That ruling was challenged and overturned, and the amendment was subsequently adopted. The second disputed amendment, this one to subparagraph 2.4 and also dealing with “essential services” enjoyed the same fate.
The hon. members for Roberval—Lac-Saint-Jean and Windsor—Tecumseh have maintained in their arguments that these two amendments serve to clarify the intent of the main provisions of Bill C-257. They argue that these amendments are admissible for they only make clearer the bill's provisions with respect to replacement workers as these relate to the continuation of essential services.
I fully appreciate the arguments that my hon. colleagues are making. However, I fear that their views are precisely what Mr. Speaker Fraser meant in the 1992 ruling cited earlier when he warned members against being led into the temptation of amendments not contemplated in the original bill.
Hon. Members will know that Bill C-257 is limited in its scope. As the summary of the bill adopted at second reading explains:
The purpose of this enactment is to prohibit employees under the Canada Labour Code from hiring replacement workers to perform the duties of employees who are on strike or locked out.
Bill C-257 amends three sections of the Canada Labour Code: section 87.6 dealing with the reinstatement of employees after a strike or lockout, section 94 dealing with prohibitions relating to replacement workers, and section 100 dealing with offences and punishment.
Clause 2, where the two remaining disputed amendments lie, addresses section 94 dealing with prohibitions relating to replacement workers. Clause 2 in the original bill does not touch section 87.4 which is the operative provision of the Canada Labour Code dealing with essential services.
Indeed, it is worth noting that the very phrase “essential services”, although one with which we are all familiar, is not a phrase found in the Labour Code. The Labour Code does not use the term, but refers to “maintenance or continuation of activities to prevent an immediate and serious danger to the safety or health of the public”.
The first amendment imports the new concept of essential services into a clause originally addressing employers' right to protection of their property. As for the second amendment, while it does not actually directly seek to amend section 87.4, it nevertheless does reach back to the parent act and import into Bill C-257 the terms of reviews of orders made by the board under subsection 87.4(7), concepts not found within the bill as adopted at second reading.
Therefore, on strictly procedural grounds, the Chair must conclude that the ruling of the chair of the committee was correct: these last two amendments do go beyond the scope of the bill as adopted at second reading and are therefore inadmissible.
Pursuant to this decision, I must order that the two inadmissible amendments to clause 2, subparagraph 2.3 and 2.4 adopted by the Standing Committee on Human Resources, Social Development and the Status of Persons with Disabilities be declared null and void, and no longer form part of the bill as reported to the House.
In addition, I am ordering that a reprint of Bill C-257 be published with all possible haste for use by the House at report stage to replace the reprint ordered by the committee.
Since report stage on this bill is to be taken up tomorrow, I have advised the Table officers to take appropriate action to ensure that any report stage motions of amendments submitted this evening are in proper form. As hon. members know, they must be submitted by 6 p.m. tonight.
I therefore wish to thank the House for giving me the opportunity of addressing this complicated and somewhat unusual situation.
The House resumed consideration of the motion that Bill C-37, An Act to amend the law governing financial institutions and to provide for related and consequential matters, be read the third time and passed.
Paul Szabo Mississauga South, ON
Mr. Speaker, I am pleased to participate in the third reading debate on Bill C-37, An Act to amend the law governing financial institutions and to provide for related and consequential matters.
I spoke on the bill at second reading and raised some concerns. I think those concerns have been enforced even further by virtue of the activity at the Standing Committee on Finance. It had an opportunity to review the bill with regard to the commentary and interventions of a number of members.
This particular bill is one which is pursuant to an obligation of the government of the day to carry out a five year review of the Bank Act and related financial institutions.
It touches about 14 different acts of Parliament. It includes about 450 amendments to the various pieces of legislation that it touches upon. The House spent a few hours at second reading dealing with a bill which in itself is not readable without having the benefit of the bills to which it is related. As a consequence, we would probably have a stack of paper in front of us to properly do a review.
The reason I raise this is because I want to make a recommendation to Parliament with regard to the review of the Bank Act and related financial institutions.
At second reading we simply talked about those items which the government is proposing to change based on its own consultation and matters that may have arisen since the prior review.
The finance committee had three hearing days at which it went through a number of witnesses to discuss some of the items in this particular bill. The committee also dealt with committee stage amendments, of which there were a number. Most of them were ruled out of order because they were beyond the scope of the bill.
What it did tell me was that there were a fair number of matters of interest related to the Bank Act and other acts which were beyond the scope of the bill but which should not be beyond the scope of the bill. We can look at something that we went through and that is the budget process before it is presented on March 19. The finance committee did some broad based, cross-Canada consultations to talk about the issues that were important to Canadians. It talked of budgets and related legislation that may touch Canadians. There were policies of government, whether taxation, income trusts, deductions, child care or aboriginal health issues. There was a whole range of issues that impact Canadians and there was an opportunity for Canadians to have an input.
We do not have that kind of input in a bill like this that touches 12 or 14 different acts of Parliament. Once it is handled at second reading there is no opportunity to introduce amendments. During the debate I started to list some of the items that members were talking about. Some issues related to bank mergers; information for consumers on particular instruments; the whole idea of foreign banks, and some of the obligations and undertakings; credit union issues; bank closures in communities, particularly small communities; and small and medium sized enterprises, the instruments available to them, whether it be loans, lines of credit or other assistance that could come from the financial services industry to allow them to continue to promote competitiveness within the Canadian economy.
We have heard a lot about bank charges and ATM fees, about private ATMs, about using another bank's ATMs, and about using our own bank and charges ranging anywhere from a $1 to $6. Those are the kinds of issues that Canadians probably would have thought of when we are talking about the banks. We ought to talk about the issues that touch Canadians.
When I heard some of the discussion, particularly in the speech of the finance minister during second reading, I thought that this bill, if I were to characterize it, has to do with three words. It has to do with openness, transparency and accountability.
If we have those elements in a process as well as in a piece of legislation, then Canadians can take comfort that there has been a thorough and comprehensive review of the important issues of the day that are related to the subject matter and that they have come before the House in a manner which parliamentarians understand and have an opportunity to consult on.
My recommendation to Parliament is to encourage the government of the day in the future to commence consultations with Canadians, not just a couple of months before a bill comes forward but to treat it like the budget. We need to hear what Canadians have to say, as well as the financial institutions themselves.
It is extremely important that we have the broad input from Canadians so we have a good understanding of their ideas with regard to how financial institutions can better provide the services and products that Canadians need for their personal and business purposes. I think we ignore the needs of ordinary Canadians and the realities of people who do not have the accessibility. We have the principles of the Canada Health Act. I wonder if we should have the principles under the Bank Act of Canada about accessibility, affordability and comprehensiveness. These are the same kinds of things. They are principles that Canadians can rely on and can look to legislators to say that we will support those principles in matters such as the Bank Act.
I raise it because, quite frankly, I find it very difficult as a parliamentarian to deal with Bill C-37, which would amend 14 acts with 450 amendments, without having all of the bills. As the House knows, even with one amendment in the bill we cannot clearly understand the intent or the impact of that amendment without looking at it in the context of the legislation that it is amending.
If members were to consult with each other on this matter, I believe there would be a fair bit of support for streamlining this process so we can deal with certain areas of issues related to the Bank Act and do a better job on those areas that are most important to Canadians, as well as deal with the regulatory and jurisdictional issues that must be dealt with to respond to the changes in the international community.
That is enough about the process. I believe the process can be improved immeasurably and would improve the quality of the legislation that we deal with as we do this five year review on the Bank Act.
I will now turn to the finance minister's speech at second reading. The finance minister took the lead on the bill and thought it was important to put some of the principles forward to guide us in our deliberation on this bill. He talked about trust in the institutions and I want to talk about trust very briefly.
Many of the NDP members who have spoken have taken the opportunity to basically say that they do not like banks. They think banks are bad. Canadians should be very pleased to have a very stable financial services industry in Canada compared to other jurisdictions. We need to celebrate the fact that our banking system has served Canadians very well.
We also need to understand that Canadians rely on the financial services sector for investments, directly or indirectly, as in their pension plans or RRSP programs. A stable financial industry means that there will be a good return for those pension plans and 80% of Canadians are invested directly or indirectly in the financial services sector. It is important that they are strong and vibrant and that they give a fair and reasonable return.
The marketplace is a dynamic place. People have opportunities and they have choices. However, if the banks had usurious yields from their operations, everyone would invest simply in banks and in nothing else, but that, obviously, is not the case. The environment out there is competitive and competition, which is an area of concern to Canadians, is an important element. I do not think we have had that fulsome debate recently in Parliament and it is one that we should have.
The finance minister also talked about ensuring financial stability and he gave the reason why we had to do these reviews. He concluded his remarks, and phrased it quite well, by saying that the best approach to improving services for consumers was through competition and disclosure.
No matter which business or which industry, we know that competition is an important element to ensuring the consumer is protected, which means that the consumer has choices.
However, we have had a great deal of discussion over the years about bank consolidations and mergers comparatively speaking. One of the things we do know is that the banking industry in Canada is relatively small in the international comparisons in terms of its capitalization, notwithstanding the fact that many of the banks have had very attractive business operations offshore that have generated substantial income for Canadian banks that pay a lot of taxes.
The other thing the banks have in their stead, and which we should not forget, is their contributions back into the community. Their charitable giving through philanthropy and through community service is unparalleled in business and industry. The banks have been extremely supportive and I am sure every member in this place can find an event or activity within their own communities where the banks have been supportive in investing back and giving back to the community.
If the banks were to stop their charitable giving and philanthropy, the money would need to be made up elsewhere. On balance, it would be very difficult for a lot of members in this place simply to write off banks as being bad institutions. Bank employees, some 700,000, pay a lot of taxes. I know people see big numbers and they suggest that somehow banks are bad because they make a profit. It is a profit based on the capital invested. If we were to look at the yield, the return and the dividend ratio that they have, et cetera, I think we would find that they are blue chip stocks that not only provide a healthy return but also provide a tremendous security and stability within the financial system of Canada to ensure we have a vibrant financial community to help Canadian business and industry, as well as consumers and individuals to have safe and secure banking service. That is extremely important. I wish the NDP would give some credit at least to the important contribution that our secure financial system has given to Canada.
The other aspect that the finance minister mentioned in his speech was the whole issue of disclosure. I was a little taken aback when I read a couple of the amendments dealing with customer charges. Canadians talk a great deal about some of the charges for various services, whether it be on a particular account or on some other product that is offered to Canadians.
Two amendments are virtually identical. The first one is to the Bank Act itself and the other is to the Cooperative Credit Associations Act, basically credit unions and the like.
Some of the provisos in clause 31 of Bill C-37 with regard to a product, a service or an account that an individual may have with a financial institution, state a number of things an individual must be provided with:
(a) information about all charges applicable to the registered product;
(b) information about how the customer will be notified of any increase in those charges and of any new charges applicable to the registered product;
(c) information about the bank’s procedures relating to complaints about the application of any charge applicable to the registered product; and
(d) any other information that may be prescribed.
With regard to the products and services of banks where charges are made, that suggests to me that there is full disclosure.
A number of amendments were proposed at committee stage. Some were passed and they are available for members and are highlighted in the reprinted bill.
In the case of clause 31, to which I just referred, an amendment was made that added subclause (2), which reads:
The Governor in Council may make regulations specifying the circumstances under which a bank need not provide the information.
The whole clause in question says that customers shall be provided with all of the information on the amount of the charges, changes to the charges and complaints regarding the charges. For the life of me, I could not think of a product that we have now in the financial services sector or one that might be proposed that has charges associated with it where customers would not be entitled to know the amount of the charges, the changes to the charges or complaints regarding the charges.
I do not understand this section related to the Bank Act and with regard to the Cooperatives Act and the provision about giving governor in council or cabinet the authority to make a regulation exempting certain products or services from full disclosure. It makes no sense. The finance minister said that the best thing for consumers is disclosure.
I cannot change that. I think I will probably support the bill on balance because there are some important technical changes but these are things that I believe we should not be able to put in unless members who have proposed them, particularly government members, can explain to Canadians why it is this change is there. I have asked the question three times but I have never received an answer.
I would like to close with regard to the disclosure issue. We have had a lot of discussion today about the $42 billion deficit inherited by the Liberals from the Mulroney government. We have had all kinds of discussion about income trusts, the broken promise, et cetera. It has been way beyond the scope of the discussion but it has been allowed to proceed.
I will just close by saying that the finance committee had public hearings on the decision of the government to reverse itself in its election promise and to tax income trusts at a rate of 31.5%. Expert witnesses appeared before that committee. The finance minister failed to justify the $500 million tax linkage calculation on which he based his decision to tax trusts. He then stonewalled the committee by not giving any explanation as to the criticisms, identified clause and the methodology that were brought up by expert witnesses. In other words, the finance committee determined that there had not been full disclosure and tomorrow there will be a report tabled by the finance committee.
I encourage all members to look at the report because it shows clearly that the finance minister has not given full disclosure, has not shown accountability, has not been transparent and has not been open with Canadians. It has cost seniors, in particular, $25 billion in their hard-earned pension savings.
Maurizio Bevilacqua Vaughan, ON
Mr. Speaker, I listened to my colleague deliver yet another speech in the House of Commons. He is known as an individual who delivers quite a few speeches and that speaks to his dedication to the things that are important to Canadians. As well, he and I have shared many days and nights in the finance committee, and I can tell everyone that very few people work as hard as he does.
I am interested in the broader issue related to an issue that I think needs to be addressed as Canadian financial institutions deal with key issues and pressures like demography, globalization and competition in the broader global context. Of course my hon. colleague would know that I am referring to the issue of the merger review process as it relates not only to banks but also to the cross pillar option.
In the 21st century economy, where financial institutions play an important role, I would think that Canada should in fact have clear guidelines that relate to merger possibilities, not only for banks, as I said, but possibly also for insurance companies as well. While there is in fact a review mechanism in place that speaks to the importance of going through the Competition Bureau and OSFI, the public interest assessment portion of the merger review process is still very unclear.
I want to ask my hon. colleague if he feels that in a country like ours in this century where financial institutions are facing not only domestic competition but also competition from abroad, and as the entire financial service sector redefines itself given all these pressures, whether or not he feels that it is perhaps time for the Government of Canada to clearly outline to the financial institutions what the merger review process is.
These words I am saying should not be misinterpreted to mean that I am in favour of or against mergers, because at the end of the day they will be evaluated according to their merit, but I do want to hear from my hon. colleague what he feels about the fact that it is still not very clear what financial institutions need to do if in fact they want to engage in a merger.
Paul Szabo Mississauga South, ON
Mr. Speaker, I thank the member for Vaughan for his input, his having been the chair of the finance committee for a number of years, particularly during the period when we went through the last round of merger discussions in which it was ultimately decided that mergers would not be permitted to proceed, but that we needed to get this process right.
The member is absolutely right. This is an issue of process. If the process is right, the decision has a better chance of being right. The process has to engage all of the stakeholders. That means not just the parliamentarians and the banks. It means the people of Canada. It means those who are going to be impacted by making moves, because there is some Newtonian physics involved here. For certain actions, there will be reactions, and we have to be sensitive to that.
We know that Canadians are trying hard to understand big numbers and big business, but they often do not get all the information, so the process has to be comprehensive in the sense that it needs to be educational, engaging, open and transparent, and indeed, ultimately it needs to be accountable to the people in terms of the needs we have.
The member is quite right, though, in that this issue and the process have been done partially. I do not think that we are exactly there. I do not think there is a comfort level, either within the industry or within Parliament, or even among Canadians, that we really understand how it is going to work. It is inevitable that we will again have this more serious discussion on the issues with regard to the insurance industry, the trust companies and now with regard to banks, in that there now is a greater facility to consider certain combinations or mergers but in a better context in which there will not be unanticipated consequences.
I think there is a good opportunity here, but the member is quite right in that the process is not there in terms of the stakeholder knowledge. It is time we had that discussion.
Thierry St-Cyr Jeanne-Le Ber, QC
Mr. Speaker, I would like to know my colleague's opinion on the provision in the bill that will reduce the minimum equity that must be applied to buying a house, in the context of a mortgage, to 80% of the value instead of 75%. I will have the opportunity to talk about this myself in my presentation. What is his opinion on this provision?
Paul Szabo Mississauga South, ON
Mr. Speaker, there is no question about it. Home ownership is part of the Canadian dream and it is not available to a lot of people. We know what has happened to the price of houses generally across the country. We are certainly aware of what has happened to the price of houses in boom areas, particularly out west. For some of us, and I am sure for most of us, it is hard to understand how people can even afford to have certain houses on which they have to carry mortgages of hundreds of thousands of dollars.
However, the member's specific question about reducing the rate to 80% has to be taken in the context of the options available. If we make it totally unfinanceable to the majority of Canadians, then we have served no one. Obviously there has to be a continuous review, I would suggest to the member, and these specific matters probably should be dealt with a lot more frequently than every five years.
These are important dynamics that affect Canadians' decisions, and they affect an important aspect of Canadian life, that being home ownership and purchase. It is an investment that is probably one of the biggest decisions a Canadian family can make. As well, they need to have some security that they are not going to be jeopardizing their financial viability without having a backstop or support from the mechanisms available to them.
Thierry St-Cyr Jeanne-Le Ber, QC
Mr. Speaker, as long as there are no other questions, I will respond to what was just said. It is worth noting that my Liberal colleague is concerned about the matter of houses and housing in Canada and Quebec.
There was a question that I wanted to ask him, if we had the time: when the Liberals were in power, why did his government slash funding for social housing programs?
Those programs were very important and helped the most disadvantaged people in our communities. Those cuts seriously hurt people in our communities. The housing situation is a matter of concern in some neighbourhoods, in Montreal for one, but also everywhere in Quebec and Canada. I would have liked to hear his response on that subject.
I would also have liked to hear his response on another subject. The Bloc Québécois recently introduced a bill to invest the surpluses accumulated by the Canada Mortgage and Housing Corporation in social housing to help people who need it most. Why did they vote against it?
I have just bought a house. I am persuaded that most homeowners who have paid premiums to the Canada Mortgage and Housing Corporation and have had the chance to become homeowners would have been happy to lend a hand to people who have not had that chance and who are having trouble finding housing.
I find the response astonishing. I think it is a shame that when the Liberals had the opportunity, they did nothing for renters and people looking for homes—for the people. They did nothing. I will return to this a little later in my presentation.
Nonetheless, the Bloc Québécois supports the bill, for a number of reasons. First, the bill will create mechanisms for transmitting information to consumers, and this will enable them to make informed choices about the banking services they use.
Bill C-37 will also establish the regulatory framework to allow for digital data to be used in cheque processing, which will reduce the time that cheques are held by banking institutions.
Bill C-37 will reduce the regulatory burden for foreign banks, credit unions and insurance companies, to make the regulatory compliance mechanisms more efficient.
The Bill will also change the rules that apply to mortgage loans so that more individuals will have access to this financial vehicle. The government will raise the equity threshold to $2 billion from $1 billion for ownership of a bank by a single shareholder, to encourage new competitors to enter the market. For all these reasons, the Bloc will support the bill.
I will not be able to list all of the provisions in this bill, obviously. It is a very large bill, the size of a hippopotamus, and it refers to another bill, which is itself the size of a hippopotamus. It is an enormous bill. Some of its provisions were of particular interest to me.
The first, to which I referred in the beginning following my colleague's speech, is the provision regarding the ratio, the minimum equity that is required for a mortgage so as not to have to pay mortgage insurance.
At present, the minimum equity ratio is 25%, with the corollary being that the maximum ratio of the mortgage to the value of the purchase is 75%.
This rate will be reduced from 25% to 20%. If someone takes out a mortgage for 80% or less of the value of the home, he or she will not be required to buy mortgage insurance. In my view, that is good.
Allow me to recount a bit of the history of this requirement. The threshold was last changed in 1965, so quite a long time ago. At that time, the rate was 66.7% or two-thirds. In 1965, it was raised to 75%.
Now this bill would raise it from 75% to 80%. In previous times, this requirement was a prudential measure intended to protect lenders against fluctuations in interest rates and property values and ensure that we did not find ourselves in a situation where many people could not pay their mortgages back.
The market has obviously changed a lot over the last 30 years, partly because risk-management practices have improved. Banks are much better now at predicting the risk posed by various borrowers. Regulatory risk-based capital requirements have been implemented and have generally matured. This is to ensure that it is really capital, real assets, and the financial market has changed.
The supervisory framework for federally regulated financial institutions has been strengthened significantly. It seems obvious that the restriction does not play the same prudential role that they used to. As a result, the statutory requirement for a 75% loan-to-value ratio is no longer necessary.
Even if people in the market do not have enough money for the down payment, they can get mortgages with higher loan-to-value ratios, but then they will have to get mortgage insurance.
The Finance Committee held a long discussion and debate on the point at which the mortgage insurance market should be opened to other insurers than the Canada Mortgage and Housing Corporation, which currently provides most of the mortgage insurance. Genworth Capital also does so. This is a discussion that will doubtless continue.
We see more and more mortgage lenders requiring down payments even with less and less mortgage insurance. Five per cent is common now. We have even mortgage insurance of 2.5%. According to some promotions, virtually no down payment is needed any more. So the 25% down payment required to avoid having to buy mortgage insurance no longer made sense.
In fact, it forced people who were able to make a large down payment but less than 20% to buy mortgage insurance for virtually nothing. This will, therefore, help these people save a little money, which is a good thing.
I tried to introduce an amendment pertaining to mortgages, which could have been addressed in this bill, but unfortunately it was beyond the scope of the bill. As a result, my amendment was ruled out of order. We need to look at the banks' responsibility for mortgage fraud. People are increasingly concerned about mortgage fraud. For example, someone steals an individual's identity, then takes out a mortgage on the person's home or takes over the person's titles to property, then takes out a mortgage and takes off with the money.
The courts have handed down judgments in such cases, but they are contradictory or ambiguous. People whose houses were stolen or mortgaged without their consent are today being asked to pay up or lose their homes.
I would have liked to see a provision added to the Bank Act to ensure that in cases of identity theft, the bank is held responsible for the fraud and for repaying the mortgage in some other way. If this provision had been adopted, the bank could not have gone to a property owner who had been a victim of mortgage fraud and said that he or she had to repay the mortgage that had been fraudulently taken out on the property.
The amendment was not approved, but I plan to raise this issue again in the near future. In any case, I hope that the government is aware of this issue and will move forward.
Certainly, improvements can be made to protect people against identity theft in general, because as the law stands at present, identity theft itself is not a crime. Using a false identity to commit fraud is a crime, because of the fraud, but identity theft itself is not a crime as the law stands at present. This is something that should certainly be changed. A good measure would be to protect people by making sure that in cases of identity theft, the banks are automatically responsible. This would force the banks to take every precaution to avoid another fraud. If such a measure were in place, the banks would be held responsible for anything that happened. Currently, consumers are held responsible.
In our society it is increasingly difficult to protect ourselves from identity theft. There are many things consumers can do, but our personal information is given out. It circulates more and more. We have recently seen data stolen from computers. Hard drives have been lost. So it is very hard to say to consumers that they are responsible for not having their identity stolen and that, if it is stolen, it is their problem. I think it would be better to have the banks bear the burden.
I said earlier that we support the measure pertaining to mortgage loans, since it is a good measure. We had other projects for the Canada Mortgage and Housing Corporation, which I mentioned before. The bill tabled by the Bloc Québécois, which aimed to use some of the surpluses accumulated by the Canada Mortgage and Housing Corporation to provide social housing was rejected. The Conservatives and the Liberals voted against it. Regarding social housing in general, the Conservatives’ record is certainly as bad as the Liberals’.
I would also like to touch on another measure provided under this bill, namely the length of time during which cheques are held once they are deposited in a financial institution. When we deposit a cheque we have received in one branch, this is the beginning of a lengthy trip from the place where the cheque is deposited to the issuing institution. Then, once it is approved, the cheque makes the return trip to the place where it was deposited. Actually it travels around here and there and obviously may physically cover great distances that increase hold times.
The current bill makes provisions for digital imaging. So instead of having the cheque travel physically, it could travel in digital format, which would greatly speed up processing. The banks claim that this measure will reduce the longest hold time from ten days to six, and then to four days, once the system is fully operational. To my mind four days is still long. They say, though, that it is much faster in the very large majority of cases. A hold period of four days would be for the most difficult cases.
However, I must say, the question of the time it takes to process financial transactions has come up repeatedly in committee. There is a reason for this. It is because our fellow citizens often mention it. In this modern age of the Internet and electronic transactions, people expect a little more instantaneousness—if I may use that word—in transactions performed by financial institutions.
More and more, the funds are frozen for a while when we deposit a cheque. The funds may be frozen even if the cheque is processed quickly. Furthermore, when we transfer funds from one account to another, the money can disappear from the first account for a few hours or a few days before it re-appears in the other account. People are wondering where that money went in the meantime.
I can give a rather interesting example from my personal experience. I told the committee about it when I was addressing my questions to the various bank representatives. I sold some shares and received a cheque from my stockbroker. I decided to invest this money in an RRSP. Thus, I wrote a cheque to my financial advisor. Both cheques were deposited on the same day, at the same time. What happened? The cheque I wrote to my financial advisor was withdrawn from my account immediately and I therefore had an overdraft. Since my account has overdraft protection, the money was taken from my line of credit. That same day, I had deposited a cheque from the broker who sold my shares, but that money was not immediately deposited to my account. I therefore found myself in the ridiculous situation of my line of credit being in the negative and my account showing a positive balance, but I could not transfer any money from one to the other because the funds were frozen.
At the time, I asked my banker what was happening and why I was being charged interest. He said that the money from my broker had not been deposited in my account yet. He did not have the money yet and was therefore holding the funds for a few days. I told him he still had not transferred my own money to the other account so why should he charge me interest? He was unable to give me a reason.
I made another attempt in committee. I asked why when I am expecting money it is held from me, but when my money is transferred elsewhere it is immediately debited. No one was able to give me a reason.
I have given this personal example because, obviously, I do not want to disclose the circumstances of the constituents who come to see me. The fact remains that people frequently tell us about this type of problem. Banks and financial institutions have to make major improvements when it comes to processing time or else we will have to consider regulating this matter, since it concerns so many people.
In closing, I would like to address two points, including a provision in the legislation on bank mergers. We are still very concerned about possible mergers between monstrous banks the size of giant hippopotamuses—truly gigantic ones—at the expense of the consumer. We are not completely satisfied with the provisions and we will keep a close eye on the bank merger file. We hope that if mergers occur, it will always be in the best interest of the consumer.
The last point, which is not directly related to the bill but is something we discussed a lot in committee, is the issue of income trusts. Once again, the Bloc Québécois did not think it was a good idea to provide a tax advantage to income trusts. If this structure, this approach to organizing companies, is appropriate in some cases, then it should be allowed, but we should not encourage companies to be structured this way just for the tax breaks. That said, we think it was completely irresponsible of the Conservative government to promise not to tax income trusts. Now it has broken its promise. We agree with taxing income trusts, but we condemn the way it was done.
Alan Tonks York South—Weston, ON
Mr. Speaker, I thank my colleague from the Bloc for a very comprehensive overview with respect to Bill C-37.
I understand that the committee travelled from coast to coast to coast in a very onerous and feverish exercise to gain advice and direction from the general community, notwithstanding the financial institutions community.
The member referred to an issue which is very top of mind with people not only in my community but communities across the country, and that is the issue of identity and mortgage fraud. It would appear to me that if Bill C-37 was an attempt to streamline the relationship between consumers and financial institutions, this particular area would have received more attention in terms of legislative changes and recommendations thereto.
I would like to ask the member what kind of discussion, if any, took place at the committee. Why, in his opinion, did the committee not come forward with recommendations as opposed to having to make amendments that were declared out of order? In fact, if they are out of order as has been declared, what is the follow-up the House could take in terms of dealing with a subject that is of extreme concern?
Not only do the banks share some responsibility, but I would suggest the legal profession shares a great deal of responsibility because innocent victims of this type of fraud could be anywhere in this country. It has happened in my riding and I am sure the member can give other examples.
Was there any discussion with respect to identity and mortgage fraud? What is the follow-up that he would recommend, or from his party's perspective, that would allow the House to address the matter?