House of Commons Hansard #88 of the 41st Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was financial.

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The House resumed from March 1 consideration of the motion that Bill C-28, An Act to amend the Financial Consumer Agency of Canada Act, be read the second time and referred to a committee, and of the motion that this question be now put.

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10:05 a.m.

Liberal

Kevin Lamoureux Winnipeg North, MB

Mr. Speaker, it is with pleasure that I participate in the debate on this bill in the sense that financial issues are something which all Canadians are concerned about. The direction in which the government is going and the sense of commitment in terms of education on financial matters are something that we should all have concerns about.

It was not long ago when the U.S. took a nosedive. Many economists did their best in trying to explain the circumstances that led to it. When I reflect on the discussions that I had with constituents from, at that time, Inkster, but all residents of Winnipeg North, many of those discussions pertained to what we thought had taken place that caused the American economy to take that radical turn. As people will recall, the price of housing dropped quite dramatically in certain areas of the United States and there was a great deal of speculation as to why. Many individuals sat around the table in discussion groups and we talked about the American debt, loans and mortgages, and the way in which housing was being financed in the U.S. I raise that because there is a general need for us to appreciate how important it is that the population as a whole has a sense of how finances are administered, both at the micro-level and the macro-level.

There was a time when going through school we had a basic economics class and that was it. There was nothing more to trying to understand finances. Today, depending on the high school one goes to or even in elementary schools, we are starting to see more interest and education in that field. That is something which we think is a good thing because the economy and the way in which we manage our financial affairs is so important. If we look at the types of decisions we need to make, the better informed and educated the population is on financial matters it is at the end of the day better for government.

An example for which people could get a good sense of an appreciation is the issue of retirement. The amount of financial planning to be considered for retirement is significant. When I was a bit younger, 25 years ago or so, first getting elected when I was 26, a pension was not an issue for me personally. I never thought about pensions. There were other bigger, broader pictures that I wanted to think about, at least at that stage in my life, and I think many of my peers would have thought likewise. When we are 25, we are not thinking of retirement but it is critically important for us to be thinking about that. Upon reflection and with hindsight, there are a number of things that I would have done differently.

We need to look at the role that government needs to play from both the consumers' perspective and the government's perspective. We need to bring it to the government. The government appears to be on the brink of making a decision to reduce the benefits for old age supplement. People who are 55 years old today will not be able to retire when they hit 67.

If we go to that generation, many individuals in the workforce, some of it very labour intense and other aspects of it requiring people to work as lawyers or whatever it might be, planned on the 65 retirement age. Once people start hitting the age of 40 or 45, they start thinking more about retirement and then bank accordingly. People need to learn what it is they need to do in order to retire at age 65. There is that learning curve.

We need to recognize that there are hundreds of thousands of people who will be affected by the anticipated decision by the government to increase that age. As a result, it will have an impact on the finances of many Canadians across Canada as they will need to start reviewing what sort of retirement funds they will have. They reflect on their homes and where they are investing their moneys today. A lot of people are on fairly tight budgets but they know they will need to increase their RRSPs if they still want to retire at age 65 to bridge the gap between 65 and 67, something we hear a great deal about from the government. People may not necessarily have the same sort of cash flow as they once would have had or they may have allocated their disposable income and it will be difficult for them to generate the type of resources they will require in order to continue with their plans to retire at age 65. There are many different options for people to be exploring at a younger age. That is just one component.

To bring it around to housing, people need to have a good understanding of the housing market and how it relates compared to mortgage rates. It was not that long ago, in the late 1970s, when there were skyrocketing mortgage rates on homes. It was in and around 18% or 19%. We can talk about a relatively small amount of money being financed in order to own a home, but when it is rated at somewhere around 18% or 19%, it takes away a good chunk of a person's disposable income.

Over the last 20 years, if we look at interest rates, they have been considerably better than what they were during the 1970s. As a result, more middle-class Canadians are buying homes that cost $250,000 or $300,000 and they can afford it because interest rates are so low in comparison to the 1970s in particular, but also the 1980s. If the interest rate today were to go up two or three points, we can only imagine the profound impact that would have on thousands of families across Canada. When people finance homes for $300,000, it is often two people working in order to support their lifestyle in that house.

I have had opportunities to have discussions with individuals who are in that sort of situation. Their homes are their futures and they are literally banking on it. People get mortgages for 25 or 30 years nowadays with an interest rate of 4% or 5% and two individuals are working. We can only think of the impact if the interest rate were to go up by two points. They would not have the disposable income, for the most part, in order to address that.

There is a great deal of pressure, whether it is on the Bank of Canada or on the government, to be cognizant of the interest rate because of the impact it would have on consumers and their life savings. The home can be the single greatest expenditure that people have.

We could continue talking about other types of expenditures by consumers, individuals who go out and purchase large ticket items, such as vehicles. They are brought in, in good part, because of low interest rates.

When we talk about financial literacy, it is a disseminating of information that will ensure there is better overall education for all Canadians. I think that could be done in many different ways.

On the surface, the bill looks great. We all support financial literacy and moving in that direction is something we want to encourage and promote. In essence, the government is saying that it will create an office of sorts and there will to be a reporting mechanism for this particular officer.

Within the Liberal Party, we see financial literacy as a major issue. Therefore, we are wondering why the government is not providing a better definition of exactly what it is it is proposing with the legislation. What sort of a budget are we talking about? I believe it is a bit vague or unclear in terms of where and how it might reach out into our communities.

I believe the provinces have a critical role to play in this discussion. To what degree has the federal government worked in co-operation with the provinces to ensure we are moving in the right direction? At the provincial level, we could go right into the schools, which could involve the school trustees or administrators.

What I am suggesting is that there are many different stakeholders who have a vested interest in trying to do what this bill is hoping to do, which is to achieve a higher level of financial literacy. To what degree has the government done consultations to bring forward legislation that is all-encompassing and that will provide for a better level of literacy for all Canadians?

In my short time in the House, I have found that there is a different attitude from the present government and the way in which it approaches public policy compared to members on the opposition benches, in particular with regard to the Liberal Party. We in the Liberal Party believe that the national government has a strong role to play. I would suggest that it is a leadership role in trying to ensure that there are standards across the nation and that we have something that reaches out in a co-operative manner, supporting provincial and other initiatives where we can.

I believe the gambit is wide, which is why it would have been good to have received some sense of a commitment from the government as to how much money it is prepared to commit to a commissioner of this nature. What sort of office will it be? The government may be looking at the possibility of the banking industry having to cover the cost of this new office or to facilitate the needs of this particular legislation. However, we do not know what the dollar value of it is. We also do not know how the government will bring in the stakeholders with regard to this important issue.

I started off by talking about the financial crisis that occurred in the United States. It did not take long for people to get an appreciation of exactly what was taking place, how people had overextended themselves on loans and how the housing market and its artificially high prices led to the crash of the housing market. Ultimately, hundreds of thousands of Americans went bankrupt because of what the banking industry was unable to do, because of a lack of healthy, strong regulations.

In Canada, there was a great deal of pressure to allow for more deregulation of the banking industry. However, there were safeguards in place. During the nineties, individuals like Paul Martin and Jean Chrétien said that we needed to have regulation to ensure that mortgages did not become 40 or 50 years in duration. People learned a lot by watching the news and hearing how so many Americans were losing their homes. Canada was in good part able to avoid a lot of that because of good policy decisions made during the nineties.

This brings us back to the issue of what we can do to ensure that Canada's financial markets, industries and consumers are best protected. That is the reason we talk about the importance of education. That is really what it is all about. When I make reference to issues such as RRSPs, owning a home or making major purchases, we want citizens to be educated to make the best decisions possible. The only way we can achieve that is to ensure that there is some sort of an educational process regarding financial literacy from coast to coast. The greatest challenge the government has in regard to financial literacy across Canada is to demonstrate that it has a national, strong, healthy leadership role to play in this area. I am not convinced the government members believe they have to play that lead role.

I know some provinces have gone a long way in providing better consumer education on financial matters, from banking fees to cheque cashing stores. They have increased the level of consumer awareness. There are many initiatives which have been taken by individual provinces. This bill brings forward the idea of the need for the federal government to play a role in financial literacy. I would challenge the government to reflect on what degree it is prepared to say that Ottawa needs to get all of the stakeholders working together to ensure that a financial literacy office has teeth and the ability to make a difference.

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10:20 a.m.

NDP

Dennis Bevington Western Arctic, NT

Mr. Speaker, I want to thank my colleague for his discussion on Bill C-28. I have some concerns about the bill, having dealt with the government for six years. Many times the government sets up straw dogs that really do not accomplish much. The government has established a commission to look into complaints for human rights and environmental conditions around Canadian mining companies in other countries. The commission has basically done nothing.

In this country, we need a lot of consumer protection and consumer information. Financial information is a very important part of that. It is a very complex field for Canadians to understand how to best use their financial system to their own benefit. We are talking about playing a game against people who have much larger and more elaborate plans. How can we guarantee that what is in this bill will actually deliver anything for Canadians?

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10:20 a.m.

Liberal

Kevin Lamoureux Winnipeg North, MB

Mr. Speaker, I see that the member shares my concern about the issue of leadership. Indeed, the government can put measures into legislation so that it can go around the country and say that it wants to play this role, but my concern is about what is in the bill. It is that real sense of commitment that we are looking for. I think that has been lacking from the national government.

There are issues within the financial industry that should be raising flags. People are concerned about interest rates on credit cards, user fees, banking fees and so forth. There is so much more that we could be doing.

I want to emphasize the leadership role of bringing all the stakeholders together. We need something more than just saying, “Here is a bill”. We want to say that we have passed the legislation. We want effective leadership on this particular front. At the end of the day, it saves our consumers, it provides for consumer confidence and it is better for the overall economy if the government is genuine. I just do not necessarily believe that the government is prepared to play that strong national leadership role. That is the biggest concern I have with respect to this bill.

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10:25 a.m.

Conservative

James Rajotte Edmonton—Leduc, AB

Mr. Speaker, I am a little uncertain whether the member does support the concept of a financial literacy leader. I have noticed, since starting to work on this issue, the number of people across the country who are making an effort with respect to financial literacy, whether it is through non-governmental organizations, institutions or individually. They are asking for national leadership, which he pointed out in his speech. Therefore, they do want a financial literacy leader and they do want him or her to work with the Financial Consumer Agency of Canada.

Can the member clarify for the record if he supports this leader and does he support him or her working within the gamut of the Financial Consumer Agency of Canada?

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10:25 a.m.

Liberal

Kevin Lamoureux Winnipeg North, MB

Mr. Speaker, the federal government has a responsibility to take action on the principle that the member is talking about, the need for financial literacy and strong leadership. Whether it is driven by the private sector or the non-profit sector, there is just cause for us to be much more proactive on financial literacy and education for all Canadians. The quicker and the more sincere we are at addressing that issue, the healthier our economy will be in the long term. That could be done through ensuring there is more accountability and transparency. It could be done by a government that is prepared to get all of the stakeholders around the table and take a proactive approach, whether in school divisions, schools, governments, work environments or television ads, whatever it takes to increase the financial literacy of the population.

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10:25 a.m.

Green

Elizabeth May Saanich—Gulf Islands, BC

Mr. Speaker, I see nothing objectionable in Bill C-28. We need greater financial literacy among Canadians.

I wonder if the bill has been costed. We are considering creating a new office within the federal government. I imagine the bill speaks to the expense accounts of that office and someone with the title financial literacy leader.

Have we examined as a House whether the goals of the bill could be better accomplished through sufficient support to groups like the Consumers' Association of Canada or Democracy Watch? They have done a lot of good work in making Canadians aware of their banking processes.

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10:25 a.m.

Liberal

Kevin Lamoureux Winnipeg North, MB

Mr. Speaker, the government has not provided Parliament with a plan regarding Bill C-28. We do not know how much it is going to cost. In regard to the financial literacy leader, we need to know what sort of resources the government is prepared to allocate to the position.

As my NDP colleague mentioned, we have to be excused for not just buying into everything that the government is trying to sell with this legislation. It is one thing to say here is a bill but it is another thing to put some teeth in it. We are not convinced that there is a solid commitment to having a well financed office that would produce the desired outcome. We recognize how critically important the issue of financial literacy is. It is an important file. Young people need to be more involved in the financial environment. The benefits far outweigh any sort of potential costs that might be incurred in making sure that we do it right and that the federal government plays a leadership role.

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10:30 a.m.

NDP

Pierre Jacob Brome—Missisquoi, QC

Mr. Speaker, I would like to thank my colleague for his lovely speech. He said that it is important to educate people about financial matters. I agree that that is a good idea. Education is one thing.

According to my Liberal Party colleague, is the Liberal Party's objective to prioritize average Canadians, to protect average consumers, to offer a better financial security plan for retirement and to level the playing field between average Canadians and big institutions by regulating the industry?

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10:30 a.m.

Liberal

Kevin Lamoureux Winnipeg North, MB

Mr. Speaker, I appreciate the member's comments but I do not necessarily agree with them.

The primary objective is to ensure that Canadians have a better understanding of financial matters. These include mortgage rates, consumer prices and what is happening within the macro and the micro environmental conditions in our communities. That is really what we are looking for. That is best done by a national government working with the different stakeholders and having the resources to do that so the overall quality of education related to financial matters improves.

We have not necessarily seen the required leadership from the government. The government is saying here is the bill, but we are concerned about the lack of commitment to follow through with the bill itself.

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10:30 a.m.

NDP

Mike Sullivan York South—Weston, ON

Mr. Speaker, I will be splitting my time with the member for Rivière-des-Mille-Îles.

This is yet another in a series of governing on the back of an envelope from the government side. The government tried to amend Bill C-10, and discovered it could not. It then had to send the bill to the Senate to have some amendments made. Now it will come back to the House.

We then had the lawful access bill, the awful access bill, which the government had to withdraw. It had to send the bill to committee so some amendments could be made to please Canadians.

Now we have this bill. It seems to be extremely poorly thought out. It does not actually deal with the recommendations of the task force, except to create a new bureaucracy. Canadians do not need another level of bureaucracy.

According to the bill, a position would be created, with no definition of what the person would do and with a very vague statement of consulting with stakeholders, which have not been defined. Are the stakeholders the big banks? Are they the payday lenders? Are they the big and powerful corporations that want better tax regimes? Who are the stakeholders in this?

The bill does not deal with the bulk of the recommendations that came from the task force. In fact, it only deals with half of one, which is to appoint a leader. The other recommendations suggested that the government spend money on making Canadians better able to deal with their day to day financial pressures. They are such things as integrating financial literacy into the Canada student loans program. That would require an expenditure. This proposed new individual would not have the authority to spend money.

There was the recommendation that government make financial literacy training programs for young Canadians eligible for funding through the youth employment strategy. Again, the bill would not do that. There was the recommendation that the Government of Canada, as part of the renewal of the urban aboriginal strategy, make financial literacy training programs for young aboriginal Canadians eligible for funding. Again, funding is not a part of the bill.

The recommendation to provide relevant financial information and education services for recent newcomers through the newcomers to Canada program, again, would require funding. In Toronto the funding for CIC programs is being cut.

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10:35 a.m.

Liberal

Wayne Easter Malpeque, PE

Mr. Speaker, I rise on a point of order. There does not appear to be a quorum in the House.

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10:35 a.m.

Conservative

The Acting Speaker Barry Devolin

There appears to be 20 people in the chamber.

Resuming debate, the hon. member for York South—Weston.

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10:35 a.m.

NDP

Mike Sullivan York South—Weston, ON

Mr. Speaker, the task force recommended that, “the Government of Canada, as well as provincial and territorial governments, invest in the capacity of the voluntary sector”. The individual would not have the power to invest anything. It also recommended that, ”the Government of Canada support existing capacity-building initiatives in First Nations communities by offering culturally relevant financial literacy tools, training and resources”. However, there is no funding in the bill for resources. The bill is all about creating a bureaucracy that has absolutely no ability to do anything except perhaps talk to a few people about what they ought to do with financial literacy.

There is no definition in the bill of financial literacy. What is it? Let us talk about some real examples of missing financial literacy in my riding. Would the bill actually fix these things?

A 59-year-old gentleman in my riding was laid-off from his job. As he had paid into the EI system for many years, he tried to collect it. However, EI was not available, not because of his fault or the fault of his employer, but because of the fault of the EI administration. It took 11 months for him to finally get his EI. In that period of time, would financial literacy have helped him collect EI better? I do not think so because it was not forthcoming.

In that 11-month period, he managed to lose his house. Would financial literacy have prevented him from losing his house? No. The big bank, I think it was the Royal Bank, decided he had missed too many payments because he did not get his EI in time. When he did get his EI, but by then it was too late.

We have an example of an individual for whom financial literacy means absolutely nothing because the systems and structures that are in place do not prevent the horrible impacts that the delay of 11 months for EI had on he and his family. He now lives on somebody's couch.

On subprime loans in the U.S., would financial literacy have helped the migrant farm worker making $12,000 a year decide to say no to a quarter-million dollar loan? Would financial literacy have prevented the subprime mortgage crisis in the U.S.? I do not think so.

If I am making $12,000 a year and somebody tells me that I could have a quarter-million dollars to buy a house and live in it for as long as I wanted because the government would back the loan, would I turn that down because there was a financial literacy program? I do not think so. These kinds of things just do not happen.

Would the financial literacy program help eliminate payday lenders? We hope so. However, what of the single mom who is told by the doctor that she has to buy a prescription for her sick daughter and she does not have the money for it because her paycheque does not come in until Thursday? There is no drug plan in any of the three part-time jobs she has to hold down in order to keep her head above water. Would financial literacy prevent her from going to a payday lender? I do not think so. Although she knows it is wrong and stupid to pay 1,000% on a loan, she does not have a choice because the financial structures in our country do not prevent the need for these payday lenders.

According to the member for Newmarket—Aurora yesterday, financial literacy would help Canadians understand some of the complexities of what was going on in financial markets and how they could respond as individuals to the things that were happening. What does that mean?

As an ordinary Canadian consumer, I have to respond to something going on in Greece and the financial markets in Europe and Tokyo? Maybe 1% of Canadians do, but I do not think that 1% have a need for financial literacy training. Canadians depend on the government to look out for them on these kinds of things. They depend on the government to pay attention to what goes on in those financial markets and act accordingly.

The government should not be considering financial literacy as a way for ordinary consumers to somehow find a way to protect themselves from these financial markets. Maybe the answer is to put all of our RRSP money in our mattresses and then we would not lose half of it when those financial markets go down.

I do not think there is going to be a financial literacy course anywhere in our country that is going to tell people to put their money in their mattresses because those financial literacy courses are going to be conducted by the big banks, whose job it is to ensure that people are investing in them, and the take 2% or 3% of people's money to keep their profits up.

Financial literacy for Canadians is knowing a bunch of things about their own financial health, such as knowing, for example, that being in a union means better wages, benefits and retirement security. Will that be part of the financial training? I doubt it. It is knowing that the tax credits for children's arts programs and other things, which are non-refundable, do not help most of the people in my riding. They are too poor to afford the children's arts program in the first place and they do not pay enough taxes to use that credit. It is knowing that non-refundable tax credits for transit passes are not of any benefit to the poor, but they are the people who use transit passes. The non-refundable tax credit does nothing for them.

It is knowing that indiscriminate tax cuts to rich and powerful corporations do not trickle down to the indefensible individuals in my riding. It does not create jobs for them. The jobs have disappeared. There were 400,000 manufacturing jobs that disappeared in Ontario alone since the government took office and those jobs were family supporting and created employment in a way that people could afford to have families, mortgages and live above the poverty line. Those jobs have disappeared under the government and have not been replaced.

Financial literacy is knowing which side of the House is good for ordinary Canadians. Financial literacy is knowing that we are.

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10:40 a.m.

Conservative

James Rajotte Edmonton—Leduc, AB

Mr. Speaker, my colleague talked about the establishment of a new bureaucracy. We are not going to recreate the existing Financial Consumer Agency of Canada. It will be the agency that works with the financial literacy leader if the bill passes.

Is he aware that there will be co-operation between an existing agency, not a newly-created agency, and the financial literacy leader if the bill passes?