Bill C-8 (Historical)

Financial Consumer Agency of Canada Act

An Act to establish the Financial Consumer Agency of Canada and to amend certain Acts in relation to financial institutions

Financial Consumer Agency Of Canada Act

[Dick Proctor, NDP, Palliser, SK]

Madam Speaker, I will go on with my speech. This legislation will help credit unions, designate a financial services ombudsman, something the NDP has been asking for for a long time, and create a consumer protection agency, that is called the financial consumer agency. It will launch a consultation process whereby the banks could legally be forced to provide a low fee retail deposit account. This is a position we have held for a long time in the NDP; however, nothing will happen in the short term. The bill will formalize a process of collecting data on small business lending but will not expand the banks' business powers into the areas of auto leasing.

These are some of the positive things in the bill. There are also in the 900 pages many things with which we disagree. Among those negatives is the wide ownership rules which lead to the concentration of banking powers in the hands of very few individuals.

This provides too much power to the Minister of Finance. Unlike parliament, the minister would then have the final say in virtually every major change that dealt with financial institutions, including mergers, acquisitions, regulations and ownership levels. It also fails to provide a real framework of accountability between large financial institutions and their local communities.

There is no community reinvestment act similar to the one in the U.S. which works very well. There is no effective improvement in accessing basic banking services, especially in rural areas. There is no right to lifeline, no cost accounting and no effective way to stop bank branch closures. Banks are only required to provide a four to six month window of notice to close under the legislation.

There are no teeth for the independent banking ombudsman and it reduces requirements for small banks. The Office of the Superintendent of Financial Institutions has been given more powers to deal with the potential for increased risk in the system, but there is no guarantee that the OSFI would be able to use these powers effectively because of the complex structures introduced in the bill, for example bank holdings and new ownership regimes.

There is nothing on the control and regulation of high risk derivative products and off balance sheet liabilities or on new monetary policy tools for the Bank of Canada.

We have dealt with some of the positives and the negatives. We note as well that it is a highly complex 900 page omnibus bill which changes eight major financial industry acts and is probably the largest bill ever to come before a Canadian parliament. Its main thrust is to increase competition, foreign and domestic, and flexibility through deregulation and re-regulation.

The Minister of Finance is easing entry requirements in the financial services market. He is purporting to broaden the powers of financial institutions including credit unions, increasing the flexibility and the complexity of ownership regimes, and allowing access to the payment system by non-bank entities, for example insurance companies. The legislation also creates a financial consumer agency, an independent financial ombudsman.

Bill C-38, its predecessor, included cosmetic measures to improve access to basic banking services and guidelines for a bank merger review process which were made available with the bill but are not included in the current version of the legislation.

The New Democratic Party opposes the bill. We emphasize that there is some support, as I have indicated in my remarks. We support parts of the bill, including the modernization of financial services, expansion of powers to credit unions, a potentially better deal for consumers, a better competitive position for insurance companies, and status quo on the distribution of insurance and leasing.

We would support the bill at third reading stage if changes to the wide ownership rules were rescinded, if it provided for more power to the House of Commons to review megabank mergers and if the government adopted an effective framework of accountability among banks, their communities and fully regulated bank holding groups.

In conclusion, there is quasi-unanimity among major financial industry players to speed up the passage of the bill which has incorporated the majority of the MacKay recommendations and has virtually gone through an invisible committee of backroom lobbyists. Bill C-8 is a done deal which the government is selling as a progressive financial consumer package.

[Dick Proctor, NDP, Palliser, SK]

Madam Speaker, I am pleased to take part in the debate in the House today on financial sector reform. I want to indicate to the House that I have a time sharing arrangement with my colleague, the hon. member for Windsor—St. Clair.

Bill C-8 is really a reincarnation of a bill that was introduced in the last parliament and died on the order paper following second reading. It purports to implement 57 measures contained in the June 1999 finance policy paper entitled “Reforming Canada's Financial Services Sector—A Framework for the Future”.

The paper was the finance minister's response to an extensive and expensive two year consultation by the MacKay task force on reforming Canada's financial services sector. The consultation culminated in the fall of 1998 with a report entitled “Change, Challenge and Opportunity”. There was a subsequent response by the Standing Committee on Finance.

One of the positive aspects of this bill is that it expands the access to the payments system, which is one of our long held positions in the NDP. This is a measure that increases competition by allowing insurance companies to offer chequing and saving accounts and helps credit unions compete by allowing the creation of a single national entity—

[The Speaker]

Different members' views of the facts, sometimes of the same facts, are seen through different eyes or maybe different glasses. However the hon. member for Prince George—Bulkley Valley has the floor, and if he kept his remarks more directly relevant to Bill C-8 perhaps there would be less controversy.

[Dick Harris, Canadian Alliance, Prince George—Bulkley Valley, BC]

Mr. Speaker, there is a direct parallel here. I was comparing the way the government treats farmers to the way it treats financial institutions. The government feels that the way it treats our financial institutions is important, and I agree. However it has forgotten about farmers. It has forgotten about how its lack of interest has affected our farmers. It has no shame.

We are happy that the government has put forward legislation to allow banks to develop their holding company structures. That will be progressive. We are also happy that we have a competitive, thriving and vibrant insurance industry in Canada. We are happy that the government has seen the wisdom of disallowing banks from retailing insurance products through their branches. That day may come, but the insurance industry now has a five year window to prepare for any impact it might cause.

Alliance members also know there is a competitive, vibrant auto leasing industry in Canada. We know that Canadian consumers who are considering buying automobiles can get leasing from a number of different areas, in some cases down to 0.9%, 0.19%.

We are happy that the government has seen the wisdom of telling banks they cannot retail auto lease products in Canada, and that it recognizes the great deal for consumers that now exists in the auto leasing business.

In order to keep down the actuarial risk in auto leasing there must be good risks to offset people who are not such good risks. Overall, one can keep lease rates down and recognize that the automobile companies, which produce automobiles and have subsidiaries like GMAC, Ford Credit or Chrysler Credit, have an interest in selling automobiles. All that seems to work together pretty well to keep interest rates down when it comes to leasing.

It is a conflict when we see the government doing something pretty good that we can support and then doing all the other things that it does. It makes us wonder who is in charge over there. We can draw many examples. I can draw one in my own riding.

Bill C-8 is as very progressive bill. It will allow one of the pillars of our economy to be more competitive globally. That is a good thing.

Members must ask the question: If the government can put through a bill like this, how can it be so neglectful of other important issues? In my riding of Prince George—Bulkley Valley, in Burns Lake, B.C., there is the Burns Lake Indian Band. The band has had an agreement for the last number of years in which the village of Burns Lake, which parallels the band, provides water and sewer facilities to the band. For the last seven and a half years the band has decided that for some reason it would stop paying taxes.

The village of Burns Lake has a very small tax base and to lose $150,000 a year in taxes has a big impact. The federal government would not want to lose tax dollars either, as evidenced by the paltry tax cuts it has given Canadians. However, I digress a bit.

All of a sudden, after seven years of non-payment of taxes, the village of Burns Lake said it would cut off the band's water, sewer and other services because it was not paying its bill. Hon. members would think the department of Indian affairs would be concerned about this and try to make up the back taxes and get the thing rolling again. The shutoff date for the band's water, sewer, fire protection and emergency services is April 30, 2001.

The mayor of Burns Lake and his officials were here a few weeks ago and I met with them and the minister of Indian affairs. We said that the issue was a problem and we agreed to get an independent negotiator to work it out and—

[Roy Cullen, Liberal, Etobicoke North, ON]

Mr. Speaker, I rise on a point of order. I do not like to interrupt the hon. member for Prince George—Bulkley Valley, but I would like to know the relevance of what he is speaking about. When we started this debate we were discussing Bill C-8.

[Dick Harris, Canadian Alliance, Prince George—Bulkley Valley, BC]

Yes, as my hon. colleague just said, a master-servant relationship. That is simply not acceptable to the official opposition nor to the other opposition parties. We have since 1993 demanded that the government be open and transparent. When the parliamentary secretary talks about the openness and transparency in the bill, here is one area in which he may be a stranger to the actuality of the relationship.

The government voted against the amendment which would have allowed that openness and transparency.

The parliamentary secretary also made a statement saying that it was the wish of the government, and it is in Bill C-8, that it would lighten the regulatory burden wherever it could.

I refer to another amendment that the official opposition put forward with regard to the payment system. The members of the payment system said very clearly that they knew there were a set of regulations and that they wanted to comply with them, but that in the course of doing business, they now and again need to make some rule changes to streamline their business in order to give better customer service to the people using the system. They said that their association wants to use the most unobtrusive method within a framework. They asked, through the Canadian Alliance, for the Minister of Finance to lay out a very clear and transparent framework under which they could operate, one that would be self-regulating and allow enough flexibility that they would not have to report every single rule change as it occurred. Having to do that is a regulatory burden that is unnecessary.

They wanted a clear and defined framework under which they could operate, which is what is in the amendment, but the Liberal government, despite wanting to lighten the regulatory burden however it could, voted that amendment down.

My last point about the amendments that we put forward deals with a statement made by the parliamentary secretary. He said “Credit unions must have the flexibility to compete and thrive at home and abroad”. How coincidental. Credit Union Central and members of its association want to have the flexibility to compete and thrive at home and abroad but it was not provided for in Bill C-8. We knew how important that was to Credit Union Central so we put forward an amendment respecting its wishes.

For a government that believes that credit unions must have the flexibility to compete and thrive at home and abroad, as the parliamentary secretary said, it voted against that amendment.

These are three distinct areas where the government is saying one thing yet doing another. Far be it for the government to say one thing yet do another. I am hesitant to bring up the red book wherein it promised to scrap, kill and get rid of the GST.

I will draw a comparison. During the election the Liberals went door to door, doorstep to doorstep, and over fences into backyards. They went to public meetings, to little restaurants and coffee shops, and said that they hated the GST. They hated it since the Tory government brought it in, and to show how much they hated it, they said that if they were elected they would kill that nasty GST. I know you would have been re-elected in any case, Mr. Speaker, because those are words that you never uttered.

Unfortunately the majority of Canadians believed that promise to kill, scrap and abolish the GST and elected a Liberal government in 1993. To their great surprise, the GST was neither scrapped, killed nor abolished. There was a name change, though, in Atlantic Canada where it is now blended and called HST. I am comparing that to the Liberals' continuing readiness to say one thing yet do another.

In those three areas the parliamentary secretary has been caught up in his own words because the bill does not reflect some of the things he said. We now have a bill that will give banks and financial institutions an opportunity to become more competitive at home and abroad. It will give them an opportunity to become more efficient and flexible in their operations, with the exception of the areas I outlined in the amendments the Liberal government voted against. These were amendments members of the financial sector wanted put through, but they were voted down.

Overall the bill would allow banks and financial institutions to become more competitive, particularly in the global economy. Due to the Liberal government's inaction over eight years, financial institutions have lost ground in the global economy. Their competitive position has gone down, so I am sure they will welcome the bill.

While the financial services sector will have this progressive bill to allow it to become more competitive, one wonders why the Liberals have not addressed some other issues that equally need to be recognized as areas where we are lagging behind.

As was reported in the news last night, the outdated medical equipment in our hospitals needs to be recognized. There is even talk about health dangers because some of the medical equipment is old, outdated, and possibly becoming a danger to patients who use it.

The government embarked on many new spending programs such as: the millennium project, fountains, golf courses and any kind of vote buying scheme that it could come up with. It has increased spending every year on brand new programs. It has raised taxes every year in the neighbourhood of $3 billion to $7 billion.

Yet there are areas of our country that are suffering because the Liberals have not considered them important enough to make them progressive, as they have finally done with Bill C-8 for banks and financial institutions.

I bring to the attention of the House the trouble farmers have when they go to financial institutions to apply for financing. Almost every farmer in Canada has either tried to get financing or is considering doing so and is not able to. They cannot do so because their farms are at risk, and their farms are at risk because of the government's refusal to help them compete with our American neighbours. U.S. farmers receive all kinds of subsidies and assistance because their government recognizes the important role agriculture plays in the United States.

Our government has refused to recognize Canada's agricultural industry to the same extent that our biggest trading partner does with its farmers. As a result, we are just an imaginary border away. American agricultural products come into Canada and sell at lower prices than we can produce them at in Canada. This is because the government has failed to recognize the importance of agriculture. It has failed to recognize the great disadvantage our farmers have when competing with our trading partners in the United States and abroad.

[Dick Harris, Canadian Alliance, Prince George—Bulkley Valley, BC]

Mr. Speaker, once again let me say how gratifying it is to see so many government members in the House. We have important business to discuss today, as we did yesterday when the ranks were a little thin on the government side.

Members from all opposition parties attempted to discuss important issues, such as the Shawinigate affair and the issue of the junior minister of multiculturalism, issues for which the Canadian people demand answers, and there was an absence of response in the House, to put it kindly.

I am happy to be here on a Friday to discuss government business, such as Bill C-8. I know you were waiting for me to get back to that, Mr. Speaker. I wish government members, including some of the cabinet ministers and the Prime Minister, took their roles as seriously as we in the opposition take our roles.

I listened to the presentation made by Parliament Secretary to the Minister of Finance earlier. The Alliance Party will support the bill because it would bring Canada's financial institutions to a more progressive level.

As we know, since the government took office in 1993 precious little, if anything, was done to put Canada further ahead as a progressive financial institution country despite calls from the official opposition in the 36th parliament. We have stayed on par with countries such as Mexico.

It has taken the government seven and a half long years to realize that one of the most important sectors and pillars of our economy is the financial institution sector which includes banks, insurance companies, securities companies and credit unions. The progressiveness of this pillar of our economy was lagging behind all our global competitors, placing our institutions at a severe competitive disadvantage. Why it took the government so long one can only guess, but given its record over the past eight years I suppose it was the status quo.

The Parliamentary Secretary to the Minister of Finance said a number of things with which we agree. However he did talk about some things that left us rather confused, considering the motions in amendment that were put by the official opposition and that were voted down at report stage.

I will deal with statements made by the parliamentary secretary and the Prime Minister, as well as those made by his colleagues, indicating that the government wants to run its business in a very open and transparent fashion so that Canadians, the official opposition and other opposition parties can judge how it is doing.

What the government did in reference to our amendment was ask that the financial consumer agency report to the Standing Committee on Finance on a permanent basis. The committee is part of parliament, which includes all opposition parties and government members. That is openness and transparency. Yet in the bill it says that the agency would report to parliament through the Minister of Finance.

Anyone who knows me knows that I am not cynical when it comes to the government. What that may mean, though, is that the Minister of Finance would allow only what he wants to report to parliament out of the reports he gets from the financial consumer agency. When it comes to Liberal governments, and the door is opened to allow them to withhold certain information that they do not want to be made public, we have seen time and time again that they have taken every advantage of that opening.

A case in point is the current Shawinigate affair. The ethics counsellor, who is supposed to be the watchdog of how cabinet conducts its public and private business, reports directly to the Prime Minister, the very person who appointed him to the job; in other words his boss.

There have been enough questions raised about this relationship. The question of the year and maybe of the century is why would Canadians and opposition members sit by when there are questions about how the Prime Minister has conducted his private business and his so-called blind trust.

Time and time again the Prime Minister has stood up and said that the ethics commissioner, the guy that he hired and that he authorized in that position, says that he is okay and that everything was above board.

This is the same situation we have with the financial consumer agency where it reports directly to the very person who will be appointing them to that position. There is a bit of a perceived conflict of interest.

[Roy Cullen, Liberal, Parliamentary Secretary to Minister of Finance]

Mr. Speaker, I am pleased to be here in this crowded House to take part in the third reading debate on Bill C-8, an act to establish the financial consumer agency of Canada and to amend certain acts in relation to financial institutions.

I think we can all agree that the financial services sector plays a critical role in the Canadian economy. It underpins all other sectors in the economy by providing the means to channel savings into investment, resulting in economic growth and wealth creation.

The role the financial institutions play in the life of Canadians is equally important. In fact, these institutions protect Canadians' assets well and meet the needs of consumers and businesses as far as major financing, purchases and investments are concerned.

Let us not forget that half of Canadians are shareholders of our financial institutions, either directly or indirectly, so this represents an important source of revenue for Canadians now and in the future.

As legislators, we have an important responsibility to encourage the health of this sector. According to 1999 Statistics Canada data, 863,000 Canadians were employed in the financial services sector, including finance, insurance, real estate and leasing.

Canada's federal financial institutions operate within a legislative and regulatory framework defined by parliament. These legislative acts require the government to periodically review this framework and to bring before parliament any amendments needed to ensure that it remains current and relevant.

I would like to call the attention of the House to the four fundamental principles that underpin the legislation and which guided the government's decision making on the specific measures in the policy paper “Reforming Canada's Financial Services Sector”. It was released to the public on June 25, 1999, as the government's response to the MacKay task force report.

The first principle is that banks, trust companies, credit unions, insurance companies and other financial institutions must have the flexibility to adapt to the changing marketplace and to compete and thrive, both at home and abroad. Upholding this principle is necessary if the financial sector is to maintain its contribution to economic growth and job creation in the face of increasing globalization and rapidly changing technology.

To this end the bill provides additional flexibility for banks and insurance companies to organize themselves under a new holding company option that would be available to them, thus permitting them to explore opportunities to improve efficiency and grow their businesses by reducing the regulatory burden, among other things.

Similarly, we are raising the limits on widely held ownership of financial institutions in order to permit the exchange of considerable shares which is required for the conclusion of strategic alliances and joint ventures. This important business strategy is becoming increasingly common in other industries and ought also to be available to Canada's financial institutions.

The bill substantially expands permitted investments for financial institutions and makes these available to both the holding company and the parent subsidiary structures.

The second principle guiding the bill stresses the importance of competition. Specifically, we believe that vibrant competition in the financial services sector is necessary to allow consumers and businesses alike to benefit from a wide range of choice at the best possible price. With this objective in mind, the government is acting to remove unnecessary barriers for a bank start-up. We want to encourage new entrants. To that end, we are lowering the minimum amount of capital required to start a bank to $5 million from $10 million.

We are also proposing a new three tier, size based ownership regime that allows for the single ownership of small banks.

Banks with equity of $1 billion to $5 billion are also allowed to be widely held, provided at least 35% of shares are widely distributed among the public. There will, however, be no restrictions on the ownership structure of small banks with equity of less than $1 billion. These measures will make it possible to increase competitivity in the banking sector and to encourage new players.

Large banks with more than $5 billion in equity would continue to be widely held. Furthermore, commercial enterprises would also be allowed to establish new banks. This may be potentially attractive to retail companies that already have a network of stores or outlets.

The bill also includes measures to strengthen credit unions and caisses populaires. It contains measures that could accommodate their plans to restructure themselves in a way that reduces structural fragmentation and increases efficiency. It also provides the government with the regulatory flexibility to respond to new initiatives that may be forthcoming from the movement. The end result could be a stronger and more competitive credit union movement in Canada, better placed to challenge other financial service providers across the land.

We also propose to open up the Canadian payments system to life insurance companies, securities dealers and money market mutual funds. We believe that a broader range of participants in the payments system would foster competition because these firms would be able to offer services akin to chequing accounts.

Moreover, we will implement measures to align access rules for foreign banks in Canada with those governing domestic banks, so as to provide greater flexibility to foreign banks that wish to settle in Canada.

All in all, these measures will promote competition in the financial services sector, thus contributing to ensuring that Canadians get the best possible deal from suppliers of financial services.

I know the House is interested in the third guiding principle underpinning this legislation and that is to empower and protect consumers of financial services.

To that end, this bill would provide better access to basic services. It would allow us to specify in regulation what are reasonable identification requirements for an individual to open a bank account. The legislation also would provide regulation making authority regarding the provision of a low cost account and would oblige banks to follow a fair and reasonable process if they decide to close a branch.

As for low fee retail deposit accounts, memoranda of understanding have already been signed by the eight largest banks. While such accounts may vary from bank to bank, they must all comply with standards that will allow us to ensure that all Canadians have access to an account at an affordable price.

The bill would also establish two new organizations to promote and safeguard consumer interests in the financial sector. The Financial Consumer Agency of Canada, or FCAC, would consolidate related functions currently housed in Finance Canada, Industry Canada and OSFI. This agency would uphold the consumer protection provisions of our financial institution statutes, monitor institutions' compliance with their pledges to self-regulate, and provide consumer information and promote consumer education about financial services.

The government would also work with financial institutions to launch the new Canadian financial services ombudsman. This office would provide an independent, objective and impartial third party who would review complaints from individual consumers and small business owners who believe that their financial institution has treated them unfairly and have not been able to resolve these matters with the management of the financial institution.

However, we are also mindful that regulations are not without cause, which brings me to the fourth and final guiding principle underlying this bill.

We believe that our government should initiate improvements to the safety and soundness of the sector, but we should also take every opportunity to lighten the regulatory burden when we can. Bill C-8 would do just that.

The bill before us today seeks to implement a streamlined approval system for numerous operations that must be approved by the superintendent.

We are also proposing to improve the payments system, to ensure that the public participates more fully in the decision making process, and to ensure that the standards, regulations and rules of the CPA reflect the public interest.

The bill would also enhance the powers of the Superintendent of Financial Institutions to deal with firms that do not meet the regulatory requirements. It would also bolster the superintendent's power to intervene in the affairs of a financial institution that is heading for trouble. This would ensure that the prudential safeguards for the financial system are consistent with the new reality of stronger competition which we are trying to bring about.

In conclusion, the measures embodied in the bill we are debating today uphold and advance all four of the guiding principles I have just enumerated.

Canada's financial sector has an excellent reputation. Our financial institutions are extremely successful, both at home and abroad. To retain this excellent reputation and to keep our financial institutions strong, we need this new policy framework, a framework for the future. We need it because it recognizes the change around us, it permits our financial institutions to seize new opportunities and it manages change for the benefit of all Canadians.

I would like to thank the members of the finance committee and the hon. members of the House for being very supportive of this bill. I firmly believe that the measures proposed in this legislation provide an important framework whereby we can move forward together.

[Jane Stewart, Liberal, for the Minister of Finance]

moved that Bill C-8, an act to establish the Financial Consumer Agency of Canada and to amend certain acts in relation to financial institutions, be read the third time and passed.

Business Of The House

[Don Boudria, Liberal, Leader of the Government in the House of Commons]

Mr. Speaker, this afternoon we will continue consideration of Bill C-2, the employment insurance bill. We will then return to the second reading of Bill C-18, the equalization bill. That will be followed by Bill C-17 respecting the innovation foundation.

On Friday we will consider third reading of Bill C-8, the financial institution, and if necessary we will return to Bill C-18.

On Monday, we will return to Bill C-2. If it is completed at report stage, we will return to Bill C-18, C-17 or C-22 on the Income Tax Act, depending on which of these bills requires further consideration.

Tuesday shall be an allotted day, and I believe it is the Canadian Alliance's turn. On Wednesday, we will return to Bill C-2. We will also try to complete third reading of Bill C-12, the Judges Act amendments, and Bill C-9, the elections bill. If we have the time, I will also suggest completing Bill C-4, respecting the Sustainable Development Foundation, before adjourning for Easter.

Financial Consumer Agency Act

[The Acting Speaker (Mr. Bélair)]

It being 5.30 p.m., pursuant to order made on Tuesday, March 27, the House will now proceed to the taking of the deferred recorded divisions on the report stage of Bill C-8.

Call in the members.

Before the taking of the vote:

Income Tax Amendments Act, 2000

[Ken Epp, Canadian Alliance, Elk Island, AB]

Mr. Speaker, I am very pleased to speak in the debate. The Liberal government is getting slack. This morning we debated a bill which was over 900 pages in length. This little itty-bitty bill of 500 pages now seems like child's play in comparison. My party will have a look at it. We are debating it for the first time today, so the debate is on general principles. After this it will go to the finance committee where some of the details will be dealt with.

The whole study of taxation is intriguing in the academic sense. We have come to accept a level of taxation that is on the verge of being obscene.

I have told this story in the House before, and if any members recall it, my apologies, but it is very important. About three or four years ago I gave one of those one minute members' statements. I told the Speaker about a tragedy we had in our home. A guy came to the house. He backed his truck up to the door and proceeded to move everything out that we had accumulated over the years. He took half of our sofa set. He looked upstairs and saw four beds and he took two. He cut my beautiful old grandfather clock in half and took half of it and put it in the truck. I phoned the police before they took all the phones and asked them to get over to my place. I told them that we were being robbed. The police said that I should give them more details. I did and they said that they could not come and that they could not help. As a matter of fact the police did show up a little later and they insisted that I help the guy load.

This is an absurd story, but this is what happens every year to average Canadians. One half of our earnings are taken from us through the various levels of taxation from the federal, provincial and municipal governments. Tax freedom day in most provinces is around July 1, which says that half of our income is confiscated every year. If we do not help the guy who is owed and if we do not deliver the money that we have earned, we are held in contempt and can go to jail.

I do not want to characterize the levels of government as though they are crooks, yet I know I am right on the verge. I do not want to say that, so I will not. They are not really stealing our money because it is taxation. However it is still money I have earned that I cannot use for my family. I have very few needs. We can see that all I need is a square meal a day, or two, some basic clothing and basic shelter. Give me a bicycle to ride or preferably a motorcycle. My needs are simple and I simply want the best. I do not have many needs.

However I do have a great need to provide for my family. Fortunately my children are now grown up and on their own so things are a little easier. Now I only have a very expensive wife to provide for. When the children were younger I was teaching at a technical institute. All hon. members probably know this. I worked there for 27 years. We also made the decision that mother would be a full time mom. The children needed to have someone there when they came home from school to care for them and to show them that they were important.

In order to supplement our income, which even back then was not quite adequate to meet all our needs, including paying the mortgage, the utilities and everything, the decision was made that I would teach part time in the evenings. I taught a night class almost always two nights a week. This was way back and it dates me. Hon. members can tell by my grey hair that I am an old guy. I used to say that I worked Tuesday nights for Trudeau and Thursday nights for my family. It was a 50:50 deal.

Even though we are dealing with Bill C-22 to amend the Income Tax Act, the question that is not being addressed is the overall huge load of taxation which burdens our families and burdens individuals.

I have also indicated recently, and I will repeat this because I feel it is important, that my family and I not only pay our taxes but we also believe in charity. Due to the fact that we needed to look after our future, and as we have always felt insecure about the inadequate provisions of the government, namely the Canada pension plan, we have tried to put a bit of money into RRSPs. We ended up living on about 30% of my income as 70% of it was gone: 50% to taxation; 10% to charity, plus or minus a bit; and 10% to future savings, usually a little less because I could not afford that much. It was a struggle.

That is one of the reasons I became a member of parliament. In 1988, when the Reform Party was just starting, I picked up one of its brochures and all these things attracted me: the elected Senate, true democratic responsibility, and a justice system that would work on behalf of law-abiding citizens. However the one that really struck me was the belief that governments should live within their means so that we could reduce and not increase the debt. That was during the Conservative years when the debt was going up by $25 billion, $30 billion and peaking at $40 billion a year, just before they were finally turfed. That was one of the reasons they were turfed.

I was attracted to the principle that said we should have a balanced budget so that we would no longer increase the debt, the principle that we should start paying the debt down so that we could relieve ourselves of the necessity of interest payments and thereby have more money available to governments for programs that citizens value.

I guess the rest is history. We came here in huge numbers in 1993. When I first joined the Reform Party I did not anticipate that I would be transposed from my career at NAIT's teaching mathematics, computing and interesting things like that into trying to persuade a Liberal government to reduce taxes, balance the budget, hopefully pay down the debt and reduce interest payments.

However I stand here proudly this afternoon when I see what has happened in the last seven years. We have been the beneficiaries of a very robust economy in the United States which has a huge influence on our economy. That is undeniable. At the same time I believe it was our presence here which made it respectable to talk about fiscal prudence and to reduce the amount we were spending. The government was also able to exercise, with our help, a little discipline in not spending all the additional revenue that came rolling in that was beyond its expectations and certainly beyond its planning.

I like what happened in the year 2000. I am a little disappointed in the election. I wish we would have the Liberals in opposition. That would have been a lot more fun. One of the things which did happen just four days before the election was we had a mini-budget, the primary election document for the Liberals. That is what the bill is about.

I must give the Liberals a grudging commendation here. They sure do know how to run elections. I saw a cartoon of the Prime Minister right after the election. It showed the increase in the number of seats. He was reading a paper that said “Liberals re-elected with a resounding majority”. The Prime Minister, speaking to Canadian taxpayers, was saying that was the best $200 million of taxpayer money he ever spent.

We know that an election costs around $200 million. It is quite an expensive project. That is what it took to put the Liberals back into power. I am giving the Liberals a weak commendation in that their pre-election document showed they were ready to go the way we were saying Canadians were asking parliament to go, namely to exercise some fiscal responsibility and implement tax cuts.

If we look at the polling data right now and if we ask Canadians what they think is important, the number one issue is health care, and rightly so. Whenever we are ill and we need some help from the medical profession, we live in a country where we have come to accept that it will be available. It ought to be that way. I believe very solidly in our principle, which is also a principle of the Canada Health Act, that no one should be denied needed health care because of financial situation. I concur with that.

Canadians are saying that is the number one issue. The number two issue is either crime, punishment or the justice system. Down the line a bit comes tax cuts, as the member from the CCF said just a moment ago. He usually calls my party by the wrong name, so why can I not?

He said that tax cuts were actually quite low. That is because when Canadians are asked to priorize something they put these things in rank order. We make the mistake of drawing the conclusion, because tax cuts are maybe third, fourth or fifth on the list, that they are not important to Canadians.

If we look at the importance that Canadians place on those issues they would probably all be close to equal. If we asked how important health care was on a scale of one to ten, a person might say ten. When asked how important tax cuts are, they might say that is a nine. It is not as important so it ranks out that way, but it is still important to them. I hear that from many people who ask why they work like slaves from early morning until late at night and do not seem to get ahead.

Very frankly, even with these timid tax cuts that the Minister of Finance introduced in budget 2000—and of course most of the things in the mini budget from last fall have not yet been implemented—the actual reduction in the total deductions in the average person's paycheque is not huge, if it is there at all. As a matter of fact, with the new payments for Canada pension the bottom line for most families is about the same or sometimes even a little worse.

In broad generalities as I am leading up to my talk on Bill C-22 today, I really think we need to address very carefully the level of taxation in the country.

Second, I want to talk a little about the complexity of it. I talked a bit this morning on Bill C-8, the banking bill, but we have had other bills in the House that have to do with changing the taxation system or the revenue system, and sometimes we deal with government expenditures. I find it frankly astounding, and I hope I never lose my astonishment, that a week ago in one evening we sat here as members and in a matter of about 20 minutes approved the expenditure of some $15 billion or $16 billion. Those were the supplementary estimates just to get the government to the end of this fiscal year. The amount of money we approve here is amazing. I believe the responsibility we have as proper stewards of the money entrusted to us is of the utmost importance.

One of the things I want to see happen is a reduction in the complexity of our tax system. My goodness, I remember not long ago reading an interpretation bulletin on the GST which differentiated between buying cooked shrimp and cold, frozen shrimp. There is a different rate of GST applied to the two of them. In one case it was considered that because they were cooked they were a meal and therefore the GST applied. In the other case they were frozen, therefore they were groceries. GST is not charged on groceries. That is only one minute example.

Bill C-22 discusses proposals for amending the Income Tax Act as well as the Canada Pension Plan, the Customs Act, the Excise Tax Act, the Modernization of Benefits and Obligations Act and another act related to the Excise Tax Act. All of this is included and does not increase the simplicity of it. It increases the complexity of it.

Already I am led to believe that there are very few Canadians, even among our best tax lawyers, who know that code. As a matter of fact, any of our citizens who have had the occasion to go to one of the tribunals to get a ruling on a tax dispute are hoping for some reasonable hearing there because, depending on who one gets, one gets different interpretations.

One person in my riding told me that he phoned Revenue Canada to ask about a certain issue. He got an answer that he did not think was right, so he phoned again, got a different person and got a different answer. Then he thought, just a minute, there are two different answers here, so he went for two out of three because he still did not really know. He phoned again, hoping that he would get one of the other two answers, and lo and behold, there was a third answer. The complexity of it is a great frustration. The bill, among other things, increases that complexity.

During the election campaign the Alliance Party was proposing that we go to a single rate tax. That is not a flat tax. That is a misnomer we are often accused of. A single rate tax is simply the same kind of a tax system we have now with basic exemptions and other deductions, but instead of three rates as we had at that time, we said we would reduce them all to the same rate of 17%. I suppose we could have achieved the same result by simply saying that the amounts where these rates kick in are some high number and it would have probably been more saleable than the way it was presented.

The fact is that we are proposing deductions. We are proposing huge tax breaks for middle income and lower income families. The Liberals are crowing about the fact that people who are now making a family income of $20,000 a year are going to get a tax break of maybe 16% or 20% or whatever number it is that they use. Under our plan that reduction would be 100%. They would be removed from the tax roll completely.

Under our plan, a family of four, a mum, a dad and two kids, would pay zero tax on the first $26,000 of income and then a straight 17% on the remaining, whereas the Liberal government goes on and on with exemptions of maybe $15,000 or $16,000 and then 17% on everything after that, although they are proposing to reduce that to 16%. That, by the way, is also a bit of sleight of hand. If we just talk about the rate but apply it on more of the income the total tax bill is higher than if there were a 1% higher rate but a great deal more of the income exempt from tax.

In wrapping up, I would simply like to say that some of the measures in the bill go in the right direction. I am rather concerned about some of them. They go in the right direction but not far enough. In any case, there are some things in the bill that are woefully inadequate. I am looking forward very much to hearing about the bill in committee, not only from officials but also from witnesses who will come to our committee and give us their read on it. I am sure that in the finance committee we will have a great time analyzing the bill and reporting back to the House in due time.

Financial Consumer Agency Of Canada Act

[Pauline Picard, Bloc, Drummond, QC]

As I said, our proposal dealt with limiting the number of boards on which a director can sit at the same time.

We were saying that, right now, what exists is the old boys' club rule where “I appoint you, you appoint me and we appoint one another”, which makes boards of directors increasingly less efficient and less representative of shareholders. We believe that the number of boards of directors on which a person is allowed to sit should be very limited, because one needs time and a minimum of dedication to do a good job. The bill completely ignores those recommendations.

Second, there is the elimination of potential conflicts of interests between board members and those who provide goods and services to the institution. Our proposal dealt with the elimination of potential conflicts of interests between board members and service providers.

Bill C-8 contains no provision to that effect, except the general provision on very general conflicts of interests. As we know, in the United States and even in Canada, there has been some success in getting shareholders meetings to pass, often against the will and recommendations of bank managers and other corporate directors, resolutions making it a requirement to disclose at least the fees paid to external auditors for audit services, on the one hand, and general consulting services, on the other hand.

For example, a consultant who is paid $1 million to audit records, while at the same time being paid $10 million for various consulting services could presumably have some difficulty presenting a critical internal audit report. Everyone understands that.

Third, there is the requirement to submit financial statements for review and discussion during the annual shareholders' meeting. That proposal seeks to clarify the legislation so that the agenda of the yearly shareholders' meetings include the item “consideration of financial statements and auditor's report”.

In that regard, according to the Canadian Oxford Dictionary , the word consideration means more than just tabling, but the act of considering and careful thought means not just tabling, but giving careful thought.

Since the financial statements are the main report of the agents on their management of the corporation, consideration and discussion of that document is a basic right of the principal shareholders, even those of banks.

There is also the presentation of the officers' remuneration policy to the shareholders' approval. With respect to banks, which are essentially public service companies operating in a very protected environment compared to other companies in the private sector, we find the remunerationpaid to officers literally outrageous.

Of course we know the process through which they receive very positive recommendations about remuneration systems providing they are paid this or that amount. Nevertheless, the end result is that the officers of these institutions are not necessarily paid a basic salary, but aggregate remuneration with a very generous option plan, and that is unacceptable.

As for the adoption of a code of procedure respecting the conduct of shareholders' meetings, the purpose of this proposal is to facilitate active and effective shareholder participation in meetings and to protect them from the arbitrary decisions of presiding officers who are anxious to cut short shareholders' remarks. Our suggestion is that each corporation prepare a code of procedure respecting the conduct of these meetings and that this procedure be adopted at an annual meeting of shareholders within a reasonable timeframe.

Some banks, and more particularly the Laurentian Bank, have voluntarily adopted such a code, but it is not a requirement of the bill.

Corporations should also be required to prepare a comprehensive report on all shareholders' meetings and send it to all shareholders. Our recommendation is that corporations be required to do so. Some of them already do, but there is no requirement to that effect in the bill.

Another suggestion is to reduce the barriers that prevent shareholders from making proposals before and during shareholders' meetings. This suggestion is being made generally rather than by the board or the management of banks exclusively. At this time, a shareholder must hold 5% of the shares of a financial institution or public corporation or have control to be entitled to present candidates as directors on the board.

Do members know how much 5% of the Royal Bank shares represents? It represents $900 million. I do not think any members has that much money or has the proposed control of a bank to be able to present candidates. I do not know too many people with that kind of money.

[Pauline Picard, Bloc, Drummond, QC]

Mr. Speaker, it gives me great pleasure to speak to the motions brought forward by the Bloc Quebecois and supported by my colleague for Saint-Hyacinthe—Bagot, who worked very hard on this issue. He submitted a brief on the subject, listened to hundreds of witnesses and also took to heart most of the recommendations made by witness groups.

The problem with this bill, and it was mentioned earlier, has to do with banks with assets totalling under $5 billion.

We are also concerned with the recommendations made by the Association de protection des épargnants et investisseurs du Québec. It submitted a brief at the committee hearings on Bill C-38, which is now called Bill C-8.

The Association de protection des épargnants et investisseurs du Québec then said:

Bank ownership is widely spread in Canada and it is so intended in order to limit a big shareholder's capacity to control one or more financial institutions while these are considered to be public services. Unfortunately, this widespread shareholding has had a perverse effect—

I repeat, “a perverse effect”,

—by leaving way too much influence in the hands of the directors of major banks. This perverse effect could well be eliminated through some legislative changes to the Banking Act.

The Bloc Quebecois supports the recommendations made by the Association de la protection des épargnants et investisseurs du Québec, and that is why we brought forward the motions read earlier. We have moved many more in support of the association, but they were rejected.

The association has made numerous representations to the federal government, to the McKay Commission in 1997, to the Standing Senate Committee on Banking in 1998 and to the House Standing Committee on Finance in November 1998. Despite these many meetings, Bill C-38 and Bill C-8 did not take any of the association's recommendations into account.

For the most part, these recommendations refer to the recommendations made by the association. I would like to quote some of these recommendations if I have enough time, but I know that time flies.

First there is the restriction on the number of boards a director is allowed to sit on at any one time. Our proposal dealt with the restriction on the number of boards a director would be allowed to sit on at any one time. What exists now is the old boys' club rule where “You appoint me, I appoint you, and we appoint each other”.

[Yvan Loubier, Bloc, Saint-Hyacinthe—Bagot, QC]

moved:

Motion No. 6

That Bill C-8 be amended by adding after line 33 on page 34 the following new clause:

“70.1 Section 160 of the Act is amended by striking out the word “and” at the end of paragraph (h) and by adding the following after paragraph (i): j ) a person who is a director of another financial institution; and k ) a person who has, directly or indirectly, an interest in the supply of products or services to the institution.

Motion No. 7

That Bill C-8 be amended by adding after line 20 on page 35 the following new clause:

“71.1 The Act is amended by adding the following after section 161:

161.1 (1) The position of chairman shall be separate from the position of chief executive officer and shall not be held by the same person.

(2) For greater certainty, the role of the chairman shall be to ensure that the board of directors assesses the management of the institution, while the role of the chief executive officer shall be to manage the institution's day- to-day activities.”

Madam Speaker, basically, these amendments have three purposes. The first is to give more power to shareholders of financial institutions. Earlier, we spoke about the special ownership structure of the Canadian financial sector and that is precisely the idea of the first motion. We said, for example, that for large banks 20% of the shares can be held by a single shareholder and that 80 % of voting shares would be widely distributed in the public.

The effects of such a distribution can be negative since small shareholders have very little to say, particularly during annual meetings of the large Canadian banks, and the bill is designed to strengthen the powers of those small shareholders.

We add our voice to that of the Association de protection des épargnants et des investisseurs du Québec, the APEIQ. We want to give our support to its campaign for more democracy at annual meetings of banks, as well as in the way the boards of directors of financial institutions operate.

On this point, in our first group of amendments, we say that shareholders, no matter how small, have a right to be heard and to participate in any decision made by the financial institutions. To do so, they must receive prompt and timely notice of a general meeting. They must have all the documents relevant to this meeting and they must also be allowed to be heard, not just on matters having to do with the profitability of the financial institution, but also on any other matter which directly or indirectly affects the activities of the institution per se.

I will give an example. Right now, it is not possible for shareholders at a general meeting to raise matters having to do with the social aspects of a company's activities. Nor may they raise political issues. For instance, they could not ask questions about the activities of a company in which they were a small shareholder in countries where democracy was not the rule and where fundamental rights were not respected. It is not possible at a general meeting to table resolutions along these lines or even to question the board of directors. It is time that this changed. It is now 2001 and the democratic system in use at the general meetings of major financial institutions is completely archaic.

There are also other motions, one of which was to avoid any possibility of conflict of interest.

A person cannot sit on the board of a major bank and also provide that bank with goods and services. This would make him or her both judge and party to the action when it came time to make decisions relating to the financial institution.

For example, someone cannot be a member of the board of a bank and a shareholder in a company of external auditors, for instance, hired by the bank to audit its financial statements.

What we are proposing then is to ensure that there are new provisions which would, for example, call for questions to be asked and for it not to be acceptable for a board member to be directly or indirectly involved in providing the institution with products and services. Nor would it be allowed for a board member of one financial institution to also sit on the board of another. This could lead to problems.

That is the gist of what we are proposing. It is also the position of the Association de protection des épargnants et des investisseurs du Québec, APEIQ, which we totally endorse.

It is our hope that, in the spirit of greater democratization and transparency of the activities of the financial institutions, the government will support such proposals, along with the members of the other opposition parties. They cannot help but improve things from the point of view of equity, small shareholder participation, democratization and, above all, transparency of the activities of these major financial institutions.