Bill C-57 (Historical)

An Act to amend certain Acts in relation to financial institutions

This enactment amends certain Acts governing federal financial institutions. It makes changes to the corporate governance framework of banks, bank holding companies, insurance companies, insurance holding companies, trust and loan companies and cooperative credit associations to bring the Acts governing those institutions up to the standards adopted in 2001 for business corporations in the Canada Business Corporations Act that are appropriate for financial institutions and adapted to the financial institutions context, and updates certain governance standards that are unique to financial institutions.

Bank Act

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

Madam Speaker, I will speak briefly to Bill C-57.

We had some reservations when this bill was first introduced, but after it went through committee and witnesses suggested avenues for improving it, especially after hearing actuaries and their concerns, we decided to support it.

We still have a few unanswered questions regarding the confidentiality of information on bank operations. However, on the whole, I think this bill is worth passing. It is an improvement on the current situation. It is an extension of Bill S-11, which was introduced last year. We will therefore support it.

As a next step, I think it would be worthwhile to look at the issue of confidentiality of the operations of banks and their boards of directors. But for now, we are supporting the bill. More improvements can be made to it later.

In a nutshell, I am announcing to the House that we will be supporting this bill.

[Charlie Penson, Conservative, Peace River, AB]

Madam Speaker, it is a pleasure to rise today to speak to Bill C-57. The Conservative Party will be supporting this bill. We believe in strong corporate governance and rules around that sector. We believe they are essential to ensuring that shareholders' rights are protected, that consumers are served properly, and that Canada's financial sector is able to be strong and vibrant.

The Conservative Party will continue to look out for the best interests of consumers and shareholders while ensuring that the regulatory environment contributes to a strong financial sector.

This bill would bring the financial sector under the same rules as other business corporations that are currently under the Canada Business Corporations Act which took effect in 2001.

However, this Liberal government should walk the talk. While it is busy bringing in Bill C-57 on corporate governance, cleaning it up and making it transparent, what do we see from the government itself? Canadians have been subjected to another year of false projection, junk accounting and misleading government spin. The Liberals continue to hide behind phoney numbers and false forecasts.

The Liberal budget of 2005 projection of $3 billion was a lowball figure, as we now know. The government would have presented a budget surplus of $6 billion if it had not been engaged in unbudgeted spending and junk accounting which served to reduce the surplus numbers close to what the budget projection then was.

Parliament's numbers, the work done by the four forecasters hired by the finance committee to check on what the projections were from the finance department and, more important, the finance minister, revealed early on that the Liberals were sitting on billions of dollars more than the budget 2005 projections that were claimed.

In April Parliament's numbers projected a surplus of $6.1 billion and most recently, in July, a surplus of $.64 billion. Now those same fiscal forecasters are continuing on and we hope to get a budget for them to continue their work.

This points out the Liberal government's questionable budgetary practices that underscore the need for a parliamentary budget office, as was presented in the new Conservative federal accountability act. Canadians deserve honest and independent forecast projections, so that Parliament can engage in a debate as to how surplus money should be allocated and in fact, whether those kinds of surpluses should be allowed to build up. In any event, maybe we need to lower tax rates, so we do not run those massive surpluses. We see sometimes that the government gets carried away just before elections and all kinds of crazy spending is coming out most recently.

We are in agreement with this. It would help several sectors. It would help The Co-operators, I know, which is a big cooperative financial institution. We have some concerns for other sectors, like the chartered accountants. We are willing to explore those further. I think it is important to get the financial sector under the same rules that other corporations are under in this country and that shareholders have the transparency they need to make investments in the sectors that are involved under this legislation.

[Roy Cullen, Liberal, Parliamentary Secretary to the Minister of Public Safety and Emergency Preparedness]

Madam Speaker, I am thankful for the opportunity to speak to Bill C-57 at third reading.

In budget 2005 the government committed to introduce the proposals in this bill, which now fulfill our government's commitment to bring the governance standards for financial institutions up to the levels adopted in 2001 for other federally incorporated companies. Bill C-57 also proposes to update certain governance standards that are unique to financial institutions.

I am told by my colleague, the Parliamentary Secretary to the Minister of Finance, that the members on the House of Commons Standing Committee on Finance worked very constructively and collaboratively on this initiative. We want to thank them for doing that.

There is little doubt of the important role that financial institutions play in the lives of Canadians. They provide services above and beyond what we most often think of as banking services, services such as chequing and savings accounts, and mortgages.

Financial institutions, though, are much more than that. For example, they provide the capital necessary for new or existing businesses. They sell insurance and can administer estates, trusts and agency contracts. In addition, they play a key role in helping governments and corporations to raise capital, as well as offering individuals an opportunity to invest in stocks, bonds and other securities.

The financial services sector is more than a provider of services. It is a critical part of the infrastructure of our economy, employing over 600,000 Canadians with a yearly payroll of over $35 billion. I can say that where I come from in Toronto, the financial services sector is a hugely critical employer in the business activity in the area. Let us not forget also that the financial services sector contributes approximately $13 billion in taxes to all orders of government.

I think everyone would agree that for Canada to continue its economic success, we must think beyond our borders. The same is true of Canadian businesses such as financial institutions. Let us face it, the reality is that we are operating in a global context and in global capital markets, but in order to compete in such an increasingly competitive global marketplace, the financial services sector needs to have a modern and up to date regulatory framework.

It is in this spirit that the government has taken action in recent years to ensure that financial institutions have the up to date regulatory framework they need to compete in today's global economy. In fact, this framework is reviewed every five years. Bill C-57 builds on those initiatives. It equips financial institutions with the modern governance tools that they need to compete in a global economy.

I would like now to quickly outline the five main elements contained in this bill. First, the financial institutions statutes recognize the importance of an effective board of directors. Bill C-57 contains proposals to clarify the role of directors in carrying out their important functions, for example, by explicitly allowing for a due diligence defence and clarifying the conflict of interest rules. I am particularly proud to see that. My first private member's bill called for the defence of due diligence for directors of corporations in Canada incorporated under the Canada Business Corporations Act.

Second, shareholders have certain rights, such as the right to participate in the major decisions of a financial institution in which they have an interest. The proposed legislation enhances those rights. For example, once this bill is passed, shareholders would be permitted electronic participation in meetings using technology such as video conferencing.

Third, Bill C-57 recognizes the importance of good governance in the well-being of a financial institution. As such, the government's framework needs to be kept up to date with best practices in this area.

Fourth, the legislation proposes to strengthen a number of governance elements in the regulatory framework, including improving the flow of information to the regulator. It also harmonizes various governance standards within and across the financial institution statutes.

The fifth element relates to changes in the policy holder governance framework for insurance companies. These changes would work to increase disclosure in respect of participating in adjustable life insurance policies.

We do not have time to go into any more detail on this particular piece of legislation, but it is an important piece of legislation that would affirm the importance of our financial institutions in Canada and would give them the tools necessary to compete in this global economy.

[Aileen Carroll, Liberal, for the Minister of Finance]

moved that Bill C-57, An Act to amend certain Acts in relation to financial institutions, be read the third time and passed.

Business of the House

[Some hon. members]

Agreed.

(Motion agreed to)

(Bill C-71. On the Order: Government Orders)

November 22, 2005--The Minister of Indian Affairs and Northern Development--Consideration at report stage and second reading of Bill C-71, An Act respecting the regulation of commercial and industrial undertakings on reserve lands, as reported by the Standing Committee on Aboriginal Affairs and Northern Development without amendment.

(Bill concurred in at report stage and read the second time)

(Bill C-57. On the Order: Government Orders:)

November 18, 2005--The Minister of Finance--Consideration at report stage of Bill C-57, An Act to amend certain Acts in relation to financial institutions, as reported by the Standing Committee on Finance with amendments.

(Bill concurred in at report stage)

[Tony Valeri, Liberal, Leader of the Government in the House of Commons]

Mr. Speaker, there have been discussions among the parties and I think you would find unanimous consent for the following motion. I move:

That, notwithstanding any standing order or usual practice, Bill C-71 be deemed to have been concurred in at report stage and read a second time in order for consideration at third reading later this day and Bill C-57 be deemed to have been concurred in at report stage in order for consideration at third reading later this day, and that at the third reading stage of each bill, after no more than one speaker from each party has spoken for not more than five minutes, the question shall be deemed put and deemed carried on division.

Committees of the House

[John McKay, Liberal, Parliamentary Secretary to the Minister of Finance]

Mr. Speaker, I have the honour to table, in both official languages, the 18th report of the Standing Committee on Finance on Bill C-57, An Act to amend certain acts in relation to financial institutions and agreed on Thursday, November 18, 2005, to report it with amendments.

Business of the House

[Tony Valeri, Liberal, Leader of the Government in the House of Commons]

Mr. Speaker, we will continue this afternoon with the opposition motion.

On Tuesday, November 22 and Thursday, November 24, we will have allotted days. The opposition House leaders are in fact considering a special House order to expedite Bill C-53, Bill C-54, Bill C-55 and Bill C-66 through all stages with a recorded vote at third reading. I hope we can come to an agreement on that special House order and proceed in that fashion.

If we cannot agree on that special order, then tomorrow we will begin with reference before second reading of Bill C-71, the first nations commercial bill; report stage of Bill S-37, respecting the Hague convention; second reading of Bill S-36, the rough diamonds bill; and reference before second reading of Bill C-72, the bill amending the DNA legislation. We will continue with this business next week, adding the report stage of Bill C-57, the financial governance bill, and other unfinished items.

With respect to the comment about the Chamber of Commerce, it is very clear, and I said this earlier, that Bill C-66 and the ways and means motion are in fact confidence motions. Although I am not sure I should do this, I am taking at the hon. member's word the public statements that in fact those members do support Bill C-66 and the ways and means motion with respect to taxes. Given his comment, I guess I should reconsider and speak to him once again since his party has flip-flopped on a number of occasions.

With respect to prorogation, I have to say that this rumour created by the Conservative Party was merely to keep the NDP in line with its confidence motion that it will put forward in the coming weeks.

Bank Act

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, the member has laid out the broad strokes of Bill C-57. It is an important bill. It will update our legislation with regard to financial institutions to bring into line changes that were made to the Canada Business Corporations Act.

I am pleased that all parties seem to have agreed that support will be given at second reading, so that the committee can hear the witnesses as well as to bring to the table some of the important ancillary issues, and the member raised a very important one. I was a member of the finance committee when we went through the last flurry of bank merger discussions. One of the significant debates and concerns that came from Canadians and parliamentarians was the impact on regional banking services and financial services.

I would like to ask the member, does he have any recommendations to give to the committee as it looks at this to ensure that there is a balance across the country and that it takes into account the regional differences throughout Canada?

[Michael John Savage, Liberal, Dartmouth—Cole Harbour, NS]

Mr. Speaker, I appreciate the opportunity to speak to Bill C-57 which introduces a new governance framework for the financial services sector. Other colleagues have spoken quite eloquently about how important this bill is to bring governance standards for the financial institutions up to date. This proposed legislation would give financial institutions and their stakeholders the governance tools that they need to allow them to continue to play a key and leading role in Canada's economy. It addresses concerns that many Canadians have about corporate governance.

The financial services sector not only plays a vital role in the economy but also in the financial lives of Canadians, whether it is banking, insurance, financing, investing or financial planning. Every day across the country consumers, businesses and governments depend on the products and services provided by financial institutions. Community groups, arts and culture groups, amateur sports groups across the country also depend on these institutions. We need look no further than the CIBC run for the cure this past weekend to see how important our financial institutions are. In my own province of Nova Scotia we are proud to be the home of Scotiabank which is a leader in corporate responsibility.

I would like to focus my remarks today on the federal legislation and the initiatives the government has introduced that are designed to make the financial services sector more competitive and to enhance consumer protection. The process of implementing the new policy framework began in 1996 with the establishment of the MacKay task force on the future of the Canadian financial services sector. In September 1998 the task force presented the government with its report which was then reviewed by two parliamentary committees.

The committees in turn conducted extensive public consultations and presented the government with their recommendations. This consultation process eventually led to Bill C-8, which in 2001 introduced legislation to reform the policy framework for Canada's financial services sector. That contained a number of measures that focused on four main areas, one of which was to empower and to protect consumers.

Perhaps the most important initiative for consumers that sprung from this legislation was the establishment of the Financial Consumer Agency of Canada in 2001. This agency was established to consolidate and strengthen oversight of consumer protection measures in the federally regulated financial sector as well as to educate consumers. While some consumer protection activities existed before that, they were dispersed among a large number of federal entities making the complaint process more arduous and less responsive to the needs of Canadians. The FCAC consolidated those services.

Hon. members may also be aware of the ombudsman for banking services and investments, OBSI, which was established in 2002. The OBSI is an independent organization that investigates consumer complaints against financial service providers including banks and other deposit taking organizations, investment dealers, mutual fund dealers, and mutual fund companies. It provides prompt and impartial resolution of complaints that customers have been unable to resolve satisfactorily with their own financial services provider. For the first time in Canada customers of banking and investment services now access comprehensive and effective complaint resolution through a single ombudsman.

The OBSI is independent of the financial services industry. To ensure its independence, the ombudsman reports to a board of directors of which a majority of the directors are independent of the financial services industry. The bottom line is that consumers have benefited from the changes in the financial services sector. With new competitors in the marketplace, increased competition among existing institutions and more innovative products and services, consumers now have more choices in deciding who fulfills their financial needs.

Small and medium sized businesses too in some cases have benefited from increased choice among financial service providers. To ensure that there is better information on the financing needs of small and medium sized enterprises and the availability of financing to meet those needs, the government undertook a comprehensive program.

That program was to assist in the development of effective public policy; to promote greater awareness among small businesses of the sources and types of financing available; and to foster a more complete understanding among financing providers of the financing needs of small and medium sized businesses.

I would not suggest that I am entirely delighted with the way that all financial service institutions have responded. I think, particularly in regions of Canada like Atlantic Canada, that we could do a lot better in terms of decision making as well as presence in those regions, but we have come a long way in a lot of areas.

Although the government has introduced consumer safeguards, we have also been mindful not to place too high a regulatory burden on financial institutions. The government is equally committed to providing a policy environment that is fair and balanced.

It is important to mention that the framework for the Canadian financial services sector enacted by the government is not a static process. Rather, it is dynamic, reacting quickly in this world with the rapid pace of globalization and technological innovation that has become a daily reality for businesses in Canada.

Indeed, the policy framework for the financial services sector should be dynamic, flexible and fair. The framework provides that flexibility in three ways. It maintains, first, the long standing practice of ensuring regular updating of the regulatory framework by including an automatic five year review in the legislation, one being scheduled in 2006. This is a practice that sets Canada apart from virtually every other country in the world.

Second, as has been frequently done in the past, the government is prepared to revisit this legislation prior to the five year review if it proves necessary in order to ensure that the framework keeps pace with the rapidly changing marketplace. Finally, the legislation allows for matters of implementation to be dealt with through regulation.

What we have is a balanced framework, a regulatory approach that is well thought out and efficient, with important consumer protection measures. Both aspects are conducive to the growth and success of Canada's financial institution.

One would ask, how does Bill C-57 fit into the big picture? I believe that government policies will continue to evolve over time, so that we can keep pace with the new economy, new innovations and new technology. Bill C-57 is part of that evolution.

The proposals contained in the bill will update and modernize the framework for the financial services sector. It has broad support among stakeholder groups in the country and I believe among Canadians. I urge and expect all members will support Bill C-57.

[Paul Szabo, Liberal, Mississauga South, ON]

Madam Speaker, I want to thank the member for her contribution. As a member of the finance committee in this debate at second reading on Bill C-57, she went through some excellent history, particularly that of the Bennett-Broadbent commission report and the MacKay task force report. There is a number of underpinning or foundational documents and studies which I think will be very helpful to the committee as it deals with a bill that is almost 300 pages long in both official languages.

It is going to take some careful work to ensure that we do get it right. That is one of the reasons why at second reading it is important for members who have interests in certain aspects of the bill to ensure that their input, either through debate or through their critics, is brought to the finance committee to help it do the job.

As the member laid out, the bill itself has some themes. There are four broad categories which the committee will be working on. The first is with regard to clarifying the role of directors. The second is about enhancing the rights of shareholders. The third concerns modernizing practices within the financial institution group. The fourth is about strengthening governance elements of the regulatory framework, an extremely important aspect and the member did comment on it. Finally, with regard to the Insurance Companies Act, certainly there is the clarifying of the policyholder governance in view of the fact that we have had this demutualization within the insurance industry.

I want to urge the member to consider one aspect for the committee's consideration, and it is with regard to the role of directors. We know the issues with regard to Enron, WorldCom, et cetera. There were officers and directors who were knowledgeable of the business practices and the decisions taken that gave rise to serious business failures, which led to significant losses to the citizens. However, we should celebrate our financial services industries as well. The failures in Canada have not seen the same kinds of problems that have been experienced in the United States.

The member is also aware that the financial industry, although it takes a pretty good beating in the public with regard to making $1 billion or something like that, does not often get credit for the fact that it employs about 600,000 people and contributes about 6% to Canada's GDP. I would also add that there is the industry's philanthropic work and the matter the member raised about the social aspect of the banks. That has been well established and well appreciated by Canadians for many years.

With regard to the directors and the specific question, there is the issue of directors' liability. Last evening I was at a function sponsored by the Canadian Institute of Chartered Accountants, at which I became aware that there is a serious concern about the low number of people putting their names forward to be directors of corporations because of the high risks and the liabilities associated with directors' responsibilities. It is a very important issue.

At the same time, and the member may have an opportunity at committee to get this kind of information, we have a broad range of financial institutions as well as corporations which have a tendency to seek marquee directors who are paid significant bonuses to join the board, along with stock options, et cetera, simply to be there to attract others. Would the member indicate whether she shares that concern and whether this kind of thing may also help to improve the governance scenario as it relates to financial institutions?

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

Madam Speaker, I am glad to have the opportunity to speak to Bill C-57 at second reading. It is very importance legislation.

Some would think, based on the low key nature of this debate, that this is a rather mundane, routine kind of legislation, that it is housekeeping to simply bring things into line. The NDP views the bill as far more significant than simply a matter of housekeeping and tidying up on the part of the government, and I want to point out some concerns right at the outset.

I begin by referencing those Liberals who this morning had the audacity to stand up and suggest that this was a good example of Liberal efficiency, that the legislation was about making our programs and our institutions more efficient and in line with modern day standards.

Let us look at the history. We are talking about a government that in the year 2005 has brought in legislation to bring in line legislation that was passed in the House in 2001. The last time I checked four years have gone by. Four years is a heck of a long time for the government to move on efficiency. I guess one could say, by the very nature of what we are dealing with, the government belies the very definition of efficiency. Only Liberals could say that waiting four years to bring something into line with a 2001 bill is efficient.

My goodness, this goes to the nub of the issue we face on so many fronts when we deal with finance. We have a government that dithers. We have a finance minister who cannot make up his mind about bank mergers. I also want to reference the speech by the Parliamentary Secretary to the Minister of Public Safety and Emergency Preparedness who focused so much of his remarks on bank mergers, suggesting that this was a matter that would be advanced if the banks supported the idea of mergers and wanted it to come forward.

The parliamentary secretary is being a little disingenuous. We know the banks have been demanding that the government bring forward merger legislation for years. We have a finance minister who promised it would be on the table this summer and this fall. Now we understand that the finance minister got cold feet because he was not sure the had the support of everyone in the House for bank mergers. He dared to suggest that he had to pull it back because of political game in this area and that it had become a political issue.

The government of the day sets the agenda. The government of the day determines what needs to be acted on. The government of the day is supposed to deal with the public interest. Surely, if the finance minister thought it was important, he would have brought it forward.

However, we recognize the fact that the Minister of Finance was cautious in his approach and needed some more support and backing. Therefore, we presented a very reasonable proposal to the Minister of Finance. We suggested to him that there would be support perhaps for the idea of bank mergers if the government would finally deal with a long list of outstanding issues that were of concern to Canadians and consumers in all our communities.

We pointed out to the Minister of Finance that he was not in a very strong position to move on bank mergers if he had not dealt with banks that shut down branches without any regard for the communities they were abandoning. The parliamentary secretary who just spoke tried to suggest that in small towns banks no longer do that, that they do not close branches and leave a community high and dry.

Perhaps that is true in small towns, but it is certainly not true for communities within large cities. It is certainly not true for inner city neighbourhoods. It is certainly not true for older north end communities. It is certainly not true for Winnipeg North, where the banks shut down every branch in the entire north end of Winnipeg without regard for citizens to be served or for the needs of people to have access to financial institutions.

We suggest to the Minister of Finance that if he wants to move on bank mergers and wants us to even look at the idea, then perhaps he should deal with that very issue. Perhaps he should have some teeth in legislation that prevents banks from unilaterally shutting down branches and abandoning entire communities. Perhaps he should deal with the credit card interest rates that banks set. Perhaps he should deal with the huge rise in numbers of payday lenders without regard for regulation. Perhaps he should deal with a form of reinvestment in our communities, which is present in the United States, and ensure that banks that benefit from communities and that reap their profits from loyal customers over the years put something back into those communities before they up and leave and abandon entire neighbourhoods.

We gave the minister all kinds of ideas and help to bring forward this issue. I want the record to show that it is absolutely irresponsible on the part of the Minister of Finance to suggest that he could not go forward because of political games that were played by members in the opposition.

On the part of the New Democratic Party, we are not playing political games. We are trying to do what is in the best interest of Canadians. We are trying to ensure there is some measure of accountability, efficiency and transparency in the area of financial institutions. That gets us right to the heart of the bill.

The bill attempts to modernize the corporate governance framework for Canada's federally regulated institutions. That is clearly an issue of great importance in this day and age of corruption and scandals in the corporate sector. We would expect the legislation to help us deal with accountability and transparency in all federally regulated institutions.

As I already said, we had a lot of chances to deal with this before, and finally we see something happening. I wish it had not taken so long. We have to see Bill C-57 as a process that has been underway in the country for a long time, certainly in a formal way since 1994. It is one that has seen other phases and has taken other legislative forms. Bill S-19, Bill S-11 and Bill C-8 are all legislative examples that leap to mind. Let us not forget the MacKay task force and the several parliamentary committees that have studied this issue over the years.

There is another aspect to this whole debate. It is the need for reform that comes not just from corporations or the financial sector as a whole, but one that is part of an ongoing broadly based shareholder and consumer movement, a movement that is trying desperately to establish greater public access to the instruments that control our economy and the impact on our livelihoods and finances in major ways.

That is part of the debate we have to address today. At least members of the New Democratic Party have been diligent about raising such issues in the past. I want to refer members to the January 2004 announcement of my party for a pocketbook protector, which outlines a comprehensive set of proposals to protect Canadian consumers including, may I emphasize, the establishment of citizen utility boards to give stakeholders an organized voice and some real clout and increased openness in Canadian financial and other corporations that would be modelled on the American experience with the Sarbanes Oxley act and other measures.

I mentioned that we gave the minister all kinds of suggestions around the whole bank merger issue for bringing more accountability to our banking sector. This summer I responded to the Minister of Finance's letter on his demand that the NDP and other opposition parties come clean with their position on bank mergers. I said to him that legislators and consumers currently lacked basic information to determine whether banks acted in the public benefit in accordance with their public charters. There is a huge potential for improving transparency in banking without compromising legitimate privacy concerns or good business practices. Legislative changes are clearly needed to enable the public to track bank activity in our communities

I want to mention another indirect initiative from the NDP. That is the Canadian Democracy and Corporate Accountability Commission, chaired by the member for Ottawa Centre. This commission examined ways to increase corporate responsibility. The member for Ottawa Centre attempted to raise many important issues and to lead efforts to reform Parliament to better embody our democratic impulses. However, those political reforms would be incomplete if our financial institutions and their decisions remained isolated from the vast number of Canadians that they serve.

What took the government so long? Why does it go in starts and fits? Why does it get something going and then pull back? In the case of banker mergers, why has it dithered about its response? On the question of income trusts, why does the government suddenly decide to study the issue and the next minute decide to crack down on the expansion of any income trusts, knowing full well the millions of dollars that are lost to our public coffers because of corporations taking advantage of this loophole?

Finally we have a chance for action, and that is what we are about to do.

There are some positives in the bill and some negatives. There are measures in it that would improve financial sector governance, and I do not want to dispute that. It recognizes changes in our communications technology and reflects those changes by accommodating electronic communications.

Bill C-57 would relax the overly restrictive limitations on shareholder communications. For example, it would allow shareholder communications without necessarily triggering proxy rules. The bill also would harmonize the legislation covering the various types of financial institutions. It introduces some long overdue measures to upgrade governance of the crucial financial institutions regulated under the direct authority of the federal government closer to a standard appropriate for the 21st century.

In particular, I want to emphasize a change that has been long overdue and one that all of us have fought for in this place. That is the alignment of the Cooperative Credit Associations Act and the Bank Act. This is very important because it will provide cooperatively structured companies with equal treatment on their share requirements as that afforded other more traditionally structured groups. This previously has been denied to them on account of the outdated limitations imposed by current legislation. Cooperatively structured corporations should be encouraged in Canada, not penalized. The measure in the bill at least puts them on an equal footing in one important area.

I will now get on to some of the negatives in Bill C-57.

I want to emphasize the fact that this legislation ignores the Broadbent commission. It has failed to incorporate modern, progressive, corporate-social responsibility initiatives recommended by the Canadian Democracy and Corporate Accountability Commission, also known as the Bennett-Broadbent commission of 2002.

Despite assurances at the time of the passage of Bill S-11 that the government would as a matter of course incorporate the positive suggestions of the commission into its corporate reform vision, the thrust of the commission's work and its specific recommendations remain largely ignored in Bill C-57.

That independently funded commission was composed of five members, three from the business community, one from organized labour and one with a political background, that being the member for Ottawa Centre.

Between February and September of 2001 the commission travelled across Canada. It held public hearings, meetings and received briefs and presentations from a wide cross-section of Canadians interested in corporate governance issues. It further conducted a public poll on the issues and concluded its activities with a report in 2002 containing 24 recommendations.

Regrettably, the work of the commission was superseded back in 2002 with the government's Bill S-11. We tried at that time to get the whole process to address the commission's findings but unfortunately were not able to do so.

Among the recommendations contained in the Broadbent commission's final report, entitled “The New Balance Sheet: Corporate Profits and Responsibility in the 21st Century”, was this recommendation:

Companies should have governance structures facilitating the development of a corporate culture supportive of corporate social responsibility. In particular, a committee of the board of directors should be assigned responsibility for corporate social responsibility matters. A senior executive should be appointed corporate social-responsibility ombudsperson and have direct access to the chair of that committee.

Many other recommendations put forward by the commission are important and have not yet been accommodated in this legislation.

I want to mention another very important issue and that has to do with a watchdog agency, because I think that perhaps the key element in any progress in realigning stakeholder authority and increasing accountability lies in the development of an independent watchdog capacity. This element has been missing in the governance of federal financial institutions generally and it is still not there. This has left stakeholder voices without a vehicle of expression when concerns about corporate behaviour arise.

Provision for the formal recognition and integration of independent watchdog groups must be incorporated, in our view, as an essential part of any corporate governance landscape. The NDP, together with many consumer advocates, has proposed an effective, inexpensive way of starting and maintaining such groups. This involves utilizing the already existing corporate communications network, mail-outs or other communications to shareholders, policyholders, et cetera, and using that network to disseminate information about forming a consumer watchdog group, along with contact numbers for those who wish to follow up.

This type of communications tool should become, in our view, a regular element of corporate mailings at specified intervals. The distribution of notices of annual meetings or annual reports is commonly suggested as a very minimum.

Having a consumers' agency with responsibilities to others besides stakeholders may be appropriate for other purposes, but it is not an adequate response to the need for an independent and exclusively consumer-oriented mechanism.

There has been a lot of support for such an oversight group. It has been endorsed by 31 citizen groups, including 18 national organizations, but it is not limited to citizens' groups alone. It has also received support from the House of Commons and Senate finance committees. Also, it was supported by the 1998 MacKay task force on the future of the Canadian financial services sector.

There has been a heck of a lot of discussion on this issue over the years and a lot of support from all sectors. The question is, how can we make it a reality? We have an opportunity in this bill to do just that. We have an opportunity to modernize the fiduciary framework for financial institutions.

There has been a battle raging for some time now over the parameters of legitimate director activity. In Bill C-57 it is apparent that those favouring a narrow, conservative and, some would say, dated interpretation must be questioned. To turn a profit for shareholders irrespective of the consequences is an approach better suited to the 19th century than the 21st century.

I could go on with many other recommendations, but let me conclude by saying that this bill is long overdue. There are some major parts to it that are important. We particularly value the acknowledgement of the cooperative sector and we want to see this bill approved with that component in it, but we would also like to see some changes. We will be working very hard in committee to address the outstanding issues and to ensure that consumers have access to financial institutions on a basis of accountability, efficiency and transparency.

[Louise Thibault, Bloc, Rimouski—Témiscouata, QC]

Madam Speaker, I have a related question for the hon. member who just spoke.

At the beginning of his speech, he indicated that Bill C-57 was part of a modern regulatory framework. That is understandable. We have to keep up with the times.

On the whole issue of access to information and the use of electronic communications to transmit any type of information, I was wondering if this was satisfactory? Is the hon. member satisfied? He did point out that this was a large piece of legislation. I am not as knowledgeable as our hon. colleague, but I am concerned because of the major challenges we are facing. I will not run down the list, but there have been scandals and, in one instance, privileged and confidential information held by a financial institution was made public.

Given the large number of amendments contained in Bill C-57 and the large number of acts in relation to financial institutions affected by these changes, I was wondering whether it had been necessary to improve security once again around the whole access to information issue, particularly where the privacy of individual citizens is concerned.

[Roy Cullen, Liberal, Parliamentary Secretary to the Minister of Public Safety and Emergency Preparedness]

Madam Speaker, I thank my colleague from Mississauga South. I welcome this opportunity to rise in this House to speak on Bill C-57.

We are well aware of just how important the financial services sector is to the Canadian economy, and that of Toronto in particular, where my riding is located. The steps taken by our government in recent years attest to that fact. We have passed legislation ensuring that financial institutions have the modern regulatory framework they need in order to be competitive in today's global economy. Bill C-57 builds on these initiatives.

This bill builds on the financial services restructuring package that was introduced and passed by Parliament in 2000. I think it was the largest piece of legislation that was introduced and passed by Parliament dealing with the financial sector in Canada and how it was going to be structured or allowed to structure itself. Of course, a major piece of that legislation dealt with bank merger guidelines.

At the time there were governance issues affecting the major banks and financial institutions that were not dealt with, so this bill addresses some of those governance issues. For example, it brings the legislation up to date to recognize the fact that the major insurance companies were demutualized. It also deals with the issues around deposit insurance and aligns this act with some of the features of the Canada Business Corporations Act, for example, the question of the defence of due diligence by directors.

In fact, my first private member's bill in 1997 dealt with giving directors the defence of due diligence for corporations incorporated under the Canada Business Corporations Act. It was necessary I felt, and in fact it was incorporated later into the Canada Business Corporations Act, that directors would be given the defence of due diligence.

What that means is that if directors of companies asked all the right questions, demanded certain information in certain ways and did everything that was reasonable for directors to do, then they would not be held liable if something occurred subsequently which created problems for the corporation. I think it is fair for directors to have that defence because directors come together for board meetings maybe once a month. It is management that is primarily responsible for running the company.

For example, if a company was building a big plant and the director asked about the impact on the environment by the plant, and wanted an independent study conducted by environmental engineers, once the study was conducted and the environmental engineers said the plant would create no environmental difficulties, then at that point in time I think the director has discharged his or her responsibility. Subsequently, if the plant creates some environmental problems, then I do not think the director should be held liable. That is what the change to the Canada Business Corporations Act did and that is what the changes to Bill C-57 contemplate as one of the pieces with respect to the financial institutions legislation.

Corporate governance is one of those items that has received more attention in the last few years around the world, particularly with the advent of the Enron scandal in the United States and WorldCom. We have not been immune in Canada either. We have had some difficulties with corporate governance at Nortel. I cannot remember the company name, but there was the Drabinsky theatre group that got into some problems.

Corporate governance is a very topical matter and concerns, of course, a lot of citizens who own shares in companies, pension plans and mutual funds. In fact, many Canadians hold shares in companies in Canada through either mutual funds or pension plans or hold those shares directly. It is important to them that corporate governance is sound.

That is why, following the Enron and WorldCom situations in the United States, members on this side reacted. I do not know about members on the other side as I do not think they spend much time worrying about things like this. They are more interested in a $1.50 pack of gum that Mr. Dingwall bought. Nonetheless, corporate governance is a very important matter because it affects the investments that many Canadians have made. Following Enron and WorldCom, the United States, through its Congress, brought in legislation referred to as Sarbanes-Oxley that basically brought in tough corporate governance rules for companies.

The reality is that the Sarbanes-Oxley legislation, while well intentioned, has had some mixed reviews, but it did raise the question, certainly on this side of the House, of what we should be doing in Canada, so we struck a caucus committee, which I was honoured to chair, and we looked at corporate governance in Canada.

Canada has a complicated quilt of different jurisdictions and different organizations that get involved in corporate governance. We have the Ontario Securities Commission. We have organizations like the Canadian Public Accountability Board, which was set up just two years ago to give oversight over auditing firms, so that auditing firms are held accountable to the audit reports that they issue. Many investors rely on these audit reports because if they give companies a clean bill of health, then someone investing in those companies has a right to expect that they have a clean bill of health. The Canadian Public Accountability Board was set up to monitor the performance of auditing firms.

We also have the Canada Business Corporations Act. I forget the exact statistic but something like 30% to 40% of the public companies in Canada are incorporated under the Canada Business Corporations Act. It is a large number of companies. It does not represent all companies, but it is quite comprehensive.

Therefore, our view, coming out of that review, was that the Canada Business Corporations Act could be used and should be used as a benchmark, as a worldclass standard that should be implemented. This is an area that the Government of Canada can control very directly. Through Parliament, we can pass legislation that sets the corporate governance rules for corporations incorporated under the Canada Business Corporations Act.

What does corporate governance consider? It deals with a whole host of things. It deals with things such as the composition of a board of directors and whether there should be independent boards of directors. We saw problems, for example with Nabisco, which was a big fiasco years ago where the CEO hand-picked all the members of the board of directors and paid them $40,000 U.S. a year. They would go to fancy meetings and so on. When the executive made presentations to the board of directors, they were all hand-picked buddies of the CEO and chairman, and nothing really came under close scrutiny. There are issues around the independence of the members of the board.

There is the question, which particularly comes up in the context of financial institutions in Canada, of what the requirements or limitations are in terms of the participation of foreign directors on boards of directors. Should a bank such as the Bank of Montreal or an insurance company such as Sun Life be allowed to have unfettered access to members of their boards who are U.S. citizens, for example, as opposed to Canadian citizens?

There are issues whether the role of the chief executive officer should be split from the role of chairman of the corporation, so that the chair could be independent and provide more oversight over the CEO and his or her executive team.

There are issues around executive compensation, stock option plans and the transparency of those. One of the problems or challenges we had was public companies' quarterly profits being reported and those profits really determining the share price of a company to a large extent. The management of companies is under huge pressure to keep earnings per share on the rise. That sometimes puts officers of a company in a position where they might compromise their ethical standards, frankly.

We saw that in a big company in the United States, Xerox or one of those, that simply capitalized a whole range of expenses that should have been expensed. Of course, if those costs had been expensed, it would have had an impact on earnings per share. Its share price would have been affected, so they treated them as assets rather than expenses. Even the most cursory examination by an accountant would have or should have revealed that those were not assets, those were expenses.

With the pressures on management to perform in terms of earnings per share, we need to have complete transparency with respect to stock options, so that shareholders know that the executive of a company has certain incentives to see the share price increase. In this way shareholders know precisely what is going on.

There are issues about the handling of proxies for meetings, so that the executive and the management of a company do not dominate what happens at these meetings. There are a whole range of developments under corporate governance, but I am pleased to note that the Minister of Industry is conducting a review of the corporate governance under the Canada Business Corporations Act and I hope that he picks the best practices.

We have had some time now to learn from the experiences of other jurisdictions, looking at what the United States did and others, and consulting with the industry and other stakeholders to pick the best practices in terms of corporate governance and enshrine them in the Canada Business Corporations Act.

That would not impact every single company in Canada, but it will be the new benchmark. It will set the standard and the Government of Canada can take pride in that because it will protect investors, whether they are direct investors, big monied investors, or small investors through mutual funds, pension plans or the like.

There has been a great deal of press recently about the bank merger guidelines, whether the Minister of Finance will come out with the new bank merger guidelines. The financial sector legislation was enacted by this Parliament around 2000 set up a process for large bank mergers. It set up a role for the Standing Committee on Finance of the House of Commons and the Senate banking committee, so that those committees would be charged by Parliament to assess the public interest questions around major bank mergers. It was enshrined in Bill C-7.

The banks of course are looking for certain clarity around what a large bank merger would entail, what would be the appetite of the government to allow another bank merger. This is a vexing question because in Canada we know there is a large concentration of banks and further consolidation would raise some questions.

The bottom line is that if we were to allow another merger of two major banks, what would the benefit be to Canadian consumers and Canadian business? We know the benefit to the shareholders of major banks, to the boards of directors and all those with stock options. They would receive a benefit and that is fine. Profit is not a dirty word. However, we need to understand what the benefit would be to consumers in terms of choice, access to services, and would it enhance the ability of Canadians to do their banking? That is the question on the table.

Another issue that has been presented has to do with cross-pillar mergers. When the finance standing committee of the House of Commons dealt with large bank mergers and the public interest aspects of that, the committee did not really deal with the question of cross-pillar mergers. Cross-pillar mergers would entail the merger of a large bank with a major insurance company, for example, Sun Life merging with the Royal Bank of Canada.

There has been some discussion, pro and con, as to whether that would be a good thing or a bad thing. The empirical evidence would suggest that there is not a lot of synergy or appetite within those two different sectors. They have a different business culture, a different business model, but nonetheless, it is an important question because it allows a concentration of capital. It allows a company to have stronger capitalization.

This is one of the things that is important for banks because they are dealing in an international world. If their client is a Canadian company that is a multinational and wants to expand globally, the banks have to have the capital, the care and the capacity to do that kind of work. So, there is some interest there. That is a debate I am sure we will have maybe in the next Parliament, but it is an important question.

When the Minister of Finance comes out with his bank merger guidelines I hope he will ask the Standing Committee on Finance to examine the public interest aspects of cross-pillar mergers because that was not really dealt with in any detail by the finance committee. We focused mostly on large bank mergers.

As I said, this huge piece of the legislation did a number of things. It described the process under which large banks could come to government seeking a merger but it did much more than that. What it attempted to do was create more competition within the banking sector so it created greater opportunities for the credit union movement to grow and enlarge. It gave more opportunities for foreign banks to participate in the economy in Canada. It gave a lower threshold for start-ups of banks in Canada. It set up the consumer protection agency. It did a number of things, which is why it was such a large bill when it was presented to the House.

Not only does the House of Commons committee and the Senate banking committee look at the public interest aspects, but the Competition Bureau weighs in and makes a determination of whether a bank merger would create any anti-competitive types of situations. The Office of the Superintendent of Financial Institutions also makes a determination of whether a merger would create any issues around prudence and stability of the financial sector in Canada. Therefore it is quite a rigorous process.

One of the ironies is that if two major banks were to merge, the Competition Bureau would very likely say that there would have to be a divestiture of certain branches. Let us say, in the case of the Toronto-Dominion Bank and the Bank of Montreal, if they ended up with too many of their banks in a small town in Ontario and not enough of the other banks, the Royal Bank and CIBC for example and others, the Competition Bureau might say that now with this merger there is too much of a dominant position by that bank in that city or that region and it has to divest of certain branches.

This creates an interesting aspect. In the past this has always been seen as a negative in the sense that if they have to divest that means the people in that local community have less choice and they do not have the range of options that they might have had if the banks just stayed the way they were. There is clearly some truth to that.

In the last few years some of the smaller banks, Laurentian Bank, the National Bank and the credit union movement, have indicated very clearly that if the Competition Bureau indicates that a bank merger would require divestitures that they would be very interested in buying up those branches. The ironic twist is that we could end up with more competition in a regional market if we ended up with some of these smaller banks in those locations.

Therefore it is an important question and it is a vexing question and I am sure the next Parliament will deal with that.

However I am very happy to support this bill because it would bring the financial institutions legislation more in line with the Canada Business Corporations Act. It would provide the corporate governance requirements that we need. I hope down the road that there will be further enhancements to governance for banks that will be further aligned with the changes to the Canada Business Corporations Act that I certainly expect will be coming.

[Alexa McDonough, NDP, Halifax, NS]

Madam Speaker, I welcome the opportunity to ask the hon. member from the Bloc Québécois a couple of questions, although my colleague, the finance critic in the New Democratic Party caucus will be speaking more broadly in the debate on Bill C-57, an act to amend certain acts in relation to financial institutions.

The couple of questions I want to put to the member arise out of some of the concerns I have about the gap between the rhetoric we have heard from Liberal members, the parliamentary secretary and the member for Esquimalt—Juan de Fuca, and the actions. The rhetoric that has accompanied the introduction of the bill is along the lines that this is about greater efficiency, more responsible use of taxpayer dollars, greater dollars and transparency and ensuring that every taxpayer dollar is protected. Yet when one looks at what we are dealing with, and this is the government's explanation and not some partisan twist on what we see before us, the act is about is making changes to the corporate government's framework of banks, insurance companies, et cetera to bring them into line with the changes to the Canada Business Corporations Act for business corporations. These changes were adopted in 2001.

When it comes to efficiency, if we are to believe that the bill before us is so incredibly important and great results will flow to taxpayers of Canada from it, one has to ask about the inefficiency of waiting four years before the bill was brought forward. No wonder we have some strains on the public purse, and that is even before we get to the Dingwalls and all the other things that are the subject of the Gomery inquiry, et cetera.

First, does the member share that concern? Does he not think there probably were other priorities for tax dollars, which apparently have not been protected during these four years while the government delayed?

Second, in the same sort of context of efficiency, of the government moving quickly to address these matters, one has to be concerned. The New Democratic Party very much shares a concern, and it is not just about our colleague from Ottawa Centre who was a major architect of the important work done.

The Canadian Democracy and Corporate Accountability Commission addressed many of the same kinds of issues, and it has been sitting gathering dust for a long time. The former New Democratic Party leader, who now sits in the House and provides very distinguished leadership, was the co-chair of that commission. Again, many of these recommendations have yet to be introduced which certainly raises in our mind concerns about how efficient and effective the government is in moving on these important issues. Could the member indicate if he shares some of those concerns?

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

Madam Speaker, I thank my Liberal colleague for his applause. But I would rather he held off until l am done with my presentation, in case he did not feel like applauding at all by then.

I also thank my colleague from Cariboo—Prince George for his excellent presentation. I will not repeat all the points he made about the government's mismanagement. He has covered the issue extensively. A government can hardly have the necessary credibility to impose new, stricter control rules on directors of public corporations when it is faced with all these scandals.

On the face of it, my colleagues and myself think that Bill C-57 is a good bill. It responds to a need. In 2001, if memory serves, this House passed Bill S-11, which dealt precisely with clarity and new rules for proper management and accountability by both shareholders and directors of public corporations.

At the time, we omitted to include certain financial institutions, such as banks, cooperative credit associations and insurance companies, as part of the federally chartered institutions. Now, Bill C-57 is completing the process by reforming the governance of federally chartered institutions. But it is not making any changes to monitoring rules.

I was listening to my hon. colleague from the Conservative Party who, together with other Conservative and Bloc members, has worked very hard on the Standing Committee on Finance to develop these new rules. I heard him suggest that this bill would shield us against Enron and WorldCom-type scandals. I do not think so, because the new rules govern the accountability of directors. No new rules were imposed to monitor the statements and corporations concerned. If there is one improvement that should be made following the work done at the finance committee, it is in that respect that it should be made. As far as we are concerned, we are not shielded in any way against Enron or WorldCom-type scandals.

The bill has its good points. It also relaxes the regulations on the exchange of information and on proxies, which is a very onerous procedure for banks, particularly cooperative credit associations and insurance companies. Furthermore, companies and shareholders are now allowed to do something they could not do before, which is communicate electronically and exchange information on the Internet. We must adapt to the new era of communication and this bill does just that.

The process by which information is disclosed to policyholders is also strengthened. I think this is a good thing. By doing so, we are making the underwriting of public companies more transparent.

The bill also attempts to increase director liability. We have questions about this. We will ask them during consideration in the Standing Committee on Finance and before the expert witnesses we intend to call. Since such bills are extremely technical, we need to call upon people in the field who worked under the old provisions and who may have an opinion about the new ones.

With regard to director liability, when such directors are taken to court, for example, there is a new defence. Previously, there was the defence of acting in good faith. A director was able to say, “Given what we were told, I made my decisions according to the information I had available”. Now, we want to adopt a new type of defence for directors, which is called due diligence.

We do not know just how far this new defence for directors can go. I think that it would be worthwhile to examine this issue in greater depth, particularly since there are strong hints of scandals every week. We saw it in Quebec, among other places, with the Norbourg affair. In order to protect shareholders, we need much more than a potentially meaningless concept, such as due diligence. We need directors who are liable and audit methods that prevent scandals similar to those we have seen in recent years and now.

These involve insider transactions, on which we can never be too vigilant or severe. This is a provision that could improve our control over such offences.

Then there is the matter of public holder requirement, which requires institutions with equity holdings between $1 billion and $5 billion to make at least 35% of their voting shares available for trading on the public stock exchange. We have a number of questions on exemptions from this provision as it relates to public financial institutions. Among other things, we are going to clarify the situation with the cooperatives, but it does seem a positive change.

If we have to work on this bill—as we will do with all possible seriousness in the Standing Committee on Finance—there are some questions we will assign importance to, including the need for clarifications on the amendments relating to insider trading. Will this really help to catch the guilty parties?

As well, we have some questions on the consequences of broadening the possible defences for directors, as I have said, under this new concept of due diligence rather than the former good faith. Not that the latter is being done away with, but due diligence is being added as a defence when directors come before the courts.

We also have some questions on the consequences of opening up the criteria for application for exemption from the requirement to float 35% of voting shares on a stock exchange. That was our objection four years ago in connection with Bill S-11 and it still is today: the bill gives no consideration whatsoever to small shareholders. We will try to improve this bill so that small shareholders have a say in decisions made by the directors and will be better treated than they are at present. It is, for instance, my intention to personally invite Mr. Michaud, dubbed “the Robin Hood of banking”, who is engaged in a pitched battle for those rights.

We are in favour of the bill in principle at second reading. We will be making some improvements and some clarifications during its examination in the Standing Committee on Finance.

Like my colleague from Cariboo—Prince George, when he said that, as a public administrator, the government should set itself strict guidelines on liability, I remembered a debate that we have been having since 1994 and that may well reach its apex in the coming weeks, during an extraordinary session of the Standing Committee on Finance. Furthermore, we will have a debate this evening on a motion by my colleague from Portneuf—Jacques-Cartier to abolish various corporate income tax regulations as they relate to the tax treaty with Barbados.

The state must be viewed as a big democratic company. This big democratic company has millions of shareholders: the taxpayers and citizens of Quebec and Canada. They are all shareholders in the state. If we draw a parallel between the public and democratic company called Canada and the regulations before us today, we see that some directors are not subject to the same rules that we want to impose upon the directors of crown corporations under Bill C-57. I am thinking, for example, of individuals who are in good position to apply double standards when it comes to calls for strict guidelines, liability, accountability, the elimination of conflicts of interest, and so forth. Some people who have worked for the Canadian state for a long time have used their status to get the governor in council and cabinet to amend tax laws and regulations so they can fill their pockets, as we say in Quebec. This was the case with the former finance minister and current Prime Minister.

I am often told, “Your approach is overly aggressive. You are always on the Prime Minister's back because of his shipping company, but it no longer belongs to him. It belongs to his children”. It is still a family business. And this is not aggression, but rather merely concern that all taxpayers be treated fairly.

What shareholders and company directors are being asked to do in this bill, the Prime Minister has not required of himself since 1994, not since he was named Minister of Finance and not since he became Prime Minister. He changed the rules of the game for international shipping corporations operating in international waters. The headquarters of Canada Steamship Lines International has been in Barbados since 1994, in other words since the tax regulations and related legislation were changed. At that time, an exception was made in the tax treaty with Barbados so that Canada Steamship Lines International would not have to pay taxes to Canada. The current Prime Minister changed the rules, taking advantage of his position as finance minister.

I would like to return to my example of Quebec, which is a large democratic corporation in which everyone is a shareholder. The Prime Minister has managed to save more than $100 million in taxes since 1998, thanks to provisions that he himself had passed. It was he who introduced Bill C-28 in 1998. And in 1994 there was the change to the tax regulations.

So he built a gilded cage for himself in order to fleece the shareholders in the democratic country of Canada. As a result, he has not paid more than $100 million in taxes since 1998. That hurts all the other shareholders, to draw a connection with Bill C-57. When they do not pay their taxes—he and other corporations that are structured similarly, that is to say, a consortium of shipping companies or other corporations headquartered in countries considered tax havens, especially Barbados—it is all the other shareholders who pay for the poorer returns of the democratic corporation known as Canada.

This evening we will have an opportunity to remind ourselves of this with the motion of my colleague from Portneuf. We are going to have a special session in November when we will fully expose the machinations of the current Prime Minister at the time he was Minister of Finance and built a gilded cage for himself. He made sure that Canada Steamship Lines and other similar companies, his friends, could take advantage of these tax loopholes. As a result, we are still paying taxes to Canada while he fleeced the Government of Canada out of about $100 million.

We are speaking about the responsibility of all citizens of this country. All the citizens are shareholders or company directors and should feel a certain amount of responsibility. For starters, when a person is Prime Minister and was finance minister for years, he or she should set an example. I think he set the wrong example. And we are going to prove it over the next few weeks.

I repeat that the Bloc Québécois will support this bill in principle. However, we are going to make some improvements to it. In regard to the other matter of the large democratic corporation in which we are all shareholders, we will be keeping an eye out and will shed light on the allegations that I have made.

[Dick Harris, Conservative, Cariboo—Prince George, BC]

Madam Speaker, I am well aware of what the member is talking about concerning the guidelines and the safety nets that the government has set out for itself in the operation of how it handles the taxpayers' money. On the surface that looks pretty good.

The difference between the government and the institutions that are going to be affected by Bill C-57 is that under this bill, when banks and financial institutions and insurance companies fail to abide by the rules of the game in their operation, they are subject to very heavy penalities because of the regulation. They are subject to being charged with criminal activity.

The government has made, and may continue to make, all the rules of operation of how it spends taxpayers' money that it wants and it all sounds good. The difference is when the Liberals do not live by the rules, when they break their own guidelines, when they break their own regulations, they set themselves up while they are in office as the judge and jury of their own misdeeds. We know what the outcome of that is, just about zero penality.

That is the difference between what the Liberal government does within the guidelines it sets and what happens when it breaks its own guidelines as opposed to the regulations laid out in Bill C-57. The member knows that very well.

[Dick Harris, Conservative, Cariboo—Prince George, BC]

Madam Speaker, I did exactly that yesterday. I outlined the importance of the bill.

The member brought forward a couple of points that I would like to address in talking about the building that was not moved into for a year after it was built, although the lease was paid. That is not the fault of the builder. That is the fault of the government.

The other thing Canadians expect from good government is good business planning. If a government, with all the resources and all the expertise it says it has, cannot plan something as simple as a date to move into a building when it is ready, if there is a year delay because of bad business planning, that is really letting down Canadians. I think Canadians would expect more than that.

In talking about the efficient operation of banks and financial institutions, that is the very thing Canadians expect from a government as well, efficient operation. That has not happened with the Liberal government.

The sole sourcing issue is something we could probably debate all day. There could be example after example where it was probably close to rightly perceived that some of the sole sourcing examples may have been created so that they could happen. We will just leave it at that. I think the member knows what I am talking about.

In closing, Bill C-57 is a good bill. We have had a lot of input into the bill and we will certainly take credit for that. It gives the financial institutions some real guidelines to operate under. It lets them do some long term efficient business planning now, something the government apparently is incapable of.

What still remains in the minds of Canadians is if financial institutions are expected to operate under very strict governance guidelines, at the very least the government should practise what it preaches.

[Paul Szabo, Liberal, Mississauga South, ON]

Madam Speaker, I will not disagree with the member on his point, as long as he understands that the member himself also has to meet the criteria that he has laid out. I think the member would agree. I would like to point out a couple of examples used by the member.

He said that an office building was leased and the building was not moved into for a year. He used that as an example of patent patronage.

The matter came before the Standing Committee on Government Operations and Estimates. The building actually was built by the company to the specifications of Public Works and Government Services. It was delivered on time and on spec. The tenants scheduled by the government to move in required substantial changes to the building layout and to the preparations of it. It led to about a year's delay in their getting into the building.

The member is suggesting that since a person who was an officer of that company at the time subsequently became a senator it is a Liberal payoff.

Clearly, as was stated at committee, the company that built the building and is leasing it had absolutely nothing to do with the delay. That in fact was confirmed by the ethics officer of the Senate in a complete 20 page report which is available to the member as he knows.

He mentioned sole sourcing and that somehow sole sourcing without going to competitive bids is a nefarious activity.

Under Treasury Board guidelines sole sourcing is permitted in certain circumstances. For example it is permitted for contracts under $25,000, where there is only one possible supplier, and where there is an emergency and it has to be dealt with quickly. I believe there are a couple of other circumstances.

The member would like to throw around a lot of examples but I am really concerned why the member did not talk about the significance and importance of making the changes proposed in Bill C-57 to bring it into line with the Canada Business Corporations Act and the Insurance Companies Act. It is going to ensure that there is an efficient operation within the financial system and provides a better foundation for accountability, transparency and governance.

These are the important things that Canadians should be advised of on this matter. If the member wants to use examples, I understand the opposition will take every opportunity. It is the opposition's job to talk about other things, but I think it is important first of all to emphasize the priority, which is the importance of the financial sector to Canada's economy.

[Dick Harris, Conservative, Cariboo—Prince George, BC]

Madam Speaker, as I say, in a courtroom I intend to show the relevance of my presentation to you, and you will find out how it unfolds. I can understand the member wanting to jump up and defend his government against, quite frankly, the indefensible.

What I was trying to point out is that Canadians have to form an opinion about everything we do in this chamber that affects them. They have formed an opinion about Bill C-57 and they like it. It gives them some security. Canadians will draw a comparison between Bill C-57 and how the government wants these financial institutions to operate, and they will draw a comparison between that and how Canadians want their government to operate.

The question they are asking themselves, I am sure, is the question of how this Liberal government can demand that financial institutions operate with honesty, transparency, full disclosure and accountability when the Government of Canada, those Liberals, fail to do that themselves. This is the question that Bill C-57 raises among Canadians. I am drawing that comparison to point out that a government is responsible not only for talking the talk but, in addition, for walking the walk. This government has not done it.

The member wants some examples. We can go right back to early in the first time I was in Parliament, to the infamous sale of the Grand-Mère Golf Club, when the Prime Minister himself was perceived to have been involved in a golf course and hotel that received government financing. We can go from there to the office building leases not too long ago, when the government leased an office building from a Liberal friend, it turned out, that it did not even move into for about a year.

There was the flagrant use of the Challenger jets, the sole sourcing of government contracts to Liberal friends, and the sponsorship scandal, when hundreds of millions of dollars went into the pockets and companies of Liberal friends. The list goes on and on. Now we have the famous David Dingwall case where, as an unregistered lobbyist, he received a success fee of $350,000 for successfully placing a request for several million dollars in government funding for the company he was representing, and he is not paying it back.

The relevance is this: Canadians are looking at Bill C-57 and saying, “That is really nice and it gives us some comfort, but why can the government not learn to live by its own rules?” Why has this Liberal government failed to be accountable? Why has it failed to be transparent? Why, in many cases, has it been involved in cover-ups? Why can the government itself not do all the things which Bill C-57 is designed to ensure that these financial institutions do? That is what Canadians are asking.

I am sure the word “hypocrisy” must be on the minds of Canadians as they listen to the presentations that have been made by the Liberal members throughout this debate. Canadians must be saying that it is all very nice and they like Bill C-57, but where is the accountability, the honesty, the set of strict guidelines, and the application of opportunities for redress to the government? Where is this within the government itself? Why can it flagrantly abuse the very rules that it is setting down for the financial institutions? Those are questions that average Canadians must be asking themselves.

It is very simple. This bill talks about the standards and duties and the ethics of the directors of financial institutions, including allowing for a due diligence defence and clarifying conflict of interest. There is a provision to make minutes of board meetings available to the public where conflicts are disclosed. Could these same rules not be applied to the cabinet of the government? The cabinet operates in much the same way, with much bigger numbers than financial institutions. Cabinet members handle a budget well over $100 billion a year, yet they are not expecting themselves to operate within the same guidelines that they want the financial institutions to operate within.

There are four simple rules which the government, and every government in the world, should operate by if they want to earn and maintain the confidence of Canadians: Do not lie. Do not cheat. Do not steal. Do not pay off their political friends with taxpayers' money. It is so simple, yet the Liberal government has a hard time grasping it.

I speak on behalf of so many Canadians who are asking themselves that if the government expects, and demands through law and legislation, that financial institutions and insurance companies operate within this very clear set of guidelines as far as their governance goes, why on earth can the government itself not adopt the same policy? That is the question. The Liberals have not done it. They have been wrought with scandal, rampant with corruption and rife with patronage payoffs. Canadians have had enough. When Canadians look at Bill C-57 they just roll their eyes and say, “what hypocrisy”.

We in the Conservative Party are always vigilant about how our financial institutions, insurance companies and credit unions handle the money of Canadians. We will always be vigilant in ensuring that the investments of Canadians are safe and sound, and that the companies that look after them are operating in an open, transparent and honest manner. At the same time, I would like to say on behalf of Canadians that it would be nice if the government could do the same.

[Paul Szabo, Liberal, Mississauga South, ON]

Madam Speaker, I rise on a point of order on two matters. First of all, with regard to allegations of corruption of anyone, whether it be a member or any other organization, that is in a legal situation which has not been adjudicated, and to suggest such is just improper. Second, we are talking about Bill C-57. To deal with matters to do with political party performance is not relevant to the debate. I would ask the member to keep his comments relevant to Bill C-57.

[Dick Harris, Conservative, Cariboo—Prince George, BC]

Mr. Speaker, I am pleased to rise today to continue the presentation I started yesterday. To quickly review, Bill C-57 is about the governance laws of banks, insurance companies, their holding companies, and credit unions. It is to provide a framework that they are going to be obligated to operate within. It also brings this in line with the Senate bill, Bill S-11, which was a standards update that occurred in 2001.

I am sure that Bill C-57 is going to give a lot of comfort to Canadians who invest and who have savings and business with financial institutions. I think this is a good bill. My party agrees with it, of course, because while the Liberals failed to mention this in their presentation, it is here because of the insistence of members of our finance group, the member for Medicine Hat, the member for Edmonton—Spruce Grove, the member for Peace River and the member for Portage—Lisgar and, of course, also the insistence of the chief member of the finance committee from the Bloc. They have insisted that the government not delay the introduction of this legislation to provide this framework and to update the governance regulations, basically so these institutions will have a clear understanding of where and how they are supposed to operate within these guidelines. I know that does give a level of comfort to Canadians.

As part of my presentation on the bill, I want to now move to what Paul Harvey might refer to as “the rest of the story”. Canadians who are watching the progression of this bill through House and who have read about it are no doubt, as I mentioned earlier, getting a great deal of comfort from knowing that the trust they have in their financial institutions is going to be even more secure and they are not going to be troubled by having another Enron or a WorldCom here in Canada. That is a good thing for Canadians, and I think all parliamentarians should take credit for getting the bill into the House.

The rest of the story is this. Let us imagine the average Canadian watching the progress of this piece of legislation about how these financial institutions are going to be governed and how they are doing their business. Let us imagine the questions they must have in their minds about how this Liberal government, which has shamelessly, over the last 12 years that I have been in the House and probably longer than that, been followed by scandal after scandal, by corruption after corruption, plagued by evidence and accusations and acts of patronage that are just beyond the comprehension of—

[Dick Harris, Conservative, Cariboo—Prince George, BC]

Madam Speaker, it is my pleasure to speak today to Bill C-57. The Parliamentary Secretary to the Minister of Finance has given a pretty good explanation of what the bill is all about.

It is very important to mention the participation of the corporations, such as banks, bank holding companies, the insurance companies and all the corporations for which the bill would set, modernize and update governance rules.

The parliamentary secretary did not mention this but it is also important to thank the members of the official opposition finance team for the input they gave to the government. I know the government, on many occasions, sought the advice of our finance critic, the member for Medicine Hat; the member for Edmonton—Spruce Grove; the member for Peace River; and the member for Portage—Lisgar, who all played a part in the formation of this bill. They have given input to the government over the years at committee and in the House. I know the government appreciated the fact that the members of the official opposition's finance group were able to participate and help the government out when it was seeking advice on some very complex issues of this bill.

The bill would make changes to the corporate governance framework of banks, bank holding companies, insurance companies, insurance holding companies, trust and loan companies and cooperative credit associations to bring them in line with the Senate Bill S-11, which was updated in 2001 for business corporations under the Canada Business Corporations Act. That is a mouthful to the average person out there watching this debate but what it means is to modernize the governance framework that the banks and financial institutions operate under so that what they do becomes more open and more transparent to shareholders and the general public at large that may do business or invest in these corporations or be part of credit unions and cooperatives. They would now be able to sleep a little better at night knowing that these governance regulations on how these corporations operate would be open and transparent. It would give them an extra measure of comfort when they are placing their money in the trust of these people.

The bill also enhances the ability of shareholders to exercise their rights by allowing for the electronic participation at meetings, which is important because many times shareholders may be living in Vancouver or Toronto and they just cannot afford to jump on a plane, fly across the country and be part of a shareholders meeting, even though they may have something important to say or to cast their votes. This would let them cast those votes electronically, something we have talked about in the House here. I am sure the day will come when members of Parliament may be able to cast their votes electronically from the other side of the country if they cannot make it to the House of Commons, which certainly would be a savings to the taxpayer given the cost of air travel these days.

The bill seeks to improve the flow of information from financial institutions to the Office of the Superintendent of Financial Institutions. The important part of the bill is that it would allow medium sized insurers and trust companies to apply for an exemption to the public holder requirement which requires institutions with equity holdings between $1 billion and $5 billion to make at least 35% of their voting shares available for trading on the public stock exchange. That is going to be a huge benefit to credit unions and co-ops that have been seeking this modernization of the rules.

The bill proposes changes to the policyholder governance framework and the Insurance Companies Act, which would be intended to increase disclosure in regard to participating in adjustable policies.

Millions of Canadians have insurance policies and millions of Canadians invest in insurance companies. These companies are reputable and have demonstrated that they are trustworthy, and although Canadians may feel comfortable investing in them, I would hazard a guess that many shareholders and policyholders really do not understand the fine print in their policies. This legislation would give that more disclosure.

It is important to point out that after the next election a Conservative government, this Conservative Party, will protect the best interests of consumers by fostering competition and ensuring that the financial services sector is appropriately regulated for the protection of shareholders and balanced with stability and the opportunity for success and growth. This is a written policy of our party, which we intend to follow through on when we become the next government in this House.

Cooperative organizations and banks have all expressed a level of comfort with Bill C-57. I think it is important to keep a line of communication open to the very companies that Bill C-57 would apply to, particularly banks and other financial institutions in our country.

In many cases, the government has failed to do this. Many times, banks have been left hanging by the indecision of the Minister of Finance on some very key issues such as bank mergers and cross-pillar merging. Credit unions have been seeking some administrative changes.

[Guy Côté, Bloc, Portneuf, QC]

Madam Speaker, I have already, in this House, told my colleague from Scarborough—Guildwood how much I like having an opportunity to debate various issues with him and to show him that, too often, he contradicts himself. However, I must admit today that following this most interesting speech on Bill C-57, it would seem that, this time, for once, the government is on the right track, which I must say does not happen often enough.

Indeed, there seem to be a number of very interesting measures in Bill C-57. It should be understood, however, that I am still not convinced that this bill cannot be improved. But the government is certainly on the right track. That being said, the member mentioned earlier a number of provisions dealing with institutions that have between $1 billion and $5 billion in equity. He was talking more specifically about cooperatives. He mentioned in his speech that other types of institutions could also be exempted from these obligations.

Could the member elaborate on those other types of institutions that could be exempted from the obligations set out in this bill?

[John McKay, Liberal, Parliamentary Secretary to the Minister of Finance]

Madam Speaker, I am thankful for the opportunity to speak to this bill and for the resounding thunderous applause and enthusiasm with which this bill has been greeted.

This is a bill of great significance to our economy because the financial services in this country are extremely important to the functioning of our entire economy. For instance, in my area, which is the greater Toronto area, it is estimated that financial services account for something in the order of 21% or 22% of the GDP. That is a pretty significant industry when one thinks of all of the people in the GTA.

The proposed legislation fulfills a commitment made in budget 2005 to bring governance standards for financial institutions up to the levels adopted in 2001 for other federally regulated corporations. As well, this bill proposes to update certain provisions and governance standards that are unique to financial institutions. In 2001 we brought up the corporate standards. This bill in some measure follows on that initiative in 2001 and makes certain changes that are unique to financial institutions.

The financial services sector is one of the key foundations of a modern industrial economy. It is an important part of Canada's economic infrastructure and plays an essential role in ensuring stability, safeguarding wealth and fuelling growth and productivity. In this regard, the Government of Canada can ensure a modern and efficient regulatory framework needed to support a successful financial services sector. That is what Bill C-57 is all about, providing an updated and modernized governance framework that will help Canada's financial sector succeed and better serve Canadians.

A well functioning and innovative financial services sector is essential for the Canadian economy to achieve its full potential. Healthy financial markets represent a critical element of a positive and competitive business environment and are fundamental to achieving key economic policy objectives. A successful financial services sector is also critical to the interest of all Canadians.

As I said earlier, Canada's federally regulated financial institutions play a pivotal role in the national economy. Not only that, but they play a significant role in the lives of Canadians. That is why, notwithstanding the fact that some of this bill is quite technical in nature, all Canadians should in fact be interested in the progress of this bill through the House.

Indeed, financial institutions employ about 600,000 Canadians and account for something in the order of about 6% of Canada's GDP. Of course, they are also leaders in the use of information technology.

Because of the sector's importance, the policy framework must ensure that financial institutions have the tools they need to adapt to a changing marketplace. One of the tools that is essential to the effectiveness, safety and soundness of the financial system is good corporate governance practices.

Governance rules underpin the effective functioning of these institutions by setting up rules relating to the rights of shareholders, policy holders and members, the role of directors, auditors and other advisers, and rules relating to the preparation, review and disclosure of information. In this bill all of those elements are touched on in one way or another. Some changes are made. Some changes are parallel to what happens in other corporations that are federally regulated.

Effective governance benefits all stakeholders, including the financial institutions themselves and their shareholders. The regulator, in turn, relies on sound practices as part of its regulation and supervision of the financial system. For these reasons, the governance rules of financial institutions need to be updated on a regular basis. This is where Bill C-57 comes in.

To set the stage for changes proposed in this bill, as hon. members may know, federal financial statutes such as the Bank Act, the Insurance Companies Act, the Trust and Loan Companies Act, the Cooperative Credit Associations Act and related legislation set out the governance rules for federally incorporated financial institutions.

The governance framework set out in the financial institutions statutes uses the Canada Business Corporations Act, otherwise known as CBCA, as a reference point. As I said earlier, take the CBCA and therein is our basic governing structure for all federally regulated corporations. Then from there go to financial institutions and we will see some changes which are unique to financial institutions. There, in and of itself, is a key to reading the bill.

Changes made to this act are normally implemented in the statutes as appropriate for financial institutions. Members may recall that in 2001 the government undertook a comprehensive reform and modernization of the CBCA, as well as the Canada Cooperatives Act in Bill S-11, which received royal assent in June 2001.

Bill C-57 would provide financial institutions with the same modern governance tools by updating their governance framework generally along the lines of the changes made in the CBCA in 2001 and would update certain governance standards that would be unique to financial institutions.

The measures in the proposed new legislation fall into five broad categories that I mentioned earlier, adapted to each particular type of financial institution. These categories are: clarifying the roles of directors; enhancing the rights of shareholders; modernizing governance practices; strengthening the governance elements of the regulatory framework; and increasing disclosure in respect of participating and adjustable life insurance policies, otherwise known as par policies.

Let me take a moment to explain how the proposals in this bill will affect each of these categories.

First is with respect to clarifying the role of directors. An effective board of directors is key and critical to protecting the best interests of a financial institution. The financial institutions statutes recognize the importance of the board by setting out the standards, qualifications and duties expected of directors of those institutions, and it is quite extensive.

The new legislation contained in Bill C-57 also would clarify the role of directors in carrying out these important functions, for example, by explicitly allowing a due diligence defence. A due diligence defence in simple parlance is a director saying, “ I did everything possible within the bounds of reasonableness to understand what was happening in that institution. Therefore, when things went bad on this institution, I was still fulfilling my role as director and, therefore, should not be liable”. In simple terms that is a due diligence defence.

The way things stand currently, directors are liable in court if they do not fulfill their duties as prescribed in the financial institutions legislation. Imposing liability is a fair way of helping assure that directors comply with their responsibilities. It also is, and this is the point, fair to give directors an opportunity to demonstrate that they have exercised good judgment in fulfilling their responsibilities by doing such things as setting up appropriate policies and procedures.

Under the proposals contained in this bill, directors of financial institutions would have the same rights as directors of other corporations, namely, they can rely on what is known as a due diligence defence if, and this is a big if, they can demonstrate that they have fulfilled their responsibilities by exercising “care, due diligence and skill that a reasonably prudent person would have exercised in comparable circumstances”. That quote is from the CBCA legislation. This due diligence defence has now been incorporated into financial institutions legislation. This legislative standard would allow directors of financial services providers to show the proactive steps that they have taken in the exercise of their duties

The next point to be emphasized is the enhancement of the rights of shareholders.

The ability of shareholders to discuss and monitor corporate performance is an important element of good governance. The financial institutions statutes set out the rights of shareholders to participate in major decisions of a financial institution in which they have an interest. For shareholders to exercise these rights, they must have access to corporate information because, as they say, information is power and if one does not have the information, it is very difficult to exercise the power that would normally accrue to oneself as a part owner of the corporation.

Bill C-57 would enhance the ability of shareholders to exercise their rights by, for example, allowing shareholders greater freedom to communicate without triggering the proxy rules. Normally shareholders who wish to communicate about issues to be considered at the annual general meeting must circulate a formal document to every shareholder of the bank. This is intended to ensure that all shareholders receive timely and accurate information, but it is also an impediment to information communications among shareholders. Imagine if a person was a shareholder in bank X and was concerned about whatever was happening in bank X, that person would be loath to trigger a proxy fight by virtue of simply communicating his or her concern to other shareholders.

Bill C-57 would create greater freedom for shareholders to communicate without triggering a requirement to send out information to all the shareholders. As we know, in Canada, bank stocks are widely held. To communicate to all shareholders would indeed be a very expensive proposition even for a shareholder who was wealthy. For example, they would be able to make public announcements and issue press releases and would be able to communicate with small groups of shareholders without, as I say, triggering the proxy rules.

The third element of the bill concerns the modernizing governance practices. Given the importance of good governance to the well-being of a financial institution, the governance framework needs to be kept up to date with the best practices in this area. The new legislation in the bill would create a new going private transaction regime and would enable insider reporting, proxy and prospectus rules to be harmonized with the rules applied by provincial regulatory authorities.

Bill C-57 also would facilitate electronic communication and the voluntary use of electronic documents. Facilitating a more efficient flow of information would reduce compliance costs for the institutions and promote more effective governance practices. The bill would make it possible for financial institutions that get written consent to communicate with their shareholders electronically. As we can imagine, with a lot of the banks and other financial institutions, there are literally thousands of shareholders. Anything which would allow a more efficient form of communication as opposed to sending everything in the mail would be good for not only the shareholders but for the institution itself and all the stakeholders in the institution as well.

The fourth element of the bill concerns the governance elements of the regulatory framework. Unlike ordinary business corporations, federal financial institutions are regulated by the Office of the Superintendent of Financial Institutions which oversees the safety and soundness of federally regulated financial institutions. Bill C-57 proposes to strength a number of governance elements of the regulatory framework, including improving the flow of the information to the regulator.

The bill also would harmonize various governance standards within and across financial institutions and statutes. For example, the legislation would harmonize the authority of the minister to exempt and ensure a trust and loan company from its 35% public vote requirement with the same exception authority that applies to banks.

To clarify what that means, when an institution such as a co-op reaches a standard of $1 billion in equity, the normal requirement would be that the institution make 35% of that billion dollars in equity available to the public for purchase on an institution such as the Toronto Stock Exchange.

If we think about it, a co-op is owned by its members and it is uniquely inappropriate for the requirement of a co-op to float stock on an institution such as the Toronto Stock Exchange. The change proposed by the bill will allow a broader range of companies to apply to the minister for an exemption from the public float requirement. Currently they cannot even apply for the exemption.

A number of co-ops have come to me to express their support for the legislation. It was not contemplated when these institutions and this legislation was created, literally decades ago, that these kinds of institutions would achieve a $1 billion equity requirement. This catches up to the reality of the marketplace in the year 2005.

Finally, the policy governance framework in the Insurance Companies Act reflects the unique interests of the role of policyholders in corporate governance of insurance companies. The new legislation in Bill C-57 contains a limited number of proposed changes to the framework. These would work to increase disclosure in respect to participating and adjustable policies, otherwise known as par policies.

For example, the new legislation would require directors to establish corporate policies on participating accounts and changes to adjustable insurance policies. It would require actuaries to prepare fairness reports for the board's consideration. It also sets out requirements for communicating and making information available to policyholders, shareholders and the public. The details would be set out in the regulations which would be developed in consultation with the stakeholders.

A par policy at its simplest is a right on the part of the owner of the policy to participate in the governance of the institution. There were some difficulties with respect to some par policyholders getting sufficient and adequate information in order to make informed decisions with respect to their policies and with respect to their participation, such as it was, in the individual insurance company.

As well as committing to updating the financial institutions governance regime, budget 2005 also announced a review of the legislation concerning financial institutions. The Government of Canada's commitment to conducting regular reviews of the federal financial services regulatory framework has been key to promoting efficiency and competitiveness in the sector.

The sunset clauses in the Bank Act, the Insurance Companies Act, the Trust and Loan Companies Act and the Cooperative Credit Associations Act provide for an automatic five year review of the legislation. Therefore, legislation amending the financial institutions ought to be brought into force by October 2006. I hope it does not take all this period of time, but we have basically a year to get royal assent on this bill. I hope members opposite will be cooperative and recognize that this important to our sector.

This is a practice that sets Canada apart from virtually every country in the world, providing an important advantage to Canadian financial institutions relative to their foreign competitors. We are constantly refreshing the legislation that governs these banks.

During the upcoming months work will progress on the review of the federal financial services regulatory framework so that draft legislation will be ready to present to the House in early 2006 with a view to having it come into force by the deadline of October 2006.

The bottom line is that the intent of the bill is to provide Canada's financial institutions with the modern government tools they need. The initiatives proposed in Bill C-57 would provide them with the tools to do exactly that. I therefore urge all hon. members to give the bill their full support.

[Ralph Goodale, Liberal, Minister of Finance]

moved that Bill C-57, an act to amend certain Acts in relation to financial institutions, be read the second time and referred to a committee.

Business of the House

[Tony Valeri, Liberal, Leader of the Government in the House of Commons]

Mr. Speaker, I would like to lay out the business for the next week.

We will continue this afternoon with Bill C-55, which is the wage earner protection program. Then we will proceed to the second reading of Bill C-57, the financial institutions bill, followed by second reading of Bill C-54, which is the first nations oil and gas and moneys management act.

Tomorrow we will consider report stage and, if possible, third reading of Bill C-25 respecting Radarsat. I understand as well that there are some ongoing discussions about the disposal of Bill C-63, amending the Canada Elections Act. We would also like to deal with Bill S-38 respecting the spirits trade and Bill S-31 respecting autoroute 30.

On Monday we propose to commence report stage of Bill C-11, which is the whistleblower bill. We would like to give this bill priority all week in the hope of completing all of the remaining stages.

We would then return to any business left over from this week and, if there is time, begin consideration of Bill C-44, the transport bill; Bill C-28, the food and drug legislation; Bill S-37, respecting the Hague convention; Bill S-36, the diamonds bill; and Bill C-52, the fisheries bill.

With respect to the business of supply during the present period, Mr. Speaker, I will reconfirm that you confirmed to the House that there will be seven allotted days during this period. In response directly to the opposition House leader's question, as per our discussion at the House leader's meeting this past Tuesday, we understood we would schedule the supply days after the Thanksgiving break.

In any event, it will be a topic that I look forward to discussing with House leaders at our meeting this coming Tuesday, so that we can in fact schedule all the required opposition days.

Bank Act

[Ethel Blondin-Andrew, Liberal, for the Minister of Finance]

moved for leave to introduce Bill C-57, an act to amend certain acts in relation to financial institutions.

(Motions deemed adopted, bill read the first time and printed)