Bill C-37 (Historical)

An Act to amend the law governing financial institutions and to provide for related and consequential matters

This enactment amends a number of Acts governing financial institutions. It also amends legislation related to the regulation of financial institutions. Notable among the amendments are the following:
(a) amendments to the Bank Act, the Cooperative Credit Associations Act, the Insurance Companies Act, and the Trust and Loan Companies Act aimed at achieving three key objectives:
(i) enhancing the interests of consumers,
(ii) increasing legislative and regulatory efficiency, and
(iii) adapting those Acts to new developments;
(b) amendments to the Bills of Exchange Act to provide for the introduction of electronic cheque imaging; and
(c) technical amendments to the Bank Act, the Cooperative Credit Associations Act, the Insurance Companies Act, the Trust and Loan Companies Act, the Bank of Canada Act, the Bills of Exchange Act, the Canada Business Corporations Act, the Canada Deposit Insurance Corporation Act, the Canadian Payments Act, the Financial Consumer Agency of Canada Act, the Green Shield Canada Act, the Investment Canada Act, the National Housing Act, the Payment Clearing and Settlement Act and the Winding-up and Restructuring Act.

Bank Act

[Monte Solberg, Conservative, Medicine Hat, AB]

moved that the bill be read a third time and passed.

[Diane Ablonczy, Conservative, Parliamentary Secretary to the Minister of Finance]

Mr. Speaker, I appreciate the opportunity to introduce at third reading C-37. The bill would amend the legislation concerning the framework for financial institutions operating in Canada and it comes out of the five year review of the Bank Act undertaken by Parliament.

The financial services sector is key to the success of a modern industrial economy. That goes without saying. The sector plays a unique role in fuelling the growth that is essential to the success of the Canadian economy, but the significance of this proposed legislation goes beyond our borders. Canada is recognized internationally for our safe and secure financial sector and the bill would help ensure that Canada remains a world leader.

The goal of Canada's new government is to improve our quality of life and make Canada a world leader for today and future generations. How will we do that? Along with November's economic and fiscal update, the Minister of Finance introduced “Advantage Canada”. This long term plan will achieve a higher standard of living and better quality of life for Canadians as the world economy continues to transform.

I will talk a bit about the plan and illustrate just how Bill C-37 fits in.

“Advantage Canada” is rooted in the realities of global competition and Canada's existing strengths and economic challenges. As a long term vision, it will serve as the framework for government decision making for years to come. Competition drives firms to become more efficient, invest in new technologies and introduce new products and services that benefit consumers. A highly competitive and open national economy also helps our companies and organizations to be more successful when competing in global markets, which means more and better jobs in Canada.

Government has a role to play in creating the ground rules for competition in Canada. Consistent with the overall purpose and principles of the “Advantage Canada” plan, Canada's framework of competition will create competitive marketplaces that serve both individual and business consumers with low prices, choice, quality and service. The investment will also drive and foster innovation investment and efficiency that grow productivity and competitiveness and it will promote a more resilient adaptable economy.

“Advantage Canada” is about making Canada a world leader and a safe and efficient financial system is crucial to achieving that goal.

Canada has a strong and sound financial system that serves Canadians well. It is an asset unto itself, providing high end, knowledge based and well-paying jobs for Canadians. Of course a strong financial system needs to be able to adapt to the evolving needs of households and businesses.

Keeping Canada's financial institutions and markets innovative and competitive with a flexible regulatory framework founded on sound principles will ensure that they continue to meet not only the needs of our growing economy but also the needs of Canadians. That is where Bill C-37 comes in.

Just as “Advantage Canada” is about making Canada a leader in the world, the bill is about ensuring that Canada's financial system remains a leader in the world. To attain that goal, Canada must have a regulatory framework that allows financial sector participants to operate as efficiently and effectively as possible.

The Government of Canada is responsible for maintaining the safety and soundness of the financial institution sector. It is also responsible for ensuring that consumers and businesses are properly served and protected. The regular five year review of the financial sector framework is an important tool in meeting these responsibilities, and a consultation process was an integral part of that review.

A large and representative group of stakeholders provided comments to shape the review of the financial sector statutes. Over 50 submissions were received from various stakeholders, including industry associations, financial institutions, consumer groups and individual Canadians. Those submissions culminated in a white paper issued by the Minister of Finance this past June. The drafting of Bill C-37 followed to legislate the proposals set out in the white paper.

While stakeholders agreed that no major overhaul was needed, there was acknowledgement that some steps could be taken to enhance the interest of consumers, increase legislative and regulatory efficiency and adapt the framework to new developments. These three objectives are the framework on which the bill is built.

I will now illustrate how Bill C-37 meets these objectives.

First, Canada's new government wants to ensure that the interests of consumers are well served. As members can imagine, competition in the industry in technological innovation can sometimes make for a confusing array of products and services confronting consumers. It is therefore important that consumers have the information available to them to help make informed decisions.

That is why Bill C-37 proposes to improve disclosure to consumers. Perhaps one of the best examples of improved disclosure to consumers relates to the growth of online services. Currently, federally regulated financial institutions must disclose in their branches information on the amounts charged for services normally provided to their customers and the public.

However, with consumers increasingly managing their finances using Internet banking, these disclosure requirements currently do not extend to the online world. To ensure that consumers have sufficient information, Bill C-37 proposes to harmonize online disclosure requirements with those of the in-branch requirements. This proposed legislation will allow consumers to compare banking products and services more easily online.

Another important measure to address consumer interests in the bill is the proposal relating to complaint handling procedures. Federally regulated financial institutions are required to have procedures and staff in place to deal with complaints from consumers. These procedures must be filed with the Commissioner of the Financial Consumer Agency of Canada and must be provided to consumers when they open a deposit account.

However, there are currently no requirements to ensure that consumers have access to information on these procedures on an ongoing basis. In addition, consumers who do not open an account, but rather obtain other products and services such as a mortgage, do not receive any information on complaint handling procedures.

Consumer groups have raised concerns that consumers may be unable to readily obtain the necessary information on the proper complaint handling procedures when a complaint with their financial institution arises. Bill C-37 addresses that issue by proposing amendments to the financial institutions statutes that will require financial institutions to make their complaint handling procedures publicly available for all consumers to access whenever they choose.

One of the biggest advantages of a regular review of the financial sector, such as we have in Canada, is the ability to modify just the framework as the sector changes and evolves. For example, there is now increased competition in Canada from foreign banks. The framework encourages competition through the entry of foreign banks into the Canadian market. However, while foreign banks have considerable flexibility to do business in Canada, some aspects of the current regulatory mechanisms have been criticized as being complex and burdensome.

An area of significant concern has been the regulatory burden placed on the so-called near banks. These foreign entities are not regulated as banks in their home jurisdictions, but provide banking type services such as consumer loans. Of particular concern is the ministerial entry approval that near banks must obtain to undertake unregulated activities. This requirement is regarded as unnecessary and costly. Moreover, it results in delayed transactions and provides little benefit.

To simplify the foreign bank entry framework and reduce the administrative burden, Bill C-37 proposes to narrow the framework to focus on real foreign banks and remove near banks from the foreign bank entry framework by eliminating the entry approval for near banks undertaking unregulated financial services.

The financial services sector has changed dramatically in recent years. Globalization has certainly played a major part in this change but so too has convergence and consolidation in the industry and, of course, advances in technology have changed the way we do banking today. One just needs to look at the way cheques have been processed for years.

Traditionally, the cheque clearing process involved the physical delivery of cheques to the issuing financial institution before a decision could be made whether or not to make the payment. Now, with the use of computer scanning technology, cheques can be sent electronically to the originating financial institution.

The faster processing enables financial institutions to clear cheques more quickly, thus allowing consumers and businesses to have more timely access to funds. To reflect the faster cheque processing time, Bill C-37 proposes to facilitate the introduction of regulations limiting hold times imposed on cheques.

Instead of using this regulatory power, however, the government is in the process of finalizing an agreement with the banking industry to reduce the maximum hold period voluntarily for cheques to seven days from ten days. Once cheque imaging technology is fully implemented across Canada, the cheque hold time will further be reduced from seven days down to four days. This, of course, represents a significant benefit for consumers and businesses alike.

Once more, these changes illustrate the importance of having an up to date framework to allow financial institutions to evolve and prosper while benefiting consumers.

Bill C-37 also contains a proposal that would attract additional expertise to the industry. Specifically, the bill proposes to reduce the board of directors residency requirement for Canadian financial institutions from two-thirds to a majority. This would l allow Canadian financial institutions to add more foreign experts to their board. It would also enhance flexibility and give financial institutions new scope to pursue global business opportunities while maintaining a strong Canadian presence on their boards.

All told, the proposals in Bill C-37 will help modernize the regulations for our financial institutions, which makes this bill important for a number of reasons. First and foremost, the bill is important because it would cut red tape and advance the interests of consumers. It is also important because it would amend the legislative framework so that Canadian financial institutions can better compete in the international marketplace. The bill is important for Canada because it would ensure that Canada continues to be a world leader in the financial services industry.

I therefore would ask all hon. members to give this bill careful consideration and allow it to pass without delay.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, in his speech at second reading to the House, the finance minister stated:

The government believes that the best approach to improving services for consumers is through competition and disclosure....

He went on to say:

Disclosure...ensures that consumers and businesses alike have the relevant information they need to make the best decisions in light of the choices available to them.

I raise those quotes because in the bill that was presented to the House at second reading there was an additional clause to the Bank Act proposed which basically states that no account or service shall be offered to a customer unless, and it lays out information on all charges as disclosed, information on how the customer will be notified of an increase in charges, information about the bank's procedures relating to complaints and any other information that may be prescribed.

Interestingly enough, an amendment moved at committee changed this. It added a proviso which says, in the new subparagraph 448.3(2), that the governor in council may make regulations specifying the circumstances under which a bank need not provide that information to consumers.

Could the parliamentary secretary explain to the House why it is that certain accounts or services provided to Canadians would not require the proper disclosure of the charges and other conditions of providing that service or account?

[Diane Ablonczy, Conservative, Calgary Nose Hill, AB]

Mr. Speaker, the simple answer is that all proper disclosure will be made. The amendment was passed by the committee simply to ensure there was no unnecessary red tape or redundant regulatory burdens put into place. On the one hand, we wanted to ensure that the act would ensure that consumers have full and greater disclosure but not in a way that would unnecessarily introduce red tape, which accomplishes nothing for consumers and causes more cost and inefficiency for banks.

It is a good balancing act and I think the member will support that as he considers the good balance that has been struck by the committee at report stage.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, I think the member may have addressed another amendment that was made to the Bank Act, section 448.3. The amendment proposed by the committee was that the disclosure would be “in the prescribed manner”. I understand that is a proviso that would ensure there was no inefficiency in terms of disclosure or a lot of red tape.

However, the subclause (2) that is being added is very specific that the governor in council, i.e., the cabinet, can prescribe that certain accounts or services provided by a bank would be exempt from proper disclosure of the charges or conditions related to an account or other services.

I would ask the member again whether she can give us one example of an account or some prescribed service included in the regulations to the Bank Act that would not require disclosure or in the future may be introduced that would not require such disclosure.

[Diane Ablonczy, Conservative, Calgary Nose Hill, AB]

Mr. Speaker, this provision was put into the Bank Act to ensure there is a proper balance so that if disclosure is not needed by consumers, the banks do not need to have extra unnecessary red tape. This judgment is made from time to time by governments and the act simply allows that judgment call to be made.

However, the first focus of the Bank Act and of all governments is to ensure that businesses, consumers and the users of financial services have the disclosure they need. I assure the hon. member that nothing in the Bank Act, as it is tabled in the House, will detract from that. In fact, it enhances the choice, competition and information that is provided to consumers and the country.

[John McCallum, Liberal, Markham—Unionville, ON]

Mr. Speaker, I am pleased to speak to Bill C-37, an act to amend the law governing financial institutions.

I was glad to see that all the members of the Standing Committee on Finance delivered the bill back to the House in such an expeditious manner. We certainly look forward to continuing the debate here.

A vibrant 21st century economy requires, at its bedrock, a strong and well regulated financial sector that is not needlessly bound by red tape and yet, at the same, protects the interests of its citizens.

In many respects, Canada's financial services sector is the envy of the world. The expertise of our financial services sector is often sought out by our international friends. It has also helped our homegrown Canadian banks make real progress in expanding their services to other countries.

In fact, while our banks currently employ about a quarter million Canadians here at home, they now employ roughly 40,000 other people around the world. Indeed, this function of our banks, and at least as much our insurance companies, in taking on the world overseas in China, in India and in many other countries, is a very good thing for this country. Canada, as a whole, needs to take on the world. We need to compete with China, India and other emerging economic giants and, therefore, it should be core and central to government policy to prepare us for this new, highly competitive 21st century.

While our banks are certainly doing well, our government in the past year has been totally asleep at the switch. In terms of preparing Canada for the 21st century economy, I would contend that just as the government wasted a year when it came to the environment, cutting environmental programs until it woke up and looked at the polls, similarly, it has been totally asleep at the switch and totally wasted the last year when it comes to building a strong economy for the 21st century.

It is not a great puzzle what has to be done. We in Canada will compete with China and India, not through low wages, which is the last thing we want to do, but through good ideas, a highly educated workforce and research and training, which are all the things the government has cut.

We must also compete through lower income taxes and competitive taxation but the government raised income taxes.

At a time when the government has literally been swimming in money, with huge surpluses bequeathed to it by the previous government, it saw fit to slash funding for research, cancel programs for training Canadians and to raise income taxes. Those are all things that are the antithesis, the opposite of what has to be done in order to prepare Canada for the 21st century economy.

It is not as if our competitor countries have been standing still. We can look at what Australia has been doing. While our government insults China, Australia has been negotiating agreements with China. While Australia has reduced its income taxes, increased credits for low income Australians and made company taxes more competitive, what has our government done? It has raised income taxes. Yes, it has reduced the GST but that does nothing to make our country more competitive. While Australia forges ahead, Canada sits back and does nothing.

The United Kingdom is another example. It has ambitious targets for research and development over the next decade, backed by government support to achieve those targets. The European Union has even more ambitious targets for research. What do we do? We slash research funding.

I think this is totally irresponsible behaviour on the part of the government. When it is swimming in cash, it has no excuse for raising income taxes, no excuse for slashing research funding and no excuse for slashing support for training Canadians because it is only through well-trained, well-educated and innovative people that we will be able to take on the world, and the government has gone in the opposite direction.

I applaud our financial institutions for taking on the world and for showing success in Asia, but the government has to go beyond those successes that we see today. The government has to build a strong economy. It has to put in place policies that will create jobs for the future. The government, sad to say, has done precisely the opposite.

To return to the Bank Act, the five year review of the act is not something that happens overnight. In fact, it began more than two years ago, when the previous Liberal government began a consultation process and outlined what ground it expected the review to cover. While it is good to see good Liberal policy brought to this place--

[John McCallum, Liberal, Markham—Unionville, ON]

--it also leaves me with some concerns about the government's broader agenda.

On the one hand, I am glad to see that the Conservatives have decided to model their bill closely on the Liberal proposals. This bill really is 100% proposals from the previous Liberal government. Naturally, therefore, we do not hesitate very much to support it, but I do have some serious concerns about the government's ability to conceive of any truly new legislation.

Canada's alleged new government is actually starting to look an awful like Canada's used government. If we look beyond the Bank Act to some of the other pieces of legislation put forward by the government, it is hard to see anything that the Conservatives have conceived of themselves. The Conservatives may have promised new government, but they have only delivered borrowed government.

For instance, the EnerGuide retrofit program for homes was once thought a wasteful program by the Conservatives before they looked at the polls on environment. We remember that just three months ago the Conservatives thought spending any money on a clean environment was wasteful. Now they have brought back the old Liberal plan.

However, instead of bringing back the full program, they have eliminated portions of it, particularly the money for energy audits. What will this do? Effectively this will help ensure that low income Canadians are unlikely to be able to afford making use of the program, but low income Canadians are not the base of the Conservative Party so the Conservatives do not really care about that.

This is a shameful act, because I remember very clearly from the time when I was natural resources minister that low income people are particularly hard hit by high energy prices. Low income Canadians pay out 25% of their low incomes on energy, but how has the Conservative government amended and altered our EnerGuide program? It has cut out the audit part, the part that is essential to allow those low income Canadians to access the program.

The Conservatives have deprived these people who are most subject to difficulties from higher energy prices. They have effectively excluded those people from this program. I think it is typical of their behaviour because they do not regard low income Canadians as part of their constituency, so if those people are excluded, that is fine.

If only the government could swallow its pride and reinstate the full EnerGuide program, which I am confident is useful; I am not so confident the Conservatives see it as useful, but that is what is in my speech. Meanwhile, at least they have brought back part of the program, but they have excluded that most critical part, which is the part that is essential to help lower income Canadians.

Another example is Bill C-25, An Act to amend the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, which we passed last fall. Much like the Bank Act before us today, nearly all of the bill was drawn from proposals drafted by the previous Liberal government. It was a sensible bill, but because of near complete inaction on the part of the Conservatives, Bill C-25 had to be rushed through the House and the Senate in order to make sure it received royal assent in time to be compliant with our international partners.

Today we find the same thing. Once again, we are rushing to get Bill C-37 through both chambers. The Financial Institutions Act was scheduled to sunset this past October, which is why the previous Liberal government began the consultation process over two years ago, but the Conservatives delayed. They dithered. They delayed the release of the white paper and gazed at their navels until they had to ask the House to extend the act by six months, which we of course did. Now we are forced to get this legislation through both chambers in the next 50 days in order to beat the April 24 sunset clause.

So on the one hand, I am impressed that the Conservatives have been, generally speaking, willing to implement the majority of Liberal policies that were waiting for them when they came to power last year. On the other hand, I am a little concerned that they are willing to implement some of them in such a piecemeal and rushed fashion and they seem to have so few ideas of their own in the legislative cooker.

Worse still, and this is perhaps the most important point, when the Conservatives do manage to dig an idea out of their own caucus, it is almost universally panned by everyone else. I do not think it would be a stretch to say that their so-called clean air act was a complete failure, and their reverse onus legislation has been called unconstitutional by the legal community.

Thank goodness for our financial institutions and the millions of Canadians who rely on them that this used Conservative government has decided to stick with Liberal policy on Bill C-37.

Let us hope that when the upcoming budget rolls around next month the Conservatives will remember a few other Liberal programs that they have ruthlessly cut. I am talking about literacy programs. I am talking about funding for Canada's struggling museums. I am talking about the GST visitor rebate program, without which our tourism industry will be at a competitive disadvantage with the rest of the world.

It is truly amazing that the Conservatives cut that visitor rebate program, making Canada the only OECD country that does not have such a program, depriving Canada of the convention business and of foreigners who come to this country as a consequence of that program. Experts have indicated that the government will lose more tax revenue by ending this program than it gained by cutting the program, and it has done so at a time when it is swimming in money. There was no need to cut that program, just as there was no need to cut literacy or status of women programs or museums.

The government is swimming in money but nevertheless has struck out and cut the programs that have provided assistance to Canada's most vulnerable. The Conservative government also struck out and foolishly cut programs like the visitor rebate program, which makes absolutely no sense. I remember this, because when I was doing expenditure review in the previous government the bureaucracy suggested that we cut the visitor rebate program, so I know where the recommendation came from. The Liberal government had the good sense to say no to the bureaucracy. The Conservative government simply followed what the bureaucracy recommended. That turned out to be an extraordinarily foolish and counterproductive move.

Returning now to the white paper that the Liberals commissioned in preparation for the five year review of the Bank Act, one of the most exciting things the Liberals were exploring in that paper was writing electronic cheque imaging into law. The bill states that banks will be required to use new technologies to better serve the needs of Canadians.

As it stands right now, the maximum hold period on a deposited cheque is 10 business days. That can be an excessively long time for some Canadians, especially low income Canadians who need access to those funds much more quickly in order to pay their bills and buy their basic needs. Bill C-37 will immediately lower this hold period to seven days, allowing Canadians faster access to their own money.

This can be done even faster. I am speaking specifically to electronic cheque imaging, which Canada's banks have already begun to implement. By adopting electronic cheque imaging, banks will no longer need to physically exchange copies of cashed cheques with other institutions. Instead, a captured electronic image of the cheque can be sent instantaneously to another financial institution.

Better still, when all of Canada's financial institutions have installed electronic imaging equipment in the next couple of years, the maximum hold on cheques will be reduced from seven days to a mere four days. Furthermore, I hope that as the technology advances we will be able to further reduce the maximum period.

A second aspect of this bill that I approve of is a provision for an increased disclosure regime that will provide Canadian consumers and businesses alike with the information they need in order to make the most informed investment decisions possible. Bill C-37 will ensure that the savings product disclosure regime is just as effective for the millions of online bankers as it is for branch customers. Strong competition and information disclosure are two of the best tools available to ensure that Canadian consumers' needs are being served well by our financial institutions.

As I have said, the official opposition will be supporting this bill. My colleague will expand on my remarks in terms of some other items contained in the bill. But I do hope that Canada's alleged new government will continue to use our ideas to their fullest and can refrain from returning to the dangerous incompetence of the previous Conservative government that was so damaging to Canada's economic well-being.

Perhaps I should expand briefly in my remaining time on that last comment. What do I mean by Canada's last Conservative government being damaging? There is a pattern here, in that Conservatives create deficits and leave those deficits for Liberals to clean up. The most glaring example in our recent economic history was the Mulroney government, which bequeathed to the Liberal government a $42 billion deficit. It took some time to clean that up.

Indeed, the Mulroney government received a credit downgrade in 1992. Since 1951, Canada had consistently had an AAA rating. Then, after a series of deficits that had us, according to the IMF, headed for third world status, the credit rating was downgraded in 1992. It took 10 years of the Liberal government cleaning up the Conservative mess to restore that credit rating to its AAA status.

It is not as if that is an isolated example. Looking south of the border, we saw Bill Clinton running surpluses. Who has been running the huge deficits? George W. Bush and, before him, Ronald Reagan. Or we can look to Ontario. The pattern is always the same. It was the Mike Harris-Ernie Eves government that ran on a campaign of a balanced budget, but when that government lost and the auditors came in, what did it show? It was a $5.8 billion deficit. That is of some relevance here, because three of our most senior ministers were senior members of that government.

Conservatives, whether we are talking about Ronald Reagan or George Bush in the United States, or Brian Mulroney or Mike Harris in Canada, historically have run huge deficits. They have left those deficits for successive Liberal governments to clean up.

What has happened to this Conservative government? It has been bequeathed the largest surpluses in Canadian history. That is why it is particularly incumbent on the government to use that money wisely, but it has not.

As I said, the Conservatives have done the opposite of what Canada needs for a strong economy to take on the 21st century. They have raised income taxes. They have slashed research. They have slashed learning. They have slashed programs for Canada's most vulnerable, the literacy programs, women's programs and the museum programs, and they have done all that at a moment when they have been literally drowning in the hard-earned cash of hard-working Canadians.

That is where I will conclude my speech, by saying that I hope this new government will continue to use our ideas to their fullest and can refrain from returning to the dangerous incompetence of the previous Conservative government that was so damaging to Canada's well-being.

[Ken Epp, Conservative, Edmonton—Sherwood Park, AB]

Mr. Speaker, whenever a Liberal talks about the deficits and debts of the Conservatives and how wonderful the Liberals are, I just cannot resist the temptation to get up and give the rebuttal which I believe the member should receive.

A huge ship must have its rudder moved long before the intended time of turning. The national economy is the same.

The facts are very clear. It was the years of a Liberal government with its huge borrowing and its deficits racking up a huge debt that caused this country to go into a series of deficit years in this country's budgets. It was the Conservatives who took over after the Liberals had put us on that path and yes, during the years that the Conservatives were in power, that path was not turned around. It happened three years approximately after the Conservatives were defeated. That is because the Conservatives put in place a number of measures that helped the economy to turn around and which the Liberals cashed in on. The Liberals got the credit for it.

I would simply say that we have to look at the long term when we are looking at these economic effects. The effect of one government does indeed go into the term of office of the next one.

[John McCallum, Liberal, Markham—Unionville, ON]

Mr. Speaker, I do not know what the hon. member is smoking. We are talking about simple facts here.

When the Liberals came to power in 1993 the deficit was $42 billion. That is a fact. That was the legacy which we inherited from the Mulroney government. As a consequence of that the Government of Canada's credit had been downgraded in 1992. That was one year before the Conservatives lost, I would point out to the member. It took 10 years of hard Liberal work to fix up the Conservatives' mess and to restore our credit rating to AAA. That is a fact.

The second fact is that when the current government came to power, it had a $13 billion surplus, not a $42 billion deficit. There is a difference. Not only that but the latest figures coming out of the finance department show that it may be en route to another huge surplus in excess of $10 billion, thanks to Liberal management.

Of course I believe in democracy. The Conservatives are in government but when they inherit riches of that scale, it gives them a special responsibility to use that money wisely. By cutting programs to the most vulnerable, by slashing research, by raising income tax, the government is simply squandering the massive inheritance that it received from the Liberals.

[The Acting Speaker, Andrew Scheer]

I would like to remind all hon. members about the provisions in the Standing Orders and parliamentary practice about relevance. We are debating a bill specifically dealing with financial institutions. There has been a lot of debate back and forth on some things that I would question as to whether or not they have relevance to this bill at third reading.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, I was interested in the dialogue that took place although it is not directly related to the Bank Act. We have to look at what we are talking about.

I note that the finance minister in his speech at second reading made several points about the importance of building a competitive business environment and of ensuring financial stability as the reasons that we make these changes. It begs the question, are we talking about the motives and objectives of a government that wants to make changes to legislation that will show Canadians there is a basis for trust, there is a basis for proper accountability and there is a basis for the integrity of what is being done in this and related areas?

I raise the example of the income trust situation. It has to do with financial stability, integrity and accountability, of which it appears there is none.

I wonder if the member would like to comment on the degree of accountability, integrity and trust that is reflected in some of the actions that have been taken that impinge on financial stability in Canada.

[John McCallum, Liberal, Markham—Unionville, ON]

Mr. Speaker, I thank my colleague for his highly relevant question relating to financial stability and financial institutions.

Indeed confidence is key. Honesty is key. Sensible, well thought out policy is key. I must say that on all of these counts, the government's income trust policy has been an abject failure. I will give very briefly the reasons.

First of all, the Prime Minister promised as clearly as was possible to promise that he would not tax income trusts. As a consequence, hundreds of thousands of Canadians went into income trusts, at which point the Prime Minister cut them off at their knees and imposed on Canadians a massive $25 billion loss in a single day.

Second, it was the execution of that broken promise by the finance minister that was absolutely incompetent. He dropped the nuclear bomb on the industry which did maximum damage to those individuals who had taken the Prime Minister at his word. Less extreme alternative measures were available that would have achieved the same objectives of tax fairness, but at a small fraction of the damage to Canadians that was caused by the finance minister's reckless plan. He did not think it through. He acted decisively but he was decisively wrong.

I would end by saying that the NDP behaviour on this file is particularly shameful. The Bloc and the Liberals are working to bring amendments to this disastrous legislation, to help in their time of need those Canadians who have suffered billions of dollars of losses in their savings which they need for their retirement. Shamefully, the NDP to this day has refused to assist us to help those ordinary hard-working Canadians in their moment of need.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, I want to quote from the finance minister again when he said, “The government believes that the best approach to improving services for consumers is through competition and disclosure”.

Generally, one would say that those are important principles, yet another example would be in terms of the impact on competition or the variety of instruments that are going to be affected. For instance, the income trust example shows that maybe there is a contradiction in its commitment to the variety of instruments available to investors.

[John McCallum, Liberal, Markham—Unionville, ON]

Mr. Speaker, my colleague makes another excellent point and there are two aspects of this I will touch on briefly.

The first is that he used the word “disclosure”. On this argument of the finance minister about tax leakage, we had a battery of witnesses, highly reputable people who know what they are talking about, who said that all of his numbers were wrong. What was the finance minister's response? It was a blacked out, censored document from the Department of Finance without one legible number. Talk about disclosure. If he wants to convince Canadians that he is right, the least he could do is disclose that blacked out document, because he cannot win the argument when there are six experts against one blacked out document with no numbers in it.

On the other point that my colleague raised in terms of availability of instruments, we do not have to go further than the governor of the Bank of Canada to find an expert witness who has said that the income trust sector has been useful for seniors in particular. It is virtually the only instrument that we in Canada have, unlike the U.S., which provides a relatively high yield to savers. Many Canadians, particularly seniors who have to pay their bills from the proceeds of the savings they have generated over a long lifetime, were extraordinarily dependent on income trusts.

The governor of the Bank of Canada himself has said that this vehicle is a useful savings instrument, particularly for those individuals. The Conservative government, through its reckless behaviour, has in fact destroyed income trusts.