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

[Jim Flaherty, Conservative, Minister of Finance]

moved that Bill C-37, An Act to amend the law governing financial institutions and to provide for related and consequential matters, be read the second time and referred to a committee.

Mr. Speaker, I am pleased to lead off the debate, at second reading, of Bill C-37, which amends the legislative framework governing financial institutions operating in Canada.

This proposed legislation is significant for a number of reasons.

First of all, it will go a long way toward improving our entrepreneurial advantage in Canada, one of the five advantages at the core of our government's new long term economic plan for Canada, called Advantage Canada.

Advantage Canada sets out to create several advantages for our country: a tax advantage, a fiscal advantage, a knowledge advantage, an infrastructure advantage, and, as I mentioned, an entrepreneurial advantage for Canadian families, students, workers and seniors.

To gain an entrepreneurial advantage, we must build a more competitive business environment by reducing unnecessary regulation and red tape and improving services for consumers, so this bill is significant for another reason as well. It will have a positive impact on one of the most important drivers of our economy, and that is the financial services sector. This sector is one of the key foundations on which our economy, indeed any modern industrial economy, rests.

On a broader scale, this important sector plays a unique role in ensuring financial stability, safeguarding savings and fueling the growth that is essential for the success of the Canadian economy.

Moreover, the financial services sector plays a significant part in the daily lives of Canadians. Beyond those of us who use their services, the financial services industry employs about 700,000 Canadians in good, well-paying jobs. It represents about 6% of Canada's GDP and is a leader in the use of information technology.

We can no doubt appreciate the importance of ensuring that the framework governing this important and influential sector is current and effective.

Canada's new government is committed to doing just that with the proposals contained in this bill before the House today.

Before I outline the proposals in the bill, I would like to make a few remarks about the consultation process that led to this review of the financial institutions statutes and the legislation before the House today.

A representative number of stakeholders have shared their comments on the 2006 review of the financial sector legislation.

Overall, stakeholders generally agreed that no major overhaul is needed, but many believe, as we do, that some steps could be taken to refine the legislative framework.

Stakeholders also made specific proposals for technical amendments. Those submissions in the consultations resulted in a white paper issued by the Department of Finance this past June, entitled “2006 Financial Institutions Legislation Review: Proposals for an Effective and Efficient Financial Services Framework”.

For the most part, the white paper is the basis for Bill C-37, which contains the government's proposals to amend the legislative framework for financial institutions. These proposals are aimed at achieving three key objectives: first, improving service for customers; second, increasing legislative and regulatory efficiency; and, third, adapting the framework to new developments.

Together, these objectives will contribute to a modern and competitive financial sector framework in which businesses of all sizes and consumers from every corner of the country will continue to be well served.

I would now like to briefly outline the intent of the three objectives contained in Bill C-37.

The first is improving service for customers.

Consumers are taking greater responsibility for their financial affairs. At the same time, we are seeing an increase in the breadth and complexity of financial products, service providers and delivery channels. Clearly, this means more choice for consumers. At the same time, it makes it more difficult for them to make informed choices in the marketplace.

That is why Canada's new government is acting to ensure that services are improved and customers are adequately protected. The government believes that the best approach to improving services for consumers is through competition and disclosure.

On the one hand, competition provides more choices to consumers and allows them to find financial products and services that best suit their individual goals and needs, at competitive prices. Disclosure, on the other hand, 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.

As we all know from newspaper and TV ads, the range of financial services and products offered to consumers continues to evolve. In order to assist consumers to make choices, the disclosure regime for our financial institutions framework needs to stay current to accommodate the different types of products and services in the marketplace.

The proposed changes to the framework contained in this bill reflect that principle.

One example of consumer protection measures in the bill is with respect to online disclosure. As we know, federally regulated financial institutions must disclose in their branches information on the products and services they provide to their customers and the public. Many Canadians today are opting for the convenience of the Internet to meet their banking needs and current disclosure requirements do not extend to the online world.

To ensure that consumers have sufficient information, the bill proposes, first, to harmonize online and in branch disclosure requirements to allow consumers to compare products more easily and, second, to ensure adequate disclosure is provided to customers conducting transactions online.

The intent of this proposed measure is to provide consumers with the information they need in order to make informed decisions.

The second major objective of the bill is to increase the efficiency of legislation and regulations governing the Canadian financial sector.

The regular review of the financial sector statutes allows this government to amend the framework as necessary so that financial sector legislation and regulations continue to be both effective and efficient.

Bill C-37 addresses a number of key areas identified in the review to achieve increased legislative and regulatory efficiencies.

One such area that is quite relevant to many Canadians is the area of residential mortgages. Mandatory insurance for high ratio mortgages was introduced over 30 years ago as a prudential measure to ensure that lenders are protected against fluctuations in property values and associated defaults by borrowers.

Of course, the marketplace has changed since then. Among other things, the risk management practices of lenders have improved significantly and the supervisory framework for federally regulated financial institutions has been strengthened significantly. This means that some homeowners may be paying more for mortgage insurance than they need to.

The proposed amendments to Bill C-37 reduce the cost of mortgages for some families by raising the loan to value ratio requiring mortgage insurance from 75% to 80%. This will lower the mortgage down payment consumers are required to make before the law requires the purchase of mortgage insurance. This proposal will create an opportunity for mortgage cost savings and ensure that more young families can realize the dream of owning their own home.

Another key area identified in the legislative review called for improvements to the regulatory approval regime. Ministerial approvals are currently required for a broad range of financial sector transactions related to market entry, structure and competition, as well as financial institution ownership.

There are, however, transactions that the minister reviews that are routine and do not raise significant policy issues. Bill C-37 proposes measures to streamline the regime to ensure that these transactions are dealt with more expeditiously.

As we know, the rate of change in the financial services sector has increased dramatically in recent years. Financial institutions must be able to respond to developing trends such as globalization, convergence, consolidation, and technological innovation. This adaptation to market changes often results in the creation of new products and services and innovative ways of doing business.

The government needs to ensure that the framework regulating financial institutions is up to date to allow them to respond to these changes so that they can evolve and grow. At the same time, the government is also committed to protecting consumers and small businesses adequately while maintaining the overall safety and soundness of the financial system.

Bill C-37 does that and more.

One way that this bill will improve our financial system is by allowing for the implementation of electronic cheque imaging. Currently banks process about one billion paper items, mostly cheques, annually valued at over $3 trillion.

The process of clearing a cheque includes the physical delivery of the cheque to the paying or issuing financial institution in order for it to decide whether or not to make the payment. This process is more labour intensive, time consuming and costly than necessary, particularly given today's developments in technology.

The proposal in this bill to allow for the implementation of electronic cheque imaging will result in significant efficiency gains, saving time and resources currently dedicated to the transport of cheques. This will allow banks to keep their costs down, a benefit that needs to be passed on to customers to ensure that the efficiencies derived from electronic cheque imaging will be shared by all users of the payment system.

Another proposal in this bill relates to cheque hold periods. For most large banks, the maximum hold period on cheques deposited with tellers is 10 days. While the government recognizes the importance of cheque hold periods for risk management, a concern remains about the length of time that consumers may be subject to these hold periods. Cheque holds not only affect consumers who need to access funds to pay their bills, but also small and medium sized businesses that need to pay employees and operate their businesses out of the funds they deposit.

While the proposed legislation would be facilitating the establishment of a limit on the time that banks can hold a cheque, the government is finalizing the agreement with the banking industry. The agreement will reduce the maximum hold period immediately to seven days and reduce it further to four days once electronic cheque imaging is fully implemented.

This change will be a significant improvement over the current maximum hold period of 10 days or more. It is a major step forward for consumers and businesses. It will increase efficiency and free money up more quickly, having a positive impact on the Canadian economy overall.

In summary, the measures proposed in this bill will amend the legislative framework governing financial institutions in order to achieve three key objectives.

First and foremost, the bill proposes steps to improve services for consumers. Second, Bill C-37 would increase legislative and regulatory efficiency and contribute to a framework where financial institutions could grow and prosper in the global marketplace. Third, the proposed amendments in Bill C-37 would allow financial institutions to adapt to new trends in the industry by providing a framework that is up to date and, above all, dynamic.

I urge all members to give Bill C-37 careful consideration.

[Roy Cullen, Liberal, Etobicoke North, ON]

Mr. Speaker, I have a couple of specific questions for the Minister of Finance.

The white paper mentions the need to deal with some measures that would allow foreign banks greater access to the Canadian market. I also see a number of technical areas in the white paper that I think have been, to a large extent, incorporated in the bill.

When our government looked at the Bank Act and the financial sector during our mandate, one of the objectives was to increase competition through credit unions and through the foreign banks. For the foreign banks there were some limits because of what we used to call the bricks and mortar advantage that Canadian chartered banks have. Therefore, a lot of foreign banks were not inclined to get into the retail market in Canada but to get into the wholesale level and others.

First, does the Minister of Finance see that these measures would realistically allow more competition from foreign banks in Canada and, in so doing, give Canadian consumers greater access and more product choice?

Second, one provision in the white paper refers to data processing outside of Canada. It basically says that the proposal is to eliminate the superintendent approval for processing information or data outside of Canada. As the minister knows full well, there were some issues, I think, last year with respect to outsourcing of data processing by Canadian financial institutions that raised certain privacy concerns, particularly with respect to the Patriot Act in the United States. It seems to me that this might be moving in the wrong direction. I wonder if the minister has followed through with that in the bill and if that is the right direction to go, given some of the privacy concerns of Canadians.

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

Mr. Speaker, the question raised by the hon. member is a good one and engages us in the reality that the financial services sector is a global business and we want it to be a global business. This is one of the great sectors of the Canadian economy. It is a pillar of the Canadian economy. We want our insurance companies, our banks and our major financial institutions to be global players and to grow globally. They are doing a good job at that and that is good for Canada.

Being global sometimes involves using data sources outside the country. We know that because that was part of the strength of Ireland when the Celtic Tigers started in the west of Ireland processing data for companies in New York, in Canada and so on, subject always to the privacy rules and the jurisdiction of the Privacy Commissioner.

The member opposite raised the point that earlier this year there was a concern about data and privacy, on which the Privacy Commissioner exercised her jurisdiction and looked into on behalf of the people of Canada. We need to be mindful always of those important privacy concerns.

[Pierre Paquette, Bloc, Joliette, QC]

Mr. Speaker, one of the objectives in the bill introduced by the minister is to enhance the interests of consumers and improve the system for disclosing information to consumers. We are obviously very pleased with that.

I want to ask the minister whether it would be possible to appoint a federal ombudsman who would have the necessary power to defend people based on law. He could also represent them when they have disputes with financial institutions. A great number of people are unable to defend their rights in legal situations with banks because they do not have the financial means.

Would the idea of appointing a federal ombudsman for consumers who feel duped by a banking practice be a possibility in this bill, or another bill?

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

Mr. Speaker, there is substantial consumer protection with respect to financial institutions. Perhaps we view things somewhat differently on this side of the House.

Competition creates choice and disclosure creates knowledge. This bill emphasizes the encouragement of competition in the Canadian banking system among Canadian financial institutions, not just banks but also credit unions that play a very important role across Canada as members of the financial services sector.

We want to encourage competition that gives Canadians choices, selections and opportunities to exercise their own judgment. However, to exercise their judgment in an informed way, there must be disclosure of various options, not only in-branch but also online, and this bill includes provisions to accomplish those goals.

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

Mr. Speaker, one of the frustrations that the businesses and individuals have is that when they make a deposit to a bank they often cannot negotiate a cheque or an instrument for up to 10 days, which is a real hardship for many people.

I think it would be helpful if the minister were to remind Canadians of the positive changes in that regard that will be coming in this bill.

[The Acting Speaker, Andrew Scheer]

I just noticed that the hon. parliamentary secretary was not at her seat when she asked the question but I did not catch it, so I will allow the Minister of Finance to respond. However, in future I would ask all hon. members to be in their proper seats when they ask questions or make comments.

The hon. Minister of Finance.

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

Mr. Speaker, the parliamentary secretary has worked hard on this bill and on her duties as parliamentary secretary in finance.

This is a big step forward, especially for small businesses in Canada. It is a problem when people deposit a cheque and they must wait 10 or more days for the cheque to clear. If the bills are not paid, the interest mounts up. This is a good step forward, particularly for small and medium sized enterprises and for individuals in Canada, that we will be moving forward with reducing that 10 day holding period down to 7 and then ultimately to 4 days. There does need to be a holding period based on the present state of affairs, but we can certainly reduce that by more than 50% down to four days over the course of the next while.

[Roy Cullen, Liberal, Etobicoke North, ON]

Mr. Speaker, I want to go back to my earlier question for the minister, which he did not have time to address, dealing with foreign bank entry and competition from foreign banks, which has the opportunity and potential to increase consumer choices and product lines for Canadians. The advantage for some of the Canadian charter banks is that they have retail branches across Canada.

I am wondering what changes he is proposing in Bill C-37, in lay terms, that he thinks will make a difference and allow more foreign bank competition in our financial markets.

[Jim Flaherty, Conservative, Whitby—Oshawa, ON]

Mr. Speaker, actually the foreign banks are doing well in the Canadian markets and growing. Their participation in Canada is welcome for the same reason that we want our banks to grow globally, be competitive around the world and help Canadian businesses expand their businesses abroad, whether it is in China, India or in other of the emerging economies.

There is a change in the bill though that relates to the composition of the boards of directors of financial institutions. The bill would allow additional foreign directors to be on the bank boards. Canadian representation would be maintained as boards of directors would still be required to have a majority of directors who are Canadian residents. The Canadian majority requirement will still be there but adding some additional foreign directors is something that the banks are interested in doing because it helps them connect and expand their businesses globally.

[Roy Cullen, Liberal, Etobicoke North, ON]

Mr. Speaker, I am happy to speak to Bill C-37, An Act to amend the law governing financial institutions and to provide for related and consequential matters.

Last June, the Department of Finance released a policy paper on which much of the bill is based. The policy paper was commissioned by the previous Liberal government in preparation for the statutory five year review of the Bank Act.

The title of that white paper was “2006 Financial Institutions Legislation Review: Proposals for an Effective and Efficient Financial Services Framework”.

Given that it was inspired in large part by the white paper, the government's bill mirrors Liberal policy. The white paper stated that competition and disclosure are the best ways to protect the interests of consumers.

Consequently, we are seeing some positive measures in this area.

Bill C-37 would ensure that financial institutions provide greater and more timely disclosure to consumers in areas such as deposit type investment products and complaint handling procedures.

What these measures would ensure is that when a customer opens something like a savings or chequing account they are provided with all the information they require to make an informed decision. I think that little could be more important for consumers than ensuring that they have the appropriate information specific to the type of product they are purchasing.

The bill also makes some routine changes that need to be addressed every few years. The prime example of this is readjusting the equity thresholds that determine the size of financial institutions. When the Bank Act was last reviewed in 2001, it was determined that large institutions would be considered those that hold over $5 billion in equity.

Times do change, however, and as a result this bill proposes to increase that threshold to $8 billion to reflect growth in the sector and the general cost of living and inflation factors, small as they are.

Additionally, it would set a new threshold for what is considered to be medium sized institutions. These will be those institutions that hold between $2 billion and $8 billion in equity. As I said, these are some routine updates, but they are important nonetheless.

The bill also has a section devoted to electronic cheque imaging, something that we had asked to be addressed in the white paper. It would require banks and financial institutions to exchange electronic images of cheques, rather than physically exchanging them among themselves. Let us try to picture some five million cheques being transported from one financial institution to another every day, some of which must travel clear across the country.

Advances in recent technology means that this drawn out process is no longer required. Electronic images of the cheques can now be scanned, captured and transmitted in a safe and secure manner between banks. This saves time and it reduces the administrative burden. It is already used by several financial institutions and we have seen great results.

This measure will be very advantageous for both consumers and businesses because cheques will clear quickly. Once electronic cheque imaging becomes widespread, cheques will no longer have to be held for more than four days.

Our previous Liberal government was constantly searching for new technologies to make business and government more efficient. For instance, last year the Canada Revenue Agency began a move toward 2D bar coding for corporate tax returns which would allow tax software to generate a bar code that could be affixed to a company's tax return. When it arrives at the Canada Revenue Agency processing facility, all that is required of the CRA is to scan in the bar code and all of the data contained in the return is transferred electronically into the CRA's computers. This not only would allow for faster processing time but would significantly reduce the occurrences of human error that often goes hand in hand with manual data entry.

This was just a small aside, but I think it illustrates the point that we need to be cognizant of new technology and seize the opportunities that they present us with. I am glad that the Conservatives are following our lead on this particular issue.

I am also in favour of the section in the bill that would make it easier for credit unions to establish cooperative credit associations as a means of expanding their business opportunities. Currently, the Cooperative Credit Associations Act requires a minimum of 10 credit union members in order to form a cooperative credit association. This is a fairly high threshold that precludes many credit unions from forming cooperatives. I am happy to see that the minimum number will be reduced.

When our government reviewed the financial sector in 2001, there were key initiatives that we pursued when bank mergers were on the radar. We wanted to ensure that if bank mergers were ever proposed and were deemed in the public interest that there would be the opportunity for more competition and more products, services and choices available to Canadians through credit unions and foreign banks.

In questioning the minister earlier, I alluded to the fact that foreign banks, while they have an interest in doing business in Canada as the minister indicated, are doing well in certain areas. Most of their efforts are in the wholesale banking side because of the dominance in terms of retail branches across Canada that are maintained by Canada's chartered banks. However, I would encourage any measures in Bill C-37 that would create more opportunities for foreign banks to more aggressively enter the Canadian marketplace. This would give Canadian consumers more choice and more opportunities to shop around for different options and that is good for consumers and the Canadian economy.

I am glad to see that the minister is trying to deal with the credit unions as well. This is a great opportunity again for giving consumers more choice. I know the minister has indicated that there is no big appetite right now for bank mergers or cross-pillar mergers and I think that is a wise decision at this point in time. It is certainly providing clarity to the financial institutions with something that they were looking for.

However, at some point in time if the banks do come back, it would be important, for example, because certain branches of the credit unions would have to be divested and then perhaps foreign banks and others would be in a position to acquire those branches. In fact, the end result could be that consumers would have more choice, so I think it is important to try to build those institutions up in Canada so that Canadians do have more choice and more access to different products and services.

The minister talked about how the bill proposes to reduce the cost of mortgages for some borrowers by raising to 80% the loan to value threshold above which mortgage insurance is required by statute. The current threshold at which one requires mortgage insurance is 75%. Given changes in risk management practices and regulatory requirements, the white paper, which we commissioned under our government, made this exact recommendation. I am happy to see it included in the bill.

One area I am concerned about that did not receive enough attention in this bill is extending customer protection. Beyond the requirement I mentioned earlier that financial institutions provide greater and more timely disclosure to consumers in areas such as deposit type investment products, there is very little mention of helping other types of customers. The bill does not seem to offer similar types of protection for Canadians who take out a mortgage, for example.

June's white paper recommended that the government amend laws governing financial institutions to require them to give all consumers full access to their complaints process, either in their branches or online.

One of the central pillars of consumer protection is providing them with the information required to make the right initial choice of product and the information required to properly lodge a complaint and seek compensation if that product is defective. Yet, the bill has largely ignored this recommendation from the white paper.

I do not think the majority of Canadians are very familiar with what the complaints process is at their local banks and legislating information in that respect to be readily available would have been a great idea and is still a great idea. My riding and I am sure many of my colleagues' ridings receive calls and complaints about banks, service charges and a range of other things. There is a bank ombudsman and there is actually an ombudsman of all ombudspeople. That is a very useful mechanism.

I would be willing to bet that there are a good number of Canadians who do not even know that there is an ombudsman for banking services should they exhaust all the avenues available to them. The banking services ombudsman and his office do fine work. I have worked with them before on a number of issues. I would have liked to have seen a requirement for information about the services of the ombudsman be made readily available.

The white paper called for the streamlining of the ministerial approval process. Currently, there are numerous ministerial approvals required for a broad range of important financial sector transactions related to market entry, structure and competition, as well as financial institution ownership. There are also many routine transactions that require multiple ministerial signatures. This could be dealt with in a more efficient manner and this bill would ensure that happens.

The bill also contains a few items that go beyond the white paper. For instance, the bill proposes to reduce the number of resident Canadians who are required to sit on the board of directors at a Canadian owned financial institution. Currently, two-thirds of such directors must be residents of Canada. The bill proposes to reduce this requirement to more than half of the directors being Canadian.

I know this issue comes up when financial institutions in Canada look to merge or acquire assets in the United States by way of example. When they try to merge, very often the U.S. enterprise will say it will merge but it would like a stronger representation on the board of directors. Frankly, I would encourage our financial institutions to grow north-south. This would give them options beyond just looking to cross-pillar mergers in Canada. This is a positive step.

The two-thirds requirement worked well in the past, but these days, our financial institutions have added a major international component to their activities. Relaxing these requirements would promote the growth and enhance the competitiveness of Canadian institutions on the world economic stage.

I brought up with the Minister of Finance the question of data processing outside of Canada. The proposal in Bill C-37 says the approval of the Superintendent of Financial Institutions would be eliminated for the processing of information of data outside of Canada. While I appreciated the minister's remarks, I think that is in the domain of the Privacy Commissioner.

If a financial institution in Canada was proposing to outsource some of its data processing outside of Canada, keeping superintendent approval is probably still a wise thing to do because before the superintendent would give his or her approval, he or she would presumably ask whether the Privacy Commissioner had been consulted and whether the transactions would protect the privacy interests of Canadians. I am sure the superintendent and the Minister of Finance do not mean to pass this off to someone else to get out of a sticky situation. I am sure that is not the motivation.

Whatever the motivation, the government and perhaps a committee should look at whether this is a wise thing to do given the recent events where certain data processing activities in the United States came under the purview of the patriot act. The confidential information of Canadians was perhaps compromised.

As I said earlier, our government made changes to the financial sector framework in 2001 to set up the process where any bank merger would be required to pass a parliamentary committee test as to whether or not it was in the public interest. That was a good move.

However, in that period, the finance committee of the House of Commons did not review cross-pillar mergers. A cross-pillar merger would be, for example, when a Canadian bank wishes to merge with a Canadian insurance company. The minister has signalled that he is not interested right now in any sort of cross-pillar merger proposals, but if that day ever comes, the public interest criteria and framework that was set up for potential bank mergers needs to be looked at by the House of Commons Standing Committee on Finance because that work was not done for cross-pillar mergers.

Unfortunately, I am not at the stage where I could have proposed amendments to the Bank Act, but that may come one day. I just have to do more work on this particular issue.

An area of interest to me has to do with Internet betting. The Woodbine Racetrack is in my riding of Etobicoke North, and it is expanding at an incredible rate. It is developing its property to include the concept of Woodbine Live, which will have entertainment, hotels, shopping, et cetera. One of the issues that is of great importance to Woodbine is the growth in Internet betting which is actually taking some of its market share away. The irony is that Internet betting is illegal, but no one seems to want to prosecute. As a racetrack, Woodbine is regulated very carefully by the provincial and federal governments. It would be happy to get into the game of Internet betting if everybody else was doing it, but it is reluctant to do so because of the regulatory regime that oversees its operations. It could lose its licence.

I have looked at this from a number of different angles. I have tried to engage the RCMP and the Ontario Provincial Police. No one seems to really be interested in seeking prosecutions in this area. One way to come at it is to do what has been done in the United States where it is illegal for banks to accept cheques, debit or credit cards for Internet betting activity.

Yesterday we debated a bill sponsored by my colleague from Bourassa with respect to video terminals in bars and restaurants. Young people could become addicted, and not just young people, but many people do become addicted. The reality is there are some people who sit in their homes, go online and play poker on their computers at poker.com, et cetera. I have never done it myself but I am told that in order to do that, people have to use a credit card or a debit card to create some credit authority.

If there were changes made to the Bank Act that the banks would not accept debit cards or credit cards associated with online Internet betting, this might be a way of trying to limit some of these activities. It would make sure that the playing field was level for organizations in my riding such as the Woodbine Racetrack, which has a very proud reputation in Canada. It hosts the Queen's Plate annually. It is a great institution and I am very proud of it.

In conclusion, I think that all parties can agree this bill contains some much needed updates for our financial institution legislation. I personally do not think the bill contains anything particularly contentious. I will be happy to provide it with my support, with the caveat that if it is referred to committee, the committee should look at a couple of the issues that I have raised today.

[Pierre Paquette, Bloc, Joliette, QC]

I am very pleased to participate in this debate. It might seem very technical, but it is extremely important, especially for consumers and all of our fellow citizens. We do business with financial institutions every day, especially with banks and near banks. Although these are private enterprises, they are for all intents and purposes public services.

Bill C-37 introduces certain changes to the banking system while ensuring its stability. The government is required to undertake consultations every five years to update legislation governing financial institutions. October 24 was the deadline for consultations on legislation governing financial institutions, but the government extended the application of these laws to next April 24 to enable Parliament to study the issue more thoroughly.

Bill C-37 follows the June 2006 publication of a document entitled 2006 Financial Institutions Legislation Review: Proposals for an Effective and Efficient Financial Services Framework, as well as Advantage Canada, which was recently published by the government during the economic and fiscal update. A lot of work went into drafting this legislation. Bill C-37 would implement new mechanisms to make Canada's financial system more efficient. This bill is aimed at achieving three key objectives. As I said earlier in my question to the minister, those objectives are to enhance the interests of consumers, increase legislative and regulatory efficiency, and adapt the regulatory framework to new developments. This is a sector that has seen a lot of technological, financial and service development over the past few decades.

On the whole, we are quite happy with this bill, because it meets a real need. Obviously, a number of things will need to be discussed in committee, and I will talk about those in my speech. We will therefore vote in favour of Bill C-37 at second reading, but we reserve the right to improve the bill, with the help of the other parties in this House, so that it better meets its objectives, which the Minister of Finance outlined earlier.

I spoke earlier of three key objectives. The first is to enhance the interests of consumers. This includes three main elements. The first consists in improving the system of disclosing information to consumers; the second consists in amending the regulatory framework to provide for the introduction of electronic cheque imaging; the third consists in reducing the hold period on cheques.

The first element of this first objective consists in improving the disclosure regime. As the minister has said, the intent is to help consumers make informed decisions about investment vehicles by providing them with more specific, more extensive, more easily accessible information. The government is therefore proposing higher standards for disclosure of charges and penalties that apply to various accounts and investment vehicles. It will also require institutions to clearly disclose this information on the Internet. Today, many Canadians use the Internet for their financial and banking transactions, paying bills and looking for information. Of course, not every household has Internet access yet, so this information will be available not only online, but also in all branches. That way, anyone who needs information will have access to it.

The second element of this first key objective of enhancing the interests of consumers is amending the regulatory framework to provide for the introduction of electronic cheque imaging.

Bill C-37 will establish a legislative framework for electronic imaging in order to facilitate cheque processing by financial institutions and to reduce the hold period on cheques. I believe that the technological developments to which I referred earlier, particularly in the area of financial management, make it possible to use this new tool.

The third element in the first key objective of enhancing the interests of consumers also results in shorter hold periods by financial institutions on cheques.

As we know, following the publication of the 2006 Financial Institutions Legislation Review, the government undertook to reduce hold periods on cheques in order to make life easier for everyone, particularly SMEs and the public.

A hold on a cheque makes our life very difficult. When we receive a cheque, we deposit it and have bills to pay or debt payments to make. We realize that our money or our assets are on hold. They are frozen, in today's language, by the bank for 10 days, even in the case of cheques from major companies or the government. The solvency of the issuer of the cheque is not in question. To manage risk and security, a hold is placed on these cheques for 10 days.

With Bill C-37, the Superintendent will have the authority to establish the hold period on cheques. In the white paper, it is recommended that the hold period be reduced to a maximum of seven days, and then five days once electronic cheque imaging, about which I spoke earlier, is implemented.

Cheque holds not only affect consumers who need to access funds to pay their bills and make debt payments or simply to do their everyday shopping, they also affect small and medium-sized businesses that do not always have a large cash flow margin. They need that cash flow to pay their suppliers and employees and to operate their businesses from day to day. They often do this out of the funds they deposit into their bank accounts from day to day.

I think that this is something that everyone will be pleased to see. As I said earlier, the 10-day maximum hold period for funds deposited is a source of irritation to virtually everyone.

As well, the government would like to ensure that the efficiencies that will be gained through the Canada Payments Association initiative to change the payments system to facilitate electronic cheque imaging will be shared by all users of the payments system, including consumers.

We certainly cannot object to this first objective and the corresponding elements, but in our view it does not go far enough.

I am sure that some of my colleagues in all parties in this House regularly receive letters from consumers these days, as I do, saying that they have been victimized by the practices of banking institutions, and in particular the big banks, and who feel that they simply have no recourse. Starting a legal battle against a financial institution that is a billionaire several times over is something that most of our fellow citizens cannot do. We need to find solutions for this problem so that consumers have some assistance in seeking remedies against financial institutions.

A few minutes ago I proposed that an ombudsman be appointed who would have more power so that he or she could take on a case and go to bat in court for consumers who have been harmed—or who think they have been harmed—by banking practices, so that consumers would not have to use their own funds to defend themselves.

I think that we need to consider, in committee, how we can achieve the ultimate goal of giving consumers more power in their dealings with financial institutions, in terms of compliance with banking legislation but also their rights as consumers.

I would add that the minister’s answer was not what I was looking for. Helping consumers to make informed choices involves more than just handing out more information.

Financial institutions are more familiar with the ins and outs of the financial system and the money market than consumers are. That is in fact why we have given consumers specific rights, to protect them, because the seller always has more information about what it is selling than the buyer does.

I think that the committee will have a lot of work to do in this regard. As I said earlier, we will be voting for the bill on second reading precisely so that we will be able to do that job. In recent days, I have assured some of my fellow citizens that the Bloc Québécois is eager to do this.

The second objective deals with increasing legislative efficiency. Obviously, this is a motherhood issue. There are three key elements. The first involves reducing the regulatory burden placed on foreign banks to facilitate their entry into the Canadian market and stimulate competition; the second is to streamline the by-law approval process; and the third is to refine the federal legislative framework for credit unions.

The reason I am interested in the first element of this second objective, increasing legislative efficiency, is that this measure, which will reduce the regulatory burden, is a response to the concerns expressed during consultations on the review of the Financial Institutions Act.

The Canadian market, as we know, is extremely concentrated and dominated by five major banks. Any legislation that aims to promote competition is desirable, in our opinion.

I know that, in the past, laws have been passed to promote competition, but we have to acknowledge that they have not produced many results up to now.

Moreover this is what caused the Standing Committee on Finance—I do not recall exactly in which month—in its report on bank mergers in 2004, to be extremely reluctant to lift the moratorium on bank mergers. A market that is already concentrated, with a merger of two large banks from among the five largest, would end up being even more concentrated. And when you have concentration, you have an oligopoly, and an oligopoly means that consumers are extremely short-changed.

This is the present situation in the Canadian banking system. I could give my region as an example. In the Joliette region, there are relatively few banks, so we are more or less at the mercy of those that are there. We do not have an unlimited choice.

Therefore a measure that would promote the introduction of foreign banks into the Canadian market is welcome. In that regard, as I mentioned, Bill C-37 would clarify the measures applying to foreign banks operating in Canadian territory by refocusing the regulatory framework on the chartered banks and simultaneously excluding the near banks.

I do not need to define near banks but for the benefit of our audience, I will say that they are companies that offer financial services of a banking nature. Unlike chartered banks, near banks cannot change their basic money supply, that is, they cannot borrow money from or lend money to the Bank of Canada to make new deposits or loans.

So this is an interesting measure. We will get a better idea, as the committee studies the bill, of the scope of these measures designed to increase competition in the Canadian market. As I said, previous legislation did not produce many results.

The second element is the streamlining of the regulatory approval régime. This measure is designed to simplify the process pertaining to routine transactions not having any effect on public policies. So Bill C-37 wants to transfer the power to approve or refuse certain operations or transactions from the minister to the Superintendent of Financial Institutions.

This is one aspect of the bill we would like to address in committee and study in depth because we have to ensure that only decisions that do not impact public policy, as provided for in the legislation, are in the hands of the superintendent. From that perspective, the criteria and characteristics will be extremely important. How do we define a transaction or an operation that has no affect on public operations?

The Bloc Québécois will not allow the minister to depoliticize operations that will have an impact on public policy. Those have to stay in his hands and also be subject to a democratic debate.

The third aspect has to do with relaxing the federal framework governing credit unions. This is a request that has been made a number of times by the Standing Committee on Finance. In order to facilitate the opening of new credit unions, the government would lower to two the number of institutions required to constitute a credit union. At present, a minimum of 10 credit unions is needed to establish an association under the Cooperative Credit Associations Act.

However, in light of the new commercial possibilities offered by retail associations and the continued consolidation in the credit union system, the current requirement places too high a threshold for new entry. A lower requirement would add flexibility to the federal framework for the credit union system, improve the system’s capacity to adapt to new developments and enable it to better serve consumers and SMEs. As I was saying earlier, the major banks are in the process of leaving several regions in Quebec and Canada and, generally speaking, credit unions are picking up the slack. In Quebec, we are well served, but this is not the case in all the Canadian provinces.

The last objective includes all the other measures—and there are three. The first is to increase from 75% to 80% the loan-to-value ratio for which insurance is mandatory on residential mortgages. The second is to readjust the equity threshold above which a bank is required to be widely held and below which it can be more closely held. The third consists in increasing the limit, from one third to a minority, on the number of foreign members of the boards of directors of Canadian banks.

I will quickly outline what these measures entail and what the Bloc Québécois thinks of them. We agree with the first measure, which consists in raising the loan-to-value ratio requiring mortgage insurance from 75% to 80% for residential mortgages. The mortgage market has changed dramatically and is now much better known. Mandatory insurance for high loan-to-value ratio mortgages was introduced over 30 years ago as a prudential measure to ensure that lenders are protected against fluctuations in property values and associated defaults by borrowers. The last time the threshold was increased was following the Porter Commission in 1965, when it was raised from 66.7% to 75%. The market place has changed since then. The risk management practices of lenders have improved significantly. Regulatory risk-based capital requirements have been implemented. Capital markets have changed and matured. The supervisory framework for federally regulated financial institutions has been strengthened significantly

The restriction may therefore no longer serve the same prudential purpose. As a result, a statutory requirement for insurance set at 75% loan to value ratio may mean that certain consumers are paying more for their mortgage than is justifiable on a prudential basis. It is also preventing some Canadians from owning their own homes, whereas they could afford to own a home if the ratio were increased to 80%.

The second measure adjusts the equity thresholds that allow banks to be wholly owned or force them to be widely held. In 2001, a new sized-based ownership regime was implemented. Under the new regime, the equity threshold above which a bank is required to be widely held—I will come back to this definition—was set at $5 billion to capture the largest banks whose potential failure would have the greatest impact on the financial system and the economy. This was another fear that the Standing Committee on Finance had expressed in its report on bank mergers.

If a major bank were to go bankrupt in Canada, in such a highly concentrated market, how would the Canadian economy be affected? To ask the question is to answer it. The result would be disastrous. We therefore have to make sure that these banks are on extremely solid financial ground.

Under the 2001 regime, medium-sized banks with equity between $1 billion and $5 billion can be closely held, but are subject to a 35 per cent public float requirement (unless a ministerial exemption is obtained). Thus, there is at least some distribution of assets. This ensures that, if one of the shareholders is having difficulties, the financial institution itself can overcome the difficulties. Furthermore, the threshold for small banks, which can be wholly owned by a single shareholder, was set at $1 billion to encourage new entrants.

The intent of Bill C-37 is to change the equity thresholds in order to adjust to the new reality of the considerable growth in the banking industry since 2001. Thus, the equity threshold for sole ownership, that is, a single shareholder, would be raised to $2 billion. Furthermore, banks whose equity varies between $2 billion and $8 billion, rather than between $1 billion and $5 billion, must henceforth have a minimum of 35% of their voting shares listed on the stock exchange. Lastly, banks whose equity is greater than $8 billion, rather than $5 billion, as in 2001, must be widely held. Of course, this is nothing new to anyone here, but once again, for our viewers, a widely held company means that no one shareholder can hold more than 50% of the voting shares.

Finally, to account for the reality that Canadian banks are purchasing more and more foreign banks, the minority would be increased, which means that the voting majority on the board of directors must be Canadian citizens, not necessarily by birth or nationality, but Canadian citizens, nonetheless.

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

Mr. Speaker, this is an interesting debate for Canadians. This is a very major policy area that requires thoughtful deliberation and thorough debate.

I want to start by saying that we on our side of the House have no intention of speeding up the process around deliberations on this bill. Bill C-37 is a momentous moment for us, so to speak. This is the culmination of a review of our financial institutions that happens every five years. This is the moment when we actually reflect on how we are doing in terms of the Bank Act, what problems are outstanding and where we can still make a difference.

This is not a routine matter. This is not a quick overview and a resolution of a few outstanding issues. This is the time when we consider what is going on in the banking world and how we fix it. How do we change it? How do we make it better from the point of view of Canadians?

We are here today to talk about Canadians and whether or not they are served well by the Bank Act, whether they are served well by financial institutions, and let me tell members that coming from a community that has seen most of its banks up and leave in the space of less than 10 years, I can say that Canadians are not served well.

We look to this process and this legislative review opportunity to make changes that are necessary, so the first thing I want to do today is take some time to go over some of the situations my colleagues and I have experienced and that need to be addressed. I will say at the outset that while the issues in the bill may be necessary and while we may support them, my question is, just as it was for the last bill, where is the rest of it?

Where are the issues that Canadians have brought to the table? Where are the solutions to the problems that Canadians have identified? Why are we in slow motion in terms of an area that is so fundamental to the life of communities everywhere and to the health and well-being of Canadians?

This debate is not meant to be a boring, staid sort of dry discussion over technical details. This debate should be about whether or not the bill reaches out to deal with problems that Canadians have raised with the government and whether or not the government, once and for all, in fact is prepared to deal with some very serious situations.

We are at a moment when Canadians are feeling that their needs and concerns do not matter one bit and that all this government, like the past government, wants to do is defend the big banks, the big financial institutions and their profits.

Speaking of profits, let us look at the final quarter bank profits this year. Let us look at the fact that, by all accounts, on average we are dealing with record level profits for all major banks. Looking at some of the statistics, I see that for the Royal Bank in the last quarter profits were up by $1.4 billion, I believe.

[John McKay, Liberal, Scarborough—Guildwood, ON]

That's terrible.

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

Oh, my colleague from the Liberals asks if that is not terrible, in a mocking way.

No one is saying that it is terrible to make a profit. We are talking about whether or not those profits are then used to serve Canadians. Surely the Liberals have some interest, finally, in serving Canadians. Did they not get a lesson at the polls? Did they not realize from the spanking they got that in fact it was time to start listening to Canadians and stop ignoring the everyday needs of Canadians right across this country?

I do not expect much from them. I have tried in the House on numerous occasions to get the former parliamentary secretary for finance to listen to these concerns so that he might get through to the former minister of finance, but it was impossible. We tried on numerous occasions to get the former government to actually address the concerns of enormous profits in the face of absolute negligence at the community level, but to no avail.

We are starting fresh. We are hoping that the Conservatives understand this issue. I am not going to give up just because the Conservatives and the Liberals so often seem like two peas in a pod. I am not going to give up, because there is too much at stake. What is at stake, in fact, are the health and well-being of communities that desperately need access to financial services.

My colleagues on the Liberal benches seem take some glee in the profits that banks make. The Royal Bank's total profits for this year are over $4 billion, as I understand it. The question we are asking is whether there is any way we can keep some of those profits in this country.

Why does so much of those bank profits go off to tax havens in the Barbados where banks do not have to pay any taxes on them? We have just dealt with that debate. Why are some of those profits not put back into the communities that were loyal to the banks over the years, instead of the banks up and abandoning communities?

I do not know if the members in the House who are smiling and laughing during this debate have any understanding of what it is like when an entire community loses every one of its banks, of what it is like to see 10 bank branches close in the space of a decade. I am not talking about just one riding, I am sure, but I can sure talk from personal experience, from the point of view of people in Winnipeg North, a community of older, inner city neighbourhoods.

I am talking about a huge area, if anybody knows Winnipeg, from the tracks to Inkster Boulevard in the north end and from Red River to McPhillips Street. If people know Winnipeg at all, they will understand that I am talking about a large, populated area, which has many small businesses, many families that are not wealthy, and many seniors who are not wealthy, who do not have cars to drive to the suburbs, who may find it difficult to access buses, and who do not have computers in their tiny apartments. Some of the people in my constituency do not even have phones, so access to a bank branch is a rather important necessity. It is a bread and butter issue that is part of one's day to day living and working experience.

We have seen communities like Winnipeg's north end deserted by banks. I want to see that addressed in this bill. I want the government to care about that situation. I would like to see some attention given to this matter.

This is the opportunity.

Back in 2000, when we agreed on the bill that set in motion the five year review with the opportunity to make changes as necessary, we put in place in that legislation, and we agreed with it, the Financial Consumer Agency of Canada, its purpose that of overseeing financial operations from the point of view of consumers, protecting consumer interests and speaking up when necessary. It was a place for consumers to take their concerns and have them addressed and it had some powers to oversee bank decisions in terms of branch establishments and closures.

We discovered through this whole process of bank closures that in fact the bill we supported back then did not have enough teeth in it to ensure that the Financial Consumer Agency of Canada could actually hold a stick over big banks to make sure they were following some due democratic process in terms of communities they were serving. Those communities were loyal to them for decades, sometimes for over 100 years, before the banks up and abandoned entire communities. When the last bank branch turned off its lights and closed its doors in this particular area of my riding, Winnipeg's north end, the community had to do something.

I want to say that one big bank left a branch at the edge of that geographic area I described, and that is the Bank of Nova Scotia. We continue to work with that bank to make sure there is a good liaison between the bank and the people so that in fact that relationship stands us in good stead and that no corporate decision from Toronto will lead to the closure of that bank branch as well.

For this huge area, there are no banks. There are no branches. When faced with that alternative, the community did the right thing. The people of community stood up and said, “If the banks are not loyal to us, then we will not be loyal to them, and we will take things into our own hands”. Thank goodness for that kind of determination, perseverance and community spirit, because over the last several years that spirit, that perseverance and that determination have allowed for the establishment of an alternative community financial services centre.

That development occurred just a few weeks ago and officially opened on November 16, and in fact it is one way in which our community has been able to overcome this kind of neglect and abandonment by the big banks. I am here today first of all to give kudos to people in my community who made this happen and to actually acknowledge the fact that it did not happen because of some decision from government. It did not happen because of largesse from either government or the business community. It happened because local community members decided to fight back. They fought back until they got something, not everything, but something that will take the place of all those banks.

I want to acknowledge all of those people who fought so long and hard to get this centre, which is something that needs to be said in the context of this review of the Bank Act. It happened because of people like Jerry Buckland from the Winnipeg Inner-City Research Alliance. It happened because of his work and his studies, repeating the information over and over again and producing studies, including “The Rise of Fringe Financial Services in Winnipeg's North End”, “Fringe Banking in Winnipeg's North End”, and “There Are No Banks Here: Financial & Insurance Exclusion in Winnipeg's North End”.

Those studies clearly show that as the banks left, payday lenders moved in, and people were left at the whim of an unregulated sector. Fortunately, I believe and I hope, the government is moving on the legislation to actually close the loophole with respect to payday lenders and fringe financial services, but the point needs to be made that in fact there are still so few alternatives for people who have been left high and dry by our financial institutions.

It is important to recognize the work of a community like my own when it fights back and wins, so I want to acknowledge the work of Jerry Buckland, who helped produce all these studies, along with Nancy Barbour, who has since passed away and to whom we owe an enormous debt of gratitude.

We had hoped that in this legislation today there would be some amendments to put some teeth into the agency that is there overseeing consumers' interests. That does not appear to be in this package.

We had hoped that somehow the government would have realized the importance of emulating an initiative in the United States. We often point to initiatives from across the border, but in this case it is one that we should look at and consider seriously, and that is a community reinvestment act that requires big banks that choose to leave a community to put money made from that community back into that community to help with economic and social development.

That is an innovative proposition that needs to be seriously considered in this country. We need to ensure that there is some way to give back to the community that which has been taken out of it through long time loyalty to banks and the contribution to the kind of enormous profits we are seeing today.

Study after study has talked about consumers' interests in this regard. I want to reference a speech by Murray Cooke, who is with the Centre for Social Justice. He writes:

In terms of finance, we need to ensure that not only business has access to capital, but we need to ensure that all Canadians, including those living in rural and small town communities, including disadvantaged groups no matter where they live, have reasonable access to finance and basic financial services. While this is an issue of social justice, I think you could appreciate that there are also wider economic benefits involved in allowing and encouraging everyone to be economically active rather than economically marginalized.

On that note, it is important to point out, again, the impact of the government's decisions in closing Status of Women offices and shutting down programs that were helping in this regard. I refer specifically to a program entitled “Money & Women” , which was organized by the North End Women's Centre in Winnipeg in the heart of my constituency. It works on a daily basis with women to ensure they have the financial knowledge, information and expertise to handle their own banking, to access banking services and not to become dependent on payday lenders.

This is a valuable service that is no longer available because of the government's heartless cuts. This is a case of government money helping a community to help itself. It was a case of money going through a program and an organization to women directly to help them manage their finances and put themselves on a stronger financial footing.

How in the world can that be described as money for bureaucracy and money for administrative purposes? This is money that goes directly toward the benefit of women, and the government has totally denied women that opportunity. Shame on it for that kind of heartless, disgusting cutback that gets at the very soul of the community and the very heart of an individual's desire to play a meaningful role in society today.

People in my community and everywhere do not want to be a drain on society. They do not want to stay on social assistance if they do not have to. They do not want to be dependent on anyone. They want to be independent and they want to manage their own affairs. Surely the most important thing government can do is provide the resources to help people help themselves, to give them the tools through literacy, through bank projects, through volunteer initiatives that help people to help themselves.

I cannot think of a single reason, from the civil society point of view or any perspective from a civilized society, why the government would take that program away. I cannot understand why the government wants to resort to the law of the jungle and the survival of the fittest. I thought it was against people staying on welfare and being dependent on the state. I thought government was about giving people the tools they needed to help themselves. Yet it is taking away the very things people need in order to participate fully in our economy so they can get a job, pay taxes and contribute to this country. It is beyond any kind of understanding and comprehension.

Let me get back to the Bank Act. Another fundamental issue for people around the Bank Act has to do with disclosure. It has to do with access to information and accountability and transparency. I know the bill touches on this issue of trying to deal with some of the numerous briefs that were presented during the development of the white paper.

Bill C-37 falls far short of what is needed. It by no means addresses the real concerns of Canadians. Let us remember, we are talking about a very complex world that provides to citizens a dizzying array of products, choices and services, yet we are doing nothing to ensure that people get the full information they need.

Some very important suggestions were made on that front. I think about the role of Democracy Watch. I think about the role of the consumer advocacy groups and others that have tried to get the now government, and the one before it, to consider the idea of citizen participation, citizen boards as a vehicle for ensuring the proper flow of information between big financial institutions and consumer groups and individuals so people would be fully aware of what was happening and would have some say when there were those possibilities for decision making.

Bill C-37 fails Canadians on some key issues. We need to stop and reflect on what is missing in the bill, what Canadians heard during the process and how we can make a better bill.

[Thierry St-Cyr, Bloc, Jeanne-Le Ber, QC]

Mr. Speaker, I am pleased to address the House on the subject of Bill C-37, which we are debating today.

Every time it has to decide whether to support a bill or not, the Bloc Québécois considers its value for Quebeckers. If the bill offers real benefits for them, the Bloc Québécois supports it; if not, it does not.

We have examined Bill C-37 closely and, after weighing the pros and the cons, we have concluded that we support the principle underlying the bill.

What factors did we take into consideration in our analysis? There are several. First, the bill would implement mechanisms to transmit information to consumers, which would enable them to make more informed choices about banking services. Second, the bill would implement a regulatory framework to permit electronic cheque processing, which would reduce the time during which institutions hold cheques, thereby addressing an issue our citizens have often raised. I will come back to this later on.

Third, this bill would reduce the regulatory burden on foreign banks, credit unions and insurance companies, thereby making the regulatory approval régime more efficient.

We have also found a fourth advantage: Bill C-37 would change regulations governing mortgage loans, thereby enabling more people to take advantage of that financial tool. That is very good.

Last, the government would increase the equity threshold from $1 billion to $2 billion, thereby making it possible for a single shareholder to wholly own a bank, thus encouraging new entrants and promoting competition.

The Bloc Québécois supports the bill in principle, but we have some reservations. As members of the Standing Committee on Finance, my colleague from Joliette and I will work to ensure a number of things.

We will begin by ensuring that the regulations are changed, and we will make certain that those changes do not allow the kind of uncontrolled mergers and acquisitions we have seen before in the banking sector.

We will continue to insist that any change to the moratorium on bank mergers be in the best interests of the public, and not made just to satisfy the financial market. To that end, the Bloc Québécois will be ensuring that the Standing Committee on Finance will hear the appropriate witnesses. We will also be proposing the amendments that are needed for this bill to pass.

The Bloc Québécois will also be stepping up the pressure on the federal government to adopt the necessary measures to protect people’s savings, in particular by appointing a federal ombudsman for the financial sector. The ombudsman will have the powers needed to defend the public based on Canadian banking law and thus enable members of the Canadian public to exercise their rights without having to go through the endless and tedious legal battles that the banking institutions wage. We therefore believe that this is a flaw that must be remedied, and we will be working to persuade the federal government to create such an ombudsman position.

That is our stand on the bill that is before us. Nonetheless, it might be worthwhile to consider the context here and recall why we are dealing with this bill today.

Every five years, to ensure that the banking system has a degree of flexibility while remaining stable, the government must hold consultations leading to the review of the financial institutions statutes.

October 24 was the date on which the financial institutions legislation expired. The government extended the sunset date for the legislation to April 24, 2007, so that Parliament could examine the matter.

Bill C-37 follows on the document entitled “Proposals for an Effective and Efficient Financial Services Framework”, released in June 2006, and the document entitled “Advantage Canada” published by the government at the time of the latest economic and fiscal update. Unfortunately, that document says nothing about the fiscal imbalance. We understand, of course, that this is not the topic of debate today, but I find it hard not to mention this serious omission in the economic update.

The object of Bill C-37 is to put in place new mechanisms to improve the efficiency of the Canadian financial system. There are three main components to this bill. The objectives of those components are, first, enhancing the interests of consumers; second, increasing legislative and regulatory efficiency; and third, adapting this regulatory framework to new developments.

I would now like to analyze the bill in more detail. Of course, I will come back to the three components I have listed.

The first component is enhancing the interests of consumers. This bill provides for a set of measures, the first of which is to improve the rules for disclosing information to consumers.

In order to allow consumers to make informed choices among their investment vehicles, the government will raise the standards concerning disclosure of charges, obligations and penalties relating to different accounts and investment vehicles. That is important because people often make that comment to us, as well as people with savings who are making choices. Later, when they realize the consequences, the charges and the penalties associated with their choice, they are often angry and feel that they have been betrayed by their financial institution. In fact, they were not in a position to have the full details of the information that would have allowed them to make proper choices.

The government will require those institutions to clearly disclose that information by means of the Internet, in all their branches, and in writing for any person who makes that request.

In the same vein, there is a second measure. This one will change the regulatory framework to enable the introduction of electronic imaging in the processing of cheques.

This bill will establish a regulatory framework to enable the introduction of electronic cheque imaging to facilitate processing and reduce the hold time in banking institutions.

That is a good example—I mentioned it previously—of the necessary evolution of the Banking Act. It is understandable that with the development of new technologies, the regulatory framework must also evolve to enable the use of digital imaging in processing cheques. We will have a legal financial framework for that, thanks to this bill.

Another measure involves the reduction of the time that banking institutions can hold a cheque. Following publication of the 2006 financial institutions legislative review, the government made a commitment to reduce cheque hold times to make life easier for small businesses and other Canadians.

Bill C-37 gives the superintendent the power to set cheque hold times. The white paper proposed an immediate reduction of the maximum hold time to seven days, and to five days once the digital cheque imaging system is in place.

Cheque holds affect not only consumers who need to have access to those funds to pay their bills, but also small and medium businesses that must pay their employees and keep the business operating out of the funds they deposit.

In addition, the government wants all users of the payments system—including, obviously, consumers—to benefit from the increased efficiency resulting from the Canadian Payments Association initiative that involved changing the payments system to facilitate electronic imaging of cheques.

In my opinion, this need for faster processing of cheques may be seen quite concretely in the explosion of small businesses that cash cheques quickly and that are proliferating throughout our towns and villages. This clearly shows that there is a need and that people want to use the money available to them quickly, but that they cannot do so in the standard banking institutions, because their money is held for several days.

Probably everyone has already experienced something like this. It has happened to me personally to make a withdrawal and for it to be drawn on my line of credit instead of on my regular account, even though the money was in my account. The money was simply being held while waiting for the necessary checks to be made. It is a bit frustrating when we pay interest on funds that are already in our bank account. This is a real problem and if these delays can be reduced, it will be to the great advantage of consumers. So I was talking about the first objective, pertaining to consumers.

The second objective is to increase legislative efficiency. In this section, a first measure consists of lightening the regulatory burden on foreign banks so as to facilitate their access to the Canadian market and stimulate competition. This measure arises from the concerns expressed during the consultations pertaining to the review of the Financial Institutions Act. The Canadian market is already fairly open to foreign competition in the banking field. But certain problems were raised concerning the regulations governing foreign banks doing business in the Canadian market.

Bill C-37 aims to clarify the measures applying to foreign banks operating in Canadian territory by refocusing the regulatory framework on the chartered banks and simultaneously excluding the near banks. The near banks are companies that offer banking-type financial services. Unlike chartered banks, near banks cannot change their basic money supply, that is, they cannot borrow money from or lend money to the Bank of Canada to make new deposits or new loans.

Still in the same section, a second measure aims to streamline the regulatory approval regime. This measure is designed to simplify the process pertaining to routine transactions not having any implication for public policies. Thus the power to approve or refuse certain operations or transactions will be transferred from the minister to the Superintendent of Financial Institutions.

The Bloc Québécois is really concerned about this and it is a part of the bill that will need further study in committee to ensure that only decisions that have no public policy implications are put in the hands of the superintendent. In other words, we will not agree to any hint that the minister is allowing operations with public policy implications to be de-politicized.

The purpose of the third measure is to loosen the federal framework governing cooperative credit associations. In order to make it easier for new associations to emerge, the government will reduce the number of establishments needed to constitute a cooperative credit association to two.

At the present time, 10 cooperative credit associations are needed to form an association under the terms of the Cooperative Credit Associations Act. However, in light of the new commercial possibilities offered by retail associations and the continued consolidation in the credit union system, the current requirement places too high a threshold for new entry. A lower requirement would add flexibility to the federal framework for the credit union system, improve the system’s capacity to adapt to new developments and enable it to better serve consumers and mall businesses.

That was in regard to the second aspect.

There are a number of measures as well in the third aspect. The first consists of increasing from 75% to 80% the loan-to-value ratio for which insurance is mandatory on residential mortgages.

Mandatory insurance on mortgages with high loan-to-value ratios was instituted more than 30 years ago—quite a while ago—as a precautionary measure to ensure that lenders were protected against fluctuations in property values and possible defaults by borrowers.

The threshold was originally set at 66.7% or a two-thirds ratio. It was then increased to three-quarters or 75% following the Porter Commission in 1966. Markets have obviously continued to evolve ever since and we know, first, that lenders’ risk-management practices have improved considerably and second, regulatory risk-based capital requirements have been implemented. Financial markets have evolved and stabilized, and the supervisory framework for financial institutions under federal government regulation has been strengthened considerably.

It seems that restriction no longer plays the same prudential role it once did and, accordingly, a legal requirement by which borrowers must contract mortgage insurance at a fixed loan-to-value ratio of 75% could mean that some consumers are paying more for their mortgage than is justifiable on a prudential basis.

I know that because this summer I bought a house in Verdun—which is one of the most beautiful places in Quebec, and even Canada, as everyone knows.

[Some hon. members]

Oh, oh!

[Thierry St-Cyr, Bloc, Jeanne-Le Ber, QC]

Not all my colleagues agree, but that is a matter for discussion.

This experience allowed me to learn a little about the mortgage market. People are being given mortgages at increasingly lower rates—with a 5% or 10% down payment, and less in some cases. It is easy to get a mortgage. One might wonder why insurance would be mandatory with a down payment of up to 25% when the minimum down payment might now be decreased to 20%. This is only normal evolution.

The purpose of the second measure is to readjust the levels of equity capital to allow sole ownership or to force wide ownership. In 2001, a new size-based ownership regime was implemented. Under the new regime, the equity threshold above which a bank is required to be widely held was set at $5 billion to capture the largest banks whose potential failure would have the greatest impact on the Canadian financial system and the economy.

Medium-sized banks with equity between $1 billion and $5 billion can be closely held, but are subject to a 35% public float requirement, unless a ministerial exemption is obtained. The threshold for small banks, which can be wholly owned by a single shareholder, was set at $1 billion to encourage new entrants.

Bill C-37 would therefore change the equity thresholds in order to account for the new reality of the considerable growth in the banking industry since 2001. The equity threshold allowing sole ownership would be raised to $2 billion, or doubled.

Banks whose equity varies between $2 billion and $8 billion must henceforth have a minimum of 35% of their voting shares listed on the stock market. Banks whose equity is greater than $8 billion must be widely held, which means that no single shareholder can hold more than 50% of the voting shares.

The last measure in this section involves increasing the limit, which is currently one third, on the number of foreign members permitted on the board of directors of Canadian banks. As announced in the Advantage Canada plan—which, I would remind the House, says almost nothing about the fiscal imbalance, but that is not the topic of my speech here today—Bill C-37 amends the Bank Act by proposing a new measure that would make the boards of directors of Canadian banks subject to a new Canadian quota.

At present, a minimum of two thirds of board members of Canadian banks must be Canadian residents. However, Bill C-37 would lower that threshold to a simple majority.

To justify this measure, the Conservatives argue that this new standard will foster the creation of international ties and open the Canadian banking sector to the rest of the world. Following the moratorium on all bank mergers in Canada, Canadian banks soon began acquiring foreign banks in order to increase their growth. Thus, a greater foreign presence on their boards of directors would allow Canadian banks to continue in that direction.

In closing, the Standing Committee on Finance still has a great deal of work to do on this. The Bloc Québécois will help with this work. For now, we support this bill in principle.

[Dennis Bevington, NDP, Western Arctic, NT]

Mr. Speaker, I come from a northern part of Canada where banking services are limited in many small rural and remote communities and limited to the extreme. In some cases, people need to air freight their cheque to another community and have it cashed there and then returned to them, which is a huge expense.

Within any amendments that are being made to the acts governing the banks, I would think that we would want to see some attention paid to ensuring that there is some universality in some of the basic banking services across this country, especially in rural and remote communities. It may be that it will require some amendments to the act that would allow banks to provide more online services. I would say that there are things that could be done.

Although we have competition in the banking field, we do have very large companies that dominate the market. The banking industry needs to have some responsibility toward Canadians to ensure their services are available in all parts of this country.

Could the hon. member comment on how these amendments to the act will help people in rural and remote communities?

[Thierry St-Cyr, Bloc, Jeanne-Le Ber, QC]

Mr. Speaker, I would first like to thank my colleague for his speech and point out that I believe his concerns are legitimate. I would even say that they are not limited to rural areas.

A few years ago, in the beautiful city of Verdun, in my riding—the city I spoke of earlier—the quality of service declined when a number of institutions closed. People are very concerned about this. I can understand that the impact may not be as serious as in a remote rural community. That is extremely disturbing. However, this is happening everywhere.

Earlier, I referred to the spread of instant cheque-cashing companies. Why should people have to pay fees that are often very high just to be able to use funds that should already be available to them? This is a real problem, and I think that some clauses of this bill will improve things, but will not solve the problem.

Of course, the whole problem of competition on the financial market remains. I also mentioned the importance of making sure that we do not go back to unrestrained bank mergers, that we impose a moratorium and that mergers always be made in the interests of consumers, which is often not the case, because too much attention is paid to financial markets.

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

Mr. Speaker, I am very interested in these new measures for the banking industry and particularly in the area of foreign directors. I am wondering if the member, in considering this document, was concerned at all whether there should be any restrictions applied to directors from other countries.

[Thierry St-Cyr, Bloc, Jeanne-Le Ber, QC]

Mr. Speaker, in the bill as it currently stands, the measures apply essentially to foreign membership in boards of directors. That is the issue at present. In our opinion, this is acceptable as long as a majority of the directors are resident Canadians. With regard to officers of institutions, I must admit that I have never considered whether a problem actually existed or whether this was something that could eventually pose a problem.

However, I am convinced that if this issue were to be brought before the Standing Committee on Finance, the committee would examine it carefully and consider whether amendments should be added to place certain restrictions on officers. We believe that the measure currently proposed for directors is reasonable.

[Pat Martin, NDP, Winnipeg Centre, MB]

Mr. Speaker, my colleague from the Bloc made reference to the blossoming of payday lenders and payday loan companies in his riding. I can tell him that the same applies in my riding of Winnipeg Centre where these outfits are sprouting up like mushrooms and where low income people, poor people I believe, are being exploited by these companies because they cannot find basic financial services anywhere else in the country.

Does my colleague share this view with me that the government should crack down on the payday lenders who are charging exorbitant usurious rates of interest, criminal rates of interest, and that rather than simply regulating the payday loan industry, it should prosecute people who charge more than 60% interest per annum?

[Thierry St-Cyr, Bloc, Jeanne-Le Ber, QC]

Mr. Speaker, I would like to clarify something. Perhaps what I said was misinterpreted. My riding does not have a problem with payday loans because they are prohibited in Quebec. The practice exists in the rest of Canada, but not in Quebec. Honestly, I hope that Quebec can continue to regulate the market to keep them out forever.

I was talking about people who receive cheques from their employer, businesses or individuals. They want to use the money right away, but they cannot. Once they deposit the cheque in the bank, they have to wait a week or two to get access to the funds. In my riding, there are businesses where people can take their cheques to get the money right away. The businesses charge a commission, which can sometimes be quite high. I used that example to show that there is clearly a problem.

When communities have a number of businesses whose revenue comes mostly from instant cheque cashing, that is because there is a need and a problem. People have money that they cannot use right away. That was what I was trying to explain. As for interest rates, it is true that the criminal interest rate is currently 60%. I think that is very high, and we should ensure that the limit is complied with. People who lend money at usurious rates exceeding 60% per year must be charged. If we did that, we would prevent a lot of exploitation. Unfortunately, it is often society's poorest people who have limited access to credit and good credit terms. Their debt eventually spirals out of control and they are trapped.

Personally, I really hope that the federal government will not interfere with provincial jurisdiction so that Quebec can continue to prohibit payday loans and enforce compliance with the criminal interest rate already provided for by law.

[Pat Martin, NDP, Winnipeg Centre, MB]

Mr. Speaker, I am pleased to have this opportunity to enter the debate on Bill C-37. I thank my colleague for answering my questions and clarifying the view in the province of Quebec on some of these issues.

This is a massive piece of legislation affecting many consequential amendments and many pieces of legislation and acts. I may be proven wrong, but at first overview of the bill, I am afraid it may fail to address the single most compelling concern that we have about our financial and banking institutions and that is basic access to basic financial services for all Canadians.

I represent a low income riding in the inner city of Winnipeg. I can tell the House that there has been a flight of capital from the core area of the city of Winnipeg. My colleague from Western Arctic in his questioning of previous speakers told us today that there is a problem finding basic financial services in the rural and remote areas of Canada's north. This is a complex problem that is bigger than just an inconvenience.

In the core area of my riding of Winnipeg Centre, 15 neighbourhood bank branches have closed in the last five years. These branches have been there for 10 to 50 years. The bank that my parents banked at since 1948 when they were married and bought their first home also closed. This is a vote of non-confidence in the inner city.

Let me remind the House that our chartered banks are granted the exclusive monopoly on some very lucrative financial transactions, such as credit cards, in exchange for providing basic services to all Canadians even where that might not be the most profitable thing for them to do. That was the trade-off under which we granted their charters.

The Government of Canada should revisit these charters to ensure that our partners are in compliance with their obligations. In an era of record profits, I defy banks to justify why they are closing branches on every street corner in the inner city of Winnipeg. My colleague from Winnipeg North, who spoke before me, indicated that there had been 13 bank closures in her community.

Winnipeg Centre and Winnipeg North are venerable ridings with old established neighbourhoods full of hard-working people. These people trustingly trudged to the street corners year after year to cash their cheques at their banks. This is a thing of the past. I think it is a breach of trust. Banks have broken their contracts with Canadians because they are making record profits quarter after quarter. Every time we open the financial pages of newspapers we read about banks making record profits. We read in community newspapers about bank closures in the inner city of some major city or in rural Canada.

[Dawn Black, NDP, New Westminster—Coquitlam, BC]

In New Westminster too.

[Pat Martin, NDP, Winnipeg Centre, MB]

In New Westminster too, my colleague from New Westminster--Coquitlam tells us.

I do not know if Bill C-37 satisfactorily addresses the one compelling issue facing Canadians and that is access to banking services. This has led to the proliferation of payday lenders. Every single vacancy in every strip mall across the country is being filled with another Money Mart or Payday Loans, et cetera. Why? Because they can charge 1,000% to 10,000% interest per year. Show me another business enterprise that receives 1,000% interest. Selling coke for God's sake does not provide 1,000% interest. Prostitution or any other illegal activity does not provide 1,000% interest.

The province of Manitoba did a study on payday lenders in my riding of Winnipeg Centre. One case study documented 10,000% per annum interest on some of the loans as a result of a series of surcharges and fees and roll-over loans. No wonder the Hells Angels are involved. No wonder terrorists are looking to this kind of activity to launder money. I trace it back directly to the banks and the abrogation of their duties to provide basic financial services. By abrogating their duties, they left a vacuum for these rip-off outfits to spring up.

Without getting too over the top on what these reprehensible companies are doing in my riding, one thing they are doing is charging to cash cheques. If people knew their banking rights and if the charter banks were living up to their obligations, people should know that the banks have to open a bank account for them. If people have one piece of ID, even if they do not have any money, a bank has to open a bank account for them. It is in the Bank Act.

Yet poor, low income people do not know this, so they get maybe a government cheque and have no place to cash it because they do not have a relationship with a bank because the bank has abandoned their community. They wind up at a payday loan outfit where they are charged 3% or 4% of their social allowance cheque to cash it. It is illegal to charge to cash a government cheque. Another thing people do not know about their banking rights, and the present and past governments have made no effort to tell them.

Governments have allowed this burgeoning mini-industry of preying on the misery of poor people by taking a chunk of their meagre paycheques to provide basic financial services. I am not overstating it to say that it is morally and ethically reprehensible to be in the payday loan industry. It is morally negligent for the government not to police this industry and not to prosecute anybody who would exceed the usury laws in the Canadian Criminal Code and charge 1,000% per annum. They should be locked up. They should be led away in handcuffs. They should be dragged away in a paddy wagon and locked up, and the key thrown away because there is no lower form of animal in my view than someone who would prey on human misery by exploiting the poor and the desperate in the inner cities.

I am no big fan of the big banks. We do not need to do a tag day for the big charter banks in this country, but we should be holding their feet to the fire and make them live up to their basic commitments, their basic obligations under the Bank Act.

Bill C-37 would have been an opportunity to remind the charter banks of their obligations. In the inner city of Winnipeg where I live and at the corner of Portage and Arlington where I had my campaign offices two elections in a row in two different vacant buildings there are six payday lenders on that one intersection within a half a block in any direction and they are open all the time.

For low income people in my riding, because these firms have been around for almost a decade, people carry their Money Mart card in their back pocket as if that is their ID. That is a poor man's credit card today which is a licence to cheat that person. It is not a credit card. It is not even an ATM card where people can get money using it. It is their identification because payday lenders are smart. They have nice clean tile floors, they are well lit and illuminated. People are treated with some dignity because they want to cheat them. People are sucked in that way, but that used to be the type of service that banks offered legally to neighbourhoods and communities. They were big clean places too where people could go with their paycheques and be treated with some dignity. All that is gone.

We have to remind our charter banks that there was a reason why we gave them the exclusive monopoly on certain very lucrative financial transactions and that was so that they would provide basic services whether we were in Plum Coulee, Manitoba or New Westminster, British Columbia, or in the heart of downtown Toronto, or wherever they are needed.

[An hon. member]

Tuktoyaktuk.

[Pat Martin, NDP, Winnipeg Centre, MB]

Let's not forget Tuktoyaktuk.

The deal was not that they could run those banks as long as they were profitable. The deal was that overall this would be one of the costs that they would assume in their overall activity, namely providing basic financial services. It seems to me the banks do not want ma and pa business any more. They are pawning it off to the credit unions.

There is this idea of the right wingers, the Conservatives, the neo-conservatives in this place. The right wing neo-conservatives have this idea that they should privatize the profits and socialize the losses. That seems to be their basic philosophy. They should privatize all that they gain and let the big banks have all the real good paying business, and they should pawn off the less profitable services such as mortgages, basic banking services, and let the credit unions have those. Somehow the non-profit sector can have all that non-profitable stuff and that will streamline our activities.

[Jeff Watson, Conservative, Essex, ON]

Just nationalize it.

[Dawn Black, NDP, New Westminster—Coquitlam, BC]

Bigger and bigger profits for the banks.

[Pat Martin, NDP, Winnipeg Centre, MB]

Bigger and bigger, there is no such thing as too much profit for the banks.

One of the right-wingers said that we should nationalize the banks. What an extremist point of view. I am going to use that in my literature the next time there is an election campaign.

The segue between the last bill we debated on offshore tax havens and the bill we are presently debating on Canada's chartered banks and financial institutions is interesting, because there are no worse culprits for tax avoidance and being tax fugitives than the big banks that are abandoning the inner city of Winnipeg. They are abandoning the inner city of Winnipeg and setting up shop in Barbados, the Cayman Islands and everywhere else they can think of to avoid paying their fair share of taxes in our country.

[An hon. member]

They are masters at it.

[Pat Martin, NDP, Winnipeg Centre, MB]

They are masters at it. They have hundreds of tax lawyers working for them, looking for ways to avoid paying their fair share of taxes. I call them tax fugitives hiding out in tax havens. They certainly are not living up to their commitments to the good people of the riding that I represent. They abandoned my riding and I will never forgive them for it. Frankly, I will not bank in a major chartered bank in this country and I do not care who knows, although I guess everybody knows now.

There are many things that could have been done with this piece of legislation to try to impose some fairness into the financial institutions regime in this country. I remember when the former leader of the NDP, currently the member for Halifax, and I used to crash the shareholder meetings of the major banks. We had nine resolutions that we would put forward at every bank meeting. Two of them almost passed.

One of the resolutions that I moved at the Bank of Montreal failed to pass by less than 1%. In fact the result was 49.6 to 50.4. I remember because it was the same ratio as the Quebec referendum, 49.6 to 50.4. That resolution was gender parity on the board of directors. We came that close to dragging the banks into the 21st century kicking and screaming all the way, but the shareholders clearly wanted modernization of the banking system or they would not have supported gender parity on their own board of directors within one-half of one percentage point. We were very proud of that.

The other resolution that almost passed, and this one almost gave the CEO a heart attack, was that the salary of the CEO would be limited to 20 times that of the average employee. It would still be 20 times what an ordinary human being made, but CEOs were making 200 times and 300 times that of an average employee. That, sadly, did not succeed as a resolution.

It gives some indication of the amount of work that needs to be done if we are going to have a fair regime governing our financial institutions in this country, first to provide reasonable access to every person in this country. Whether people have any money or not, they deserve the right, and in fact they have the statutory right, to basic banking services. Even if people do not have any money but they want to open a bank account, they have to be allowed to open one. Do Canadians know that?

We would drive the payday lenders right out of business. People who have relationships with banks and need to borrow an extra $100 to get them through until their next paycheque could simply use their overdraft the way I or my colleagues do and pay a surcharge of a couple of dollars for that privilege instead of having to pay a surcharge beginning at 1,000% interest. Some of these institutions charge 10,000% interest on a simple loan. On title loans these companies are actually lending people $1,000 and making them sign over the title of their homes as collateral. If they fail to pay off the loan, they run the chance of forfeiting their homes.

[Dawn Black, NDP, New Westminster—Coquitlam, BC]

Unbelievable in a civilized society.

[Pat Martin, NDP, Winnipeg Centre, MB]

This is unbelievable in a civilized society, as my colleague from New Westminster—Coquitlam pointed out.

I do not know why the Liberals and Conservatives refuse to address these basic inequities in the financial sector. It used to be they relied heavily on the big banks to finance and bankroll their political parties. That is not allowed any more. News flash: They do not have to be afraid of the banks any more. The banks are not allowed to give political parties money any more.

The banks would always line up with wheelbarrows full of money. They would dump an equal amount on the Liberals and on the Tories, but the laws have changed. We no longer have to be afraid of the big banks. If we stand up on our hind legs we can actually demand service from the big banks without jeopardizing our political future. It is a liberating feeling to be able to tell the truth about the banks without having to worry about our donations drying up. That was the beauty of the changes to the election financing laws.

It begs the question, what is the barrier now? If it is no longer money, why do we not force the banks to live up to their obligations under the current Bank Act? Why do we not amend the Bank Act to make it even better so it serves the best interests of Canadians?

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

I agree.

[Pat Martin, NDP, Winnipeg Centre, MB]

My colleague from Nova Scotia, a Conservative, is agreeing with me. Now and then that Conservative member has the odd lucid moment I have noticed. It may be that in his home community he has suffered the same indignity as I have, that the corner banks are closing their doors, folding up their tents and abandoning us. They are bailing out. They have more investments offshore than they have in our own communities. We grant them a charter to exist and give them the exclusive monopoly to make a fortune on certain financial transactions and they refuse to live up to their end of the bargain. That is where I find fault. The little guy is not getting a fair shake from the big banks.

We create our own credit unions and we are left with the least profitable side of banking that nobody else seems to want. We seem to make it work. We are making it work in the non-profit sector through a vibrant credit union system throughout the land, but that is still no excuse. We cannot afford to backfill every place the banks have abandoned us, we simply cannot. No credit union can.

Imagine how devastating it is to represent an old established neighbourhood like mine and see 15 bank branches close their doors. There is another place in which they are failing to live up to their commitment. Right in the Bank Act it says that if a bank wants to close a branch, it has to have public meetings. It has to deal with the inconvenience to the long-standing customers. It has to help them find alternate banking services within a reasonable distance. One of the banks was even ordered to provide a van to drive seniors from the existing branch to the new branch, which was all the way across town. That lasted exactly four months. The van disappeared and the seniors at the Blue Bird Lodge in the inner city of Winnipeg are without service. It is just not working.

I am here to serve notice that the current Bank Act lets Canadians down. The Bank of Canada had Arthur Anderson as its auditor of record for the whole time of the Enron scandal. I have no confidence in that particular system.

I am very concerned though that Bill C-37 is a lost opportunity, because the very things that I point out as being urgent needs for the communities that I have cited I do not find anywhere in the hundreds and hundreds of complex amendments to complex acts in here.

I would urge the government to get back to the basics and listen to what Canadians are saying. They are sick to their stomachs. Get back to the people. Let us do what is best for ordinary Canadians for a change, not for whoever gets affected.

[Penny Priddy, NDP, Surrey North, BC]

Let's do what is right.

[Pat Martin, NDP, Winnipeg Centre, MB]

My colleague from Surrey is saying let us do what is right. What better way to summarize why we were sent here. My colleague from New Westminster says it is despicable and my colleague from Surrey is suggesting that we do things right.

I do not think that is too much to ask. We were sent here on a mission to represent the views, the needs and the concerns of the people we represent. In the inner city of Winnipeg, one of the primary concerns of people is the complete lack, an absolute paucity of basic financial services. They are being forced to use payday lenders who I think are morally and ethically reprehensible. There is no lower form of animal than someone who would prey on human misery and exacerbate the poverty of low income people, stealing from the poor to give to the rich.

The last thing I would point out is if we are serious about putting a lid on organized crime, we should cut off their ability to raise money and cut off their ability to launder money. I say without any hesitation, without any fear of contradiction whatsoever, money, ill-gotten gains, is being laundered through these payday loan outfits in my riding and every riding in this country. If government were serious about stemming that tide and choking off their ability to carry on organized crime, this would be an important step that it should take.

[The Speaker, Peter Milliken]

When debate resumes on this matter, there will be 10 minutes of questions and comments for the hon. member for Winnipeg Centre.

The House resumed consideration of the motion that Bill C-37, An Act to amend the law governing financial institutions and to provide for related and consequential matters, be read the second time and referred to a committee.

[Olivia Chow, NDP, Trinity—Spadina, ON]

Mr. Speaker, I rise before you to speak on behalf of Canada's banks. Yes, that is right, I am empowered to speak on their behalf. I am in fact their member of Parliament. Canada's major banks and most of the insurance companies all have their dazzling, beautiful towers in my riding of Trinity—Spadina. So does the Toronto Stock Exchange, at the fabled intersection of King and Bay.

I am their member of Parliament, so I must speak up on their behalf.

Technically they are not citizens and do not have a vote, although they have certainly bought plenty of influence with the government over the years. They have poured, I am told, thousands of dollars into the coffers of the Liberals and the Conservatives, though none to the NDP, I must admit, and none to my campaign in the last election.

However, I am fair. I represent every constituent. The banks are constituents. If we read their annual reports and corporate responsibility statements, we see that they all claim to want to be good corporate citizens. I am here to plead on their behalf, to encourage members to help them to be good corporate citizens, to consider the bank act amendments as a golden opportunity to help the banks come to terms with their role and to help further the role of government in fostering a healthy economy and economic opportunity, prosperity and security for every single Canadian.

That is what the banks say they want, so let us help them. Let us show them how they can do a better job and enshrine the right regulations in legislation to keep them from going astray of their ideals. Let us ensure they are guided to make the best possible investments, and investments in Canada, not in offshore tax havens.

Let us ensure that we protect the sovereignty of the financial system that is so important to our independence and role in the world. That would be good citizenship.

The banks have grown and prospered. Surely citizenship demands reinvestment in every geographic region, community and sector, and for all Canadians, regardless of income level.

My colleague, the hon. member for Winnipeg North, has already pointed to the problems in many communities. They have been abandoned by the big banks. They are denied fair and equal access to banking services. This is the result of mergers. We need to protect against this and help banks fulfill their duties as corporate citizens.

Bank charters provide a protected privilege, but Canadians are owed something for this privilege. Let us ensure availability and access. Banks used to pride themselves on the fact that it costs the same for services in Yellowknife as it does at King and Bay. My constituents demand it. Let us ensure that bank profits are fair and fairly taxed. That would help.

Let us look at credit card rates. As I said earlier, this bill is an opportunity for renewal and change in the way banks work with Canadians. Canadians, particularly low income Canadians, are gouged daily by ridiculously high credit card interest rates. The gap between the prime lending rate and the rate most credit cards charge has never been bigger. It is time to cap credit card interest rates to five points above the prime rate. Five points is quite a lot.

The prime rate today sits around 6%. At the same time, the banks are charging upward of 18% to 19% for credit card interest. It is time to reduce the interest paid on the almost $44 billion in credit card debt owed by average Canadians. That is right: $44 billion. That is higher than Brian Mulroney's record federal deficit in 1992-93. I would like everyone to remember that. A $44 billion debt is carried by average Canadians because of huge credit card interest rates.

The Liberals refused to protect consumers from outlandishly high credit card rates. They argued that there were lower credit card rates available elsewhere. However, far too often, lower income people who have poor credit ratings cannot qualify for these lower interest cards. This is the time for the government to take real action to protect average working families from high interest rates and real action to improve our national economy by improving the disposable income of average Canadians.

There is simply no justification for maintaining high credit card interest rates during this period of steady and declining interest rates, thus making the need to cap credit card rates at 5% above prime a necessity today.

I also want to speak about affordable housing and mortgage insurance, which is also part of Bill C-37. I noticed that deep within this bill are amendments to the National Housing Act, the act that legislates the Canada Mortgage and Housing Corporation.

The former prime minister, as part of his government-wide commercialization initiatives in the 1990s, steered through some amendments to the National Housing Act in 1998 that were widely opposed by affordable housing advocates and cities.

Those amendments limited the role of CMHC in working with municipalities and community based housing providers in developing innovative new ways to create desperately needed new affordable homes, while at the same time opening the CMHC mortgage insurance business to the private sector.

Mortgage insurance has been very lucrative as Canada's housing market has been secure for the most part. Because of the Liberal era restrictions on CMHC, the housing corporation has been generating huge surpluses without being able to spend those on new affordable homes. In fact, we know the surplus to be $5 billion. Basically, it is taking this money, billions of dollars in premiums, and paying out almost nothing. We know that affordable homes are desperately needed in cities across Canada.

What this bill does is further commercialize or privatize CMHC. That includes opening mortgage insurance business to even more private sector businesses. The problem with this is that it cuts into the lucrative and desperately needed revenue stream for CMHC. This stands, even though it has not been able to invest this revenue, which makes it almost impossible for CMHC to gain any more future dollars.

The current amendments appear to seek to further privatize CMHC, and we must oppose that. CMHC has made a lot of money in recent years and has been providing good service at a reasonable cost and every bit as efficient as the private sector. There is no reason that CMHC should be squeezed out or forced to share this business at all.

We should be able take the funds that are in CMHC and use those funds to build more affordable housing. It is good for our economy and it is good for Canada. We know that we need to invest and we need to change the previous Liberal government policy and allow CMHC to invest a portion of its mortgage insurance earnings into building affordable homes.

We heard earlier today that the affordable housing crisis is something that brings our country together. We are in a desperate situation and we must build affordable housing. We are seeing increased homelessness, massive housing insecurity and substandard housing which, in turn, is leading to a heavy burden on individuals and massive disruptions of communities and local economies and increased costs for government.

We also need to look into small business lending, at service charges and at huge profitability and ask if it might be time to look at the concentration in the financial district, a district that graces my riding. We also need to look at employment, as well as at the loan shops that are popping up in poor neighbourhoods. We need to look at all of those things.

We need to address the act and give it a total overhaul for the good of my bank constituents, for Canadians and for the country. We have the opportunity right now with Bill C-37 to reform the Bank Act and we should take this opportunity. We should not just tinker with the Bank Act. We need to reshape it to reflect current realities and future opportunities right here and now in Canada.

[Alexa McDonough, NDP, Halifax, NS]

Mr. Speaker, as I make a few very brief comments on Bill C-37, An Act to amend the law governing financial institutions and to provide for related and consequential matters, I want to congratulate my colleague, the member for Trinity—Spadina, who just pointed out some of the consequential matters that arise in relation to the proposed changes that the government has placed before the House of Commons.

I particularly want to commend her for drawing attention to the implications for affordable housing, which we desperately lack, in the bill that is before us, following on the appalling record of the previous Liberal government in having basically pulled the plug on any federal commitment to affordable housing.

I wonder if I might ask the member for Trinity—Spadina if she could explain, in perhaps a little bit more detail, what the implications are of the changes to the National Housing Act that will make the likelihood of affordable housing being made available to those fantastic numbers of people who are currently in crisis even less available to them than it is now.

[Olivia Chow, NDP, Trinity—Spadina, ON]

Mr. Speaker, Bill C-37 is squeezing CMHC out. CMHC is being forced to share this business.

If that happens, it means that CMHC will not continue to garner the money as it has been collecting in the last few years. It means that it will not have a large reserve fund. It also means that CMHC will not have the funds it needs to assist a lot of the co-operatives or social housing units that are now quite old and need repair and maintenance. These housing co-ops, these existing affordable housing units need the funds from CMHC to assist in maintaining their buildings. If CMHC does not assist, then some of these co-operatives and some of these affordable housing units may end up going bankrupt and, therefore, we would be shutting down on some of these affordable housing units.

If CMHC has no funding left because of the privatization that is in front of us, it will not be able to provide funds to assist some of these co-operatives that are now in need of taking more funds to subsidize some of the tenants. The tenants need quite a bit of subsidies as they cannot pay market rents. If the tenants were asked to pay market rents, they would not be able to afford some of these co-operatives. The co-operatives are looking to CMHC to fix the section 95 question but for CMHC to be able to do that it needs a pool of money.

As I said earlier, CMHC does have $5 billion at this point but it needs to spend those funds to help build affordable housing, to assist co-ops, to bring in more subsidized units and to maintain and repair some of the older cooperatives.

All of that is required and that is what we need to do, which is why I believe we should strike out the part in this bill that would commercialize or privatize CMHC.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, the member raised a certain aspect of the bill that relates to housing, an area in which I have some experience having served on the board of the Peel Regional Housing Authority for some time.

She also spoke about Canada Mortgage and Housing. I know we have had this discussion in a private member's bill that was recently before the House with regard to the accumulated surplus that CMHC has had. It is a very large number.

It is important for members to understand a little bit about CMHC but I will not have the time in a question. However, effectively, it relates to the same kind of principle that general insurance companies have. They must have sufficient reserve funds, through investment or whatever it would be, to have the coverage ratio necessary to meet the risk of loss, and CMHC is no different. It is not a matter that we can just simply take the resources that are there to provide the security that allows CMHC to provide the services that it does.

I would just ask the hon. member if she would maybe come to an understanding that CMHC does not have a surplus because it just wants to hoard cash, but that it is jurisdictionally and legally obligated to maintain coverage ratios. I do not know if she understands that concept, but there are coverage ratios that must be in place.

It is really important and appropriate in the House not to suggest that somehow the surplus is discretionary and can be invested elsewhere. I would encourage the member to ensure we get that straight so Canadians do not assume somehow that CMHC is hoarding cash.

[Olivia Chow, NDP, Trinity—Spadina, ON]

Actually, Mr. Speaker, I do know that quite well because I remember opposing the amendments to the National Housing Act in 1998 that were put through by the former prime minister. Why did I oppose them? I opposed them because they concerned the commercialization of CMHC.

On the cover ratio, CMHC has $5 billion in its reserve fund. Surely it does not need $5 billion in the coverage ratio. The surplus has grown tremendously. Even if we take one-fifth of it, or 20% of it, we could use those funds to start creating some affordable housing.

The amendments that were put through in 1998 in the National Housing Act limited the role of CMHC in working with municipalities and community based housing providers, which prevented them from developing innovative new ways to create desperately needed affordable housing. At the same time, the amendments opened CMHC's mortgage insurance business to the private sector, which is what it is doing now.

What was started with the former prime minister is now being continued, and both of those trends are very bad trends.

In other countries around the world, their equivalent of CMHC provides that kind of bases. Every time mortgage interest rates go down, they take the money that is gained from that lower interest rate and reinvest it into building new affordable housing.

It has been done in Hong Kong, in Britain and in many parts of the world. It is only in Canada that we have a very reactive and negative way of dealing with CMHC. As a result, very few affordable houses were built after 1994-95 when the national housing program was cancelled.

I lament the complete walking away of the government from its responsibility of building affordable housing. It started with the former prime minister, Mr. Mulroney, and later on the former Liberal prime minister continued that trend and continued to cancel the national housing program.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, I am pleased to participate in the debate on Bill C-37. I found it very difficult to deal with the bill. First, the bill in itself is probably one of the larger bills I have ever seen in this place. It is some 237 pages long.

It is an omnibus bill of sorts, which means it provides a variety of amendments, technical and otherwise, to a wide range of bills. When people read the bill, they cannot understand what the provisions in it mean unless they have the bill to be amended beside them so they can see the provisions that are already in place and understand the context in which they relate to that bill.

I know the members know, but Canadians should know that when we get bills such as this, members, who are involved in the finance committee, have to rely on the work and due diligence of others to make absolutely sure the provisions are there. In fact, it is probably the most extreme example that I could cite.

I have a problem with the bill because it covers so many things. I suspect that if any government ever wanted to do anything to amend certain acts, this certainly would be the way to do it, to put through a bill in excess of some 230 pages, which affects maybe 20 or 30 different existing pieces of legislation.

In order to give people an idea, the summary to Bill C-37 indicates that it is an enactment that amends a number of acts governing financial institutions. At least it is in a pocket that we understand.

The bill also amends legislation related to the regulation of financial institutions. This place has been seized over the years with legislation related to financial institutions, particularly as it relates to bank mergers and the lines of business banks can get into. I must admit it conjures up some memories of clichés that some members would use in their speeches during some of the debates about banks being terribly bad. However, most people would say that their bank branches are pretty good.

The notable pieces of legislation that are being amended are the Bank Act, the Cooperative Credit Associations Act, the Insurance Companies Act and the Trust and Loan Companies Act. All of the amendments are aimed at achieving three objectives: first, enhancing the interests of consumers; second, increasing legislative and regulatory efficiency; and third, adapting those acts to new developments. These sound a little comprehensive, but they are envelopes under which these particular amendments could be placed. There are also amendments to the Bills of Exchange Act to provide for the introduction of electronic cheque imaging.

There are also technical amendments, which cover a broad range of acts: the Bank Act, the Cooperative Credit Associations Act, the Insurance Companies Act, and I could go on. There are at least 20 of them.

I think maybe I have made my point, that ordinary members of Parliament, who are not involved in the finance committee and maybe do not have some of the background and training, will have a very difficult time. A number of votes are taken on bills like this, whether it be at second reading, committee stage amendments, report stage, third reading. I think Canadians will ask themselves this. If this is so cumbersome, if there are 230-some odd pages, if there are virtually hundreds and hundreds of amendments to dozens of acts, how can a member of Parliament, with all the responsibilities, make an informed decision and cast a vote reflective of the due diligence that has been done?

How that happens here is probably the same way it happens in real life.

I can recall being the vice-chairman of the board of the Mississauga Hospital. Under the Ontario hospitals act, the board of directors is responsible for every aspect of the administration and operation of the hospital.

I remember giving a seminar on trustees of hospitals. As I recall, the title was “Hospital Trustee: Mission Impossible”. It is impossible because we can not possibly expect volunteer members of a board of directors to be fully informed about the day to day activities of the hospital, to take full responsibilities for what the doctors, nurses and administrative people do and, if anything goes wrong, to be personally responsible for those.

What happens is the responsibilities of the board are seconded or delegated to other persons. Therefore, for the board's responsibilities, as is the case for members of Parliament, there is a delegation or a secondment of those responsibilities to others who specifically spend their time on them. They perhaps have the specific expertise and the support personnel, either within their offices or from parliamentary offices, to do the necessary due diligence, to do the checking, to ask the questions, to hear witnesses and to make some ascertainment as to the propriety of the amendments being made.

We have in this chamber always the presumption of honesty. We certainly have that as well in our committees as we bring witnesses forward. It is a process which the members of Parliament rely on their best judgment to ascertain that witnesses who appear before the committee are appropriate witnesses, that they cover the necessary areas and that they get the proper representations from the departmental officials who are responsible for having drafted this.

We also have the support of the Library of Parliament, which does some excellent legislative summaries to the extent that it can. In this regard, I suspect the legislative summary for a bill this size might very well be five times larger, maybe about 1,000 pages, but we have the resources available to us of the Library of Parliament to assist us in specific areas.

It is an onerous task. I do not purport to be fully knowledgeable and able to come here and argue the case of why members should vote for a particular clause in a particular bill that is to be amended, whether it be technical or otherwise. However, the job does get done and it gets done through a process of secondment, provided the committee is doing its work and provided the officials have done their work.

I must admit Canadians should be assured, and I wish they would get a better chance to see it, that the work done in committee is probably the most productive work that members of Parliament do. The work in committees is excellent. The quality and level of questioning of witnesses is excellent in terms of discharging the responsibility of due diligence or doing the detail with regard to the legislation before this place.

Being a legislator is an important responsibility. One of the things that I note in the bill is right at the very end. It is coincidental, but I just gave a speech a couple of days ago on a private member's bill that had to do with repealing acts that had received royal assent. They had gone through the entire legislative process of being tabled at first reading, debated at second, went to committee, committee stage amendments, report stage amendments back to the House, third reading, passed on to the other place and then went through an almost identical process and then received royal assent.

The public would think that when the bill receives royal asset it is law. It is not law until it is proclaimed. It must be in force.

The private member's bill I referred to was started in the Senate by Senator Tommy Banks. It was the third iteration of a bill that has been around since about 2002. It has to do with repealing legislation that has received royal assent but has not been proclaimed and put into force, and therefore is not active law in Canada.

I note the final provision of the bill found on page 237 entitled, “Order in Council” under the subtitle of “Coming Into Force”. It reads:

The provisions of this Act, or the provisions of any Act enacted by this Act, come into force on a day or days to be fixed by order of the Governor in Council.

This appears from time to time in bills. It means there is no set date as to when the provisions of this bill will be put into place. Often that happens because other things must occur before the provisions of the amendments within the bill could be operative. It is almost like once we pass this, before we put it in force, certain other things have to happen. Once they have happened, then the governor in council, which is basically the cabinet, sets a date fixing that certain provisions of this act would come into force.

As an aside, in most of the cases bills would generally say that the act would come into force on the date on which it received royal assent. That is fairly straightforward. There are others which have provisos that the in force date will be on a specified date, for instance, January 1, 2007.

In the reproductive technologies bill, I believe there two key areas. One is called prohibited acts under the bill. The other is controlled activities. The prohibited acts were all in force on royal assent. The controlled activities were subject to being in force by a date set by order in council. The reason for that was the controlled activities required the establishment of a board of management that would do certain things. Until that was set up, the provisions of that could not go forward.

Another example is Bill C-11 from the last Parliament, the whistleblower legislation. This legislation received royal assent in November of last year. The legislation provides protection to civil servants who have allegations of wrongdoing within the public service or anybody who is within the definition of a public servant. The bill is not in force yet.

In this Parliament we have Bill C-2, and this can get complicated in non-financial bills. Bill C-2 prescribes amendments to Bill C-11.

[John Baird, Conservative, Ottawa West—Nepean, ON]

It just passed the Senate.

[Paul Szabo, Liberal, Mississauga South, ON]

I am advised by the President of the Treasury Board that it just passed the Senate. That is good news for everybody because the House unanimously supported the accountability act. There were some loose ends to be tidied up.

Bill C-2 has to come back to the House. As long as everyone is happy and this place can live with the compromises, it will pass. I will reserve judgment on that until I see the documents. It is like doubting Thomas.

[John Baird, Conservative, Ottawa West—Nepean, ON]

You are going to like it.

[Paul Szabo, Liberal, Mississauga South, ON]

That is a good thing. The President of the Treasury Board is a trusting person, I am sure.

As I said, some amendments in Bill C-2 of this Parliament amend a bill that was passed in the last Parliament, which has not been put into force yet. It is kind of reverse order. One would think that Bill C-11 would be in place and then Bill C-2 would be passed.

I could talk for some time about Bill C-11 and why it would have been important to have it in place because there is so much work to do before it gets up to speed and is operating efficiently. We could have had more accountability within the public service and the Government of Canada had it been in force when the Conservative Party took office. However, that is the Conservatives' choice. I do not think they really wanted to have too many people with the protection to blow the whistle on a government that was not doing things properly.

Before Bill C-2 gets royal assent and comes into force, Bill C-11 must be proclaimed. Because Bill C-2 amends Bill C-11, Bill C-11 must exist in law before Bill C-2 can be proclaimed.

I am glad to hear that Bill C-2 is now in the last stages of becoming law and is ready to receive the go ahead in terms of coming into force, which means that Bill C-11 also would be proclaimed and be in force. We will see the beginning of the establishment of the human infrastructure of an effective accountability mechanism and protection for our public servants.

I thought it was important to raise with members that we are now considering a bill which has a very large number of amendments. Today in the Standing Joint Committee on Scrutiny of Regulations which I chair, we addressed an issue where a regulation has been bouncing back and forth. It passed in this place, but on review it was found to have a flaw. We sent it back to the department saying that it should be fixed. The first piece of correspondence on that matter actually took place 23 years ago. A problem in a regulation was cited 23 years ago. The departments are still bouncing back and forth as to who is to blame and why it cannot be done.

[Robert Thibault, Liberal, West Nova, NS]

The Fisheries Act.

[Paul Szabo, Liberal, Mississauga South, ON]

It has to do with the Fisheries Act; the member is quite right.

Here we have the same kind of thing. There are hundreds of amendments, many of them technical, some of which will lose the continuity of the knowledge of the people who are here. We can see how important this is. When we have a bill like this, we have the assurances, the sign off by the minister and all of the clearances, but technically, with regard to parliamentarians, there are more changes in this bill than any one person could possibly be responsible for or track to ensure that their implementation received the proper attention.

The Standing Joint Committee on Scrutiny of Regulations will have to review some of these to the extent that they are amendments to regulations which currently exist to make absolutely sure that the bills to which they relate have enabling provisions within them for that amendment to happen.

We have seen cases, for instance, in the Broadcasting Act there was a regulation which allowed the charging of fees for services provided to the cable industry. As it turned out, the fees were far in excess of the costs that were incurred by the CRTC and in fact were creating surpluses because the fees were excessive. It is currently before the courts. If it is on a cost recovery basis that is fine, but if the amount recovered is more than the costs, it is effectively a form of taxation. Taxation is not enabled in the legislation. In the Broadcasting Act a tax cannot be levied.

Members can see why I hesitate to attempt to try to provide some insight into even one of these because it would probably take an entire speech to explain one of the technical amendments in a way in which all hon. members could understand. That is something we cannot do, but I wanted members to understand that I am confident that the changes that have been made have been followed in due process and the departmental officials have given us the necessary assurances.

I believe members will find there is strong support to pass many of these amendments, most of which I agree very much are necessary to bring up to date the important legislation affecting the daily lives of all Canadians.

[Olivia Chow, NDP, Trinity—Spadina, ON]

Mr. Speaker, in the last six years while the Liberals were in government the total debt load carried by Canadians grew by 50%, the median load 38% to $44,500 per family. The line of credit debt grew more than double to $68 billion and the median line of credit debt jumped 56% to $9,000. For average Canadians that means almost $14 in debt for every $100 in assets. That is a huge jump.

The Government of Canada is loading the debt onto ordinary Canadians. Whether they are students who are graduating with $20,000 in student loans and they are carrying that debt, or ordinary families, that debt load has jumped by 50%.

For 12 years the Liberals did nothing to cap the credit card rates. Would the member be willing to support the NDP motion to begin to cap credit card interest rates at 5%? There is absolutely no reason when the prime rate right now is 6% that the credit card interest rate would be 17% to 18%. Ordinary Canadians are being gouged. Would the member support an NDP initiative to cap credit card interest rates?

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, that certainly is a very creative way of getting around to a question which the House has dealt with in private members' bills and in debate before.

I can recall that the minister of industry of the day, Mr. Manley, reported on the Industry Canada website all of the credit card companies and the various rates. The member should know that there are certain commercial entities that have cards with very high interest rates. There are other institutions, particularly the principal banks, which seek to have appropriate rates for their cards.

The problem is whether or not the government should get into the business of legislating how businesses do their business. It is a free market system. They can charge what they want. The most important thing is that there is a competitive environment in which Canadians have choices. The more competition, the more choices. A competitive environment keeps the rates low.

I suggest to the member that financing one's lifestyle on a credit card is a bad investment in the first instance.

[Robert Thibault, Liberal, West Nova, NS]

Mr. Speaker, the hon. member made a great exposé of the bill before the House. He spent a lot of time on the process of getting a bill here and how the work gets done by others to make sure that we have the information needed so that we can finally take a decision in Parliament.

One point in this bill discussed earlier is the question of the reserves necessary at institutions like Canada Mortgage and Housing Corporation. Some people would point to the increase in the reserve over the last few years without taking into consideration the changes that have happened in the domestic market situation and domestic mortgages.

Not too long ago it was impossible for a first time buyer to buy a house if the buyer did not have a 10% deposit. Then the regulations were changed to allow for substantially lower deposits. In some cases no deposits were necessary. But that is guaranteed and backstopped with the financial institutions and Canada Mortgage and Housing Corporation plays a great role there. There has been a greatly increased risk.

The member pointed out the question of risk and that the risk had to be covered. When there is less of a deposit in the initial purchase with the mortgage at the bank, the risk grows exponentially. Look at what is happening in the housing market in our principal cities where young couples are working. Alberta is having a huge growth and many people from across the country are going to work there. The housing market there is inflating incredibly fast. If we want young couples to be able to buy homes, then they need that type of assistance from CMHC and the type of reserves needed to backstop it. I would ask the member to comment on that.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, I thank the hon. member for his kind words. I could make the very identical commentary on the member's work in this place on a broad range of issues in representing his constituents and eastern Canada.

Banks, insurance companies, credit unions, CMHC and other institutions under the jurisdiction with respect to the financial institutions of Canada all have reserve requirements. This is the law. It is established so that there is coverage in the event that there are losses.

We could imagine an insurance company that simply sells insurance policies and collects the premiums and hopes that it is going to be able to keep the losses down so that it does not make a loss. When I was a chartered accountant with Price Waterhouse I had three insurance companies that I did the audits for, and in all the years that I was there, at least five or six years, there was not one year in which an insurance company made money on selling insurance. Where the insurance companies made their money was on the investment income on the investment portfolio that they were obligated to have to backstop the loans or the insurance policies and the risk on the policies.

That is the way it works. There has to be this guarantee. We can imagine what would happen if an insurance company had sold millions of dollars of general insurance and all of a sudden had an enormous claim that wiped it out. What about the protection for all the other policyholders?

The same has to do with housing. CMHC provides about $1.9 billion of mortgage insurance to Canadians every year. It is a tremendous amount of money and it requires a tremendous amount of reserve. The member is quite right about what is happening in the major urban centres, particularly in the west where the price of houses has gone through the roof because of the significant growth in economic activity. Mortgages being held by people are very substantial. Should something occur where that economic activity tapers off for one reason or another in a significant way, jobs would be lost, people would start selling houses, the value of houses would go down and people would find that they owed more on the mortgage than the house was worth and they would walk away from it. Who would take care of the mortgage?

These mechanics with regard to financial institutions and those who provide the security of Canadians in fact provide us with one of the most secure financial regimes of any country that I know of in terms of the major loss levels and for the extreme risk because of the reinsurance programs that are available.

The member is quite right. The reserves are there in accordance with the law to be sure that there is ample coverage and security for all Canadians, regardless of the financial services they are receiving.

[Judy Sgro, Liberal, York West, ON]

Mr. Speaker, I was listening earlier when the member was talking about a private member's bill that he had introduced from the Senate.

I would like to know why anyone would go to all of the work of bringing in legislation, getting it through the House and not follow it through or make sure that whoever was the government of the day at least paid attention to the fact that it was on the books?

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, there were two entire pieces of legislation that had been on the books for over 10 years and had not been enacted. If this bill were in play, it would have repealed them. The others were about 57 pieces of legislation which were amending other acts.

These are the kinds of things that occur in a great number of cases when it is a change in government, or it could very well be that they were done to anticipate certain things.

What it gets down to and I think what we really concluded in the discussion on this was that it is important to look at all aspects--

[The Acting Speaker, Andrew Scheer]

Resuming debate. The hon. member for Esquimalt—Juan de Fuca.

[Keith Martin, Liberal, Esquimalt—Juan de Fuca, BC]

Mr. Speaker, it is a pleasure today to speak to Bill C-37, An Act to amend the law governing financial institutions and to provide for related and consequential matters. Essentially it is the Bank Act review.

The government has drafted a bill that largely follows Liberal policy that has been occurring over the last five years. This legislation was a result of recommendations that came from a white paper that was commissioned by the previous government.

The bill represents the statutory five year review of the Bank Act, and there is nothing in the bill, quite frankly, that is particularly contentious. The government avoided a number of controversial issues and has provided some important updates that we have been fighting for and in fact was an extension of what we were doing before.

The bill satisfies the obligations of the government to present statutory updates to the Bank Act every five years, so in essence, it is a rather rudimentary bill, almost administrative in nature. The last time this happened was in 2001.

Bill C-37 will ensure that financial institutions provide greater and more timely disclosure to consumers in areas such as deposit type of investment products and complaint handling procedures. I think that is probably music to the ears of most Canadians in dealing with their banks. The bill and this update will provide consumers with a lot more accountability and knowledge about what is happening with respect to their accounts and their activities with the financial institutions of their choice.

The Bank Act, in this particular review, also does something which I think is quite intelligent. It expands the definition in terms of what one defines as a large bank and one that is a medium sized bank, so as a result of an increase in assets, the definition and threshold will be increased from $5 billion to $8 billion. That is a sensible thing for the banks which could be credited as being one of the great success stories in Canada and are competitive internationally. Those banks hire a lot of Canadians and provide a lot of asset attraction with respect to private capital into Canada that can be invested in our country and used to create jobs, and hopefully, jobs that pay very well.

The bill also increases the use of electronic cheque imaging, which is a technology that will allow financial institutions to transfer cheques more efficiently. The bill also proposes to reduce the cost of mortgages for some borrowers by increasing to 80% the loan to value threshold above which mortgage insurance is required by the statute.

There are also some provisions that I hope the government takes into consideration. Because of the value of homes increase quite significantly, it would be wise for the government to start looking at CMHC grants and allowing the valuation of those homes to be bumped up quite significantly. I would personally recommend at least a 50% increase for the value of those homes, specifically in my area of Victoria, British Columbia, where house prices have increased astronomically.

People have been forced to buy homes, the value of which may be much higher than in most other parts of the country, but they are not able to access the CMHC grants that are available to most Canadians. A home of one size, all things being equal, may be equivalent to one in most other parts of Canada; however, the value of the home in a place like Vancouver and Victoria will be so much greater as to push that home above the ability of the individual to access CMHC grants. Most Canadians have made all of us very aware of this problem. I would strongly encourage the government to resolve this.

One of the things that the Canadian International Development Agency has done over the last year is moved the international development envelope from what we call project funding to what is called program funding. What does that mean?

Project funding would be something that we would do in terms of Afghanistan. We would fund a particular project such as the building of a school. We would probably do it through a Canadian NGO or an Afghan domestic NGO.

That is a very efficient way of ensuring that taxpayers' money is going to be used to help the people on the ground who need the help, but curiously, what has happened over the last year is that the government, and CIDA in particular, has moved to something called program funding. What it is doing is taking a large amount of money, $50 million, $60 million and even more, and giving it to a large organization.

What does that mean? It means we are giving $50 million to $60 million to a large organization such as UNICEF, the World Bank or the IMF, and we utterly lose traction and accountability with respect to those moneys. This is not an intelligent way for us to use taxpayers' money to help those who are less fortunate.

I would encourage CIDA and the minister to really take a close look at this. It does not mean that we do not have to invest in the international financial institutions. They have a very important role, but if we are going to take our international development envelope, the ODA, and simply take that money, divvy it up into rather large chunks of money and give it to very large international multilateral organizations, we lose traction, we lose accountability, and we lose the ability of Canadians and Canadian NGOs, and Canadian companies quite frankly, to execute those roles on the ground.

We have seen over the last few years a shift in our international development envelope. We are not giving money to Canadian NGOs, small NGOs and groups, particularly Canadians out there who are doing an incredible amount of work, but taking the funds from those groups that are very effective at getting work done on the ground, and instead giving it to these large black holes of large multinationals. We do not know where that money goes or what it is used for, and it utterly loses the connection between those Canadian dollars and our wonderful nation.

This is not an intelligent thing to do because not only do we lose accountability and the branding that identifies Canada as the country that has given those moneys but we also lose the effectiveness. I would argue, and I would challenge members to say otherwise, that the most effective way of using our international development assistance is through small NGOs, either international small NGOs that are working on the ground or Canadian NGOs.

Right now, Canadian NGOs can only compete for a paltry $20 million out of the $3.2 billion official development assistance envelope. Does that make sense? The fact is that from coast to coast, in our ridings, there are thousands of non-governmental organizations in our wonderful country, people who are committed, many of whom are volunteers and most of whom are doing an outstanding job on the ground. Those groups should be able to compete for the official development assistance envelope in a way that enables them to be able to carry out their duties on the ground, consistent of course with the objectives of our ODA.

That is a much better way of using Canadian taxpayers' money rather than taking moneys and plunking them into the World Bank where we completely and utterly lose the accountability and effectiveness of those moneys.

This is something that will require a sea of change on the part of the minister and I hope she understands this because one of the great frustrations, and I think all of us have seen this with respect to Afghanistan, is that we are missing the boat in Afghanistan. We are certainly doing a good job from the military aspect, and our defence forces and RCMP deserve enormous credit for the hard work that they are doing, but there are four or five things that we need to do, in my view, that will provide security on the ground in that country, and they are as follows.

First, a Loya Jirga is required in Afghanistan that will bring in those groups that have been disarticulated from the Bonn agreement and bring them to the decision-making table. Right now they are excluded and right now they have become part of the Taliban, warring against us.

Second, and the Minister of Foreign Affairs was just in Latvia along with the Prime Minister, we need to ask our NATO allies to invest in the training of the Afghan police. Right now they are being paid $70 a month. Their training is eight days. They are not equipped to do the job, so what has happened is that many of them are engaging in thuggish behaviour simply to put food on the table for themselves and their families.

What does this mean on the ground for our troops? It means that once they go out there and take out the Taliban there is nothing to come in after them which will enable our troops to be assured that security is going to take place. There is no effective constabulary force on the ground. Our troops are doing a yeoman's job, an incredible job, of removing the immediate threat, but there is nothing coming after they are done. Now, the Germans have been tasked to do this.

What I would ask the Minister of Foreign Affairs to do is to ask the other NATO allies to contribute money for salaries, money for training, and money for the equipment that the Afghans need. If we do that and build up an effective Afghan police force, then that will go a long way to providing the long term security the country needs. If we do not deal with that, we will have a major problem.

Third, we have a major problem with respect to an insurgency coming from outside Afghanistan. If the insurgency that is coming, particularly from Pakistan, is not dealt with there will be war without end. The border is porous. We know that. We cannot block that border off. It is too large, too wild, and too strategically impossible to block off.

What we have to do in my view is call together a regional summit of countries that will bring together the regional powers that will be dealing with the Afghan security. Only by doing this will we be able to address this problem of blocking off and reducing the threat from the outside.

Those individuals who are blowing themselves up as suicide bombers in Afghanistan and those groups that are shooting and trying to kill our troops, many of those, in fact the vast majority, are from outside Afghanistan. They are Pashtuns from Pakistan, Chechens, Tajiks, Kazaks and others, in addition to those from the gulf states. These people are flowing into Afghanistan, particularly in the south, and they are the ones who are killing our people.

No military solution will be able to resolve this. The Minister of National Defence understand this and the Chief of the Defence Staff understand this as well very clearly. So if we accept that as a fact, how are we going to address this?

Leopard tanks are required by the NCOs on the ground and they should get whatever they want. We must also provide other solutions. I know the government is seeking other solutions. This plan will address that: one, ensure the Aghans have the Loya Jirga and have the meeting with all groups, particularly those who have been excluded; two, train the Afghan police; and three, ensure that the development envelope is going to work.

Mr. Karzai's government is roundly known as being utterly corrupt. If the government is being utterly corrupt, we must, if we are giving moneys to him, which we are in the amount of $100 million a year, ensure that those moneys are going to be used effectively and wisely. That is our responsibility to the taxpayers and indeed to the Afghan people. Right now his government is corrupt and money coming in the front door is going out the back door into the hands of the warlords and drug dealers.

Fourth, with respect to the issue of the opium crop, we know the opium crop is the highest it has ever been. How do we deal with that? We can deal with that by transferring the opium into the legal production of medically-used narcotics. If we are able to transfer those moneys from that area to legal production, we will undercut the financial underpinnings that are being used right now to fuel the Taliban and the warlords. We have to do that. It is absolutely essential.

The last point is the development envelope. That is where the banks come into play; the international financial institutions that we are talking about today, in part.

Those international financial institutions must be able to ensure that the moneys are getting on the ground to the people who need it. The development assistance envelope is not functioning that way. Right now Afghanistan, as a post-reconstruction country, is receiving perhaps the least amount of any post-reconstruction country that we have ever seen.

The NATO countries that are not willing to contribute the troops can do a lot more by contributing moneys for international development. We have to ensure that the accountability is there. We have to give President Karzai the budget support that he requires and also have the accountability checks and balances to make sure that our moneys are being used wisely. Again, have the Loya Jirga and the regional summit to address the insurgency coming from the outside.

I see my time is almost up. Is that correct?

[The Acting Speaker, Andrew Scheer]

It is not quite time. In the last few minutes the hon. member has not dealt very much with the actual bill before the House. I would just ask him, if he wants to finish up his comments, to stay relevant to the actual bill in front of us and the matter at hand.

[Keith Martin, Liberal, Esquimalt—Juan de Fuca, BC]

Mr. Speaker, I will just finish my comments on Afghanistan. That five point plan, which is attached to the international development and financial institutions, will enable us to do this.

I want to talk a little about our banks here at home, and also economic productivity, which is attached to this bill. We know that our banks are a great success story for Canada in terms of industry, but this also leads us into the issue of productivity and how our government and in fact the House can provide solutions to improve productivity in our country.

There are some ways to do that. First, we have to be able to put more money into Rx and D. The government has failed to continue the investments into research and development that we made when we were in power. Second, we have to continue the reduction of taxes to make sure that our tax base is competitive internationally. Third, we have to remove interprovincial trade barriers.

There has been an agreement between my province of British Columbia and Alberta. The agreement between Alberta and British Columbia shows incredible foresight. In fact, it is an incredible model for other provinces to adopt. I certainly hope this model is adopted. What does it do? The agreement between British Columbia and Alberta enables people to work across borders. It facilitates the movement of labour, the movement of capital and the recognition of skills.

Why on earth do we have a situation in our beautiful country where there are more barriers to trade east to west than there are north to south? It makes no sense. We have to deal with the reduction of interprovincial trade barriers.

We also have to enable the private sector to work more effectively. By working with the banks and the private sector, we can find ways in which we can ensure that start-up capital is there for the small to medium sized businesses that are the prime economic generators in our country.

One of the complaints we members of Parliament hear is that the small businesses in our communities really struggle to find the seed capital required to take their ideas from paper to product. This is something that I think would be innovative for the government to adopt if it were to discuss it with the banks, the other financial institutions and the private sector and find out how we actually can do this.

For example, recently there was the issue of British Columbia Ferries purchasing a ship called the Sonja, from Spain. There is an import duty tax of about 17% on the purchase of that ship. That tax will go to general revenues.

However, let us suppose that we took that import tax the company is paying and put it into a fund for the modernization of our shipbuilding industry on the east and west coasts. The president of a shipbuilding company could access the funds but only if the funds were matched. That is the key. That is the beauty of this. A company cannot simply ask for those funds. It can access the funds, but only if it is able to put in its own money. That way, we get a buy-in from the private sector. If we were to do that, our shipbuilding industry would be able to acquire a niche in the medium sized shipbuilding area that would be extraordinary.

I know that on the west coast B.C. Ferries is going to require between 12 and 17 ships. In the future, the navy is going to require ships, which will be built in a compartmentalized fashion. If we are able to build them in Canada, and I am totally confident that we are, this is something intelligent that we could do with respect to our shipbuilders. I know that in my riding of Esquimalt—Juan de Fuca this is very important, but it is also important to the east coast.

Why do we not take that import tax, put it into a special fund, ask the private sector to use those moneys and add their own moneys, purely for the modernization of their infrastructure? We already have an excellent shipbuilding industry, albeit much smaller than what it was. We can expand that. Our shipbuilders, the people who do the work, the technically skilled individuals, are really outstanding. We cannot lose that skill set.

In my view, there is no reason whatsoever why we as a country cannot compete. That is where this bill comes in. Banks can work with the government and the private sector and enable us to be more competitive. This will benefit Canadians from coast to coast.

[The Acting Speaker, Andrew Scheer]

It is my duty pursuant to Standing Order 38 to inform the House that the question to be raised tonight at the time of adjournment is as follows: the hon. member for Thunder Bay—Rainy River, Airport Security.

[Alexa McDonough, NDP, Halifax, NS]

Mr. Speaker, I welcome the opportunity to ask a couple of questions of the member for Esquimalt—Juan de Fuca, who has spent 15 minutes outlining a multi-point plan on how Canada should change its focus in Afghanistan, away from what his party got us into in the first place in the aggressive search and kill counter-insurgency mission in Kandahar.

Next, unbelievably, his party gave the Conservative government enough votes to ram through an extension on a mission with nine months still to go, adding two more years to that mission. Those members did this without a proper evaluation of what was happening with the mission, without an opportunity for us to even begin to consult Canadians, let alone have a fully informed, thorough, responsible debate before being pushed into a vote on very short notice.

Mr. Speaker, I assume that you will be as liberal in the interpretation of the rules of relevancy as your predecessor in the chair this afternoon. We are here this afternoon to deal with Bill C-37, An Act to amend the law governing financial institutions and to provide for related and consequential matters, but since the member for Esquimalt—Juan de Fuca was given the opportunity to speak for 15 uninterrupted minutes about his views on Afghanistan, I assume it is in order for me to ask him a question on this extremely important topic.

It took me a minute to realize that we were debating Afghanistan, so I did not hear in full the first couple of points in his five point plan on how to get us out of the Kandahar quagmire and finally address the horror of what is happening to our troops in the current flawed mission.

I want to ask him about a subject that came up in the foreign affairs committee yesterday of which he will be aware, I am sure. The Deputy Commissioner of the RCMP confirmed and informed the committee that 34,700 Iraqi police had been trained by Canadian RCMP officers over the last couple of years. This raised in the minds of everyone at committee, I think, the question of how many Afghan police, particularly in Kandahar, had been trained over the same period, because of course we are not supposed to be in Iraq although it is a very important thing for there to be training for the Iraqi police.

Given the fact that our commitment is supposed to be dealing with the insecurity in Kandahar, and given that many people feel that problems with the under-policing, the under-qualified policing and the insufficient numbers of police are at least as much or perhaps more of a threat to the security of the citizens of Kandahar, the question of interest, of course, is how many have been trained by Canada in Kandahar? I have to say that I almost fell off my chair when the Deputy Commissioner of the RCMP confirmed there had been 150.

I want to invite the member to address this question. Where does the issue of training the Afghani police fit into the member's five point plan for getting out of the Kandahar quagmire?

[Keith Martin, Liberal, Esquimalt—Juan de Fuca, BC]

Mr. Speaker, the member asked four large questions, really, and I will try to go through them briefly.

The first is on the Iraqi police. RCMP officers train Iraqi recruits in Jordan. I have had a chance to visit them and I want to say on the record that the RCMP officers are doing an absolutely outstanding job in training the Iraqi police. They are doing a magnificent job. Wherever the RCMP has gone, and I have seen their work in Sierra Leone, their work deserves medals, quite frankly. The work of the RCMP is outstanding.

Second, on the issue of the 3D approach, we sent our troops to Afghanistan because al-Qaeda was there. It was not an aggressive search and destroy mission, as the hon. member mentioned. It was a balanced mission in a number of ways.

Yes, our troops engage in combat and we are very proud of the fact that they do an outstanding job within their combat role, but that is one of their roles. Unfortunately, the milk of human kindness does not flow through the veins of some of the people who are trying to kill Afghan civilians and, indeed, our troops. Our troops are trying to protect them, as the member knows, and to provide security. They are doing a great job in that respect.

However, they are also there, and we sent them there, to engage in something called a provincial reconstruction team, of which our forces are an integral part. They are making a difference on the ground in terms of providing small amounts of money, in being able to give people the basic infrastructure they require on the ground and in building roads, drilling boreholes and a number of other things. Quite frankly, our troops are the only ones who can do that in these areas of great insecurity.

Third, on the issue of the vote, I am glad the member brought this up. I was utterly disgusted by what the Prime Minister did. He used our troops as a shameless tool to try to divide my caucus. It had nothing to do with the mission in Afghanistan. It was a political decision and a political tool to use our troops shamelessly. Why do I say that? Because the decision to extend the mission into Afghanistan has nothing to do with what the House says. It is an executive decision. In the Prime Minister's speech, he very clearly said, “I am going to extend this mission for a year regardless of what the House says”.

That is what the Prime Minister said. He should be utterly ashamed of using our troops as a political tool because no decision of the House can ever be more important than when we have to put our troops' lives on the line, when our troops can possibly be killed. As for the fact that the Prime Minister did this, he should be utterly disgusted with himself.

Fourth, to answer the member's question of what my plan is with respect to Afghanistan, it involves the following points.

Number one, we have to train the Afghan police. The Germans are responsible for that. The government could have asked our NATO allies to contribute to their training, equipment and pay. They are being paid only $70 a month right now. As a result, they have become as much of a problem on the ground as the Taliban, because they are engaging in thuggish activity, quite frankly just to be able to put food on the table in many cases.

Number two, the development component, the amount of money that Afghanistan receives on a per capita basis, is among the lowest of any post-reconstruction situation we have seen in the last 30 years.

Number three, we need a loya jirga to bring in the groups that have been disarticulated from the decision making process and were excluded from the Bonn agreement. They need to come to the table. A loya jirga is a way of doing that.

Number four, we need to be able to deal with the insurgency coming from Pakistan and other areas. We need a regional summit on the area.

Last, the poppy crop is going to destroy Afghanistan unless we affect the poppy crop. To destroy the poppy crop would be a huge mistake, because we would be destroying the only source of income people have. One of the solutions is to destroy the poppy crop and pay the farmers or use the poppy crop to produce legal, medically used narcotics and provide a domestic industry for the people of Afghanistan.

[Olivia Chow, NDP, Trinity—Spadina, ON]

Mr. Speaker, when the former Liberal government sent troops into the southern part of Afghanistan for an operation called Operation Enduring Freedom, there was no debate in the House. There was no vote. There was no analysis of the cost. There was no reporting back to the House of Commons. There was no discussion whatsoever with the Canadian public.

There absolutely has to be some accounting for why billions of dollars have been spent in Afghanistan. There was absolutely no debate here in the House of Commons provided by the former government.

How can the member talk about democracy when there was not even a vote last summer in the House when troops were sent to southern Afghanistan, into Kandahar?

[The Acting Speaker, Royal Galipeau]

The hon. member for Esquimalt—Juan de Fuca will know that the clock has run out but I will allow a short moment if he will keep an eye on the Chair.

[Keith Martin, Liberal, Esquimalt—Juan de Fuca, BC]

Thank you, Mr. Speaker, and I will be very brief.

I have two things to say. First, the member was not in the House at that time so perhaps she is not aware that ample discussions took place in the defence committee and in other committees, including foreign affairs, and this House did have take note debates on the issue.

Lastly, the member should know that this is an executive decision on the part of a prime minister, which is why the vote that took place to extend the mission was so reprehensible. The decision had already been made and it was a political tool, not an effective tool to inform the public or allow this House to have effective input on an exceedingly important decision.

[The Acting Speaker, Royal Galipeau]

Is the House ready for the question?

[Some hon. members]

Question.

[The Acting Speaker, Royal Galipeau]

The question is on the motion. Is it the pleasure of the House to adopt the motion?

[Some hon. members]

Agreed.

[The Acting Speaker, Royal Galipeau]

I declare the motion carried.

[Paul Dewar, NDP, Ottawa Centre, ON]

Mr. Speaker, I rise on a point of order. I just want it recorded that we on this side said no to the motion but I am not sure if the Speaker heard us.

[The Acting Speaker, Royal Galipeau]

Is it agreed that the motion carry on division?

[Some hon. members]

Agreed.

[The Acting Speaker, Royal Galipeau]

Accordingly, the bill stands referred to the Standing Committee on Finance.

(Motion agreed to, bill read the second time and referred to a committee)