Mr. Speaker, it is a pleasure to rise today to speak to Bill C-28, An Act to amend the Financial Consumer Agency of Canada Act, or more to the point, let us talk about having a financial literacy leader, or as my hon. colleague pointed out, financial literacy coordinator. It is necessary across all regions in the country for the sake of the troubled times that we have entered into. For that reason alone, having a person in charge of financial literacy is one that is necessary.
We are living in a different world than we used to. My father worked in one mill for over 40 years and he had what is called a defined benefit pension plan. Quite simply, when he retired, he had the same amount of money each and every month apportioned to him and the financial risk was taken on by the company. These types of pension plans are not as prevalent as they used to be.
What is happening is a lot of pension plans are becoming what is called the defined contribution plans, so the company contributes like they did before, but so does the individual contribute. The essential risk of a pension plan now falls on the shoulders of the individual worker or the person investing in that plan. There is a fundamental shift. People have to plan, if they take an annuity, how their asset mix is to be placed, which was done before in a defined benefit plan by the person in charge of the plan itself. Now we have entered a new age when there are a lot of people in that position.
The other aspect is there are a lot of people out there now who are in transient work. I say that for my riding in Newfoundland and Labrador because a lot of people there get work in other jurisdictions, especially when it comes to skilled labour.
In the early nineties, we had a collapse of the cod industry, which was the greatest massive layoff in the history of the province of Newfoundland and Labrador. A lot of government programs were put in place to educate people to give them the skills. Over the years that paid off tremendously. Within my riding, a tremendous amount of people are not at the wharf, not at the factory, not at the plant, but at the airport. They are going to places like Alberta, Saskatchewan, Russia, off the coast of Africa, drilling. They are going to eastern Russia, Kazakhstan, Uzbekistan, parts of the North Sea, Norway. They are going to places that were considered to be unimaginable for so many people in my riding.
What does that mean? How does this equate to financial literacy because they are making very good money to sustain their families? The problem is the pension plans we used to rely on are not portable. These people have to be their own investor. They have to take on all the risk themselves, which is the most important aspect of having financial literacy. Because people are now investors and absorbing the risks, I would like to see more defined benefit plans. Why not? If 308 members of Parliament are eligible for a defined benefit plan, why can others not be? That is not the way it is going. The risk is falling on the particular individual and that is why financial literacy is so important.
Let us look at another aspect. Let us look at our youth today. Let us look at some of the numbers. We are indebted right now at $1.60 for every dollar that we bring in as income. This is not a good statistic, especially for the category of age 18 to 24, because they have actually fallen way behind before they have even started. A lot of that is consumer debt, which is the worst kind because there is no asset to show at the end of the day. Student debt is a big thing, but there is a degree to show for it and a education to get a high paying job. Whether they are mortgages, or automobiles to a lesser extent, or investments in RRSPs, pooled or not, these plans have a certain asset at the end of the day.
The problem is with the consumer debt and the high amount of interest on certain things, like credit cards either from a store or chartered bank, what happen is a lot of this debt will not show an asset at the end of the day and therefore it becomes that much more burdensome to all individuals, especially the young.
How do we get into a situation where we improve financial literacy? There has been a lot of talk about it in the House. The member for Edmonton—Leduc brought it up in the House during the past number of years and also had a motion passed in the House some time ago, which lends to the type of legislation we are debating today. I certainly commend him for that.
Because we are the national legislature, the federal institution, when it comes to the term “education”, according to our Constitution, it falls within the jurisdiction of the provinces. However, the federal government has a role to help coordinate some kind of educational program for the young people across the country. It is not just isolated to them, but certainly for high school students this could be an open window into the minds of our young as to how this will cripple their ability to financially support themselves and their families in the future.
Bill C-28 is a small step in that direction. As we talk here in third reading and send it to the Senate, it is a step in that direction.
We talked about the task force. My colleague, the member for Sudbury, talked quite a bit about the task force itself, the financial literacy task force with 30 recommendations, the vast majority of which are bona fide recommendations. Number one of which would be to have that coordinator, the financial literacy leader, which is most important.
If we look at the background of this, over the past little while we have talked about it a lot and now I would like to see more action given to a national financial literacy strategy, if I may be so bold as to call it that. We will make small steps along the way, and this is one of those steps that is necessary.
It is designed to create the position of a financial literacy leader and enforces the consumer provisions applicable to federal financial institutions. It is all coached within the Financial Consumer Agency of Canada. This is the particular agency that provides a lot of this information. I would like to see it be more proactive in its education. Nevertheless, it does have ability and the resources and now because of the bill, it will get more resources to make that possible, certainly under the guise of the financial literacy leader.
The legislative summary is from the Library of Parliament, and I would like to congratulate the library for the wonderful work it does.
The FCAC, the Financial Consumer Agency of Canada, monitors the financial services sector self-regulatory measures designed to protect consumers and small businesses. Again, we are in the situation where those who do not have the benefit of being a large company cannot really provide a lot of resources to looking after a lot of this material. What the government ends up doing is taking on that responsibility to provide a source of information for individuals and smaller businesses unable to afford to get the right advice, or a substantial amount of advice, to make that decision.
It also promotes consumer awareness and understanding of the financial services sector and responds to selected consumer inquiries. One point about that is very important, and that is the financial adviser. There are thousands and thousands of financial advisers across the country. I always like to recommend to people that they see a financial adviser especially those who have a skilled trade and find themselves working for a particular company for a short period of time, then another one and another one.
People are working for a 40-year span of their lives. Nowadays the idea of working for one company for over 40 years is a very rare thing. It happened many years ago for my family in a small town with a big plant, but now these situations do not happen as regularly as they used to. I would suggest people see financial advisers because they are the ones that take on the risk.
They could be pipefitters, electricians or carpenters. They are not necessarily financial experts. Many of them do not want to be. However, there is certainly a level of financial literacy that has to be attained in order for these people to support themselves as they move on from work, or if something happens to them and they have no choice but to leave the workforce because of a long-term disability or something of that nature.
It is certainly incumbent upon us to take the risk, but it is also incumbent upon us to learn about the financial tools out there to help us and to see what is available to us in order to plan over the long term.
The government has a large role, both provincial and federal, to ensure that financial literacy is a key learning tool for many of our young people and certainly for middle-aged people who have not even started to think about retirement.
I mentioned earlier the people who do not have access to a portable pension. The largest portable pension is the CPP, but whether it is the combination of the Canada pension plan and old age security coming together, it does not replace the income we had while we were working. It is a very low percentage. Therefore, for people who invest on their own, that would probably become the majority of their income as they enter into retirement years or if they face something like a long-term disability.
I have talked quite a bit about pensions, which I think is the ultimate example of financial literacy. This is important because we now have a substantial amount of people retiring. I am basically talking about the baby boomer age group, as we affectionately call it.
The 2011 federal budget announced $3 million annually to undertake financial literacy initiatives. This amount was in addition to what was provided to the FCAC, which is a $2 million fund. When we talk about the financial literacy leader, the terms of the provision are clauses 3, 5 and 7 of the bill.
The objective of the leader is to provide national leadership in strengthening financial literacy. Whether we call the person a financial literacy leader or coordinator is a question of semantics, but we get the idea that the person has to take a very large role in the lives of others. They have to coordinate across many sectors, federal and provincial, French and English, as well as first nations.
This is a huge task for this person and one that is worthy. Obviously any task that is asked by Parliament and by government is worthy, but this one also has to be contemplated and well-financed, which is why the $3 million is key here as the additional budgetary amount. In looking at this in depth, the powers, duties and functions of this particular person are also key to ensuring success is there.
I mentioned earlier that this is a small step toward improving financial literacy in this country. There is no doubt about that, but let us take a look at the financial literacy leader in this particular situation. The Commissioner of the FCAC may impose an assessment on any financial institution in order to recover some or all of the expenses associated with initiatives designed to strengthen the financial literacy of Canadians. It is putting some of that burden onto the financial sector, which is a great idea.
As is the case for Her Majesty, the Minister of Finance, and the commissioner, deputy commissioners, officers and employees of the FCAC, no action may be taken against the financial literacy leader for anything he or she does or omits to do in good faith in administering or discharging the powers or duties of the position of financial literacy leader. This is also a very important aspect. It allows this person to function in the way a person should function whose goal is to increase the amount of financial literacy across this country. We would not want to see this person chained into a position where they find themselves being suffocated, for lack of a better word, by rules and regulations and by their own machinery. It allows this person to go above and beyond the call of duty if that person chooses to do so.
The bill says the financial literacy leader will report to Parliament, and there is also a clause about civil proceedings.
The final point from the Library of Parliament is that financial literacy is frequently a topic of interest to parliamentarians, which it has been for quite some time. I mentioned my hon. colleague from Edmonton—Leduc. The issue has been discussed in parliamentary committee reports. We also heard from the member for Sudbury, who talked about six possible amendments. These were not accepted, but nonetheless, the discussion was there and I think some of them are quite noteworthy and noble in their cause.
We talked about the 30 recommendations from the task force. One of the recommendations my colleague from Sudbury brought up was about the advisory council, which I think is a positive step in the right direction as well.
What we see here are many facets of the industry, including those who are workers, such as the people I meet every weekend when I am at the airport and they are on their way to whatever job it is they have in the oil and gas sector. These are people who belong to building trades associations, or unions for that matter. They certainly do have quite a bit of input in how we can improve financial literacy.
Also, the issue has been mentioned in the House of Commons, including in the context of the private member's motion, Motion No. 269, by the member for Edmonton—Leduc, who is also the chair of the House of Commons Standing Committee on Finance. The conversation we had centred around the importance of financial literacy and how we have moved ahead into what I would deem is a brave new world for all citizens who work in this country.
As I mentioned before, there is the Canada pension plan and old age security. If people do not have the CPP, they are most likely eligible for the guaranteed income supplement. These measures do not displace the income that people earned, and certainly not if people work in the oil and gas sector where wages are so high and all of a sudden they find themselves out of work, through no fault of their own, such with a long-term disability.
Financial planning at the earliest age and financial literacy plays a very important role for many years to come. It someone gets injured on the job at the age of 25 to 30, think about how many years he or she has to recover based on his or her investments in a very short period of time. This is where financial literacy becomes that much more important. We get calls at our office every day about this.
This particular legislation, Bill C-28, required a ways and means motion as it would give the Commissioner of the Financial Consumer Agency of Canada the authority to impose a financial levy against any financial institution, as I mentioned, in order to pay for expenses related to financial literacy initiatives. During the committee study, officials also told finance committee that the government would increase the annual budget for the FCAC from $2 million to $5 million.
A significant contributor to rising household debt, which we talked about some time ago, was mortgages. One of the things I think was necessary was reducing the mortgages with 40-year amortization down to about 25 years. I think it was necessary because zero-down, 40-year mortgages were causing more problems than not. We found ourselves in a situation similar to that in the United States, where they had sub-par loans that caused ripples around the world that have lasted for years. That was not the only thing but certainly that was the genesis of it, the spark. That is one part of it that had to come down.
We are taking measures in addition to this that help financial literacy and certainly help the average consumer cope.
The danger in having zero-down, 40-year amortization mortgages is that, as we have seen, it is way too much risk to take on. We end up elevating ourselves to the statistic I read earlier, which is $1.63 in debt for every dollar that we bring in. Nations in the world are in the same ratio. In Europe right now, nations that we considered financially sound are no longer as sound.
In looking at this, I would say that many of the questions that we had asked prior to third reading were addressed in committee.
The financial literacy leader will not have his or her own office. Instead, he or she will operate out of the office of the FCAC. That was one of the questions we brought up.
There are no plans to use Bill C-28 to levy an assessment on banks to pay for financial literacy. It should be noted the FCAC already had the power to levy assessments against banks under legislation brought forward when the FCAC was created.
There was also, of course, the question about the anticipated cost, the extra $3 million for this particular individual.
Again, I would agree with my colleague that the advisory council should also be a second part to this. I am certainly willing to say yes to this, as a precursor to that step in the future.
I will go back to what I talked about in the beginning. This is a brave new world. It is one that compels our children to be that much more financially literate, to the point where this is a step in the right direction.