Financial Literacy Leader Act

An Act to amend the Financial Consumer Agency of Canada Act

This bill was last introduced in the 41st Parliament, 1st Session, which ended in September 2013.

Sponsor

Jim Flaherty  Conservative

Status

This bill has received Royal Assent and is now law.

Summary

This is from the published bill. The Library of Parliament often publishes better independent summaries.

This enactment amends the Financial Consumer Agency of Canada Act to create the position of Financial Literacy Leader within the Agency. The Leader is to be appointed by the Governor in Council to exercise leadership at the national level to strengthen the financial literacy of Canadians. The amendments also provide for the other powers, duties and functions of the Financial Literacy Leader.

Elsewhere

All sorts of information on this bill is available at LEGISinfo, an excellent resource from the Library of Parliament. You can also read the full text of the bill.

Votes

June 20, 2012 Passed That the Bill be now read a second time and referred to the Standing Committee on Finance.
June 20, 2012 Passed That this question be now put.

Financial Literacy Leader ActGovernment Orders

March 1st, 2012 / 4:05 p.m.
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Newmarket—Aurora Ontario

Conservative

Lois Brown ConservativeParliamentary Secretary to the Minister of International Cooperation

Mr. Speaker, we could spend the afternoon poking accusations across the floor. There are $40 million still unaccounted for under Liberal budgets. I am sure Canadians would like to know that.

I would like to get back to the essence of what the legislation tries to do. I have two daughters, both successful young ladies. My hope is they will be financially successful and understand the mechanisms available to them to make wise choices with their money, to be educated about those opportunities and to have the opportunity to invest their money to create their own futures.

Because much of what my colleague said earlier rests with the provinces, because of a curriculum for schooling being a provincial responsibility, does he have any suggestions for the government as to how we might work with those partners to ensure that the financial portion of this education could be included in perhaps high schools or in college education? Does he have any suggestions for the government to work on?

Financial Literacy Leader ActGovernment Orders

March 1st, 2012 / 4:10 p.m.
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Liberal

John McCallum Liberal Markham—Unionville, ON

Mr. Speaker, first, in relation to the member's earlier comments about her daughters, of course, we on this side agree that financial literacy is very important not only for her daughters but my children and all Canadians. There is a lack of it and a need for more.

Our question is not that. Our question is whether the bill would make any difference or whether the existing agencies, which I described in my speech, are doing the job. There might be duplication and it might not make the situation any better. Since the bill does not tell us anything about how many people or what the mandate would be, it is unclear to me what the answer should be.

Working with provincial governments to improve financial literacy, including in areas of provincial jurisdiction, through some sort of national committee might be a good idea, but there is no statement by the government in the bill as to whether that is involved or not. Its absence suggests it is not involved.

If the member is asking whether, in principle, a co-operative body involving different levels of government to address financial literacy in different areas involving both levels of government jurisdiction is a good idea, yes. However, if that is the case, why was it not in the bill?

Financial Literacy Leader ActGovernment Orders

March 1st, 2012 / 4:10 p.m.
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Conservative

Brian Jean Conservative Fort McMurray—Athabasca, AB

Mr. Speaker, I welcome the opportunity to speak on this subject. I especially want to take the time to thank the member for Edmonton—Leduc, the chair of the finance committee, who was very instrumental in the initiation of this bill.

I understand why the member from the Liberal Party does not want this bill to go forward, a seriously co-operative bill resulting from working with the provinces and territories. The Liberal Party's idea of co-operation was to take $25 billion from the provinces back in the 1990s for social care, education and infrastructure.

As we know, when the Conservatives came to power, the Federation of Canadian Municipalities actually identified that there was a $123 billion deficit. The Liberals are the third party and they clearly indicated that the $123 billion deficit on infrastructure in the country was as a result of past practices of federal and provincial governments. For the most part, we all know why provincial governments could not invest in infrastructure. It was because $25 billion were taken by the previous federal Liberal government, of which the member was an active participant.

Before I continue, I would like to move the following motion. I move:

That this question be now put.

Financial Literacy Leader ActGovernment Orders

March 1st, 2012 / 4:15 p.m.
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NDP

Mike Sullivan NDP York South—Weston, ON

Mr. Speaker, having read the bill, I am curious as to how big the envelope was that the Conservative Party wrote this on. It seems to be very hastily and shabbily put together legislation that does not do justice to the report of the financial literacy task force, which made 30 recommendations, not 1, a report that had a great deal of depth and detail to provide a framework for financial literacy in Canada. We believe that framework for financial literacy is not met by this bill. The bill therefore is woefully lacking in detail, its objective, the mandate of the individual and in any of the other 29 recommendations made by the task force.

Where are the remaining 29 recommendations?

Financial Literacy Leader ActGovernment Orders

March 1st, 2012 / 4:15 p.m.
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Conservative

Brian Jean Conservative Fort McMurray—Athabasca, AB

Mr. Speaker, I am glad to see this particular New Democratic member not criticize the issue as it relates to financial literacy, as the Liberal Party did previously. We all clearly know now that the global economic recession is causing significant problems in the world economy as a whole. That is a result of personal finances primarily and the inability of people to keep track of their personal finances and to be able to manage those properly. That is why this bill is so important.

However, before we start with the entire 30 recommendations, I would say it is just like picking a coach for a hockey team. Before one picks the entire team, one first picks the coach so that the coach can be part of the rest of the team. In this particular case, I would say that is exactly the issue, and I hope that answers the member's question.

If people do not know that, though, I would point out that this particular bill deals with the importance of having tools and knowledge so that Canadians will be able to make responsible financial decisions for their future. Clearly, our belief as a government is that Canada's future is based on Canadians as a whole and their success depends on their own good management decisions, and we are going to help them with those decisions.

Financial Literacy Leader ActGovernment Orders

March 1st, 2012 / 4:15 p.m.
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Liberal

Wayne Easter Liberal Malpeque, PE

Mr. Speaker, I am a little surprised by the motion that the question be now put. Just as we were starting to really get into the meat of the bill and to find out what was wrong with it, the government found another way of invoking closure, shutting down debate so that questions could not be asked on this bill.

I would suggest that this bill is really a shell with no meat in it, other than to perhaps appoint someone else in a patronage appointment and leave the impression that the government is doing something about financial literacy when it is not.

Financial literacy is important; we know that and we agree with it. The problem and the question that we need answers for, which the member is now trying to shut off debate about, is that the bill really does nothing to add to the tool chest of recommendations that a former member talked about and to actually exercise financial literacy and get that job done.

Could the member answer two questions? Why is he in a roundabout way trying to invoke another method of closure and shut down debate? Could he also tell me what else is in this bill from his perspective, because I do not see it, other than making another appointment and spending money without providing the tools to do the job?

Financial Literacy Leader ActGovernment Orders

March 1st, 2012 / 4:15 p.m.
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Conservative

Brian Jean Conservative Fort McMurray—Athabasca, AB

Mr. Speaker, I always find it amusing when the member for Malpeque stands on his feet because, of course, I am from western Canada and that particular member wants to make it legal to sell marijuana but wants to keep it illegal to sell wheat. I have always found that to be interesting from that member's perspective.

I am not going to take any lessons from that particular member who was part of a government that cut $25 billion in social transfers to the provinces and, certainly, I am not going to take his expertise—

Financial Literacy Leader ActGovernment Orders

March 1st, 2012 / 4:20 p.m.
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Liberal

Wayne Easter Liberal Malpeque, PE

What about the $40 billion health transfer? Do you remember that?

Financial Literacy Leader ActGovernment Orders

March 1st, 2012 / 4:20 p.m.
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Conservative

Brian Jean Conservative Fort McMurray—Athabasca, AB

Mr. Speaker, I am glad he brought up the amount of $40 million, as I think I heard, because that is still what is missing as a result of the sponsorship scandal of a government he was a member of at the time. I am not going to take lessons from him.

However, we have a government with a Minister of Finance who is the number one finance minister in the world. We have a country that is the best off of any country in the world, and that is under the leadership of this Prime Minister, this Minister of Finance and this cabinet. We do not need to take lessons from someone who left us far behind and left the provinces far behind. We are going to move forward with a government and a cabinet that shows leadership in the world and clearly has a strong economy for Canadians.

Financial Literacy Leader ActGovernment Orders

March 1st, 2012 / 4:20 p.m.
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NDP

Raymond Côté NDP Beauport—Limoilou, QC

Mr. Speaker, we can say a number of things about this bill, things that the hon. member is unfortunately incapable of saying. There is a reason that he insists on cutting off debates.

The bill talks about financial literacy, but the reality is that it contains no definition. The government does not even care about finding out what it is. There is no accountability mechanism for the financial literacy leader, and there are no initiatives to increase financial literacy itself.

I really wonder where we are going with this. Frankly, we are going to provide Canadians with a fake institution, with a puppet that will not even be able to help them. What is that? It is a waste of public money and an abuse of the trust of all Canadians.

I would like to ask the hon. member to reassure me on another matter. With the government in such a rush, does it at least have a financial literacy marketing plan for its puppet in order to improve the government's image? I even worry about that.

Financial Literacy Leader ActGovernment Orders

March 1st, 2012 / 4:20 p.m.
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Conservative

Brian Jean Conservative Fort McMurray—Athabasca, AB

Mr. Speaker, I could not help but snicker when the member talked about this government wasting money, because nothing could be further from the truth. An NDP member suggesting that a Conservative government would waste money is bizarre indeed.

We know that many of these initiatives are currently under way in Canada and have been for some time. In fact, some things are taking place in high schools across this country with web-based systems.

Clearly, the task force that launched public consultations with Canadians in February 2010, with its over 17 sessions in 15 communities across this country, did receive input from Canadians.

We are not starting off from ground zero. We clearly know what caused the global economic recession. We clearly understand that we have to help Canadians educate themselves on how to move forward with their own personal finances and how to be more successful, so that we can continue to have that leadership position in the world not only as a government that is keeping a strong country and keeping Canadians safe, but also as a country that continues to enjoy an excellent quality of life, second to no one else in the world. Canadians can do that by being educated with our help.

Financial Literacy Leader ActGovernment Orders

March 1st, 2012 / 4:20 p.m.
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NDP

Ève Péclet NDP La Pointe-de-l'Île, QC

Mr. Speaker, what the hon. member is saying is very interesting. But public funds were spent to create this task force, whose membership was widely criticized by Canadians. With this government, that does not surprise me at all. But, most of all, after spending taxpayers' money and taking time, the government is accepting only one of the task force's recommendations. Is that really going to help people who need to learn about this, people likely with low incomes, who pay no taxes and so will not be able to take advantage of the tax credits? They say that the NDP spends taxpayers' money for nothing, but here we have taxpayers' money being spent on a job that has not been done.

Financial Literacy Leader ActGovernment Orders

March 1st, 2012 / 4:25 p.m.
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Conservative

Brian Jean Conservative Fort McMurray—Athabasca, AB

Mr. Speaker, I hope we never get to see what an NDP government could do with public funds. It would be pretty embarrassing indeed.

The proposed amendments to the Financial Consumer Agency of Canada Act aim to establish the financial literacy leader within the agency. There is already an agency involved. It is a key step in addressing the task force's recommendations.

However, the difference between our government and a potential NDP government is not just that our government would not waste taxpayers' money on wishes and wants, but also that the NDP or the Liberals would impose what they wanted, what its leadership wanted, on Canadians instead of listening to Canadians as we are doing with this legislation. We are going to appoint a coach, someone who can listen to Canadians, someone who can understand and work with stakeholders and other agencies across Canada, including financial experts.

We are going to listen to them and then bring forward legislation based on stakeholders' best wants and desires in the best interests of Canadians.

Financial Literacy Leader ActGovernment Orders

March 1st, 2012 / 4:25 p.m.
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Conservative

The Acting Speaker Conservative Bruce Stanton

It is my duty pursuant to Standing Order 38 to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the hon. member for Winnipeg North, aboriginal affairs; the hon. member for Montcalm, persons with disabilities; and the hon. member for Brome—Missisquoi, the firearms registry.

Financial Literacy Leader ActGovernment Orders

March 1st, 2012 / 4:25 p.m.
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NDP

Tarik Brahmi NDP Saint-Jean, QC

Mr. Speaker, I would like to start off by responding to the hon. member for Fort McMurray—Athabasca. In light of the events we are currently seeing, he should not be so confident because he might be disappointed in the next election if he ends up in the opposition.

I would like to speak to Bill C-28 as the deputy critic for consumer protection. I would first like to criticize the parliamentary manoeuvre that we have just witnessed, which sought, once again, to reduce the time allotted to the opposition members so that they do not have an opportunity to point out the shortcomings and flaws in the bill. The Conservatives use this method constantly, and it is our duty to denounce it.

This bill has a number of obvious flaws. The first one that jumps out is that the financial literacy leader will not be required to be bilingual. Being bilingual does not just mean knowing a few words in French or being able to read a few documents in French. Being bilingual also means being able to explain provisions, to present choices, to listen and to meet with people across Canada, especially in provinces with francophones, not just Quebeckers.

Hon. members from Quebec and from other francophone regions in Canada and I myself, as the member for Saint-Jean, want first to know where in the bill is the provision that ensures that the financial literacy leader is capable of communicating in both languages correctly, using decent French, and is capable of putting himself at the level of the people he intends to serve.

Above all, I do not want to hear the government say that we should not worry because, once he is appointed, the leader will take French courses, which is what we have been hearing over the past few months in the House. The government claims that it is possible to learn French and that there is no need to worry. No. That is not true. It takes years, it takes skills and a will to learn a foreign language. So that is an obvious flaw in the bill. That goes against the bilingualism requirements of this country and against Canada's will to stay bilingual and able to serve all its people in both official languages.

Now, let us talk a bit about financial literacy programs. Their goals are often criticized. We know that, more often than not, these programs are not intended to give consumers the tools that will enable them to pay fewer fees and have more control over their expenses. Instead, they are used by large financial institutions—banks and insurance companies—to gain more clients who will spend more money.

One of the things that should grab our attention about the famous task force on financial literacy is who is on it. It has 13 members. Don Stewart, the CEO of Sun Life Financial, is the chair of the group, and his vice-chair is Jacques Ménard, the chairman of BMO Nesbitt Burns and the president of BMO Financial Group Quebec. The very make-up of this task force should give us an indication of its objectives. The recommendations clearly show that they are basically designed to help financial institutions boost their clientele, obtain more clients. They do not aim to give consumers the ability to manage their money better and save by using what banks or financial organizations have to offer.

This is an important element. This is the make-up of the famous task force. Beyond that are the recommendations. This task force issued 30 recommendations, from which the government has plucked only one. The only one it took was the first, which involves appointing a financial literacy leader. It is too bad, because the second recommendation was much more worthwhile. It focused on creating a task force, an advisory board, that would give the leader direction and would have control over the actions of this financial literacy leader. So the task force would lend the financial literacy leader greater legitimacy because he would be accountable. This is an important part that this government ignored, intentionally in my opinion, because it is the second recommendation. It is not some subsidiary recommendation tucked away at the end of the document; it is truly the second recommendation.

Another aspect of this legislation is that it attempts to lay a guilt trip on consumers by claiming that they are not competent enough to properly manage their money. But it is absurd to try and educate consumers about how to save money when they do not have any. That is the main problem: consumers, currently, do not have money and, therefore, do not have the ability to save. They can be taught as many strategies as possible, but when the average family is indebted to the tune of over 150% of their income, in other words, the equivalent of half of their income in debt, how can this family of average consumers save money when they do not even have the means to pay off their debts? What is most striking about this legislation is that it does not deal with the problem, but with the consequence, the consequence being that now that consumers are in debt, we are going to explain to them how to avoid going further into debt.

A French comedian once said: “Write to us and tell us what you need, and we will explain to you how to make do without it.” That is this government's logic: do not create ways to help consumers; instead, explain to them, after the fact, how to get out of their predicament.

Another very interesting aspect of this report is that it confuses a complement and a substitute. Indeed, what we call financial literacy, which is also known as “financial education” or “financial knowledge”, must complement any government measures to assist consumers. It must not be a substitute.

A very interesting report was published in 2009 by the OECD and is entitled “Financial Literacy and Consumer Protection: Overlooked Aspects of the Crisis”. This report was prepared by the OECD following the financial crisis in order to demonstrate that the fact that consumers had started to use increasingly complex financial mechanisms that they did not understand jeopardized not only consumers' financial security, but the financial security of the whole system. Moreover, this very interesting report states that some recent financial innovations are incomprehensible not only to consumers, but also to bankers themselves.

One of the things mentioned was floating interest rate loans. When the time comes to choose between a floating rate and a fixed rate loan, most consumers are unable to understand the difference between them and how their choice will affect their future indebtedness. And yet, they are the ones who make the choice.

Subprime mortgage loans were what caused a crisis that had never been seen before, mainly in the United States. Why? Because consumers were given the opportunity to get involved in innovative mechanisms that were different from traditional financing mechanisms. The end result was that their own financial health as consumers was endangered, as well as the financial health of the whole system. As it happens, the whole system collapsed because some little financial geniuses devised instruments that are very difficult to understand.

If most people who work in the field of finance cannot understand them, how can the average consumer avoid being confused? The very interesting OECD report stated that most consumers greatly overestimate their financial skills. Here is a personal example. In a previous life, I was in charge of a team that conducted social population surveys for Statistics Canada. One of the projects was to evaluate the literacy and numeracy of the people being surveyed.

The results of these surveys were disastrous. Not only that, but what does not show clearly in these studies is that most people who are unable to respond will not respond, because they are ashamed. Quite simply, people who are unable to add or subtract will not participate in these studies. This means that the pool of respondents is biased from the very outset. When the sample is biased at the outset because those who are not capable of responding are ashamed of taking part in the study, then the results clearly do not reflect just how disastrously uninformed most consumers are.

This proposal is meaningless not because it would be impossible to do something worthwhile with it, but because the government has decided to blame indebtedness on consumers, households and families who find themselves unable to control their spending because they do not have enough money, rather than take action that would truly enable consumers to first get themselves out of debt and perhaps then set money aside for the future.

Unlike the Conservatives, who think that education and financial literacy are substitutes for programs, the NDP proposed concrete measures in our election platform in May 2011. For instance, we proposed—and it was our leader, the late Jack Layton, who drew attention to this—capping interest rates at 5% above prime, which is based on the Bank of Canada's key interest rate. The NDP proposed this concrete measure, which would give all Canadian families who are struggling with record debt levels—that is what Statistics Canada is reporting—a little breathing room and hope that they will one day get out of debt.

One interesting thing that came out of the 30 recommendations in the task force's report was this: “the Government of Canada...integrate a financial literacy component into the Canada student loans program for students receiving funding.” Helping students, most of whom have a lot of debt, would be very beneficial. This report recommends that the Government of Canada integrate programs, concrete measures to help students manage and deal with their level of debt, which can be huge. That is recommendation number 10 in the report. But where is that recommendation in the bill before us today? It is missing. Why is the government ignoring things that could help change the lives of consumers?

Instead, the Conservatives prefer to create a very well-paid executive position, but they will not even give that individual an advisory board to make recommendations and give the position some legitimacy. Of the 30 recommendations, the Conservatives took only one, and they drafted a bill that is nothing but a smokescreen. That is how I would describe it.

In closing, the NDP will not be supporting this bill, because we believe we can do better. The resources that resulted from the deliberations of the task force—even though it seems to favour the financial institutions—could be put to better use. We cannot support this bill today.