Finance Committee on March 27th, 2007

[Michèle Bridges]

That's right.

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

All right. Thank you.

I have another question I would like to ask. Earlier, we talked about a 6.5% increase. Pierre also mentioned this. You talked about inflation and merit. We can understand why costs have increased because of inflation, which is approximately 2%. But as for merit, how does this translate into increases? How much does that represent?

[Julie Dickson]

I think that would refer to if you were at a certain level, the pay scale when you moved into the job would be x dollars, and over time the pay scale would rise, depending on the experience you'd gained.

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

Therefore, it mostly covers fringe benefits, does it not?

[Julie Dickson]

It's something you get only if you perform in the job.

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

It's a matter of wages.

In closing, my last question deals with the requested appropriation of $780,000. Once again, it is quite striking to note that in your expenditure budget, there's a balance for all activities, that is to say that revenue balances out with expenditures, except in the case of the Office of the Chief Actuary, where only one part of the expenditures has been recovered.

What explains this difference? Why must money be allocated to the chief actuary's office, and not for other activities?

[Michèle Bridges]

I will answer that question. The costs of activities other than that of the Office of the Chief Actuary are 100% recovered from the industry that we supervise and regulate. In the case of the Office of the Chief Actuary, it is the office which delivers certain services to certain pension plans or benefit plans within the federal government. Therefore, those services are covered by the appropriation we tabled.

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

Therefore, that amount corresponds to the contribution made by the Office of the Chief Actuary in services provided to other organizations of the federal government?

[Michèle Bridges]

Exactly.

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

All right. Thank you.

[The Chair, Conservative, Brian Pallister]

And lastly, Ms. Wasylycia-Leis, you may ask a brief question to close.

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

Thank you. I have other questions.

I want to go back to pensions. In your 2005-06 annual report you state that one of the priorities going forward is to “contribute to financially sound federal government public pension and other programs through the provision of expert actuarial valuation and advice”.

I'm asking you, given the fact that CPP contributors are not able to receive their benefits beyond 11 months, is there an actuarial reason that overrides this access to their rightful benefit?

[Julie Dickson]

I think that's a question for the Office of the Chief Actuary. He is independent. He is the expert. He is situated within OSFI, which is why he's covered under our annual report.

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

Your office says that you are contributing financial advice to government on pensions in terms of actuarial evaluation and advice. Can you give us the same advice you're giving the government on this?

[Julie Dickson]

No. That is advice that is given by the Chief Actuary of Canada.

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

Okay.

You've said that OSFI needs to--and I am quoting from your last annual report--“promote institutional behaviours that support good risk management”. Given that, if you have a situation where banks are breaking the law or are appearing to break the law and they are embroiled in lawsuits, does it not make sense that this kind of behaviour affects the reputation of our banking institutions, that it could affect the whole issue of risk management, and therefore it requires some sort of oversight, investigation, and response on your part?

[Julie Dickson]

Every year my assumption is that all types of institutions are going to be dealing with lawsuits. If we felt there were major problems with an institution that were leading to lawsuits all the time and that there did not seem to be any controls whatsoever, that is something we'd be interested in.

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

So if they break the law some of the time, it's okay, but if they break the law all of the time, it's not.

[Julie Dickson]

I don't think you know whether they've broken the law until it's been through the courts.

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

Well, we have the FCAC report that documents violations. We just heard from them about 100-and-some violations by banks.

To reduce that inappropriate behaviour, do you take that information and say to the banks, if anyone should be upholding the law it should be you, our chartered banks?

[Julie Dickson]

We have lots of conversation with banks, but it's always about things that, if not corrected, we think are going to lead to a safety and soundness problem. We would have to determine that. A lawsuit out there of that magnitude....

I would say that most of our discussions with the institutions are about their lending practices or whether they know how the portfolio is changing over time. Those are things that can lead to serious financial impact on an institution.

[The Chair, Conservative, Brian Pallister]

Thank you, Ms. Wasylycia-Leis.

Thank you very much, Ms. Dickson. And thank you to your friends for being here today. We appreciate that as well.

Quickly, committee members, remember that on Thursday, from 11 until 12:30, we'll be hearing from the Canadian International Trade Tribunal and representatives from FINTRAC. Be prepared for that discussion.

We are adjourned.