Finance Committee on March 26th, 2013

[The Chair, Conservative, James Rajotte]

Thank you.

Monsieur Caron.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

I do not want to over the same points again. I agree with what Ms. Nash has said. However, there are two things I would like to mention.

First, I do not see the link between income inequality and household debt. Household debt affects a significant number of Canadian households, whatever their income level. Families in comfortable financial circumstances as well as those less fortunate all have too much debt. Whatever way you look at it, indebtedness is a question that is much more macroeconomic in nature, if you tackle it as a Canadian problem. We are talking about a debt-to-income ratio of 167%, but that does not apply to all Canadians. It is a macroeconomic question. The study we are proposing has nothing to do with income inequality.

So, even though I agree that we will be very busy—we are the Standing Committee on Finance, after all—I want to emphasize that that did not stop us from holding 12 meetings on charitable donations. That is an important matter. But if we were able to dedicate 12 meetings to that one question, despite the fact that our schedule was equally busy, I feel that we can find some time between now and Christmas, or between now and whenever we set, to have some meetings on this other matter, which is extremely important for all Canadians.

So I encourage everyone to vote in favour of this motion. We can then decide on the best time to conduct the study, depending on the time the committee has available.

[The Chair, Conservative, James Rajotte]

Thank you.

Mr. Brison, please.

[Scott Brison, Liberal, Kings—Hants, NS]

I think the issue of household debt is a very important current issue. It's also one where all parties have expressed very similar concerns. Is it possible to—even in the autumn—take another look at studying the issue? I'm not certain—I may have missed it, Ms. Nash—how many days you were looking at for a study.

Another option is to have a subcommittee of finance focus on this. That's something we might consider from time to time, having a subcommittee take on a particular issue and then report back, because we are tasked with a lot right now. But this is one issue where I think all parties are on the same page in terms of the concern over household debt. I would hope we could find time to study it at some point.

[The Chair, Conservative, James Rajotte]

Thank you.

I have Mr. Hoback, and then Mr. Adler.

[Randy Hoback, Conservative, Prince Albert, SK]

Thank you, Mr. Chair.

[Inaudible—Editor]...study that I proposed, and it's a duplication of the industry study. I've been talking to different players in the sectors, whether wireless, consumers, or retail associations, and they're very excited that we're taking on this study. In fact, they feel that this study will add a lot of benefit to the industry study, with things the industry study did not address. I think she should maybe be careful of what she says about what's more important to Canadians in this work.

We have recognized the fact that household debt is huge. In fact, every economist talks about it. I know the Bank of Canada Governor has talked about it, and our minister has talked about it. It is something that everybody recognizes as a problem. But when you go to look at individual household debt from house to house, it will not be consistent in how it's made up. I'm not sure what your goal is in this study, in trying to figure out how you move forward, because household debt is household debt. My debt is different than Mr. Brison's debt, which would be different than Monsieur Caron's debt.

What do you want to do with this information when you're done? Are you going to bring in some regulations on the amount of financing that an individual can take on? What is your end goal with this study? Is the NDP proposing to regulate the amount of financing an individual can take on? What is the reality of the end goal of this study? I just shake my head.

Again, this committee has been very good to the opposition members. I don't even mind that they've had lots of chances and have brought forward many studies that we've also engaged in. We bring forward one study and then they attack it. So if they want good cooperation, I think maybe they should let us proceed with some work, too, work that Canadians see as viable and important, and that is actually going to help shape the sector for consumers as we move forward.

If timing is an issue, I would hope you would recognize the importance of this motion I brought forward, and understand why that would probably be more important than her study at this point in time.

[The Chair, Conservative, James Rajotte]

Okay, thank you.

I have three more. I have Mr. Adler, Ms. Nash, and Monsieur Caron.

Mr. Adler, please.

[Mark Adler, Conservative, York Centre, ON]

Thank you, Chair. Through you, Chair, I would just like to say that our government has taken substantive steps to attempt to educate people in terms of reducing their household debt. Mr. Chair, your own financial literacy and leadership on that has been outstanding, I may add. The finance minister has reduced amortization years' rates. All of which of course the NDP did not support.

But I would refer everybody back to....I see this as a bit of a red herring being proposed by the NDP. I refer everybody to the NDP policy platform of the 2011 election where their 5% solution, which proposed capping credit card rates at 5% above prime, would have shot household debt, credit card debt, into the stratosphere. So it's a bit of a red herring that's being proposed currently by the NDP.

We know what their solution is. It's reducing credit card interest rates to levels where people will take on more debt. I don't see the purpose of this motion being proposed by the NDP. It's a total red herring as far as I'm concerned.

[The Chair, Conservative, James Rajotte]

Thank you.

Ms. Nash.

[Peggy Nash, NDP, Parkdale—High Park, ON]

Thank you, Mr. Adler and Mr. Hoback, for your pre-emptive conclusions for any such study. I guess I take a different point of view. The purpose of the study would in fact not be to start with conclusions and try to prove those conclusions but rather to conduct a study to investigate and find out perhaps new information, hopefully new information that might inform this committee, so that then we could draw conclusions from the fact-based analysis that we would have presented by various experts who would come to the committee.

Given that this is the number one issue identified by Canadians in recent polling, identified by the Governor of the Bank of Canada, the OECD....In fact, the finance minister himself has raised this as a serious concern. One could point, but I won't, to things that the government has done because I think that they made changes in one area around mortgages, but then they changed that direction I think to address the very real concern about growing household debt.

I don't think that household debt is strictly mortgage debt. I think there could be a variety of factors. Households do vary in terms of the nature of their household debt. I think there is a multiplicity of factors and therefore just telling people to reduce their debt is a nice comforting simplistic solution, but it's incumbent on this committee to actually investigate and see what the various causes are.

While I appreciate the time constraints of the committee, I respect the time of the committee. I do feel that between now and the end of December, surely we could find some time to address this important issue.

[The Chair, Conservative, James Rajotte]

Thank you.

Mr. Caron, the floor is yours.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

I would like to make a quick comment in response to Mr. Hoback's. This is exactly what I was saying. This is the difference between a microeconomic matter and a macroeconomic matter. We are not going to study the composition of people's individual debt. We are going to study the problem as it exists Canada-wide, for Canadians as a whole. That will give us information on the systemic problem.

What causes household debt? Why has it climbed so quickly? We have no answer to that. We cannot just attribute it to mortgages. Other factors come into play. What are those factors that have led to the rapid growth of household debt? We will be able to discover that after studying it in committee. We cannot really claim in advance to have defined the problem and found a solution.

Studies are part of the committee's role. A study like that would not only allow us to gather interesting information that would help the government to deal with the situation, but its results could also be of interest to the Bank of Canada in forming its own monetary policies. So do we really want to stop ourselves from gathering that information?

Comments from Canadians, in the media and from experts, vary considerably at the moment. By rejecting a motion like this, the committee would be missing the opportunity to be able to gather that information. So I encourage everyone to vote in favour of the motion. It is a real concern for Canadians and we cannot ignore it.

[The Chair, Conservative, James Rajotte]

Okay. Thank you.

I have Ms. Glover next, and then Mr. Jean, please.

[Shelly Glover, Conservative, Saint Boniface, MB]

Thank you, Mr. Chair.

I'm a little troubled by what I'm hearing, Mr. Chair. What I've heard the NDP say is that they want to see us adopt this and study it in the fall, which is completely unrealistic if you look at the calendar.

According to the calendar we'll have Mr. Hoback's study in the fall. I'm quite troubled by what Ms. Nash said, and I find it quite negative toward Mr. Hoback's motion. I would strongly implore the NDP to actually look at Industry Canada's report.

Just so we're very clear, Industry Canada's report focused on e-commerce, focused on expanding broadband, focused on reducing red tape, focused on fighting wireless spam, focused on the shortage of labour in IT, focused on a directory for R and D programs within the government, focused on a code of conduct for consumers and retailers—which is addressed, by the way, in economic action plan 2013; there is a plan underfoot to have a new consumer code. And the report also focused on government being a model for e-commerce, and it focused on literacy.

It did not deal, not one iota, with the problem that is being addressed right now in our offices. I'm getting calls, and I know Mr. Hoback is getting calls, because people don't know what their rights are with regard to tap-and-go payments. They don't know how the banks are going to treat the competition that exists between one and another, and other providers of electronic wallets.

This government needs to make recommendations at some point on how we regulate these things. Without a study, it is very difficult for a government to get the best practices and get the input. That is the responsibility of this committee, to help government develop policies that actually protect Canadians, and particularly protect consumers.

That is what is of interest to this side of the committee. If we don't address how the fees will occur, if we don't address whether debit will be allowed on the same electronic wallet as two different credit cards that compete with one another, if we don't address whether advertising will be allowed and those kinds of things, we are going to have some very confused Canadians, as they already are as tap-and-gos begin to make their way into our society.

This is pressing. It will further complicate the ability of consumers to do their finances in a prudent and knowledgeable way. It addresses the fact that we want them to be literate in financial areas, and it is a hugely pressing study. For the NDP to suggest that it is not, and suggest that we can just set that study aside is disrespectful to Mr. Hoback. It's also, frankly, unfair of Ms. Nash because we had a conversation about it being the government's intention to look at this, and then the motion was put forward to pre-empt the motion from Mr. Hoback. If we're going to work collaboratively, those things cannot happen and we have to be honest about what is before us.

The industry committee did a good report but it had nothing to do with banks and regulation, which is clearly a finance committee responsibility. I take my responsibilities very seriously, Mr. Chair. I intend to see that Mr. Hoback's study takes place and in another time and another place this might have been a motion that would have fit in the calendar but it is just not possible at this point.

[The Chair, Conservative, James Rajotte]

I have a few points.

As the chair I'm going to play out one thing, which is that when a member introduces a motion and the motion is actually addressed at committee, the motion becomes the debate of the committee.

When that motion is adopted, as it was in the case of Monsieur Mai, as it was in the case of Mr. Brison, and as it was in the case of Mr. Hoback, it then becomes the committee's motion and the committee's study.

We may want to refer to “the member and the motion” but we should actually refer to “our study”. So the income inequality is our study, the tax evasion is our study, and Mr. Hoback's motion is now our study as the finance committee. I should have pointed that out earlier. Once we adopt a motion and it becomes our study, we should probably stop debating it because we've already adopted it and it is our study and we all should support that study and work towards getting as much information as we can. I was perhaps remiss in not stating that earlier, but I think it's important to state it now.

I have Mr. Jean next, and Ms. McLeod, and Ms. Nash on this motion.

Mr. Jean, please.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

Thank you, Mr. Chair.

I would say that I do support our study that was moved by Mr. Hoback—

[Voices]

Oh, oh!

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

I have a business right now that has 10,000 customers a month and a tremendous amount of cash transactions, as well as opportunities to use some of the new and innovative techniques around the world. Frankly, I think Canada lags behind Australia and the U.K. tremendously in relation to opportunities that are available here. I certainly think that it would help our economy to have something implemented that would look at other studies that have been done in other jurisdictions and at what those jurisdictions have done.

Again, I'm asking a question to Ms. Nash in this particular case, because of course she's a mover of this motion. That is, you refer to the social impacts of high household debt levels, and I'm just curious to know if you've looked at other jurisdictions. We know that the United States, for instance, has this issue, as most of Europe does and as some of the other western economies do.

Has there been any attention spent on what's happening in other jurisdictions and have there been any proposals to move this particular motion more in the direction that other jurisdictions have looked at and have been successful in? Because, simply put, Mr. Rankin referred to other jurisdictions, and one of his comments was that, well, if other jurisdictions are doing it, we should do it too, which quite frankly, in my mind, is not a very good argument. That's one of the reasons I voted against it.

I'm wondering if Ms. Nash could take just a minute and explain to us what other jurisdictions are doing related to this particular—

[The Chair, Conservative, James Rajotte]

She's speaking after Ms. McLeod, so can she address it at that point?

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

Yes, absolutely.

[The Chair, Conservative, James Rajotte]

Okay. Thank you, Mr. Jean.

Ms. McLeod, please.

[Cathy McLeod, Conservative, Kamloops—Thompson—Cariboo, BC]

Thank you, Mr. Chair.

I want to go back to the original point in terms of our fall schedule. Again, I think that what the priorities would be if there's any space in the fall schedule should actually be discussed in the fall. We know that probably from September through to December we are going to be very, very busy, but again, if there's an opportunity to do anything in addition to Mr. Hoback's study—or our study—on tap-and-go, which we've already agreed to do, then I think that's the appropriate time for that conversation to be held.

Again, I worry about us planning years into the future. I think we know what our schedule is for the next number of months, and again, if there's any opportunity, we can look at the priorities come fall, when we have an opportunity to look at the schedule in more detail.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you.

Ms. Nash, please.

[Peggy Nash, NDP, Parkdale—High Park, ON]

Yes, there are just a couple of things.

First of all, to Ms. Glover's points, I don't know why we're debating the committee's motion on electronic payments, because that has been adopted. We're going to study that so we don't need to debate whether or not we're going to study it. We are going to study it. The discussion will be on how many meetings we have on it.

Concerning the question around international comparisons, I mean of course the global financial crisis was in effect caused by a personal debt bubble, and when the housing market crashed, it crashed economies around the world, so it's fairly important for us to take a look at it. Certainly, the International Monetary Fund and many other organizations have studied this issue, and I think their testimony and/or their reports might be relevant information for us to take a look at as part of a study here.

I think to our credit Canada has not had the same kind of—although we had a downturn in our economy and we were into recession—disastrous crash that other economies and other countries have faced. But we still see personal debt rising, so I think it is something that is of concern to Canadians and anyone who is in the housing market. It's something they follow very closely, and they want to make sure that their elected representatives, especially on this committee, are on top of the issue and are keeping it front of mind.

I think it is absolutely something that we should consider and adopt as a study. While I think it's a pressing issue, if it's something that we can take a look at this fall, I think that would be prudent.

[The Chair, Conservative, James Rajotte]

Thank you.

Mr. Caron, the floor is yours.