Finance Committee on Oct. 18th, 2011

[Mark Adler, Conservative, York Centre, ON]

Just projections based on—

[Andrew Jackson]

But I'll be pleased to provide those.

[Mark Adler, Conservative, York Centre, ON]

—a number of variables that aren't necessarily--

[Andrew Jackson]

But I think it's fair to say that they see a negative impact on growth and they see Canadian policy overall having that influence.

[The Chair, Conservative, James Rajotte]

Thank you. Let's have that overview sent to the committee.

[Andrew Jackson]

I'll send that.

[The Chair, Conservative, James Rajotte]

Thank you.

Mr. Giguère, you have five minutes.

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

Thank you, Mr. Chair.

Thanks to all our guests for coming here.

My first question goes to the president of the Canadian Bankers Association. You spoke at length about making the industry more secure. Here at the committee, we have started discussing the establishment of an insurance plan for victims of financial fraud. Is that a good idea, in your opinion?

[Terry Campbell]

I am sorry, but I will have to speak in English.

Fraud is an issue, and it has many forms in the financial sector. The bad guys are out there and they're very motivated to do bad things, and we are always trying to stay one step ahead of that. The challenge with fraud, and I think it's what you are referring to, is it comes down to an effect of breach of trust—you know, you trust somebody and that trust is broken, and there's a lot of damage. I think the question comes down to, how best do you deal with that?

When you look at the kinds of fraud that have been reported and that have taken place across the country, you have to be very careful how you approach that. I think a lot of the people who have committed fraud were not regulated. They were not registered individuals. They were not within the regulatory scheme. They were doing private deals or side deals.

We have always been of the view that one of the best protectors for consumers is to deal with regulated financial institutions that fall under a proper supervisory regime, whether it's financial institutions or registered and regulated advisers. I would also say, and I hearken back to a question I responded to earlier, that one of the great advantages that we see of a national approach to securities regulation, a Canadian security regulator, is that it would significantly strengthen enforcement and significantly strengthen the capacity to go after the bad guys. So that's how I'd answer your question.

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

Unfortunately, with insurance plans, someone has to pay the premiums. That's the user pay principle.

How can the banking system not be in favour of a plan like that? It's still insurance.

[Terry Campbell]

One thing I have learned as I've gone through the public policy world on both sides of the fence—I used to be in the government and I'm in the private sector now—is to be aware of the law of unintended consequences. A worry is that if you establish, say, an insurance fund against fraud, do you run the risk of actually making fraud more likely? Then you have a situation where people can let their guard down: “Oh, there is a fund, I don't have to worry about it so much, I will be protected.” It could actually result in a situation where you're not actually addressing the need--

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

Excuse me, Mr. Campbell; let me just point out to you that, in the Earl Jones case, the banks participated in the fraud to a great extent because of their negligence. If a bank with all its resources gets taken, how can small investors protect themselves?

[Terry Campbell]

I understand the case of Earl Jones. I would say in the case of Earl Jones, and I go back to the point I made originally.... As I understand the facts, this was an individual who was operating completely outside the regulatory system based on a system of personal trust, which he broke. We have a very sophisticated—and it could be better if we had a single regulator—system of regulation that could address situations like that. It could be made better, and I hope it will be.

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

My last question goes to the representative from the…

[The Chair, Conservative, James Rajotte]

Your question is going to have to be very quick.

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

In our pension plan, we have a strict liability to perform. We must ensure that, when people retire, they will have a basic minimum amount to live on. If we had to project the present situation into the future, the income supplement would increase by $26 billion.

What do you see as the one pension plan that can guarantee that people do not have to live in poverty?

[The Chair, Conservative, James Rajotte]

Okay.

I am afraid, members, if you use up your full time I can't allow more time. We have to move along. Maybe Mr. Mai will give you some time for your response.

We will move to Mrs. Glover, please.

[Shelly Glover, Conservative, Saint Boniface, MB]

I have a couple of questions.

Mr. Campbell, I just want to give you a heads-up that I will come back to you, because you made a bit of a face when Mr. Jackson made a comment earlier about PRPPs versus RRSPs, and when he talked about the financial benefits for those who provide. Think about it, and I'm going to come back to you for your comment on that.

I'm going to skip to the Canadian Home Builders' Association.

Mr. Olson, as I look at the suggestions being made, I am looking particularly at the Canadian Labour Congress' suggestions in their executive summary for this budget coming up. The second one was about Canadian pension plans doubling, when we all know that right now CPP is fully functional and will be secured, frankly, for the next 75 years. I want to ask you about that recommendation, as well as their third recommendation and how it will affect the people who are members of your organization. It would be doubling of CPP, and in their third recommendation it's the raising of corporate income tax to 19.5%.

How would that affect your members? Is that a positive thing for Budget 2012 that would help them to create jobs? They do say it is supposed to create jobs. How do you feel about that?

[Ron Olson]

I am going to defer that question, if I can, to Dr. John Kenward, our chief operating officer.

[Shelly Glover, Conservative, Saint Boniface, MB]

Sure.

[Victor Fiume, Former President, Canadian Home Builders' Association]

Thank you. I will field that question.

My name is Victor Fiume. I am the past president of the Canadian Home Builders' Association.

Certainly, we are struggling at all levels of this association to keep our housing product affordable. Increasing the rates, the CPP rates—as well-intentioned as that may be—and the corporate rates will have an adverse affect on our ability to deliver a product affordable to Canadians.

[Shelly Glover, Conservative, Saint Boniface, MB]

The cost would be borne by and be reflected on consumers. Is that what you are saying?

[Victor Fiume]

That is absolutely what I am saying. There is no room for us to absorb any more costs.

[Shelly Glover, Conservative, Saint Boniface, MB]

Do you think you would see job losses?

[Victor Fiume]

Inasmuch as the fewer homes we build, the more unaffordable—if you will—houses become for Canadians. There would be job losses in this industry, for sure.