Finance Committee on March 6th, 2012

[Shelly Glover, Conservative, Saint Boniface, MB]

Thank you, Mr. Chair.

I actually recall having this discussion about this clause during committee witness hearings. I must say that I thought it was addressed at that point.

Clause 24 does, clearly, in our opinion, address the concern that Monsieur Giguère has about an employer trying to receive inducements in the way he described. There was another clause within the bill that addresses any inducements that would benefit all of the people who are involved in the pooled registered pension plan, which Monsieur Giguère brought up during witness hearings, and actually when the officials were here the last time.

I'd like to ask the officials to explain why the clauses that are already in the bill address the concerns Monsieur Giguère has and demonstrate that there is no need to alter them at this time.

[The Chair, Conservative, James Rajotte]

Ms. Anderson, would you like to speak to that?

[Leah Anderson, Director, Financial Sector Division, Financial Sector Policy Branch, Department of Finance]

The intention of the clause is indeed to prohibit inducements for the reasons you cite, but recognizing that there are circumstances where you wouldn't want to prohibit employers from achieving lower costs to members for entering into such an agreement. Those cases are, for example, where, by bundling services that are beneficial to all employees, the offering of both the PRPP and that other service, they can get a lower rate overall. So that's beneficial to all.

Also, in the circumstance, for example, where an employer wants to switch to another PRPP provider, if that PRPP provider, for example, wants to pay the switching fee, that's advantageous to all and promotes competition. So it should be, in our view, considered in the regulatory scope, subject to the regulations in exception to this overall restriction.

The duties of the employer, furthermore, are supported by clause 33, where it does explicitly put an onus on them to say “Subject to the regulations, an employer must not demand, accept”. So we have the administrator not being able to offer, but the employer's responsibility is very clear here, that they are not to accept. So they are not immune from the other provisions of this bill, and indeed are targeted at inducements as well.

[The Chair, Conservative, James Rajotte]

Thank you.

I have Ms. Sgro and then Monsieur Giguère.

[Judy Sgro, Liberal, York West, ON]

Just to follow up, then, this clearly allows for some competition in the marketplace.

[Leah Anderson]

Yes.

[The Chair, Conservative, James Rajotte]

Monsieur Giguère.

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

I understood clauses 24 and 33 very well. They reflect each other. One deals with the administrator and the other deals with the employer. I was told—and I heard this correctly—that other provisions guarantee that, should the employer or the administrator provide an inducement, the inducement must be favourable exclusively to contributing employees. I don't see this provision anywhere. Can you tell me which clause in the bill indicates that those inducements must be favourable for the contributors?

[Leah Anderson]

Those details will be elaborated in the regulations.

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

Do you mean to say that there are no provisions for this in the bill?

Ms. Glover, you told us that there were. Could you give us some information about that?

[Shelly Glover, Conservative, Saint Boniface, MB]

I'm happy to answer.

The point is that the amendment Monsieur Giguère is trying to make is to take out the words "subject to the regulations", which the officials have clearly said will cover important measures in here. What I referred to was paragraph 76(1)(i), which Monsieur Giguère mentioned during officials' presentation here earlier. It specifies inducements that can be offered by an administrator that will benefit all of the people involved in a pension plan. This is just to make sure Monsieur Giguère understands the difference. This is why we would oppose the removal of "subject to the regulations". These are two different things.

I hope I've answered so that he understands that.

[The Chair, Conservative, James Rajotte]

Okay, thank you.

Ms. Lafleur, would you like to comment?

[Diane Lafleur, General Director, Financial Sector Policy Branch, Department of Finance]

Let me be clear. Absent any regulations, the prohibitions are clear, definitive, and without exception.

[The Chair, Conservative, James Rajotte]

Without regulations, the prohibition is absolute.

[Diane Lafleur]

Exactly. So it's not as though there is a gap pending regulations.

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

Still, the regulations could contradict clauses 24 and 33. An employer or an administrator could receive an inducement that is not exclusively to the benefit of contributors.

[Diane Lafleur]

That's not the purpose of the regulations that are going to be presented. They will be subject to the normal regulatory process. The public will have the opportunity to comment on the regulations and see what the actual content is before they are adopted in their final form. Everyone will be able to do so.

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

You are asking us to approve a bill that refers to important aspects of a regulation, but we don't have it.

[Diane Lafleur]

That is the normal parliamentary process.

[The Chair, Conservative, James Rajotte]

Merci.

I have Mr. Jean, please.

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

I was just going to comment on this.

I think it's a very normal process in most of the bills that I've seen before other committees, but to suggest that there shouldn't be allowed to be some exemptions relating to the better purpose of the act—to allow exemptions and particular purposes that would help the employees more and so protect them, even more so in particular circumstances that were brought up earlier—would go against what we're trying to do as legislators.

But also, to go against the very spirit and purpose of the act would not be allowed under regulation anyway. So I think this is quite normal.

[The Chair, Conservative, James Rajotte]

Thank you.

We'll have the vote on the amendment. This is NDP-2, and as I mentioned, the ruling applies to NDP-7.

(Amendment negatived) [see Minutes of Proceedings]

(Clause 24 agreed to on division)

(Clause 25 agreed to on division)

(On clause 26—Low-cost plan)

We have clause 26, and we have two amendments. I have NDP-3 and I have Liberal-1.

I'll deal first with amendment NDP-3. It is on page 3 of our amendments document. I have a ruling on this one by Mr. Marston.

I'll ask you to move it and speak to it.

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

I'll move the amendment. This will incur costs, most probably, and I have a suspicion as to the result of the response from the chair. However, I'll point out a lack of rigour in drafting this; the board should have been thought of before. We think that's an important part of it, but I'll await your ruling.

[The Chair, Conservative, James Rajotte]

You're very prophetic.

Bill C-25, in clause 26, provides that any administrator of a pooled registered pension plan must provide those services at a low cost. The amendment attempts to establish a board that would seek to determine the criteria to be used to decide what an acceptable low cost for such services would be by examining the range of other investment options available to Canadians and their associated fees.

As the House of Commons Procedure and Practice, second edition, states on page 766:

An amendment to a bill that was referred to a committee after second reading is out of order if it is beyond the scope and principle of the bill.

In the opinion of the chair, the creation of this board is a new concept that is beyond the scope of Bill C-25, and the amendment is therefore inadmissible. Additionally, the creation of the board may also infringe on the financial initiative of the crown, as the power to appoint persons to a board also includes the power to pay.

I will state that this also applies to NDP-6.

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

You punched some big holes in our stuff.