Finance Committee on Sept. 24th, 2012

[Ted Menzies, Conservative, Macleod, AB]

Tough but fair.

[The Chair, Conservative, James Rajotte]

Tough love, Mr. Adler.

We'll go to Ms. Nash, please.

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

Thank you, Mr. Chair.

Congratulations on your election again as chair of the finance committee. I look forward to working with you, as always.

Thank you, Minister Menzies, for being here today to discuss with us Bill C-28.

I want to echo what my colleague Mr. Thibeault said around financial literacy. We did support Mr. Rajotte's motion on this, because there are many areas where it of course would assist Canadians to have a better understanding of debt and of their obligations when they enter into debt. But we also have concerns with this bill. One of the concerns was that the financial literacy task force made 30 recommendations, the first of which was the appointment of a financial literacy leader. There were 29 other recommendations that would have really put a strong framework around such a position.

I want to clarify a couple of things. First, if we're going to appoint a person who's expected to teach Canadians about financial literacy, should they not be able to speak both languages fluently so that they can have the best communication possible with all Canadians?

[Ted Menzies, Conservative, Macleod, AB]

I would certainly expect that.

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

Okay. That was a recommendation but it's not in the existing bill, so it's good to hear you say that.

My second question is around why none of the other recommendations appear in this bill. We have the Financial Consumer Agency of Canada, which exists now. It's an award-winning organization—congratulations, Ms. Menke—and it serves a very useful purpose. Why would we add another position to an existing agency, which already engages in financial literacy, without spelling out what exactly this person will be doing? What are their terms of reference? Why is there to be no advisory council, as was recommended in the task force report, so that there is guidance and a framework and in essence rules for this person in this new position?

[Ted Menzies, Conservative, Macleod, AB]

Thank you, Ms. Nash, for that question.

The number one recommendation is the leader. My view of a leader is someone who is able to lead an organization or a group or a mandate. I think the leader will have to be given some latitude as to how they enact what they feel is their role. The Financial Consumer Agency of Canada has lots of resources, but to your comment about why do we need another person, I think it's very important that we need someone specifically.... Ms. Menke is a very capable lady, as are the people in her department, but we need someone who is focused individually on this. This person will be given the financing to roll this out and the mandate of how it's delivered.

We will face some challenges, because in my view we need to insert this in the education system. As you know, we'll have some challenges working with our provincial counterparts on how we do that. This leader will have to sculpt, if you will, a process for delivering that.

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

Thank you. I'm sorry; I just have such a short time.

[Ted Menzies, Conservative, Macleod, AB]

No, that's fine.

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

I guess we see it a little bit differently. I would argue that, yes, a leader has to lead, but leading in a vacuum can be challenging...and given that there were many very good recommendations from the task force report.

I want to ask one last question. Literacy in numeracy amongst Canadians is not really that high. About 48% of Canadians struggle with practical levels of literacy. I notice that a few years ago, in 2006, the Conservative government cut $17.7 million from adult literacy programs. This seems to be a change in direction.

Can you explain now why this is a new direction that seems to be different from the old direction?

[The Chair, Conservative, James Rajotte]

Just a brief response, Mr. Minister.

[Ted Menzies, Conservative, Macleod, AB]

Yes.

I don't think it's different in any way. When we formed government, we found a lot of advocacy organizations that weren't actually delivering products to the individuals. There were a number of those. I wasn't part of the cabinet at that time when the decision was made, but I would have to assume, from some of the discussions we've had, that the delivery of these programs is still happening; however, the groups that are just set up to advocate for that perhaps aren't necessarily getting the funding.

[The Chair, Conservative, James Rajotte]

Okay. Thank you.

Thank you, Ms. Nash.

Mrs. McLeod, please.

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

Thank you, Mr. Chair. I also would like to congratulate you and welcome back our colleagues to the table.

I think it's critically important, and I'm really pleased, that the first thing we're dealing with is Bill C-28 as we start the fall session. I think it's really appropriate and it's extremely important.

I just have a quick comment, because I've heard it a number of times. Perhaps, Mr. Minister, as you read the task force recommendations.... It says that the financial literacy leader “should have the mandate to work collaboratively with stakeholders to oversee the National Strategy” and “implement the recommendations”. Really, I perceive this as the critical piece in terms of moving forward on all the task force recommendations, so I'm not quite sure where my colleague's concern is in terms of creating a structure that allows that important work to continue.

Minister, could you tell me if that sounds to be how you envisioned the process moving forward?

[Ted Menzies, Conservative, Macleod, AB]

You've actually articulated it very well. That's certainly how we see it. The financial leader has at his or her discretion the option to put in place many of the other 29 recommendations.

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

Thank you.

The next area I would like to focus on—and I think it's a huge area of interest—is credit and debit card code of conduct. I always remember being newly employed in the workforce and talking to a colleague of mine who said they had paid off their credit card when in actual fact what they did each month was pay down the minimum balance. I remember at the time being a little bit stunned. I think the whole issue we're dealing with is not a new problem but perhaps an expanding problem in Canada.

We've talked a lot about consumers, but there are all these products and opportunities for businesses. Can you talk about what measures are currently in place to ensure that small businesses understand the costs and benefits associated with credit and debit cards?

[Ted Menzies, Conservative, Macleod, AB]

Thank you, Ms. McLeod.

We heard from the Canadian Federation of Independent Business the concerns of a number of different organizations about credit cards and the cost to these individual organizations. So we put together a code of conduct for both the credit and debit card industry, specifically to protect small businesses. The simple fact is there needed to be clear information about the rates and fees that are charged. It wasn't as clear as it could have been, so in the code of conduct we said that these need to be better articulated, that there needs to be notification of any new fees or fee increases, and that businesses need to be able to cancel the contract without penalty if those fees are changed without notification to them.

So it's very simple and straightforward, but that wasn't the case before. They should also be able to choose whether they will accept only credit or debit payments without having to accept both. The co-badged cards that we're seeing now create some challenges.

Just last week—and we all know things are changing very quickly in the electronics world—we expanded an addendum to this code of conduct to actually have a consultation on how we deal with mobile payments. The fact is that in the very near future you may not even need to carry a credit card. It will simply be embedded in your cellphone or your smartphone. Other countries have been dealing with this. We've put out a consultation paper for 60 days and we're looking forward to some information. In fact I heard back from one of the financial institutions that told me it was good and was aimed in the right direction and would not be problematic for them.

Once again, it's about protecting not just the consumers but the retailers as well.

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

My colleague was so anxious for ten seconds. I'll give him ten seconds.

[Mark Adler, Conservative, York Centre, ON]

Thank you.

Mr. Minister, I was just wondering if you could comment on something. During the election campaign last year, the NDP's answer to financial illiteracy was to cap credit card interest rates at prime plus five. I was just wondering if you could comment on how disastrous that would be.

[Glenn Thibeault, NDP, Sudbury, ON]

A point of order.

I've been listening to a lot of the questioning from the other side, Mr. Chair. What does this have to do with Bill C-28? We're here talking about Bill C-28. The questions that we've been hearing don't relate to the bill whatsoever. I would just like to know the relevancy.

[The Chair, Conservative, James Rajotte]

The bill deals with financial literacy. Financial literacy, as the member well knows, is a very broad topic. I'm also applying the rule applied in the House, which is that relevance is a fairly broad issue under which members can state their questions and have ministers respond. So I am going to allow the question.

Mr. Adler, be very brief on this please.

[Mark Adler, Conservative, York Centre, ON]

I'm finished the question.

[The Chair, Conservative, James Rajotte]

Minister Menzies.

[Ted Menzies, Conservative, Macleod, AB]

We see no reason to cap credit card fees. There are options out there. Competition provides the best available tools to all Canadians. If they have the information, they can actually choose whether to use a card with extra perks or a low-cost card. There are no-cost bank accounts available out there, but they need the information. I don't think we need to regulate the credit card fees at this point.

[The Chair, Conservative, James Rajotte]

Thank you.

Mr. Caron, you have five minutes. Go ahead.

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

Thank you very much. I want to join my colleagues in congratulating you on your election.

Minister, thank you for being with us today.

I have two questions, and that is probably all I will have time for.

As Ms. Nash pointed out, we did indeed vote in favour of Mr. Rajotte's motion on financial literacy because it sought to meet an existing need. Notwithstanding the agency's wonderful work, there was still a need to do even more in the area of financial literacy.

However, as Mr. Thibeault mentioned, we do have a few problems when it comes to financial literacy and the corresponding report. Respected Globe and Mail columnist Barrie McKenna summarized those problems, writing, and I quote:

Looking to financial literacy to fill the void is like asking ordinary Canadians to be their own brain surgeons and airline pilots. The dizzying array of financial products, mixed with chaotic and increasingly irrational financial markets, makes the job of do-it-yourself financial planning almost impossible—no matter how literate you are. The average credit-card agreement is as intuitive as quantum physics.

Some needs in the area of financial literacy were addressed through the motion. But what I would like to know is how a financial literacy leader can deal with much more structural problems related to the workings of our financial markets, problems that even the experts have trouble figuring out. We hear a lot about credit cards and retirement plans, but there's much more to the financial economy than that.

I would like to know how the plan before us—which calls for the election or appointment of a financial literacy leader, among other things—can really help all Canadians understand these incredibly complex issues.