Finance Committee on Oct. 1st, 2012

[The Chair, Conservative, James Rajotte]

I call the meeting to order.

This is the 74th meeting of the Standing Committee on Finance. Our orders of the day, pursuant to the order of reference of Wednesday, June 20, 2012, are the study of Bill C-28, an act to amend the Financial Consumer Agency of Canada Act.

Colleagues, we are here to give clause-by-clause consideration to this bill. I believe we have six amendments proposed for this bill. We have an official from the Department of Finance present in case there are any questions from members, or the officials may wish to comment as well. Welcome to our committee.

I will proceed in order with respect to the clauses. Pursuant to Standing Order 75(1), consideration of clause 1 is postponed. Therefore we will move to clause 2.

(On clause 2)

On clause 2, we have an amendment, NDP-1. What I will do as we proceed through is ask a member of Parliament to move the amendment and to speak to it. Then any others who wish to speak to it will please indicate their intention to me, and I will ensure you do so.

We will move to amendment NDP-1.

Go ahead, Mr. Thibeault.

[Glenn Thibeault, NDP, Sudbury, ON]

I'd like to move the amendment.

[The Chair, Conservative, James Rajotte]

Okay, thank you.

Is there any discussion on the amendment?

Go ahead, Mr. Thibeault.

[Glenn Thibeault, NDP, Sudbury, ON]

Thank you, Mr. Chair.

As the committee is aware, we talked about over the last few meetings that we would really like to see some terms of reference and some guidance for the financial literacy leader. Of course, having a definition of what financial literacy is all about is important. It's missing both in this legislation and in the act that is being amended. By adding a definition, we feel that we can ensure the financial literacy leader has a specific goal to be working towards.

[The Chair, Conservative, James Rajotte]

Okay, thank you.

Is there any further discussion?

I have Mr. Adler, please.

[Mark Adler, Conservative, York Centre, ON]

I think it's a mistake to give a specific definition to financial literacy. You know, I was talking over the weekend with my kids. We have nine-year-old twins. They are learning about financial literacy in school right now. We were talking about what they are learning about. They were learning about the fundamentals of finance and banking, how to save your money and investments, and that sort of thing, at a very preliminary and rudimentary level. Nevertheless, they understand it in a way that is fluid and changing over time.

Their definition of financial literacy is not the same as mine from my generation. We need to keep the definition of financial literacy fluid. The only constant is change in our world. By putting strict parameters on the phrase “financial literacy”, we're going to run into some problems. We can't run the risk of defining the phrase too narrowly. It would limit the ability of the financial leader at some point in the future in working with new concepts, a new phraseology, new terms, and new concepts that would arise in finance. It would also hamper the ability of the Financial Consumer Agency of Canada to respond to these changing needs.

On this side, we would be against the amendment as proposed.

[The Chair, Conservative, James Rajotte]

Thanks, Mr. Adler.

[A voice]

You weren't listening, Mr. Chair?

[The Chair, Conservative, James Rajotte]

I'm sorry. Someone was involved in the discussion.

Mr. Adler, continue, please.

[Mark Adler, Conservative, York Centre, ON]

I've concluded. Thank you, Chair.

[The Chair, Conservative, James Rajotte]

You're done? Okay, thank you.

Go ahead, Mr. Thibeault, please.

[Glenn Thibeault, NDP, Sudbury, ON]

Thank you, Mr. Rajotte.

I know it's very difficult to be in your position, because you have to be able to five things at once and chew gum and listen, so no worries there.

In relation to my colleague's comments, Mr. Adler said that having a definition of financial literacy is a mistake. Well, on page 4 of the financial literacy task force there is a definition of financial literacy. I believe in the last meeting or so I heard my colleagues from across the room say that this financial literacy leader will just follow the definition that is in the task force recommendation. I don't think having a definition is a mistake. Having a definition is an important piece. If they don't like the language of the one I have presented, fair enough; let's bring the one that is in the financial literacy report as a definition, so that we know the financial literacy leader has a goal that he can be working towards.

Thank you, Mr. Chair.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Thibeault.

Is there any further discussion? I have a few people who would like to speak.

[Mark Adler, Conservative, York Centre, ON]

What's in the report, you understand, is a series of recommendations. It's not legislation. That could be used as a term of reference. Once again, the phrase is evolving. It's fluid. It needs to be. One person's understanding of financial literacy from one generation is not the same as another's. We need to keep the concept of financial literacy without specific criteria and without specific definition. It would be a mistake to ground it; we'd have to go through an entire legislative process and through Parliament to change any definition we'd put into legislation. It would be a mistake to do that. I think we just need to keep it undefined because, like a lot of other things, we know financial literacy when we see it.

[The Chair, Conservative, James Rajotte]

It is Mrs. Glover, Mr. Brison, and Mr. Hoback, is that correct? Is there anyone else who wishes to speak to this amendment?

Go ahead, Mrs. Glover, please.

[Shelly Glover, Conservative, Saint Boniface, MB]

Thank you, Mr. Chair.

I want to direct a question to the witness, if that's all right.

Ms. Ryan, thank you for being here; we appreciate it.

Just to be clear, there is no requirement to define this statement, is there, in this case?

[Eleanor Ryan, Senior Chief, Strategic Planning and Trade, Department of Finance]

The act does not contain a definition, as the intention was to allow the term to have its ordinary-course meaning in the timeframe that we're in. It can evolve. It can evolve to contemplate what is considered financial literacy and meet the needs of Canadians as we find them now, as we might find them five years from now, or as we might find them 10 years from now.

The other, more technical reason is that it doesn't require the financial literacy leader over time to say, “Could I speak to that stakeholder, collaborate with that stakeholder? Am I technically within this definition?” That's part of what a government agency would always do. If it had a definition, it would try to make sure it stayed within the confines of the definition. A more expansive approach is to have the bill as it is currently drafted.

[Shelly Glover, Conservative, Saint Boniface, MB]

I have a quick follow-up, Chair, if I could.

Thank you for that. What you're saying is it could actually limit the ability of the financial literacy leader to collaborate and get advice from elsewhere. Am I accurate in interpreting what you said in that way?

[Eleanor Ryan]

That's always the risk when you have a definition. It is meant to have a meaning, and it would depart from what the ordinary meaning would be.

[Shelly Glover, Conservative, Saint Boniface, MB]

In that case, I too do not want to see that happen, so I'll be rejecting the amendment. Thank you.

[The Chair, Conservative, James Rajotte]

Thank you, Mrs. Glover.

Go ahead, Mr. Brison, please.

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

Thanks, Ms. Ryan, for being with us today.

You've cited that there may be a risk that somehow defining financial literacy in this way would potentially limit the mandate. The amendment proposes that financial literacy means the state of having the knowledge, skills, and confidence to make responsible financial decisions and become more aware of financial risks and opportunities.

What would be an example of another potential definition of financial literacy, in addition to this, that would represent a risk in terms of limiting the mandate, in addition to those cited in the amendment? It would help edify the committee to have an example of another potential definition that we haven't thought of that might, if we were to pass this amendment, limit the mandate.

[Eleanor Ryan]

There are many common ways to define financial literacy. Generally these are the kinds of things that are contemplated at this time. I've sometimes seen it described without the words “financial risks” taken into account in the wording. Usually we're talking about making sure that people have the knowledge—so that's the disclosure—the skills, and then the ability to make decisions, to act on the knowledge and skills.

At this point in time, that kind of definition seems in line with others, but whether it will be in line with what is expected on financial literacy in a year, two years, five years.... Really, the approach in drafting is that if one intends the meaning to reside in the current state of affairs, in what is commonly accepted, one relies on the ordinary-course meaning instead of a static definition.

I don't think I can point to a specific aspect that is not appropriate.

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

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Brison.

Go ahead, Mr. Hoback, please.