Finance Committee on May 29th, 2014

[John McKay, Liberal, Scarborough—Guildwood, ON]

Could we do clauses 201 to 204?

[The Chair, Conservative, James Rajotte]

Okay.

(Clauses 201 to 204 inclusive agreed to)

(Clause 205 agreed to)

Colleagues, we have division 12, did you want to do a health break? I'll suspend for about five or 10 minutes. Thank you.

[The Chair, Conservative, James Rajotte]

I call this meeting back to order.

This is meeting number 37 of the Standing Committee on Finance, continuing our consideration of Bill C-31, an act to implement certain provisions of the budget tabled in Parliament on February 11, 2014 and other measures.

We are dealing with clause-by-clause consideration. Colleagues, we are at division 12, Nordion and Theratronics Divestiture Authorization Act. This deals with clauses 206 to 209. We have an amendment with respect to clause 207.

Is there any discussion on clause 206?

(Clause 206 agreed to)

(On clause 207)

On clause 207 we have amendment NDP-15.

Mr. Cullen.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Thank you, Chair, and thank you to our official for staying with us.

I have a question that I'll put through you, but first let me posit what this amendment would do. Through NDP-15 we're seeking to ask the government to publish any undertakings, written undertakings in particular, with respect to the sale of Nordion, any obligations that were picked up by the purchaser with respect to jobs that were to be maintained or positions held through management. Is there any requirement right now under the Investment Canada Act that would make such a requirement of the minister?

[Soren Halverson, Senior Chief, Corporate Finance and Asset Management, Department of Finance]

No, in fact it is the contrary of that. Under the Investment Canada Act undertakings that are made are not made public.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Can you explain why that is?

[Soren Halverson]

What I can say is that the act contains strong protections with respect to information both to protect the Canadian businesses as well as foreign investors. It is a matter of commercial confidence essentially.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

We've had foreign takeovers—this is of an asset—of Canadian companies that were contingent upon regulatory approval by the government in which they made any of the requirements of the purchase public. I'm thinking of some of the steel in Hamilton and some of the other conditional aspects of the sale. These, again, were not assets owned by the Canadian government but the Canadian government was involved. There was no concern of breach of confidentiality or privacy of the purchaser or the seller. Was that just foregone voluntarily by the government in order to make that public?

[Soren Halverson]

I'm not familiar with the particular cases that you are referring to.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

For the layperson not familiar with the Investment Canada Act, when selling off an asset, if part of the condition of that sale is to maintain a certain number of jobs in Canada, what possible harm could come to the purchaser if that requirement the government is making of the purchaser were to be made public?

[Soren Halverson]

I'm just not in a position to debate the merits of those parts of the act either way.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

I don't want to put you in an unfair position at all. What we're trying to understand is that the Canadian government wants to sell something and they have a purchaser in mind, so they are making the sale and enabling the sale through this budget implementation act. So to Mr. Keddy's point before the break in terms of inappropriate uses of budget implementation acts, one may argue that selling off assets and making all the stipulations possible through an omnibus bill would be incongruous with accountability.

What we're trying to offer here is simple transparency, Chair, through you to the other committee members, to say if there are any conditions of this sale on jobs, on any investment, things that have been agreed to between the Canadian government and the purchaser, that those conditions be made public, period. That's all it does. Certainly if there are conditions that the purchaser is willing to adhere to in confidence they would be ones they would be willing to have exposed in public.

The angling of the question I had for you, Mr. Halverson, was to understand if there is any sort of.... I understand the legal requirements as it's written, but there’s nothing preventing the government from agreeing with this and making it a condition of the sale that any conditions and requirements would be made public. I don’t know why the government wouldn't, in the spirit of transparency and accountability, make all that information and those conditions public because the public owns the asset.

[Soren Halverson]

If I could just make one point of clarification, it is that this is not a government sale. The federal government privatized Nordion in 1991, so—

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Excuse me.

Yes, thank you for the clarification, yet in the foreign investment act and the enabling of this sale through the legislation, on the commitments that have been made by the purchaser to the government, allowing for those commitments to be made public is what we seek to do. I get the sense from you in terms of what you're able to testify to and not...but perhaps someone from the government is going to be able to argue against this particular amendment, because for a government that seeks to pride itself on accountability and transparency, this is exactly what this amendment seeks to do.

Thank you, Chair.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Cullen.

Okay? We'll go to the vote, then, on NDP-15.

Did you want a recorded vote?

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

I'm sorry. I thought there would be counter-arguments. None? Okay.

Yes, a recorded vote, please.

(Amendment negatived: nays 5; yeas 4 [See Minutes of Proceedings])

[The Chair, Conservative, James Rajotte]

The amendment is defeated. All in favour of clause 207?

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

A recorded vote, Mr. Chair....

[The Chair, Conservative, James Rajotte]

We will have a recorded vote for clause 207.

(Clause 207 agreed to: yeas 5; nays 4)

(Clauses 208 and 209 agreed to)

(On clause 210)

I want to thank Mr. Halverson for being with us this evening.

Colleagues, we now have division 13 on the Bank Act. We have one clause, clause 210. We have amendment PV-12, which you have in your documents, so it is deemed moved.

All in favour of PV-12?

(Amendment negatived [See Minutes of Proceedings])

PV-12 is defeated. All in favour of—

[An hon. member]

On the main motion....

[The Chair, Conservative, James Rajotte]

Okay.

I think we have officials from Finance here.

We welcome Mr. Foster to the committee. We are on clause 210.

We will have a debate on that.

Mr. Caron, the floor is yours.

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

Thank you, Mr. Chair. Good afternoon, Mr. Foster.

I have a question for you.

I don't think this was asked during the information session or when you appeared before us. The summary we were given said something along the following lines:

Under the guidance of the Heads of Agency Committee, federal regulators and provincial securities regulators agreed that the Office of the Superintendent of Financial Institutions (OSFI) is best placed to monitor the effectiveness and governance of risk controls for submission processes for the rates of the banks that submit them.

Can you tell us whether this was the opinion of the Autorité des marchés financiers du Québec, among others?

[Wayne Foster, Director, Securities Policies, Department of Finance]

Indeed it was. You're referring to the provision to empower the Governor in Council to promulgate regulations as regards bank submissions to financial benchmarks. The key benchmark in Canada this would relate to would be what's called the “Canadian dealer offered rate”, which is kind of the Canadian version of LIBOR. You've heard maybe a fair bit about LIBOR, about some scandals and so on.

In Canada, the Canadian dealer offered rate, or CDOR, is an average of rates submitted by seven banks. Since they are banks that submit the rates, it was concluded at the heads of the agencies that you referred to, which includes the AMF, the Autorité des marchés financiers in Quebec, that OSFI was best placed to supervise the submission process for the calculation of that rate—since they are seven banks that submit.

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

I have another question for you.

You referred to the second part of the legislation, which deals with financial benchmarks.

Regarding the Governor in Council's explicit power and the regulation of derivative products, did you consult provincial authorities or agencies, including the Autorité des marchés financiers?

I'm asking this question because it's important. In fact, if we look at all of Canada's stock exchanges, derivative products are a specialty of the Montreal Exchange. I would basically like to know whether the Autorité des marchés financiers approved this decision.

[Wayne Foster]

So in regard to the first part of the provision that deals with the regulation of derivative transactions by banks, we're talking about over-the-counter derivatives, not exchange traded derivatives, which would include those products traded on the Montreal Exchange that are rightly regulated by Quebec authorities. So these are interest rate swaps and other transactions used for hedging purposes that are transacted by banks primarily between Canadian banks and foreign banks.

In terms of that activity, again it is clearly banking activity, so the right authority for that is a federal authority and under the Bank Act. Currently the office of the superintendent would be responsible for supervising banks' activities in this regard.