Finance Committee on May 8th, 2018

[Marie-Josée Lambert]

No. In the Currency Act, the power to remove from circulation only exists for coinage. It's not parallel for banknotes, which is why we're looking to have it put in legislation for banknotes.

The Act as it stands today does not allow us to do what was done with the penny.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Okay.

I would like to ask another question about legal tender.

Once all is said and done and people are told that they can redeem their banknotes at the Bank of Canada, will retailers be required to refuse this money?

[Marie-Josée Lambert]

Retailers.

[Richard Wall]

A transaction exchange is an exchange between two parties. What they use is up to them to determine. There's no obligation now for a retailer to accept money in a transaction unless they agree to do that.

That exists before and after the removal of legal tender status. Basically what we're saying is that if that retailer who accepted that money that had legal tender status removed came to the government and tried to say, pay their tax bill, it would not be accepted at that point. Between parties, there's always an agreement on what they're going to use in order to settle a transaction.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Okay. Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Ms. Lambert and Mr. Wall.

Now, for part 6, division 7, “Payment Clearing and Settlement”, could the witnesses come forward?

We have from Finance Canada, Ms. Bourdeau, senior advisor, financial sector policy branch; Mr. Sample, acting director general, capital markets division; Mr. Brown, director, financial stability; Mr. Vaillancourt, director, payment policy. From the Bank of Canada, we have Mr. Chande.

Welcome, and the floor is yours.

[Justin Brown, Director, Financial Stability, Financial Sector Policy Branch, Department of Finance]

Thank you, and good evening.

Division 7 of part 6 proposes to amend the Payment Clearing and Settlement Act to implement a financial market infrastructure resolution framework so that the appropriate tool kit is in place in the unlikely event that a systemically important FMI fails.

Financial market infrastructures, which are known as FMIs, are hubs for financial transactions, and facilitate the clearing, settling, and recording of payments. Certain FMIs are designated and overseen by the Bank of Canada if they are considered to pose systemic or payments risk. It is important that these designated FMIs continue operating, even at times of stress.

Therefore, these amendments would introduce a resolution framework to support the development of feasible, credible resolution plans for designated FMIs, and to provide a legal basis for federal authorities to intervene if a designated FMI is unable to recover from a stress event.

These proposed changes would help preserve financial stability, maintain critical services of the FMIs, and minimize public exposure to loss during a financial crisis.

Thank you.

[The Chair, Liberal, Wayne Easter]

Financial market infrastructures are what, specifically?

[Justin Brown]

They conduct three types of activities: payments, clearing, and settling. The specific FMIs we're referring to in this case have been designated by the Bank of Canada and reside in Canada. There are four of them. First, there is the large-value transfer system, which is the only system for settling large-value and time-critical Canadian dollar payments. Second, there is the automated clearing settlement system, or ACSS, which is a retail payment system for cheques, direct deposits, and pre-authorized debits. Third, there is the central counterparty CDSX, which is the only system that settles securities and maintains a central securities depository. Finally, there is the Canadian Derivatives Clearing Service, or CDCS, a central counterparty for fixed-income securities and repurchase agreements.

[The Chair, Liberal, Wayne Easter]

Thank you for that.

Are there any questions?

We're all done, then. That is unusual.

Thank you very much for your testimony. It must have been a clear explanation.

We now turn to division 8, which is the “Canadian International Trade Tribunal Act”.

We have Ms. Villeneuve, economist, trade rules, at international trade and finance branch of the finance department; and Ms. Govier, senior director, trade rules, international trade and finance branch, finance department.

Welcome, the floor is your.

[Léticia Villeneuve, Economist, Trade Rules, International Trade and Finance Branch, Department of Finance]

Thank you, Mr. Chair.

Division 8 of part 6 proposes amendments to the Canadian International Trade Tribunal Act in relation to the appointment of tribunal members. The CITT is a quasi-judicial tribunal that conducts inquiries and hears appeals on various aspects of trade policy. Its mandate includes conducting injury inquiries for anti-dumping and countervailing duty or safeguard investigations in Canada's trade remedy system, hearing government procurement complaints related to Canada's free trade agreements, and adjudicating appeals on customs and excise tax matters.

The tribunal is composed of up to seven members, including a chairperson, who are appointed by the Governor in Council for a term of up to five years.

Division 8 of part 6 of the Budget Implementation Act, 2018, No. 1, includes three amendments to the Canadian International Trade Tribunal Act. The first would create one vice-chairperson position. Thus, the tribunal would always have a maximum of seven members, including one chairperson and one vice-chairperson.

The second amendment clarifies the rules for member's eligibility for re-appointment.

The third amendment clarifies that the vice-chairperson may act as chairperson in the interim, as necessary, and provides for the appointment of the vice-chairperson in the interim.

These changes will provide greater clarity, flexibility, and efficiency in the process for appointing members to the tribunal.

We're happy to take any questions.

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you.

Mr. Dusseault.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

The bill makes reference to a period of 60 days; Governor in Council approval is required for a longer term. Is there a reason for this 60-day period? Why was this period chosen?

[Michèle Govier, Senior Director, Trade Rules, International Trade and Finance Branch, Department of Finance]

The 60-day period was something that existed in the previous law, and I think it's just because a period under 60 days is considered a very short-term replacement, so perhaps the higher-level approval isn't required, contrary to the requirement for a longer-term replacement.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

It gives latitude.

[The Chair, Liberal, Wayne Easter]

So there is no change in the total number of people on the tribunal.

[Michèle Govier]

That's correct.

[The Chair, Liberal, Wayne Easter]

It's just adding a position with the same individual.

Mr. Kmiec.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

For permanent members of this group, has the chairperson's absence at a meeting been problematic in the past? I am simply trying to understand the usefulness of and real need for a vice-chairperson. Have meetings been cancelled in the past due to the absence of the chairperson?

[Michèle Govier]

There haven't been situations like that. Usually the replacement of the chair would be for a longer-term vacancy in the position. For example, if a chair's term had expired and a new chair had not yet been appointed, or if there had been an illness or some other long-term issue. It's not about the issue of this short-term coverage or any issues that have arisen there. Two vice-chair positions were phased out, resulting from budget cuts in 2011.

The intent here is to make it much clearer if there is that kind of a gap in the chair position, who the appropriate person would be acting in that position. Right now, it can be any of the other members and requires that—

[Tom Kmiec, Conservative, Calgary Shepard, AB]

These are all permanent members here.

[Michèle Govier]

Yes.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Obviously there's a pay difference between vice-chair and chair?

[Michèle Govier]

There is, yes.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

What is it?