Evidence of meeting #154 for Finance in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was bank.

A video is available from Parliament.

On the agenda

MPs speaking

Also speaking

Grahame Johnson  Managing Director, Funds Management and Banking Department, Bank of Canada
Nicolas Marion  Chief, Capital Markets and International Affairs, Securities Policies Division, Department of Finance
Marie-Josée Lambert  Director, Crown Corporations and Currency, Financial Sector Policy Branch, Department of Finance
Richard Wall  Managing Director, Currency, Bank of Canada
Justin Brown  Director, Financial Stability, Financial Sector Policy Branch, Department of Finance
Léticia Villeneuve  Economist, Trade Rules, International Trade and Finance Branch, Department of Finance
Michèle Govier  Senior Director, Trade Rules, International Trade and Finance Branch, Department of Finance
Annie Moulin  Acting Director, Arctic Science Policy Integration, Department of Indian Affairs and Northern Development
Patrick Barthold  Director, Northern Governance and Partnerships Directorate, Northern Governance Branch, Northern Affairs, Department of Indian Affairs and Northern Development
Christian Sylvain  Director General, Corporate and Government Affairs, Canadian Institutes of Health Research
Jeannine Ritchot  Executive Director, Regulatory Cooperation, Regulatory Affairs Secretariat, Treasury Board Secretariat
Don Parker  Director, Strategic Policy, Communications Security Establishment
Julie Lalonde-Goldenberg  Director General, Partnerships Development and Management Directorate, Department of Employment and Social Development
Andrew Brown  Acting Director General, Employment Insurance Policy, Skills and Employment Branch, Department of Employment and Social Development
Cara Scales  Director, Policy Analysis and Initiatives, Employment and Insurance Policy, Department of Employment and Social Development
Catherine McKinnon  Senior Counsel, Judicial Affairs, Courts and Tribunal Policy, Department of Justice
Anna Dekker  Counsel, Judicial Affairs, Courts and Tribunal Policy, Public Law Sector, Department of Justice
Manuel Dussault  Senior Director, Framework Policy, Financial Sector Policy Branch, Department of Finance
Julien Brazeau  Senior Director, Framework Policy, Financial Sector Policy Branch, Department of Finance
Jeremy Weil  Senior Project Leader, Financial Sector Policy Branch, Department of Finance
Saskia Tolsma  Senior Economist, Sectoral Policy Analysis, Economic Development and Corporate Finance, Department of Finance
David Dewar  Director, Strategic Policy & Government Affairs, Policy & Strategic Direction, Department of Western Economic Diversification
Selena Beattie  Director of Operations, Cabinet Affairs, Legislation and House Planning, Privy Council Office
Marianna Giordano  Director, CPP Policy and Legislation, Income Security and Social Development Branch, Department of Employment and Social Development
Ann Sheppard  Senior Counsel, Criminal Law Policy Section, Department of Justice

8:50 p.m.

Senior Director, Framework Policy, Financial Sector Policy Branch, Department of Finance

Julien Brazeau

We plan to discuss that with the industry to find out what its voluntary code of conduct covers. We want to ensure that the code would provide consumers with the protection they need.

8:50 p.m.

NDP

Pierre-Luc Dusseault NDP Sherbrooke, QC

Okay. Will those discussions occur as soon as the bill receives royal assent?

8:50 p.m.

Senior Director, Framework Policy, Financial Sector Policy Branch, Department of Finance

8:50 p.m.

NDP

Pierre-Luc Dusseault NDP Sherbrooke, QC

We are giving you the regulatory authority to do that, so we hope that it will be done as soon as possible.

8:50 p.m.

Senior Director, Framework Policy, Financial Sector Policy Branch, Department of Finance

Julien Brazeau

Yes. I understand.

8:50 p.m.

NDP

Pierre-Luc Dusseault NDP Sherbrooke, QC

Thank you.

8:50 p.m.

Liberal

The Chair Liberal Wayne Easter

Mr. Sorbara.

8:50 p.m.

Liberal

Francesco Sorbara Liberal Vaughan—Woodbridge, ON

Thank you, Mr. Chair.

With respect to the legislation in the BIA with regard to life insurance companies making investments in infrastructure, do there need to be any corresponding capital adjustments in terms of how capital is accounted for by OSFI for the insurance companies? It's one thing to have it in the BIA here, but in terms of the capital ratios and capital requirements that the insurance companies operate on, I'm just curious. I'm still thinking that they'll need some sort of adjustments on how they have to set aside capital to invest in these assets.

8:55 p.m.

Senior Director, Framework Policy, Financial Sector Policy Branch, Department of Finance

Manuel Dussault

There is no proposal in the legislation to make adjustments to capital rules. OSFI sets the capital rules independently. Of course, as you learn by experience—and we very much see this as a journey on new types of investments—there'll be lessons to be learned and adjustments to be made, probably.

8:55 p.m.

Liberal

Francesco Sorbara Liberal Vaughan—Woodbridge, ON

If this legislation, hypothetically, were implemented this evening, what would change tomorrow morning for the insurance companies in Canada, which manage literally hundreds of billions of dollars and definitely can use the ability to invest in assets in Canada?

8:55 p.m.

Senior Director, Framework Policy, Financial Sector Policy Branch, Department of Finance

Manuel Dussault

At this point, life insurers are not allowed to take investments in infrastructure on the equity side, so this will open up a new area for investment for them in terms of better asset-liability matching. That's what's going to change for them. It's a new asset type of investment that they will be allowed to make.

8:55 p.m.

Liberal

Francesco Sorbara Liberal Vaughan—Woodbridge, ON

Historically, they have been able to do debt investments up to a certain amount depending on the internal rating, private and public, and so forth.

I think Mr. Dussault may have alluded to that, if I was listening correctly. In terms of the structure between banks and insurance companies right now, there is no change in terms of banks directly or as we would say say in the House of Commons, indirectly, being able to offer any clients, business, or persons insurance projects' products.

8:55 p.m.

Senior Director, Framework Policy, Financial Sector Policy Branch, Department of Finance

Julien Brazeau

That's correct.

8:55 p.m.

Liberal

Francesco Sorbara Liberal Vaughan—Woodbridge, ON

If they were to take investments in fintech companies, is that still correct?

8:55 p.m.

Senior Director, Framework Policy, Financial Sector Policy Branch, Department of Finance

Julien Brazeau

They would still be covered by the direct or indirect prohibition.

8:55 p.m.

Liberal

Francesco Sorbara Liberal Vaughan—Woodbridge, ON

Okay.

I have a bunch of other stuff, but I'll stop there. It's been a long day.

8:55 p.m.

Liberal

The Chair Liberal Wayne Easter

Mr. Albas.

8:55 p.m.

Conservative

Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC

Thank you.

Just going back to life insurance companies, the provisions under subdivision B, are there still restrictions on the ability of life insurance companies to hold infrastructure for 14 years, or does that only pertain to the debt and not the equity provisions?

8:55 p.m.

Jeremy Weil Senior Project Leader, Financial Sector Policy Branch, Department of Finance

Thank you for the question, Mr. Chair.

I think you may be making reference to the specialized financing regulations that include a 13-year term limit on investments. We've heard from stakeholders from time to time that the term limits in those regulations can be a constraint; they are, by definition. The investments as proposed in this legislation wouldn't be made pursuant to the specialized financing regulations; rather, they'd be held pursuant to a new set of regulations on which, if adopted, it would be our intention to work collaboratively with the industry to develop, and those as contemplated would not include a term limit such that long-lived infrastructure assets could be held for their life.

8:55 p.m.

Conservative

Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC

Okay, so subject to some sort of Governor in Council process where there could be a time limit, but you still haven't got to that point with consultations as to what's appropriate. Is that correct?

8:55 p.m.

Senior Project Leader, Financial Sector Policy Branch, Department of Finance

Jeremy Weil

That's right. What we heard very clearly from the industry in this investment space is that it's not appropriate to impose a term limit. We wholeheartedly agree that those regulations were not designed for this type of asset, so that we're not contemplating a term limit.

8:55 p.m.

Conservative

Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC

The use of the term “permitted infrastructure entity” sounds similar to some of what's gone on in the European Union when they've made special provision for infrastructure to be held by certain companies. Is that following the model that was used in the E.U.?

8:55 p.m.

Senior Project Leader, Financial Sector Policy Branch, Department of Finance

Jeremy Weil

We're aware of the project that EIOPA, the European Union insurance regulator, undertook from a prudential standpoint to find ways to relieve their insurers of capital requirements. That was more of a prudential project, but it's certainly something that we're aware of, that we did research into, and in which we engaged with the Europeans in the context of this project, so not a direct parallel, but—

8:55 p.m.

Conservative

Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC

Yes, it's not a direct parallel, but again, just a useful mechanism to kind of forward this particular—

8:55 p.m.

Senior Project Leader, Financial Sector Policy Branch, Department of Finance

Jeremy Weil

It's a significant project that's happening in the same sort of policy space, so we would have been aware of that.