Finance Committee on May 10th, 2016

[Faith McIntyre]

Thank you very much for the question.

It's something we are asked fairly often, unfortunately.

The form in question is not a Veterans Affairs Canada form. I know that changes have been made to that form. It isn't a change to the act, but a change in the documentation that is requested from veterans and their doctor.

We are certainly working hard to ensure that all our forms are client-service focused. We have done a lot of work recently, not just to reduce the number of forms to Veterans Affairs Canada, but also to change and simplify the language used. I can tell you that a change has been made to the document you are referring to.

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

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you.

Mr. Ouellette, you may have one quick question.

[Robert-Falcon Ouellette, Liberal, Winnipeg Centre, MB]

Let's say you get hurt around your tenth year of service. Your career progression moves on. You were starting out as corporal and you might have said you could have finished as, perhaps, a sergeant or something like that. You get 90% because perhaps you're very hurt. You reach retirement age.

What happens at retirement age, 55 or 65?

[Faith McIntyre]

Thank you very much for the question.

After age 65, there are two current benefits for which the veteran might be eligible. Again these would depend on their post-retirement earnings and also on some other eligibility criteria that they would have to meet.

One is the supplementary retirement benefit, which is a percentage of their earnings loss benefit that is kept aside for them and that they receive in a lump sum payment at age 65.

Second, there's the retirement income security benefit, which came into place in budget 2015; it is payable after age 65.

[The Chair, Liberal, Wayne Easter]

Thank you very much.

Now we will go to division 4, part 4, amendments to the Bank Act (Federal Credit Unions).

Let's call up Glenn Campbell and Margaret Tepczynska. Mr. Campbell is the director of financial institutions, financial sector policy branch. Ms. Tepczynska is a senior economist in the financial institutions division, financial sector policy branch.

[Glenn Campbell, Director, Financial Institutions, Financial Sector Policy Branch, Department of Finance]

Thank you, Mr. Chair.

The proposed legislation contained in part 4, division 4, of Bill C-15 amends certain provisions of the Bank Act relating to federal credit unions. The government is acting to address the unique transitional risks credit unions entering the federal framework may face due to the differences between federal and provincial regimes. The federal credit union framework within the Bank Act was put in place to offer the sector an option to grow regionally or nationally if they so choose. The framework is neutral and does not incent federal entry.

There are three main amendments. The first amendment provides the Minister of Finance authority to exempt an applicant from a federal technical procedural entry requirement so long as the applicant substantively meets the intent of the requirement. In short, in certain circumstances there are federal requirements and provincial requirements and to avoid a problem at the end of an application period there is, with a compelling reason, flexibility there to follow a provincial rule.

The second amendment provides the Minister of Finance authority to exempt federal credit unions from certain technical procedural requirements relating to voting up to three years after they have entered so long as they have substantially met the intent of the requirement. This gives some flexibility to electronic voting, in particular where there are some differences between various provinces and federal. Again, this flexibility exists providing they substantially meet the federal requirement.

The third amendment provides the Minister of Finance authority to offer a transitional loan guarantee to a federal credit union for the purpose of supporting it through its first three years. Credit unions could face uncertainty during transition. The loan guarantee would be a safety net providing insurance value. It would also potentially provide a stable source of funding if funding challenges exist and credit unions need it.

The measures are in addition to transitional support that already exists in the federal credit union framework and provide targeted protection against transitional risk. The measures continue to refine the federal credit union framework in response to demands from the credit union sector. There was also a small technical housekeeping amendment on French concordance that has no policy effect.

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Mr. Campbell.

We'll turn to Mr. Grewal.

We are going to run out of time. We had hoped to deal with the witness list. Could we have agreement from committee? There are five witnesses who the clerk has called for Thursday who relate to commonality across the parties. Could we agree that the clerk take the first five in priority from each of the parties' lists to work with to get the witnesses for Thursday?

They're all in priority order I think, Ms. Raitt.

[Lisa Raitt, Conservative, Milton, ON]

Yes. We had a discussion about that, Mr. Chair, on our side. That may not reflect our current thinking.

[The Chair, Liberal, Wayne Easter]

Okay. Could you give your five to the clerk.

[Lisa Raitt, Conservative, Milton, ON]

Yes, we will.

[The Chair, Liberal, Wayne Easter]

We'll give our five, Mr. Sorbara, and yours are in order of priority, I think, Guy.

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

Yes, they are.

[The Chair, Liberal, Wayne Easter]

So we'll ask the government and the official opposition to give us their five so that the clerk can work with them.

Mr. Grewal.

[Raj Grewal, Liberal, Brampton East, ON]

Thank you, Mr. Chair.

I have a quick question. In their history, how many federal credit unions have failed?

[Glenn Campbell]

Actually there has not yet been a federal credit union that exists. There is one formal applicant before the government right now, the Caisses populaires acadiennes, soon to be renamed Uni Coopération financière. They will be the first federal credit union.

[Raj Grewal, Liberal, Brampton East, ON]

They're applying for a patent under the Bank Act?

I'll revise the question. Within provincial jurisdictions, do you know how many credit unions have failed?

[Glenn Campbell]

Actually I don't have the specific data at my fingertips. However, I can say the provincial system has been quite adaptable at consolidating credit unions. When they face trouble, stronger credit unions often pick up smaller credit unions. Really there's been a reduction by the hundreds of credit unions over the last 15 or 20 years. I would not want to portray these as failures per se. Often it's a natural consolidation that happens inside provincial regimes.

[Raj Grewal, Liberal, Brampton East, ON]

So the risk is pretty small in terms of solvency issues?

[Glenn Campbell]

From a solvency point of view, the risk is lower. Given that most credit unions, whether they're provincial or federal, would be engaged in what we would call plain vanilla activities, taking savings, simple loans, and credit; they're not involved in risky capital markets activity by and large. Some of the bigger ones are, but they largely do that for funding purposes. By and large, credit unions are simple financial institutions and they have a good track record that supports that.

[Raj Grewal, Liberal, Brampton East, ON]

Is the government guaranteeing these loans? There won't be a substantial fiscal cost to the government?

[Glenn Campbell]

In this case, there's no direct fiscal provisioning required on a loan guarantee. Given the nature of the loan guarantee that supports, there is a Treasury Board guideline and a history of the federal government providing loan guarantees. There's a lot of threshold before this can even be tapped, and the scenario under which there would be losses is very remote. Technically it's not insignificant, but it's highly unlikely.

[The Chair, Liberal, Wayne Easter]

Thank you.

Mr. Liepert.

[Ron Liepert, Conservative, Calgary Signal Hill, AB]

As a follow up, Mr. Campbell, is it not fair to say, however, that had there not been significant provincial government bailouts of credit unions on occasions in the past, there would have been significant failures?

[Glenn Campbell]

I think that question is beyond my remit to answer.