Finance Committee on May 31st, 2016

[The Chair, Liberal, Wayne Easter]

Yes, okay.

Mr. Caron.

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

Once again, the explanation makes no sense.

We are not denying the fact that increased compensation is being granted; that is certainly the case. However, there is also no denying that the government continues to appeal a decision in court on veterans’ cases. That is also a fact.

Let me go back to our amendment.

If the amendment is not passed, the current practices will continue. The government would rather continue to force veterans with permanent medical conditions—we are not talking about a condition that may change—to provide information about that condition every year under the excuse that some may move and they would need to be contacted to confirm some information. That makes no sense to me.

If we want to put an end to this insult of asking veterans to justify the loss of a leg year after year, then this is the amendment that we have to pass.

[The Chair, Liberal, Wayne Easter]

Nobody needs to hear from any witnesses, and it's a recorded vote.

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

(Clause 107 agreed to on division)

[The Chair, Liberal, Wayne Easter]

Are there any of clauses 108 to 188 that need to be brought up, or hear witnesses on?

Mr. Caron.

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

I would like to speak to division 5, please.

[The Chair, Liberal, Wayne Easter]

Division 5, starting at what clause?

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

I have one simple comment on division 5 of part 4 as a whole.

[The Chair, Liberal, Wayne Easter]

All right, we might as well do it now and then we'll go to the vote.

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

Division 5 of part 4 deals with the recapitalization of the banking system. It is a group of provisions that is extremely important and delicate. It would change the way in which our banking institutions would be protected if any serious problems were to undermine their viability.

We are not opposed to a solution like recapitalization. However, I find it extremely problematic that this committee has not conducted an in-depth study of the consequences of the provisions in this division of the bill, given that they cover more than twenty pages or so and are very technical in nature.

As members of the Standing Committee on Finance, our responsibility is to hold the government to account for the provisions that it is making, whether they are good or whether they need more discussion. Our responsibility is to conduct a thorough study of measures that are going to be very important for our economy in the years to come. We are about to make major changes to the lifelines we give to our banking institutions and we are doing so with a minimum of debate and a dearth of questions. Such behaviour should lead us to reflect on the role of this committee. We must keep in mind its basic function, that of requiring the government to account for its proposals. That has not been done.

A government official, Mr. Campbell, came to answer a few questions about the consequences of these provisions. I would like to thank him for that, because he provided us with useful answers.

However, did anyone from a financial institution testify before the committee? Did we hear from external analysts who have studied these provisions? We could have heard the views of OECD or IMF representatives. We could have spoken to all of them.

I can tell you that Canadians from my constituency and some from outside it are worried. I do not necessarily share those concerns, but they are worried because they have seen the abuses that bank recapitalization measures can cause. The most common example is Cyprus, where amounts deposited in savings accounts were seized in order to recapitalize the banks. That is not what is in this bill, I admit, but the concern exists, and we did not have the opportunity to study this issue in depth.

Once again, some of these provisions are not in the bill, but they will be included in the regulations to come and those regulations can be changed at any time by the government, by the Governor in Council. It would have been important to make sure that safeguards are in place.We have had no guarantees in that regard.

I can tell you that this division of the bill on bank recapitalization is one of the most significant and complex that I have ever seen in more than four years on the Standing Committee on Finance. But the study it has been given is extremely superficial.

I do not know what else to say to make committee members realize the importance of the work that we have to do for our public finances and for the Canadian economy. Dealing so casually with something so crucial and so technical leads me to question the legitimacy and the effectiveness of the committee's functions.

For those reasons, even though we are not opposed to the provisions that the government is proposing, we cannot support this approach. The government should have introduced this part of the bill as a separate bill. Then it could have been closely studied. That was not the case.

[The Chair, Liberal, Wayne Easter]

Thank you, Mr. Caron.

Comments are basically on part 4, division 5 as a whole. We are not on any specific clause.

I know these folks who are in the room because I spoke at a panel this morning. There's a delegation who just walked in the room who are with the Commonwealth Parliamentary Association, our colleagues in other parliaments with that institution.

I say welcome and I know all our members will be on their best behaviour just because you're here.

Thank you.

Mr. MacKinnon.

[Steven MacKinnon, Liberal, Gatineau, QC]

I would like to reassure my opposition colleague that we are not in Cyprus, far from it. We will avoid situations like that.

If possible, Mr. Chair, I would like to ask Mr. Campbell to be good enough to come forward, plus any of the officials with us today who would like to answer questions on these provisions.

[The Chair, Liberal, Wayne Easter]

Mr. Campbell, Ms. Dostal, and Mr. Robinson.

Mr. MacKinnon, the floor is yours.

[Steven MacKinnon, Liberal, Gatineau, QC]

Thank you.

It's good to see you again.

Could you explain, Mr. Campbell or Ms. Dostal, the consultation process that occurred? Perhaps start at the beginning. What was the genesis of this idea, what form of worldwide collaboration was undertaken, and what were the specific steps in consulting with stakeholders, clearly financial institutions and any others you may care to mention, since the genesis of this proposal?

[Alexandra Dostal, Senior Chief Framework Policy, Financial Institutions Division, Financial Sector Policy Branch, Department of Finance]

Thank you very much for the question.

The Department of Finance has been in consultation with respect to the provisions here, but with respect to the bail-in regime more broadly, on a very consistent basis over the past several years. As you may be aware, there was a consultation paper issued by the Department of Finance in August 2014. However, even in the run-up to that consultation, there were extensive consultations with the industry and other interested stakeholders. That includes banks, investors, and others who possibly would be impacted by the development of this regime.

We've been in continuous contact, actually, beyond the consultation paper, through the continuation of the development of the regime, and we'll continue to do so as the regulations are developed, if the legislation passes, to continue to implement the regime.

[Steven MacKinnon, Liberal, Gatineau, QC]

Do you have anything to add to that, Mr. Campbell?

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

Yes. I have just one supplemental point, if I may.

While this bill has been pre-reviewed in the other place in Parliament, I can say, not speaking for them, that the Canadian Bankers Association, representing all of the affected institutions, have come forward to suggest that we had consulted, and they were supportive of introducing this regime quite consistent with standards internationally. I'm not speaking for them, but I am referring to them being on the record in that regard.

We also have consulted widely in past months with both the investors as well as the various institutions, and collaborated closely internationally with all of our peer jurisdictions, to make sure we are consistently following the guidelines set out by the financial stability board and the G20. While this is an important provision to ensure financial stability in Canada, we also want to make sure our institutions and investors are treated the same globally so that there's an equal platform upon which the banks operate and investors participate in as well.

[Steven MacKinnon, Liberal, Gatineau, QC]

If I'm understanding this, these are measures that are being adopted across the G20, the OECD countries.

[Glenn Campbell]

That is correct.

[Steven MacKinnon, Liberal, Gatineau, QC]

Yesterday we heard the minister, however briefly, on these measures. I don't have his exact words in front of me, but if memory serves, I think he qualified that all of these measures are being undertaken in the extremely remote chance of a looming failure, an impending failure, of a recognized financial institution.

How would you qualify that?

[Glenn Campbell]

Far be it from me to qualify the minister's statements, but I think he reflected the sentiment that this is a provision that is designed to protect customers and depositors, hence that all deposits are excluded. It really is to keep the institutions operating.

From a broad point of view, this is one measure we hope never to test, but it's adding one element to the tool kit of many tools that already exist under the CDIC Act. From a large system point of view, this is one extra feature. It's important, and we hope we never test it.

That being said, it's important to ensure that even under hypothetical scenarios our system works sufficiently to give confidence to investors in the Canadian financial system.

[Steven MacKinnon, Liberal, Gatineau, QC]

Belt and suspenders, as it were.

[The Chair, Liberal, Wayne Easter]

I think you'll have to interpret that, Mr. MacKinnon. What do you mean?

[Steven MacKinnon, Liberal, Gatineau, QC]

Belt and suspenders: one assurance on top of another set of assurances.

[Glenn Campbell]

That would be correct.

[The Chair, Liberal, Wayne Easter]

Okay. There we go.

Mr. Champagne, do you want to comment?