Thank you, Mr. Chair, honourable members. It is our pleasure to be here to assist you with division 7 of the budget implementation act, number two.
As announced in budget 2016, the government has conducted a review of legislation that provides authorities for the management of the treasury operations of the government. The objective of this review and the proposed amendments is to ensure that the authorities continue to be sufficient to facilitate sound and efficient management of federal funds and operations of crown corporations.
These, for the most part, amount to technical or housekeeping amendments. They fall into three general categories. The first category is to classify authorities for existing operations that the government is undertaking. A second category is to provide further tools for management of the operations. A third category is related to the crown operations, to make them more efficient, and to provide more flexible tools for certain crowns.
The amendments proposed relate to the Financial Administration Act, the Bank of Canada Act, and the Canada mortgage and housing act. These amendments are covered in clauses 140 to 144 in the bill. Clause 145 is the coming into force provision.
The first amendment is in clause 140. This would establish an explicit authority for the Minister of Finance to lend out excess cash from Receiver General cash balances. These are operations that already occur on a daily basis. The purpose of these operations is to help manage the cost of holding and collecting the cash for expenditures.
The second amendment, also in clause 140, is to establish an explicit authority for the Minister of Finance to enter into certain arrangements, such as hedging against currency risks. From time to time, the government acquires large sums of foreign currencies, and during the period of converting it to Canadian dollars, there's a certain amount of exchange at risk. This amendment is to ensure that the government has more tools for managing against such risks.
The third amendment, which is in clause 141, provides the Minister of Finance with authority to make payments that are consistent with his broader powers under the public debt section of the Financial Administration Act. There are occasions, for instance, when we use fiscal agents in other countries, such as the U.S., to act on behalf of the government in managing the issuances. In the fiscal agent's terms and conditions there is a certain limitation or time frame that obligations in the Canadian debt have to be redeemed. After such time, then there's a potential doubt as to the obligation on behalf of the government to repay that debt. This clause is meant to clarify that the minister would always have the power to pay such debt to ensure that Canada maintains its sound reputation of having good credit and being willing to repay its debts. This is very important in credit markets.
The fourth amendment is in clause 143. This establishes an authority for the Bank of Canada to manage the lending operations from the government to its crown corporations. There's an ongoing lending operation to facilitate the crown's needs. The upfront, front desk operations have been managed by the Department of Finance, since this program started in 2008. Now, over a number of years, the program has been working very well and it's very consistent with the Bank of Canada's fiscal agent's responsibilities for them to actually be running such operations. This amendment would facilitate the transfer of such operations to the Bank of Canada.
Finally, the last amendment relates to clauses 142 and 144. These amendments would propose to allow the Bank of Canada to provide custodial services to the Canada Mortgage and Housing Corporation. Canada Mortgage and Housing Corporation already has a custodian, but the intent of these provisions is to allow the Bank of Canada to be able to act as a custodian, which means that CMHC could move a portion of its assets to the Bank of Canada to help manage. This would facilitate and provide more options for CMHC in its financial operations.
A similar provision was provided to the Bank of Canada Act in 2014 to allow similar services to the Canada Deposit Insurance Corporation, so it's very much the same. We're amending the same provision, but we're just adding CMHC to the end of that provision.
Collectively, these are the amendments that we feel would support the continued sound management of Canada's financial operations. With that, I conclude my remarks, and I'm happy to take any questions you may have.
