Thank you so much, Mr. Chair and honourable members, for inviting me to speak at this committee today.
My name is Michael Hatch. I am the vice president of government relations with the Canadian Credit Union Association.
Our members manage assets worth almost $600 billion, and we serve nearly 11 million Canadians. There are over 2,000 credit union locations. We are, as many of you will know, the only financial institution with a physical presence in nearly 400 communities across Canada, many of which are represented here today.
Credit unions and regional centrals employ over 30,000 Canadians and provide full-service financial services while being fully Canadian owned.
We are pleased to appear today to comment on Bill C-59, which contains many measures of importance to our sector and to Canadians.
First of all, we were extremely pleased to see in last year's budget an update to the definition of “credit union” in the Income Tax Act. The current definition—too often enforced by CRA—dates from the early 1970s, so that makes it older than a lot of people in this room. It's no longer remotely relevant for today's world and has had negative tax consequences for co-operatively owned financial institutions in recent years. Last year's budget proposed language that will solve this problem, and we urge Parliament to pass this as soon as possible.
We were also pleased to see in last year's budget bill expanded membership options for credit unions in Payments Canada.
Furthermore, this bill also contains significant reforms to competition law in Canada, and I gather we'll hear more from my colleagues on that. These are largely necessary, should enhance competition and consumer protection and are part of a broader global shift towards enhanced competition law. However, in our sector, there is an important nuance that must be pointed out.
Credit unions, as many of you will know, provide some of the only real competition that exists in financial services in this country. Bill C-59 contains, among other things, significant reforms to the merger review process. Normally, mergers and consolidation are associated with decreased competition. In our sector, the opposite is true, and I can't underline this enough. Credit unions have been consolidating for decades, and this trend will continue.
Far from reducing competition, consolidation has allowed the sector to continue to provide the only competition that exists for the large banks. The recent acquisition of HSBC by RBC will negatively impact the competitive landscape for financial services in Canada, as these are two massive entities. The partnership of two or more small co-operatively owned financial institutions that come together to share costs and increase scale allows them to continue competing with the RBCs and HSBCs of this world. It is our hope, therefore, that a more robust merger review process will not hinder the further consolidation that will be required in the years to come in the credit union sector.
We urge members of this committee and all parliamentarians to pursue a legislative regime that allows credit union consolidation to continue, as this is consistent with enhanced competition in Canadian financial services. As federal policy-makers, the members on this committee have a key role to play in ensuring a regulatory and legislative environment that fosters the competition the Canadian financial services sector so desperately needs.
Far too often, policy coming out of Ottawa towards our sector takes into account the needs, scale and structure of the large banks. This has had very negative impacts on the credit union sector over the years. By working towards a federal legislative regime that allows credit unions to grow and thrive, we can be part of the solution to the ongoing cost of living pressures faced by millions of Canadians. Passing this bill at the earliest opportunity will help a great deal in this.
Thank you so much again for your attention.
I look forward to the testimony of my fellow panellists and to your questions, Mr. Chair.