Finance Committee on May 31st, 2024

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Ste-Marie.

Our final questioner for this panel will be MP Davies. You have three to four minutes.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you.

Mr. Skelton, we've touched on this a bit. I want to be clear: Canadians are currently permitted to bring a personal-use quantity of a natural health product into the country without requiring special licences for the import. They often do that over the Internet, with Amazon delivering that sort of thing.

Do you expect that consumers will be more likely to import products from foreign jurisdictions if the regulatory changes proposed by Health Canada go through in this budget?

[Aaron Skelton]

I do think it's a reasonable assumption that in the current economic environment, Canadians will seek to use the Internet, given that the impacts of the changes will be less choice and increased costs. It is the modern age. People are seeking information on the products they buy, the products themselves. Our concern is that without addressing that import piece, we'll be leaving Canadians to procure products that don't have the regular oversights that Canadian-made and Canadian-licensed products have.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thanks.

Ms. Gomez, you touched on this point as well. Besides the three major provisions, which would give the minister—if he has the subjective belief that there's a problem with off-label use or with products that are approved for use for animals being used for humans—the ability to exempt products completely, there is this section that says, “The Minister may make the order despite any uncertainty respecting the risk of adverse effects that the use of the drug, including a use other than the intended use, may present.”

What kind of test or provision would you prefer or suggest should be in legislation like this, or do you think that this uncertainty test is appropriate?

[Laura Gomez]

The uncertainty test is extremely broad, and it avoids the scientific rigour that is already in place for products that are licensed in Canada through the health regulatory-making process.

For that standard, the similar standard that would be appropriate would be for the other powers that are already in the Food and Drugs Act: that there is a “serious or imminent” health risk, that there is a “risk of injury to...health”, or that it may have a “risk of injury to...health”. That drafting is reasonable, and there may be stakeholders and other parties that are concerned about that from past experience.

However, I think the addition of this uncertainty clause really takes away from the basic requirement that there be an actual risk to health and safety before the minister can take action to remove a product from the market or make other changes.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you.

Mr. Brun, as you pointed out, the government wants the Financial Consumer Agency of Canada to be the body that implements the open banking provisions. The U.K. created a fit-for-purpose entity called the Open Banking Implementation Entity, and I've spoken to some stakeholders in the industry who believe it's more appropriate to have a fit-for-purpose entity created to implement open banking provisions. Is that something that you would support?

[Bernard Brun]

Thank you for the question.

In fact, yes, it's absolutely something that we would support, because open banking is clearly quite transversal and covers a lot, and it's hard to make it fit.

Clearly, the government looked around at what was already in place and what was available to host that, but I think it's not necessarily the best way. Your suggestion absolutely provides that the federal government and the provincial regulators could step in and pitch in at the same time. It's the way to go.

[The Chair, Liberal, Peter Fonseca]

That is the time. Thank you, MP Davies. I know it goes fast.

We want to thank our witnesses for joining us here in Ottawa. It's a beautiful Friday morning. Thank you for coming before us on Bill C-69. We really appreciate your testimony. We wish you the best for the rest of the day. Thank you very much.

On that, we're suspended, members, as we transition to our second panel.

[The Chair, Liberal, Peter Fonseca]

Members, we're back.

We have our second panel with us now, and we're looking forward to hearing from them.

With us we have the Canadian Teachers' Federation and its president, Heidi Yetman. Welcome, Ms. Yetman.

From the Financial Consumer Agency of Canada, we have with us the deputy commissioner for supervision and enforcement, Frank Lofranco. We also have the deputy commissioner for research, policy and education, Supriya Syal, and the interim commissioner and chief financial officer and assistant commissioner of corporate services, Werner Liedtke.

Our third witness group here is from the University of Ottawa. We have Stewart Elgie, professor in the faculty of law. Welcome, Professor Elgie.

On that, we are going to start with the Canadian Teachers' Federation and its president, Ms. Yetman, please.

[Heidi Yetman, President, Canadian Teachers' Federation]

Thank you very much.

Good morning, everybody. Good morning, Mr. Chair.

Thanks for having the Canadian Teachers' Federation here to speak to Bill C-69 and bring the perspective of teachers in Canada to the study of the legislation.

The federation is an organization that represents over 365,000 K-to-12 public education teachers and education workers in Canada. We proudly represent members in every province and territory.

I'm here to speak to the positive things for education in Bill C-69.

As the cost of living crisis continues to hit Canadians hard, teachers and their families are no different. That's why, when we met the Minister of Finance earlier this year to discuss issues of affordability and cost-saving measures that would benefit teachers and their families, we had three clear asks. These were the creation of a national school food program, federal loan forgiveness for teachers and more resources for mental health.

The pandemic has negatively impacted the mental health of students and young people, and students' academic success is linked to their well-being. This budget has more resources dedicated to addressing mental health concerns within youth communities in Canada. We know that sadly, mental health is becoming a more prevalent cost for families. We called on the federal government to find a way to make sure the government seeks to alleviate barriers to mental health supports, especially for those who find them inaccessible. We are pleased to see that the government pledged $500 million over five years for a new youth mental health fund designed to help younger Canadians access health care.

With student mental health issues on the rise, classrooms are becoming more complex. As a result, working conditions are deteriorating. Consequently, teachers are leaving the profession. In addition, student populations are growing and, unfortunately, fewer people are enrolling in education faculties and universities. This has resulted in a retention and recruitment crisis in education in this country, especially in remote and rural communities.

The federation pointed out a way that the federal government could make entering teaching a more enticing and viable career path by using loan forgiveness. This initiative would mean the loan forgiveness of thousands of dollars for teachers in communities that already have a difficult time recruiting. I cannot state strongly enough how significant an investment this is into public education and into making the lives of teachers and their families more affordable.

Did you know that in 2022, one in four Canadian children were food insecure in Canada? That really is something, if you think about it.

We asked for the creation of a national food program, which is a program that we have long called for and felt was long overdue. After a decade of advocacy, we are thrilled and relieved to hear the announcement of an investment of $1 billion over five years.

This is wonderful news for us and many other organizations that have advocated a food school program for years. Taking pressure off parents and families by providing nutritious meals for school-aged children at school is something that Canada, collectively, should be excited and proud about. This will have a life-changing impact on the lives of children and families living in Canada. Putting food on the lunchroom table at school will improve student physical and mental health, improve their ability to fully participate in their education and improve relationships at school. Research shows that universal food programs provide a 2.5 to 7 times return in human health and economic benefits.

I'm really pleased that Bill C-69 has made investments into each of these three key areas that will have an impact on education. Education is the foundation of a healthy and prosperous society. Spending money on education and youth is not a cost; it's an investment.

Thank you very much.

[The Chair, Liberal, Peter Fonseca]

Thank you, Ms. Yetman.

Now we'll hear from the Financial Consumer Agency of Canada. I believe Mr. Liedtke will be delivering remarks.

[Werner Liedtke, Interim Commissioner, Chief Financial Officer and Assistant Commissioner, Corporate Services, Financial Consumer Agency of Canada]

Thank you, Mr. Chair.

Thank you to the committee for inviting us to appear before you today.

My name is Werner Liedtke. I am the Interim Commissioner of the Financial Consumer Agency of Canada, or FCAC. I am joined by Frank Lofranco, Deputy Commissioner, Supervision and Enforcement, and Dr. Supriya Syal, Deputy Commissioner, Research, Policy and Education.

FCAC is an independent federal agency that protects the rights and interests of consumers of financial products and services.

At FCAC, we are happy that the financial well-being of Canadians is such an important part of Budget 2024.

Budget 2024 contains several important initiatives of note for our agency, including a new role and an expanded mandate to oversee, administer, and enforce Canada's Consumer-Driven Banking Framework. FCAC is a leader and innovator in financial consumer protection and is well positioned to take on this new responsibility.

We are working closely with the Department of Finance to advance the consumer-driven banking framework, which prioritizes innovation and includes strong and consistent protections for Canadians who will use consumer-driven banking. The new framework is guided by three objectives: safety and soundness; protecting the financial well-being of Canadians; and advancing economic growth and international competitiveness.

While the Department of Finance leads on policy and legislative or regulatory development for this framework, budget 2024 proposes providing $1 million in 2024-25 to FCAC to support preparation for its new responsibilities. This funding in the budget will also allow us to prepare for a consumer awareness campaign.

Over the coming months, we will support the Department of Finance in its engagement with the financial sector and other stakeholders on the development of the remaining elements of the consumer-driven banking framework. FCAC has deep operational knowledge of how the banking industry in Canada functions through our work as an industry regulator.

Consumer-driven banking complements existing financial services. FCAC's suitability for oversight of consumer-driven banking also extends from our knowledge of consumer trends and issues, and from our long-standing consumer education mandate.

We conduct research to better understand consumer needs and behaviour, including how financial decisions are made. We also collaborate with organizations across the financial ecosystem, including financial service providers, consumer advocacy groups and provincial and territorial regulators. These factors position the agency to effectively protect consumers while overseeing an innovative and competitive framework that benefits all parties.

Budget 2024 also includes other initiatives to benefit and protect consumers, such as the low-cost or no-cost bank account commitment originally announced in 2014. FCAC is working with banks to update this commitment and expand the features of low-cost accounts to reflect modern banking, and expand the accessibility of no-cost accounts to more Canadians. Our work to update the commitment is another example of how our understanding of consumer needs complements our regulatory mandate.

I will end there. I look forward to your questions.

Thank you, Mr. Chair.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Liedtke. I'm sure there will be many questions.

We're now going to hear from Professor Elgie of the University of Ottawa.

[Prof. Stewart Elgie, Professor, Faculty of Law, University of Ottawa]

Thank you very much, Mr. Chair.

Good morning, everyone.

I'm here today to discuss the Impact Assessment Act and the need to address the matter of trans-border environmental impacts.

I'm going to give my statement in English, but I can answer any questions you may have in French if you wish.

I'll start by saying that, as a parent, I agree with everything Ms. Yetman said. That's the end of my expertise on that subject matter.

I do have a bit of expertise, though, on the environment and the Constitution. I teach it and research it. On the side, I've litigated all the major cases in the Supreme Court of Canada since 1990 on the issue, except for the last one, where the court struck down the Impact Assessment Act. We were in France that year. I've also been involved in the development of every environmental impact assessment bill since 1992. I'm proud to say that the first one was introduced by the Conservatives and has enjoyed support by all parties in the House ever since then, for the last 30-plus years.

For today, I'm going to focus on the changes brought in to address the Supreme Court's decision. That's the purpose of the revisions in this bill. You have slides from me, by the way. If you don't like what I'm saying, there's a small slide deck in English and French that you can follow along.

The court really did two major things, but I'll only talk about one of them. The first thing they talked about was distinguishing between federal projects and provincial projects. The act more or less has that right. The second thing the court said was about making sure that assessments involve only “effects within federal jurisdiction”. That's the defined term in the act.

The court said that the definition was a little bit too broad and it needed to be tightened up. In particular, the court said that the federal government does not have jurisdiction over all aspects of cross-border environmental harm, such as greenhouse gas emissions. It doesn't have comprehensive authority over everything. It focused on saying that the act should limit itself to things that cause “significant...effects within federal jurisdiction” for cross-border impacts.

In the slides, which you can look at later, I've set out how this act defines “effects within federal jurisdiction” and compared it with the previous bill, which was the way the Harper government defined it in 2012. You may find it surprising that the Harper government defined it more broadly. In addition to fish and federal lands and migratory birds, which everyone agrees on, the previous version said that all cross-border pollution, everything that crosses a provincial or national border, is a federal matter, which intuitively makes sense.

This bill has narrowed that to just cross-border water pollution and marine pollution. It's just those two. It's gone far further than the court required by doing that. In effect, it's abandoned long-standing federal authority over cross-border environmental effects except in regard to water. As you will know, a core responsibility of the federal government is to deal with pollution problems that don't respect borders, that affect other provinces and other countries. If they didn't have that, it would undermine the ability of provinces to protect their own environment from upstream or upwind pollution.

I won't get into an in-depth lecture on constitutional law in two minutes and 30 seconds, but let me just say this: There is clear constitutional authority, recognized by the Supreme Court, to address international and cross-border environmental effects. The Supreme Court of Canada in 1997, in upholding the Canadian Environmental Protection Act, said the federal government can regulate pollution that causes “serious harm” and “move[s] across interprovincial or international borders”.

In upholding the Greenhouse Gas Pollution Pricing Act in 2021, the court again said that Parliament may regulate over “serious extraprovincial harm” to the environment. In fact, Canada signed a treaty more than 30 years ago legally requiring it to do environmental assessments of any activity that may cause significant transboundary environmental harm. That's a treaty obligation and an international law obligation.

When I read the amendments, I was surprised to see that the act would cover cross-border water pollution but not cross-border air pollution. It seemed a little bit absurd, to be honest. Parliament has been legislating over cross-border air pollution since 1971. It's been regulating over greenhouse gases since 2010. Those regulations were brought in by the Harper government, and then again in 2012. They've been operating in this area for over 30 years.

I can't explain why such a cautious approach was taken, but it really leaves the Government of Canada unable to deal with a problem that can only be addressed at a federal level, which is pollution problems that move across national or provincial borders.

If you need any convincing, on the last slide I've given you some quick summaries of why cross-border air pollution is a big deal. There are 15,300 premature deaths each year in Canada from air pollution. The economic cost is $114 billion.

That's it.

Thank you very much.

[The Chair, Liberal, Peter Fonseca]

Thank you very much, Professor Elgie. I'm sure there will be many questions, which we will begin right now.

For the first round, each party will have up to six minutes to ask the witnesses questions.

MP Williams, you have the first six minutes, please.

[Ryan Williams, Conservative, Bay of Quinte, ON]

Thank you, Mr. Chair.

Good morning to everyone in Ottawa.

Mr. Liedtke, I'll start with you, sir, if I can. I'd like to talk about open banking. Canadians have been waiting with bated breath to see legislation for open banking. They want to see open banking implemented, and alongside it instant payments. We have some reports that CEBR says the delay from instant payments is costing the GDP up to 2.7% a year. That would be almost $500 million or a little bit more than that.

I'll start with the government's conversations with you. Congratulations on being named the regulator.

What is the timeline the government is giving you, the clear timeline, for the implementation of open banking in Canada—or have they given you one yet?

[Werner Liedtke]

Thank you for the question.

We don't have a full timeline at this time. What we are looking at is that the legislation asked us to commence the preparation of our regulatory activities, which we're in the process of doing. That's what we'll use the million dollars in the budget to do.

We're supporting the Department of Finance from a policy perspective and a research perspective as they continue the development of the legislation, which will include those full timelines.

[Ryan Williams, Conservative, Bay of Quinte, ON]

Just to give everyone at home a clearer lens, you've always been more involved with consumer regulation. You'll be doing the same consumer regulation. Something that open consumer-led banking is going to implement as well, though, is B2B, which is business-to-business.

How do you intend to look at business-to-business and shift gears—it's not just the consumer—and what are you specifically looking at to take care of those concerns from businesses?

[Werner Liedtke]

We actually see business-to-business being a nexus to the financial consumer as well, because one of the benefits of consumer-driven banking is that consumers will have a safe and secure way to have their data transferred. As we create a framework that allows business-to-business to share the data, they'll become accredited. By default, by addressing their issues, we will be protecting financial consumers at the same time.

To answer to your specific details of how we're going to engage the business-to-business, that's still to be developed as the next part of the framework.

[Ryan Williams, Conservative, Bay of Quinte, ON]

How long do you see that implementation being? Will you have any consultations with business groups? Are there going to be any consultations at all on the business side?

[Werner Liedtke]

The next phase is to continue with the elements of identifying the accreditation standards, the liability issues of privacy and the security issues. We will be supporting the Department of Finance in these consultations with industries and applicable stakeholders.

[Ryan Williams, Conservative, Bay of Quinte, ON]

Do you support amendments that allow us to look at business-to-business as part of what the regulation should look like?

[Werner Liedtke]

It's too early in that stage.... I need to see the rest of the legislation on how that will impact. I don't have insight into what that will be in order to give you an opinion on that.

[Ryan Williams, Conservative, Bay of Quinte, ON]

Okay. Thank you.

Speaking of its being early right now, we've started to see the implementation of the administrative monetary penalties, AMPs, within the bill, with maximum penalties of up to $10 million for violations by registered entities. That's more than some fintechs have in total revenue for a year.

I'm wondering why we have these AMPs being introduced prior to the legislation being introduced by the government. Would you support that perhaps we should see these AMPs removed until the legislation is presented...?

[Werner Liedtke]

My understanding is that there's a large part of the AMP section that is just to have penalties that are very similar to the Bank Act's, especially for companies that are misrepresenting themselves. I think there is an advantage to protecting financial consumers by having these potential penalties at the outset to ensure there's proper behaviour.