Finance Committee on Oct. 24th, 2024

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

I'm referring to the gas grid.

[Paul Cheliak]

We like to think about it this way: There's the fuel the system delivers, and there is the infrastructure system itself. What my members operate is the infrastructure, the pipelines underground. In Markham, Ontario, we have North America's first hydrogen blending facility.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

I've visited that facility. It's phenomenal to see.

[Paul Cheliak]

That takes excess electricity, creates hydrogen from water, puts it into the gas pipeline and delivers a lower emissions molecule to the residents of Markham. There's also one in Fort Saskatchewan and there are a series of projects planned across Canada.

Similarly, we talked about methane earlier. Agricultural methane is a large source of emissions in Canada. We are capturing methane from landfills and waste water treatment plants and converting that renewable methane into a product we put into our pipelines, which again reduces the emissions profile of the product that we deliver. Those are two examples of cleaner fuels that can flow through that infrastructure system.

I would encourage anyone in the energy policy space to think about the electric system 50 years ago in many countries around the world, such as the United States and Canada. It was very, very dependent on coal. Fifty years later, we are very dependent on natural gas and renewables. We didn't cut the wires back then because they were coal wires; we cleaned them up, and I encourage you to think about cleaning up the gas system further.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Sorbara.

Members, we are moving into our third round now, and we will get through a full third round, looking at the time.

We are starting with MP Hallan for the first five minutes.

[Jasraj Singh Hallan, Conservative, Calgary Forest Lawn, AB]

Thanks, Chair.

Thank you, Mr. Simser, for your testimony today.

You said that Canada is a playground for money laundering. I would say that after nine years of this government, we're hearing the same thing about foreign interference.

Are you concerned at all that foreign actors are using financial crimes such as money laundering in Canada right now as a way to interfere in Canada's financial institutions and in our economy?

[Jeffrey Simser]

Yes, I'm concerned in two ways.

On is that the Chinese government put in currency controls a few years ago. It's created this demand for Canadian money. It's not necessarily that the government, as a foreign actor, is here, but it's encouraging people who, for example, within China, produce precursor chemicals that go to the cartels and then come onto our streets as fentanyl.

The other thing, which is not so much a money-laundering issue but is a very concerning issue, is cybercrime. We have state actors; we have North Korea and we have China, Iran, and Russia, although Russia does it a little differently. Instead of a criminal who wants to smash and grab and do ransomware and get their money out quickly, these are patient and persistent long-term adversaries, and they're very concerning as well.

[Jasraj Singh Hallan, Conservative, Calgary Forest Lawn, AB]

Thank you.

With that, since we're talking about money laundering, Chair, I would like to move a motion I had on notice.

It reads:

That, given the unprecedented $3 billion fine on TD by the U.S. Department of Justice and given that the criminal activity that this money laundering fuels has likely carried into Canada, the U.S. has named Canada as a major money-laundering country and Canada has developed an international reputation for ease of money laundering and has a lack of enforcement, the committee invite Bharat Masrani, chief executive officer of the TD Bank, the superintendent of OSFI, the Minister of Finance, Bank of Canada officials responsible for the financial crimes risk management program, and FINTRAC, and that these hearings happen in addition to the regularly scheduled committee work plan, and that in order to accommodate these witnesses, regular committee meetings be extended by one hour.

This is a big issue. The Prime Minister has said this is an issue, and I was glad to see my colleague Mr. Davies raise this in the House of Commons as well just yesterday.

We know the Liberals have ignored the issue of money laundering. That's why it continues to happen. Minister Freeland sent this committee a letter last year, in November 2023, asking us to do the statutory five-year review of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act. It's now October 2024 and the review has not yet been started.

In the meantime, recommendations from the Cullen commission in B.C. have been ignored. FINTRAC has no teeth when it comes to fighting money laundering. The Liberals are more focused on making band-aid solutions to the act in different budgets. They failed to crack down on organized crime and drug cartels, especially since these criminals launder the money they get from theft and extortion through Canadian financial institutions, casinos and real estate. Over $110 billion is laundered in Canada every single year. Money laundering is serious and a systemic criminal issue plaguing Canada and our financial and real estate sectors.

We saw TD Bank in the U.S. commit the largest money-laundering scheme in U.S. history. TD Bank is the tenth-largest bank in the U.S. and the second-largest in Canada. There is no way that money laundering at TD is an isolated incident that happened in the U.S., and there is no way it would stop at the border. Canada is known internationally—it's exactly what we heard today—for how easy it is to launder money here. In 2019, the U.S. State Department listed Canada as a major country of concern when it comes to money laundering.

This motion is not to attack any specific institution but to highlight that the system is broken. Bad actors can operate inside financial institutions without anyone stopping them. The government turned a blind eye to these crimes. FINTRAC has been ineffective in stopping money laundering. Since 2015, the total number of convictions for money-laundering offences have declined, and so have money-laundering investigations. However, the amount of money laundering being done has not. This shows how ineffective the system is here. Drug cartels operate with impunity, laundering money through real estate and driving up house prices for Canadians. Organized crime runs smuggling rings and commits car thefts and then launders the proceeds of those crimes in Canada.

This committee cannot even do a five-year review of the act on time. Officials spoke to this committee in February about how Canada's rating on money laundering with the global Financial Action Task Force was lowered in 2021. The next review takes place in 2025.

The damning TD money-laundering scandal in the U.S. shows the urgency for every member in this place to address money-laundering crimes and put an end to Canada's status as a major money-laundering country of concern. Canadians should be able to trust that criminals are not taking advantage of the financial institutions where we keep our savings and invest and that we rely on for loans and mortgages.

Oversight in Canada must be improved. Regulators must be given teeth to hold institutions and criminals accountable for money laundering and financial crimes. More responsibility should be expected from financial institutions. Penalties and fines should be painful and reflect the seriousness of the crimes committed. It shouldn't be chump change or a slap on the wrist for the people committing it. Penalties should be a deterrent against negligence or criminal activity.

I realize I'm asking to extend the time. However, since this is a very serious issue, we are open to accommodating it on a certain day—maybe on Tuesdays—until we get this done.

I'll leave it there.

I hope that we can get to a vote quickly on such a serious issue.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Hallan.

I do have a list started. I have MP Ste-Marie and MP Davies.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Thank you, Mr. Chair.

I want to inform the committee that I am in favour of the motion. This is a very important topic.

I would add that the news release from the U.S. Department of Justice is catastrophic for TD Bank and something needs to be done.

As our colleague Mr. Hallan said, everyone needs to agree on when the matter will be studied. Some members may not be available or they have to catch a plane. It would be better if the regular members of the committee were present. Let's find a time when that could happen.

That said, I agree with this important motion.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Ste-Marie.

MP Davies is next.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you.

I very much agree with the substance of the motion. I agree with Mr. Hallan that this is an important issue. As he kindly pointed out, I raised this matter in the House yesterday. To my knowledge, it's the first time anyone has raised the issue of TD Bank's $3-billion fine in the House of Commons.

What I think is important to note, though, is that we've already scheduled a study on anti-money laundering in January. We did that after extensive discussions among everybody at this table, including the Conservatives, a few weeks ago. They prioritized the study on the CRA as the next study to come after this one.

For anybody who's watching, we've established the committee's business for the next three months. First are the pre-budget hearings, which we're doing now. Right after that, we would move into the CRA hearing, which is a study proposed by a Conservative colleague and, I believe, by Mr. Ste-Marie. We agreed to that. Then we agreed that before Christmas we wanted to try to issue a report highlighting and summarizing all of the excellent ideas we're hearing in the pre-budget hearings. Then we would get to anti-money laundering in the very first meeting when we come back in January.

At the time we discussed that, the TD money-laundering issue was already in the media. I'm not sure that the $3-billion fine had been announced yet, but it was certainly there. Anti-money laundering has been on our agenda and our radar as a very serious issue, as Mr. Hallan eloquently pointed out. The real question is this: Do we now want to revisit that and add time to this committee's meetings?

We sit Tuesdays and Thursdays from 3:30 to 5:30. Adding extra time to that is a disruption to the well-established schedule of this committee. As well, it was not a proposal made by anybody a couple of weeks ago.

Yes, I agree that we need to get to it. This is a very important issue. I think it's been with us a long time. I think some of the testimony today has indicated that this has been an entrenched problem. I think Mr. Hallan himself said it's been going on for nine years. It's been going on for longer than that, but it's been going on. I would say that this is a very important issue, but I don't think it's urgent. I think that we can deal with it when we begin the study in January.

I am concerned about starting to tack on ad hoc witnesses after regular pre-budget hearing committee meetings on this subject now, in October and in November, without the proper context, focus and concentration, and to then pick up evidence in February.

For example, the first witnesses I'd want to hear from are FINTRAC, OSFI and the law enforcement agencies to get an idea of the actual context in which this is occurring. I wouldn't want to call TD Bank first. It's the subject of the issue. I wouldn't know what to ask them yet. I want to be fully briefed and informed on what the legal and prosecutorial situation is. I learned more about it from Mr. Simser today than I've learned at all. I want to hear more of that.

I'd like to take an organized, concentrated, rational approach to this subject that would focus entirely on this issue, with no other distractions. The way to do that is to stick with what we've already agreed to, which is dealing with the anti-money laundering study that we've already scheduled for January.

In lieu of that, I would propose to let the Conservatives swap it with the CRA study that they decided they wanted before the anti-money laundering study. They could switch it. I'm happy to move anti-money laundering up, and we could deal with that immediately after we finish our pre-budget hearings, which will happen in a matter of a few weeks. I'm happy to do that if the Conservatives believe that it's a more important priority than their study on the CRA. However, I'm not in favour of adding an hour to these meetings.

My final point is that western alienation is a real thing. For those of us who live in British Columbia, sitting until 6:00 or 6:30 on a Thursday means that we don't go home Thursday night, which means that we go home Fridays. For those of you who come from central Canada or can get home, that doesn't matter to you. You can be home Thursday night, but we don't get home until Friday. If we turn around on Sunday, we don't get to spend as much time in our constituencies, and I want to be hearing from the people in my riding about what's important to them.

For that reason, I'm in favour of the substance of the motion. I think it's a great idea.

I want to thank Mr. Hallan for bringing it forward, but the scheduling of it I don't think is appropriate.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Davies.

I have PS Bendayan next, and then I have MP Chambers, I believe. Is that correct, MP Chambers? Did you want to be on the list?

You did. Good. I have PS Bendayan next, and then you.

[Rachel Bendayan, Liberal, Outremont, QC]

Thank you very much, Mr. Chair.

I would like to open with my regrets to the witnesses who've made themselves available to the committee and for whom I'm sure it's very frustrating to sit through a lengthy debate on a subject that is not about the pre-budget consultations that they prepared for.

Mr. Hallan, you've introduced your motion with a lengthy introduction that I don't think I will rebut, word for word, other than to say that we had proposed to strengthen enforcement. We had proposed to strengthen FINTRAC, we had money on the table to finance the Canada financial crimes agency, and the list goes on. When those proposals were before the finance committee, the Conservative members filibustered for 20-plus hours.

I would also note that it was this government that suggested and included in the programming motion the anti-money laundering review that we will be undertaking, and I look forward to that study. I would agree with the suggestion that my colleague Mr. Davies has now proposed to extend that study. We are open on the government side to extending it by two or three meetings, depending on the list of witnesses that we agree to.

I, for one, had questions for the witnesses who are still here, and I could prepare amendments to this motion. As everybody realizes around this table, there is agreement of a majority of members between Mr. Davies and colleagues on the government side. If you would like, and if it is the will of the committee, I can prepare those amendments and submit them to the clerk before the end of the meeting, hopefully today, and we can continue with questions. Alternatively, Mr. Chair, I'm happy to go through the amendments now.

It does appear to me, therefore, that we will not get back to witness questioning. Mr. Chair, I could read them into the record if you like, but I would also like to point out that I am in agreement with my colleague opposite regarding the importance of listening, first and foremost, to OSFI, as well as Bank of Canada officials.

[The Chair, Liberal, Peter Fonseca]

Ms. Bendayan, on the amendment, are you proposing these amendments?

[Rachel Bendayan, Liberal, Outremont, QC]

Yes. I'm happy to do that.

Also, I recognize that there is a speaking list, and I'm not sure if my colleague Mr. Ste-Marie wants to speak to the fact that something that was quite important to him—

In particular, it's very important for Mr. Ste‑Marie to proceed with the study on the Canada Revenue Agency and to have the opportunity to hear what the Minister of National Revenue has to say.

For my part, I suggest that we keep this study. We all worked hard together, in large part because we responded to the requests of our colleagues on both sides. We agreed on the motion that gives us the schedule of meetings for the next few weeks and months. I think it is very important to continue as we had previously decided.

Mr. Chair, I see it's 5:28 p.m. Therefore, I move to adjourn debate on the motion proposed by Mr. Hallan.

[The Chair, Liberal, Peter Fonseca]

You're moving to adjourn debate on the motion.

The question is, “Shall the debate be now adjourned on the motion of Mr. Hallan?” It will be a recorded vote.

(Motion agreed to: yeas 6; nays 5)[See Minutes of Proceedings])

We've adjourned the debate on that motion and now we're going to get back to our witnesses.

Members, I am looking at the time. We have about 10 minutes. The Conservatives already had their opportunity, so I'm going to go to the Liberals, then the Bloc, and then the NDP, and that's how we're going to finish off.

I'm going to divide up the time. Each party will have three minutes or so.

Who will be the speaker?

MP Thompson, please go ahead.

[Joanne Thompson, Liberal, St. John's East, NL]

Thank you. I'm pleased to get this opportunity.

Thank you to all the witnesses.

I want to focus very quickly on the business of higher education, so this will probably go to you, Mr. McKean, following my colleagues' questions around what your process looks like.

I'm very proud of an organization in my riding, Econext, which I think is going to provide a more tangible example of what your process looks like and why it is so impactful.

Econext is a non-profit. Their mission is economic development and links the economy and the environment. Of course, I'm very proud to talk about the wind energy and hydrogen and the work that's happening in the province to really move us into a cleaner green economy. They have a green jobs bank, and they help industry and SMEs to build a workforce.

Could you speak to your role in empowering Econext and the organizations and the industry on the ground to move this important sector forward?

[Dr. Matthew McKean]

This is one of the examples we came with and are happy to talk about.

In Newfoundland and Labrador, less than half of the students get work experience, so there's a lot of opportunity for growth there, and we're keen to play a bigger role in your region and in Newfoundland and Labrador.

We're very proud to partner with Econext and with the Memorial Centre for Entrepreneurship to create career pathways. I think our partnership is for 300 students to get into the clean energy sector. This is part of our leveraging of our funding to create the HR capacity and the mentorship and assessment capacity on both the Econext side and the post-secondary side to create what we hope will be a sustainable partnership, by which I don't mean one that is green but one that will last long after we're gone.

[Joanne Thompson, Liberal, St. John's East, NL]

Thank you.

In general, how does your programming help address Canada's labour force challenge?

[Dr. Matthew McKean]

That's a good question.

Do you want to try that one, Valerie?

[Dr. Valerie Walker]

We've looked at this question specifically and have a paper coming out shortly that speaks in more detail to this.

WIL provides the ability to create targeted workforce development in sectors of the economy that have the highest growth potential and the highest productivity potential. Exposing students to careers in areas of the economy where they might not have thought they wanted to start gives them an opportunity to see the impact they could have in a place where they might not otherwise have thought they wanted to go. It has a huge, clear and direct impact on Canada's economic competitiveness, and it's our productivity challenge.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Thompson.

Now we will go to MP Ste-Marie, please.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Thank you, Mr. Chair.

I have one last question for the ETS representative.

Ms. Baig, how will the funding requested for deep-tech incubators, such as Centech, help address the current lack of financial support?

What impact could that have on the country's economic development, and what would its position be in deep tech globally?

Thank you.

[Kathy Baig]

Thank you for your question.

There are a lot of positive effects.

First, I would say that it can certainly help Canada become a leader in advanced technology.

Second, it's important to know that many start-ups don't have the funding they need right now. However, there are a number of reasons to justify the need to fund these businesses.

Let's take the example of Centech, the ETS's deep-tech incubator. Very simple numbers speak for themselves: Over the past five years, this incubator has created 1,500 jobs in deep-tech start-up companies. Over $600 million has been raised to support those companies. Just in terms of the economic impact and the number of jobs created, it's remarkable.

That said, we can imagine what the benefits could be if more funding could support these businesses.

There are a number of other reasons why this funding could have a beneficial impact.

I'll ask Mr. Bosco to elaborate on that.