Finance Committee on April 27th, 2023

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Thank you. That's what I was looking for in terms of timing.

There are some extraordinary powers being conferred to the Minister of Finance with respect to the Canada Deposit Insurance Corporation and deposit insurance amounts. I just want to confirm that it's a time-limited authority. I think the expiration date on the legislation is April 30, 2024.

Would somebody like to speak to why it is the government feels that those authorities should be granted in this act, and the time-limited nature of those authorities?

[Rachel Grasham, Senior Director, Housing Finance, Department of Finance]

Thank you for your question.

Yes, the proposed authorities are time-limited. They're set to expire on April 30, 2024. With Governor in Council approval and under consultation with the Governor of the Bank of Canada, the president of CDIC and the heads of OSFI and the Financial Consumer Agency of Canada, they provide for the minister to bring forward a temporary increase.

That authority is set to expire, as I said, on April 30, 2024. The purpose of that is to really allow the minister and the government to bring forward a temporary measure under extreme circumstances just to help promote financial stability and safeguard public confidence in the system.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Can you describe for the committee the kinds of circumstances that might trigger the use of this power?

[Rachel Grasham]

I think we would want to look to some international guidance on that. In the event that there is instability or concerns around potential bank runs, etc., as we saw in the U.S., the minister would be poised to be able to step in and bring forward a measure.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Have these kinds of authorities ever been granted to a minister of finance before? Are there any precedents for the use of this kind of measure?

[Rachel Grasham]

Yes, there is a precedent. In the early days of COVID, under the special emergency legislation, the minister was granted this power. It also had an expiry date. It did expire and was never used.

Additional governance around this measure is being proposed. For example, as I noted, it would be with Governor in Council approval and consultation with the heads of those other financial sector agencies. For the duration, should the minister bring forward a temporary increase, she would also be required to table a monthly report in Parliament in terms of the measure.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Thank you very much.

How's my time, Chair?

[The Chair, Liberal, Peter Fonseca]

You have another minute or so.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Okay.

Maybe we could just have someone speak briefly to the changes to the criminal rate of interest, particularly if there's a way to distill that for Canadians who find themselves in the position of having to make use of payday loan services. What will this likely mean for them when they walk in the door, and what can they expect will change in terms of the nature and terms of the services?

[Mark Radley, Acting Director, Consumer Affairs, Department of Finance]

Absolutely.

[The Chair, Liberal, Peter Fonseca]

I apologize for interrupting. I'll stop the time.

I would ask all the witnesses and the officials who are joining the table or who are at the table or who are here virtually to introduce themselves and indicate what department they represent.

Thanks.

[Mark Radley]

Absolutely. Thank you for the question.

I'm the acting director of the consumer affairs team in the financial sector policy branch at the Department of Finance. This is one of the files we work on.

Budget 2023 announced two things, essentially: first, lowering the criminal rate of interest to 35% and, second, implementing a cap on payday lending at $14 per $100. Upon implementation, the department would expect that Canadians would be able to access lower-cost credit loans as well as lower payday loan costs.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Do you have a sense of what the differential would be for somebody who is borrowing, say, $100 every two weeks? What would they currently pay in interest on that and what they would pay under the new rules?

[Mark Radley]

Provinces have different caps in place currently. They range from approximately $18 per $100 borrowed down to $14 per $100 borrowed in Newfoundland and Labrador. Depending on which province they are in, they would save a few dollars per $100 borrowed.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Okay.

Thank you very much.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Blaikie.

Members and witnesses, we are moving into our second round here. We'll start with the Conservatives.

MP Morantz, you have five minutes, please.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

Thank you, Mr. Chair.

I want to ask a few questions about the arrangement with PSP Investments, the subsidiary of the PSPIB. Your briefing notes say that the Canada growth fund will be paying for this service. Do you know how much PSP Investments will be charging for its investment management services to the Canada growth fund?

[Anne David]

My name is Anne David. I am a senior director in Crown investment and asset management. Thank you for your question.

PSP Investments, as you note, will be able to charge a fee to the growth fund. The intent is for it to operate on a cost recovery basis. While we don't have dollar figures for that, the expectation is that PSP Investments will recover its cost from the Canada growth fund and not earn a profit on these services.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

Was the PSPIB selected for this through a request for proposals?

[Anne David]

No, PSP was not selected through a request for proposals. Rather, the government looked at various entities and various mechanisms to stand up the growth fund, conducted some analysis and discussed it with entities such as PSP. Through mutual agreement, it ended up landing on PSP.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

On the Government of Canada's procurement website, it says that for departments acquiring contracts for services over $100,000, there's supposed to be an RFP. I recognize that you're saying it's cost recovery, but at the end of the day, if you don't know how much it's going to be, how do you know whether or not you're required to go to an RFP?

[Anne David]

Thank you for your question. I'm happy to take that back and provide more details on this.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

Could you table that response with the committee?

[Anne David]

Yes.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

Were any other organizations considered to provide these services?