Industry Committee on Dec. 9th, 2024

[The Chair, Liberal, Joël Lightbound]

Good morning, everyone.

I call this meeting to order.

Welcome to meeting number 151 of the House of Commons Standing Committee on Industry and Technology.

Before we begin, I would like to ask all members and other in-person participants to consult the cards on the table. They provide guidelines to prevent audio feedback incidents. This is about everyone's health and safety, especially the interpreters, whom we sincerely thank.

Pursuant to the Order of Reference of the House and the motion agreed to on November 21, 2024, the committee is commencing its study of the subject matter of the Supplementary Estimates (B) 2024-25.

In addition, pursuant to the motion adopted on Thursday, September 19, 2024, and the order of the House referring back the twentieth report of the committee entitled “Potential Anti-Competitive Behaviour in Canada’s E-Transfer Ecosystem” the committee is resuming its study on credit card practices and regulations in Canada.

As a reminder to members, today is an extended four-hour meeting. We are running a bit late, so the meeting will continue until eight o'clock.

Let's get started right away.

I am very pleased to welcome today François-Philippe Champagne, Minister of Innovation, Science and Industry. He is accompanied by Chrystia Freeland, Deputy Prime Minister and Minister of Finance.

Welcome to you both. Thank you for making yourselves available for this meeting.

Accompanying the Minister of Finance is Julien Brazeau, associate assistant deputy minister, financial sector policy branch.

From the Department of Industry, we have Philip Jennings, deputy minister, Innovation, Science and Economic Development Canada.

I would also like to thank Mr. Jennings and Mr. Brazeau for joining us.

Without further ado, I yield the floor to you, Ms. Freeland.

[Chrystia Freeland, Liberal, Deputy Prime Minister and Minister of Finance]

Thank you, Mr. Chair.

I am pleased to be here today.

Our government takes the financial protection of businesses and consumers very seriously, and that includes credit cards.

Today, I would like to talk about four areas in which our government has taken action in recent years in relation to credit cards.

First, we are lowering credit card transaction fees for small businesses. In 2023, our government reached agreements with Visa and Mastercard to lower credit card fees paid by small businesses. These agreements came into effect on October 19 this year. Thanks to these agreements, more than 90% of businesses that accept credit cards are paying lower fees and have seen their fees reduced by up to 27%. Over the next five years, these agreements will save eligible Canadian small businesses about $1 billion, and we're doing this while protecting and preserving the rewards points Canadians receive from their credit cards. For a small business, that is money that can be used in so many ways: to advertise, to buy new equipment, to pay down loans, to hire staff or just to give themselves a little extra breathing room.

Let me be clear: We negotiated these agreements to help small businesses. We have repeatedly stated that we expect all payment processors—that includes Stripe—to pass these savings on to businesses, and we are prepared to take further action to make sure that happens.

Second, we announced a revised code of conduct for the payment card industry in Canada to protect over one million businesses that engage in credit and debit card transactions with their customers.

Since October 30, 2024, the revised code has been helping businesses compare prices and offers by different payment processing services.

In addition, the code aims to reduce the time it takes to address complaints from businesses to only 20 business days. This transparency and ease are positive for merchants. All major payment card network operators in Canada have agreed to the terms of the revised code.

Third, we introduced the financial consumer protection framework, in 2022, to protect consumers by making sure they have additional and timely information to help with decision-making, including related to their credit cards. For example, banks must send electronic alerts when credit available on a credit card or line of credit falls below $100. Banks must also send timely reminders when products and services are set to renew. For products or services with 30 days or more, two reminders must be sent before the end of term. The framework ensures banks must also have policies and procedures in place to ensure that the products and services they offer to consumers, including credit cards, are appropriate to the consumers' financial needs. Additionally, banks must provide certain information in a prominent way to consumers when they apply for credit cards, such as key interest rates and fees.

Fourth, and finally, to ensure Canadians can count on always being treated fairly by their bank, I designated the ombudsman for banking services and investments as Canada's single transparent, not-for-profit external complaints body for the banking sector. This strengthened complaints body has had jurisdiction to resolve complaints at all Canadian banks starting on November 1.

For too long, banks have been able to pick and choose who is going to resolve complaints from Canadians. With an independent, transparent, not-for-profit ombudsman, Canadians will benefit from greater transparency. Our government will continue to ensure that Canadians are treated fairly by their banks. We will ensure that they have access to affordable, quality banking options.

Thank you, Mr. Chair.

[The Chair, Liberal, Joël Lightbound]

Thank you, Minister.

Minister, the floor is yours.

[François-Philippe Champagne, Liberal, Minister of Innovation]

Thank you, Mr. Chair.

It is truly a pleasure for me to be back today with my colleagues on the Standing Committee on Industry and Technology. I'm also pleased to be here with my colleague, Minister Freeland, to talk to you about issues that are very important to Canadians.

As always, it's an honour and a real pleasure to appear before this committee.

Colleagues, we live in an era of significant transformation. The digital revolution is moving at an unprecedented pace. We even get the impression that the time itself is speeding up. Climate change is disrupting our economies and redefining our industrial landscape. Our world is facing geopolitical challenges of all kinds, as we have seen in recent weeks.

The picture I am painting may seem worrisome, but it also presents opportunities for Canada—a country that offers unparalleled stability, predictability and the rule of law around the world. Today, I would like to draw your attention to the issues raised by the minister, but also the opportunities for Canada.

Financial technology and payment systems are a perfect illustration of this, and I think Minister Freeland said that very eloquently. They represent rapidly evolving markets where we can see innovation happening in real time. This is a sector that virtually every Canadian and every Canadian business depend on. This means that having a competitive and innovative fintech sector is not simply nice to have. It is, in fact, critically important. I want to applaud the work that has been done by my colleague Minister Freeland in this field. As you've seen, our government has been acting decisively and in a timely way.

With that in mind, I would like to highlight for you some important changes we've recently made to the Competition Act, which I think will be the cornerstone of our government and bring lasting possibilities in terms of more competition in Canada, less consolidation and better prices for consumers.

First, as colleagues will remember—because this committee, Mr. Chair, worked hard to make suggestions—we dramatically increased the resources available to the Competition Bureau. I think colleagues should take comfort in the fact that you've seen the commissioner of the Competition Bureau very active with his office recently, in order to really tackle the issues that concern Canadians.

Second, through legislative amendments—and I want to thank this committee for its work on that—we transformed the Competition Act in a way we have never seen before. This is the single biggest transformation we have seen in the competition landscape in our country. Those include amendments to the abuse of dominant position, where we significantly increased monetary penalties. These were previously capped at $10 million. Today, penalties are based on the benefit companies derive from their actions, and they can be up to three times the value of those benefits.

Third, private parties can now bring cases directly to the Competition Tribunal. I think that's something this committee has heard about from a number of stakeholders. A change was warranted. Gone are the days when private parties solely relied on the Competition Bureau to bring forward a case.

Together, these important changes have led to an economic ecosystem that is fairer, more transparent and more competitive.

In the same spirit of promoting competition, innovation and affordability, I would now like to take a moment to talk about Supplementary Estimates (B) 2024-25.

As you know, the 2024-25 spending top-ups provide critical support for Canadian innovators, researchers and businesses.

As you know, the $711 million in these supplementary estimates represents more than just line items. It is vital for a number of communities, sectors and small and medium-sized businesses in our country. It represents our strategic vision for Canada's future. It represents an investment in our world-class innovation ecosystem. It represents a vote of confidence in our communities, workers and businesses.

Mr. Chair, in Canada, we have everything we need to succeed in the economy of the 21st century, from world-class talent to robust ecosystems that make us world leaders in aerospace, the auto sector, biomanufacturing and artificial intelligence. From critical minerals and renewable energy to market access, Canada holds a significant competitive advantage as a green strategic partner of choice.

Even in an era of rising protectionism around the world, we're building bridges, Mr. Chair, sharing knowledge and positioning Canada—our Canada—as a global innovation hub.

Canada has before it unprecedented opportunities, generational opportunities that we must seize for future generations. Seizing them requires that we be bold and ambitious.

In closing, let me say this: I am convinced that, together, we can and will transform today's challenges into opportunities. Together, we can and will build the Canada of tomorrow—an ambitious Canada full of opportunities and possibilities for all.

We will be pleased to answer our colleagues' questions.

Thank you.

[The Chair, Liberal, Joël Lightbound]

Thank you very much, Ministers.

Mr. Perkins, you have the floor for six minutes.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

Thank you very much, Mr. Chair, and thank you, Ministers, for coming.

My initial questions will be for the Minister of Finance, Minister Freeland.

What's the deficit this year?

[Chrystia Freeland, Liberal, University—Rosedale, ON]

Thank you for the question, Mr. Perkins.

This gives me an opportunity to say how glad I will be to present the fall economic statement on Monday in the House of Commons. There will be full transparency for all Canadians and all MPs about Canada's financial position.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

Thank you.

When you delivered the budget, you said that it won't be above $40 billion and that there are guardrails. However, we know that the Parliamentary Budget Officer has said otherwise—that you're already through that, plus you've added more on the GST.

Can you tell me if the deficit is going to stay at the $40 billion that you said, in the budget, was the maximum?

[Chrystia Freeland, Liberal, University—Rosedale, ON]

I'm very glad, Mr. Perkins, to hear you quoting the Parliamentary Budget Officer. He reported very significantly this summer that Canada's fiscal position is sustainable. Indeed, this summer he said that our fiscal position is “sustainable over the long term” and that even a permanent swing of 1.5% of GDP would be permissible, while retaining Canada's fiscal sustainability.

That is really good news for all Canadians, especially when we are entering—as my colleague, the Minister of Industry, has just said—a time of real global uncertainty.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

As the Minister of Finance, you must know what the deficit is, since we're almost three quarters of the way through.

Are you going to stick to the $40 billion you told Parliament you would not go above? That was your fiscal guardrail, and it wasn't going to go above that.

[Chrystia Freeland, Liberal, University—Rosedale, ON]

Thanks again for the question, Mr. Perkins.

I do want to be very clear and assure all MPs and all Canadians that Canada's public finances are sustainable. Canada has the lowest debt-to-GDP ratio in the G7. We have the lowest deficit in the G7. Our public finances are sustainable, as the PBO has made clear.

I am really looking forward to delivering the fall economic statement on Monday in the House of Commons.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

Since you've been minister, you've delivered a number of budgets. In any of those budgets that you delivered, has the deficit come in as projected? Has any one of them come in as projected?

[Chrystia Freeland, Liberal, University—Rosedale, ON]

Actually, Mr. Perkins, we are delivering a far stronger and faster rate of fiscal consolidation than anyone predicted, including our budget documents, when COVID first hit and when Canada experienced the deepest recession since the Great Depression. The recovery led by our government's economic plan has been significantly stronger and faster than the recovery that Canada saw when the Conservatives were in office after the financial crisis, which was a shock, but a much milder shock than the COVID recession.

I'm very pleased that Canada is on track for a soft landing. Inflation has been in the Bank of Canada's target range for 10 months—for all of this year—and interest rates have been coming down. That is really good news for Canadians, and that did not happen by accident.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

I spent most of my life before being elected in 2021 in the private sector, as an executive of a number of corporations, as well as on boards. If the CFO for my company missed their financial projections every single year, they wouldn't be the CFO for very long—and it's the same with the public markets.

Why should you remain a CFO of Canada if you can't seem to hit a single target you set?

[Chrystia Freeland, Liberal, University—Rosedale, ON]

As I said, Mr. Perkins, I strongly disagree with the premise. Canada has had the fastest rate of fiscal consolidation in the G7. Today, we are reaping that positive harvest with inflation in the Bank of Canada's target range for all of this year, with interest rates coming down and with the Canadian economy experiencing a soft landing.

Mr. Perkins, you spoke about the private sector. The credit markets show that they approve of Canada's fiscally sustainable position. If Canada were to—

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

I'll have to ask it another way, Minister, since you're not answering my questions. I'll ask it a different way.

[Chrystia Freeland, Liberal, University—Rosedale, ON]

I am answering.

Mr. Perkins, may I just conclude my sentence, please?

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

Sure.

[Chrystia Freeland, Liberal, University—Rosedale, ON]

If Canada were to pay what the U.K. pays for its debt, we would be, every single year, spending more than $9 billion more. If we paid what the U.S. pays for its debt, we would, every single year, be paying $11 billion more.

That is a market verdict on the strength of our fiscal position.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

Minister, your officials have leaked to the media that the deficit will be $60 billion or more.

Is it going to be that, higher or lower?

[Chrystia Freeland, Liberal, University—Rosedale, ON]

Mr. Perkins, because a Conservative filibuster has blocked the work of our Parliament, it has been a challenge.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

Minister, the only filibuster is your unwillingness to produce the documents.

[Chrystia Freeland, Liberal, University—Rosedale, ON]

No.

I look forward to presenting the fall economic statement on Monday.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

I would ask you a simple question.

Is the deficit going to be higher or lower than the $60 billion your officials have leaked to the media?

[Chrystia Freeland, Liberal, University—Rosedale, ON]

I think it is very important not to cast any doubt on Canada's financial credibility. I want to take this opportunity to be very clear that Canada's fiscal position—