Industry Committee on Dec. 9th, 2024

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

As I hope you are aware, the 30-year amortization is focused. It is focused on new builds, and it is focused on first-time homebuyers. This is a very important step to help young Canadians have an advantage in the market and get their first home. It's an important step to create more demand for new builds, which I hope we all agree are absolutely essential.

As well, Mr. Chambers, if the Conservative Party is opposed to 30-year amortization—

[Adam Chambers, Conservative, Simcoe North, ON]

Did you do an analysis of whether it would impact house prices, along with the insured mortgage rules?

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

—then I think the Conservative Party should be very clear with those first-time homebuyers who are going to be able to get that first home in December.

[Adam Chambers, Conservative, Simcoe North, ON]

Okay.

Minister, look, I think you're in the toughest position—next to the Bank of Canada governor, probably. You've made three very big promises with respect to spending. First, it was that, when there was no need for stimulus, you'd take it away. That didn't happen. Then, it was that the debt-to-GDP ratio will keep going down. That lasted only a year. Now you have made a promise that the deficit would not be greater than $40 billion. You're in a very difficult position when making these promises. I'm having a hard time understanding why you would make these promises and then have to break them.

Is there some tension between the Prime Minister's Office and your office, or are you fully standing behind the deficit number when it's finally released?

By the way, we have to vote on supplementary estimates before we get the public accounts from last year. I'm not sure there is a lot of precedent for that.

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

Okay. There are so many incorrect statements embedded in there, but let me start with two.

First of all—and this is crucial—the declining debt-to-GDP ratio is the critical thing that underpins the stability and sustainability of Canada's public finances. That is a significant accomplishment following the COVID recession. It is significant to be able to do that while achieving a soft landing from the COVID recession. That is something all Canadians should celebrate.

When it comes to the work of Parliament, it is a bit rich for Conservatives, who have been blocking the constructive work of our Parliament for more than two months, to criticize that. This is like—

[Adam Chambers, Conservative, Simcoe North, ON]

The Speaker says you can introduce the public accounts any time.

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

—an arsonist saying, “Wow, I don't like the heat and the smoke.” That's exactly what we're hearing.

[Adam Chambers, Conservative, Simcoe North, ON]

Minister, we're well over time.

I would like to wish you both a very merry Christmas. Thank you for showing up to committee today.

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

Yes. Let me also wish you a very merry Christmas.

[The Chair, Liberal, Joël Lightbound]

Thank you, Mr. Chambers.

Mr. Turnbull, the floor is yours.

[Ryan Turnbull, Liberal, Whitby, ON]

I liked that last analogy—an arsonist complaining about the heat and the smoke. It's so true.

Minister Freeland, I want to ask you a question to clarify the record here. The Conservatives keep saying that the oil and gas cap regulates production. It actually doesn't. It regulates only the emissions. Can you verify that for the record?

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

Yes, that's a very good point.

[Ryan Turnbull, Liberal, Whitby, ON]

My understanding is that there are significant amounts of emissions reductions that can be achieved within the production process itself.

Our government has done two critical things. One is introducing an investment tax credit for carbon capture, utilization and storage. We've also set up the Canada Growth Fund, which has already made some significant investments in some sizable projects. In fact, we heard about them at the Sustainable Finance Forum this year, which is great to hear.

Could you speak to how critically important it is to drive innovation in that industry and reduce emissions within the production process?

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

Thank you very much, Mr. Turnbull. Thank you for your hard work.

I'm especially glad to have a chance to talk about the CCUS tax credits. I think these are really important for Canada. I am very glad that we have them in place now. I do want to take this opportunity to say, let's start getting the Pathways project built. This is an investment in Canada's future. The federal government has done its part. The CCUS tax credits are in place, and the Canada Growth Fund is working hard on this. I would really call on everyone to get this across the finish line. This could really be great for jobs and growth.

I know that you've been working with and talking about the Canada Growth Fund. I do want to highlight the very important Strathcona CCUS project, which the Canada Growth Fund is contributing to. This is a milestone, and I really hope and believe that it is the beginning of some important projects in that space.

[Ryan Turnbull, Liberal, Whitby, ON]

Thank you very much.

I also want to pose a question to Minister Champagne about the importance of AI.

I remember that I got the chance to meet Yoshua Bengio. We're very proud of Geoffrey Hinton, and we're also very proud of Yoshua Bengio. Both of them have played such a critical role in terms of the thought leadership that Canada has provided to the world. He said that it was like an Oppenheimer moment for him. He was saying that he has created something and he's now worried about the incredible risks that AI can pose. That's not to say that there isn't considerable benefit for productivity, which there is, and we heard about that from my colleague Mr. Van Bynen.

I'm also concerned about protecting Canadians while ensuring that we can take advantage of the innovation and productivity gains that AI can provide to our whole economy, small businesses, etc., as you've already highlighted. I want to give you an opportunity to talk about the risk side of things and ensuring that we have ethical use of AI and critical legislation like Bill C-27. Do you want to speak to this at all?

[François-Philippe Champagne, Liberal, Saint-Maurice—Champlain, QC]

For sure, and I want to say thank you to you, Mr. Turnbull, particularly on the Sustainable Finance Forum. You gathered some of the best minds in the country. We should all be proud of what you're doing. Not only are you an outstanding member of Parliament, but also, as parliamentary secretary, you've been able to really guide us in this process.

Listen, it's very simple. For folks who are watching at home, if we want to move from fear to opportunity, we need to build trust. Trust is fundamental. How do you build trust? You have a framework. That's why Bill C-27 is so important, because only when you have trust can you have adoption. With adoption, you'll have innovation. That is the decision tree we're facing.

That's why I also want to thank you, Mr. Chair, for all the work you've been doing to try to bring us there. We said that this is the holy grail of productivity, but we need to build trust. That's why Bill C-27 and the work of this committee are so important.

We're getting close to Christmas. I know people have a lot on their minds, but if there was a gift that the Conservatives wanted to give to Canadians, it is really to allow them to have a framework so that Canada can continue to lead on AI. I know it's possible. Mr. Chair, you have been a witness that, when the House wants, we can do big things fast. We've done it before. If the members of the committee put their good hearts forward before Christmas, they'd say, “Let's give Canadians a gift. Let's give them a gift that will protect them and that will allow innovation and adoption of AI so that Canada will be a nation that can lead in the 21st century.” Let's hope that they have all listened to me today.

Mr. Chair, you've done a great job. Thank you for having me and Minister Freeland. I know that it's getting close to Christmas, and I see your smiles, so it's about time for us to end. Thank you very much for having us.

[The Chair, Liberal, Joël Lightbound]

Thank you, Minister. After three years chairing this committee, I think Santa Claus will have to work overtime to deliver what you've asked for, which is for Bill C-27 to be adopted by this committee. I'm optimistic.

Thank you all.

Thank you, Minister Champagne and Minister Freeland, for joining us for the full two hours. It's not often we have ministers for two hours, so I appreciate your participating in this.

Colleagues, we will suspend for about 10 minutes and then resume this meeting with Interac.

The meeting is suspended.

[The Chair, Liberal, Joël Lightbound]

Colleagues, we are resuming the meeting without further ado, since we're already running a little late.

We're starting the second part of the meeting. As you know, from Interac Corp, we have Jeremy Wilmot, who is the president and chief executive officer.

Thank you, Mr. Wilmot, for joining us. I apologize for the delay in starting this committee meeting.

Without further ado, we'll get it started.

As you know, Mr. Wilmot, you have a couple of minutes for your opening remarks. I know you've asked for 10 minutes. Considering you're the only witness, I'm okay with that, but if you can make it around seven or eight minutes, that would be ideal.

The floor is yours.

[Jeremy Wilmot, President and Chief Executive Officer, Interac Corp.]

Thank you very much, Mr. Chair.

Good evening, everybody.

Every second, Canadians rely on Interac, whether they're tapping their debit cards to pay for everyday purchases, sending money to loved ones or accessing critical services. For 40 years, we've been more than a payments company. We've been a trusted partner in building Canada's digital and economic resilience.

Interac is proud to be Canada's most trusted financial services brand. Our products serve as a cornerstone of Canada's financial system, powering over 20 million transactions every day. Behind every tap, mobile payment, Interac e-transfer and secure sign-on is our commitment to providing low-cost, reliable and accessible services to Canadians from coast to coast to coast.

I joined as Interac CEO in August 2023 because I'm passionate about Canada's potential to lead the global digital economy. Since joining, I've focused on enhancing the company's legacy while preparing it for the future, leading with innovation, inclusivity and a deep commitment to serving the evolving needs of Canadians.

Interac was founded in 1984 as a collaborative network of Canadian financial institutions. Our original mission was to make it easier for people to access money through ATMs. Interac products are known for being trusted, low-cost options to make and accept payments.

To give you an example of what I mean, when a small or medium-sized business accepts a payment of $500, other payment methods could cost $15, while Interac debit costs 10¢. It is for this reason that organizations such as the Canadian Federation of Independent Business have noted that Interac debit has served businesses well for many decades.

Over the past four decades of our operation, we've been at the forefront of innovations that have transformed how Canadians access and use their money and their data. All Interac debit transactions are made via secure chip and PIN, which became the standard across Canada far earlier than in many other countries. Interac was also the first domestic payment network globally to launch Apple Pay, Google Pay and Samsung Pay, which provide access for Canadians to pay via their digital wallets. Interac e-transfer allows Canadians to send money securely in an instant, whether it's a parent sending money to their child who's away at school, a business paying its suppliers, or friends splitting a meal.

Launched in 2003, Interac e-transfer made Canada one of the earliest adopters and heaviest users of person-to-person, or P2P, payments. Because of Interac, Canadians were able to access this payment innovation long before Venmo, PayPal and other solutions around the world. Interac Verified ensures that Canadians can securely access services, including government programs, with confidence in a digital-first world. Verification and authentication is another area where Canada, enabled by technology that Interac has brought to market, is leading the way globally.

We're very proud of these achievements and Interac's role in enabling Canada's payment evolution. However, we're not resting on our laurels. Interac has embarked on a bold and ambitious three-year corporate strategy with a vision to lead Canadians to digital prosperity through key investments in fraud, in real-time payments and in digital commerce.

We understand that this committee has raised important questions about Interac's governance, about Interac e-transfer pricing and about competition. Let me address those three areas.

The first is governance. Interac's governance model reflects best corporate governance practices and a commitment to fairness, accountability and inclusivity. Interac's board of directors includes independent directors alongside representatives from financial institutions and credit unions, ensuring balanced decision-making. While much attention is focused on the participation of Canada's largest banks, it's important to recognize that Interac's network extends far beyond them. Our participants include credit unions, regional institutions, caisses populaires and fintechs, reflecting the diversity of Canada's financial ecosystem and our commitment to fostering competition.

The second area of discussion is pricing. With respect to the pricing of the e-transfer service, financial institutions pay a fee to Interac for each transaction they send. This is currently determined by volume-based tiers. Our prices are wholesale rates. That means Interac does not directly charge consumers or businesses to use Interac e-transfer. Financial institutions determine the fees they collect from their customers.

I'm very pleased to report that, starting in 2025, all financial institutions will pay a single flat-rate fee for e-transfer transactions. Interac's goal in operating e-transfer is to ensure that it's widely available and accessible for all Canadians, and the results speak for themselves. Ten years ago, Interac e-transfer processed 30 million transactions in 2012. In 2023, last year, more than 1.2 billion transactions were completed.

The process of reviewing and updating Interac e-transfer pricing has been under way for over one year, and it was recently improved both by the independent committee of Interac and by the Bank of Canada. This change will ensure that Interac e-transfer can continue to grow, and that it can remain an attractive and competitive service for all financial institutions, big and small.

I'll move on to the last of the three points, which is competition. Interac recognizes the responsibility that comes with being a key player in the Canadian payments ecosystem. It's also important to note that the payments market in Canada is very competitive. E-transfers account for less than 6% of the total electronic transaction market.

Interac has worked to safely expand access to the Interac e-transfer service for fintechs and for smaller organizations, ensuring a level playing field for innovation and growth. We're very pleased that Wealthsimple, an emerging and successful Canadian provider of digital financial services, joined the e-transfer service as a direct participant as a direct result of this change.

With the implementation of the Retail Payment Activities Act, or RPAA, we plan to further support evolving market needs by enabling RPAA-regulated payment service providers to access the Interac e-transfer service. Interac has a long history of working with regulators to support a competitive and dynamic payments landscape and to maintain compliance with Canada's rigorous standards.

We're very pleased to be regulated by the Bank of Canada through the operation of two prominent payment systems: the Interac intermember network, which we call Interac debit, and Interac e-transfer. We work with the Financial Consumer Agency of Canada, ensuring compliance with Canada's code of conduct for the payment card industry.

We acknowledge and will fully co-operate with the Competition Bureau as it conducts its preliminary assessment of Interac e-transfer. We view this as an opportunity to demonstrate our commitment to fairness and competition. I'm also grateful to the committee for providing a forum to discuss the steps we've taken to support a vibrant economic financial system.

In conclusion, and to wrap up, Interac is woven into the fabric of Canadians' financial lives. We take this responsibility very seriously. For 40 years, we've been trusted to provide secure, affordable and accessible payment solutions that empower individuals, support businesses and drive economic growth. Interac is not just a payments operator; it is a protector and an enabler of Canada's financial system. As fraud becomes more sophisticated, we're prioritizing significant new investments in technologies, such as AI-driven fraud prevention and detection, and digital verification to safeguard Canadians' transactions.

We welcome the committee's questions, and we view today's discussion as an opportunity to strengthen understanding, address concerns and reaffirm our commitment to serving Canadians with integrity and innovation.

Thank you, and I look forward to your questions.

[The Chair, Liberal, Joël Lightbound]

Thank you very much, Mr. Wilmot.

I'll now turn it over to MP Chambers to start the discussion.

You have six minutes.

[Adam Chambers, Conservative, Simcoe North, ON]

Thank you, Mr. Chair.

Mr. Wilmot, thank you for coming to the committee. I appreciate that you came in person on a difficult travel day with the weather out there. Hopefully you're getting used to the Canadian climate.

My understanding is that there are 13 members of the board, if I include you. Is that correct?

[Jeremy Wilmot]

That's correct.

[Adam Chambers, Conservative, Simcoe North, ON]

Only four of them are independent, so it's not a majority of the board. Do you recognize that there's still an issue of conflicts of interest in overall governance?

[Jeremy Wilmot]

Interac has a best practice board governance structure. We have 13 members, including me. We have four independents and eight shareholder nominee directors, of whom six are from the designated systemically important banks, the large banks, the D-SIBs.

[Adam Chambers, Conservative, Simcoe North, ON]

How much would any of the big five banks own of Interac?