Mr. Speaker, when inflation is high in Canada, bank profits are high. When inflation is low in Canada, bank profits are high. When the economy is in recession, bank profits are high. When the economy is in a growth mode, bank profits are high. When interest rates are high in this country, bank profits are high. When interest rates are low, bank profits are high. They are high in every circumstance when it comes to economic indicators.
The fact is that bank profits continue to be high in this country. In view of the fact that the chartered banks donated to the Liberal Party over $700,000 to the last campaign in Canada and the financial institutions as a whole donated over a million dollars to the Liberal Party slush fund in the last campaign, I am curious to know why the banks continue to get a free ride when it comes to contributing their fair share to building Canada.
In the last year alone the six major chartered banks in Canada reported profits of $4.3 billion. The chartered banks have an important role in our country's economy due largely to the regulations that are in place under the Bank Act. With the privilege of banking should come the responsibility of assisting in the development of our economy.
The Minister of Finance agrees that Canada's deficit is a serious problem. He, in consultation with the Minister of Human Resources Development, has made it clear that they will be making cuts and reductions to Canada's social security programs. Many Canadians have experienced the hardship of the recession and also faced cutbacks to their unemployment insurance coverage.
The Minister of Finance has made it clear that we will all be tightening our belts to help pay down Canada's debt. Meanwhile we have the banks in Canada that have made huge profits during hard economic times. They have made their profits on the backs of Canadians. It is money that is made on the spread of interest rates, financial transactions and on the government debt.
Another reason is bank service charges. Service charges are one of the fastest growth areas for banks. They allow the banks to continue making money in hard times and in good times.
I believe the government should ask the banks to justify their banking practices and their actions. As responsible corporate citizens the banks have a moral responsibility to pay their fair share of taxes and to reinvest their wealth in Canada and create jobs.
The Minister of Finance has a responsibility to regulate the banks and ensure that they participate in our country's economic recovery.
Bank customers receive interest rates of 2 per cent or 3 per cent on their savings accounts while being charged up to 11 per cent on their loans. The interest rate spread is wide and the banks are the winners on the spread.
After 127 years of Liberal and Conservative governments in Canada we are approaching $550 billion in debt. There has been no job creation as a result of this latest bank manoeuvre. The banks have made profit by cutting back on staff as a matter of fact. A year go the Royal Bank announced the need to slash 3,000 jobs from its payroll as well as another 1,100 jobs from its newly acquired Royal Trust, because of the recession its said.
Is the Royal Bank now willing to create 4,000 new jobs or is it going to continue to make profit at the expense of its former employees? The answer to that is not likely.
The Royal Bank in 1993 year end made profits of $324 million and paid absolutely no taxes. As a matter of fact, it received from the federal government and the revenue department $5 million in tax credits.
Two years ago the CIBC announced cutbacks of 2,500 jobs. In fact, 14,000 banking jobs have been eliminated in the past four years. Banks reasoned that cutbacks were necessary but now we see their profit margins. The banks lost money on bad real estate loans primarily over ambitious commercial projects in foreign countries. As well, they have lost money loaning money to other countries without providing the same equity backup and guarantees that individuals in Canada must provide.
I am asking in summary that the government provide leadership on this issue and ensure that the banks make a stronger contribution by paying their fair share of taxes back to this country and to institute a fair interest rate policy and to justify some of their monopolistic practices so that Canadians do benefit from banks when they make a profit.