Debates of Nov. 24th, 1995

Bank Act

[Doug Peters, Liberal, for the Minister of Finance]

moved that Bill C-100, an act to amend, enact and repeal certain laws relating to financial institutions, be read the second time and referred to a committee.

Mr. Speaker, it is a pleasure to launch second reading debate on Bill C-100. The legislation offers concrete, well considered measures to further enhance the safety and soundness of Canada's financial system.

These measures are the culmination of an extensive consultation process. I take this opportunity to extend the government's thanks to the many industry participants and other stakeholders who provided constructive insightful advice and to the Senate committee for its extensive hearings and report. As well I express appreciation to the Standing Committee on Finance for its decision to hold advance hearings on Bill C-100 during the summer parliamentary recess.

The presentations received by the committee were invaluable groundwork for effective clause by clause review of this wide ranging package. It will ensure that the legislation we approve will fulfil the best interests of consumers, financial institutions and their stakeholders, as well as the Canadian economy.

There is no question that sound, secure financial institutions are a fundamental requirement for national economic well-being.

Canada is blessed with a world class system. The financial sector is very much a part of a world of dramatic, accelerating change driven by new technology, by surging globalization, by new consumer demands and by heightened competition. That is why we are introducing the legislation now rather than waiting for the mandate in the 1997 review of financial regulations.

As I said in many forums, we are acting now not because the system is broken, and it surely is not, but to maintain a dynamic, competitive system. We must do our part to help it evolve with market trends and respond to recent experiences. That is why Bill C-100, dedicated to safety and soundness, responds to our experiences with financial institutions that have recently failed.

The changes in Bill C-100 are not patchwork nor band-aid measures. They flow from a series of basic principles outlined in the white paper we issued last February. They include that the ownership of a financial institution is a privilege and not a right, that it is preferable to have early intervention and resolution of institutions experiencing difficulty, that financial institutions must operate with sufficient incentives to solve their problems in a timely manner, and that there must be appropriate accountability and transparency in the system.

The first principle, that ownership of a financial institution is a privilege and not a right, is virtually a given, but good principles are worth reiterating from time to time. More important, we believe the principle leads to an important corollary. In certain circumstances it may mean that the interests of depositors, policyholders and creditors will take priority over the interest of shareholders.

This is why we believe it is necessary to provide the Office of the Superintendent of Financial Institutions, OSFI, with the new powers needed to resolve a troubled firm's problems early on. Financial institutions need incentives to manage their risks adequately. When an institution fails to manage its risks and experiences financial difficulty, it is then to the advantage of depositors, policyholders and creditors of the company to have the situation resolved promptly.

This would not necessarily mean that the institution would be closed. For example, the institution could develop a plan to implement changes that would solve its problems. The simple fact is that early resolution is likely the best way to prevent substantial losses to depositors, policyholders, creditors and potentially shareholders.

The legislation stakes out the clear position that if an institution is facing difficulty owners do not have the right to continue in business until they hit the brick wall and cannot pay liabilities as they come due. This leads to another closely related point. Our regulatory approach must recognize that the failure of a financial institution does not in and of itself represent a failure of the supervisory system.

In a vibrant, competitive marketplace firms can and do fail. No system can forestall every institutional failure unless it is given the authority and the resources to oversee all management decisions and unless institutions are severely restricted in the loans and investments they can make. Canada could not afford the price of such a failure safe system, even if it did work. My experience of almost 40 years in financial institutions clearly indicates to me that it would not. However, even if it did work, the result would be to strip the industry from contributing to the dynamism, growth and evolution of the economy.

One final principle is the need for transparency of the supervisory system. It is important that financial institutions understand the steps authorities could be expected to take if the financial condition of an institution deteriorates. Furthermore the supervisor must have a clearly defined role.

A new legislative mandate for OSFI notes the importance of OSFI taking prompt action to deal with institutions in trouble. The guide to intervention we have also set out clarifies the actions that could be expected and the role of OSFI and CDIC.

I have highlighted the key principles underlying our proposed legislation. Let me now turn to some of the specifics of Bill C-100. The legislation includes amendments to what are collectively referred to as the financial institution statutes including the Bank Act, the Trust and Loan Companies Act, the Insurance Companies Act and the Co-Operative Credit Associations Act.

A key thrust of the new regime as highlighted is to allow the superintendent, where circumstances warrant, to take control of a troubled institution earlier than at present including the authority to close an institution before its capital is depleted.

The function of the Minister of Finance will also be affected. He or she will no longer have to come to an independent view of the solvency of an institution. The legislation places this responsibility more appropriately in the hands of the regulator involved with the day to day activities of the instutition.

Other changes are being made to move responsibility for approving matters of a more technical, supervisory nature from the minister to the superintendent. The minister, however, will continue to play a key controlling part in the process with final responsibility to determine whether or not it is in the public interest to close an institution.

Increasing OSFI's scope for early intervention provides an incentive for problem prevention, not just a means of resolution. Under the proposed legislation troubled financial institutions will understand that OSFI will take action if its concerns are not dealt with promptly.

Another important element of Bill C-100 deals with information, which is a critical commodity for effective public and regulatory decision making. That is why we are amending the statutes to facilitate the release by federal financial institutions and by OSFI of more information on the financial condition of institutions. I do not, however, believe that financial institutions or OSFI should disclose information regarding regulatory actions. Doing so could create self-fulfilling prophecies with detrimental consequences for the institutions.

I emphasize that OSFI's role is not and cannot be to mirco manage financial institutions. Nor do we deploy an army of examiners to scrutinize federal financial institutions. That is why we must place constant emphasis on corporate governance. The boards of directors are on the frontlines ensuring problem prevention and good management. Bill C-100 takes important steps to strengthen the effective, independent corporate governance that is a vital part of strong, prudential framework.

First, the legislation proposes that the superintendent will have the power to designate certain directors as affiliated for purposes of the requirement that one-third of directors of an institution be unaffiliated.

Second, the legislation proposes changes that will prevent the board of a financial institution from being identical to an unregulated parent firm. This will help ensure there are directors of a regulated institution who will focus primarily on the institution's interests.

Third, the legislation will empower the superintendent to veto the appointment of directors and senior officers of troubled institutions.

Legislative amendments are being made for insurance companies so that the superintendent can employ the services of an external actuary at the company's expense in certain circumstances. There will also be a separation of the function of corporate chief actuary from certain other executive positions to avoid potential conflicts. OSFI will have the explicit authority to develop standards of sound business and financial practices for insurance companies.

Now let me turn to the amendments that Bill C-100 makes to the Winding-up Act. As part of the early intervention policy these amendments will provide additional grounds for obtaining a winding-up order for a financial institution.

The act is also being amended to provide more flexibility to restructure, under court supervision, the affairs of insurance companies in liquidation. As a result of these provisions a liquidator will have greater scope to enhance the value within the estate and improve recovery of assets disposed of by the liquidator, all of which will go to the benefit of policy holders.

The principal changes are designed to provide for earlier closure of problem federal financial institutions in cases where this would reduce the loss to consumer stakeholders.

I will touch on a third area of action under Bill C-100, the amendments to the Canada Deposit Insurance Corporation Act, or the CDIC act. This is another aspect of our emphasis on the principle of incentives for timely problem solving. The act is being amended to allow the CDIC to develop a system of varying premiums on member institutions based on the risk rating of specific firms, reflecting the risk they could bring to the deposit insurance fund.

The risk rating would provide a clear signal from the CDIC to the company's board of directors and management concerning the level of risk. More important, such an approach will recognize firms for good management.

As well, the government is making changes that will allow the CDIC to act as receiver of an unhealthy member institution's assets and to sell those assets along with a package of liabilities to a healthy institution. This should permit CDIC to obtain more value than it would if the institution was liquidated and its assets sold.

I want to turn to a final important area of change proposed by Bill C-100, which is one dealing with transactions between financial institutions here in Canada and with the rest of the world.

Through this legislation we are proposing a new act, the payment clearings and settlement act. It is designed to ensure that major clearing and settlement systems for financial transactions are designed and operated properly.

By the term "properly" we are addressing two clear concrete objectives. The first objective is to reduce or eliminate systemic risk to the Canadian financial system by ensuring that the failure of one participant in a clearing system will not lead to a domino effect by bringing down other members of a group. Second, it will enhance the international competitiveness of Canada's clearing and settlement systems.

The key components of the legislation are as follows. They will give the Bank of Canada explicit powers in the oversight of clearing and settlement systems that are potential sources of systemic risk. Again I emphasize systemic risk. Systems designated by the bank would be subject to bank oversight.

Second, they will provide the Bank of Canada with the capacity to participate in aspects of these clearing and settlements, such as the large value transfer system, or LVTS, as well as to serve special functions, such as guaranteeing settlement.

Third, they will give statutory recognition to netting arrangements in payments and other clearing and settlement systems in order to ensure that Canadian participants in derivative markets have greater certainty that their transactions will close. This will ultimately mitigate systemic risk.

I want to dispel concerns raised by the Quebec government last August. Systemic risk is an issue internationally and it is the central banks that have led in the development of measures to deal with systemic risk concerns in various fora, such as the Bank for International Settlements, the BIS.

Let me be very clear. The proposed federal legislation is not aimed at, nor will it result in, the regulation of securities markets. The focus of the Bank of Canada's oversight role is very different from that of the provinces. It does not in any way infringe on any province's jurisdiction.

I have talked at some length because this legislation covers much ground and deals with important issues. I believe Bill C-100 will help Canada's financial sector preserve and improve its world class stature to the benefit of all stakeholders and all Canadian citizens.

The measures we have proposed strike a critical balance between on the one hand, protecting the rights of depositors, policyholders and creditors and, on the other hand, facilitating innovation and growth in economic activity.

Canadians expect the government to ensure that their hard earned savings and investments will be well protected. The legislation will ensure we have the best and most efficient regulatory system, one that recognizes the interests of policyholders, depositors and creditors as well as one that promotes dynamic economic growth.

[Yvan Loubier, Bloc, Saint-Hyacinthe—Bagot, QC]

Mr. Speaker, I am pleased to rise on the subject of Bill C-100, an act to amend, enact and repeal certain laws relating to financial institutions. Permit me first to say that the Bloc Quebecois disagrees with three aspects of Bill C-100.

The objectives of the bill are highly laudable, particularly the one aimed at reducing the potential for systemic risk-the creation of the domino effect-within financial circles. For those who are not familiar with these financial terms, there is potential for systemic risk when one financial institution is unable to meet its obligations and drags the entire financial sector along with it. It is a sort of domino effect where one institution is unable to pay another, the other cannot pay the next, and so on. In short, we end up with a financial catastrophe such as we saw recently in western Canada.

Reducing the potential for systemic risk is highly laudable. However, when it serves as a pretext to slip through the back door into exclusive provincial jurisdiction, and specifically that of Quebec, it is no longer acceptable. I refer here to the securities sector. Securities do not escape from the application of the new provisions on financial institutions. Under subsection 92(13) of the

Constitution Act, 1982, jurisdiction over the securities sector is a matter for the provinces, for the Government of Quebec.

This jurisdiction, based on the Government of Quebec's exclusive powers over property and civil rights, was confirmed by the case law of the Supreme Court of Canada, which added provincial regulation of the securities market to property and civil rights. It has been clear since 1982. Now the bill is directly targeting the field of securities.

This is strange. We are barely over a constitutional debate, a referendum campaign, in which our colleagues opposite argued: "Yes, we will make certain changes to the system. Yes, we will respect Quebec's jurisdiction. Yes, we will have a good understanding in the future". This is what they told Quebecers, they said: "If you vote no to Quebec sovereignty, things will go well, you will see". A few weeks after the result, Quebec is being treated with arrogance and cynicism with the tabling of a bill such as Bill C-100.

What is more, this bill, in addition to invading Quebec's exclusive jurisdiction, accords unheard of powers to the Bank of Canada and the Department of Finance.

I am referring to the provisions on pages 117 and 118 of the bill, which stipulate that the Bank of Canada may enter into an agreement with a clearing house or a participant, or both, in respect of: netting arrangements; risk sharing and risk control mechanisms; certainty of settlement and finality of payment; the nature of financial arrangements among participants; the operational systems and financial soundness of the clearing house.

In addition, the Directives section of the bill provides that, and I quote: "Where the Governor of the Bank is of the opinion that a clearing house or participant is engaging in or is about to engage in any act, omission or course of conduct that results or is likely to result in systemic risk being inadequately controlled-the excuse of systemic risk, or-that the designated clearing and settlement system in respect of the clearing house or participant is operating or is about to operate in a way that results or is likely to result in systemic risk being inadequately controlled, the Governor may issue a directive in writing-not a proposal or suggestion but a written directive-to the clearing house or participant requiring it to cease or refrain from engaging in the act, omission or course of conduct, and perform such acts as in the opinion of the Governor are necessary to remedy the situation".

Do you know what this means? It means that the Governor of the Bank of Canada could issue directives not only to clearing houses but also to participating institutions telling them how to conduct their business. It means that, if the institution is a participant, as specified in this provision, the Governor of the Bank of Canada could tell this institution what to do; it makes no difference whether this institution is a provincially chartered bank or a player in the securities industry.

Under this bill, the Governor of the Bank of Canada may issue directives to a clearing house or a participant. This means that he could-he has the authority to do so-issue directives to an institution like Fiducie Desjardins, Lévesque Beaubien Geoffrion and Leclerc, and Desjardins' central branches for example. These are all provincially chartered institutions in the securities industry. Such an invasion is unacceptable.

I would say that this invasion is even worse than the recent federal invasion in the area of manpower training for example. It is worse in the sense that it touches one of Quebec's sacred cows. It touches an area under the exclusive jurisdiction of the Government of Quebec, as recognized in the Constitution imposed on us by the current Prime Minister in 1982.

It takes a great deal of self-righteousness and cynicism to do something like that.

[Don Boudria, Liberal, Glengarry—Prescott—Russell, ON]

Thank you for your generosity.

[Yvan Loubier, Bloc, Saint-Hyacinthe—Bagot, QC]

I can hear my Liberal colleagues, and the Liberal whip in particular, scoff at the arguments we are putting forward.

[Don Boudria, Liberal, Glengarry—Prescott—Russell, ON]

Not at the document, at you.

[Yvan Loubier, Bloc, Saint-Hyacinthe—Bagot, QC]

I would tell the hon. member that his friend Daniel Johnson, in Quebec, Daniel Johnson himself took offence at this federal invasion. Daniel Johnson himself wrote to the Minister of Intergovernmental Affairs, because he found appalling that a bill has been on the table since last year to invade one of Quebec's areas of jurisdiction.

So, Mr. Speaker, when even strong federalists like Daniel Johnson, like the government whip who scoffs at the arguments we put forward, take a stand similar to ours, this goes to show that there is major consensus on this issue in Quebec.

It is a unfortunate that the people across the way show this kind of an attitude. Instead of listening to our arguments and amendment proposals concerning the bill, they poke fun at us. Such an attitude is unacceptable in this House, and it has been going on for about a month, since the referendum campaign has been over.

I do not know if you can do something about it, Mr. Speaker, but I would really like our friends opposite to listen to what we are suggesting instead of acting like they are this morning, throwing arguments without substance at us and mocking us.

Can you call for order, please, Mr. Speaker? He is making me lose my concentration.

[The Acting Speaker (Mr. Kilger)]

Sometimes the House gets somewhat animated and that is understandable. However, following the request made by the hon. member for Saint-Hyacinthe-Bagot, I am asking for the co-operation of the House, so that members who have the floor can speak in an atmosphere of mutual respect.

[Yvan Loubier, Bloc, Saint-Hyacinthe—Bagot, QC]

Thank you, Mr. Speaker. It is rather unusual to see a whip get involved at this stage.

I was mentioning the powers given to the Bank of Canada regarding clearing and settlement houses. Let me quote the brief recently submitted by the Quebec securities commission: "The powers given to the Bank of Canada regarding the clearing and settlement system would constitute an infringement on the authority given by the Quebec legislator to the securities commission. Most of the powers given to the Bank of Canada are a replica of those delegated to the Quebec securities commission more than 10 years ago. The only difference is that the Bank of Canada's authority, as provided in the schedule to Bill C-100, is based on a desire to control the systemic risk by invoking the national interest, while the authority of the commission relates to the overall market regulations".

If we look at the bill, we see, given the schedule and the new powers delegated to the Bank of Canada, that the bank, through its authority to give directives to a clearing house and a participant, does exactly the same as the securities commission. For example, under Bill C-100, the Bank of Canada would exercise powers which are an integral part of the authority given to the securities commission, such as giving clearing houses and their participants directives akin to an order to do or not do something. Such power is given to the Quebec securities commission through its incorporating act.

"Since the Bank of Canada should be informed of any change in the internal regulations and rules of operation of the clearing houses, this means that it exerts a supervisory power over these changes. The Commission des valeurs mobilières also has the power to approve these modifications. Finally, the Bank of Canada is empowered to inspect clearing houses, which duplicates the power assigned to the Commission". This is a quote from the Commission des valeurs mobilières.

Not only, then, is there encroachment on an area of jurisdiction that belongs exclusively to Quebec, but they have also taken the luxury of creating duplication and overlap in times of austerity budgets, after all we have heard from across the way in that connection. After hearing the Minister of Intergovernmental Affairs, the Prime Minister himself even, saying that action will be taken to reduce duplication and overlap, now we are presented with a bill that does exactly that, creates a double structure, a double role, which encroaches on an area of Quebec jurisdiction, which makes institutions such as the Bank of Canada duplicate the work of others. It is inadmissible and nearly unbelievable on the one hand, and on the other it creates flagrant inefficiency through overlapping of resources in the area of financial institutions.

As for systemic risk, as I have said, we agree with the objective of reducing it. It is a most praiseworthy objective and one shared by all nations throughout the world. It is, however, a false pretext for giving such a broad and powerful mandate to the Bank of Canada, particularly in an area of jurisdiction that belongs exclusively to Quebec, securities.

All that the government could do to reduce systemic risks would be to improve what is called the large value transfer system, by putting into place an electronic clearing system which will ensure the final character of the clearing transaction, and will make it possible to pay out, perhaps not immediately, but within the day. If the Secretary of State is familiar with such a system-and I am not convinced that he is all that familiar with it, judging by the responses he gave to the finance committee, but let us assume his familiarity-this was specifically one of the recommendations by the internationally renowned group of 30. This was precisely what they said in 1989, that it was necessary to implement and perfect a large value transfer system, so as to reduce the systemic risks on the financial market.

This recommendation by the Group of Thirty was so good that the Governor of the Bank of Canada, speaking to members of the financial community this summer before he appeared before the finance committee on August 15, acknowledged that it was enough to improve the large value transfer system in order to reduce, and in fact, if I remember correctly, he did not say reduce, he said eliminate, in referring to the most ambitious risk taking that went on, more ambitious than most people are prepared to undertake. In other words, to eliminate systemic risks, all we had to do was improve the large value transfer system.

There is no need to intrude in the jurisdictions of the Government of Quebec. There is no need to give the Governor of the Bank of Canada extraordinary powers to issue directives to provincial chartered institutions involved in the securities sector. There is no need to create unnecessary friction between the federal government and the Quebec government. All we have to do is improve the large value transfer system. That is all.

So why does it again boil down to encroaching on one of Quebec's jurisdictions? Why give the Governor of the Bank of Canada considerable powers and take away from the Government of Quebec its power to control the development of the securities sector? Why?

Again, I put this question to the Governor of the Bank of Canada on August 15, but I did not get an answer. I asked him about the difference between the speech he made before the finance commit-

tee and the one he made this summer, when he said: "I do not need additional powers; all I need is a better large value transfer system". The debate became very political, and I agreed with the Governor of the Bank of Canada that his role was not that of a politician. However, I think everyone realized that the federal government was again trying to centralize all powers, including prerogatives explicitely recognized under the Constitution Act, 1982.

In fact, as I pointed out earlier, this is not sovereignists against federalists, it is simply a matter of common sense and respecting the prerogatives of Quebec as conferred on the province by the Constitution. So much so that on February 16, 1994, when the federal government's intentions with respect to financial institutions were already known, and the bill was already on the table, not the bill as such but the proposals to invade the securities sector, Daniel Johnson, the Premier at the time who was to be Premier for a short while yet, wrote to the President of the Privy Council and the Minister of Intergovernmental Affairs, the hon. member for Hull-Aylmer, to tell them that he disagreed with the bill.

With your permission, Mr. Speaker, I will quote what he said: "Perhaps I may remind you, first of all that the Government of Quebec has never supported an expanded federal role in the securities sector, which is the exclusive responsibility of the provinces". This is not Mr. Campeau or Mrs. Marois but Daniel Johnson when he was Premier of Quebec. I will continue: "In fact, it has regularly indicated it was opposed"-strong language for Mr. Johnson-"to federal initiatives in this respect, as were several other provinces regarding the recent reform of federal legislation on financial institutions, which came into force in June 1992".

I will continue this quote from Mr. Johnson's letter: "In the quinquennial report she tabled in the National Assembly last December, the minister responsible for finance reiterated Quebec's concerns about the federal bill to regulate the securities sector which would be part of this legislation. She stressed that federal regulations would be inappropriate, both constitutionally and from the point of view of efficiency". This still according toMr. Johnson, a staunch federalist, who in this letter warned the federal government against meddling with the securities sector, which is Quebec's exclusive responsibility.

To continue with the letter from Mr. Johnson, who is still a federalist today: "Such regulations would mean duplicating both existing regulations and the supervision involved and would inevitably add to the administrative and financial burden on issuers, investors and intermediaries". Mr. Johnson goes on to say the following: "If the purpose is to reduce duplication and improve efficiency, it seems to me it hardly makes sense to create a new structure and additional regulations".

As I said before, if the Bloc Quebecois and Daniel Johnson agree, it is because a broad consensus exists in Quebec.

The federal government must amend its bill in order to withdraw from the area of securities which is a field of exclusive jurisdiction for the Quebec government. This is the unanimous feeling in Quebec. It must not invade this area. It must not give the Governor of the Bank of Canada and the Minister of Finance new powers to issue directives not only to clearing houses, but also to participating institutions or establishments.

It must not give the Governor of the Bank of Canada powers to issue directives to the Fiducie Desjardins, for instance, or Lévesque Beaubien Geoffrion and Leclerc, or the Caisses centrales Desjardins. This is none of its business. This is the Bloc's position in this matter.

The Quebec finance minister is still waiting for an answer to a letter he sent the Minister of Finance on August 15. No abuses. The Quebec government does not need the kind of abuse it got from the Minister of Finance the day after he received the letter. All the Quebec government wants is explanations, assurances and changes to Bill C-100.

To this day, these basic requests have remained unanswered on the part of the federal government. This is not normal, especially since federalists claim to be open to reforms and willing to foster greater harmony between Quebec and the federal government, and eliminate inefficiencies and duplications. Between words and actions, there is a big gap, not to say a huge discrepancy.

There are two other aspects of the bill which annoy the official opposition. The second aspect of Bill C-100 with which Quebec has a serious problem is clause 133, the clause dealing with the Winding-up Act. The notion of insolvency is broadened-we acknowledge that it is an area of exclusive federal jurisdiction-but by widening it, once again the federal does not take into account the role of a major player in Quebec, namely the inspector general of Quebec financial institutions.

I can hear them laughing and mocking on the other side. This is the kind of reaction we have been getting for the last month whenever we tell the truth. the pretence of wanting to increase stability and reduce uncertainty in the financial sector, they added a player and thereby added the possibility for dispute by institutions which could be found wanting by Quebec's Inspecteur général des institutions financières.

That opens the door to disputes which could go all the way to the Supreme Court. Let me give you an example. If the inspector general sees that an institution is not fulfilling its obligations and issues directives that it must follow, and then that institution, given the new bill, the new provisions respecting the Winding-up Act, decides to ignore these directives, it will have the possibility to do so because the bill adds some ambiguity, it adds another player

whose objectives and powers are exactly the same as those of the Inspecteur général des institutions financières.

Therefore, they say they want to increase the predictability of the financial market, that they want to eliminate uncertainty and reduce systemic risk, but they are adding another element which could interfere with the decisions and the orientations of Quebec's Inspecteur général des institutions financières.

If that is what they mean by reducing uncertainties, increasing stability, we are no longer on Earth. We are on another planet. With this bill, the federal government is stretching the notion of insolvency, it is creating uncertainty on the financial market and ambiguity in the evolution of institutions in the financial sector which could adversely affect the proper operations of these institutions.

This will not improve anything, this bill does not propose improvements. What the bill proposes, I tell you, is quite harmful. At a time when financial institutions, as everybody knows, need stability and certainty, a federal bill is adding uncertainty to the market. It is adding a nebulous provision which will deny the Quebec Inspecteur général des institutions financières his exclusive role, his directives will no longer be exclusive. Which directives will financial institutions abide by? Those of the Quebec inspector general or those issued by the federal government under Bill C-100?

The financial sector can do without such ambiguous situations. It is hard enough to manage in this sector without possible challenges over the role of the Quebec Inspecteur général des institutions financières and without added uncertainty.

There is also a third aspect of the bill which raises questions, and this will be my last point. It is on page 11 of the bill where it says: "from now on, premiums payable to the Canada Deposit Insurance Corporation will be based on a risk factor assessed by the institutions". The principle may be excellent, but once again, they are disregarding a Quebec institution in the area of securities called the Régie de l'assurance-dépôt du Québec, which did not consider necessary to implement this kind of system and was never consulted on the rating system that the federal government is trying to implement through the Canada Deposit Insurance Corporation.

We have mixed feelings about this new rating system which will set the rate which will apply to a given institution following a risk analysis. Let us take for example Fiducie Desjardins; it is just an example, but let us take this one. About 95 per cent of its deposits are from Quebec and only 5 per cent from the rest of Canada. With this bill, the Canada Deposit Insurance Corporation would be empowered to give Fiducie Desjardins a bond rating on 5 per cent of its deposits on a Canadian basis. It would issue a rating on only 5 per cent of its deposits.

By issuing a rating on 5 per cent of deposits, this rating becomes a signal for all financial markets, including in Quebec. This signal can be as private as the one given by ratings from agencies such as Moody's, Standard & Poor, Dominion Bond Rating and Canadian Bond Rating. If this rating becomes public-and there is a risk that it will-, that would mean that Fiducie Desjardins, which would have been rated according to the risk associated with 5 per cent of its deposits, would be given this rating for all its deposits. In other words, that would become a risk signal for 100 per cent of Desjardins' deposits. And that risk is very real.

These are the three aspects that I wanted to underline and for which we did not get a satisfying answer from the government when Bill C-100 was tabled this summer. We hope that the analysis that the official opposition has just made will result in valuable answers from the government and that, when Bill C-100 is examined clause by clause, the government will propose amendments to assure us that, first of all, Quebec's exclusive jurisdiction, that is its securities sector, will be respected.

Second, that no extraordinary powers be granted to the Governor of the Bank of Canada just to reduce the systemic risks of issuing guidelines to the clearing houses and the participating institutions. So, that no new powers be granted that would directly infringe upon the powers of the Quebec Securities Commission.

We should also get rid of the new role given to the Deposit Insurance Corporation that could lead to an increase in financial market concentration and also to a rating that would apply to all deposits made in Quebec institutions, but not to the deposits made elsewhere in Canada.

Third, that the extension of the concept of insolvency should not be used to disregard the role of the superintendent of financial institutions in Quebec.

So, these are the three provisions that bother us and we will try hard to urge the government to amend them. We hope that the government will respond to these three objections made not only by the official opposition, but also by the Government of Quebec and even the leader of the opposition at the National Assembly, Daniel Johnson.

If the government does not amend the bill in this manner, we shall move, during clause by clause consideration of the bill, some amendments to Bill C-100 that will meet respond to these objections.

[Jim Abbott, Reform, Kootenay East, BC]

Mr. Speaker, the expressions of the Bloc member are an absolute classic example to the House and to all Canadians that Her Majesty's Loyal Opposition fundamentally represents or thinks that it represents 25 per cent of the people resident in Canada.

I took particular note of the fact that the prairie provinces, British Columbia, Ontario and the Atlantic provinces somehow were completely apart from any concern of the so-called official opposition. I find that exceptionally unfortunate.

For the duration of this Parliament the Reform Party has been the national opposition. I will be responding to the bill in light of our concern on behalf of all Canadians no matter where they live, including in the province of Quebec.

I should like to put on the record the Reform Party understanding of the bill. It brings amendments to the Bank Act, Co-Operative Credit Associations Act, Insurance Act and Trust and Loan Companies Act dealing with first, the disclosure of information; second, the elimination of appeals in relation to certain matters; third, the disqualification of persons from becoming officeholders in an institution; fourth, the taking of control of an institution by the Superintendent of Financial Institutions; and, fifth, changes to the duties of the superintendent.

There are also amendments to the Winding-up Act respecting, first, the circumstances and procedures for winding up an institution and, second, a revised part III dealing with the restructuring of insurance companies. There are also amendments to the Canada Deposit Insurance Corporation Act. It is this area that I will be addressing in the balance of my speech.

Continuing with our observations, the amendments to CDIC concern, first, the business affairs of the corporation; second, the restructuring of institutions by means of vesting of shares and the corporation becoming a receiver; third, the assessment and collection of deposit insurance premiums; and, fourth, the enforcement of the act.

As I mentioned, the amendments to the Canada Deposit Insurance Corporation Act is the primary concern of the Reform Party. The bill is as a result of the government's review of the safety of financial institutions. It follows upon failures of a number of financial institutions and is the government's response to concerns regarding financial institutions. We also note that the bill is a prelude to the Bank Act review scheduled for 1997 that promises to be much wider in scope.

I have been approached in my office by a number of people with respect to the Bank Act review. There is much concern on the part of businesses with respect to the encroachment or the potential further encroachment of the chartered banks into the insurance business. I look forward to the review in 1997.

As I noted at the start of my speech, the Bloc Quebecois is being irresponsible in its position as official opposition in that it is very myopic in taking a look at the concerns of only 25 per cent of Canada's citizens, but I would be remiss if I did not make some comments about the government.

The bill we are speaking to today is important. It concerns the fundamentals of controlling money or at least the affairs surrounding money. Money as the medium of exchange whether it be in Canada or around the world must have government control. We respect that the act is of some value. However, in the context of all other legislation or non-legislation the government has been bringing forward and the way it keeps taking us as parliamentarians through a void of any meaningful legislation, the act although important to Canadians is yet another way of getting around the fact that we should be getting on with other affairs that are important to Canadians rather than simply wasting time on housekeeping issues.

I do not suggest that the act is a waste of time. I am just saying that it falls into the context of avoiding any review of UI, for example. There are all sorts of leaks to the press about what will be happening with UI and about items promised by the government over the last two years about which nothing has happened.

Speaking specifically to the bill, there is a very little difference between the thought processes of the Liberals and the Conservatives. Liberal, Tory, same old story. The same kind of thought processes would come from the either of the old line parties. The Liberals are trying to engineer results of the gain. With the act, particularly as it relates to the Canada Deposit Insurance Corporation, they are continuing to attempt to interfere in the natural process in the marketplace. Liberals, as was the case with the Conservatives, want to engineer the results of the gain. They want to make the rules of the game such that they can ensure what the results will be.

Basically this imposes external and extraneous pressure on an international commodity such as the trading medium of money. It brings values into the marketplace that would not be there if it were not for blatant government interference, as is shown in its proposals relative to the CDIC.

It makes me think a lot of the way that the Liberals and their predecessors, the Tories, have gone about interfering in the marketplace in the area of regional development and regional development grants. There is an absolute parallel between regional development and the way they are looking at the CDIC amendments.

In regional development we see countless Canadian dollars going into marketplaces under western economic diversification, FORD-Q, ACOA or any other program. The Canadian taxpayers' money squandered through these programs basically ends up distorting the marketplace. Why? It is because most frequently they end up supporting non-competitive companies that cannot make it on their own. There is no natural cleansing process to the marketplace. The biggest problem that creates is distortion or disadvantage for the firms that are competitive.

It is tremendously ironic that the competitive, healthy firms are paying the taxes. Their taxes are being taken in by big government, by the Liberals, and in turn are being put into firms that are less competitive, thereby creating competition for the firms that are competitive. The bottom line is that it costs taxpayers lots and lots of money.

[The Acting Speaker (Mr. Kilger)]

I hesitate to interrupt the hon. member, but it being 11 a.m., pursuant to Standing Order 30 the House will now proceed to Statements by Members pursuant to Standing Order 31.

The hon. member for Kootenay East will have his remaining time after question period and daily routine of business.

Legislative Assembly Of Northwest Territories

[Jack Iyerak Anawak, Liberal, Nunatsiaq, NT]

This week the newly elected members of the Northwest Territories Legislative Assembly selected their government leader and cabinet. Of the eight-member cabinet, four are from the Eastern Arctic and four are from the west. There is one female, and there is Inuit, Dene, and Métis representation in the cabinet.

Congratulations to veteran MLA and former cabinet minister Don Morin as the new premier of the Northwest Territories. I congratulate as well John Todd, Kelvin Ng, Manitok Thompson, Goo Arlooktoo, Jim Antoine, Charles Dent, and Stephen Kakfwi as new cabinet ministers.

On behalf of the Government of Canada, I wish the new territorial government well. There are many challenges ahead of us leading up to the division of the territories in 1999. We look forward to working closely and co-operatively with the new government.

National Unity

[Dick Harris, Reform, Prince George—Bulkley Valley, BC]

Mr. Speaker, we learned this week that the leader of the separatists will soon be leaving the House to become the anointed premier of Quebec. Constituents in my riding will be happy to see his anti-Canada rhetoric exiting the House.

Meanwhile, the other 52 Bloc members appear to be in for the long haul. After all, they did vote in favour of the MPs pension plan and they are very comfortable sitting here receiving their federal salaries and their federal perks at the expense of the Canadian taxpayers.

Most Canadians are sickened at seeing the separatists continue to sit in the House. They have every right to feel that way, because the Bloc is committed to the destruction of Canada.

If constituents in my riding had their way, Bloc members would be dragged kicking and screaming from the House and charged with treason.

[The Speaker]

Colleagues, we cannot use words taken from another source and repeat them in the House. We have to claim them for our own.

I would like the hon. member to please withdraw the last line of his statement and I would ask him to do so right now.

[Dick Harris, Reform, Prince George—Bulkley Valley, BC]

Mr. Speaker, I apologize. I was reflecting the thousands of comments I have heard. If I was out of order in the House, I do withdraw that.

[The Speaker]

I thank the hon. member, and I would encourage all members of the House to stay away from this type of language, either in statements or in questions. I appreciate very much the hon. member's withdrawing. I do not think it does us any good in the House to use these types of terms.

The hon. member for Victoria-Haliburton.

Page Program

[John O'Reilly, Liberal, Victoria—Haliburton, ON]

Mr. Speaker, in each session of Parliament I offer a challenge to the pages who serve us in the House of Commons. The current group was given the challenge of producing a picture of their home area. The contest included a box of Crayola crayons, which are produced in my riding of Victoria-Haliburton in the town of Lindsay, and a single piece of white paper. The contest was judged by Hélène Monette, a security guard in the lobby.

This session's winner is Katheryn Lyons of the Montreal-Kirkland area. Congratulations to all the pages who took part in the contest with such enthusiasm.

If members wish to view the art work, it is on display in the government lobby. The prize is an assortment of Crayola products and a certificate to prove the bragging rights that go with winning any contest.

Lincoln And Welland Regiment

[John Maloney, Liberal, Erie, ON]

Mr. Speaker, I am sure you will be pleased that a clerical oversight that deprived the Lincoln and Welland Regiment of two World War II battle honours has finally been corrected.

Regrettably, the regiment failed to receive honours for the unit's final two battles when scrolls were presented to Canadian military units in 1951. The oversight was recently detected, and scrolls citing exceptional conduct and courage at the Battle of Kusten Canal in April 1945 and the Battle of Bad Zwisehenahn in May 1945 were presented at a reunion for veterans.

Seventy-two men of the regiment died and approximately a hundred more were wounded in these two campaigns. These two scrolls recognizing the regiment's efforts in these two very intense battles during the closing days of the war are proudly placed on the armoury wall beside 16 others.

Peace and freedom were purchased for us with the sweat, toil, tears and blood of those like the Lincoln and Welland Regiment who walked the road before us. My congratulations go out to the Lincoln and Welland Regiment for this well deserved honour. My sincere appreciation goes out to veterans everywhere.

Hans Daigeler

[Beryl Gaffney, Liberal, Nepean, ON]

Mr. Speaker, I rise in the House today to pay tribute to Mr. Hans Daigeler, who tragically died on November 9, 1995, at the young age of 50 years.

Hans represented the provincial riding of Nepean from 1987 to 1995. He was a very special man, whose basic goodness impacted on all of us who knew him. His loyalty to the riding of Nepean and its people was legion. This commitment permeated his community, his province, and his country through all his interventions in the Ontario provincial legislature.

I knew Hans well. He was both my friend and my provincial Liberal colleague. His memory will live on through the dignity, compassion and justice that he so personified. To his wife Beverly, his son Christopher, and daughters Elyssa and Amanda, I offer my heartfelt sympathy.

We will miss you, my friend.

Cp Rail

[Philippe Paré, Bloc, Louis-Hébert, QC]

Mr. Speaker, CP Rail's move enlightens us on the lack of ethics shown by the no side during the referendum campaign. They told Quebecers that a yes vote could lead to a move by CP Rail when the decision had already been made for business purposes only. And two days ago, the Prime Minister added insult to injury when he blamed sovereignists for the move of CP Rail's head office.

To have the Prime Minister tell us that Quebec's economic problems are caused by the sovereignist movement is an insult to all Quebecers who work hard to build a strong Quebec.

The Prime Minister should stop playing politics on the back of Quebecers and support them by addressing the real problems. After all, he is the Prime Minister of all Canadians, including the 49.4 per cent of Quebecers who voted yes in the referendum.

Canadian National Railways

[Jim Gouk, Reform, Kootenay West—Revelstoke, BC]

Mr. Speaker, yesterday the government spoke with pride about what a great price it is getting for CN Rail shares and how selling them in foreign countries helped to increase that price. What really helped to increase the share price was the amount by which the government reduced CN's debt.

In committee the government talked about reducing CN's debt by approximately $1 billion and that very little if any would actually come from the Canadian taxpayer. In reality, the government reduced CN's debt by $1.4 billion, and all of it came from the taxpayer except for what can be realized from the sale of non-rail real estate assets with a book value of $235 million and no appraisal to the contrary.

This pay-down may well have contributed to the enhanced share price. However, if the government is going to use Canadians' tax dollars to enhance the value of shares, should it not have offered the first chance of those shares to Canadians? As it now stands, 40 per cent of those shares are being sold outside of Canada, despite the fact there appears to be sufficient interest inside Canada. If this government is going to continue to run huge deficits, at least let Canadians be the beneficiary of that debt.

Forestry

[Audrey McLaughlin, NDP, Yukon, YT]

Mr. Speaker, the management of forest resources in Yukon has been one of the most mismanaged federal issues I have ever seen in my years in Yukon. The lack of a comprehensive forestry policy has resulted in sit-ins,

week long demonstrations, and lawsuits. Surely this has to be a wake-up call that all is not well.

The only positive thing that can be said about the federal government's handling of this issue is that its ineptness has managed to unite the politicians of all parties, First Nations, loggers, and a very large percentage of the population. It should do so well on national unity.

Northern affairs has managed to introduce casino logging by calling three lotteries for timber permits and then cancelling them. It has not instituted the promised forestry advisory committee on reforestation and has caused unnecessary expenditures by both First Nations and taxpayers for failing to foresee the possibility of legal action.

The minister of Indian and northern affairs must take charge, do a full review of the management of northern affairs in Yukon, and institute immediately a full and public review of forest policy.

Canadian Sports Hall Of Fame

[Mauril Bélanger, Liberal, Ottawa—Vanier, ON]

Mr. Speaker, last November 9, six Canadians were inducted into Canada's Sports Hall of Fame: Bob Gainey, who played with the Montreal Canadiens for 16 years and was a key part of five Stanley Cup winning teams; Paul Henderson, who scored the winning goal for the Canadian hockey team in the series of the century against the Soviet Union in 1972; Kerrin-Lee Gartner, who won a gold medal at the 1992 Albertville Olympics in downhill skiing; Mark Tewksbury, who won a gold medal in the 100 metre backstroke event at the Barcelona Olympics in 1992; Paul Dojack, a Canadian Football League official for 24 years, involved in 550 games, including 14 Grey Cups; and Debbie Muir, head coach for our national synchronized swimming team from 1981 to 1991, who shared in the success of Carolyn Waldo, Sylvie Frechette and many others.

Congratulations to the six new members of the Sports Hall of Fame and best of luck to all up and coming athletes, coaches and officials.

Small Business

[Andy Mitchell, Liberal, Parry Sound—Muskoka, ON]

Mr. Speaker, recently the industry committee and Canada's major banks agreed to a set of small business lending standards that will benefit all Canadians. This represents progress for the small business men and women in this country. It is an example of what can be accomplished when industry officials and federal politicians work together to achieve change.

Small business constituents can now insist their lenders adhere to a code of conduct. They can take advantage of an alternative dispute resolution system. They can take complaints to an internal ombudsman, and if they are still not satisfied they will now have access to an independent industry-wide ombudsman as well. Finally, every three months parliamentarians will see the banks' small business borrowing statistics. These standardized statistics will be our tool to monitor progress.

To paraphrase a famous quote, this is not the end of ensuring that the banks will live up to their responsibilities. It is not even the beginning of the end. But it is perhaps the end of the beginning. There is much to be accomplished.

Environment

[Maria Minna, Liberal, Beaches—Woodbine, ON]

Mr. Speaker, I wish to congratulate the residents of Beaches-Woodbine, in particular Mr. Michael Liebson, for their perseverance in helping to prevent offshore dredging in Lake Ontario. The residents of the Toronto Beaches area are pleased that the Ontario Ministry of Natural Resources has turned down an application to dredge in Lake Ontario.

Bedrock Resources Inc. put in a proposal to the Ontario Ministry of Natural Resources to dredge sand in Lake Ontario off the shores of my riding. The health and environmental issues raised by this proposal were critical. In its correspondence, Environment Canada stated that the quality of the material makes it acceptable for on-land use as aggregate, but it is not acceptable for open water disposal. The proponent will be separating and saving the larger grain size material, while discharging the fine silts and clays back into Lake Ontario. In our view, this is open water disposal. Environment Canada also found that the sediment plume modelling, as conducted by the proponent's consultants, was inadequate.

In addition, the Department of Fisheries and Oceans stated in its correspondence that dredging will result in the harmful alteration, disruption and destruction of fish habitat. As well, in the opinion of the-

Prime Minister

[Stéphane Bergeron, Bloc, Verchères, QC]

Mr. Speaker, during the referendum campaign, the Prime Minister of Canada promised Quebecers that his government would recognize Quebec as a distinct society and give the province the right to veto any

constitutional change. He even repeated this promise a few days after the referendum.

But, once again, it was just an empty promise. The Prime Minister, trying to buy time or to make us waste ours, decided two weeks ago to create a phoney committee that has absolutely no substance to it.

The Prime Minister is so troubled by the criticism expressed with regard to this puppet committee that he is now claiming that he never promised anything and that Bloc members are liars. Take some rest, Mr. Prime Minister, and try to regain your memory because you can be sure that Quebecers have not forgotten and will never forget.