House of Commons Hansard #109 of the 35th Parliament, 2nd Session. (The original version is on Parliament's site.) The word of the day was c-42.


Judges Act
Government Orders

5:40 p.m.

The Acting Speaker (Mrs. Ringuette-Maltais)

I declare the motion carried.

(Motion agreed to and amendments read the second time and passed.)

Judges Act
Government Orders

5:45 p.m.

The Acting Speaker (Mrs. Ringuette-Maltais)

The House will now proceed to consideration of Private Members Business as listed on today's Order Paper.

Bank Act
Private Members' Business

5:45 p.m.


Sarkis Assadourian Don Valley North, ON

moved that Bill C-335, an act to amend the Bank Act (foreign banks), be read the second time and referred to a committee.

Madam Speaker, it is an honour for me to rise to debate at second reading my private member's bill, Bill C-335, an act to amend the Bank Act, with particular focus on foreign banks. I am sorry that the committee did not see fit to make this bill a votable item. However, we are here to discuss the issue and to make a point.

The purpose of the bill is to open the Bank Act to foreign competition so that they can provide more money to small business people in Canada and create more jobs.

This bill amends the Bank Act to require the minister to consider a commitment to serving small and medium size business in Canada as a factor in deciding whether to grant letters patent to foreign banks to operate in Canada.

It is interesting to point out at the outset the interest which the banking industry has taken in this bill. I have received correspondence from the Canadian Bankers Association which states that over 80 per cent of small businesses have their loans approved and that Canadian banks are giving strong support to Canada's small businesses.

I have statistics which were prepared by the hon. member for Trinity-Spadina which indicate that the Bank of Montreal increased its loans to small business by $110 million in the period September 30, 1995 to December 31, 1995. The CIBC decreased its loans to small business by $152 million. The National Bank decreased its loans to small business by $600,000 during the same period. The Royal Bank decreased its loans to small business by $111 million. The Scotiabank increased its loans to small business by $171 million. The TD Bank decreased its loans to small business by $116 million. The net loss to business people in Canada was $104 million in that period as compared with the previous period.

I mention these statistics because, as we all know, banks have announced profits of over $6 billion this week. That is a 20 per cent increase in their profits, but they have decreased their loans to small business.

Recently Toronto-Dominion's incoming chief executive told an audience in Ottawa that a strong and healthy country requires strong and healthy banks. It is also true that strong and healthy banks require a strong and healthy country.

Small businesses create over 80 per cent of the new jobs in Canada. Greater competition in the banking system will accelerate the funding of small and medium size businesses and create more jobs for Canadians. Economic growth will allow Canadians to work. It is better than depending on social work programs.

I believe the increased competition will generate better service and lower the costs that Canadians now pay for their banking services.

This week I picked up three brochures from the Bank of Nova Scotia, Bank of Montreal and CIBC. When I checked their service charges some of them were identical. Just like the gas stations, they charge the same price. For example, it costs the same amount for an NSF cheque, for each cheque you write, for monthly service charges. It does not matter which bank you go to, all charge the same price. Maybe my colleague can tell me that in western Canada they do not do the same but here in Ottawa, the nation's capital, that is how they charge.

My bill mirrors the opinion of two recent parliamentary committees, the Senate banking committee and the House of Commons finance committee. In separate reports they both recommended that we open the system to foreign banks in order to have more competition so consumers and business people alike will have flexibility in dealing with their bank.

In announcing the House of Commons standing committee on finance recommendations, the chairman and my colleague, the member of Parliament for Willowdale said: "This will allow greater flexibility for and more financial assistance for more financial institutions to come into Canada and provide more competition and services to Canadians". The recommendations of the committee are in response to the federal government's white paper on financial reports released earlier this year.

Foreign banks have been restricted by current restrictions and have warned that their numbers will decline unless the rules are eased. There used to be 62 foreign banks operating in Canada and now we have only 46. The less foreign banks we have the less competition there is and more freedom for the banks to charge as they wish.

The foreign banks have indicated that easing the rules will prompt them to expand their lending activities and look for new markets in the area of small and medium size businesses. Other foreign banks that have not yet entered Canada will take a second look and come in to operate in this market.

I should point out that the Canadian Bankers Association is in agreement with the committee's proposals. A spokesman for the CBA said that the proposed changes will bring economic benefits. The CBA's position is: "This is very positive for the foreign banking community. If the proposals are adopted, it would make Canada attractive to foreign lenders. I would expect you would see

the Americans looking at entering the market again, and the British banks".

The changes proposed by Bill C-335 will ensure that any foreign bank wishing to operate in Canada will intend to make and will be capable of making a contribution to the financial system in Canada by promoting the financial stability of and providing support for small and medium size businesses.

The Young Liberals at their convention also pushed through a resolution critical of chartered banks' record in financing small and medium size businesses. These young Canadians recognize the importance of this sector and their resolution shows that greater attention should be paid to how the big six banks meet this important need. After all, the future belongs to them. They are concerned with their future. We have to support them in their resolution so we can see competition in the banks.

In conclusion, I ask for the consideration of my fellow members in debating the merits of Bill C-355. My bill is consistent with the policy of the Government of Canada and with the findings of the parliamentary committees. It should be viewed as an extension of the job creation strategy of the government.

The central point of government policy is that the ownership of financial institutions is a privilege, not a right. With privileges come responsibilities and this bill merely requires new foreign banks to satisfy the minister as to how they will meet those responsibilities.

Bank Act
Private Members' Business

5:55 p.m.


Maurice Bernier Mégantic—Compton—Stanstead, QC

Madam Speaker, I am pleased to rise in this debate on Bill C-335 introduced by the member for Don Valley North.

The aim of this bill is to amend the Bank Act in order to require, as it says in the summary of the bill, the minister to consider commitment to serving small and medium size enterprises in Canada as a factor in a decision whether to grant letters patent to a foreign bank to operate in Canada.

In other words, so the ordinary folks may understand, the intent of this bill is to add another condition to those already governing foreign banks wanting to do business in Canada, a sort of requirement to provide more help to small and medium businesses.

I would first like to point out that there are already, as I have just mentioned, conditions governing the entry of new banks into the Canadian market. They should be identified, before we discuss the relevance of the condition added by the member for Don Valley North.

Section 27 of the Bank Act provides a number of conditions foreign banks must satisfy in order to receive their letters patent, and they are as follows: the nature and sufficiency of the financial resources of the applicant or applicants as a source of continuing financial support for the bank. They want to know whether the bank will be viable once it is operating in Canada.

The second condition is the soundness and feasibility of plans of the applicant or applicants for the future conduct and development of the business of the bank.

The third is the business record and experience of the applicant or applicants.

The fourth condition is whether the association will be operated responsibly by persons who are fit as to the character, competence and experience suitable for involvement in the operation of a financial institution.

Finally, the fifth and last condition, the best interests of the financial system in Canada.

The purpose of Bill C-335 is to add one of these conditions, and, again, this is to require, or to encourage, the banks-this is not made clear in the various clauses in the bill-to assist small and medium sized businesses. It would be hard not to be in favour of this. Of course we recognize the good intentions of this bill and, as far as its principle is concerned, we have no objection to such a condition being added.

It would, however, be a good idea to clarify a number of points. Perhaps it is a printing error, or merely an error in the French version, but since I am a former French teacher, these are matters of interest to me.

In clause 2 of the bill, where small and medium enterprises are defined, a medium size enterprise is defined as follows in paragraph ( a ), and I quote:

"moyenne entreprise" Entreprise qui, avec les entreprises qu'elle contrôle et celles qui la contrôlent:

(a) soit compte au plus cent, mais moins de cinq cents, employés-

There seems to a problem with the wording. My understanding of this section is that a medium size enterprise is an enterprise that has more than 100 employees and fewer than 500. That is what is meant.

In paragraph (b), there is also a reference to a medium size enterprise that has an activity other than manufacturing, an enterprise that has more than 50 employees but no more than 500 employees. We should say fewer than 500 employees. I therefore suggest that the hon. member check the wording of clause 2 and perhaps make appropriate corrections that would improve the clarity of his bill.

A few moments ago I said we had no objections to the purpose of this bill which is to ensure that the banks serve small and medium size businesses, especially at this time of the year when most banks

file their financial statements and we see fantastic, even excessive profits being made by Canada's chartered banks.

This week, the Bank of Nova Scotia announced profits of over $1 billion. Last week, it was the Bank of Montreal announcing profits of more than $1 billion. We can expect that next week, at the latest, the Royal Bank will confirm a substantial increase in its profits.

When we look at the profits banks make on the backs of the little people, it stands to reason they should care about small and medium size businesses. We should not have to tell them so.

I also want to take this opportunity to point out the work done by the hon. member for Portneuf. Last week, together with colleagues from the other parties in this House, he presented a request to Canada's chartered banks, asking them to reduce the interest rates charged on credit card balances. We all know these rates are extortionate, and this is not an overstatement. In some cases, we would call it outright robbery. I think the banks will have to examine their consciences. If this debate does no more than recall these facts, it will have achieved something.

As for the bill itself, I would like to add a few comments. I said earlier that the wording of the sections defining small and medium size enterprises was not entirely satisfactory. And I think defining a small or medium size business on the basis of number of employees alone also creates problem. There should be other criteria such as turnover.

The bill gives the impression that it is up to the minister to grant or not to grant letters patent to a foreign bank to operate on the Canadian market. I think there may be a conflict of interest if the minister alone is responsible for the decision. There should be more details in the section that deals with the decision to be made by the minister.

In concluding, I wish to point out that this bill is not a votable item. We in the official opposition support the purpose of the bill, but we want to take this opportunity to point out to the members of this House, and especially to the government, the need for a broader debate on the activities of banks in Canada and especially on how their enormous profits are used.

Bank Act
Private Members' Business

6:05 p.m.


Herb Grubel Capilano—Howe Sound, BC

Madam Speaker, I agree with one of the premises underlying the hon. member's bill. Canada's financial system would benefit from more competition generally and foreign competition in particular. This view is reflected in the Reform Party's minority amendment to the government's report on the hearings on the review of the financial sector held by the finance committee this fall. In this amendment we opposed the government's proposed legislation which would have made it more difficult and expensive for foreign banks to operate in Canada.

However, I cannot agree with the second part of the hon. member's legislative initiative which would require foreign banks to commit themselves to increased lending to small business as part of obtaining a licence to operate in Canada. I oppose this provision on two grounds.

First, it is out of touch with a modern relationship between business and government. It is sometimes efficient and equitable for government to set general rules of operation to assure public safety, as for example the rule which requires banks to maintain equity at a certain per cent of its deposit base. This rule assures the systemic stability of the banking system in case of a serious economic slowdown and many bankruptcies.

However, it is not wise for the government to set out specific rules about the composition of the banks' loan portfolios. Such regulation represents an indirect tax on the banks which they pass on to other clients. It also represents an indirect subsidy-

Message From The Senate
Private Members' Business

November 28th, 1996 / 6:05 p.m.

The Acting Speaker (Mrs. Ringuette-Maltais)

I have the honour to inform the House that a message has been received from the Senate informing this House that the Senate has passed Bill C-68, an act for granting to Her Majesty certain sums of money for the public service of Canada for the financial year ending March 31, 1997.

A message was delivered by the Gentleman Usher of the Black Rod as follows:

Madam Speaker, it is the desire of the Honourable the Deputy to His Excellency the Governor General that this honourable House attend him immediately in the chamber of the honourable the Senate.

Accordingly, the Speaker with the House went up to the Senate chamber.

And being returned:

Message From The Senate
The Royal Assent

6:15 p.m.

The Acting Speaker (Mrs. Ringuette-Maltais)

I have the honour to inform the House that when the House went up to the Senate Chamber the Deputy to His Excellency the Governor General was pleased to give, in Her Majesty's name, the Royal Assent to the following bills:

Bill C-6, an act to amend the Yukon Quartz Mining Act and the Yukon Placer Mining Act-Chapter 27.

Bill C-54, an act to amend the Foreign Extraterritorial Measures Act-Chapter 28.

Bill C-68, an act for granting to Her Majesty certain sums of money for the public service of Canada for the financial year ending March 31, 1997-Chapter 29.

Bill C-42, an act to amend the Judges Act and to make consequential amendments to another act-Chapter 30.