Mr. Speaker, I followed this debate with a great deal of interest, including the comments of the hon. member for Kamloops, Thompson and Highland Valleys, who displayed an unprecedented degree of frustration with government members.
The hon. member for Kamloops, Thompson and Highland Valleys has been here for quite some time. He can usually live with his frustration. If he ever has problems, he can always go to a therapist, including one from the Reform Party.
My colleague and friend, the hon. member for Sherbrooke, also expressed a great deal of concern about clause 7.1. I hope the decision not to support the bill will not be based on clause 7.1. After all, that clause includes the key word “may”. As members know, there are many problems concerning financial institutions in Quebec.
What happens is that the financial system is changing because of the WTO, among other factors. But the problem is more global than that. It is not the first time that we go through this kind of major change. We experienced a similar situation 25 or 30 years ago, when federal and provincial legislation was adjusted. Quebec had made legislative changes to prepare the ground for the major shakeup that had taken place.
These changes had a very negative impact on certain lending institutions in Quebec but, in the end, consumers were the winners.
What is clear is that today's bill is the result of WTO negotiations. This bill should have been debated in the House shortly after the WTO hearings. Officially we were told we had to wait for the report on bank mergers, but in truth, the finance minister wanted to wait for the decision on bank mergers to avoid giving the banks any legal argument regarding the fact that foreign banks are beating a path to our door. They are now in. It is made official by this bill, they are moving in.
Is Canada ready for this? Is Quebec ready for this? Probably not. The government made political hay on the issue of bank mergers. I can guarantee that this same government. which prevented bank mergers from happening in 1998, will allow them to go ahead in 2000 or 2001. Mark my words. It said no then, it will say yes later. Why? It will argue that the international environment has changed. The proof will be in the fact that Bill C-67 will have been passed by this House.
The move towards bank mergers in Canada is not over. What we and others fear however is that bank mergers will lead to a massive concentration of financial markets, insurance and car loans.
It was also feared that bank mergers would bring about a major reduction in services to savers in Quebec and Canada, particularly in rural areas. Guess what is happening today? Bank mergers are not allowed to go ahead.
A number of banks announced massive layoffs. Many banks, big and medium one, will announce branch closures. In Quebec, the flagship caisses populaires have announced—and will be discussing on the weekend—a major reorganization of local caisse populaire federations. Over 300 small caisses populaires in remote areas are going to close. Massive layoffs are taking place throughout Canada's financial sector. And there have been no bank mergers yet.
This has been made into a strictly political issue and the broader picture largely ignored. Yes, foreign banks are entering the country and yes, foreign banks will increasingly take hold. Yes, it is true that, with computer technology, an American credit card can be used to pay bills in the United States, that a car can be bought through the Internet, and an American loan taken out as well. All that is true.
Bill C-67 legalizes only a small part of what is now going on internationally. Whether we like it or not, even though the major banks have not been allowed to merge, major changes are still taking place.
And yet, the number of branches is still dropping. And yet, the job losses expected to follow bank mergers are occurring; it is just less obvious. The Minister of Finance has arranged not to be held responsible for branch closings and job losses by saying no to the bank merger.
These branch closings and layoffs are therefore being blamed on the nasty Canadian banks and Quebec's mean caisses populaires. It is their fault, and the ministers of finance in Ottawa and Quebec City are off the hook.
A wonderful opportunity has been lost to set up a financial safety net for the savings of Canadians. We missed an opportunity. At present, there are no bank mergers but there is no financial safety net either. In remote areas in Quebec and Canada, branches are closing, services are being reduced and fees are rising. This is what is going on. And yet, there have been no bank mergers.
Bill C-67 will legalize something we already know is coming. There will be a complete reorganization. At the end of this year or at the beginning of the year 2000, there will be other applications for mergers.
We can be wiser, because Canadian banks know that the American and foreign institutions are coming. There could be a legislative change which would not bring official mergers of Canadian financial institutions. However, the legislation says nothing about services agreements, at present. We should not be surprised if the Royal Bank, the Bank of Montreal, the Toronto Dominion Bank, the CIBC and Scotia Bank sign service agreements without going as far as merging.
In a town with a population of 6,000, for instance Asbestos in Quebec, where there are several bank branches, we can be sure that one of these branches will close while the other remains open. There will be service agreements. Each branch will keep its sign outside, but the number of branches of each bank will be reduced.
If there are no legislative changes, the government will have to deal with the situation and allow one or several bank mergers, or pass a bill at the last minute to set terms for bank mergers or service agreements between financial institutions, otherwise the market in Canada and Quebec will be taken over by foreigners and we will not be prepared for it.
Yes, we are open to competition. Yes, we are not afraid to have our institutions and businesses compete in the United States. Yes, we are prepared to let the Americans into our country with their financial services. But can we be prepared with a financial safety net, which will guarantee that the people of Quebec and of the rest of the county will be protected?
Reduced service charges, more customer services, continued services to rural areas, these are some of the demands that were made when the whole issue of bank mergers was being discussed. Unfortunately, the issue got rather clouded and today Bill C-67 reflects only part of the discussions.
Bill C-67, which was to be voted on in the House, was held up in order not to give the financial institutions that wanted to merge the legislative argument that “Yes, it is true, the foreign banks are on the way here”.
If one goes out and asks people in the street, they will say “We are fine now. Those big bad banks did not merge, so we will be protected. I'll still have my local branch. I'll still have my teller; service charges won't go up too much; I won't have to deal with that darned banking machine too often”. That is what they think, but that is not what is going to happen.
If there is an agreement, what we need in this country is not subsidiaries, but actual branches. There is a $150,000 investment, and some people see this as positive, as an element of protection. The only ones that will benefit from competitive service will be the people who are better off. That is a pity, because it was one of the arguments used by the Reform Party.
They also said that the $150,000 figure was negative, since it deprived all Canadians financial consumers, all Canadians wishing to save money, of any entitlement to more competition.
Unfortunately, we do not have the overall picture. The MacKay report was good, because it did provide the overall picture. But who has read the report among those who use their bank cards daily or go to the bank every Thursday to deposit their pay cheques? No one. The only thing that is remembered from the MacKay report is that it was against bank mergers. But it did not end there. It was much more than that.
It was a wake-up call about what we can expect from the banking industry at the international level, but the issue was not addressed in the House. We will miss the boat.
I mentioned the MacKay report. Bill C-67 only provides that foreign banks have to open branches, instead of subsidiaries. There is no one on the face of this earth who can make any sense out of this bill.
What it means is that, first of all, the financial environment will make it easier for foreign banks to set up shop in this country. Second, branches will close, jobs will be lost, services charges will go up and services will be reduced in rural areas.
The new legislation will come into force and people will say “We have a problem. One option is to reduce the minimum $150,000 loans.” Foreign banks will be brought down to the level of other banks, to the level of branches, not subsidiaries, just branches. Watch out for what will happen during the next two years.
At that point the foreign banks will do their lobbying. Financial institutions, including the caisses populaires in Quebec—do not be surprised of they make agreements; they have already done so, but the Mouvement Desjardins will be reaching agreements with others in order to meet the competition—will be amalgamating and entering into service agreements more and more.
Then there will be a problem in the regions and with the SMBs. BDC reports will prove there are financing problems for SMBs. The government will be running around trying to put out as many fires as possible. They will not be prepared for the inevitable, that is, international competition within a country. That is today's reality—international competition within a country. That is today's financial reality, and we have to live with it.
Credit is even harder for people to obtain, and yet banks will not be amalgamating. There is nothing. People earning a lower or middle income have a lot harder time borrowing today than five or ten years ago. And yet the interest rates are low.
Look at consumer protection groups. Look at what is happening in Quebec with the difficulty in borrowing. The guarantees they want are incredible. In the past, they wanted your shirt; now they want your pants, your underwear, your socks and those of your parents and your uncles. That is what they want when you borrow these days. Why? Because the banks and the caisses populaires in Quebec cleaned out their financial portfolios.
Financial institutions have financial ratings for borrowers like you and me. Mr. Speaker, I know yours is excellent. A bank may, for example, have a rating between 1 and 9. One is the best rating and it is yours, Mr. Speaker. A Reformer would probably get a rating of nine. Why? Because that party is almost at the end of its political life. We do not know what rating the Conservatives would get.
