Debates of March 24th, 1999

Bank Act

[Charlie Power, Progressive Conservative, St. John's West, NL]

Mr. Speaker, I would like the ask the hon. member a brief question.

I was probably one of the few members in the House who were open minded on the bank mergers. I said to the banks and to all who would listen that as long as bank mergers did not reduce competition and did not reduce the rights of Canadians to have access to free and competitive business in the banking circles, I was willing to support them.

I look at other things that have happened with mergers since then, like the consolidation of the grocery business in eastern Canada. In Newfoundland and all through Atlantic Canada all the reports show that through the merger of a couple of large grocery retail outlets, grocery costs for every family in Atlantic Canada will go up by an average of 7% a year. We allow mergers in one sector when we will not allow mergers in another sector.

Now that we are allowing foreign banks to come into Canada and increase the competition, maybe they will just come into the big cities. Maybe they will come in and take the cream of the crop and just open branches in bigger places, in the places that are more profitable.

Equally now that we will have a more competitive banking system in Canada which will give better access to all Canadians, should we not reassess the bank mergers which were rejected primarily upon the basis that we would have a less competitive banking system?

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

Mr. Speaker, I thank the hon. member for his question. It is a good one.

The fact is that when the merger proposals were put forward, because of the government inaction in making changes that would allow more competition in the financial services sector, the Minister of Finance basically painted himself into a corner. Under the current regime the merger of the banks would have indeed created a lessening of competition because the Minister of Finance and Liberal government have not taken any steps since 1993 to allow the opportunity for more competition in the banking industry.

With this step, this very important but still small step, we will have foreign branch banking in Canada that will be able to compete head-on with the big banks for commercial business. It may fill a void. There may be some switching of business between domestic banks and new foreign banks. Yes, this is more competition indeed.

There are a few more steps, and this is a good one, that the government could take to increase competition. Then we should let those bank merger proposals come forward to be viewed in an entirely different light, in a more competitive environment.

The banking industry is going to go through a number of changes to compete in the global economy in the next few years. It has been doing it now, but there are some big changes to be made. One of those changes may very well be that our domestic banks will have to get together in some sort of marriage to take advantage of all the opportunities there are in the global economy.

Yes, this is a good step and it will create more competition, but there is more to be done. This government is the only thing standing between a fully competitive banking industry in Canada and what we have right now. It is time that it stopped its foot-dragging and brought Canada into the 21st century where we can compete with big foreign banks in other countries.

[John Bryden, Liberal, Wentworth—Burlington, ON]

Mr. Speaker, I cannot let this opportunity pass without making a comment.

My read on the bank merger was that the danger of having the big banks merge at this time was the amount of exposure to Canada's economy that would be incurred if our banking institutions merged. In the context of a world economy where we have major disasters like the Asian flu, I think the Minister of Finance showed genuine prudence in putting off, at least for now, the prospect of a merger. If there were to be a major loss with these merged banks it could have a catastrophic effect on the economy.

I point out to the member opposite that the CIBC experienced this past year a major downturn and very significant losses. I suggest that we keep our comments closer to the truth. It is not just a matter of competition; it is a matter of the safety of our fiscal and economic nationalism.

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

Mr. Speaker, I am afraid the member is completely wrong in that assessment.

I believe that our big Canadian banks are among the finest bankers in the entire world. They are leaders in the way they run their operations. They are leaders in making prudent business decisions that will benefit not only their companies but also the Canadian economy.

I think it is irresponsible to compare our Canadian bank structure and our Canadian bank expertise with those of the banks that ran into trouble in Asia and in some third world countries.

We can compete and we can lead in the industry with any bank in the world. I do not believe for a moment that our Canadian banks are in any danger of making decisions that would lead to anything like what happened during the Asian flu.

The fact is that the finance minister and this government since 1993 have been dragging their feet on making changes to the financial industry that would allow Canadian banks to get even stronger and have more opportunity to be leaders in the global economy. That is what they have to do. They know it, and this is just one small step.

[Peter Stoffer, NDP, Sackville—Eastern Shore, NS]

Mr. Speaker, I do not want to get into the merits or the pros and cons of whether we should allow foreign banking. However, if foreign banks were allowed in and allowed to compete, as he and his party wish, would he not agree or take under advisement the private member's bill of my hon. colleague from Regina—Qu'Appelle which would force banks to have more community investment, similar to the credit union movement, where they would have to reinvest so much of their profits in the community so that we could have regional development, especially in the rural areas? I know that he comes from a rural area. Would he not agree that would be one hell of an idea and would he not agree that his party should support that initiative?

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

Mr. Speaker, if I was a rabid socialist I probably could support that idea very well, but the fact is that I am a free enterpriser, always have been and always will be.

To place those types of requirements on Canadian business of any kind, whether it is a bank, Magna Industries or Bombardier, is a profound intrusion of government into free enterprise and I could never support that.

Let me point out to this member that it is Canadian business which provides millions and millions of jobs in this country. Those members may think that it is government that should employ everyone, but the fact is that Canadian business is the number one employer, always has been and always will be.

As this economy grows we can look to Canadian business, which is employing workers who support that party and other parties. Canadian business writes the cheques for this country and keeps the economy going.

[Roy Cullen, Liberal, Etobicoke North, ON]

Mr. Speaker, I am very pleased to stand in the House today to speak in favour of Bill C-67, an act to amend the Bank Act. This bill is very important, not in itself necessarily, but because it begins the process of creating a more competitive financial services sector in Canada.

As a member of the 1998 national Liberal caucus task force on the future of the financial services sector, which was chaired by my colleague from Trinity—Spadina, I met with Canadians and listened to their concerns about the financial services sector. Canadians of all walks of life are concerned with both the accessibility and the affordability of financial services in Canada.

For example, seniors and seniors' organizations shared with the task force many of the same concerns about banking services as did other Canadians. Seniors are concerned about reduced choice in banking services, tied selling, poor service in rural areas, access to capital for small businesses, high levels of profit and privacy issues. Seniors also brought forward issues regarding the cost of banking services, reduced teller services, fewer branches, reduced pedestrian access and a lack of information about basic accounts.

Although many seniors are having their banking needs properly met, the multitude of different banking options now available can be very confusing. Banks have a tendency to promote the most expensive service packages, which may include features seniors do not need. It is particularly important that services available to seniors and basic low-cost service packages in general be advertised prominently at bank branches and automated teller machines.

The trend toward automated services cuts costs for banks and can provide a convenient service for many customers. Many seniors, however, are uncomfortable with some of the new technologies and prefer to deal with a person rather than a machine.

Further, not all branches have lower counters for persons with limited mobility or provide areas where seniors and others can sit while waiting for service.

For many seniors dependent upon public transportation, a visit to a bank branch a few kilometres away can cause significant travel time while waiting for buses.

Low income Canadians and ethnocultural communities in Canada have also raised concerns about the accessibility and affordability of financial services in Canada.

As well, small and medium size businesses, which are the driving force behind economic growth, also need affordable and accessible financial services. There are 2.4 million SMBs in Canada. Half of all private sector jobs are in these businesses. They are also responsible for 45% of the production in the private sector, and 95% of all new jobs.

Small businesses are highly dependent on the chartered banks for financing. This dependence has been increasing over the past few years. The Conference Board of Canada has shown that domestic chartered banks held 50.3% of the total SME financing market in 1996, compared to 48.4% in 1994. In addition, they held 72% of outstanding commercial loans to SMEs in 1996, up from 66% in 1994.

With such a large share of the SME lending market, the chartered banks face little competition from other institutions. This absence of competition is even greater in some regions of the country and in rural areas where small businesses may be totally dependent on one or two banks that operate in their communities.

The situation is even worse in areas located outside financial centres. Women, young entrepreneurs and aboriginal people in particular have poor access to debt financing. Small and medium size businesses are an integral part of our economy, yet they have only limited access to bank capital.

In the gallery are two business people from Alberta, Darrell Toma and Tom Clark, who have a very good entrepreneurial idea involving innovation in the agricultural and agribusiness sector. Capital is an issue that is constraining them. For that reason I am hoping they are successful in their visit to Ottawa.

It is for these reasons that our caucus task force made it a priority to offer solutions to ensure that affordable financial products and services are available to all Canadians and their businesses, regardless of where they live. We, the members of the task force, concluded that the most effective way to make the financial services sector more affordable is to encourage more competition.

Among other measures, the task force recommended the introduction of foreign bank branching into Canada. Our government again has responded.

At the present time, foreign banks wishing to operate in Canada must open distinct Canadian subsidiaries. For foreign banks not wishing to receive retail deposits in Canada this constitutes a needless regulatory requirement, which adds to their costs of doing business in the country.

Since reaching a peak of 59 in 1987, the number of foreign bank subsidiaries in Canada has declined to just 45 in 1998. Their share of total banking sector assets, which stood at about 12% in 1990, fell to just under 10% by the end of 1998. Almost all of the foreign banks in Canada operate solely as investment banks specializing in financing large corporations.

Foreign banks have publicly stated that they currently find the cost of trying to compete head to head with Canadian chartered banks for personal and small business lending to be so high as to make it futile. These banks cite tax, regulatory issues and the delay in introducing branching as factors inhibiting the entry of foreign banks.

I am pleased to note that earlier this year our government announced measures which will ensure that Canadian branches of foreign banks, Canadian subsidiaries of foreign banks and domestic banks are all taxed on a similar basis. Bill C-67 further levels the playing field for foreign banks. At the same time, however, no advantage has been provided to foreign banks over our domestic banks.

Compared to other industrialized nations, Canada is falling behind. The 1998 world economic forum on global competitiveness ranked Canada 39th in the ease with which new banks can begin operation and 40th for the participation of foreign banks in the Canadian financial sector.

There is no question there are significant barriers to entry for foreign banks and that is why this bill is so important. It is also why our national Liberal task force encouraged the government to move expeditiously to allow foreign banks greater access to Canada, and our government has responded.

Bill C-67 will bring Canada's foreign bank entry policies into line with practices in other major industrialized countries, all of which allow foreign bank branching. The new rules will give foreign banks the option of establishing one of two types of branches, a full service branch or a lending branch. Full service branches will not be allowed to accept deposits of less than $150,000 from Canadians. Lending branches will not be able to accept any deposits or borrow except from other financial institutions.

Since the branches of foreign banks will not be accepting retail deposits, they will be subject to slightly less stringent regulatory requirements in Canada than the subsidiaries of foreign banks.

The restrictions applicable to deposits ought not to discourage the arrival of any new banks, since most foreign banks want primarily to provide commercial banking services in Canada. Those wishing to accept retail deposits will still be able to establish a distinct subsidiary in Canada for that purpose.

The proposed banking regime will permit foreign banks to use their larger capital base to support lending activities in Canada. Over time this should allow foreign banks currently operating in Canada to increase their lending activities. This will provide new sources of capital for small and medium size businesses.

Bill C-67 is the first step in a process to encourage more competition in Canada's financial services sector. I encourage our government to unleash the power of our domestic financial institutions such as the credit unions, near banks and some of our very own crown corporations through further legislative and regulatory change. This will further encourage greater competition in Canada's financial services sector.

In conclusion, the bill benefits all consumers of banking services. It will, in particular, help small businesses to create still more jobs in the 21st century.

It is for this reason that I am proud to support Bill C-67 and I hope my colleagues will do the same.

[Bill Blaikie, NDP, Winnipeg—Transcona, MB]

Mr. Speaker, I am pleased to speak on behalf of the NDP in the debate today on Bill C-67, basically a bill which implements an agreement the current federal government signed at the World Trade Organization. Interesting that it signed it a day before the banks announced their plans to merger.

I always remember being struck with what I thought was the simulated shock on the part of the Minister of Finance that the banks had not told him this, that he had no idea what was happening. He was appalled and yet surely to goodness the Minister of Finance must have realized that by signing this agreement he created some of the significant conditions that led to the banks feeling they had to merge. We did not agree with the proposal to have the banks merge.

[The Acting Speaker (Mr. McClelland)]

It is my duty, pursuant to Standing Order 38, to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the hon. member for Yorkton—Melville, Agriculture; the hon. member for Churchill River, Agriculture; the hon. member for Lévis-et-Chutes-de-la-Chaudière, Shipbuilding.

[Bill Blaikie, NDP, Winnipeg—Transcona, MB]

Mr. Speaker, as I was saying before I was so procedurally interrupted, the Minister of Finance feigned surprise when the banks said they wanted to merge. It is not a coincidence as far as I am concerned and as far as many other people are concerned that they made this announcement a day after the signing of this international financial services agreement of which we are now debating the implementation.

What this will do is introduce an element of competition at a certain level in the Canadian banking industry and obviously the banks felt, wrongly, that they had to merge in order to meet the new conditions. These new conditions whether or not the banks merge still should be of concern to Canadians. What I think will happen is that these foreign banks will be allowed to compete at the high end of the banking industry. They will be able to deal with the people who have $150,000 to deposit. These foreign banks will not have anything to do with sort of ordinary folks who cannot keep $150,000 in their account.

The Canadian banks if they do not win this competition with these foreign banks and begin to lose money, where will they look for more profits in order to meet the inquisitive instincts of their shareholders? They will look to ordinary Canadians who are still captive customers of the Canadian banks. I see more and higher service charges ahead, more of all the little ways the banks have devised to take a little money off people here and there and everywhere and nickel and dime them to death.

There was a time when people actually had the feeling that banks, although it was probably an illusion, were there to serve them. When I was a kid the bank used to come to our school every Monday. This is what we would call capitalist inculcation or something like that. Nevertheless people from the bank would come to this school on Mondays and we would all have our bank books and we would put a dime in or whatever. This was to teach us to save. It was also to create sort of a lifetime brand loyalty to this bank which I will not name because I would not want to give it a free advertisement.

That was service. Teller did things for people. There are still some banks that do that, some individual bank locations. Certainly what the banks would like us to do is not have anything to do with a teller at all, not having to do with any human being. If we need something to do with a human being we are supposed to stand there and fill out all the forms while they do something else.

I went the other day to pay a Visa bill for somebody else. There is a special charge to pay somebody else's Visa bill. Pretty soon they will be measuring people's footsteps from the doorway to the teller and they will charge by the footstep or how long they are in there using up air. They will have a long line-up and then they will be charging so many bucks per cubic inches of oxygen. I do not want to get too ridiculous but the banks have in my judgement become ridiculous in the manifold ways in which they find new inventions to charge people money for things they used to do for nothing.

I want to move on to the larger issue, the WTO, and this international financial services agreement. There are two things here. There is the way the WTO works and the way the government allows itself to be worked over by the WTO, and the fact that these agreements are signed without any input from parliament.

There is no debate before the government signs these agreements. Then what we get here is an agreement that is already signed. It is a fait accompli and we do not really have any say in the matter whatsoever. I do not think that is right and it shows up the undemocratic nature of the WTO. Governments sign these agreements and then they simply expect them to be ratified.

It is part of a larger trend, particularly on the part of this government, which we see unfolding that I find objectionable not just in terms of the WTO but in terms of some of the other significant decisions it has made.

Just today, for example, people were commenting on the NATO operations in Kosovo. NATO was recently enlarged. Three countries were added to NATO. Every other NATO country had a debate in its parliament about the enlargement of NATO. Most of those other NATO countries, I think 13 out of 15, were required by their constitution or statutes that when such a significant decision would be taken there would be a real debate in parliament about the merits of that expansion, because a treaty was being changed. Certainly it was mandatory in the United States.

The only other place like Canada where it was not mandatory was Westminster, United Kingdom, but it did have a debate. Its parliamentary tradition is stronger and it would not make such a significant decision without having a debate in parliament.

What happened in Canada? We just issued a press release. The Minister of Foreign Affairs just issued a press release saying that the Government of Canada had ratified the expansion of NATO. Not a take note debate, not ministerial statement, absolutely nothing, no consideration by the standing committee on foreign affairs. Zippo.

Whether it is the WTO or NATO, we see a pattern on the part of the government that it simply signs agreements and expects parliament to ratify them or expects parliament to be silent about the ratification, depending on whether there is legislation required. When it came to the NATO expansion there was no legislation required so it did not have to go parliament a year later for implementation purposes. It never has to go to parliament. I think it is a shame.

With the WTO sooner or later it has to go to parliament, but then we are debating things a year and a half after the fact. That is inadequate also because what we find with respect to international financial services is that there is a great need for reform.

We are not having that debate about reform of the international financial services and system, although we did make progress yesterday. We made progress when the private member's motion of the hon. member for Regina—Qu'Appelle was passed in this House, not unanimously but nevertheless by a significant majority, calling for the enactment of a tax on international financial speculation, sometimes called the Tobin tax after Professor Tobin who invented it.

I sometimes think that for years we have been trying to get the Minister of Finance to agree to the Tobin tax and then finally somebody got to him and told him that the tax was not named after the Premier of Newfoundland. Then he was willing to go along with the idea. I do not know if his feelings about the future Liberal leadership were getting in the way of his relationship with the Tobin tax. Anyway, at some point the Minister of Finance decided that it might be okay to support something called the Tobin tax.

It is not inconsistent with some of things the Minister of Finance has been saying over the last little while about the need for a new global architecture for the international financial system. We need a Bretton Woods agreement for the 21st century, not an imitation in any way of the Bretton Woods system that broke down, but something that has the same principles and goals, not just the goals of creating an unfettered global free market in capital movement and speculation.

At least the world leaders after the second world war had some kind of vision of what kind of world they wanted. They were not afraid to talk about a world in which the systems they devised were there for the purposes of creating employment. They were there for the purposes of bettering the social conditions of people in all countries of the world. These sort of uncritical, brainless mantras about trade investment and liberalization as if this would be the salvation of mankind were not for them.

Mr. Speaker, it might be a good learning experience for you to go to a WTO meeting. People get up and speak about trade investment and liberalization as if it had salvific qualities; whatever problems humanity experiences, a little more liberalization of trade and investment will do the trick. It is a quasi religious experience to be at a WTO meeting. It is like being at some kind of revival meeting where a guy gets up, like Ruggiero, the head of the WTO. I am not kidding. They talk about liberalization of trade and investment as if it is the solution for everything; if there is a problem, all that is needed is a little more investment liberalization or trade liberalization.

It is not working. We are in a world in which there is a greater gap between the poor and the rich countries, and a greater gap between the poor and the rich within countries. It is creating a world which is very unjust, very unstable and very unsustainable environmentally.

Not so long ago some of us in the House rose on jubilee 2000 and the call from the leaders of many of the churches in Canada for forgiveness of debts for the poorest nations in the world. Are we doing this just because we want to be nice guys? Partly I hope.

We recognize the situation in which these countries have found themselves. Many of these countries are in these situations as a result of decisions taken by previous authoritarian dictatorship unelected governments. They are in a hole which they have a hard time getting out of. The churches have said that we need to have some debt forgiveness. We need to realize in our own time the insights of the biblical teaching about the year of jubilee in which debts are forgiven, slaves are freed, captives are liberated and people have a chance to begin anew, to start over. Many of these countries need to have that. It is not just for that. It is also in our own interests that we do this, particularly from an ecological point of view.

What do these countries do? This is part of the problem with the international financial system. They have to pay these debts in hard currency. In order to get hard currency they have to export. In order to export they have to do things that are not necessarily good for the population or good for the local environment. They have to stop doing all the things they might normally do to provide food for the local population. They grow coffee, or they have to burn down the rain forest and turn it into pasture, or they have to harvest the rain forest and turn it into exportable hardwoods or other wood products. Acres and acres of forest in southeast Asia are being turned into chopsticks as part of a growing export market.

We are not being very smart in the extent to which we make these people destroy our common environment in order to pay these debts. We are cutting off our nose to spite our face. Penny wise and pound foolish. There are an infinite number of morals which we are not paying attention to when we ask people to do this.

Imagine a world in which all the debts are paid, but we cannot breathe the air. We cannot drink the water. We cannot enjoy a stable political relationship with other countries because everything is in absolute violent chaos. But the banks will be okay. The debts will be paid. And that is the important thing because that really is our god, is it not?

What is a god after all, at least in the sense of a false god, an idol? That which has this power over human life, that is a false power, that is there only because we give it that power and we pretend that it has that power over us in some objective way rather than realising that it has that power over us because we give it that power. That is one of the commandments. Thou shalt not make a graven image. Thou shalt not have false gods before me. It means that we give power to something which has no power, except that power which we give it.

What we do here over and over again is we give power to systems over us, as if they have some kind of objectivity and reality apart from our acquiescence, apart from our own participation in giving them that power. What I am saying here today is that we need to name those idols, those false gods for what they are, as just that: something over which we should have more control as human beings instead of them controlling us. Because when we are controlled by something other than ourselves, when we are captive to something, we are captive to a particular point of view or to some power.

That is what they meant in the old days by the demonic. If you had a demon it meant you were not in control of your own life, that something else was controlling your life.

What we have here now is the elevation of the free market to the level of the demonic. We cannot control anything. We want to have a decent drug system in this country, generic drugs. We cannot do it. That would get in the way of the free market and intellectual property rights. We would like to have our own culture and protect it through split-run magazines, but we cannot do it. That would get in the way of the free market. The list goes on and on.

Soon it will be, we would like to keep our water and not export it to a country that is irresponsible in its use of water, like we ourselves are but nevertheless, we cannot do it. It will be NAFTA and free market principles that will keep us from doing that. The list goes on and on of the ways in which we have ceded the power that we should rightly hold individually and collectively, politically, over our own lives to this thing that we call the market.

That is what this bill is about and what many other bills that come before this House are about. That is why the NDP is against it.

[John Bryden, Liberal, Wentworth—Burlington, ON]

Mr. Speaker, I listened to the member opposite. He brought up the issue of the Tobin tax. I have to say it is terribly typical of members of his generation in this House who talk about issues long on sentiment but very short on practicality.

Yesterday we passed a private member's motion with respect to supporting a Tobin tax, which is a global tax on financial transactions. I have to say that many of the members on my side of the House supported the motion. I did not.

I did not because anyone should realize that the only way this financial transaction tax can ever work is if every country that has a financial transaction market gets on side, everyone. The United States, Europe, the Cayman Islands, everyone has to get on side otherwise the money, the transactions will just flow to wherever there is no tax.

I suggest to the member that here again we have a do good notion that raises expectations. Just as the member said, it is such a great thing, it will solve the world's problem, but he ignores the fact that it can never be implemented. We in parliament should be dealing with issues that are possible with things that can be done, not with simple dreams that look good in the public and perhaps will win the member a few votes. That is not where we should be at.

[Bill Blaikie, NDP, Winnipeg—Transcona, MB]

Mr. Speaker, I suppose the member is free to say what he just said, but the record should be clear that what he said obviously applies to 95% of his own caucus. They voted for that particular motion by my New Democratic colleague. It was not my motion. It was the motion of the member for Regina—Qu'Appelle.

What if we took that attitude toward everything, that it cannot be done, that it cannot be done until everybody does it? There is some truth in that. We are talking about an international tax. We understand it is not going to have the effect we want it to have if only Canada does it.

We are talking about Canada showing leadership in international fora, trying to get such a tax to be imposed not just by Canada but by other countries. The member has set up a straw man and then conveniently knocked him down. Unfortunately for him, I am not a straw man.

I never said it would solve everything. I never said anything of the kind. I said it would be a step forward in trying to set up an international financial system that was not driven by the greed of international money speculators. If he is for that, good for him. He should go out and get a job as a PR agent for the money speculators. As for me, I would rather drive them out of the temples.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, very briefly for anybody who might be following the debate, the motion dealt with by the House last night was to consider the advisability and in fact to study, not to approve a tax and to move forward with it. Obviously, this needs a starting point. I wanted simply to clarify that. I am sure the member would also want to confirm this is a starting point for consideration of the advisability.

[Bill Blaikie, NDP, Winnipeg—Transcona, MB]

Mr. Speaker, that is the way all motions read, but we all know, in spite of the fact that they read that way, politically they are taken as approval of the idea that is contained in the motion.

That is why the government so very often resists motions. If the government were to take the member's comments, technically speaking the government should vote for everything because it is only considering the advisability of it. But the government does not vote for everything. Some things it does not want to consider the advisability of because it is against them. When we get to the point that the government wants to consider the advisability of, this is a step forward and should be recognized as such.

[Bryon Wilfert, Liberal, Oak Ridges, ON]

Mr. Speaker, I do not know whether the discussion has now moved back to the Tobin tax, but I was very interested and I did support that. It is a step in the right direction.

I listened to the member with some interest. Unfortunately, for me, the member paints a very gloomy picture of the state of the nation state as we move into the 21st century. If we look at the works of Joseph Frankel or Hans Morgenthau on the role of the nation state in the international system, what we have seen is that over the years the nation state has become more important particularly in terms of its relationship between the citizens and government.

In listening to the member, the member gives me the impression, and hopefully it is a wrong impression, that we as parliamentarians and indeed as a government are losing our ability to act on the international stage. Certainly anything which would infringe on an issue, whether the issue is water—and I certainly concur with my colleague across the way about the export of water—one of the things we have to be very careful about in Canada is the loss of sovereignty both in economic and political terms.

I just want some clarification from the member with regard to the picture he was painting. Does he feel that we have lost our ability, again in dealing with this bill, to serve our citizens? Will we become not only slaves to the market but to other international organizations to the point that we might as well just close up shop, because at the end of the day it will be those international bodies, both in an economic and political sense, that really will be dictating our future?

[Bill Blaikie, NDP, Winnipeg—Transcona, MB]

Mr. Speaker, yes, I was painting a very gloomy picture. I do feel that parliament has a lot less power than it had certainly when I arrived here 20 years ago this May. A lot of the power that parliament had in 1979 it has since ceded through various international trade agreements, depending on how we want to describe it, either to the marketplace or to the culture of those particular international organizations.

I am talking particularly about the WTO. Things that this parliament has done have been literally struck down by these international organizations. The member from Kamloops was talking about the MMT decision. Thanks to the investor state dispute settlement process in NAFTA, we now have a situation in which various decisions taken by governments can be challenged by corporations in the courts. Governments are suffering what is called the chill effect, that is, they are very reluctant to move on certain environmental matters because they may be sued in the courts.

I already mentioned the drug patent and property rights thing and the split-run issue. There is a long list. I say to the hon. member that there is a long list of things that parliament can no longer do. We in this place have lost a lot of power, not just to the international marketplace. We have lost it to executive federalism. We have lost it to the charter of rights. We have lost it in at least three different ways. We have lost it to polling. We have lost it to the media.

There is a lot to be gloomy about as parliamentarians. I think we should be concerned and I do not think we should puff ourselves up with a sense of false importance. We should be concerned about how unimportant we are in this place and about how many decisions that used to be made in parliament are no longer made here, for a variety of reasons.

I was concentrating on those national economic decisions that used to be made in this place but which now cannot be because of the free trade agreement. I cite a recent speech by the member's own former leader, Mr. John Turner, former Prime Minister of Canada, who spoke in the Canadian Club of London in January.

I circulated a copy of that speech to every Liberal member just a week or so ago and I recommend to the member that he read that speech by Mr. Turner. It certainly does not read like anything that anybody in this Liberal government has ever said since they were elected in 1993. One of the reasons why we do not have the power we used to is the total betrayal by the Liberal Party of the position it took on the FTA in 1988 and on the NAFTA in 1992.

If there is something to be gloomy about, most of it can be attributed to that betrayal. At least the Conservatives had the decency to run on the free trade agreement. At least you always knew where the Tories were coming from. They were coming right at you with a machete.

These people say one thing and do another and they continue to behave in that same deplorable way. I feel a little gloomy about it. I have a lot to be gloomy about when our country is run by a pack of people like the members opposite, who say one thing and do another.

[Scott Brison, Progressive Conservative, Kings—Hants, NS]

Mr. Speaker, I enjoyed the spirited discussion between the member for Winnipeg—Transcona and the members opposite. When I hear the member for Winnipeg—Transcona, I have a great deal of respect for him. This House is a better place due to his presence. As he was saying, he has been here for 20 years.

One of the things I respect about the New Democrats, even though I disagree with them on particular issues, is their consistency on these issues. There is a set of core values. Even though I disagree with them fervently on a number of them, it is like the quotation that was falsely attributed to Voltaire: “although I disagree with what you are saying I will fight to my death to protect your right to say it”.

I will also say that the member for Winnipeg—Transcona has a terrific oratorical flair. I guess that comes from his time in the clergy. He makes me very proud to be a member of the United Church of Canada. If he ever decides to leave this political life and re-enter the clergy on a full time basis, I would probably move to his community just to hear him on Sunday mornings. He is a terrific orator even though I disagree with an awful lot of what he says.

The legislation before us today on the liberalization of the regulations for foreign banks in Canada is a very important piece of legislation. It is part of Canada's compliance with the WTO agreement on financial services.

It is also part of an ongoing trend, a global trend of significant changes in the financial services sector and in every sector. Much of this change that is occurring is technologically based. For instance, in the financial services sector and in the banking sector, many of the changes have been developed through technology. There has been the death of distance as a determinant in the cost of telecommunications. There have been the advent of the bank machines and the automation in banking, which have changed and revolutionized banking.

Some would say, and there is some credence to the argument, that it has depersonalized banking, that it has made banking services less friendly, that there are not as many tellers in the communities. Others are saying that in fact there are some positive developments: we can now withdraw money at a grocery store with a bank card, which effectively makes a grocery store like a bank, to a certain extent, due to the fact that we can withdraw or deposit money.

One of the members opposite in the Liberal Party says this can be done at liquor stores too. I do not frequent those establishments, but I certainly would not speak judgmentally of anyone who does.

In any case, the fact is that there are many changes occurring in terms of trade and commerce and there are changes that are technologically driven.

In the banking sector, we have seen a great deal of merger activities around the world over the past several years. This week there were announcements coming out of Italy, where there has been significant merger activity. There has been activity in Switzerland and in the U.S. Banks are getting larger, partly to develop economies of scale in order to afford the types of technologies necessary to be competitive in the global environment.

In the Canadian banking sector, one of the difficulties that has occurred over the past 50 years is that there has not been enough competition in the Canadian banking sector, particularly in terms of lending to small business.

I spent some time living in the U.S. One of the things I noted when doing business there was that the banking sector was far more entrepreneurial. For instance, if you lived in Maine and were turned down as a small business person by the Bank of Bath, one could go to the Bank of Bangor. If one lived in Georgia and were turned down by the Bank of Loganville, an actual bank that has been there for about 150 years, one could go to the Bank of Snellville, an actual bank in Snellville, Georgia.

In Canada, the banks used to do something called character lending, which was very positive in some ways. They would lend to people because they knew them and trusted them. They knew they would get their money back, regardless of the financial situation. Banks stopped doing that a few years ago. Effectively it is all ratio lending in Canada now. If we do not match one bank's ratios, we do not match any of them. It is very difficult for small business to attain financing.

We do need to move to increase competitive factors in Canada in the banking sector, in particular to improve lending to small business. In this legislation, the government has made a baby step to address this. Having more foreign competition in the Canadian banking sector, for instance creating more competition in small business lending, will help somewhat. The fact is even before this legislation we have seen players like Wells Fargo introduce services in Canada. In 1997 Wells Fargo had about 10,000 customers in Canada. By 1998 that had grown to 120,000. Much of that is in small business lending.

It is occurring and the competition is growing. We would argue as well that part and parcel of the government's response to the MacKay task force recommendations should be that we allow the credit unions to compete more directly with banks. Changing the co-operatives act to allow credit unions to compete directly with banks would help as well.

It is very important that while we do these things to allow more competition in Canada we do not do things that hurt the Canadian banking sector too much. It is very easy to pick on banks. It is like picking on politicians. One of the nice things about the bank merger discussions was that there were a lot of bankers in Ottawa and they made politicians feel more popular.

It is very easy for us to attack banks, but one thing we have to realize is that over 50% of Canadians own bank shares, either directly or indirectly through their RRSPs and pension funds. We have an RRSP policy that basically forces Canadians to invest 80% of their retirement savings in the Canadian equities markets or in Canadian investments, which represent about 1.5% of global equities markets. At the same time, it is hard to invest in Canadian equities markets without buying Canadian bank shares. They dominate the TSE.

We have to be a careful that we do not, in the interest of short term political gain, make decisions that actually hinder the long term growth of Canadian retirement savings plans. All these things should occur as parallel initiatives.

I am looking forward to the government's response to the MacKay task force, which I believe will be a white paper—I hope it is not a whitewash—on the Canadian financial services sector.

We are advocating greater competition in the Canadian financial services sector through more foreign competition and through changing the co-operatives act. It is important to recognize that more competition in the Canadian financial services sector and more efficiency in the Canadian financial services sector, with better services for Canadians, is a productivity issue.

I spoke earlier about small business. For small business access to capital is critical to growth and to getting started. That has hindered economic growth in Canada relative to the U.S., because, frankly, it is easier for a small business person to raise money in the U.S. than it is in Canada.

One of the strengths of the Canadian banking system is that we have five very strong banks that will never go broke. The fact that they never take risks with small business people is one of the weaknesses we have. There is a risk and reward question here.

The U.S. banking system is more entrepreneurial and does contain higher elements of risk, which results in more capital being available to U.S. small businesses when they want to grow and prosper. That does have a significant impact on our productivity in a competitive sense, particularly with our largest trading partner, the giant to the south.

This bill will help facilitate more small business lending. This bill will help foreign banks currently participating in the Canadian market to expand their operations. It will also help attract more foreign banks to initiate lending to Canadians.

During the bank merger discussions, some people who were opposed to the mergers said that foreign competition is really not a factor in the Canadian banking sector, that this was a red herring being used by the proponents of the mergers. The fact is that foreign competition has had and does have a presence in Canadian industry. It has not had a strong presence because the regulatory framework was not conducive to it or supportive of it. That had to be changed. It is changing. This is one step.

There are what I think are some reasonable arguments for the government to move quickly on liberalizing and allowing more foreign competition in Canada. At the same time, it is very important that while we increase foreign competition and allow more small business lending from foreign competitors, co-ops and others, we do not, by some shortsighted political decisions, handcuff Canadian banks or Canadians who are saving for their retirement with their investments in the equities of Canadian banks.

The types of decisions I am talking about can have a significant impact on the savings of Canadians. For instance, the gap between the Dow Jones index and the TSE has grown by about 500 points since December. Part of that had to do with the performance of the Canadian banks in the past several months. Part of that had to do with the decision the minister made in December.

When Canadian bank stocks fall, it is not without an impact on the average Canadian, on ordinary Canadians who through their pension funds, mutual funds and union pension funds have their investments. It is very important. The fact is some of these decisions by this government do threaten the future standards of living of Canadians.

For instance, since 1993 the Dow Jones in the U.S. has grown by about 180%. In Canada the TSE has gained by about 60%. Wealth being a relative thing, we have to realize that if our largest trading partner is getting richer, we are getting poorer. When it gets richer, the price of goods and services due to competitive factors actually will increase and we, as Canadians, can less afford to have them.

I believe now the best selling car in the U.S. is the Toyota Camry and the best selling car in Canada is the Honda Civic. I believe that is the latest factor. I would think that if the government is in much longer the best selling car in Canada will be perhaps one of the old Austin minis or maybe it will be a bicycle.

We have to be very careful because with public policy the law of unintended consequences can wreak havoc. When we do not really realize it, sometimes the decisions we make here can really have a tremendous impact on Canadians.

One of the things we felt very strongly about and we were not in support of was the bank mergers. What we were in support of was the government's using an opportunity that it had from the merger proponents who were seeking approval for something to engage in a discussion and negotiate on behalf of Canadians, to stand up for Canadians and to get from the banks commitments on things like a reduction in service charges, more customer service staff, continued service to rural Canada, creation of new banks for small business lending, increased bank branch access and that sort of thing. Those are the types of things that are very important to Canadians.

There was a Maclean's poll done in November that indicated that 53% of Canadians were opposed to the mergers based on the information they had. Some 57% said they would be supportive if the government were to negotiate commitments from banks and the banks were to make specific commitments on particular areas.

The fact is that the MacKay task force actually recommended making these commitments legally binding so that the banks would have to make good on these commitments. It could not just be a marketing ploy. They would have to actually keep the commitments or ultimately directors would end up going to jail or facing legal penalties.

What was interesting was that during that process some of the bank merger proponents, for instance the Royal Bank and the Bank of Montreal, said they would reduce service charges by 10%. They would increase customer service staff and they made specific commitments in numbers. They would continue their services to rural Canada.

For instance, they committed to doubling their small business lending. I believe it was from $25 billion to $50 billion. That is $25 billion more for the Canadian small business sector as a result of this and a new bank for small business.

One of the terrible things about being in small business, particularly in small town Canada, is that they change the bank managers every few years. We just get to know one manager and then they switch him or her. It is a real problem. That was one of the things they were willing to address with a small business bank where they would keep people in the same area for longer and it would create better relationships. I think that a lot of that stuff was positive.

Unfortunately we kind of lost our opportunity to get these commitments because we sort of shut the door before the negotiation even began. Now we are seeing banks closing branches. It is happening all the time. Last week in Nova Scotia I believe two communities lost bank branches, their only bank branches. We are seeing on an ongoing basis services threatened.

Right now in some ways the banks are trying to do the right thing because they have a responsibility to their shareholders and when they were willing to make those kinds of commitments the minister kind of shut the door. I hope the minister has not made a shortsighted decision that would prevent Canadians from having received the best possible banking services that they could have achieved and at the same time not necessarily handcuff our banks. We will see how well that decision ages.

I suggest that the Dominion Bond Rating Service's downgrading of the Canadian banks a few weeks ago is one of the indications that the minister's decision was a little shortsighted.

Unfortunately when that kind of downgrading occurs it means that for Canadians there will be higher borrowing charges ultimately for banks. The cost of the banks' money for capital goes up. The banks will pass that on to consumers. When Dominion Bond Rating Service downgrades the Canadian banks and the cost of capital for the Canadian banks goes up that means for Canadian consumers the cost of services will face increased pressure and interest charges will face increased pressure. The effects could be quite significant. I am quite concerned that we in the future study these issues as parliamentarians and do not just make shortsighted decisions that may be politically expedient in the short term but in the long term are very deleterious to Canadians.

On the legislation to reduce the regulatory impediments to foreign banks in Canada we are supportive of this direction. We believe that if we are serious about increasing and improving competition and services for Canadian consumers as a parallel initiative we need to ensure greater access to the markets by foreign competition.

We believe there should be greater efforts by the government to make it possible for more domestic competition to grow through changing the co-operatives act so that the credit union can compete with banks or through what the MacKay report suggested in terms of changing the ownership rules such that small banks could actually start up in Canada as long as they meet the safety and soundness regulations of OSFI. We could actually see more small banks start up for instance by changing the ownership rules.

All these things have to occur quickly. The government has had since 1993 full knowledge of the global competitive forces in this very important sector and has sat on its hands for a long time not doing a whole lot. There were two things that pushed the envelope. One was the WTO financial services agreement that the government signed on to. The other was those proposed bank merger announcements. It kind of pushed the envelope and brought this debate forward.

Unfortunately it is another example of where the government only deals with these complex long term issues that are on the horizon when they are directly in front of the government and they have reached a crisis proportion. We need to develop these issues or these policies a lot more quickly in response to issues not as they evolve today but as we see them evolving tomorrow and well into the future and into the next millennium.

[John Bryden, Liberal, Wentworth—Burlington, ON]

Mr. Speaker, I congratulate the member for Kings—Hants for his excellent speech which in comparison to the New Democratic MP who preceded him was a full glass of thought versus an empty glass.

I draw attention to one item in his speech. He commented that in the United States banks much more aggressively chase small business. I suggest to him that part of this is because in the United States there is a whole galaxy of small banks. There is tremendous cutthroat competition and there are a great many failures in the United States banking system because there are so many small banks.

As he said, we enjoy because of our five banks much greater security in the banking system. The price we pay is less aggressiveness in terms of providing a competitive environment for getting the business of small business.

Given that we have five large banks that should be competing for the small business and yet we feel they are not, not effectively, what makes him certain, and maybe he is not certain, these new foreign bank branches will competitively go after small business? Are the competitive incentives there?

[Scott Brison, Progressive Conservative, Kings—Hants, NS]

Mr. Speaker, I thank the hon. member for his typically erudite intervention. The foreign banks have significant incentives in the Canadian market and there are opportunities. As I mentioned earlier, Wells Fargo in a one year period went from 10,000 customers to 120,000 customers. One of the ways Wells Fargo succeeded or is succeeding in Canada is by lending to small businesses and individuals with fairly wide margins, fairly wide spreads, for instance lending sometimes at prime plus four or five. A lot of small business people can go to a bank and the banks in Canada are reticent to that type of high margin lending because I think part of it is the political stigma of doing it. They do not want to be seen as loan sharks.

For a lot of small business people if they cannot get any capital they will pay a premium to get capital. Wells Fargo has discovered a niche in that area.

The differences between the Canadian banking system and the U.S. banking system have had a real impact on the growth of our economies. I read a study about 12 years ago that compared the concentration of wealth in Canada to the concentration of wealth in the U.S. In the early 1900s in Canada wealth was fairly concentrated with a few families. In the U.S. it was concentrated similarly, the Duponts, the Kelloggs, the Vanderbilts.

Since then in the U.S. wealth has become very much disbursed, whereas in Canada it remains fairly concentrated. This study was basically positing that the Canadian banking system had played a role in that because frankly it is awfully difficult in this country to get capital to grow our business without actually being a part of one of those families or knowing somebody who is or getting a guarantor. Banks are not that entrepreneurial.

I believe there is a significant market in Canada for more entrepreneurial banks if these foreign banks will pursue quite aggressively. I have heard from a number of constituents in small business who have been receiving letters from Wells Fargo. Probably every member of parliament has received letters from MBNA on credit cards. Maybe members of parliament typically do not receive those types of solicitations because we are considered a bad credit risk with no job security and that sort of thing. In any case, I think foreign banks will grow their markets in Canada because they will pursue them aggressively and smartly.

[Ted White, Reform, North Vancouver, BC]

Mr. Speaker, the hon. member mentioned a number of ways government actions can cripple the activities of Canadian banks. That takes me back to the previous speech from the NDP member who was talking about the Tobin tax and how it would solve the problems of the world because it would get those nasty speculators.

It is true that the government side did vote for that Tobin tax last night. The only reason I can think for doing that is that it is a tax and Liberals like taxes. They voted for it because it is a tax. There simply was not any logical reason to do it.

An NDP speaker earlier was talking about how these dreadful speculators had to be stopped. If there is one way to cripple our Canadian banks it is to introduce a Tobin tax and remove from their possession all the major international transactions and the major corporate business that would be going on. It would all be transferred to different countries.

When I came to Canada 20 years ago, 1979, the Canadian dollar was worth more than 90 cents U.S. Today it is down to about 67 cents U.S. I ask who caused that. Overspending, overtaxing, oversized government caused that. It did more damage than all the speculators we could name.

Can the hon. member think of any case, any example where speculators did more damage than overspending, overtaxing, oversized government?

[Scott Brison, Progressive Conservative, Kings—Hants, NS]

Mr. Speaker, to explain the government's position on this, the Minister of Finance has been very busy lately. He has had a lot of things on his plate. He has this leadership thing coming up and everything. He was walking along one day and one of his staff asked what he was going to do about this Tobin tax. I think the minister thought it was a Tobin attack. He was thinking of the premier in Newfoundland and he said, “I support any attack on that guy because he is going after the same job I want” and ultimately this changed things very quickly.

On the issue of speculation, the southeast Asia meltdown occurred partially because governments were operating monetary policies that were inconsistent with their fiscal policies. They had pegged currencies, and that could exist only for so long. The speculators saw a huge opportunity. The only time there is a huge opportunity for speculators to make a lot of money is when governments operate fiscal policies inconsistent with monetary policies, and that is not sustainable anyway.

Effectively, if the speculators had not done what they did in southeast Asia, it is kind of like someone who is injured and is lying on the sidewalk bleeding to death. The difference would be getting hit by a bus and being taken to the hospital as opposed to lying on the sidewalk and slowly bleeding to death. Those economies ultimately were not sustainable with that.

The way that kind of speculation occurred, sometimes can be considered to be very negative. The other kind of speculation that occurs every day and is an operating mechanism for floating exchange rates is not a negative speculation. Even the Prime Minister who calls the speculators the guys in red suspenders would probably agree that it is not so bad.

The bad thing about a Tobin tax is that it would punish the good speculation, but would not inhibit the bad speculation because the margins on the good kind of speculation that we need if we are going to have floating currencies, or floating exchange rates, are minute. The margins are very small. The Tobin tax would discourage that, but it would not stop the Soros type of speculation because the margins are so big.

The only way a Tobin tax would ever be able to work is if every jurisdiction in the world signed on. Even if we had every OECD country sign on, and for instance a Singapore or a Cayman Islands opted out, we would be creating havens there or increasing the level of tax havens those countries would have. With the death of distance as a determinant in the cost of telecommunications, we cannot afford to do that to our Canadian financial services sector because there would be an exodus.

The other issue is these new financial instruments. For instance, derivatives have become so complex that they cannot be traced. It is almost impossible. One of the issues we have in terms of safety and soundness issues in Canada is how the heck can OSFI which is already overburdened deal with all these financial complexities in the global environment, plus the complexities in the instruments?

Look at what happened in Orange county, California. I think the treasurer of the county was actually a hero for years because he had been investing in derivatives and making copious quantities of quid on behalf of the people of Orange county. Ultimately, when the derivatives he was participating in went down, Orange county faced bankruptcy.

It is very difficult and we have to be very careful to watch those kinds of things. When there are failures, those are not failures of speculators; those are failures of regulatory authorities within our countries.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, I wanted to ask a question of the member for Kings—Hants. Since the time has expired, I want to put on the record a couple of points which he may wish to consider.

With regard to this debate, one of the important areas that has not been discussed as much as it probably should have been is the whole issue of consumer protection. Members and Canadians should know that the government is working on a consumer protection package, particularly with regard to issues such as coercive tied selling and other business practices of the banks. Canadians need to understand better what their rights are and what the situation is with regard to their options within the financial services sector. I wanted to make that point.

The member for Kings—Hants also spoke, as many members did, about the access to capital issue for small business. There is no question that this is an important area. Canadians want to know that the accessibility issue is going to be addressed, and that foreign competition is going to provide some additional competition and access to capital.

The member for Kings—Hants gave a speech with regard to the small business sector, which was very much reminiscent of what Brian Mulroney spoke about in this place when he introduced a $100,000 lifetime capital gains exemption. The whole discussion was with regard to how we could put some incentives for Canadians where they could start to invest in small business and get a tax break by doing that.

The flaw and the big flaw of the Conservative government of the day, and I recall raising it with the then leader of the Liberal Party, John Turner, was that there was no grandfathering of the provisions. In other words, the capital gains exemption was applicable not just to gains that would be earned on investments made from today forward, but they were eligible even for holding gains, gains that people had made on investments and other assets that they had held from wherever.

When capital gains taxes did come in, there was a V-day, a valuation day on which any gains or appreciation in the value of investments and assets were not going to be captured under a capital gains provision. There was prospective legislation so that capital gains tax would only be applied on gains from the point at which the tax was brought in to the time of disposition or deemed disposition.

If members are very serious about access to capital issues, they also have to be very realistic about the risks that face lenders when they are dealing with small businesses. When there is a smaller capital base, when there is less ability to take that financial hit, there is a risk premium associated with it. That is one of the contributing factors to small business.

Certainly the other is that most small businesses are not having difficulty getting capital for capital expansion purposes where there would be collateral assets for the loan. One of the biggest problems they are having is with regard to getting working capital loans. This is where businesses need the cash flow to finance their receivables, their inventories and their general float of cash requirements.

Capital gains taxes and the lifetime exemption have gone away now. They have been basically eliminated except for those who have made declarations that were permitted when it was phased out. Maybe it is time we reconsidered some sort of a tax benefit or a capital gains exemption for small businesses, where equity investments made in small business would get the kind of support from the taxpayers of Canada who pay for all tax expenditures, to the extent that we could stimulate the investment in small business equity financing. Canadians would have an opportunity to support the biggest job generator sector in the country, that being small business.

I wanted to raise those issues because as we deal with legislation, whether it be opening up the foreign banking and amending the Bank Act et cetera, there will be many complex issues and collateral issues to deal with.

For instance, Wells Fargo is in the business of electronic banking over the Internet. It does not pay tax to Canada on profits because it is not resident here. It has no physical building that it is a resident in Canada and has to register that company. In fact, it has an arrangement with Revenue Canada whereby when it pays interest to the depositors of Wells Fargo for instance, a withholding tax on payments made to non-residents would have to be remitted.

There are some significant anomalies or challenges to be addressed in terms of the banking sector.

The MacKay task force report obviously has raised a number of important issues. I think the member from Kings—Hants well knows that the finance committee has not finished its job. In fact, we have just started our job with regard to assessing how we can continue to promote consumer protection and consumer confidence in the banking sector, regardless of whether it is provided domestically or through foreign bank facilities.

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

Mr. Speaker, I hate to let the member for Mississauga South off the hook that easily. He has not given a complete speech. I would like to have his comments on a couple of the items that were mentioned by the member for Kings—Hants and the member for North Vancouver.

The member for North Vancouver has indicated how bad the Canadian dollar is and that his native country, New Zealand, is so much better because of its political system. Actually this afternoon a New Zealand dollar can be bought for 65 cents Canadian, so that should be on the record. The actual parliamentary system in New Zealand has almost collapsed because of MMP.

I wonder if the member for Mississauga South could comment on the assault right now on the Canadian public and the almost misleading advertising from the foreign nationals that are trying to come in here, the foreign banks, Bank One and so forth. They are assaulting Canadians with massive credit card applications. Almost nothing is required to get on the list. The lists are sold to them by veterinary clinics and all kinds of organizations.

My dog received an application for a MasterCard. I am sorry to say my dog probably has a better credit rating than I do. I sure hope there is never a big sale at the dog food store.

Could the member for Mississauga South comment on those items?

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, I thank the member for the question. I do not know his dog, but I am sure the member's credit rating is quite healthy.

One of the things we did learn of in the review of the MacKay task force report was the increasing control of the credit card business of the financial services sector by foreign banks. Our big five banks have basically admitted they cannot compete in the credit card business. Virtually all organizations now have their own marquee card. This is a very large business.

Our banks are dealing with the issues. They are not going to compete in an area in which others can compete through economies of scale, can provide services and are prepared to take risks which maybe are not very commensurate with the returns but they are still prepared to do it. Who knows what happens after this. That is why we have to be more vigilant in moving to expand our financial services sector.

[Peter Stoffer, NDP, Sackville—Eastern Shore, NS]

Mr. Speaker, today it was announced that 20% of Bell has been purchased by the Americans. The other day we lost the Canadarm from Spar to the Americans. The member for Winnipeg—Transcona indicated in a question a couple of days ago that almost $63 billion of what used to be Canadian is now gone.

Would the member not agree that if foreign banks are allowed into this country, with the power and the size they have, they would eventually not only gobble up our own financial institutions, but also would intrude into areas of auto leasing and insurance? Would he not think that would not be a good thing for Canadians?