Mr. Speaker, I think the House needs a little livening up of the debate on Bill C-67. I do not know if I am more nervous for the millions of Canadians who will feel the effects of the bill down the road, or for my daughter who has a piano recital tomorrow and my other daughter who has a gymnastics competition on Saturday.
I commend my hon. colleague from Kamloops and my hon. colleague from Regina—Qu'Appelle who have done outstanding work in the finance committee to bring the issue to a forefront, allowing Canadians to know what is going on behind the bill.
The Secretary of State for International Financial Institutions said he was looking for our support for this bill. Unfortunately I have to disappoint him one more time because parts of the legislation came out of the south end of a northbound cow. We certainly find it unacceptable that this is the way the government is doing it.
I will provide a little background on Bill C-67. In December 1997 the federal government signed a financial services agreement, the FSA, under the auspices of the WTO, the World Trade Organization. The FSA aims at relaxing the rules governing the entry of foreign banks into domestic economies of participating countries. More than 100 countries signed the FSA and Canada faces a June 1999 deadline to pass the enabling legislation.
We have heard that the government has consulted the stakeholders on this bill, but we wonder if the government actually consulted Canadians on the bill, the average Canadian from Sointula, B.C., to Alert, Nunavut, to my riding of Sheet Harbour, Nova Scotia. I wonder if people in small rural towns and coastal communities were consulted. I suspect not. I suspect it was the friends of the government and of the official opposition, the Reform Party, who were consulted. We cannot help notice that they are financial contributors to the government and the opposition.
The government has succumbed in its international negotiations again without benefiting Canadians. Bill C-67 will benefit very few, a small percentage of very rich and capital wary investors to the tune of anyone with $150,000 or more. It certainly does not appeal or even go to the average Canadian who does not have $150,000 to invest.
It will also put more pressure on Canadian domestic banks, credit unions and caisses populaires in Canada because it will bring back merger argument. The banks have already been told by the finance minister that merger is not in the cards. That is now. He never said it was permanently off the table.
The international financial institutions will come into Canada. Most of them will be virtual reality. They will not even have any bricks or mortar here. It will be through the Internet or through a 1-800 Wells Fargo number or whatever it is they wish to call it. They will take the cream of the deposits out of this country, the 2%, 5%, or 10%.
As the House should know, every bit of capital that leaves the country puts more pressure on the credit unions, the caisses populaires and the chartered banks in Canada today, which puts more pressure on the government to allow domestic banks to reach their ultimate goal of merger. Eventually they will say that in order for them to compete with international financial institutions they will need to merge.
That is one of the elements of Bill C-67. It will allow Canadian banks to have a back door entry to a merger, which is really what they have always wanted.
This bill will put more pressure on our auto leasing and insurance companies because the banks have been putting a lot of pressure on the government to get access to these markets in order to increase their profits for their shareholders.
What will happen is, as their profits erode because of the competition from financial institutions, they will in turn go back to the government requesting access to the insurance and auto leasing markets. That will create a lot of hardship in small rural communities and even larger communities because there will be bank closures, branch closures and insurance companies will be put under a tremendous amount of pressure. In the end that pressure will filter down to Canadians.
Foreign banks operating branches in Canada will be subject to the capital adequacy requirements imposed by the bank's home country. These banks will not be required to comply with the Canadian capital requirements applicable to Canadian banks. That means that the tax measures of Bill C-67 are very complex. The intent is for the FBBs to remain in the same position as the schedule II banks. However, Canadians will not have a full knowledge or understanding of whether foreign banks or institutions are being taxed at the same levels as Canadian banks.
Bill C-67 does not deal with the virtual banks, which I mentioned earlier, such as the U.S. equivalent of the ING Bank from Holland. The Liberal government does not know what to do with these banks, which only have an Internet presence in Canada. So far these banks have been kept out of Interac and the Canadian payment system. However, it is just a matter of time before they gain access to that as well and that will put even more pressure on Canadians.
Bill C-67 may erode the market share of charter banks in lucrative, high end private banking niches. Access of highly sophisticated American and European banks will compel Canadian banks to rely more heavily on their regular Canadian consumer base to extract their profits. Charter banks will likely offset these losses by jacking up the price of bank services on Canadians who have no access to the foreign banks.
One of the biggest complaints of Canadians from coast to coast to coast is the poor service provided by the banks as well as the high service charges. There are service charges on literally everything they do.
A while ago I was at one of the chartered banks because I wanted to open up an account for one of my daughters. I deposited $100. Then, realizing that my wife had already deposited money at another bank, I wanted to close the account, take the money and transfer it to the other bank. I was told by the bank that in order to close the account I would be required to pay $15. I only had $100 in the account and the bank wanted to take $15 for having the money for a day. I found that to be absolutely unacceptable. We can imagine how the banks are ripping off millions of Canadians right across this country.
What we should be doing is concentrating on improving our banks and allowing our credit unions more access to the capital that is available. Do we really need foreign banks to ensure a greater level of domestic competition? The real issue is not whether we should allow more foreign competition; the issue is what needs to be done to increase the accountability of our banking system and to increase the competition between our domestic financial institutions. The key is to provide better services for Canadians; all Canadians, not just a select few.
To increase accountability and ensure better banking services for Canadians the government should force banks to disclose more information on lending activities. This would reveal any unequal lending patterns to lower income neighbourhoods and small businesses. This would be similar to the Community Reinvestment Act in the U.S., where over $650 billion U.S. has been reinvested as a result of these laws. The laws are supported by 200 major cities and over 600 economic development groups in the United States alone.
My colleague for Regina—Qu'Appelle has been asking for community reinvestment legislation for a long time. Basically what that means to the average lay person is that if a bank, for example in the community of Upper Musquodoboit, is making a profit from deposits, investments and loans, then it should be forced to reinvest some of the profit into the community in which it is located. That would create economic growth in the rural communities across the country from coast to coast to coast. It would allow businesses to develop and grow in these small communities.
One of the scourges of Atlantic Canada is that communities such as Halifax are the bread basket of education for the country and yet most of our young people have to leave Atlantic Canada to find work elsewhere within the country or abroad. That is unacceptable. One of the ways the government could stop the exodus of our young people, our greatest asset and resource, would be to institute community reinvestment legislation.
What they have in the United States, which we do not have here, is the ability to write off mortgage insurance on taxes. What a novel idea, allowing young people, or anybody for that matter, to own their own home. It is a wonderful dream for millions of Canadians who cannot buy homes to be able to have pride in being able to say “We own this house”.
One of the ways we could do that is to follow the example of the United States and allow them to write off the interest, or part of the interest, on their mortgages. That would promote economic growth in the country that we would not believe. It is a great idea. I do not see why the government cannot concentrate on sound policies of that nature which would benefit the average Canadian.
I know the government has difficulty when we use the term average Canadians, but what average Canadians would like to see is leadership from their government and opposition parties in putting forth policies that actually are of benefit to Canadians, their children, neighbourhoods, communities and small business enterprises. They would then be able to stay in their communities and have a good quality of life.
It would also enhance competition by broadening access to the Canadian payment system and it would allow insurance companies, large mutual fund companies and investment dealers to offer banking services.
It is worth noting that in England the post office has banking services. I understand that there have been conversations between the Canada Post Corporation and the Government of Canada about financial transactions. Although I do not have a firm opinion on that myself, it is one of the aspects the hon. member for Regina—Qu'Appelle is seriously looking into.
This is something that should really be done to benefit small communities and Canadians throughout the country: the power of credit unions should be enhanced. God love those credit unions. Credit unions are a democratic alternative to the big banks. Unlike the banks they have a mandate to plow profits right back into the communities they serve, helping everyone who is a member of those credit unions.
I notice that my colleague from Selkirk, Manitoba is a member of a credit union, as well as myself and another member on the Liberal backbench. Even members of parliament believe in the credit union system and what a credit union does for a town.
We should be promoting financial institutions like the credit unions or the caisse populaires in Quebec. For instance, we could change the Credit Union Central Act to give credit union provincial centrals, the CUPCs, more flexibility and powers. I note that the finance minister had very positive meetings with members and stakeholders of the credit unions a couple of weeks ago. We are very hopeful that the finance minister will take their recommendations to heart and implement some of the programs they have initiated to help average Canadians.
CUPCs could provide services not just for credit unions, they could directly serve individual members. This would allow provincial centrals to enhance the viability of smaller credit unions which cannot afford to provide directly certain services like wealth management and mutual funds because they cannot take advantage of economies of scale. That is the big problem. A lot of small credit unions would like to offer the same services as the bigger ones or other financial institutions, but unfortunately they cannot because they just do not have the size or the capital to do it. What we should be doing is encouraging and enhancing the ability of credit unions in the country to do that.
The banks should also be forced to facilitate to honour their commitment to ensure that the poor have access to banking services. This is something that I am sure all of us have noticed when we go into a bank. When an elderly person goes into a bank with their little bank book in their shaking hand, if they are fortunate and do not have to wait long in line for a teller, they may get one who is quite compassionate who will assist them in filling out forms and so on.
I cannot count the number of times I have gone into a bank to hear a teller say that because of the pressure put on the customer service representatives by management to get the people in and out, to reduce services and the hours that the branches are open, people have to fill out their own deposit forms because the tellers are too busy. These people are generally elderly people. In the year of the older person I would think they could have a little more compassion and sympathy. There should be more services for these individuals.
Bill C-67 will allow international financial institutions to provide services of that nature. They will turn around, take the cream off the top and put more pressure on our individual banks, which in turn will put more pressure on the consumer, the average Canadian.
The government should create an independent financial service ombudsman with teeth. We love the term with teeth. That individual should answer to parliament and not to the government of the day. The independent ombudsman would provide stronger protection to consumers and small businesses than the current banking ombudsman who is paid and controlled by the banks.
The finance minister has said that he is preparing to revamp the financial services sector in response to the MacKay task force. A white paper is expected later this year. These are the kinds of policy measures that the NDP would like to see forthcoming.
I wish to thank my hon. colleagues from Regina—Qu'Appelle and Kamloops, Thompson and Highland Valleys for their intervention on this bill. We would like to say that we could support the bill, but we cannot. Unfortunately it does not go nearly far enough. It does not protect our institutions. It does nothing for the credit unions and it does not do anything to protect average Canadians from coast to coast to coast who use the banking services.
If the government really wanted to spend some time on amending the Bank Act it would have committee hearings from coast to coast to coast in the small towns to ask Canadians what they would like to see in their financial institutions, instead of going to Bay Street to ask what the government could do to appease the people on Bay Street in order to make life easier for the international institutions.
In the end, all of us believe in competition. It is healthy. However, we do not believe in competition which sucks the capital out of our country and invests in other countries.