Debates of March 30th, 2001

Petitions

[Svend Robinson, NDP, Burnaby—Douglas, BC]

Madam Speaker, more than 18,000 people across Canada, particularly in Quebec, have signed petitions that I have the honour to present today. These petitions deal with secret negotiations for a future free trade area of the Americas, or FTAA, including 34 countries.

The petitioners are asking that all documents pertaining to the FTAA be made public on or before March 20.

They also say that, if this fair and reasonable request were not honoured, they would support legitimate and strictly non-violent means to obtain these documents.

These petitions were written by the alternative group Opération SalAMI, the Fédération des infirmières du Québec and the group Rights and Democracy. They were submitted to me, as member of parliament, as well as to the member for Lac-Saint-Jean.

[Guy St-Julien, Liberal, Abitibi—Baie-James—Nunavik, QC]

Madam Speaker, I would like to present a petition signed by residents of Val-d'Or and workers of the Sigma mine.

The residents of the city of Val-d'Or and of the RCM of the Vallée de l'Or are asking the government, through its national highways program, to intervene in the McWatters project for the Sigma-Lamaque complex on the Trans-Canada Highway, highway 117, in the municipality of Val-d'Or. The government should reinforce its presence and increase its activities in mining regions that are experiencing difficulty in adapting to the new economy.

Questions On The Order Paper

[Derek Lee, Liberal, Parliamentary Secretary to Leader of the Government in the House of Commons]

Madam Speaker, I ask that all questions be allowed to stand.

[The Acting Speaker (Ms. Bakopanos)]

Is that agreed?

[Some hon. members]

Agreed.

The House resumed consideration of the motion that Bill C-8, an act to establish the Financial Consumer Agency of Canada and to amend certain acts in relation to financial institutions, be read the third time and passed.

Financial Consumer Agency Of Canada Act

[Dick Proctor, NDP, Palliser, SK]

Madam Speaker, I am pleased to take part in the debate in the House today on financial sector reform. I want to indicate to the House that I have a time sharing arrangement with my colleague, the hon. member for Windsor—St. Clair.

Bill C-8 is really a reincarnation of a bill that was introduced in the last parliament and died on the order paper following second reading. It purports to implement 57 measures contained in the June 1999 finance policy paper entitled “Reforming Canada's Financial Services Sector—A Framework for the Future”.

The paper was the finance minister's response to an extensive and expensive two year consultation by the MacKay task force on reforming Canada's financial services sector. The consultation culminated in the fall of 1998 with a report entitled “Change, Challenge and Opportunity”. There was a subsequent response by the Standing Committee on Finance.

One of the positive aspects of this bill is that it expands the access to the payments system, which is one of our long held positions in the NDP. This is a measure that increases competition by allowing insurance companies to offer chequing and saving accounts and helps credit unions compete by allowing the creation of a single national entity—

[The Acting Speaker (Ms. Bakopanos)]

I am sorry to interrupt the hon. member, but I do not know if he is aware that the first three speakers have 40 minutes and that those 40 minutes, under the rules of the House, are not divisible unless we have unanimous consent of the House. Is there unanimous consent?

[Some hon. members]

Agreed.

[Some hon. members]

No.

[The Acting Speaker (Ms. Bakopanos)]

Is the hon. member aware of that?

[Dick Proctor, NDP, Palliser, SK]

I was not aware of that, but I am now. What you are saying, Madam Speaker, is that I will not be able to share my time. Just for the record, I stood to speak because nobody from any other party stood at that time. I thank you for the clarification.

[The Acting Speaker (Ms. Bakopanos)]

I realize the hon. member stood for that reason. I want to make sure that if he wants to take advantage of the 40 minutes he can, but he cannot share his time.

[Dick Proctor, NDP, Palliser, SK]

Madam Speaker, I will go on with my speech. This legislation will help credit unions, designate a financial services ombudsman, something the NDP has been asking for for a long time, and create a consumer protection agency, that is called the financial consumer agency. It will launch a consultation process whereby the banks could legally be forced to provide a low fee retail deposit account. This is a position we have held for a long time in the NDP; however, nothing will happen in the short term. The bill will formalize a process of collecting data on small business lending but will not expand the banks' business powers into the areas of auto leasing.

These are some of the positive things in the bill. There are also in the 900 pages many things with which we disagree. Among those negatives is the wide ownership rules which lead to the concentration of banking powers in the hands of very few individuals.

This provides too much power to the Minister of Finance. Unlike parliament, the minister would then have the final say in virtually every major change that dealt with financial institutions, including mergers, acquisitions, regulations and ownership levels. It also fails to provide a real framework of accountability between large financial institutions and their local communities.

There is no community reinvestment act similar to the one in the U.S. which works very well. There is no effective improvement in accessing basic banking services, especially in rural areas. There is no right to lifeline, no cost accounting and no effective way to stop bank branch closures. Banks are only required to provide a four to six month window of notice to close under the legislation.

There are no teeth for the independent banking ombudsman and it reduces requirements for small banks. The Office of the Superintendent of Financial Institutions has been given more powers to deal with the potential for increased risk in the system, but there is no guarantee that the OSFI would be able to use these powers effectively because of the complex structures introduced in the bill, for example bank holdings and new ownership regimes.

There is nothing on the control and regulation of high risk derivative products and off balance sheet liabilities or on new monetary policy tools for the Bank of Canada.

We have dealt with some of the positives and the negatives. We note as well that it is a highly complex 900 page omnibus bill which changes eight major financial industry acts and is probably the largest bill ever to come before a Canadian parliament. Its main thrust is to increase competition, foreign and domestic, and flexibility through deregulation and re-regulation.

The Minister of Finance is easing entry requirements in the financial services market. He is purporting to broaden the powers of financial institutions including credit unions, increasing the flexibility and the complexity of ownership regimes, and allowing access to the payment system by non-bank entities, for example insurance companies. The legislation also creates a financial consumer agency, an independent financial ombudsman.

Bill C-38, its predecessor, included cosmetic measures to improve access to basic banking services and guidelines for a bank merger review process which were made available with the bill but are not included in the current version of the legislation.

The New Democratic Party opposes the bill. We emphasize that there is some support, as I have indicated in my remarks. We support parts of the bill, including the modernization of financial services, expansion of powers to credit unions, a potentially better deal for consumers, a better competitive position for insurance companies, and status quo on the distribution of insurance and leasing.

We would support the bill at third reading stage if changes to the wide ownership rules were rescinded, if it provided for more power to the House of Commons to review megabank mergers and if the government adopted an effective framework of accountability among banks, their communities and fully regulated bank holding groups.

In conclusion, there is quasi-unanimity among major financial industry players to speed up the passage of the bill which has incorporated the majority of the MacKay recommendations and has virtually gone through an invisible committee of backroom lobbyists. Bill C-8 is a done deal which the government is selling as a progressive financial consumer package.

[Ken Epp, Canadian Alliance, Elk Island, AB]

Madam Speaker, I rise on a point of order. I wonder whether there would be unanimous consent, since the member used only 10 minutes of his 40 minute allocation, to allocate the 30 minutes to a speaker from the Bloc if he gets here from the scrums, or to me since I have a lot to say on the bill. Would there be unanimous consent for that?

[The Acting Speaker (Ms. Bakopanos)]

Is there unanimous consent?

[Some hon. members]

Agreed.

[Some hon. members]

No.

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

Madam Speaker, it is a pleasure to rise to speak to Bill C-8. The legislation will have a very important effect on the level and quality of services available to Canadians and consumers of financial services. It also has the potential for a significant impact on the competitiveness of our financial services sector globally.

We are in an increasingly competitive financial services sector that from a global perspective has become hyper competitive. The amount of change in the financial services sector in the last 10 years has been greater than the level of change that has occurred in the entire 150 years preceding that.

In this rapidly changing hyper competitive environment the government has dragged its feet since 1993. It has avoided making the necessary updates and improvements to reflect this reality and the new realities in the financial services sector. There is very little in the legislation that could not have been introduced in 1994-95. Instead, the government used every delaying mechanism at its disposal to wait as long as it possibly could to introduce the legislation, and that is unfortunate.

Further, the MacKay report of about a year and a half ago provided an extraordinarily comprehensive and well thought out long term visionary plan for the financial services sector that has been butchered by the government. It has selectively chosen based on political palatability certain elements of the MacKay task force to recommend.

It has chosen to ignore and to turn a blind eye to many of the other recommendations which may have been more politically contentious but would have contributed significantly to improved competitiveness in our financial services sector and to an improved environment to create more jobs and opportunities for Canadians in this sector.

The government has treated the MacKay task force like a buffet where it could selectively choose from the menu of public policy options. It chose the various options based on political criteria, not on economic criteria or on achieving what was best for Canadians and the financial services sector.

The government has delayed and dithered on this issue for a long period of time. It is with a pinched nose that the PC Party supports the legislation because it does not reflect the type of measures and policies that we believe would harness the power of the financial services sector in Canada. While it does have some of the elements that could help to improve the environment for the financial services sector and create greater levels of wealth and opportunity for Canadians, it does not go nearly far enough in many ways.

In 1993 Canada was ahead of the U.S. in terms of deregulating our financial services sector. Today we have fallen behind the U.S. With the last vestiges of the Glass-Steagall act gone from the U.S., American financial services, such as banks and trust companies, are better positioned to participate in the opportunities of the 21st century than their Canadian counterparts.

The government's approach to the financial services sector has forced Canadian banks to grow in the U.S. and to limit their growth here in Canada. This is unfortunate because many of the jobs and opportunities could be here in Canada. I fear that the government is driving people offshore and limiting opportunities within our borders.

There has been a significant amount of lost opportunities in the last couple of years. The last time the issue of bank mergers was pursued, the finance minister's response in December 1999 closed the door to bank mergers. There was an opportunity for dialogue between the banks and parliamentarians, and between the banks and people served by the banks about some of the issues of concern to Canadians.

Instead of the finance minister taking opportunity to address those concerns in a constructive way by sitting down with the banks and negotiating terms that would protect the interests of Canadian consumers, borrowers and small business people, he slammed the door shut for short term political reasons. He not only denied an opportunity for a more efficient financial services sector, he also denied Canadian consumers the opportunity to have better, more competitive services well into the future.

During that time, the Bank of Montreal and the Royal Bank agreed to several long term commitments which would have given improved services to consumers. These included doubling the amount of lending to small businesses and the setting up of a separate bank to do that, reducing bank service charges, protecting services to smaller communities and increasing staff in branches.

Instead of taking advantage of these opportunities on behalf of Canadians, the minister, for political reasons, made a shortsighted decision. Part of that was to appease the Liberal caucus witch hunt on banks—I am sorry—the Liberal task force on banks which constructed the most partisan, poorly written and researched, short term document ever in the history of parliament. Instead, he capitulated to the forces of evil on that side of the House with its short term, populist, pandering perspective which denied Canadians the long term opportunity of a stronger financial services sector and better levels of services to Canadians.

The Liberals opposite are convenient free marketeers. It is focus group economics on the other side of the House. It is whatever is popular this particular week, or month or year. There was a time when those members opposite campaigned vociferously against free trade until of course they were elected. At that point they saw the benefits of free trade and embraced it. Some would say the government claimed the invention of free trade in the same way that the former vice president of the U.S., Al Gore, claimed invention of the Internet. We also saw that with the GST.

It must be great to be able to go through life unburdened by the yoke of principle and consistency. Fortunately we on this side of the House are burdened with the yoke of consistency, principle and values that may not always be popular but are consistently well thought out and based on sound values.

This piece of legislation would give the Canadian government a greater level of intrusion and regulation of the financial services sector than any other sector or industry in the country. The government will say that this growth of regulations is good for consumers, but I would argue this would in the long term cost Canadian consumers more in the following ways.

First, Canadian bank service charges are competitive globally. None of us like to pay service charges but the fact is our bank service charges are competitive. In fact they are lower than those of American banks. Sometimes it does make sense for us in this place to deal with reality and not simply perceptions when we are voting public policy.

Second, this growth of regulation is going to cost a great deal for financial services players to participate in and to comply with. Ultimately those costs will be borne by someone. Will they be borne by shareholders? Perhaps they will in part. I would argue that ultimately those costs will be borne by consumers, the very people who the government is claiming to be trying to protect. Consumers will be paying higher service charges in order for the financial services institutions to comply with the government's egregious, oppressive levels of regulations in this particular area.

[Anne McLellan, Liberal, Edmonton West, AB]

Egregious and oppressive.

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

I heard the Minister of Justice opposite agreeing with my comments and echoing them.

[Anne McLellan, Liberal, Edmonton West, AB]

I did not.

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

I recognize that in a sea of ambition over there she may represent a thimble full of principle. Her roots are in Hants county, Nova Scotia. She and I share similar roots. I guess that is where her sudden regaining of the good common sense of people from the Hants shore prevails here today. It is great to have her support on my position on this very important piece of legislation.

Further, the legislation and the government's position and perspective in dealing with this very important financial services sector ignores the seven million Canadians who are shareholders in the Canadian banks. The overwhelming majority of adults in Canada today in one way or another, either through their pension funds, unions or mutual funds or through direct investment, have an ownership in one or more Canadian banks.

The government is not only denying Canadian bank consumers and the financial services sector consumers the opportunity for sustainably competitive services, it is also shackling investors in Canadian financial services entities with a regulatory burden that is unacceptable.

The government says that it is very important that we regulate and ensure there is a low cost account provided to Canadians, and force the banks to provide services to Canadians regardless of income.

In theory nobody would argue with what the government is trying to achieve in that sense. If the government is going to actually embrace this from an ideological perspective, the logical corollary of this argument would be that the next step for the government would be to regulate the food companies. That is Loblaws, Sobey's, et cetera, should have to introduce a new low cost food provision service to Canadian consumers regardless of income.

In other words, because of the fact that the government is forcing Canadian financial services institutions to provide services to Canadians regardless of their ability to pay, it is only logical to expect the next step will be that the government is going to be forcing Canadian grocery distributors and stores to provide food to Canadians regardless of their ability to pay. Surely food or the availability of food is more important to individual Canadians than simply the ability to obtain financial services.

Shelter is very important too. I would fully expect that the government is going to be introducing legislation in the coming months to force real estate developers to provide free apartments to people, regardless of income, because clearly the government determines that that is in its best interest based on this legislation, if we look at it from a logical perspective.

If we are going to go along this route and abdicate any free market principles that we may still have left, perhaps we should start at the top with a crown agency. Canada Post should be giving away free stamps to people if they do not happen to have the amount of money required to buy a package of stamps.

Clearly the government is going in the wrong direction on this piece of legislation in many areas from the regulatory perspective.

That being the case we recognize some of the positive elements of this legislation, including the ability for greater flexibility in the financial services sector and greater opportunities for our Canadian financial services players to compete and grow. We would like to see those opportunities for jobs to be created and for shareholder value to grow for Canadians. We would like to see more of those opportunities.

Unfortunately the government in this hodgepodge legislation, this buffet style of picking and choosing from those comprehensive reports like the MacKay report and focusing on the politically palatable while ignoring any long term consistency or vision from an industrial strategy perspective for the country, is giving us a piece of legislation that we will be supporting with pinched nose.

I know the Minister of Justice agrees with me on this. I know she as well would like to see a more competitive, stronger financial services sector in the 21st century, and not one shackled by the Liberal incompetence in this very important part of the Canadian economy.

[Ken Epp, Canadian Alliance, Elk Island, AB]

Madam Speaker, I listened with interest to the member's speech. He has perhaps a confused view of the role of government in protecting the rights of people who deal with banks.

He used an analogy of grocery stores and people who own apartment buildings being forced to provide facilities. If I am not mistaken, the legislation does not address that question with respect to the low cost accounts. It does not state a specific amount. It simply says that the bank shall provide a low cost account for people who have limited financial means. He has perhaps to some degree not fairly represented the purpose of the statement that was put in the bill in this particular regard.

Would he care to clarify that and perhaps correct his small error?

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

Madam Speaker, I urge him to look up the word irony in the dictionary and at the same time to look up the word humour as well.

The fact is that the legislation provides an unprecedented opportunity for the Canadian government to intrude in a private sector environment and tell financial services players what to charge for various services. My point is, which I would expect the hon. member would agree with in a more whimsical moment, that it is analogous and comparable to telling grocery stores what to charge for their produce or telling real estate developers in private settings what to do. There is no difference.