Debates of Feb. 27th, 2007

Bank Act

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

Is there such a thing?

[John McCallum, Liberal, Markham—Unionville, ON]

--it also leaves me with some concerns about the government's broader agenda.

On the one hand, I am glad to see that the Conservatives have decided to model their bill closely on the Liberal proposals. This bill really is 100% proposals from the previous Liberal government. Naturally, therefore, we do not hesitate very much to support it, but I do have some serious concerns about the government's ability to conceive of any truly new legislation.

Canada's alleged new government is actually starting to look an awful like Canada's used government. If we look beyond the Bank Act to some of the other pieces of legislation put forward by the government, it is hard to see anything that the Conservatives have conceived of themselves. The Conservatives may have promised new government, but they have only delivered borrowed government.

For instance, the EnerGuide retrofit program for homes was once thought a wasteful program by the Conservatives before they looked at the polls on environment. We remember that just three months ago the Conservatives thought spending any money on a clean environment was wasteful. Now they have brought back the old Liberal plan.

However, instead of bringing back the full program, they have eliminated portions of it, particularly the money for energy audits. What will this do? Effectively this will help ensure that low income Canadians are unlikely to be able to afford making use of the program, but low income Canadians are not the base of the Conservative Party so the Conservatives do not really care about that.

This is a shameful act, because I remember very clearly from the time when I was natural resources minister that low income people are particularly hard hit by high energy prices. Low income Canadians pay out 25% of their low incomes on energy, but how has the Conservative government amended and altered our EnerGuide program? It has cut out the audit part, the part that is essential to allow those low income Canadians to access the program.

The Conservatives have deprived these people who are most subject to difficulties from higher energy prices. They have effectively excluded those people from this program. I think it is typical of their behaviour because they do not regard low income Canadians as part of their constituency, so if those people are excluded, that is fine.

If only the government could swallow its pride and reinstate the full EnerGuide program, which I am confident is useful; I am not so confident the Conservatives see it as useful, but that is what is in my speech. Meanwhile, at least they have brought back part of the program, but they have excluded that most critical part, which is the part that is essential to help lower income Canadians.

Another example is Bill C-25, An Act to amend the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, which we passed last fall. Much like the Bank Act before us today, nearly all of the bill was drawn from proposals drafted by the previous Liberal government. It was a sensible bill, but because of near complete inaction on the part of the Conservatives, Bill C-25 had to be rushed through the House and the Senate in order to make sure it received royal assent in time to be compliant with our international partners.

Today we find the same thing. Once again, we are rushing to get Bill C-37 through both chambers. The Financial Institutions Act was scheduled to sunset this past October, which is why the previous Liberal government began the consultation process over two years ago, but the Conservatives delayed. They dithered. They delayed the release of the white paper and gazed at their navels until they had to ask the House to extend the act by six months, which we of course did. Now we are forced to get this legislation through both chambers in the next 50 days in order to beat the April 24 sunset clause.

So on the one hand, I am impressed that the Conservatives have been, generally speaking, willing to implement the majority of Liberal policies that were waiting for them when they came to power last year. On the other hand, I am a little concerned that they are willing to implement some of them in such a piecemeal and rushed fashion and they seem to have so few ideas of their own in the legislative cooker.

Worse still, and this is perhaps the most important point, when the Conservatives do manage to dig an idea out of their own caucus, it is almost universally panned by everyone else. I do not think it would be a stretch to say that their so-called clean air act was a complete failure, and their reverse onus legislation has been called unconstitutional by the legal community.

Thank goodness for our financial institutions and the millions of Canadians who rely on them that this used Conservative government has decided to stick with Liberal policy on Bill C-37.

Let us hope that when the upcoming budget rolls around next month the Conservatives will remember a few other Liberal programs that they have ruthlessly cut. I am talking about literacy programs. I am talking about funding for Canada's struggling museums. I am talking about the GST visitor rebate program, without which our tourism industry will be at a competitive disadvantage with the rest of the world.

It is truly amazing that the Conservatives cut that visitor rebate program, making Canada the only OECD country that does not have such a program, depriving Canada of the convention business and of foreigners who come to this country as a consequence of that program. Experts have indicated that the government will lose more tax revenue by ending this program than it gained by cutting the program, and it has done so at a time when it is swimming in money. There was no need to cut that program, just as there was no need to cut literacy or status of women programs or museums.

The government is swimming in money but nevertheless has struck out and cut the programs that have provided assistance to Canada's most vulnerable. The Conservative government also struck out and foolishly cut programs like the visitor rebate program, which makes absolutely no sense. I remember this, because when I was doing expenditure review in the previous government the bureaucracy suggested that we cut the visitor rebate program, so I know where the recommendation came from. The Liberal government had the good sense to say no to the bureaucracy. The Conservative government simply followed what the bureaucracy recommended. That turned out to be an extraordinarily foolish and counterproductive move.

Returning now to the white paper that the Liberals commissioned in preparation for the five year review of the Bank Act, one of the most exciting things the Liberals were exploring in that paper was writing electronic cheque imaging into law. The bill states that banks will be required to use new technologies to better serve the needs of Canadians.

As it stands right now, the maximum hold period on a deposited cheque is 10 business days. That can be an excessively long time for some Canadians, especially low income Canadians who need access to those funds much more quickly in order to pay their bills and buy their basic needs. Bill C-37 will immediately lower this hold period to seven days, allowing Canadians faster access to their own money.

This can be done even faster. I am speaking specifically to electronic cheque imaging, which Canada's banks have already begun to implement. By adopting electronic cheque imaging, banks will no longer need to physically exchange copies of cashed cheques with other institutions. Instead, a captured electronic image of the cheque can be sent instantaneously to another financial institution.

Better still, when all of Canada's financial institutions have installed electronic imaging equipment in the next couple of years, the maximum hold on cheques will be reduced from seven days to a mere four days. Furthermore, I hope that as the technology advances we will be able to further reduce the maximum period.

A second aspect of this bill that I approve of is a provision for an increased disclosure regime that will provide Canadian consumers and businesses alike with the information they need in order to make the most informed investment decisions possible. Bill C-37 will ensure that the savings product disclosure regime is just as effective for the millions of online bankers as it is for branch customers. Strong competition and information disclosure are two of the best tools available to ensure that Canadian consumers' needs are being served well by our financial institutions.

As I have said, the official opposition will be supporting this bill. My colleague will expand on my remarks in terms of some other items contained in the bill. But I do hope that Canada's alleged new government will continue to use our ideas to their fullest and can refrain from returning to the dangerous incompetence of the previous Conservative government that was so damaging to Canada's economic well-being.

Perhaps I should expand briefly in my remaining time on that last comment. What do I mean by Canada's last Conservative government being damaging? There is a pattern here, in that Conservatives create deficits and leave those deficits for Liberals to clean up. The most glaring example in our recent economic history was the Mulroney government, which bequeathed to the Liberal government a $42 billion deficit. It took some time to clean that up.

Indeed, the Mulroney government received a credit downgrade in 1992. Since 1951, Canada had consistently had an AAA rating. Then, after a series of deficits that had us, according to the IMF, headed for third world status, the credit rating was downgraded in 1992. It took 10 years of the Liberal government cleaning up the Conservative mess to restore that credit rating to its AAA status.

It is not as if that is an isolated example. Looking south of the border, we saw Bill Clinton running surpluses. Who has been running the huge deficits? George W. Bush and, before him, Ronald Reagan. Or we can look to Ontario. The pattern is always the same. It was the Mike Harris-Ernie Eves government that ran on a campaign of a balanced budget, but when that government lost and the auditors came in, what did it show? It was a $5.8 billion deficit. That is of some relevance here, because three of our most senior ministers were senior members of that government.

Conservatives, whether we are talking about Ronald Reagan or George Bush in the United States, or Brian Mulroney or Mike Harris in Canada, historically have run huge deficits. They have left those deficits for successive Liberal governments to clean up.

What has happened to this Conservative government? It has been bequeathed the largest surpluses in Canadian history. That is why it is particularly incumbent on the government to use that money wisely, but it has not.

As I said, the Conservatives have done the opposite of what Canada needs for a strong economy to take on the 21st century. They have raised income taxes. They have slashed research. They have slashed learning. They have slashed programs for Canada's most vulnerable, the literacy programs, women's programs and the museum programs, and they have done all that at a moment when they have been literally drowning in the hard-earned cash of hard-working Canadians.

That is where I will conclude my speech, by saying that I hope this new government will continue to use our ideas to their fullest and can refrain from returning to the dangerous incompetence of the previous Conservative government that was so damaging to Canada's well-being.

[Ken Epp, Conservative, Edmonton—Sherwood Park, AB]

Mr. Speaker, whenever a Liberal talks about the deficits and debts of the Conservatives and how wonderful the Liberals are, I just cannot resist the temptation to get up and give the rebuttal which I believe the member should receive.

A huge ship must have its rudder moved long before the intended time of turning. The national economy is the same.

The facts are very clear. It was the years of a Liberal government with its huge borrowing and its deficits racking up a huge debt that caused this country to go into a series of deficit years in this country's budgets. It was the Conservatives who took over after the Liberals had put us on that path and yes, during the years that the Conservatives were in power, that path was not turned around. It happened three years approximately after the Conservatives were defeated. That is because the Conservatives put in place a number of measures that helped the economy to turn around and which the Liberals cashed in on. The Liberals got the credit for it.

I would simply say that we have to look at the long term when we are looking at these economic effects. The effect of one government does indeed go into the term of office of the next one.

[John McCallum, Liberal, Markham—Unionville, ON]

Mr. Speaker, I do not know what the hon. member is smoking. We are talking about simple facts here.

When the Liberals came to power in 1993 the deficit was $42 billion. That is a fact. That was the legacy which we inherited from the Mulroney government. As a consequence of that the Government of Canada's credit had been downgraded in 1992. That was one year before the Conservatives lost, I would point out to the member. It took 10 years of hard Liberal work to fix up the Conservatives' mess and to restore our credit rating to AAA. That is a fact.

The second fact is that when the current government came to power, it had a $13 billion surplus, not a $42 billion deficit. There is a difference. Not only that but the latest figures coming out of the finance department show that it may be en route to another huge surplus in excess of $10 billion, thanks to Liberal management.

Of course I believe in democracy. The Conservatives are in government but when they inherit riches of that scale, it gives them a special responsibility to use that money wisely. By cutting programs to the most vulnerable, by slashing research, by raising income tax, the government is simply squandering the massive inheritance that it received from the Liberals.

[The Acting Speaker, Conservative, Andrew Scheer]

I would like to remind all hon. members about the provisions in the Standing Orders and parliamentary practice about relevance. We are debating a bill specifically dealing with financial institutions. There has been a lot of debate back and forth on some things that I would question as to whether or not they have relevance to this bill at third reading.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, I was interested in the dialogue that took place although it is not directly related to the Bank Act. We have to look at what we are talking about.

I note that the finance minister in his speech at second reading made several points about the importance of building a competitive business environment and of ensuring financial stability as the reasons that we make these changes. It begs the question, are we talking about the motives and objectives of a government that wants to make changes to legislation that will show Canadians there is a basis for trust, there is a basis for proper accountability and there is a basis for the integrity of what is being done in this and related areas?

I raise the example of the income trust situation. It has to do with financial stability, integrity and accountability, of which it appears there is none.

I wonder if the member would like to comment on the degree of accountability, integrity and trust that is reflected in some of the actions that have been taken that impinge on financial stability in Canada.

[John McCallum, Liberal, Markham—Unionville, ON]

Mr. Speaker, I thank my colleague for his highly relevant question relating to financial stability and financial institutions.

Indeed confidence is key. Honesty is key. Sensible, well thought out policy is key. I must say that on all of these counts, the government's income trust policy has been an abject failure. I will give very briefly the reasons.

First of all, the Prime Minister promised as clearly as was possible to promise that he would not tax income trusts. As a consequence, hundreds of thousands of Canadians went into income trusts, at which point the Prime Minister cut them off at their knees and imposed on Canadians a massive $25 billion loss in a single day.

Second, it was the execution of that broken promise by the finance minister that was absolutely incompetent. He dropped the nuclear bomb on the industry which did maximum damage to those individuals who had taken the Prime Minister at his word. Less extreme alternative measures were available that would have achieved the same objectives of tax fairness, but at a small fraction of the damage to Canadians that was caused by the finance minister's reckless plan. He did not think it through. He acted decisively but he was decisively wrong.

I would end by saying that the NDP behaviour on this file is particularly shameful. The Bloc and the Liberals are working to bring amendments to this disastrous legislation, to help in their time of need those Canadians who have suffered billions of dollars of losses in their savings which they need for their retirement. Shamefully, the NDP to this day has refused to assist us to help those ordinary hard-working Canadians in their moment of need.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, I want to quote from the finance minister again when he said, “The government believes that the best approach to improving services for consumers is through competition and disclosure”.

Generally, one would say that those are important principles, yet another example would be in terms of the impact on competition or the variety of instruments that are going to be affected. For instance, the income trust example shows that maybe there is a contradiction in its commitment to the variety of instruments available to investors.

[John McCallum, Liberal, Markham—Unionville, ON]

Mr. Speaker, my colleague makes another excellent point and there are two aspects of this I will touch on briefly.

The first is that he used the word “disclosure”. On this argument of the finance minister about tax leakage, we had a battery of witnesses, highly reputable people who know what they are talking about, who said that all of his numbers were wrong. What was the finance minister's response? It was a blacked out, censored document from the Department of Finance without one legible number. Talk about disclosure. If he wants to convince Canadians that he is right, the least he could do is disclose that blacked out document, because he cannot win the argument when there are six experts against one blacked out document with no numbers in it.

On the other point that my colleague raised in terms of availability of instruments, we do not have to go further than the governor of the Bank of Canada to find an expert witness who has said that the income trust sector has been useful for seniors in particular. It is virtually the only instrument that we in Canada have, unlike the U.S., which provides a relatively high yield to savers. Many Canadians, particularly seniors who have to pay their bills from the proceeds of the savings they have generated over a long lifetime, were extraordinarily dependent on income trusts.

The governor of the Bank of Canada himself has said that this vehicle is a useful savings instrument, particularly for those individuals. The Conservative government, through its reckless behaviour, has in fact destroyed income trusts.

[Pierre Paquette, Bloc, Joliette, QC]

Mr. Speaker, before I begin my remarks on Bill C-37, I would like to add a few comments on the issue of public finance.

The Liberal finance critic who just spoke reminded hon. members that the Mulroney years were extremely disastrous as far as public finance was concerned, with major deficits including the last one of $42 billion.

Nonetheless, I want to provide a few facts for the public's information and so that everyone knows the whole story. The first deficit recorded in 1975 was run by a Liberal finance minister, John Turner. Then a whole series of deficits followed until 1993-94. The Liberal solution was to offload the problem to the provinces, Quebec in particular, by creating the fiscal imbalance. If we look at the true public finance story of the past 20 or 30 years, neither side has anything to teach us.

Let us come back to Bill C-37 , An Act to amend the law governing financial institutions and to provide for related and consequential matters. The Bloc Québécois will obviously be in favour of this essentially technical bill and we will have no problem supporting it.

Precisely because this is a technical bill, it does not address the substantive questions that we would have expected the Conservative government to provide us with some answers to, some possible solutions, or even that it raise issues. I am thinking, for example, of the entire question of electronic transactions. There is absolutely no reference to that, apart from cheque imaging, which I will come back to.

We know that this is a major issue in the economic development of Canada and Quebec and all of our economies. Failing to address this question, failing to provide solutions, at least in terms of regulation, means that we run the risk of hitting a ceiling over the next few years in terms of electronic transactions. The regulatory framework is inadequate. We would therefore have expected that this question be addressed in Bill C-37.

The same is true of bank fees. It may be appropriate for there to be fees for certain transactions. But do fees need to be charged for all transactions? Some transaction charges are surely somewhat questionable. An example might be a cash withdrawal at an ATM that belongs to a bank other than the one that the person ordinarily does business with. There are relatively high fees for that transaction. This might at least have been given some thought.

In fact, the Minister of Finance will be meeting with the banks in a few days to discuss these questions. It would have been useful, before they are discussed with the banks, if we could have had a substantive discussion at the Standing Committee on Finance, based on various information that both the Department of Finance and the Minister of Finance could have provided to us. But no, the question had to be raised by one of the members of the Standing Committee on Finance and the committee had to take it upon itself to initiate a study of bank fees.

Once again, on questions of this type, we must not take an ideological approach, whether on the right or on the left. We must first try to understand why banks charge these fees, what they are for, and to establish rules or limits, to regulate this practice based on information and facts, and not based on preconceived notions.

The work on this will be done by the Standing Committee on Finance. We would have expected, however, in a bill to revise the Bank Act, something that happens only every five years, that these subjects, which have been widely debated in Canadian and Quebec society, would have been addressed.

There is another matter that should have been included in this bill. That is the entire question of reinvesting in the community. We know that discriminatory practices sometimes occur on the part of our banking institutions. I would say that they are not even committed intentionally. It is simply a certain way of doing things that is referred to as systemic discrimination.

Here is an example. Every year, the Canadian Federation of Independent Business, which is hardly a left-wing institution, as we know, speaks out against the discrimination that women entrepreneurs suffer, particularly small and medium-sized business owners. March 8 will be International Women's Day, and they will probably speak out against it again this year.

This is a known fact that even the business community recognizes, and we must therefore find ways to counter this systematic discrimination.

In the United States, community re-investment is a practice that forces financial institutions to take stock of their loan and credit applicants, and how the banks approve the applications. If it appears that certain groups are under-represented despite their applications, a special fund makes money available to those investors who have been discriminated against by the banks based on their profile. It is even better when there is no discrimination and the financial institutions take stock of the ratio of loan applications and approved loans.

However, I repeat, this is common practice in the United States, and this forces the financial institutions to re-invest in the community, in those groups that have the greatest difficulty obtaining credit, in particular, to start up a business.

Another question should have been addressed during the examination of Bill C-37 and that is the issue of tax havens. How is it that Canadian banks are such frequent users of tax havens? The Bank of Nova Scotia comes to mind, among others, since I discovered that it has locations in nearly all the tax havens in the West Indies, including Bermuda and the Bahamas. Why? Is it simply because it does not have the choice, given the global economy? We would like to know. The question has not even been asked. Is it because Canadian laws and regulations are not stringent enough? The Standing Committee on Finance began examining one possibility and will delve further into this over the coming weeks.

People will remember some interesting debates we had in the House on how companies like Canada Steamship Lines Inc. were using tax havens to avoid their responsibilities as good corporate citizens. As I was saying, we should at least have touched on this, although we still can. The Bloc Québécois intends, by the way, to introduce a motion in the next few weeks that the committee should pursue its work on tax havens.

Another aspect is identity theft. We know now that criminals can access our entire profile using social insurance cards. There are about five million too many of them in circulation.

With a certain amount of credit information, these people can go to a financial institution, take out a mortgage on someone’s house and disappear with the money. Unfortunately, these things happen every day. There is nothing about this crime, which is still not recognized as such. Sometimes people discover from one day to the next that they are indebted to the banks.

Who is responsible when this kind of thing happens? Are the banks not responsible for ensuring that when someone comes to them with certain information, he or she is the right person?

I think that we could have an interesting debate on this. We did touch on it when Bill C-37 was being studied. However, the department officials told us that it would have to be listed first as a crime in the Criminal Code before it could be included in the Bank Act.

We should have suggested a number of possibilities. The opposition parties, the Bloc Québécois and the NDP, have obviously tried to fix some things. However, most of their amendments were deemed out of order because they went beyond the bill before us.

As I was saying, this bill severely restricted parliamentarians’ ability to do their job and review the Bank Act. Unfortunately, this opportunity only presents itself every five years. I hope that the department, the minister and the Conservative government will not wait five years to do something about these issues of considerable concern to the public.

Some other things too would have deserved further consideration, such as the question of the bank ombudsman, for example.

I quite liked the debate that started up where bank representatives explained what this system was and why the banks financed it. These representatives also explained that the ombudsman is quite independent and the banks have complied with fully with his decisions since the position was created.

Nevertheless, some consumer associations and individual consumers still appeared before the committee and said they did not think they had the protection they needed to proceed with some of the outstanding legal actions between consumers and the banks.

I for my part will not prejudge the issue. However, it seems to me that we should have pursued this further. Even after Bill C-37 has gone through the study phase, consumer associations will continue to think, whether rightly or wrongly, that the Bank Act does not protect consumers sufficiently. I think that they are right at least in regard to the fact that we have not studied this issue enough and did not go into it further. To this extent, their questions remain unanswered.

As I mentioned earlier, Bill C-37 is very technical and has limited debate on a number of questions. Furthermore, this bill was studied very quickly, I must confess. The committee did this work in three sessions. I do not think that the members of the committee needed a great many more sessions, given the technical framework of the bill. However, in my opinion, in future, when we study a bill like this one, we should have much more substantial debates, especially since the Bank Act is only reviewed every five years.

As I have already mentioned, the Bloc Québécois will vote in favour of this bill. Although it does not affect the big societal debates surrounding banking institutions and the Canadian banking system as a whole, Bill C-37 will nevertheless introduce a number of measures on which the Bloc agrees. For example, it will introduce mechanisms for conveying information to consumers, and this will enable them to get more information so that they can make informed decisions regarding their use of bank services. This is a step in the right direction. More remains to be done, but we are headed in the right direction.

Also, a regulatory framework allowing the use of digital data in the processing of cheques has been introduced, and this will reduce the length of time cheques are held by banking institutions.

There too I do not think anyone will complain about the fact that, instead of their cheque being frozen for ten days or seven days, as provided under the voluntary agreement between the banking institutions and the Department of Finance, the funds will only be frozen for four days, if I remember correctly. I will come back to this. The members of the committee nevertheless wondered why the banks were continuing to freeze the funds of deposited cheques for more than 24 hours, in spite of all the electronic means at our disposal.

We will have to wait till digital imaging is put in place. We have not had any answers on this.

The time during which such funds are frozen must be reduced to a minimum. This creates a lot of problems, particularly for small investors and small and medium-sized businesses. Still, the possibility of imaging will be there. Let us hope that the banks will use it to reduce waiting times for releasing funds as much as possible.

There is a provision for reducing the regulatory burden on foreign banks, credit unions and insurance companies in order to make the regulatory approval regime more efficient. Obviously nobody wants regulations for the sake of having regulations. Everyone agreed that this was a good step, especially for the credit unions.

Facilitating the establishment of foreign banks in Canadian and Quebec markets can only be beneficial for consumers. We know that our banking market is extremely concentrated in Canada, with only five major players. Despite the efforts that have been made to create competition, in particular with the passing of Bill C-8 a few years ago, we have to acknowledge that there is not much competition, particularly in the regions.

In the case of Quebec, for example, it could be said that, in the regions, the Desjardins movement practically has a monopoly because the major financial institutions have decided to desert this market as it is not lucrative enough for them.

We find ourselves in a situation where competition does not have all the results expected and the arrival of foreign banks and credit unions provides an opportunity for real competition in the financial sector, which is quite desirable.

Regulations governing mortgage loans are also revisited: the insurable portion of a mortgage will be reduced. At present, up to 75% of a mortgage does not have to be insured; the remainder does. Naturally, that leads to additional costs for consumers who wish to purchase a home. The uninsured portion is being increased to 80%. Reducing by 5% the portion to be insured will make it easier for a number of individuals to purchase property and lower the cost of borrowing. We obviously cannot be against this measure.

Various other matters were also reviewed. They relate to the proportion of equity of a bank held by a single shareholder or groups of shareholders. This should make it easier for small banks to enter the market. That is desirable. As I mentioned, past legislation adopted has not yet led to the desired competitiveness in the financial market.

Therefore, we will support this bill. In the time allotted to me I would like to talk in more detail about certain matters found in Bill C-37.

My presentation will address the bill's objectives.

The first objective covers all matters affecting the interests of consumers. A certain number of measures in this regard were taken by Bill C-37. As I mentioned, we do not go far enough; however, some measures are headed in the right direction.

The second objective is to improve legislative efficiency and there are a certain number of measures in this regard in Bill C-37.

The last objective pertains to a group of varied measures in Bill C-37.

The first key objective, which is enhancing the interests of consumers, includes a first main element, namely to improve the system of disclosing information to consumers. I talked about it earlier, in my introduction. This will help consumers make informed decisions about the investment vehicles that they choose.

It was decided to set higher standards for disclosure of charges and obligations. Penalties that apply to various accounts and investment vehicles are also heavier. Moreover, once the act is passed, it will require institutions to clearly disclose this information in all their branches, through the Internet, and also in writing to any individual who requests it.

Some might think that it goes without saying, but these provisions were not yet included in the Bank Act. Since one can hardly be opposed to virtue itself, we will support this measure.

There is a second element in this key objective of enhancing the interests of consumers. It is, as I mentioned, the change made to the regulatory framework to provide for the introduction of electronic cheque imaging. This will allow financial institutions to reduce the hold period on cheques. That is also a change that was asked for.

As for legislative efficiency, I already talked about reducing the regulatory burden for foreign banks and for credit unions. We will have to streamline the regulatory approval process, and provide a more flexible framework for credit unions.

Finally, as regards the other measures, the most important one is, as I mentioned, to increase from 75% to 80% the loan-to-value ratio for which insurance is mandatory on residential mortgages.

In conclusion, as I said at the outset, the Bloc Québécois will support Bill C-37.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, I thank the member for his commentary and I know of the good work that he has been doing on the finance committee. I tend to agree with him that the issue of trying to deal with an omnibus piece of legislation which touches 11 different acts related to financial institutions is a very ominous chore, particularly when it is somewhat restricted.

I think there were only three hearing days at committee and even at second reading, the speeches really could not get into some of the detail because one had to go to committee to hear the witnesses to get some of the rationale for some of those key changes.

One of the changes that has been made is to the Cooperatives Act. It has to do with the disclosure of information to consumers about some of their products. I note that specifically, even though there were only three hearing days at committee, the committee itself made an amendment. I did not quite understood why and maybe the member can help.

It has to do with clause 165 of the bill which deals with any account or service that is provided to a customer and that the individual requesting the goods or services shall receive information about all charges. It talks about how the customers will be notified about any increases in the charges and information about how they will be notified or be kept apprised of the association's procedures related to complaints.

That was in the original bill. That remains in the bill as amended by the committee with the following change. It effectively says that the governor in council may make regulations specifying the circumstances under which a retail association need not provide that information to a consumer.

It would seem to me that consumers have a need to know, so that they can make informed decisions. I have not heard an argument yet as to the nature of something that would not be applicable to disclose the fees or the charges, the notification of changes to the terms and conditions about what they got involved in, and also information with regard to complaints which will help the consumer.

I wonder if the member has some recollection as to the discussion which led to the amending of this section and indeed the related section in the Bank Act itself, which gave to the governor in council the authority to make regulations exempting an institution from such disclosure. In fact, I would have thought that the purpose of making the amendments to the act is to respond to the consumers' need to know, and to have full disclosure and accountability with regard to the fees, services and charges that are being levied.

[Pierre Paquette, Bloc, Joliette, QC]

Mr. Speaker, I thank the member for his question. He clearly examined the bill in great detail. It did not generate much debate when it was amended. I believe that this amendment was in fact introduced by the government.

Of course, my recollection may be questionable. I agree with the member that, given more time, we should have done more work on this issue in particular.

In the context of Bill C-37, more flexible measures concerning cooperative credit associations were aimed at facilitating the entry of new cooperative credit associations and at reducing to two the number of institutions that would be required to become a cooperative credit association.

Thus, small communities will have the opportunity to put in place cooperative credit associations that will be recognized as long as they have two institutions or two branches. In this case, the regulatory requirements cannot be the same as for a charter bank that has thousands of branches and which manages billions of dollars. This is why the bill was amended to account for some situations where there would be a small number of cooperative credit associations.

Another aspect is perhaps related to this fact. I admit that I would have to take another look at the text . The regulatory requirements for foreign near banks that are present in Canada were also amended so that they would be regulated almost to the same extent as in their country of origin. Once again, these are institutions that may be relatively small.

This is the only reason I can give the member. In some cases, regulations that would be too onerous would prevent communities from putting in place cooperative credit associations as long as there are two institutions. They would not be nearly as large as the Desjardins movement or other credit unions.

I think that we will have to remain vigilant to ensure that there is no abuse in this regard.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Mr. Speaker, I listened with interest to my colleague's speech on some rather complex issues, which the average person does not deal with every day. The issue of bank mergers is very important, in particular regarding services in the regions, as my colleague pointed out.

For several years now, we have been waiting for the government to have a transparent vision on this. Year after year, the former Liberal government put off this issue and tried to sweep it under the rug, and now the Conservative government is doing almost the same thing.

Could the member tell me what directions the Bloc Québécois wants to take regarding bank mergers? Which approaches have they proposed to ensure that the debate will be democratic enough, given that we are dealing with financial experts and people who know the system?

Our fellow citizens and the business sector are also in contact with the banks. In the regions, we can see that because of the lack of competition, the expected improvements have not materialized, even if the banks have had access in recent years to programs such as SBLs to guarantee loans, measures which shielded them from major losses.

Could my colleague assure me that the Bloc will be vigilant and monitor bank mergers, so that the end result is support for businesses and the development of our regions?

[Pierre Paquette, Bloc, Joliette, QC]

Mr. Speaker, I thank the hon. member for his very relevant question. In fact, I should have included it in the questions to be submitted regarding Bill C-37. That issue is like a sword of Damocles hanging over our heads.

Currently, there is not enough competition on the banking market to allow for mergers, particularly in the case of major institutions here. This is not to say that it will never happen, but before thinking about merging two of our five largest banks, there will have to be more competition on the market.

A number of laws have been passed so far, but they have not had the anticipated impact, perhaps because they are too recent. So, we just have to wait and see.

Also, not only will conditions be imposed on eventual mergers, but the two or three businesses—I hope there are not more than that—involved will have to demonstrate that it is in the public interest, and not just in their own best corporate interests. Even though banks are private institutions, they remain an essential public service. As citizens in a modern Canadian or Quebec society, we cannot live fully if we do not have a bank account somewhere. Even welfare recipients must have a bank account. So, the state already provides a framework, but we must ensure that the outcome is positive.

The Standing Committee on Finance has already recommended to reverse the onus. Instead of doing what the then Minister of Finance wanted to do—namely to allow banks to merge if they meet some set criteria—businesses that want to merge should demonstrate that such a move is in the public interest.

If we had a Canadian megabank to compete on the international market—our banks are very big institutions in North America—and if that megabank had financial difficulties, what would happen to the Canadian banking system?

This debate is extremely important, and I hope that it is as transparent as possible.

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

Mr. Speaker, I am pleased to participate at final reading of Bill C-37. The bill would ensure that legislation is changed to reflect the Bank Act review.

I have to say from the outset, as we heard repeatedly at committee, that this whole process and the legislation is a major disappointment to Canadians everywhere. We are talking about a fundamental issue pertaining to communities in this country, and that is the right to access community financial service.

We are dealing with a fundamental obligation on the part of our chartered banks. We are dealing with a situation where increasingly Canadians are feeling overburdened by the regulations and the charges of the banks without access to information so that they can make wise decisions.

We are dealing with communities everywhere, especially inner city, rural and northern communities, which are faced with branch closure after branch closure. We are dealing with people in communities who are then left to deal with payday lenders and other fringe financial institutions on a regular basis where, of course, they are subject to astronomical interest charges. We are dealing with people in communities who are left to access their hard earned money through ATMs, automated banking machines, for which they must pay dearly.

On every aspect in this whole area of banks and financial institutions, Canadians have not been served well by this legislative process. This is an opportunity we have every five years to review the Bank Act and to make necessary changes to ensure that we keep pace with Canadians' concerns and that we keep pace with changes in new technology.

We have not done that in the bill. We have failed Canadians dismally. Why? How did this happen? Let us start with the fact that by and large the dominant players in this process of review and study of the Bank Act are the big banks, moneyed institutions, and people and organizations with a heck of a lot of power and money.

It is pretty hard in that context for ordinary Canadians, for everyday working families, and for non-profit advocacy organizations to compete in that context. There is no money and support from this government to help balance out the equation. There has been no attempt on the part of governments, whether it is this one or the previous Liberal one, to actually ensure a level playing field to ensure that consumer groups and everyday Canadians could have a say in this Bank Act review process and be equal to the part being played by big banks, big insurance companies and moneyed interests in this country.

As a result, we have before us a very limited piece of legislation that tinkers with the system, does make a few necessary changes, granted, but misses the boat on the most pressing issues of the day in terms of banking and financial institutions.

If there is one shining light in all of this, if there is one silver lining in this process, it is the fact that because of the turbulent political times we are in, the present government and the former government have decided to pull back on their agenda to adhere to the banks' wishes for mergers, both in terms of banking institutions and cross pillar mergers.

It is a blessing that this minority situation we have been in for the last couple of years has slowed down the agenda of big banks and their mouthpieces here in Parliament. This legislation, thank goodness, does not include any reference or any permission to allow for bank mergers, nor does it allow for cross pillar mergers which involves the sharing and the merging of responsibilities around insurance.

That was a fear many of us had. Many small insurance brokers right across this country thought that the banks would win the day and gain control not only of every other area in the financial world but also of insurance, thereby putting out a lot of independent insurance brokers and leading to tied selling and lack of competition. One good thing about this bill is that is not in the legislation. However, that is about all I can say right now on the positive side of things.

What is so sad about this bill is what is missing in terms of the everyday lives of Canadians. There is nothing in this bill to make the banks accountable to Canadians and responsible for demonstrating why the banks deserve $19 billion in profits this year. We only have to look at the statistics to know that the banks are in a very stable and very lucrative position with better profits than they have ever enjoyed. On top of the huge profits that we see being earned by the banks, the CEOs of the major banks are being paid exorbitant, unbelievably high salaries.

A recent study by the Canadian Centre for Policy Alternatives documented that the salaries of CEOs at the big banks and big oil companies were so high and out of line that the CEOs could make in a few hours what many Canadians make in a whole year.

That has certainly been revealed to us by the recent decision of the Royal Bank of Canada. By the way, the bank was up 40% in terms of profits this past year. It brought in $4.7 billion in profits. The Royal Bank gave its CEO, Gordon Nixon, a 25% raise last year, up to $11.9 million, including a salary bonus of $5 million. Mr. Nixon receives a salary of $1.4 million, a bonus of $5 million and deferred shares and stock options valued at $5.5 million. That is up from $9.5 million in fiscal year 2005. The bank also contributed about $766,000 to Mr. Nixon's pension plan, compared with $620,000 a year earlier.

Never mind that the CEOs make in a few hours what Canadians make in a year; I think those CEOs make in a year what Canadians could never make in a lifetime.

It would not be so bad if we could actually get some accountability from the banks. That is the purpose of government. That is the purpose of legislation. That is why we are here: to scrutinize legislation to ensure that there is a level playing field and to ensure that Canadians are given some protections. I am afraid we do not find that in this bill.

Before I give some of the critiques of this bill on that front, let me also say that when it comes to the big banks we also know that many of these institutions are moving their money offshore to avoid paying taxes. Let us not forget the studies. I am referring to one that is a couple of years old, but I am sure its findings are still current. It was clearly reported that Canada's top five banks have deprived tax coffers of $10 billion since 1991 through offshore tax havens. Not only are banks making those kinds of profits, they are moving money offshore so they do not have to pay taxes on it.

And of course they were anxious to make sure that we followed the advice of the Liberals and kept the income trusts alive and well on our agenda so they could have these flow-through entities and not have to pay taxes. Let us keep that in mind as we hear the former Liberal finance minister criticize the New Democratic Party which had the strength of its convictions to stand pat and stand firm and to say from the very beginning that income trusts had to be phased out, that we needed to do everything we could to stop this tax leakage and to close all corporate tax loopholes. This is something that he and his colleagues did not do when they had a chance in government. Despite all the hot air today, we know on what side their bread is buttered and on whose side they stand when push comes to shove.

Let us also be clear that the banks have used much of their money to gamble on the international casino stage. Let us not forget some of the endeavours by CIBC and its ties to Enron. Let us not forget some of the scandals that our banks have been involved in. We have seen some of the profits squandered in terms of playing the casino game on the international scene.

I say all of this to make the point that in fact we have to do something as a Parliament to get control over the situation and to hold the banks to account. Reputation is important and the banks know that. I think their response by some of the big banks to our plea for a rolling back of the fees charged to people when they use ATMs is an indication that they realize they have a public relations problem on their hands and that they must begin to deal with it.

In speaking of the need for Canadians to have confidence in the banks, I would like to refer to statements by the Office of the Superintendent of Financial Institutions and to Nicholas Le Pan's statement not too long ago when he said:

There is no other basis for the financial services business than trust and confidence! And that goes to a firm's reputation and why reputation is a zero tolerance risk.

That is the message the banks need to hear from this Parliament. The banks need to be told that they are way beyond the zero tolerance risk level. The banks do not have the trust and confidence of Canadians. They do not have absolute loyalty to the very advantageous position of the banks today. This is what we have to change. That is why we are here. We are here to say that the banks owe it to Canadians to be accountable, transparent and open. There is nothing in the Bank Act and nothing in this legislation before us that requires the banks to do that.

It is interesting that according to the Financial Consumer Agency of Canada, which is authorized under the Bank Act, there are hundreds of violations, but do we know the names of any of the banks that have violated the Bank Act and violated the laws of this country? No. There is no obligation for the banks to come forward. There is no obligation on the part of government to give their names.

Consumers who want to shop around to get the best service available cannot get the basic information to do that. We could get it if we were buying a toaster. We could get it if we wanted to take a vacation. We could get it if we were buying a house. However, we cannot get the basic information to choose a bank. Canadians cannot get the information they need to make a wise decision--

[John Cannis]

Why?

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

--because in fact the Bank Act is not written to ensure transparency and accountability to Canadians.

I see there is some curiosity on the part of my colleagues across the way. Let me tell them what we tried to do at the committee that was studying Bill C-37. In order to get some accountability from the banks, we moved a motion suggesting that there should be publication of the names of the banks that violated the consumer provisions of the Bank Act. We were not allowed to do that. Supposedly it was beyond the scope of the bill.

I must say that outside of an amendment from the Bloc around equity in community reinvestment and a few technical amendments from the Conservatives, the rest of the amendments came from the New Democratic Party. The two hours spent debating and amending the bill were primarily focused on the 30 or so amendments that I put forward. Not one was put forward by the Liberals, not a single amendment, not a single recommendation to change the Bank Act. Nothing. Nada.

Yet the former minister of national revenue, presently the Liberal finance critic, stands up in the House and lambastes the NDP for what? For doing our job. For devoting time and energy to study a piece of legislation.

Or is it still a sore point around the income trusts and the fact that we did our job when the Liberals were in government? When the Liberal government would not answer for the suspicious stock market activity on November 23, 2005 we asked the government to do something about it. We asked the government to investigate. It would not.

[John Cannis, Liberal, Scarborough Centre, ON]

You asked the RCMP.

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

Excuse me, Mr. Speaker. There is a Liberal cat calling suggesting that we asked the RCMP. We did, but not until we asked the Liberal government to take this seriously. When the Liberals refused, we did the obvious thing, the only thing available, something that those Liberals would do today, which would be to ask for an investigation.

[John Cannis, Liberal, Scarborough Centre, ON]

There was no government.

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

Mr. Speaker, yes, I guess we could say there was no government. The Liberals were acting as though they were not a government at the time.

[The Acting Speaker, Conservative, Andrew Scheer]

Order. I would invite all hon. members to hold off until the questions and comments period when they will be free to ask the hon. member for Winnipeg North anything that they would want to on this. I would ask for a little bit of patience. She only has about four minutes left, so we will wait until questions and comments.

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

Mr. Speaker, let me go back to talking about the job we are doing here in Parliament trying to make Parliament work, something that the Liberals do not seem to yet grasp after their short term in opposition. I guess they still think they are entitled to govern.

We called for the elimination of bank ATM fees. We could not get it.

[John Cannis, Liberal, Scarborough Centre, ON]

Why?

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

Mr. Speaker, the member asks why. I guess we will save that debate for another day and we will show the Liberals some Canadians who are struggling daily to make ends meet. They are finding it hard to actually pay anywhere from $2 up to $6 every time they want to take out $30 or $40, because they do not have access to a bank and are forced to go to an ATM, and if not an ATM, a payday lender where they pay a much higher amount.

We asked for mandatory disclosure of ATM fees. We could not get the committee to agree to eliminate or reduce the fees, so we just asked for disclosure. Guess what the Liberals did. They voted against disclosure. They voted against Parliament asking the banks to disclose their fees to use an ATM. Could someone explain that to me?

We asked for public accountability for proposed bank branch closures. We asked that the banks provide some proof that a bank branch was not profitable, some display of the numbers, some reasons, some discussions with the community. Guess what. It was defeated. By whom? By the Liberals, by the Bloc and by the Conservatives.

We asked for disclosure of security breaches leading to identity theft. Guess who voted against that. The Liberals, the Bloc and the Conservatives.

We asked for adherence to international standards in handling consumer complaints. It was defeated by the usual guilty suspects.

We asked for publication of names and events violating the consumer provisions of the act. It was not allowed.

We asked for increased penalties for banks for violations from $100,000 to $500,000. It was defeated, despite the fact that in telecommunications the fees for violating the laws are more like $15 million. Those members could not agree to $500,000.

We did win one and that was that government shall require banks to hold public meetings when they are planning bank closures, not may, but shall. That was a small victory for the NDP after many attempts.

We have so much more work to do on this front. We have issues pertaining to community reinvestment, electronic payments, credit cards and simple access to information to make the way through this maze of new technologies and systems. We will keep doing that.

I hope at some point we will get the support of other members of Parliament. This is very important to Canadians. Fundamentally we are talking about the right for all Canadians to access financial services where they live in whatever part of the country and whatever their background.