Mr. Speaker, I am pleased to rise today to present the NDP's position on Bill C-28, which would create a financial literacy leader with the aim of improving financial literacy in Canada.
Let me start by saying that, obviously, an understanding of financial literacy is a good thing. Understanding how much the difference between a 5% and 5.5% APR will cost over the lifetime of a loan, how long it will take to pay off a credit card if only minimum payments are made each month, how much needs to be saved each month for school or for a car or to put money away for a down payment on a house, or for retirement, having this knowledge is clearly a benefit.
How do we get to the end point? As I said at committee, it is a little like golf. Some people hook. Others slice, but at the end of the day they are all trying to put the ball into the hole. Therefore, the question we must ask ourselves is: How well does the bill achieve its desired ends?
Unfortunately the bill, while a very small step, is not going to get us to the end point we all desire. For a start, the terms of reference for this position are extremely vague. While the holder of this post will be required to advance financial literacy, there is no definition of what constitutes financial literacy within the bill nor any attempt to define how we could or should advance it.
Moreover, the original recommendation to create this position was very clear on the need for an advisory council that would include labour, voluntary groups, educators and business stakeholders to direct the work of the financial literacy leader. The bill does not include any such measures to create this advisory council and, as such, there is very little in the way of accountability.
Additionally, there is no proviso in the bill that would ensure that this position is filled by someone who is fluently bilingual in both official languages. To me, and to the NDP, it would seem a necessary condition that someone who is expected to teach and encourage Canadians about financial literacy would be able to communicate in both French and English.
We in the NDP tried to address these problems at committee. We introduced six amendments, all of which were dismissed by the Conservative members of the finance committee. Most surprisingly, some of those nay votes seemed to contradict comments made by the Minister of State (Finance) in committee and here today.
When I asked the minister of state about the fact that bilingualism is not a legislative requirement in the bill, the minister replied that the ability to speak both official languages and to disseminate the information in both official languages will be mandatory. Yet just a week later when I tabled a motion to amend the bill to this effect, the Conservative members voted against the amendment on the grounds that they want to ensure that they can choose the right person.
We in the NDP believe that it is impossible to choose the right person if that person is not bilingual, because bilingualism is necessary to ensure that we are helping improve the financial literacy of all Canadians.
We are therefore left with a dilemma. The stakeholders that we have consulted have told us that the NDP approach is far superior to the bill that we are debating today, but unfortunately, and especially with the current government, the choice we are presented with is all or nothing, no compromise, no improvements. This is what is on the table and we can take it or leave it.
That is exactly what was on display at committee, where the Conservatives refused to accept even a single amendment. This approach is not good for the functioning of parliamentary democracy and it is not good for Canadians.
That is why we in the official opposition are not going to play these ideological games. Canadians want good governance and good public administration, and that is exactly what they will get when they elect their first NDP government in 2015.
That is why we in the NDP will be supporting the bill at third reading, not because we believe it is the big fix the Conservatives claim it is but because, for all its faults, passing the bill is better than the current status quo.
Unlike the Conservatives, we listen to stakeholders regardless of their political affiliations and we listen to their concerns when it comes to policy decisions. These groups have told us that the bill would be a small step in assisting their work and enhancing the financial literacy of Canadians.
Our concerns with the bill have certainly not disappeared. However, my colleagues and I will hold the government to account for all of the commitments that we have heard around their position, and when we form government in 2015, we will be in the position to correct all the problems that the party opposite is all too happy to ignore in order to score political points.
When we look at the bill, we should also look to place it within the broader policy changes that the Conservatives have brought forward in the past six years. For example, Human Resources and Skills Development Canada stats tell us that 26% of Canadians struggle with basic numeracy and 20% struggle with basic literacy. Yet the government that is trying to sell Canadians on financial literacy being the answer to their economic problems is the same one that cut $17.7 million from adult literacy programs in 2006. The Conservative government's approach is to give with one hand while taking away with the other.
It is clear that financial literacy is something that we cannot understand in a vacuum. In fact, during the committee process, my colleague from Quebec raised this issue with the minister of state. He said:
You mentioned curriculum. That is very much a key issue. When I was in my third year of high school—which is equivalent to grade 10, I believe—we had what was called an economic education program. It covered things like credit cards and bank accounts, but it also dealt with fundamental issues facing people such as unionization. We looked at everything from a macroeconomic perspective, taking a lot more into account than just financial markets.
Instead of strictly limiting the financial literacy discussion to financial markets, pensions and other really specific issues such as credit cards, don't you think we should widen the scope and talk about economic education in general? Taking that approach, we could work with the provinces to help them develop a curriculum component possibly for primary students, but especially for high school students, to educate all young people about the complexities of economics, beyond just the financial dimension.
The minister's response was simple and to the point. The minister said, “I certainly can't disagree with you: that needs to happen”.
When pushed on it, even the government agrees that we need a more comprehensive strategy than the one we have been presented with. Instead, we get a bill that includes recommendation one of the Task Force on Financial Literacy and ignores the other 29. The minister's response to this is that the financial leader has at his or her discretion the option to put in place many of the other 29 recommendations.
We would agree with recommendation one but not with ignoring all the others. What is the point of independent task force reports if the Conservatives simply pick and choose the parts they like? Recommendation two of the task force calls for the creation of an advisory council made up of financial institution members, educators, unions and other stakeholders to ensure that the financial literacy leader is properly guided.
The Conservatives were happy to say that they were introducing the first and most important recommendation, but what they are doing is equivalent to building a house without putting in a proper foundation. It is not enough to say that it could, will or should have been implemented. It should have been implemented side by side with the financial literacy leader legislation. To do otherwise is to say that it is not important to ensure that all voices are heard.
We in the NDP take a different approach, one that listens to a wide variety of voices and ensures that no Canadian gets left behind. We need to make finance more understandable, not just make people better at understanding it. Even for people who do not struggle with numeracy and literacy, finance is not a particularly comprehensible subject. Barrie McKenna, a business columnist for the Globe and Mail, states:
Looking to financial literacy to fill the void is like asking ordinary Canadians to be their own brain surgeons and airline pilots. The dizzying array of financial products, mixed with chaotic and increasingly irrational financial markets, makes the job of do-it-yourself financial planning almost impossible – no matter how literate you are. The average credit-card agreement is as intuitive as quantum physics.
We also need to ensure that Canadians are aware that sometimes it may not be in their best interest to take out certain financial products. Encouraging people to take out savings and investment funds creates lucrative fees for banks and brokers. In fact, according to Morningstar, an investment research company, Canadian fees for equity funds are some of the highest in the world, being on average around two and a half times higher than fees in the U.S. for example.
We need to ensure that our financial literacy regime will criticize plans where fund managers take a substantial fee regardless of the performance of the fund, that it will highlight funds like the CPP, regularly outperform private funds and it must communicate to people the need to weigh the inherent dangers of investing in the stock market. Unfortunately, without a definition of “financial literacy” and without an advisory council, we cannot be sure that this will be the case.
We as parliamentarians should also be wary about increasing the quantity of financial literacy available without ensuring its quality. We in the NDP understand that this is a possibility and introduced an amendment to improve the reporting requirements of the financial literacy leader. However, as seems par for the course, the Conservatives ignored the concerns and voted it down. This has two dangerous and interlinked consequences.
First, the model presents the possibility of shifting all blame off banks and onto consumers. At the individual level, people can begin to be blamed for their own uninformed choices and, at the national or even international levels, systemic problems are no longer the fault of banks that will lend beyond their means to individuals who borrow too much. Obviously, individuals do have a responsibility to manage their own finances but banks, hedge funds and other financial institutions have the ability to affect the economy in a much more profound way than individual consumers, and we must not forget that.
Second, what do we do for the people who actually end up worse off due to financial investments that fail? We have to understand that some people will lose their savings when businesses go bust or when the stock market drops. This has been the way the stock market has worked since the first recognizable stock exchange opened in Amsterdam in the 17th century.
What about those people who simply do not have the type of disposable income required to invest in their futures, the people who live paycheque to paycheque, the people who have seen their wages stagnate or fall in real terms since the mid-1990s? The government should recognize that for a very large portion of Canadians a lack of savings is a reflection of the disparity between the rise in the cost of living and the rise in wages over the last 15 years or so.
Encouraging savings is fine for people who have disposable income after they have paid for the essentials but, unfortunately, far too many people taking on debt is not a choice. It is the only way to survive.
An OECD report published in December 2011 pointed out that the trend toward a less progressive tax structure and a more unequal society here in Canada began in the mid-1990s under the then Liberal government and has continued since 2006 under the current government.
As famed Canadian economist, Jim Stanford, noted in his submission to the national task force:
Personal savings will never constitute an important source of financial security for the strong majority of Canadians who cannot save, given the paucity of their incomes.
If the government really wanted to give these people an opportunity to build their own savings, then it would regulate bank fees and the level of interest that is charged on credit cards in order to allow people to put a little bit aside each month to ensure that it can help with their savings.
Similarly, if the government wants to ensure that Canadians have adequate savings when they retire, the way forward is not to create a new and inherently risky vehicle for private savings. There are already multiple methods for Canadians to save for their futures, RRSPs and TFSAs spring to mind, if they have the funds available to invest.
These vehicles are already supported and funded by the government. In fact, studies have shown that the highest earning 11% of Canadians contribute more to RRSPs than the bottom 89% of tax filers combined. Because of the tax benefits of these investments in RRSPs, Canadian taxpayers subsidize that contribution by the top 11% of earners to the tune of $7.3 billion in annual net tax expenditures.
The creation of pooled registered pension plans, or PRPPs, therefore, only benefits those who are already able to invest in their retirement. It does nothing for the 30% of Canadian families who lack any form of retirement savings outside of CPP.
Encouraging people to invest in a risky vehicle on the stock market is not real leadership on financial planning. It again simply passes the entire risk and blame for an individual not having adequate retirement savings onto that individual. To make matters worse, the Conservatives have delayed the age at which Canadians are eligible for OAS from 65 to 67. It would make far more sense, if the government is really interested in Canadians' retirement security, in allowing Canadians to properly plan for their retirement, to reverse the changes to the eligibility age for OAS and, just as the NDP leader has done, make a commitment to the NDP plan to expand the guaranteed Canada/Quebec pension plan by phasing in an affordable doubling of benefits.
This plan has been called for by provinces across the country. It would allow Canadians both the ability to plan for their retirement and a guaranteed income to ensure they can retire with dignity. Moreover, the CPP is a much safer investment than market based private funds and consistently outperforms the market. Even business columnists, like the aforementioned Barrie McKenna of The Globe and Mail, pointed out the benefits of such a policy by stating:
And Ottawa could beef up the CPP, mandating Canadians sock away more money for retirement, while benefitting from the CPP's low costs.
However, so far, the government, and the Minister of Finance in particular, have not listened to this appeal for a real and proven way of ensuring Canadians can retire with dignity.
The problem is that the government seems to think that encouraging these skills is a suitable substitute for a proper regime of consumer protection, retirement security and a proper strategy for economic growth. The bill embodies the government's strategy, or lack of strategy, in addressing the issues that really matter to working and middle-class Canadians across the country.
I wonder why the creation of the financial literacy leader could not be included in the Financial System Review Act rather than being a stand-alone act? The Conservatives have no problem lumping together pieces of legislation that have no relationship to one another in omnibus budget bills but, apparently, a bill to amend the Financial Consumer Agency of Canada Act could not be included a system review of banking legislation. It appears to me that the only reason these did not go together was because the government hoped it could get some positive media out of this legislation, but who knows?
The NDP believes in real measures to protect consumers, seniors and low-income Canadians. My colleagues on this side of the House in the official opposition will continue to stand up for policies that really help hard-working Canadians. This is a small start, a very small step, and one which we will be supporting to send to the Senate in order to get the funds, which have already been allocated, out to the organizations that really need them.