Debates of March 1st, 2012

Financial Literacy Leader Act

[Tarik Brahmi, NDP, Saint-Jean, QC]

Mr. Speaker, I thank my colleague from Abitibi—Témiscamingue for her question. There is a problem in Quebec. The younger generation does not understand that previous generations had certain privileges, such as no tuition hikes. The younger generation is also asking for help to get out of this situation.

The NDP suggested increasing federal transfers to the provinces to help the provincial governments increase loans and bursaries. That was the principal measure in our platform, because the federal government cannot meddle in the provincial management of loans and bursaries.

[Ève Péclet, NDP, La Pointe-de-l'Île, QC]

Mr. Speaker, I would like my colleague to comment on two things. First, most government tax credits will not benefit those most in need. There is a disconnect. We are going to help people better understand the system and make good decisions. And yet, those most in need, those targeted by these measures, will not even be able to take advantage of tax credits. Their income is so low that they do not pay tax.

Would it not be smarter for the government to start by helping people find a job and pay taxes instead of spending public money to put together a group that is totally useless and whose recommendations will not even be put into action?

[Tarik Brahmi, NDP, Saint-Jean, QC]

Mr. Speaker, I want to thank the hon. member for La Pointe-de-l'Île. That is a very good question.

The non-refundable tax credits are just more smokescreens. Most of the time, non-refundable tax credits are used for making announcements so that the government can say it provides tax credits. That being said, as the hon. member pointed out so well, these tax credits do not benefit the people who need them the most.

For example, in the NDP platform, financial institutions would be required to lower their transaction fees, since we know that the cost of transactions is practically nil. The infrastructure carries a certain cost, but every individual or additional financial operation costs nothing. Those are indeed the measures that the NDP has proposed. They are concrete measures and not smokescreens, as my colleague was saying when she was talking about non-refundable tax credits.

[Mike Sullivan, NDP, York South—Weston, ON]

Mr. Speaker, I appreciate my colleague's comments on this apparent attempt at a bill. When I read it, I could not find anything captivating in it. However, having read the recommendations from the task force, I realized that the bill was smoke and mirrors to try to keep what we really need out of the legislative agenda of the government. What we really need are these recommendations.

A number of individuals in my riding could really use some financial literacy when it comes to their daily banking and their ability to exchange their cheques for money. We have payday loan companies that operate with a 1,000% interest but there is nothing in the bill that talks about how we would put those payday loan companies out of business, which is what we should be aiming at. We should be aiming at financial literacy in a way that helps the poorest of the poor in this country but the bill does none of that.

Would my colleague like to comment further on that?

[Tarik Brahmi, NDP, Saint-Jean, QC]

Mr. Speaker, it is absolutely absurd to try to teach consumers how to save money that they do not have in the first place. That is the problem with the bill. It contains no measures to help consumers save money and to get more money in their pockets. Teaching people to save money that they do not have is useless.

[Christine Moore, NDP, Abitibi—Témiscamingue, QC]

Mr. Speaker, another point in my colleague's speech that raises questions is that bilingualism is not a requirement for this new position. Since my colleague is bilingual, I would like to ask him his opinion on this. When a text is translated, a simple change in a modifier can completely change the meaning of the sentence. Financial documents are rather complex to understand.

If a person who does not speak French is analyzing a translated text or is trying to analyze a French text with only limited knowledge of the language, does this not pose the risk that the person will miss certain traps or aspects that are misleading to the consumer and that are found in the details?

[Tarik Brahmi, NDP, Saint-Jean, QC]

Mr. Speaker, my colleague is absolutely right. She identified one of the bill's major shortcomings: not only does it not require the financial literacy leader to be able to interpret very complex texts, it does not even require this person to have the vaguest idea of what the texts are about.

My colleague was absolutely right when she said that there can be subtleties in either language or in translation that might be missed by someone who understands just one of the two official languages.

[Jean Rousseau, NDP, Compton—Stanstead, QC]

Mr. Speaker, I would like to thank my colleague for his excellent speech.

In his opinion, how can a segment of the population be educated about a very complex subject when their main concerns are the business of day-to-day living, providing enough food for their families, and solving truly essential survival problems? The gap between rich and poor is getting bigger, and as we all know, the poor are always less well educated than those who are better off. So there is also a problem with access to education. There are some things that the government always forgets, and now it wants to educate a segment of the population with extremely complex legislation.

Someone in my riding told me that if he called the government, the person answering the phone would not even be able to explain the legislation and what he should do about it.

Can my colleague explain why the government is determined to introduce hastily conceived bills without even considering the people these bills are for?

[Tarik Brahmi, NDP, Saint-Jean, QC]

Mr. Speaker, my colleague from Compton—Stanstead hit the nail right on the head. It is right there in black and white in the OECD report entitled “Financial Literacy and Consumer Protection: Overlooked Aspects of the Crisis”: “...consumers have low levels of financial literacy and often overestimate their skills, knowledge and awareness when it comes to credit products.” That sums up the situation nicely.

Consumers are being asked to be their own doctor and their own neurosurgeon. Average consumers cannot be expected to make informed decisions about such complex subjects. It is up to the government to implement measures that restrain financial institutions and prevent them from developing products that, though innovative, are impossible to understand and can trap people, such as subprime mortgages.

[Raymond Côté, NDP, Beauport—Limoilou, QC]

Mr. Speaker, I am going to share my precious time with the hon. member for Vaudreuil-Soulanges. This is another one of the government's tactics. It wastes the precious time of the servants of the people of Canada by limiting debate. It is very important to fully debate the meaning and consequences of Bill C-28.

I would like to start with what I could call my conclusion. It is extraordinary and unbelievable to see this government's stubbornness and its unwavering willingness to completely abandon the people of Canada to the forces of the market or what we might call the market to use classic economics terms. The word “abandon” is not too strong.

Some government members—self-professed libertarians—convey what seems to be a respectful message by saying that they are going to lower taxes and give people back their money because they know how to spend it. However, in reality, they are abandoning and letting people down. People have to deal with their own problems and, if they are not able to watch their own backs, then too bad for them. They will freeze to death. The government will be subject to more and more attacks in this regard. If it refuses to pay attention to this type of message and warning, the anger will continue to grow. This government should beware because it is facing hard times ahead, and I will be there to remind it of its turpitude. The word “abandon” could just be an empty word that I am throwing around, but it is not. It is supported by facts.

I am not going to repeat the eloquent speeches that my colleagues made about Bill C-28's shortcomings and problems. Instead, I would like to illustrate my point in a different way.

It is absolutely unbelievable that this government, which created total chaos by handing over the reins to the large financial institutions—banks, insurance companies and all sorts of investment companies—has the audacity to tell people that it is going to appoint an official who will give them all the documentation available, whether or not they are literate and whether or not they have the ability to understand the complex financial products that exist today. It is absolutely unbelievable. I can say this because my statements are based on real and substantiated facts.

The government is talking out of both sides of its mouth. On one hand, it is running a marketing ploy—yet another one—and, on the other, the budget is coming. The government will likely continue to announce useless little tax measures that are unnecessarily complex and that most taxpayers are unable to understand let alone use.

A number of months ago, a poll showed that half of all Canadians do not prepare their tax return themselves because it is too complicated. Preparing one's tax return is a duty that is as essential and as basic as voting. This government has no qualms about treating that with contempt, but it throws up its hands in horror and gets indignant about the revelations, each one based in fact, about problems during the recent election. We could probably go back to the beginning of the 2000s and find all kinds of completely dirty electoral tricks.

One out of every two Canadians is not even able to fulfill a basic requirement, preparing his income tax return, by himself. He has to rely on a family member or friend or pay a professional to do it. There is something really scandalous in that. I know, because one of the greatest gifts my father gave me when I was growing up was to make me prepare my tax return myself, to make an effort as a Canadian to do it myself and to understand what it represented. Now that I have a reasonable idea of what to do—and I will not hide the fact that it is still a decent challenge—I still do them for people close to me.

If I did not fill out their tax returns for them for free—we are talking about people who really do not have a lot of money, who earn less than $20,000 a year—they would be paying a professional accountant $25 or $30 an hour to do it. They do not even have a high enough income to claim tax credits, like that darned public transit credit, for example. I know, I see it, I fill out their tax returns. It is a sham of a tax credit, it is totally useless, and it does absolutely nothing to help our cities develop their public transit systems. The people whose tax returns I fill out have nowhere near the resources to qualify for it.

This government is just laughing in the face of most Canadians. That is the reality. Bill C-28 is another insult to Canadians everywhere. I am as comfortable with it as I am watching hon. members with their noses stuck in their papers or their computers and pretending not to listen to me. It is really extraordinary. We are here debating the future of our fellow Canadians, debating the fact that they are going to be buried in documents, which they will only half understand. They will be the victims of all kinds of tricks. There is no need to go looking for very complex financial products.

I recently had to shop for a credit card that would give me additional benefits. In connection with that, an expert showed me that credit cards with points and bonus systems are an excellent trick to attract a clientele that will be eager to use the cards again and again, which then increases their level of spending. One explanation for the famous household debt in Canada is this type of credit card, and that is just one example. When we visit the website of any Canadian bank, not to mention the astronomical number of offers we get in our mailboxes for new and supposedly exceptional cards, we cannot help but notice the extraordinary number of cards offering all kinds of incredible advantages, with all kinds of different fees and totally different interest rates.

Even the experts can get confused. One of my colleagues talked about this and he is absolutely right. It is complicated. Given that the government does not put a cap on this type of bloat, which is completely useless and counterproductive, except for the institutions that benefit greatly from it, to the detriment of the most vulnerable, it is basically using Bill C-28 to tell the Canadian population to take a hike. It is truly outrageous.

I can no longer stand watching this government pose as the poor victim when it has a majority and, in addition, use every possible means to shut us up, when we are defending true Canadian values and all of our fellow citizens. The government should not be surprised if we systematically refuse, for all its bills, to be truly complicit in immoral and, ultimately, almost criminal actions.

Before I get carried away, I will leave it at that. I think I have made my point.

[Mike Sullivan, NDP, York South—Weston, ON]

Mr. Speaker, I listened to my colleague's comments which I found to be erudite, a word that maybe is known to members on the other side of the House.

As far as we can tell, this bill has not done the job that needs to be done for most Canadians. I am talking about Canadians who are not in the upper echelons of the 1%, shall we say. I am talking about people who may need some financial literacy but they are managing money that most of the people we represent could not dream of. The financial literacy that is necessary is not being provided.

There is no definition of what financial literacy is, for one thing. There is no indication of a mandate or what the goal of the individual would be. The person would spend a considerable sum of government money, we assume, because he or she is not going to work for nothing. The person would need an office and staff and may need some language training.

What is missing from this bill? What is it that we would be considering if we were to present this bill?

[Raymond Côté, NDP, Beauport—Limoilou, QC]

Mr. Speaker, I would like to thank the hon. member for his question and comments. Actually, he has really hit the nail on the head. From the outset, this bill introduces a position that does not have a really defined objective. The so-called financial literacy leader has no goal to achieve and no obligation to be accountable.

Those are basic principles that should be in any bill worthy of the name. The fact that the government introduced this type of bill is simply a joke.

Of course, I would like to tell the hon. member that the New Democratic Party has no greater duty than to say that it agrees and that something of the kind can always be considered. However, before planning to create a new position, we would look at what is already in place. And let me point out that there is already an organization that takes care of financial literacy.

If we ever needed something else, we would set goals, but we would first look at what is already up and running, what are the strengths and weaknesses, in order to support what is being done right now. There are resources already available and the government chooses to ignore them.

[Claude Gravelle, NDP, Nickel Belt, ON]

Mr. Speaker, I have examined the bill several times. The only thing I see is that it will give one person a job, but it will not help people generally.

I would like to know if my colleague can see how this bill will help ordinary Canadians.

[Raymond Côté, NDP, Beauport—Limoilou, QC]

Mr. Speaker, I thank my hon. colleague from Nickel Belt, because that is a very pertinent question. He would not believe how pertinent it is.

In addition to creating a somewhat phoney position—perhaps my interpretation is a bit harsh; I will let God be the judge of that—I think the main objective of this bill is to serve the government's fondness for self-promotion. The bill is so devoid of any substance that, apart from forming the foundation of a marketing ploy, like other monumental projects the government has developed for its own self-glorification, I really do not see how this could help ordinary Canadians in any way. That is what is utterly shameful. The government is going to waste public money not only to create the position, but also, no doubt, to launch a multi-million dollar ad campaign to tell us how wonderful the government is for creating this position, which will basically be useless.

[Jamie Nicholls, NDP, Vaudreuil—Soulanges, QC]

Mr. Speaker, I will start off by looking at the problems the national task force on financial literacy had from the very beginning.

First, it was headed by a former banker. I have nothing against bankers. My mother was a banker. She worked as a bank manager for the Bank of Montreal for over 35 years. She worked in human resources. I had an aunt who worked for the Bank of Montreal for the same period of time. My mom's friends worked for a bank. I am familiar with bankers and I have no problem with them.

The raison d'être of bankers is to market financial products. I know this because I lived in a banking family. Bankers sell financial products. There are certain marketing seasons when they sell RRSPs or different financial products. They have quotas. There are things that they have to sell. They are salespeople. That is their raison d'être. Often the financial products that they sell to consumers increase the profits of their institutions.

That is not a balanced way to start a group dedicated to the idea of financial literacy. It is similar to putting McDonald's in charge of nutrition policies. It is not a balanced way to do things.

Members know as well as I do that consumers sometimes get burned by financial products because they do not quite understand them. A case in point is the RESP.

I want to make a transparent declaration to the House. When I was in my early thirties and took out an RESP for my daughter, I did not quite understand what I was getting into. The marketing material made it look like I could squirrel away money for my daughter and by the time she was 18 there would be enough money for her university education. I was conscious of the fact that when she did reach university age it would be quite expensive to put her through post-secondary education with the rising costs of education and the rising costs of living. I was really scared and I wanted to find a financial product that would allow me to pay for her education without any worries.

What I did not know was that I could lose that money easily. Call me a fool, but I did not know that the RESP would lose so much money when the market took a dive. My mother the banker did not tell me that fact either until I had lost half the value during the downturn in 2008. There was $12,000 in that plan and it went down to about $5,000 or $6,000. I worked hard to put that money aside. I believed that I was doing the right thing. The bank told me I was doing the right thing. The government told me I was doing the right thing. I believed them.

What we need in terms of financial literacy is somebody who will tell the people of Canada the whole truth, not just the marketing truth.

The Minister of Finance denied that we were in a downturn until the very end of 2008, but I felt it much earlier. I remember the government initiatives to boost people's contributions to RESPs in 2006 and 2007. There was quite a marketing drive by the banks and government. They were telling people to put their money into RESPs so that their kids could go to school.

I am sure people will say that I was a fool not to know how it worked before I put my money in the RESP. With raising a child, working full-time, taking care of my family, I did not have the time to sit down and look at what the RESP was about. It was never taught to me in high school. It was never taught to me in university. I was to teach myself from the bank's own marketing products and from the government literature. None of those things told me that I could lose my money just like that.

I know I am not alone in that. I know there are plenty of Canadians out there who have gone through similar experiences to me. Therefore, as much as we might say that I am a fool, if I am a fool, thousands of Canadians are fools. They need help understanding these financial products.

Francophones may find it even more difficult to learn about these financial products through this group because bilingualism is not a requirement for the position of financial literacy leader. Obviously, what the government wants to do is create a single consumer protection agency. However, that is not really within the purview of this bill. Consumer protection is not really included in the bill.

Instead, I would like to talk about one of the greatest problems for Canadians: savings.

If we are looking at the issue of financial literacy, I must agree with my colleague in the third party who said that the financial leader of the government was not quite literate, because we have serious problems. One of those serious problems is the savings of Canadians and it is one of the things that is effecting the competitiveness of our economy.

The former governor of the Bank of Canada said, in a report quite a while ago, that Canadians needed to save more. He said that they needed to save between 10% and 21% of their pre-tax income each year and that they needed to save consistently for 35 years to have comfortable retirement incomes.

According to a report prepared by the C.D. Howe Institute, which is not exactly a socialist organization, people who earn between $42,000 a year and $150,000 a year need to save between 11% and 21%.

What I see in Bill C-28 is the creation of a group that will try to market financial products, like credit cards, RRSPs and RESPs, without fully explaining what those products do or explaining it in a way that will promote those products to promote the profits of those institutions and banks. I do not think that is the way to teach Canadians how to be financially literate. We need to find a way for Canadians to save more money.

The Conference Board of Canada, looking at the World Economic Forum's 2011 report on competitiveness, said that Canada's macroeconomic environment rankings were weak. It said that a number of fiscal pressures were restricting Canada's economy from achieving its full potential. For example, Canada ranked 80th in terms of its gross national savings as a percentage of GDP and a lowly 129th out of 142 countries in terms of its overall government debt levels as a percentage of GDP.

It is clear that we need to help Canadians become financially literate but that starts with telling them to save more and finding efficient ways for them to save without marketing these financial products to them. I do not think the task force would be able to sufficiently explain these financial products to Canadians when it is obvious that the composition of the board would be compromised in that it would not be necessary for the head of the task force to be bilingual.

I have problems with the bill. I do not think it would do what the government states it would do, which is increase financial literacy. We need to take a serious look at how we can actually improve the financial literacy of Canadians. Looking at the statistics, I can see that we have a long way to go.

[Laurie Hawn, Conservative, Edmonton Centre, AB]

Mr. Speaker, my colleague said something toward the end of his speech, which I hope I did not hear correctly. Was the member saying that the financial literacy leader and his or her office would be marketing and selling products to Canadians?

Clearly, that is ridiculous. That is not the job or the mandate of that person or that office. That is done by financial institutions, by people who have the expertise. He explained that he had some problems with his RESP, which is too bad, but, having been in the business for a number of years, a good financial advisor is essential.

Could the member clarify whether he thinks that this office would actually be marketing and selling products?

[Jamie Nicholls, NDP, Vaudreuil—Soulanges, QC]

Mr. Speaker, no. What I was implying was that, because of the composition of the working group being mostly former bankers, having their raison d'être for their careers the marketing of financial products, they would be amenable to not fully explaining these products.

I was not implying that they would be selling these products. However, they will have done that in their careers, that will be what they know and it will not be in their interests to steer Canadians away from products that might not give the results their former institutions promised in the past.

[Claude Gravelle, NDP, Nickel Belt, ON]

Mr. Speaker, I commend my colleague from Vaudreuil—Soulanges for his excellent speech. During his speech he mentioned the word “fool” a couple of times. I certainly would not call him a fool but I would call this bill a foolish bill.

He also talked about poverty and about trying to save for RRSPs. I know that is very difficult. I know a lot of seniors are living in poverty right now because when they were raising their kids they could not put money aside for their retirement.

Would it not have been a better idea if the government had invested in the Canada-Quebec pension plan to help people, especially seniors, who are living in poverty?

[Jamie Nicholls, NDP, Vaudreuil—Soulanges, QC]

Mr. Speaker, I do believe that if we were to invest more in our CPP and QPP, if we were to beef that up, Canadians would find more money at the end of their careers when they retire.

I mentioned that my mother worked for over 30 years for the Bank of Montreal and believed in all the financial products that she sold. She was quite a fan. However, in her retirement now, I am helping her out with the day to day, simply because she could not save enough money during her career, even with all the financial products that she used, for her retirement.

[Raymond Côté, NDP, Beauport—Limoilou, QC]

Mr. Speaker, I congratulate my colleague from Vaudreuil-Soulanges for making his speech very relevant. I would also like to reassure him right away. Although he had an unfortunate experience with his RESP, he is not less intelligent than the average person. Mr. Rousseau, the former CEO of the Caisse de dépôt et placement du Québec and a former CEO of the Laurentian Bank, also admitted that he does not understand the ultra-sophisticated savings products that led to the 2008 crisis.

Now the government is introducing a defined contribution pension plan, which also has pitfalls similar to those of the product central to my colleague's unfortunate experience. What does he think of the government's ability to assess financial literacy? Is it qualified to do so?

[Jamie Nicholls, NDP, Vaudreuil—Soulanges, QC]

Mr. Speaker, I thank the member for the question. When I spoke candidly, I heard someone on the government side say that they could see why I had lost my money. That says a lot about the government's attitude. It is saying that if we lose our money and are poor, it is our own fault. The government will carry on with its agenda. It will make one group of people rich and not care about the rest. That is completely unacceptable. We must protect both the poor and the rich of this country.

[The Acting Speaker, Conservative, Barry Devolin]

Resuming debate. The hon. member for Abitibi—Témiscamingue has six minutes remaining.

[Christine Moore, NDP, Abitibi—Témiscamingue, QC]

Mr. Speaker, we cannot talk about this bill without a clear understanding of what happened in the beginning. In budget 2009, the Minister of Finance created a national task force that was mandated to provide the minister with advice on the issue of financial literacy. So the group went to work. It was made up of various stakeholders from different sectors, including workers, volunteers and teachers, as well as people from the business and financial sectors.

The task force submitted a report containing 30 recommendations. One recommendation was to create the position of financial literacy leader. This bill completely disregards all the other recommendations. To me, that does not make any sense. The report gave 30 recommendations and the government adopted only one of them.

Furthermore, this bill could have described very concrete measures. For instance, one of the recommendations was this:

The task force recommends that the Government of Canada, as part of the 2011–12 renewal of its urban aboriginal strategy...make financial literacy training programs for young aboriginal Canadians eligible for funding.

This could have been a concrete recommendation in terms of financial literacy and it could have helped. We all know that aboriginal youth and aboriginal communities have problems stemming from poverty.

Often, one of the problems, when we talk about financial literacy, is that they do not understand the terms accurately. If someone needs to buy a car and does not understand the actual terms of their loan, they go into debt and go bankrupt. If they use a credit card to buy food, but they do not have a good grasp on financial literacy, they have the impression they are paying 10% interest when really it is 28%, because sometimes the advertising is hard to understand. I think help is not being given.

So this is a community that could have been targeted for this. The task force also recommended that the government of Canada provide recent immigrants with financial information and education services tailored to their needs, as part of the orientation services offered both abroad and in Canada by the Immigrant Settlement and Adaptation Program and the language instruction for newcomers to Canada. So this is another group that could have been targeted, but that has absolutely ignored. Those recommendations are not taken into account in the bill.

Some of these immigrants are coming from countries like Africa where, and I apologize for the expression, about 1% of the population has a credit card and a debit card and where bartering is still done with food and that sort of thing. They also use cash, but they still use the barter system. They find themselves in Canada, with a system that involves handling a mountain of paperwork and where they may not understand the language very well. They may not have a significant level of education, and they find themselves in this kind of system and having to manage to understand. They have to understand an income tax system, which is entirely new to them.

The government is choosing to target only the financial literacy leader, instead of applying a recommendation like that one, which could have been more concrete. I do not understand the priorities; it is impossible to understand. When they have 30 excellent recommendations and they choose not to pay attention to them, that seems to me to be rather unusual.

The possibility was also recommended of working side-by-side with provincial and territorial governments in order to provide teachers with the tools they need to teach financial literacy to children and to their students. If financial literacy is taught gradually and in a language that is familiar to children, teenagers, college and university students, there is a chance that they will understand it. That could, therefore, be the way forward. It could facilitate a beneficial exchange between provinces, so that teachers are able to teach the material and have the tools they need at their disposal, instead of having to invent them. That was another recommendation.

It was also recommended that employers be able to offer financial literacy training, so that their employees fully understand, for example, their pension programs and the importance of investing in an RRSP. But this recommendation has not been followed. That strikes me as incomprehensible. In my opinion, budgets and key recommendations should have been the focus of this bill.

Granted, the bill creates the position of financial literacy leader, but it is just as essential ti implement the key recommendations, and it is crucial, as of now, to take into account these recommendations, and that things do not drag on. Otherwise, the work of the task force will largely fall short of its objective.

In my opinion, this smacks of a lack of logic and a failure to adequately prioritize. Positions should not be created without prior knowledge of the objectives, without knowing how to proceed, and what the priorities are for implementation. There needs to be some direction when that kind of position is created, otherwise it is tantamount to sending a cheque to a senior official who is acting rudderlessly.

[The Acting Speaker, Conservative, Barry Devolin]

It being 5:30 p.m., the House will now proceed to the consideration of private members' business as listed on today's order paper.

The House resumed from December 2 consideration of the motion that Bill C-312, An Act to amend the Constitution Act, 1867 (democratic representation), be read the second time and referred to a committee.