Mr. Speaker, I am pleased to take part in this debate today on Motion No. 269 brought forward by my hon. colleague from Edmonton—Leduc on financial literacy.
I will read the five components in the motion that my colleague is recommending:
--the government should help improve financial literacy in Canada by: (a) working to implement the recommendations of the task force on financial literacy: (a) creating, promoting, and continuously upgrade a single source website for financial literacy to increase public awareness and ease access to information for Canadians; (c) requiring federally regulated financial institutions to publicly disclose their contributions to financial literacy initiatives; (d) ensuring the Financial Consumer Agency of Canada works with willing provinces and territories to promote financial literacy to youth through the educational system; and (e) designating November as financial literacy month.
Those are all worthwhile objectives generally because there are things to be concerned about, whether it is helping Canadians pay for their education these days, which is getting more difficult as we see young people struggling with the higher cost of tuition let alone the cost of living as a student, or whether it is people who are trying to buy a house, manage their debt or save for retirement. There is a clear need for greater financial literacy in Canada.
All of us I am sure can think of times in our lives when we would have benefited from a better understanding of how things work in finances, such as understanding how to budget, how a mortgage works and how interest is calculated.
When I was practising real estate law, I found that people often did not understand the rules if they wanted to prepay a mortgage. If they were in a position at some point during the term of the mortgage to pay part of it down early or pay it all off, they did not know the rules ahead of time unless they were explained to them. I always took time to tell them what rules in the mortgage document would apply to them and the penalties that would need to be paid by them if interest rates had gone up between the time they signed the mortgage and received their loan and the time they were trying to pay it off. From the bank or lender's point of view, it would lose money because it would need to lend that money out at a lower rate and, therefore, would charge a penalty. People did not always understand that going into a mortgage. That is just one small example of why people need to understand financial rules.
Financial literacy is a vital component for our consumer protection regime. I would agree that the federal government should be taking leadership and working closely with the provinces and territories to improve financial literacy, especially among young Canadians.
It is important to note that what we are talking about here is a matter of education, a matter primarily within the responsibility of the provinces. In a sense, it is an odd issue for a member to bring a motion on. On the other hand, I am interested and pleased to have the chance to debate this issue as we are all concerned about what is happening with Canadians' finances, with their high debt loads, which I will talk about more in a moment.
There is, among other things, a growing need for credit counselling services across the country. That is unfortunate because it is often the people with high debt loads who have difficulty managing them.
The reality is that, under the Conservative government, household debt has soared to record levels. The debt of the Government of Canada has also soared. The Conservative government ought to learn some financial literacy itself when we consider that it inherited a $13 billion surplus and, by April and May of 2008, about six months before the recession began, the government had put Canada back into deficit, which is a shocking fact. There is certainly a need for the Minister of Finance and others on that side of the House to learn some financial literacy.
A new record was set for household debt in the third quarter of last year. The average Canadian now owes $1.51 for every dollar of annual income. That is a worrisome figure when we consider how much that has gone up in recent years. However, the measures proposed in my hon. colleague's motion are only the first steps in promoting greater financial literacy across the country.
When we think of literacy and education, there has to be a strong base for whatever kind of literacy we are talking about. That is why the Government of Canada ought to be investing in affordable early childhood education and in adult literacy programs.
For example, Senator Joyce Fairbairn has throughout her time in Ottawa been a very strong advocate for literacy programs across the country. I think back to several years ago when the Conservative government made substantial cuts. It gouged out a lot of funding from literacy groups across the country. That was a very short-sighted and unfortunate thing to do. Early childhood education is really important for our future. We know that children who get a head start, learning their ABCs and their 123s before the age of five, have a huge advantage. The records of people who have had that experience show they are far less likely to get into trouble with the law and far more likely to have a job throughout their lives because they had that good, strong head start.
We need to create a culture of lifelong learning. All of us can benefit from learning on an ongoing basis, of course. However, we have to make sure that all Canadians have the skills to manage their finances. There is a role that, with the provincial governments, can be played.
The government must also help people save for retirement. That is certainly a federal responsibility. It is surprising that older Canadians have been growing their debt loads at a considerably faster rate than younger Canadians. That is not what we would expect. We would think that those of us, say over the age of 50, would be less likely to be growing debt levels. This is an indication of how difficult people are finding it these days to prepare for retirement. It is very worrisome that older Canadians are growing their debt much faster than younger Canadians. What does that mean in the next 30 years when they are heading toward retirement age and the government is talking about increasing the age for the old age supplement and the guaranteed income supplement? It is very disturbing that people are having a tough time and yet the government is saying it is not going to help them.
We know, for example, that 50% of the people who receive OAS are making less than $25,000 a year. In fact, 40% of them earn less than $20,000 a year. These are not people who are well off. These people really need the help. To make them wait two more years is unconscionable. It is certainly not good for the future of the country.
In Canada, the average debt load in the past 10 years has increased twice as fast as income. That is a scary thought. However, the rate is three times as fast for older Canadians. Many older Canadians simply cannot afford to retire. They need all the help they can get. That is why the Liberal Party has proposed a voluntary supplemental Canada pension plan that would give Canadians access to a low cost, well diversified financial opportunity. I hope that members can see the advantage of doing that. People would feel much more comfortable knowing that they can have those retirement funds managed by the Canada Pension Plan Investment Board, by people who have real expertise and great knowledge of the investment world, which is a mysterious place for many people.
The Conservative government has missed an opportunity. It failed to follow up on the report of the financial literacy task force in the last two budgets. It failed to protect consumers with the voluntary code of conduct the Minister of Finance negotiated with the credit card issuers and the banks behind closed doors. There is real room for improvement there.
It concerns me that I heard the Royal Bank and the Toronto-Dominion Bank are planning to withdraw from the services of the banking ombudsman. Considering that that institution is already just a voluntary one, and not binding on the banks, to think that they are actually going to withdraw from that is very disturbing. I would hope they would reconsider that decision.