Barry Campbell

[Business Of The House, March 18th, 1997]

Mr. Speaker, in spite of the tired rhetoric, flawed logic, incorrect facts and the insults to the millions of Canadians who are employed in jobs that are not McJobs, I am going to answer this question as I have been asked to do. I might point out in beginning my response that in my city of Toronto 70,000 people work for the banks.

The government is delighted with the low rate of unemployment in Saskatchewan. I applaud the Saskatchewan government's partnership approach to developing the economy. Successful as that government's programs have been, we must recognize that other factors have played a substantial role in Saskatchewan's low unemployment rate. Bumper grain crops and strong grain markets have been an important part of the province's success this year. Furthermore, Saskatchewan has historically been blessed with one of the lowest unemployment rates in the country.

Like the Government of Saskatchewan, this government believes it is only through team efforts that we can harness the financial resources and the knowledge needed to implement effective strategies for continuing growth. That is why partnership is also a key part of the federal government jobs and growth strategy. The strategy has three main elements.

The first is to set the appropriate macro-economic conditions. This has been done by setting and achieving inflation control targets and meeting and exceeding those targets. The pay-off is evident in the dramatic declines in interest rates to levels no one thought possible even a year ago. Even in the hon. member's province, he will know that mortgage rates, car loan rates, small business rates, are substantially less than they were when we took

office in 1993. Those are real savings, real dollars back in the pockets of his province.

Second, the government is also helping the private sector to create jobs in the near term to bridge the gap to stronger growth and the full impact of lower interest rates take effect. We have extended the Canada infrastructure works program, a program that involves partnerships between all levels of government and the private sector. We have reduced the EI premium to $2.90 in 1997, the third successive decrease in as many years and we will reduce it to $2.80 in 1998.

We also introduced a new hires program, giving EI premium relief to small firms that create new jobs in 1997-98. We have extended the residential rehabilitation assistance program for another year. We are increasing support for tourism and youth employment in partnership with the private sector. All of these things benefit the people of his province.

Third, we have made strategic investment in new technology, worker's skills, labour market social reforms to increase employment opportunities for Canadians. The government is the first to admit that unemployment is too high. While no one can be satisfied with the pace but progress recently is important to recognize. We are making substantial progress.

[An Act To Amend Certain Laws Relating To Financial Institutions, March 17th, 1997]

Madam Speaker, I find myself in the rather awkward position of thinking that we had heard the last from the member for Capilano-Howe Sound last week and standing up to thank him on that occasion for his even-handedness in giving credit where credit is due. Now to my great chagrin I see that he will not stay dead and I am going to have to put a stake through his heart once more.

I did mean what I said last week about him doing politics a little differently but today his colleagues seem to have got to him. I think he has been a little unfair in his comments today.

There are two targets that matter, the targets for reducing the deficit and reducing overall program spending. We are on target for both. In fact, we are doing better than we projected for both. There has been no increase in program spending as today's article that the hon. member referred to claims.

Projected program spending would amount to $106 billion in 1997-98 and $105 billion in 1998-99. With program review the 1997 budget forecast program spending was revised downwards, as the member knows. As with our deficit reduction targets we are ahead of our original projections.

I will use this time to say that. It is in the nature of a comment because I care not to ask him a question.

[An Act To Amend Certain Laws Relating To Financial Institutions, March 17th, 1997]

Mr. Speaker, I am sorry if I offended the hon. member opposite. He has not done his homework by his own admission. When I rise to ask questions on questions and comments I have usually read the sections I am asking about, read the press releases properly, and know generally what I am talking about.

The foreign branching regime will be the subject of additional legislation in place by the end of this year. It is not in the bill. The press release makes that perfectly clear. That was his first question.

His second question was on our banks abroad. I answered it.

His third question was on tied selling. I am tempted, as lawyers say in court sometimes, to respond to all three questions by saying asked and answered.

Specifically on tied selling, we have proposed a change in the law with respect to coercive tied selling in direct response to the testimony we had. We would welcome the member's input at the finance committee on what he thinks should be done.

[An Act To Amend Certain Laws Relating To Financial Institutions, March 17th, 1997]

Mr. Speaker, I regret, because I have great regard for the member opposite, that he has it wrong. The bill does not allow foreign branching. There was an announcement at the time the bill was introduced that a foreign branching regime would be put in place by the end of the year. However, a great deal of study needed to be done about many features of the foreign branching proposal. He is not quite right on that, but he makes an important point about how that will enhance competition in certain sectors.

He is right, there is a flip side to that, which is the position of Canadian banks abroad. I can assure the member opposite that the government would not have taken the step of announcing the possibility of direct branching, as opposed to the current regime, unless it was assured that in those major jurisdictions where Canadian banks operate, namely the United States and Europe, they were gaining additional access.

If he talked to bankers today he would learn that the doors have been increasingly opening south of the border to allow greater expansion for Canadians doing business there. Recent changes, particularly under their securities acts, have made that an even more hospitable environment than just a few weeks or months ago.

I am glad the member asked the question because it gives me a chance to reinforce something which I said in French and will now say in English, that is, the establishment of the task force on the future of the financial services sector. That task force, which is under way and will report to the minister roughly 18 months hence, will address the very question of what the shape of the sector should look like, both to ensure that our institutions can be competitive internationally and to serve the needs of Canadian consumers.

That brings me to the last point, which dealt with tied selling and cross selling. I agree with the member opposite that there are a lot of terms involved which can be quite confusing. As a former competition lawyer I can tell him that it is a very interesting but complex field.

If he was concerned, as he asserts, about the ability of banks to grow and compete internationally, then I invite him, when the finance committee studies further this issue, to read up on it, do a bit of work on it, talk to people who know something about the field and share his views with the committee.

[An Act To Amend Certain Laws Relating To Financial Institutions, March 17th, 1997]

Mr. Speaker, it is a great pleasure for me to start the second reading debate on Bill C-82.

This legislation proposes important measures to better protect consumers of financial services, to lighten the regulatory burden of financial institutions, and to define some of the provisions in the legislation affecting these institutions.

These measures are the results of a thorough consideration process and of widespread consultations. Therefore, I would like to take advantage of this opportunity to thank, on behalf of the government, the many consumer groups, industry members and other stakeholders who shared their opinions with us.

I want also to mention the very helpful participation of the House of Commons Standing Committee on Finance and of the Senate Committee on Banking, Trade and Commerce.

Canada has one of the strongest financial systems in the world, a system that is effective, efficient and stable. It strikes a balance between our financial institutions' competitiveness and their stability. We want this to continue. That is why the Canadian government is keeping a close eye on the evolution of the financial sector and considering ways of evaluating the system.

In 1992, we eliminated a large number of restrictions that prevented financial institutions from freely competing with each other. The consensus seems to be that these changes had a positive effect. When the 1992 bill to amend the legislation on financial institutions was passed, it was agreed that the legislative framework would be reviewed five years later. That is why the legislation contained provisions calling for a review in 1997. We embarked on this legislative review with two objectives in mind: to determine whether the measures adopted in 1992 had yielded the desired results and to see whether the legislative framework was still appropriate in view of the financial sector's evolution.

Following extensive consultations and in-depth analysis, the government came to the conclusion that the framework put in place in 1992 was working well in general and that its main components had to be maintained. The majority of stakeholders agree with this evaluation. However, we believe it is possible to make a number of

major changes to give consumers better protection and to bring the legislation more in line with the new realities of the markets.

Let me now turn to the specifics of these adjustments. They involve amendments to statutes governing financial institutions and related acts, including the Bank Act, the Co-operative Credit Associations Act, the Insurance Companies Act, the Trust and Loan Companies Act, the Canada Deposit Insurance Corporation Act and the Canada Payments Association Act.

Several of the proposed adjustments are aimed at strengthening consumer protection. Relationships between financial institutions and their clients are in constant evolution and regulation needs to reflect this changing environment.

The bill proposes a number of amendments to improve protection for consumers in their dealings with financial institutions. The first of these changes involves privacy. The protection of personal information is an area of growing concern to consumers. Accordingly, the bill provides the authority to require financial institutions to establish procedures governing the collection, retention, use and disclosure of customer information, to implement complaints handling procedures and to report annually on complaints. Regulations will be passed to implement these requirements.

The bill also proposes to enhance cost of credit disclosure provisions in the financial institutions statutes following the recent federal-provincial agreement on harmonization of disclosure requirements. These changes will result in improved and uniform disclosure practices throughout the country.

Another matter the government will address is tied selling. The matter is a complex issue and, indeed, members opposite have been talking about it for a few minutes and should hear the reply.

Tied sales can be beneficial in many situations where a consumer pays less for one product if he or she purchases a second product. However, concerns have been expressed about the potential for financial institutions to exert undue pressure on consumers when selling financial products. In response, financial institutions will be asked to adopt a policy on tied selling and establish procedures for dealing with complaints in this area. While the government is confident that this is the best approach, we are prepared to go further if the need arises. The bill includes an amendment to Bank Act to prohibit coercive tied selling.

The Secretary of State for Financial Institutions issued a press release on February 14 which suggested that the government would proclaim this amendment if necessary. After additional consideration, the government is now prepared to set a specific date for proclaiming the amendment. We intend to bring it into force on September 30, 1998.

At the same time the government wants to provide an opportunity for the institutions to address the tied selling matter through the establishment of appropriate policies and procedures. Therefore, the government is requesting that, before the proclamation date, the House of Commons finance committee carry out a review. This review would assess the degree to which tied selling remains a problem and the extent to which financial institutions have responded to the challenge. It would also consider methods to differentiate between beneficial practices such as when discounts are offered for taking more than one service, something the hon. member for Calgary Centre did not want consumers to have the advantage of, and those forms of tied selling that might be anti-competitive. These matters would be reflected in regulations.

Consumers raised other issues during the 1997 review, including the difficulty many low income individuals face in getting access to basic financial services and the difficulty of comparing service charges across financial institutions. While the government is not proposing legislative changes in these areas, I am pleased to report that discussions with major financial institutions and consumer groups have resulted in concrete commitments to address these problems. I am confident that these commitments will result in significant improvements in access and information on service charges.

The government recognizes that to promote a proper climate for economic growth and jobs, we need to ensure regulatory requirements that are fair and necessary. The bill identifies several areas where the regulatory burden on financial institutions can and should be eased.

First, several rules governing the operations of foreign banks in Canada will be modified. These will streamline regulatory requirements and lower costs for foreign banks. In particular, the legislation removes the requirement for regulated foreign banks which own a schedule II bank to own other financial institution subsidiaries only through a schedule II bank. It also includes changes to ease regulatory requirements for near banks.

Near banks are entities that do not generally take deposits and are not regulated as banks in their home jurisdiction but provide banking type services. Approval requirements will be reduced for near banks in certain circumstances and near banks will be permitted to own non-bank financial institutions.

Another element of the bill that will reduce regulatory burden is deposit insurance opt-out for eligible institutions. Many banks in Canada specialize in serving wholesale customers whose deposits far exceed the amounts insurable by the Canada Deposit Insurance Corporation. Such institutions will be permitted to opt-out of Canada Deposit Insurance Corporation, CDIC coverage, provided they are not affiliated with another CDIC member. As a result they

will no longer have to fulfil the reporting requirements associated with CDIC membership. Banks serving retail customers are still required to be members of the deposit insurance program.

In addition, subsidiary requirements will be eased. Currently financial institutions can engage in certain types of business only through subsidiaries. To reduce operating costs the legislation will permit financial institutions to carry on both information processing and specialized financing activities in-house.

The bill also includes a number of changes to streamline the self-dealing regime. These involve streamlining the operations of the conduct review committee, narrowing the range of related parties and allowing subsidiaries of a federal financial institution to transact with each other.

Changes are also necessary to keep the financial institution statutes current with evolving trends. The bill proposes a number of changes in the area of corporate governance. Although the corporate governance provisions were updated in 1992 and are generally considered to be working well, changes are needed to keep the legislation in tune with evolving standards. The bill proposes measures to update and improve corporate governance procedures, including clarifying the duty of the audit committee and enhancing policy holders' rights.

Regulatory adjustments will also be made to provide more flexibility to financial institutions seeking to enter into joint venture agreements. The requirement that the eligible joint venture be controlled by a financial institution will be removed. These adjustments will enhance the ability of financial institutions to compete both in Canada and abroad.

The legislation includes a number of amendments to enhance access to capital for mutual insurance companies. They will be permitted to issue participating shares. In addition, the demutualization regime will be extended to apply to all mutual life companies and added flexibility will be provided. Large mutual insurance companies will be required to remain widely held after conversion to a stock company.

The Superintendent of Financial Institutions will have the authority to exempt companies on specific aspects of the demutualization regime on a case by case basis. The Minister of Finance will have the authority to exempt companies in financial distress from any aspect of the demutualization process. Details will be set out in regulations to be developed in consultation with industry participants over the coming months.

Bill C-82 also includes a number of amendments of a technical nature that are aimed at further streamlining the statutes governing financial institutions and the agencies that govern them.

Among the technical amendments are changes to the Bank of Canada Act to remove outdated impediments to certain activities of the bank. These include expanding the range of instruments that a bank may buy and sell in clarifying the ability of the bank to carry ancillary activities such as licensing anti-counterfeiting technology.

The bill also includes technical amendments to the Bank Act, the Co-operative Credit Associations Act, the Insurance Companies Act, the Trust and Loan Companies Act, the Canada Deposit Insurance Corporation Act, the Office of the Superintendent of Financial Institutions Act and consequential amendments to the Winding-Up and Restructuring Act and the Greenshield (Canada) Act.

The financial services sector is in constant evolution. It is absolutely necessary to update constantly the regulations governing this important sector of our economy to reflect the various changes that occur.

Even though it is agreed that the system works well in general, as I said earlier, it will be improved immediately through the bill before you. We are still focused on the future. That is why we have established a task force on the future of the Canadian financial services sector. The task force will be responsible for advising the government on the appropriate framework for the financial sector in the 21st century, a framework that will promote economic growth and job creation.

We have also undertaken a review of the payment system. Moreover, we are reviewing the access rules for foreign banks, which will lead to a system for establishing branches. Legislative proposals on this subject will be made public by the end of the year.

We have to approach tomorrow's challenges intelligently, but the same applies to the changes before us today. This is an important bill for many Canadians and I urge the House to adopt it as quickly as possible.

[An Act To Amend Certain Laws Relating To Financial Institutions, March 17th, 1997]

Mr. Speaker, I guess for some of the members opposite math is difficult.

The hon. member for Calgary Centre has carried on in a diatribe about his not being permitted to finish the last four minutes of his speech on the previous bill. I am sure which all members look forward to hearing from him on Bill C-70 when it is taken up again.

I want to point out, because he has harped on this, that in the Thursday question the House was informed that the government would commence consideration of Bill C-82 with respect to financial institutions no later than 3 p.m. today, Monday and that is exactly what we did.

[Excise Tax Act, March 17th, 1997]

Mr. Speaker, a point of order. You have been trying to clarify that amendment which comes from a party that promises to practise politics differently.

Can the Chair or the Reform members clarify whether the amendment would have the effect of denying the benefits of harmonization to Atlantic Canada because one province does not have a sales tax and it calls for-

[Excise Tax Act, March 17th, 1997]

Mr. Speaker, I rise once again in support of Bill C-70. My remarks today will focus on an amendment that was adopted in the other place last week.

As hon. members will recall from earlier debates in the House, the purpose of Bill C-70 is to implement the harmonized sales tax in the provinces of Nova Scotia, New Brunswick, Newfoundland and Labrador. As of April 1, 1997 the harmonized tax will replace the GST and provincial retail sales taxes in those provinces.

This legislation also proposes over 100 technical amendments to the Excise Tax Act. These technical improvements will apply not only to the harmonized sales tax, but also to the GST in the rest of Canada.

A key element of the legislation that was debated by the House a few weeks ago is tax included pricing. This is the feature of Bill C-70 that the hon. senators propose to amend. Specifically, the proposal is to delay tax included pricing until such time as provinces with sales taxes that comprise at least 51 per cent of Canada's population have harmonized or otherwise adopted tax included pricing.

To repeat, the proposal is to delay tax included pricing until such time as provinces with sales taxes and that comprise at least 51 per cent of Canada's population have harmonized or have otherwise adopted tax included pricing.

I would like to make two points concerning this development.

First, in every other respect the proposed legislation that is the subject of today's debate is identical to the legislation that was passed by the House on February 11. The postponement of tax included pricing is the only change on which the hon. members will be asked to vote.

Second, the government continues to recognize the importance of tax included pricing. As I have said many times, consumers want tax included pricing. This is a policy to which the government remains committed. As more provinces harmonize in the future, we will welcome tax included pricing as the solution to the annoyance, the inconvenience and the frustration that consumers now experience at the cash checkout every day.

I would now like to explain the practical considerations that govern our approach today.

Essentially, opposition senators on the banking, trade and commerce committee gave us a choice: either postpone tax included pricing or delay passage of the bill beyond the April 1 implementation date.

Speaking for the Progressive Conservative Party, Senator Angus stated emphatically that if the pricing requirements remained in the

bill, it would not see the light of day by April. He said in no uncertain terms that his party would delay the bill regardless of the chaos and confusion that such a delay would entail for businesses and everyone else that are gearing up for harmonization to come into effect 15 days from now.

Given the potential for chaos, and given the fundamental economic benefits that harmonization will bring to the Atlantic economy, the risk of missing the April 1 deadline is a risk the government is not prepared to take.

In the course of the banking, trade and commerce committee's recent hearings on the legislation, witness after witness spoke of the real and immediate advantages of the HST. The Atlantic Provinces Economic Council argued that the harmonized sales tax will make Atlantic Canada more competitive by ridding their economy of embedded sales taxes and by bringing the relatively high sales tax rates into line with those of other provinces. They see it as a way to reduce costs for businesses and stimulate consumer spending.

The government and its provincial counterparts also see harmonization as a way to reduce administrative costs. These and many other points were eloquently endorsed by the finance ministers of the participating provinces. All three ministers took the time to appear before the Senate committee.

No matter how it is looked at, this is legislation that will work to the benefit of Newfoundlanders, Nova Scotians and New Brunswickers. That is a point these ministers came to Ottawa to make in the face of criticism from opposition parties that think they know better and that want to tell that region of the country what it should or should not do.

On balance, the gains in this legislation outweigh the postponement of tax included pricing. We accept Bill C-70 in its amended form because of the long term economic benefits it will bring to the Atlantic region.

A more immediate consideration is that April 1 is fast approaching and we must ensure the transition to a harmonized sales tax does not cause disruption and confusion for businesses and consumers.

From the time the House of Commons Standing Committee on Finance began studying options for replacing the GST three years ago, the goal of an orderly transition has been a guiding principle in developing the harmonization model that is before us today.

In its current form, Bill C-70 contains several features that will contribute to a smooth transition. The harmonized tax will have the same tax base and same basic operating rules as the GST. There will be no requirement for GST registrants to obtain new registration numbers. Most businesses already know and understand the rules for applying the GST and for claiming input tax credits. These rules will continue to apply under the harmonized sales tax.

The Atlantic business community needs certainty, a smooth and orderly transition to the harmonized system. The importance of a smooth transition is not lost on lawmakers in those provinces or on us in the House, for they have given their respective harmonization bills swift passage, something we are anxious to do as well. It is now time for hon. members to do likewise by supporting the proposed amendment to Bill C-70.

[Finance, March 7th, 1997]

Mr. Speaker, now I have a conundrum. If I can read between the lines the hon. member is saying that we should never look at a program over time and decide whether or not it should be changed.

We have done that with the provinces. It is the responsible thing to do. Canadians told us to make sure the Canada pension plan was

there for them when they retired and that if it required adjustment we should have the courage and the fortitude to provide the leadership to do it. We have done it.

[Finance, March 7th, 1997]

Mr. Speaker, not surprisingly the member opposite continues to confuse a number of different things.

Under the government payroll taxes have been reduced. UI premiums have been reduced significantly putting $1.7 billion back into the economy.

When he tries to roll in the CPP package it is really quite incredible. Canadians will not be fooled. What is going on with the CPP is a serious attempt, in conjunction with the provincial governments, to make that program sustainable so that it will be there for those who are retired and for those who will be retiring in the future. It is not killing jobs. It is saving for people's retirement.